# Community Development Block Grants for Indian Tribes and Alaska Native Villages

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A96-19350

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** July 31, 1996
- **Citation:** 61 FR 40084

## Text

SUMMARY: This rule makes final the requirements for the Community
Development Block Grant Program for Indian tribes and Alaska native
villages. Several revisions have been made to the previously published
interim rule by this final rule. These revisions have been made in
response to public comments, to correct errors and unintentional
omissions in the interim rule, and to include in this part those
applicable sections of subparts C, J, and K of part 570 which were
included by reference in the interim rule.

EFFECTIVE DATE: August 30, 1996.

FOR FURTHER INFORMATION CONTACT: Robert Barth, Office of Native
American Programs, Room 6728, Department of Housing and Urban
Development, 450 Golden Gate Avenue, San Francisco, CA 94102. (415)
436-8121. TTY (415) 436-6594. (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The information collection requirements contained in this rule have
been approved by the Office of Management and Budget (OMB) 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.

Background

This final rule represents the culmination of a process which
commenced with the publication of a proposed rule on June 21, 1991 (56
FR 28666). This was followed by the first interim rule on April 7, 1992
and the second and last interim rule which was published in the Federal
Register of July 27, 1994 (59 FR 38326). The last interim rule became
effective on October 1, 1994, and invited public comments for a five
month period ending December 27, 1994. The principal impetus for this
rule making process was the need to implement various statutory
mandates included in Section 105 of the Department of Housing and Urban
Development Reform Act (Pub. L. 101-235) as amended by the National
Affordable Housing Act of 1990. In addition, the transfer of the
authority for the Community Development Block Grant Program for Indian
Tribes and Alaska Native Villages to the Office of Public and Indian
Housing, and specifically the Office of Native American Programs within
that office, occasioned a re-evaluation of various policy
determinations reflected or embodied in previously issued program
regulations.

Public Comments

The Department of Housing and Urban Development (HUD) received 18
individual comments from 5 sources on the interim rule published on
July 27, 1994. HUD received 3 letters from tribes and 2 from
representative associations. General comments are discussed below and
are followed by specific comments. The specific comments and the
Department's responses are discussed under ``Specific Comments,''
according to the section where they appear in the interim rule.

General Comments

Comment: One comment was received which stated that the 1994
revision of the 1992 rule is a ``long step in the wrong direction'' in
that the entire thrust of this rule is the centralization of decision
making in the HUD Central Office to the ultimate detriment of the
Indian tribes. This perception is apparently based upon the removal of
specific application procedures and detailed selection criteria from
the rule. As stated in the rule, this information would be included in
the Notices of Funding Availability (NOFAs) published for specific
funding cycles. The commenter is of the opinion that this change would
significantly, if not completely, remove the opportunity for public
comment on these items. The commenter also states that the application
kits provided by HUD for the last two funding rounds (presumably FY
1993 and FY 1994) contained requirements which went beyond NOFA
requirements. This statement is apparently provided as additional
support for the commenter's opinion that the centralization of decision
making with little or no opportunity for public comment is the intent
of this rule.
Response: It is the position of the Department that centralizing
decision making and restricting opportunity for public comment on this
process certainly is not the intent nor the result of this rule. The
inclusion of the specifics of application procedures and the detailed
selection criteria in the NOFA rather than in the rule does not
increase the centralization of decision making; application review and
funding decisions will continue to be made at the Area ONAPs. With
respect to the effect of these changes on the opportunity for public
comment, at best such opportunity would be increased by moving in this
direction and in no conceivable circumstance would such opportunity be
diminished as compared to that afforded under the previous interim
rule. The implementing regulations (24 CFR part 4) for section 103 of
the HUD Reform Act provide a significant window of opportunity for
public comment on the content of a NOFA. The Department encourages
tribes and other interested parties to take advantage of the
opportunity to impact the process during this period. It is
considerably easier to change the content of a NOFA from one funding
cycle to the next as compared with the process required to amend
program regulations.
Regarding the relationship between the NOFA and the application kit
issued by the Department, the purpose of the kit is to assist the
applicant in understanding NOFA and regulatory requirements and, if
necessary, to supplement NOFA instructions regarding form use and
completion. The purpose of the kit is not to impose additional
requirements on the applicant. The application kit issued for the FY
1995 ICDBG funding cycle was very closely reviewed to ensure that none
of the information provided established requirements beyond the NOFA or
Program Regulations.
Comment: One comment was received which stated that renaming the
Phoenix Office of Native American Programs as the Southwest Office of
Native American Programs works to the detriment of the tribes in the
jurisdiction of that office. The commenter also questions the source of
the funds necessary to raise the base allocation to each Area ONAP from
Sec. 500,000 to Sec. 1,000,000.
Response: The Department does not believe that changing the name of
the Area ONAP located in Phoenix will work to the detriment of any
tribes; the name change does not signify anything other than a change
in the name so that it better reflects the jurisdiction of this office;
the names of all other Area ONAPs have also been changed for the same
reason. With respect to the source of funds necessary to increase the
base

[[Page 40085]]

allocation to each Area ONAP, it is to be noted that the change from
$500,000 to $1,000,000 in the base allocation represents the second
such change since the inception of the ICDBG program in 1978; the
original base allocation was $250,000. In making these changes it has
been the intent of the Department to increase the nation-wide equitable
availability of ICDBG funds.
Comment: One commenter raised an objection to moving the imminent
threat program from the Area ONAPs to Headquarters. It is the
observation of the commenter that Headquarters staff could not be as
knowledgeable about imminent threats in a specific area of the country
as the Area ONAP staff would be for that area.
Response: The Department agrees with the observation of the
commenter. However, the objection appears to be based on a misreading
of the changes made to subpart E--Imminent Threat Grants. These changes
were not intended to move the decision making process for such grants
from the Area ONAP to the Headquarters level nor is there such a
resultant effect. A clarifying memorandum was issued by ONAP on
February 9, 1995, to all Area ONAPs to make certain that this is
understood by all ONAP staff involved in this program. The changes were
to ensure that any eligible applicant would have potential access to
imminent threat funds. Before these changes, the establishment of an
Imminent Threat Set Aside was left to the determination of each Area
ONAP; some offices established such set asides and others did not.
Under this rule, all eligible applicants have the same potential access
to funds.
Comment: One commenter raised a strong objection to the elimination
of the provisions for correcting procedural errors. This commenter is
also of the opinion that HUD should have a uniform appeal procedure for
all competitive programs which would allow the redress of errors by the
raters in mathematical calculations or in the interpretation of program
requirements.
Response: Although the provisions for correcting procedural errors
have been removed from the rule, it was not the intent of the
Department to eliminate such a process; language identical to that in
the previous rule was published as part of the FY 1995 ICDBG NOFA.
Unless changed through a subsequent process of consultation, it will be
published as part of all subsequent NOFAs.
The argument made by the commenter for a uniform appeals process is
not related to the need to change the subject rule; it will, however,
be taken under advisement. It should however be noted that the
interpretation of program requirements is within the purview and
responsibility of the Department and, therefore, any appeals process
would be limited, as it always has been limited, to perceived errors of
compliance with procedural requirements.
Comment: One commenter (representing an association of housing
authorities) supports the resolution passed at the National American
Indian Housing Council's 1994 annual meeting that 1.5 percent of the
national appropriation for CDBG be reserved for the ICDBG.
Response: Increasing the percentage of the national CDBG
appropriation that is provided for the ICDBG program to 1.5 percent
from the current 1 percent would require a statutory change and it is,
therefore, outside the scope of rule making.
Comment: One commenter (representing an association of housing
authorities) strongly urges the allowance of comprehensive planning as
an eligible activity under the ICDBG program.
Response: Comprehensive planning is an eligible activity under the
ICDBG program (Sec. 953.205(a)). Funding for such activities could
however be affected by the statutory limitation (reiterated at
Secs. 953.205(c) and 953.206) which provides that no more than 20
percent of the funds of any ICDBG program may be used for planning and
administrative activities.

Specific Comments

Section 953.6--Technical Assistance

Comment: One commenter recommends that expanded technical
assistance should be made available to tribes/villages and that the
Department should provide in-depth regulations regarding the technical
assistance role of the field staff.
Response: On January 5, 1994, HUD's General Counsel issued a
memorandum to all HUD staff in which he clearly describes the type and
form of technical assistance which may be provided by HUD staff to
potential applicants for assistance under the restrictions imposed by
Section 102 of the HUD Reform Act. As it is described in this
memorandum, permissible technical assistance activities include
explaining and responding to questions concerning program regulations,
defining terms in an application package, and providing other forms of
technical guidance that may be described in the NOFA. In addition,
before the deadline for the submission of applications, HUD employees
may assist applicants by reviewing draft applications and identifying
those parts of the applications that need substantive improvement. HUD
employees may not, however, advise applicants on how to make the
improvements. The provision of technical assistance of a type and in a
manner inconsistent with that described by the General Counsel would
not be allowed by the Reform Act and, therefore, would require a
statutory change to be possible.
The Department encourages potential applicants to take advantage of
the extensive technical assistance available from the staff of the
various Area ONAPs. One of the principal reasons behind the recent
reorganization of the Area ONAPs was to improve the ability of the
organization to meet the technical assistance needs of its customers
within the parameters established by the HUD Reform Act.

Section 953.100(b)(1)--Ceilings

Comment: Two comments were made regarding the establishment of
grant ceilings. One commenter stated that the method of setting grant
ceilings is inequitable because in certain Area ONAP jurisdictions,
smaller tribes are allowed to compete for the same amount as larger
tribes. The other commenter stated that there should not be a policy of
allowing Area ONAPs to establish different ceilings for different size
tribes/villages as is done by certain of these offices.
Response: Each Area ONAP has the ability to recommend the ceiling
or ceilings for its jurisdiction. The Assistant Secretary for Public
and Indian Housing has the final authority to determine these ceilings.
The Department has determined that the present procedure for
establishing ceilings is the most appropriate method and, therefore,
has made no change to this section other than to eliminate a sentence
which was merely descriptive of one option available to Area ONAPs.

Section 953.101--Allocation of Funds

Comment: One commenter supports the increase in the base amount
allocation to each Area ONAP but strongly disagrees with the formula
for allocating the remaining funds and contends that it is unfair and
detrimental to the Alaska native villages. It is the position of the
commenter that using the total eligible Native American population in
an Area ONAP's jurisdiction as a factor in this allocation process is
not equitable. The commenter provides three suggestions for changing
the formula, all of which are based upon using the number of eligible
applicants in an Area ONAP's

[[Page 40086]]

jurisdiction rather than the eligible Native American population in
each jurisdiction.
Response: It is the position of the Department that the present
procedure used to allocate funds to each Area ONAP after the base
amount is allocated is the most appropriate method to use to ensure
that the allocations reflect the relative community development needs
of eligible applicants in each area. The number of eligible applicants
in each area is not an accurate measure of the relative community
development needs of the eligible applicants in that area compared to
another area.
Comment: One commenter states that the U.S. Census population data
is not a true and accurate count of Native populations and that HUD
should therefore allow each Area ONAP to request and use more accurate
data from the tribes/villages in its area.
Response: The Department recognizes that census data on Indian and
Alaska Native populations may be incomplete or inaccurate. Census data
is, however, the only such information which is consistently available
and which is reasonably accurate when aggregated by Area ONAP
jurisdiction. It has been the experience of the Department that census
data inaccuracies tend to affect each area equally and, therefore, do
not impact the relative distribution of Native American population
characteristics such as poverty and substandard housing conditions.
Based on these considerations, the Department will continue to use U.S.
census data in the formula for allocating funds to the Area ONAPs.
In order to eliminate any possible confusion or misunderstanding
regarding the source of data used to allocate funds to the Area ONAPs,
paragraph (a)(2) of this section has been revised to include explicit
reference to the U.S. Bureau of the Census. A corresponding clarifying
revision has been made to the definition of eligible Indian population
in Sec. 953.4.
These revisions are not substantial changes to the rule since data
provided by the U. S. Bureau of the Census has been used to allocate
funds to field offices since the inception of the ICDBG program in
1978.
Please be advised, however, that the Department intends to schedule
a series of consultation sessions throughout the country. During these
sessions, the type and source of data used by the Department for funds
allocation and other purposes will be agenda items. The hope is that an
identification and discussion of the availability and applicability of
other sources of data which could more accurately reflect the relative
and absolute community development needs in Native American communities
will occur.

Section 953.300--Application Requirements

Comment: One commenter states that this section is agreeable in
that it does not allow multiple project applications.
Response: The commenter has misread this section since it does not
address the issue of multiple project applications. However, it is to
be noted that an applicant could include as many projects as it wishes
in an application as long as the total ICDBG cost for all projects does
not exceed the applicable grant ceiling. Given the apparent
misunderstanding of this policy, it will be clearly stated in the NOFA
published for this program.
Comment: One comment was received which indicates that paragraphs
(b) and (c) of this section (953.300) are in direct contradiction.
Response: These two paragraphs do not contradict each other.
Paragraph (b) addresses the recognition and reimbursement of costs
incurred by an applicant before the submission of an application.
Paragraph (c) addresses the recognition and reimbursement of costs
incurred by an applicant after the submission of an application but
before HUD approval. To eliminate any possible misunderstanding, these
two paragraphs have been rewritten.

Section 953.302--Selection Process

Comment: One commenter expresses concerns over the meaning of the
language in Sec. 953.302(b) (Application rating system) and
Sec. 953.302(c) (Periodic NOFAs) and asks for clarification of the
phrases ``rated competitively within each field office's jurisdiction''
and ``will rate applications on the basis of their responsiveness.''
The commenter supports allowing each Area ONAP to establish its own
rating system for the NOFAs based upon the responses of the tribes in
its jurisdiction, but does not support the establishment of a generic
rating system for all tribes.
Response: The first phrase for which clarification is requested
should be construed to mean that all applications submitted for funding
consideration by applicants in the jurisdiction of a specific Area ONAP
are in competition for the ICDBG funds allocated to that Area ONAP. The
second phrase means that the Area ONAPs will rate applications on the
basis of their responsiveness to the criteria identified in the Program
Regulations and further detailed in the NOFA. In all of the ICDBG
funding cycles that have taken place since the implementation of the
HUD Reform Act, a NOFA has been published which contains the detailed
rating criteria and the specifics of the application procedures to be
used; the interim rule does not change this process. Each of these
NOFAs has contained items which vary from one Area ONAP jurisdiction to
another, e.g., rehabilitation grant limits, tie breaking
considerations, etc. These variations were included to reflect real
differences between the circumstances found in the various
jurisdictions. It is important that eligible applicants provide
specific feedback to their Area ONAPs so that the need for additional
jurisdictional variations can be analyzed and, if supported,
incorporated into the NOFA.
Comment: Another commenter believes that Sec. 953.302(b) is too
wide open in that each Area ONAP is afforded too much judgmental
discretion, i.e., one office could determine a project to have
unreasonable costs and be inappropriate for the intended use and reject
it from further consideration. Another office could determine that a
similar project does not fail these threshold requirements and proceed
to rate and rank the project. The commenter recommends that the
selection process be made consistent nationally so that each applicant
has an equal chance of funding.
Response: It is expected and required of each Area ONAP that
reasonable and responsible judgement be exercised in implementing all
aspects of the selection system. The specific aspects of the selection
process referenced by commenter are two of the community development
appropriateness thresholds which have been in the Program Regulations
since the March 18, 1983 interim rule was published for effect.
Guidance has been provided and will continue to be provided to the Area
ONAPs by the Headquarters ONAP to ensure equitable and consistent
implementation of these threshold requirements. It is the position of
the Department that no change is necessary in this section.

Section 953.303--Housing Rating Category

Comment: It is the position of one commenter that the threshold
requirement that an applicant shall assure that it will use project
funds to rehabilitate units only when the homeowner's payments are
current may raise issues of confidentiality.
Response: It is necessary to note that this specific threshold
applies to homeownership and not rental situations. As such, this
specific requirement for a homeowner who

[[Page 40087]]

wishes to participate in an ICDBG funded rehabilitation project should
be viewed as a reasonable condition for participation. It is also to be
noted that in all single family housing rehabilitation funded with
ICDBG funds, the households to be assisted must be of low or moderate
income status. The requirement that the household document this status
could also be viewed by some as raising issues of confidentiality, but
it is the position of the Department that it is also a reasonable
prerequisite for assistance.

Section 953.304--Community Facilities Rating Category

Comment: One commenter notes that the definition of the ``neediest
segment of the population'' has been removed from the interim rule and
asks what replaces it.
Response: Included among the details of the rating criterion of
project need which are now found in the NOFA is the definition of
``neediest segment of the population''.

Section 953.400--Criteria for Funding (Imminent Threat Grants)

Comment: One commenter states that the requirement that these funds
may only be used for imminent threats which impact an entire service
area is too restrictive.
Response: The ICDBG program was enacted by Congress to address
community development needs and was not enacted to provide assistance
grants to individuals. Therefore, it is the position of the Department
that the requirement that a threat to health or safety must impact an
entire service area and not just an individual or household is
consistent with congressional mandate and intent. The rule has not been
changed. It is to be noted, however, that the specific language of the
comment indicates that the commenter may be defining ``service area''
in a manner which is more restrictive than the definition provided in
Sec. 953.4 and the commenter is urged to review that definition.

Subpart F--Grant Administration

Comment: One commenter requests that income generated by economic
development activities funded with ICDBG funds should be able to be
retained and used at the grantee's discretion. It is the opinion of the
commenter that the requirements in the previous interim rule at
Sec. 571.505 (c) were more flexible in this regard.
Response: When the current interim rule was developed, the language
of Sec. 953.505 was written to incorporate the language of 24 CFR
570.504 which had previously only been referenced in the previous
interim rule in Sec. 571.504. However, the current and previous interim
rules were both in error. Section 913 of the National Affordable
Housing Act of 1990 included a number of technical corrections and
clarifications regarding the applicability of various sections of Title
I of the Act of 1974, as amended, to the CDBG program for Indian
tribes. Among the clarifications listed in this section was a statement
regarding the applicability of the various subsections of Section 104
of Title I of the 1974 Act. It is stated that only subsections (f),
(g), and (k) of that section apply to the ICDBG program. The
significance of this statement is that the statutory basis in the 1974
Act for the regulatory program income requirements and restrictions
specified in Sec. 570.504 is subsection (j) of Section 104. Given the
inapplicability of this subsection to the ICDBG program, the Department
has determined that 24 CFR 85.25--Program income (with the
modifications stated in a revised Sec. 953.503), will apply to the
ICDBG program. Specifically with respect to the commenter's concerns,
it is to be noted that as defined in Sec. 85.25 (b), program income
does not include income generated by the grant supported activity after
grant close-out. Given the nature of economic development activities
funded with ICDBG funds, it is most likely that any income generated by
these types of projects would occur after the grant period and
therefore its use would not be subject to regulatory restrictions.

Other Changes Made by This Rule

Subpart A--General Provisions

Section 953.1--Applicability and scope. The term ``Indian tribes
and Alaska native villages'' has been changed to ``applicants'' since,
as defined in Sec. 953.5, eligible applicants include entities, i.e.,
certain tribal organizations, other than Indian tribes and Alaska
native villages.
Section 953.4--Definitions. Six new definitions have been added--a
definition of Area ONAP, Assistant Secretary, Buildings for the General
Conduct of Government, Imminent treat, Microenterprise, and Small
Business. Please note that the definition of Area ONAP replaces that of
Field office.
The definition of Tribal government, Tribal governing body or
Tribal council has been modified to clarify that the Federal entity
providing recognition is the Bureau of Indian Affairs.
The definition of Subrecipient has been included in this section
rather than in subpart F--Grant Administration. In the interim rule
this definition was included in that subpart by virtue of the inclusion
(by reference) of subpart J of 24 CFR part 570 in that subpart.
Section 953.6--Technical assistance. This section has been deleted
since it did not address a matter or issue of program regulation; it
was a statement of Departmental policy. The deletion of this section in
no way diminishes the commitment of the Department to the provision of
technical assistance to eligible applicants. The response to the
comment submitted on this section reflects Departmental policy on this
matter.
Section 953.6--Waivers. This section (formerly Sec. 953.7) has been
revised to better state the policy of the Department regarding a waiver
of a regulatory requirement. The revised language also describes
procedural requirements for such waivers.

Subpart B--Allocation of Funds

Section 953.101--Field Office allocation of funds. This section has
been re-titled Area ONAP allocation of funds and has been changed to
clearly state that any amount retained by Headquarters to fund imminent
threat grants pursuant to Sec. 953.402 of this part will not be
available for allocation to the Area ONAPs.
Section 953.102--Use of recaptured and unawarded funds. The title
of this section has been changed so that it more accurately reflects
its content. The language of the section has also been revised so that
it more clearly states the requirements for the use of funds recaptured
or those which may remain unawarded after the completion of a funding
competition by an Area ONAP. The term ``unawarded'' replaces the term
``undistributed'' which was used in the interim rule; the term
``undistributed'' is not a term which satisfactorily describes
allocated funds which may remain with an Area ONAP after the completion
of a funding competition.

Subpart C--Eligible Activities

To improve the ease of use of the ICDBG rule for program applicants
and grantees, subpart C of part 570 has been incorporated in this
subpart with the exception of those provisions which apply only to the
Entitlement Cities or HUD-administered Small Cities programs and with
the additional exceptions or modifications discussed below. In the
interim rule, subpart C of part 570 was incorporated by reference.
Those sections of subpart C in the interim rule which were listed
as modifications to subpart C of part 570 (Sec. 953.201 through
Sec. 953.203) have been

[[Page 40088]]

incorporated in the appropriate sections of the revised subpart C.
In the process of reviewing the various sections of subpart C of
part 570 prior to their incorporation into subpart C of part 953, it
was determined that certain of these sections either included language
which was duplicative of language contained in other sections of the
rule or which was excessively descriptive or, that certain sections
included paragraphs which should be relocated to other sections or
subparts to facilitate ease of use and understanding of the rule.
Based on these determinations, the following modifications or
revisions have been made:
Section 570.200--General policies. 1. The language contained in
paragraph (a)(3)--Compliance with the primary objective (as modified to
meet the requirements of the ICDBG program) has been incorporated in
Sec. 953.208.
2. Paragraph (a)(4) Compliance with environmental review procedures
has not been incorporated since it duplicated the requirements included
in Sec. 953.605--Environment.
3. The language of paragraph (a)(5)--Cost principles was made part
of Sec. 953.501 which has been titled Applicability of uniform
administrative requirements and cost principles.
4. The language of paragraphs (b)--Special policies governing
facilities and paragraph (c)--Special assessments under the CDBG
program has been incorporated in Sec. 953.201(c)--Public facilities.
5. The introductory language of paragraph (d)--Consultant
activities has been eliminated since it was determined to be
superfluous.
6. The language of paragraph (d)(1) regarding the limitation on the
rate of compensation in employer-employee relationships has been
incorporated in the revised Sec. 953.501 as paragraph (c)(2) of that
section.
7. Both paragraph (e)--Recipient determinations required as a
condition of eligibility and (f)--Means of carrying out eligible
activities have not been included in the rule since it was determined
that the language in these paragraphs was either duplicated in other
sections of the rule or it was exemplary and not expository and did not
address a matter or issue of program regulation.
8. The language of paragraph (g)--Limitation on planning and
administrative costs has been incorporated in Sec. 953.206--Program
administration costs.
9. The language in paragraph (h)--Constitutional prohibition was
incorporated into subpart G--Other Program Requirements as
Sec. 953.600-- Constitutional prohibition.
Section 570.205--Eligible planning, urban environmental design and
policy-planning-management capacity building activities. The review of
subpart C of part 570 discussed above revealed that much of the
language included in this section was more exemplary or descriptive of
the types of activities possibly eligible under this section and did
not address a matter or issue of program regulation. The resultant
Sec. 953.205 is, therefore, more concise than Sec. 570.205, but it
affords the same degree of flexibility in the use of ICDBG funds for
planning and management capacity improvement types of activities
authorized by section 105(a)(12) of the 1974 Act, as amended.

Subpart D--Single Purpose Grant Application and Selection Process

Section 953.301--Screening and review of applications. This section
has been removed from the rule since it was determined to be
superfluous. All subsequent sections in this subpart have been re-
numbered.
Section 953.301--Selection process.
This section (formerly numbered 953.302) has been re-formatted to
clarify threshold requirements and the role of the NOFA with respect to
this process. No substantive changes have been made in the
requirements.
Section 953.303--Housing rating category, section 953.304--
Community. facilities rating category, and section 953.305--Economic
development rating category. These three sections have been
consolidated into two new sections Sec. 953.303-- Project specific
threshold requirements and Sec. 953.304--Project rating categories.
This consolidation process did not involve or include any substantial
changes in requirements. It however is to be noted that independent of
this consolidation, changes were made which affect project specific
threshold requirements for economic development projects. The threshold
requirement that ``an applicant shall demonstrate the need for grant
assistance by providing documentation to support a determination that
the assistance is appropriate to implement an economic development
project'' has been deleted. This requirement has proven to be an
unnecessary complication for potential applicants for assistance.
One of the two remaining threshold requirements for economic
development projects, i.e., that an analysis demonstrates that public
benefit commensurate with the assistance requested can reasonably be
expected, has been expanded in scope and revised. The expansion/
revision of this threshold was done to state this requirement in a
manner consistent with the objectives for the evaluation and selection
of economic development projects which were set forth in Section 806 of
the Housing and Community Development Act of 1992. As was indicated in
the Supplementary Information section of the January 5, 1995 Final Rule
and guidelines (24 CFR part 570), that rule would not apply to the
ICDBG Program; necessary compliance with the requirements of the 1992
Act would be established as part of a future rule. The Department has
reviewed the need to establish such compliance as part of a future rule
and has determined that the rating criteria for economic development
projects set forth in this rule, as explained and reified in all future
NOFAs, will be adequate to achieve general compliance with the
guidelines set forth in the 1992 Act.
The rating requirements for economic development projects have also
been changed to include a rating criterion ``additional
considerations'' which was inadvertently left out of the interim rule.
Section 953.304--Funding process. The language of
Sec. 953.304(b)(2) [formerly Sec. 953.307(b)(2)] has been changed to
delete an incorrect reference to 24 CFR part 58 made in the interim
rule and to more concisely state the applicable requirements of part
58.
Section 953.305--Program amendments. The language of this section
(formerly Sec. 953.308) has been changed since paragraph (b) of this
section in the interim rule referenced application component
requirements which were no longer specified anywhere in the rule. This
paragraph now references application component requirements now
specified in the NOFA. In addition, this paragraph has been revised to
raise the dollar amount of a program amendment request which must be
rated from $25,000 to $100,000. This change is consistent with the
Departmental policy of increasing program flexibility for clients and
customers while ensuring compliance with statutory requirements and
congressional intent.
Section 953.306--Public services. This section has been deleted
since it duplicates the language in Sec. 953.201(e) --Public services.

Subpart E--Imminent Threat Grants

Section 953.401--Application process. Paragraph (b) of this section
has been changed since the interim rule referenced application
requirements which were no longer specified anywhere in the rule. This
paragraph

[[Page 40089]]

now indicates that the form and content requirements for imminent
threat grant applications will be specified in the NOFA.
Section 953.402--Environmental review. This section has been
eliminated and the language of the section has been relocated to
Sec. 953.605 (b).
Section 953.402--Availability of Funds. This section (formerly
Sec. 953.403) has been changed to indicate that the amount which may be
retained by HUD for imminent threat grants will be determined by the
Assistant Secretary. It is the determination of the Department that
this discretion will provide for necessary flexibility. The amount to
be retained will be published in the NOFA and will be based upon an
anticipated level of demand which will take into consideration historic
funding levels and other relevant factors.

Subpart F--Grant Administration

To improve the ease of use of the ICDBG rule by program applicants
and grantees, those applicable sections of subpart J of part 570--
Program Administration--have been incorporated into subpart F of the
ICDBG rule; the interim rule incorporated these sections by reference.
Section 570.508--Public access to program records and Section 570.509--
Grant closeout procedures have been incorporated without substantial
modification as Sec. 953.507 and Sec. 953.508, respectively.
The following sections or provisions were either not incorporated
or they were incorporated but modified as discussed below.
Section 570.500--Definitions. This section has not been
incorporated. The definition of program income applicable to the ICDBG
program is set forth in Sec. 953.503. As discussed above, the
definition of subrecipient is set forth in Sec. 953.4.
Section 570.501--Responsibility for grant administration. This
section, with appropriate modifications to meet the requirements of the
ICDBG program, has been incorporated as Sec. 953.500.
Section 570.502--Applicability of uniform administrative
requirements. This section, with the following modifications, has been
incorporated into Sec. 953.501.
1. Reference to the program income requirements of 24 CFR 85.25 (as
modified by Sec. 953.503) is included in Sec. 953.501 as paragraph (7).
Reference to this section of part 85 is not included in Sec. 570.501
since there are different statutory program income requirements for the
CDBG program, as discussed above in the response to the comment
submitted regarding these requirements. Given the inclusion of a
paragraph referencing Sec. 85.25, the number of paragraphs in
Sec. 953.501 is 21 as compared to 20 in Sec. 570.502.
2. The language of paragraph (a)(12) has been incorporated in
Sec. 953.501(a)(13) and additional language has been added so that the
alternatives to the payment and performance bonding requirements of
Sec. 85.36(b) which are acceptable to HUD for the ICDBG program are
stated. These acceptable alternatives will allow grantees increased
flexibility to adequately ensure performance and payment by a
contractor while at the same time allowing the grantee to more easily
meet its other obligations and responsibilities under the rule.
3. The language of paragraph (a)(16) has been incorporated in
Sec. 953.501(a)(17) and has been added to by stating the starting date
for record retention requirements.
Section 570.504--Program income. This section has not been
incorporated in Sec. 953.501.
Section 570.505--Records to be maintained. This section has been
incorporated, in a highly modified form, in Sec. 953.505. Section
953.505 merely states that each grantee shall establish and maintain
sufficient records to enable HUD to determine whether or not it has met
the requirements of this part. A grantee guidance document which will
recommend specific records to be maintained will be issued by HUD in
the near future.
Section 570.507--Reports. This section has been incorporated, in a
modified form, as Sec. 953.506. The modifications include the deletion
of inapplicable performance reporting requirements and the relocation
to this section of the requirements of Sec. 953.700--Reports to be
submitted of the interim rule. In addition to this relocation, specific
timing requirements for the submission of the status and evaluation
reports has been added.
Section 570.510--Transferring projects from urban counties to
metropolitan cities. Section 570.513--Lump sum drawdown for financing
of property rehabilitation. These two sections have not been
incorporated. It is to be noted that lump sum drawdowns are authorized
under subsection (h) of section 104 of Title I of the 1974 Act. This
subsection was not stated in section 913 of the National Affordable
Housing Act of 1990 as being applicable to the CDBG Program for Indian
tribes.
The provisions of the following sections of subpart F of the
interim rule (with modifications discussed below) have been
incorporated into the final rule as follows.

------------------------------------------------------------------------
Interim rule Final rule
------------------------------------------------------------------------
Sec. 953.502--Force account construction.................. Sec. 953.5
09
Sec. 953.503--Indian preference........................... Sec. 953.5
10
Sec. 953.505--Program income.............................. Sec. 953.5
03
------------------------------------------------------------------------

The following modifications have been made to these sections.
Force account construction--The last sentence in paragraph (e)
regarding the approval of alternative requirements in lieu of bonding
has been deleted. As discussed above, acceptable alternatives to
performance and payment bonding are set forth in Sec. 953.501(a)(13).
Indian preference--This section has been revised in the following
ways.
1. Inaccuracies in certain referenced definitions in the interim
rule have been corrected.
2. A definition of ``Indian'' as this word is defined in the Indian
Self-Determination and Education Assistance Act (25 U.S.C. 450 b) has
been included.
3. Paragraph (e), Additional Indian preference requirements is
being deleted since its provisions have never been used and, upon
analysis, it did not appear to be meaningful or necessary.
4. A new paragraph (e) Complaint procedures in which the specific
process to be followed is clarified and in which the grantee is
identified as the final arbiter has been added.
Program income--The basis for the changes to this section and the
changes themselves are addressed above in the section Specific
Comments.

Subpart G--Other Program Requirements

In Sec. 953.600 of the interim rule it is stated that the following
requirements of 24 CFR Part 570, subpart K apply to grants under the
ICDBG Program:

Sec. 570.605--National Flood Insurance Program
Sec. 570.608--Lead-based paint
Sec. 570.609--Use of debarred, suspended or ineligible contractors
or subrecipients
Sec. 570.610--Uniform administrative cost principles

A review of these requirements with the intent of incorporating
them in their entirety into the ICDBG rule resulted in the following
determinations.
Section 570.605--National flood insurance program. This section was
not incorporated into the final rule since it duplicates the
requirements of 24 CFR 58.6(a) in which grantee responsibilities under
the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001--4128) are
set forth.

[[Page 40090]]

Section 570.608--Lead-based paint. The language of this section was
modified prior to incorporation to reflect the current policies of the
Department. The modifications were based on recommendations from HUD's
Office of Lead-Based Paint Abatement and Poisoning Prevention. These
requirements are set forth in Sec. 953.607. The Department, however,
has published a proposed regulation to implement the Residential Lead-
Based Paint Hazard Reduction Act of 1992, Title X of the Housing and
Community Development Act of 1992 (Pub. L. 102-550). The June 7, 1996
regulation will substantially alter the lead-based paint requirements
for all HUD programs including the CDBG Program for Indian Tribes and
Alaska Native Villages.
Section 570.609--Use of debarred, suspended or ineligible
contractors or subrecipients. It was determined that the incorporation
of this section would not be completely appropriate without significant
modifications. Instead of modifying this section so that its provisions
better fit the ICDBG Program, the provisions and requirements from the
Indian HOME Program regulations which address these responsibilities
will be incorporated into the final rule since the requirements for
both programs are the same. Therefore, the requirements which govern
the use of debarred, suspended or ineligible contractors or
subrecipients in the final rule (now Sec. 953.608) are the same as
those for the Indian HOME Program.
Section 570.610--Uniform administrative cost principles. This
section was not incorporated into the final rule. It was determined
that it duplicated the requirements set forth in Sec. 953.501--
Applicability of uniform administrative requirements and cost
principles.
Section 953.602--Relocation and real property acquisition. The
language of this section was revised to reflect current policies and
terminology used by the Department with respect to relocation and real
property acquisition activities related to or funded by programs under
the Act.
Section 953.605--Environment. This section was revised to
explicitly reference the flood insurance, coastal barrier resource and
airport clear zone requirements found at 24 CFR 58.6 and to correctly
identify the title of 24 CFR part 58.
Section 953.606--Conflict of interest. The references in subsection
(a) to the applicability of OMB Circular A-110 have been deleted and
replaced with a reference to 24 CFR 84.42; part 84 has superseded OMB
Circular A-110.

Subpart H--Program Performance

Section 953.700--Reports to be submitted by grantee. As stated
above, reporting requirements for ICDBG grantees have been consolidated
under Sec. 953.507. With the deletion of this section, all subsequent
sections in this subpart have been re-numbered.
Section 953.701--Corrective and remedial actions. Paragraph (b)(3)
of this section (formerly Sec. 953.702) has been deleted since
certifications of compliance are no longer used in the ICDBG program.

Other Matters

Executive Order 12866

This final rule was reviewed by the Office of Management and Budget
(OMB) under Executive Order 12866 on Regulatory Planning and Review,
issued by the President on September 30, 1993. Any changes made in this
final rule as a result of that review are clearly identified in the
docket file, which is available for public inspection in the office of
the Department's Rules Docket Clerk, Room 10276, 451 Seventh Street
SW., Washington, DC.

National Environmental Policy Act

A Finding of No Significant Impact with respect to the environment
was made in accordance with HUD regulations at 24 CFR Part 50, which
implement Section 102(2)(C) of the National Environmental Policy Act of
1969, when the July 27, 1994 interim rule was issued. Because no
significant changes have been made that would pertain to the
environment, that finding applies to this final rule. 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.

Regulatory Flexibility

The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule does not have a significant
economic impact on a substantial number of small entities. The rule
establishes criteria for funding eligible grantees among Indian Tribes/
Villages and has no impact on small entities.

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 rule would 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. While the rule has
some direct effects on States and political subdivisions, those effects
are limited to direct implementation of instructions contained in
statutes governing the grant program. Given the lack of discretion in
the Department to refrain from implementing these statutory
instructions, further analysis of federalism concerns would serve no
useful purpose.

Executive Order 12606, The Family

The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule would not have
potential for significant impact on family formation, maintenance, and
general well-being, and, thus, is not subject to review under the
Order.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance program number is
14.862.

List of Subjects in 24 CFR Part 953

Alaska, Community development block grants, Grant programs--housing
and community development, Indians, Reporting and recordkeeping
requirements.

Accordingly, 24 CFR Part 953 is revised to read as follows:

PART 953--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND
ALASKA NATIVE VILLAGES

Subpart A--General Provisions

Sec.
953.1 Applicability and scope.
953.2 Program objective.
953.3 Nature of program.
953.4 Definitions.
953.5 Eligible applicants.
953.6 Waivers.

Subpart B--Allocation of Funds

953.100 General.
953.101 Area ONAP allocation of funds.
953.102 Use of recaptured and unawarded funds.

Subpart C--Eligible Activities

953.200 General policies.
953.201 Basic eligible activities.
953.202 Eligible rehabilitation and preservation activities.
953.203 Special economic development activities.
953.204 Special activities by Community-Based Development
Organizations (CBDOs).

[[Page 40091]]

953.205 Eligible planning, urban environmental design and policy-
planning-management-capacity building activities.
953.206 Program administration costs.
953.207 Ineligible activities.
953.208 Criteria for compliance with the primary objective.

Subpart D--Single Purpose Grant Application and Selection Process

953.300 Application requirements.
953.301 Selection process.
953.302 Project specific threshold requirements.
953.303 Project rating categories.
953.304 Funding process.
953.305 Program amendments.

Subpart E--Imminent Threat Grants

953.400 Criteria for funding.
953.401 Application process.
953.402 Availability of funds.

Subpart F--Grant Administration

953.500 Responsibility for grant administration.
953.501 Applicability of uniform administrative requirements and
cost principles.
953.502 Agreements with subrecipients.
953.503 Program income.
953.504 Use of real property.
953.505 Records to be maintained.
953.506 Reports.
953.507 Public access to program records.
953.508 Grant closeout procedures.
953.509 Force account construction.
953.510 Indian preference requirements.
953.511 Use of escrow accounts for rehabilitation of privately
owned residential property.

Subpart G--Other Program Requirements

953.600 Constitutional prohibition.
953.601 Nondiscrimination.
953.602 Relocation and real property acquisition.
953.603 Labor standards.
953.604 Citizen participation.
953.605 Environment.
953.606 Conflict of interest.
953.607 Lead-based paint.
953.608 Debarment and suspension.

Subpart H--Program Performance

953.700 Review of grantee's performance.
953.701 Corrective and remedial actions.
953.702 Reduction or withdrawal of grant.
953.703 Other remedies for noncompliance.

Authority: 42 U.S.C. 3535(d) and 5301 et seq.

Subpart A--General Provisions

Sec. 953.1 Applicability and scope.

The policies and procedures described in this part apply to grants
to eligible applicants under the Community Development Block Grant
(CDBG) program for Indian tribes and Alaska native villages.

Sec. 953.2 Program objective.

The primary objective of the Indian CDBG (ICDBG) Program and of the
community development program of each grantee covered under the Act is
the development of viable Indian and Alaska native communities,
including decent housing, a suitable living environment, and economic
opportunities, principally for persons of low and moderate income. The
Federal assistance provided in this part is not to be used to reduce
substantially the amount of tribal financial support for community
development activities below the level of such support before the
availability of this assistance.

Sec. 953.3 Nature of program.

The selection of single purpose grantees under subpart B of this
part is competitive in nature. Therefore, selection of grantees for
funds will reflect consideration of the relative adequacy of
applications in addressing tribally determined need. The selection of
grantees of imminent threat grants under the provisions of subpart B of
this part is not competitive in nature. However, applicants for funding
under either subpart must have the administrative capacity to undertake
the community development activities proposed, including the systems of
internal control necessary to administer these activities effectively
without fraud, waste, or mismanagement.

Sec. 953.4 Definitions.

Act means Title I of the Housing and Community Development Act of
1974, as amended (42 U.S.C. 5301 et seq.)
Area ONAPs mean the HUD Offices of Native American Programs having
field office responsibility for the ICDBG Program.
Assistant Secretary means the Assistant Secretary for Public and
Indian Housing.
Buildings for the general conduct of government mean office
buildings and other facilities in which the legislative, judicial or
general administrative affairs of the government are conducted. This
term does not include such facilities as neighborhood service centers
or special purpose buildings located in low and moderate income areas
that house various non-legislative functions or services provided by
the government at decentralized locations.
Chief executive officer means the elected official or legally
designated official who has the prime responsibility for the conduct of
the affairs of an Indian tribe or Alaska native village.
Eligible Indian population means the most accurate and uniform
population data available from data compiled and published by the
United States Bureau of the Census available from the latest census
referable to the same point or period of time for Indian tribes and
Alaska native villages eligible under this part.
Extent of overcrowded housing means the number of housing units
with 1.01 or more persons per room, based on data compiled and
published by the United States Bureau of the Census available from the
latest census referable to the same point or period of time.
Extent of poverty means the number of persons whose incomes are
below the poverty level, based on data compiled and published by the
United States Bureau of the Census referable to the same point or
period in time and the latest reports from the Office of Management and
Budget.
HUD means the Department of Housing and Urban Development.
ICDBG Program means the Indian Community Development Block Grant
Program.
Identified service area means:
(1) A geographic location within the jurisdiction of a tribe (but
not the entire jurisdiction) designated in comprehensive plans,
ordinances, or other tribal documents as a service area;
(2) The Bureau of Indian Affairs (BIA) service area, including
residents of areas outside the geographic jurisdiction of the tribe; or
(3) The entire area under the jurisdiction of a tribe which has a
population of members of under 10,000.
Imminent threat means a problem which if unresolved or not
addressed will have an immediate negative impact on public health or
safety.
Low and moderate income beneficiary means a family, household, or
individual whose income does not exceed 80 percent of the median income
for the area, as determined by HUD, with adjustments for smaller and
larger households or families. However, HUD may establish income
ceilings higher or lower than 80 percent of the median for the area on
the basis of HUD's findings that such variations are necessary because
of unusually high or low household or family incomes. In reporting
income levels to HUD, the applicant must include and identify the
distributions of tribal or village income to families, households, or
individuals.
Microenterprise means a business that has five or fewer employees,
one or more of whom owns the enterprise.
Secretary means the Secretary of HUD.
Small business means a business that meets the criteria set forth
in section 3(a) of the Small Business Act (15 U.S.C. 631, 636, and
637).
Subrecipient means a public or private nonprofit agency, authority
or organization, or a for-profit entity

[[Page 40092]]

described in Sec. 953.201(o), receiving ICDBG funds from the grantee or
another subrecipient to undertake activities eligible for assistance
under subpart C of this part. The term excludes a CBDO receiving ICDBG
funds from the grantee under the authority of Sec. 953.204, unless the
grantee explicitly designates it as a subrecipient. The term does not
include contractors providing supplies, equipment, construction or
services subject to the procurement requirements in 24 CFR 85.36 or in
24 CFR Part 84, as applicable.
Tribal government, Tribal governing body or Tribal council means
the governing body of an Indian tribe or Alaska native village as
recognized by the Bureau of Indian Affairs.
Tribal resolution means the formal manner in which the tribal
government expresses its legislative will in accordance with its
organic documents. In the absence of such organic documents, a written
expression adopted pursuant to tribal practices will be acceptable.
URA means the Uniform Relocation and Real Property Acquisition
Policies Act of 1970, as amended (42 U.S.C. 4601 et. seq.).

Sec. 953.5 Eligible applicants.

(a) Eligible applicants are any Indian tribe, band, group, or
nation, including Alaska 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) or which had been an eligible recipient
under the State and Local Fiscal Assistance Act of 1972 (31 U.S.C.
1221). Eligible recipients under the Indian Self-Determination and
Education Assistance Act will be determined by the Bureau of Indian
Affairs and eligible recipients under the State and Local Fiscal
Assistance Act of 1972 are those that have been determined eligible by
the Department of Treasury, Office of Revenue Sharing.
(b) Tribal organizations which are eligible under Title I of the
Indian Self-Determination and Education Assistance Act may apply on
behalf of any Indian tribe, band, group, nation, or Alaska native
village eligible under that act for funds under this part 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 the Indian Health
Service, as appropriate.
(c) 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.

(Approved by the Office of Management and Budget under control
number 2577-0191)

Sec. 953.6 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.

Subpart B--Allocation of Funds

Sec. 953.100 General.

(a) Types of grants. Two types of grants are available under the
Indian CDBG Program.
(1) Single purpose grants provide funds for one or more single
purpose projects consisting of an activity or set of activities
designed to meet a specific community development need. This type of
grant is awarded through competition with other single purpose
projects.
(2) Imminent threat grants alleviate an imminent threat to public
health or safety that requires immediate resolution. This type of grant
is awarded only after an Area ONAP determines that such conditions
exist and if funds are available for such grants.
(b) Size of grants.--(1) Ceilings. Each Area ONAP may recommend
grant ceilings for single purpose grant applications. Single purpose
grant ceilings for each Area ONAP shall be established in the NOFA
(Notice of Funding Availability).
(2) Individual grant amounts. An Area ONAP may approve a grant
amount less than the amount requested. In doing so, the Area ONAP may
take into account the size of the applicant, the level of demand, the
scale of the activity proposed relative to need and operational
capacity, the number of persons to be served, the amount of funds
required to achieve project objectives and the administrative capacity
of the applicant to complete the activities in a timely manner.

Sec. 953.101 Area ONAP allocation of funds.

(a) Except as provided in paragraph (b) of this section, funds will
be allocated to the Area ONAPs responsible for the program on the
following basis:
(1) Each Area ONAP will be allocated $1,000,000 as a base amount,
to which will be added a formula share of the balance of the ICDBG
Program funds, as provided in paragraph (a)(2) of this section.
(2) The amount remaining after the base amount is allocated and any
amount retained by the Headquarters ONAP to fund imminent threat grants
pursuant to the provisions of Sec. 953.402 is subtracted, will be
allocated to each Area ONAP based on the most recent data complied and
published by the United States Bureau of the Census referable to the
same point or period in time, as follows:
(i) Forty percent (40%) of the funds will be allocated based upon
each Area ONAP's share of the total eligible Indian population;
(ii) Forty percent (40%) of the funds will be allocated based upon
each Area ONAP's share of the total extent of poverty among the
eligible Indian population; and
(iii) Twenty percent (20%) of the funds will be allocated based
upon each Area ONAP's share of the total extent of overcrowded housing
among the eligible Indian population.
(b) HUD will use other criteria to determine an allocation formula
for distributing funds to the Area ONAPs if funds are set aside by
statute for a specific purpose in any fiscal year if it is determined
that the formula in paragraph (a) of this section is inappropriate to
accomplish the purpose. HUD will use other criteria if it is determined
that, based on a limited appropriation of funds, the use of the formula
in paragraph (a) of this section is inappropriate to obtain an
equitable allocation of funds.
(c) Data used for the allocation of funds will be based upon the
Indian population of those tribes and villages that are determined to
be eligible ninety (90) days before the beginning of each fiscal year.

Sec. 953.102 Use of recaptured and unawarded funds.

(a) The Assistant Secretary will determine on a case-by-case basis
the use of grant funds which are:
(1) Recaptured by HUD under the provisions of Sec. 953.703 or
Sec. 953.704;
(2) Recaptured by HUD at the time of the closeout of a program; or
(3) Unawarded after the completion by an Area ONAP of a funding
competition.
(b) The recaptured or unawarded funds will remain with the Area
ONAP to which they were originally allocated unless the Assistant
Secretary determines that there is an overriding

[[Page 40093]]

reason to redistribute these funds outside of the Area ONAP's
jurisdiction. The recaptured funds may be used to fund the highest
ranking unfunded project from the most recent funding competition, an
imminent threat, or other uses. Unawarded funds may be used to fund an
imminent threat or other uses.

Subpart C--Eligible Activities

Sec. 953.200 General policies.

An activity may be assisted in whole or in part with ICDBG funds
only if the activity meets the eligibility requirements of section 105
of the Act as further defined in this subpart and if the criteria for
compliance with the primary objective of the Act set forth under
Sec. 953.208 have been met. The requirements for compliance with the
primary objective of the Act do not apply to imminent threat grants
funded under subpart E of this part.

Sec. 953.201 Basic eligible activities.

ICDBG funds may be used for the following activities:
(a) Acquisition. Acquisition in whole or in part by the grantee, or
other public or private nonprofit entity, by purchase, long-term lease,
donation, or otherwise, of real property (including air rights, water
rights, rights-of-way, easements, and other interests therein) for any
public purpose, subject to the limitations of Sec. 953.207.
(b) Disposition. Disposition, through sale, lease, donation, or
otherwise, of any real property acquired with ICDBG funds or its
retention for public purposes, including reasonable costs of
temporarily managing such property or property acquired under urban
renewal, provided that the proceeds from any such disposition shall be
program income subject to the requirements set forth in Sec. 953.503.
(c) Public facilities and improvements. Acquisition, construction,
reconstruction, rehabilitation or installation of public facilities and
improvements, except as provided in Sec. 953.207(a), carried out by the
grantee or other public or private nonprofit entities. In undertaking
such activities, design features and improvements which promote energy
efficiency may be included. [However, activities under this paragraph
may be directed to the removal of material and architectural barriers
that restrict the mobility and accessibility of elderly or severely
disabled persons to publicly owned and privately owned buildings,
facilities, and improvements including those provided for in
Sec. 953.207(a)(1).] Such activities may also include the execution of
architectural design features, and similar treatments intended to
enhance the aesthetic quality of facilities and improvements receiving
ICDBG assistance. Facilities designed for use in providing shelter for
persons having special needs are considered public facilities and not
subject to the prohibition of new housing construction described in
Sec. 953.207(b)(3). Such facilities include shelters for the homeless;
convalescent homes; hospitals, nursing homes; battered spouse shelters;
halfway houses for run-away children, drug offenders or parolees; group
homes for mentally retarded persons and temporary housing for disaster
victims. In certain cases, nonprofit entities and subrecipients
including those specified in Sec. 953.204 may acquire title to public
facilities. When such facilities are owned by nonprofit entities or
subrecipients, they shall be operated so as to be open for use by the
general public during all normal hours of operation. Public facilities
and improvements eligible for assistance under this paragraph (c) are
subject to the following policies in paragraphs (c)(1) through (c)(3)
of this section:
(1) Special policies governing facilities. The following special
policies apply to:
(i) Facilities containing both eligible and ineligible uses. A
public facility otherwise eligible for assistance under the ICDBG
program may be provided with ICDBG funds even if it is part of a
multiple use building containing ineligible uses, if:
(A) The facility which is otherwise eligible and proposed for
assistance will occupy a designated and discrete area within the larger
facility; and
(B) The grantee can determine the costs attributable to the
facility proposed for assistance as separate and distinct from the
overall costs of the multiple-use building and/or facility. Allowable
costs are limited to those attributable to the eligible portion of the
building or facility.
(ii) Equipment purchase. As stated in Sec. 953.207(b)(1), the
purchase of equipment with ICDBG funds is generally ineligible.
However, the purchase of construction equipment for use as part of a
solid waste facility is eligible. In addition, the purchase of fire
protection equipment is considered to be an integral part of a public
facility, and, therefore, the purchase of such equipment is also
eligible.
(2) Fees for use of facilities. Reasonable fees may be charged for
the use of the facilities assisted with ICDBG funds, but charges such
as excessive membership fees, which will have the effect of precluding
low and moderate income persons from using the facilities, are not
permitted.
(3) Special assessments under the ICDBG program. The following
policies relate to special assessments under the ICDBG program:
(i) Definition of special assessment. The term special assessment
means the recovery of the capital costs of a public improvement, such
as streets, water or sewer lines, curbs, and gutters, through a fee or
charge levied or filed as a lien against a parcel of real estate as a
direct result of benefit derived from the installation of a public
improvement, or a one-time charge made as a condition of access to a
public improvement. This term does not relate to taxes, or the
establishment of the value of real estate for the purpose of levying
real estate, property, or ad valorem taxes, and does not include
periodic charges based on the use of a public improvement, such as
water or sewer user charges, even if such charges include the recovery
of all or some portion of the capital costs of the public improvement.
(ii) Special assessments to recover capital costs. Where ICDBG
funds are used to pay all or part of the cost of a public improvement,
special assessments may be imposed as follows:
(A) Special assessments to recover the ICDBG funds may be made only
against properties owned and occupied by persons not of low and
moderate income. Such assessments constitute program income.
(B) Special assessments to recover the non-ICDBG portion may be
made provided that ICDBG funds are used to pay the special assessment
on behalf of all properties owned and occupied by low and moderate
income persons; except that ICDBG funds need not be used to pay the
special assessments on behalf of properties owned and occupied by
moderate income persons if the grantee certifies that it does not have
sufficient ICDBG funds to pay the assessments in behalf of all of the
low and moderate income owner-occupant persons. Funds collected through
such special assessments are not program income.
(iii) Public improvements not initially assisted with ICDBG funds.
The payment of special assessments with ICDBG funds constitutes ICDBG
assistance to the public improvement. Therefore, ICDBG funds may be
used to pay special assessments provided:
(A) The installation of the public improvements was carried out in
compliance with requirements applicable to activities assisted under
this part including environmental and citizen participation
requirements; and

[[Page 40094]]

(B) The installation of the public improvement meets a criterion
for the primary objective in Sec. 953.208; and,
(C) The requirements of Sec. 953.201(c)(3)(ii))(B) are met.
(d) Clearance activities. Clearance, demolition, and removal of
buildings and improvements, including movement of structures to other
sites. Demolition of HUD-assisted housing units may be undertaken only
with the prior approval of HUD.
(e) Public services. Provision of public services (including labor,
supplies, materials, and the purchase of personal property and
furnishings) which are directed toward improving the community's public
services and facilities, including but not limited to those concerned
with employment, crime prevention, child care, health, drug abuse,
education, fair housing counseling, energy conservation, welfare (but
excluding the provision of income payments identified under
Sec. 953.207(b)(4)), homebuyer downpayment assistance or recreational
needs. To be eligible for ICDBG assistance, a public service must be
either a new service, or a quantifiable increase in the level of an
existing service above that which has been provided by or on behalf of
the grantee through funds raised by the grantee, or received by the
grantee from the Federal government in the twelve calendar months
before the submission of the application for ICDBG assistance. (An
exception to this requirement may be made if HUD determines that any
decrease in the level of a service was the result of events not within
the control of the grantee.) The amount of ICDBG funds used for public
services shall not exceed 15 percent of the grant. Such projects must
therefore be submitted with one or more other projects, which must
comprise at least 85 percent of the total requested ICDBG grant amount.
(f) Interim assistance. (1) The following activities may be
undertaken on an interim basis in areas exhibiting objectively
determinable signs of physical deterioration where the grantee has
determined that immediate action is necessary to arrest the
deterioration and that permanent improvements will be carried out as
soon as practicable:
(i) The repairing of streets, sidewalks, parks, playgrounds,
publicly owned utilities, and public buildings; and
(ii) The execution of special garbage, trash, and debris removal,
including neighborhood cleanup campaigns, but not the regular curbside
collection of garbage or trash in an area.
(2) In order to alleviate emergency conditions threatening the
public health and safety in areas where the chief executive officer of
the grantee determines that such an emergency condition exists and
requires immediate resolution, ICDBG funds may be used for:
(i) The activities specified in paragraph (f)(1) of this section,
except for the repair of parks and playgrounds;
(ii) The clearance of streets, including snow removal and similar
activities; and
(iii) The improvement of private properties.
(3) All activities authorized under paragraph (f)(2) of this
section are limited to the extent necessary to alleviate emergency
conditions.
(g) Payment of non-Federal share. Payment of the non-Federal share
required in connection with a Federal grant-in-aid program undertaken
as part of ICDBG activities, provided, that such payment shall be
limited to activities otherwise eligible and in compliance with
applicable requirements under this subpart.
(h) Relocation. Relocation payments and other assistance for
permanently and temporarily relocated individuals families, businesses,
nonprofit organizations, and farm operations where the assistance is:
(1) Required under the provisions of Sec. 953.602 (b) or (c); or
(2) Determined by the grantee to be appropriate under the
provisions of Sec. 953.602(d).
(i) Loss of rental income. Payments to housing owners for losses of
rental income incurred in holding, for temporary periods, housing units
to be used for the relocation of individuals and families displaced by
program activities assisted under this part.
(j) Housing services. Housing services, as provided in section
105(a)(21) of the Housing and Community Development Act of 1974 [42
U.S.C. 5305(a)(21)].
(k) Privately owned utilities. ICDBG funds may be used to acquire,
construct, reconstruct, rehabilitate, or install the distribution lines
and facilities of privately owned utilities, including the placing
underground of new or existing distribution facilities and lines.
(l) The provision of assistance to facilitate economic development.
(1) The provision of assistance either through the grantee directly or
through public and private organizations, agencies, and other
subrecipients (including nonprofit and for-profit subrecipients) to
facilitate economic development by:
(i) Providing credit, including, but not limited to, grants, loans,
loan guarantees, and other forms of financial support, for the
establishment, stabilization, and expansion of microenterprises;
(ii) Providing technical assistance, advice, and business support
services to owners of microenterprises and persons developing
microenterprises; and
(iii) Providing general support, including, but not limited to,
peer support programs, counseling, child care, transportation, and
other similar services, to owners of microenterprises and persons
developing microenterprises.
(2) Services provided under paragraph (l)(1) of this section shall
not be subject to the restrictions on public services contained in
Sec. 953.201(e).
(3) For purposes of this paragraph (l), persons developing
microenterprises means such persons who have expressed interest and who
are, or after an initial screening process are expected to be, actively
working toward developing businesses, each of which is expected to be a
microenterprise at the time it is formed.
(m) Technical assistance. Provision of technical assistance to
public or nonprofit entities to increase the capacity of such entities
to carry out eligible neighborhood revitalization or economic
development activities. Capacity building for private or public
entities (including grantees) for other purposes may be eligible as a
planning cost under Sec. 953.205.
(n) Assistance to institutions of higher education. Provision of
assistance by the grantee to institutions of higher education where the
grantee determines that such an institution has demonstrated a capacity
to carry out eligible activities under this subpart.
(o) Homeownership assistance. ICDBG funds may be used to provide
direct homeownership assistance to low- and moderate-income households
to:
(1) Subsidize interest rates and mortgage principal amounts for
low-and moderate-income homebuyers;
(2) Finance the acquisition by low-and moderate-income homebuyers
of housing that is occupied by the homebuyers;
(3) Acquire guarantees for mortgage financing obtained by low-and
moderate-income homebuyers form private lenders (except that ICDBG
funds may not be used to guarantee such mortgage financing directly,
and grantees may not provide such guarantees directly);
(4) Provide up to 50 percent of any downpayment required from a
low-and moderate-income homebuyer; or
(5) Pay reasonable closing costs (normally associated with the
purchase of a home) incurred by a low-or moderate-income homebuyer.

[[Page 40095]]

Sec. 953.202 Eligible rehabilitation and preservation activities.

(a) Types of buildings and improvements eligible for rehabilitation
or reconstruction assistance. ICDBG funds may be used to finance the
rehabilitation of:
(1) Privately owned buildings and improvements for residential
purposes; improvements to a single-family residential property which is
also used as a place of business, which are required in order to
operate the business, need not be considered to be rehabilitation of a
commercial or industrial building, if the improvements also provide
general benefit to the residential occupants of the building;
(2) Low-income public housing and other publicly owned residential
buildings and improvements;
(3) Publicly or privately owned commercial or industrial buildings,
except that the rehabilitation of such buildings owned by a private
for-profit business is limited to improvements to the exterior of the
building and the correction of code violations (further improvements to
such buildings may be undertaken pursuant to Sec. 953.203(b)); and
(4) Nonprofit-owned nonresidential buildings and improvements not
eligible under Sec. 953.201(c);
(5) Manufactured housing when such housing constitutes part of the
community's permanent housing stock.
(b) Types of assistance. ICDBG funds may be used to finance the
following types of rehabilitation or reconstruction activities, and
related costs, either singly, or in combination, through the use of
grants, loans, loan guarantees, interest supplements, or other means
for buildings and improvements described in paragraph (a) of this
section, except that rehabilitation of commercial or industrial
buildings is limited as described in paragraph (a)(3) of this section.
(1) Assistance to private individuals and entities, including
profit making and nonprofit organizations, to acquire for the purpose
of rehabilitation, and to rehabilitate properties, for use or resale
for residential purposes;
(2) Labor, materials, and other costs of rehabilitation of
properties, including repair directed toward an accumulation of
deferred maintenance, replacement of principal fixtures and components
of existing structures, installation of security devices, including
smoke detectors and dead bolt locks, and renovation through
alterations, additions to, or enhancement of existing structures, which
may be undertaken singly, or in combination;
(3) Loans for refinancing existing indebtedness secured by a
property being rehabilitated with ICDBG funds if such financing is
determined by the grantee to be necessary or appropriate to achieve the
grantee's community development objectives;
(4) Improvements to increase the efficient use of energy in
structures through such means as installation of storm windows and
doors, siding, wall and attic insulation, and conversion, modification,
or replacement of heating and cooling equipment, including the use of
solar energy equipment;
(5) Improvements to increase the efficient use of water through
such means as water saving faucets and shower heads and repair of water
leaks;
(6) Connection of residential structures to water distribution
lines or local sewer collection lines;
(7) For rehabilitation carried out with ICDBG funds, costs of:
(i) Initial homeowner warranty premiums;
(ii) Hazard insurance premiums, except where assistance is provided
in the form of a grant; and
(iii) Flood insurance premiums for properties covered by the Flood
Disaster Protection Act of 1973, pursuant to 24 CFR 58.6(a).
(iv) Procedures concerning inspection and testing for and treatment
and abatement of defective paint surfaces and lead-based paint,
pursuant to Sec. 953.607.
(8) Costs of acquiring tools to be lent to owners, tenants, and
others who will use such tools to carry out rehabilitation;
(9) Rehabilitation services, such as rehabilitation counseling,
energy auditing, preparation of work specifications, loan processing,
inspections, and other services related to assisting owners, tenants,
contractors, and other entities, participating or seeking to
participate in rehabilitation activities authorized under this section;
(10) Improvements designed to remove material and architectural
barriers that restrict the mobility and accessibility of elderly or
severely disabled persons to buildings and improvements eligible for
assistance under paragraph (a) of this section.
(c) Code enforcement. Code enforcement in deteriorating or
deteriorated areas where such enforcement together with public or
private improvements, rehabilitation, or services to be provided, may
be expected to arrest the decline of the area.
(d) Historic preservation. ICDBG funds may be used for the
rehabilitation, preservation or restoration of historic properties,
whether publicly or privately owned. Historic properties are those
sites or structures that are either listed in or eligible to be listed
in the National Register of Historic Places, listed in a State or local
inventory of historic places, or designated as a State or local
landmark or historic district by appropriate law or ordinance. Historic
preservation, however, is not authorized for buildings for the general
conduct of government.
(e) Renovation of closed buildings. ICDBG funds may be used to
renovate closed buildings, such as closed school buildings, for use as
an eligible public facility or to rehabilitate such buildings for
housing.

Sec. 953.203 Special economic development activities.

A grantee may use ICDBG funds for special economic development
activities in addition to other activities authorized in this subpart
which may be carried out as part of an economic development project.
Special activities authorized under this section do not include
assistance for the construction of new housing. Special economic
development activities include:
(a) The acquisition, construction, reconstruction, rehabilitation
or installation of commercial or industrial buildings, structures, and
other real property equipment and improvements, including railroad
spurs or similar extensions. Such activities may be carried out by the
grantee or public or private nonprofit subrecipients.
(b) The provision of assistance to a private for-profit business,
including, but not limited to, grants, loans, loan guarantees, interest
supplements, technical assistance, and other forms of support, for any
activity where the assistance is necessary or appropriate to carry out
an economic development project, excluding those described as
ineligible in Sec. 953.207(a). In order to ensure that any such
assistance does not unduly enrich the for-profit business, the grantee
shall conduct an analysis to determine that the amount of any financial
assistance to be provided is not excessive, taking into account the
actual needs of the business in making the project financially feasible
and the extent of public benefit expected to be derived from the
economic development project. The grantee shall document the analysis
as well as any factors it considered in making its determination that
the assistance is necessary or appropriate to carry out the project.
The requirement for making such a determination applies whether the
business is to receive assistance from the grantee or through a
subrecipient.

[[Page 40096]]

(Approved by the Office of Management and Budget under control
number 2577-0191)

Sec. 953.204 Special activities by Community-Based Development
Organizations (CBDOs).

(a) Eligible activities. The grantee may provide ICDBG funds as
grants or loans to any CBDO qualified under this section to carry out a
neighborhood revitalization, community economic development, or energy
conservation project. The funded project activities may include those
listed as eligible under this subpart, and, except as described in
paragraph (b) of this section, activities not otherwise listed as
eligible under this subpart. For purposes of qualifying as a project
under paragraphs (a)(1), (a)(2), and (a)(3) of this section, the funded
activity or activities may be considered either alone or in concert
with other project activities either being carried out or for which
funding has been committed. For purposes of this section:
(1) Neighborhood revitalization project includes activities of
sufficient size and scope to have an impact on the decline of a
geographic location within the jurisdiction of a grantee (but not the
entire jurisdiction) designated in comprehensive plans, ordinances, or
other local documents as a neighborhood, village, or similar
geographical designation; or the entire jurisdiction of a grantee which
is under 25,000 population;
(2) Community economic development project includes activities that
increase economic opportunity, principally for persons of low- and
moderate-income, or that stimulate or retain businesses or permanent
jobs, including projects that include one or more such activities that
are clearly needed to address a lack of affordable housing accessible
to existing or planned jobs;
(3) Energy conservation project includes activities that address
energy conservation, principally for the benefit of the residents of
the grantee's jurisdiction; and
(4) To carry out a project means that the CBDO undertakes the
funded activities directly or through contract with an entity other
than the grantee, or through the provision of financial assistance for
activities in which it retains a direct and controlling involvement and
responsibilities.
(b) Ineligible activities. Notwithstanding that CBDOs may carry out
activities that are not otherwise eligible under this subpart, this
section does not authorize:
(1) Carrying out an activity described as ineligible in
Sec. 953.207(a);
(2) Carrying out public services that do not meet the requirements
of Sec. 953.201(e), except services carried out under this section that
are specifically designed to increase economic opportunities through
job training and placement and other employment support services,
including, but not limited to, peer support programs, counseling, child
care, transportation, and other similar services;
(3) Carrying out an activity that would otherwise be eligible under
Sec. 953.205 or Sec. 953.206, but that would result in the grantee's
exceeding the spending limitation in Sec. 953.206.
(c) Eligible CBDOs. (1) A CBDO qualifying under this section is an
organization which has the following characteristics:
(i) Is an association or corporation organized under State or local
law to engage in community development activities (which may include
housing and economic development activities) primarily within an
identified geographic area of operation within the jurisdiction of the
grantee; and
(ii) Has as its primary purpose the improvement of the physical,
economic or social environment of its geographic area of operation by
addressing one or more critical problems of the area, with particular
attention to the needs of persons of low and moderate income; and
(iii) May be either non-profit or for-profit, provided any monetary
profits to its shareholders or members must be only incidental to its
operations; and
(iv) Maintains at least 51 percent of its governing body's
membership for low- and moderate-income residents of its geographic
area of operation, owners or senior officers of private establishments
and other institutions located in and serving its geographic area of
operation, or representatives of low- and moderate-income neighborhood
organizations located in its geographic area of operation; and
(v) Is not an agency or instrumentality of the grantee and does not
permit more than one-third of the membership of its governing body to
be appointed by, or to consist of, elected or other public officials or
employees or officials of an ineligible entity (even though such
persons may be otherwise qualified under paragraph (c)(1)(iv) of this
section); and
(vi) Except as otherwise authorized in paragraph (c)(1)(v) of this
section, requires the members of its governing body to be nominated and
approved by the general membership of the organization, or by its
permanent governing body; and
(vii) Is not subject to requirements under which its assets revert
to the grantee upon dissolution; and
(viii) Is free to contract for goods and services from vendors of
its own choosing.
(2) A CBDO that does not meet the criteria in paragraph (c)(1) of
this section may also qualify as an eligible entity under this section
if it meets one of the following requirements:
(i) Is an entity organized pursuant to section 301(d) of the Small
Business Investment Act of 1958 (15 U.S.C. 681(d)), including those
which are profit making; or
(ii) Is an SBA-approved Section 501 State Development Company or
Section 502 Local Development Company, or an SBA Certified Section 503
Company under the Small Business Investment Act of 1958, as amended; or
(iii) Is a Community Housing Development Organization (CHDO) under
24 CFR 92.2, designated as a CHDO by the HOME Investment Partnerships
program participating jurisdiction, with a geographic area of operation
of no more than one neighborhood, and has received HOME funds under 24
CFR 92.300 or is expected to receive HOME funds as described in and
documented in accordance with 24 CFR 92.300(e); or
(iv) Is a tribal-based nonprofit organization. Such organizations
are associations or corporations duly organized to promote and
undertake community development activities on a not-for-profit basis
within an identified service area.
(3) A CBDO that does not qualify under paragraphs (c)(1) or (2) of
this section may also be determined to qualify as an eligible entity
under this section if the grantee demonstrates to the satisfaction of
HUD, through the provision of information regarding the organization's
charter and by-laws, that the organization is sufficiently similar in
purpose, function, and scope to those entities qualifying under
paragraphs (c)(1) or (2) of this section.

Sec. 953.205 Eligible planning, urban environmental design and
policy-planning-management capacity building activities.

(a) Planning activities which consist of all costs of data
gathering, studies, analysis, and preparation of plans and the
identification of actions that will implement such plans, including,
but not limited to comprehensive plans, community development plans and
functional plans in areas such as housing and economic development. In
addition, other plans and studies such as capital improvements
programs, individual project plans, general

[[Page 40097]]

environmental studies, and strategies and action programs to implement
plans, including the development of codes and ordinances are also
eligible activities. With respect to the costs of individual project
plans, engineering and design costs related to a specific activity are
eligible as part of the cost of such activity under Secs. 953.201
through 953.204 and are not considered planning costs. Also, costs
necessary to comply with the requirements of 24 CFR part 58, including
project specific environmental assessments and clearances for
activities eligible under this part are eligible as part of the cost of
such activities under Secs. 953.201 through 953.204.
(b) Policy--planning--management--capacity building activities
including those which will enable the grantee to determine its needs,
set long term goals and short term objectives, devise programs to meet
these goals and objectives, evaluate the progress being made in
accomplishing the goals and objectives. In addition, actions necessary
to carry out management, coordination and monitoring of activities
necessary for effective planning implementation are eligible planning
activities, however the costs necessary to implement the plans are not.

Sec. 953.206 Program administration costs.

ICDBG funds may be used for the payment of reasonable
administrative costs and carrying charges related to the planning and
execution of community development activities assisted in whole or in
part with funds provided under this part. No more than 20 percent of
the sum of any grant plus program income received shall be expended for
activities described in this section and in Sec. 953.205--Eligible
planning, urban environmental design and policy-planning-management
capacity building activities. This does not include staff and overhead
costs directly related to carrying out activities eligible under
Secs. 953.201 through 953.204, since those costs are eligible as part
of such activities. In addition, technical assistance costs associated
with developing the capacity to undertake a specific funded activity
are also not considered program administration costs. These costs must
not, however, exceed 10% of the total grant award.
(a) General management, oversight and coordination. Reasonable
costs of overall program management, coordination, monitoring, and
evaluation. Such costs include, but are not necessarily limited to,
necessary expenditures for the following:
(1) Salaries, wages, and related costs of the grantee's staff, the
staff of local public agencies, or other staff engaged in program
administration. In charging costs to this category the grantee may
either include the entire salary, wages, and related costs allocable to
the program of each person whose primary responsibilities with regard
to the program involve program administration assignments, or the pro
rata share of the salary, wages, and related costs of each person whose
job includes any program administration assignments. The grantee may
use only one of these methods during the grant period. Program
administration includes the following types of assignments:
(i) Providing tribal officials and citizens with information about
the program;
(ii) Preparing program budgets and schedules, and amendments
thereto;
(iii) Developing systems for assuring compliance with program
requirements;
(iv) Developing interagency agreements and agreements with
subrecipients and contractors to carry out program activities;
(v) Monitoring program activities for progress and compliance with
program requirements;
(vi) Preparing reports and other documents related to the program
for submission to HUD;
(vii) Coordinating the resolution of audit and monitoring findings;
(viii) Evaluating program results against stated objectives; and
(ix) Managing or supervising persons whose primary responsibilities
with regard to the program include such assignments as those described
in paragraph (a)(1) (i) through (viii) of this section.
(2) Travel costs incurred for official business in carrying out the
program;
(3) Administrative services performed under third party contracts
or agreements, including such services as general legal services,
accounting services, and audit services; and
(4) Other costs for goods and services required for administration
of the program, including such goods and services as rental or purchase
of equipment, furnishings, or other personal property (or the payment
of depreciation or use allowances for such items in accordance with OMB
Circulars A-21, A-87 or A-122, as applicable), insurance, utilities,
office supplies, and rental and maintenance (but not purchase) of
office space. (OMB Circulars are 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.)
(b) Public information. The provisions of information and other
resources to residents and citizen organizations participating in the
planning, implementation, or assessment of activities being assisted
with ICDBG funds.
(c) Indirect costs. Indirect costs may be charged to the ICDBG
program under a cost allocation plan prepared in accordance with OMB
Circular A-21, A-87, or A-122 as applicable.
(d) Submission of applications for Federal programs. Preparation of
documents required for submission to HUD to receive funds under the
ICDBG program. In addition, ICDBG funds may be used to prepare
applications for other Federal programs where the grantee determines
that such activities are necessary or appropriate to achieve its
community development objectives.

Sec. 953.207 Ineligible activities.

The general rule is that any activity that is not authorized under
the provisions of Secs. 953.201 through 953.206 is ineligible to be
assisted with ICDBG funds. This section identifies specific activities
that are ineligible and provides guidance in determining the
eligibility of other activities frequently associated with housing and
community development.
(a) The following activities may not be assisted with ICDBG funds:
(1) Buildings or portions thereof used for the general conduct of
government as defined at Sec. 953.4 cannot be assisted with ICDBG
funds. This does not include, however, the removal of architectural
barriers under Sec. 953.201(c) involving any such building. Also, where
acquisition of real property includes an existing improvement which is
to be used in the provision of a building for the general conduct of
government, the portion of the acquisition cost attributable to the
land is eligible, provided such acquisition meets the primary objective
described in Sec. 953.208.
(2) General government expenses. Except as otherwise specifically
authorized in this subpart or under OMB Circular A-87, expenses
required to carry out the regular responsibilities of the grantee are
not eligible for assistance under this part.
(3) Political activities. ICDBG funds shall not be used to finance
the use of facilities or equipment for political purposes or to engage
in other partisan political activities, such as candidate forums, voter
transportation, or voter registration. However, a facility originally
assisted with ICDBG funds may be used on an incidental basis to hold
political meetings, candidate

[[Page 40098]]

forums, or voter registration campaigns, provided that all parties and
organizations have access to the facility on an equal basis, and are
assessed equal rent or use charges, if any.
(b) The following activities may not be assisted with ICDBG funds
unless authorized under provisions of Sec. 953.203 or as otherwise
specifically noted herein, or when carried out by a CBDO under the
provisions of Sec. 953.204.
(1) Purchase of equipment. The purchase of equipment with ICDBG
funds is generally ineligible.
(i) Construction equipment. The purchase of construction equipment
is ineligible, but compensation for the use of such equipment through
leasing, depreciation, or use allowances pursuant to OMB Circular A-21,
A-87 or A-122 as applicable for an otherwise eligible activity is an
eligible use of ICDBG funds.
(ii) Furnishings and personal property. The purchase of equipment,
fixtures, motor vehicles, furnishings, or other personal property not
an integral structural fixture is generally ineligible. Exceptions to
this general prohibition are set forth in Sec. 953.201(o).
(2) Operating and maintenance expenses. The general rule is that
any expense associated with repairing, operating or maintaining public
facilities, improvements and services is ineligible. Specific
exceptions to this general rule are operating and maintenance expenses
associated with public service activities, interim assistance, and
office space for program staff employed in carrying out the ICDBG
program. For example, the use of ICDBG funds to pay the allocable costs
of operating and maintaining a facility used in providing a public
service would be eligible under Sec. 953.201(e), even if no other costs
of providing such a service are assisted with such funds. Examples of
ineligible operating and maintenance expenses are:
(i) Maintenance and repair of streets, parks, playgrounds, water
and sewer facilities, neighborhood facilities, senior centers, centers
for persons with a disability, parking and similar public facilities;
and
(ii) Payment of salaries for staff, utility costs and similar
expenses necessary for the operation of public works and facilities.
(3) New housing construction. ICDBG funds may not be used for the
construction of new permanent residential structures or for any program
to subsidize or assist such new construction, except:
(i) As provided under the last resort housing provisions set forth
in 24 CFR part 42; or
(ii) When carried out by a CBDO pursuant to Sec. 953.204(a);
(4) Income payments. The general rule is that ICDBG funds may not
be used for income payments. For purposes of the ICDBG program, income
payments means a series of subsistence-type grant payments made to an
individual or family for items such as food, clothing, housing (rent or
mortgage) or utilities, but excludes emergency payments made over a
period of up to three months to the provider of such items or services
on behalf of an individual or family.

Sec. 953.208 Criteria for compliance with the primary objective.

The Act establishes as its primary objective the development of
viable communities by providing decent housing and a suitable living
environment and expanding economic opportunities, principally for
persons of low and moderate income. Consistent with this objective, not
less than 70 percent of the expenditures of each single purpose grant
shall be for activities which meet the criteria set forth in paragraphs
(a), (b), (c) and (d) of this section. Activities meeting these
criteria as applicable will be considered to benefit low and moderate
income persons unless there is substantial evidence to the contrary. In
assessing any such evidence, the full range of direct effects of the
assisted activity will be considered. (The grantee shall appropriately
ensure that activities that meet these criteria do not benefit moderate
income persons to the exclusion of low income persons.)
(a) Area benefit activities. (1) An activity, the benefits of which
are available to all the residents in a particular area, where at least
51 percent of the residents are low and moderate income persons. Such
an area need not be coterminous with census tracts or other officially
recognized boundaries but must be the entire area served by the
activity. An activity that serves an area that is not primarily
residential in character shall not qualify under this criterion.
(2) For purposes of determining qualification under this criterion,
activities of the same type that serve different areas will be
considered separately on the basis of their individual service area.
(3) In determining whether there is a sufficiently large percentage
of low and moderate income persons residing in the area served by an
activity to qualify under paragraph (a) (1) or (2) of this section, the
most recently available decennial census information shall be used to
the fullest extent feasible, together with the Section 8 income limits
that would have applied at the time the income information was
collected by the Census Bureau. Grantees that believe that the census
data does not reflect current relative income levels in an area, or
where census boundaries do not coincide sufficiently well with the
service area of an activity, may conduct (or have conducted) a current
survey of the residents of the area to determine the percent of such
persons that are low and moderate income. HUD will accept information
obtained through such surveys, to be used in lieu of the decennial
census data, where it determines that the survey was conducted in such
a manner that the results meet standards of statistical reliability
that are comparable to that of the decennial census data for areas of
similar size. Where there is substantial evidence that provides a clear
basis to believe that the use of the decennial census data would
substantially overstate the proportion of persons residing there that
are low and moderate income, HUD may require that the grantee rebut
such evidence in order to demonstrate compliance with section 105(c)(2)
of the Act.
(b) Limited clientele activities. (1) An activity which benefits a
limited clientele, at least 51 percent of whom are low or moderate
income persons. (The following kinds of activities may not qualify
under paragraph (b) of this section: Activities, the benefits of which
are available to all the residents of an area; activities involving the
acquisition, construction or rehabilitation of property for housing; or
activities where the benefit to low and moderate income persons to be
considered is the creation or retention of jobs except as provided in
paragraph (b)(4) of this section.) To qualify under paragraph (b) of
this section, the activity must meet one of the following tests:
(i) Benefit a clientele who are generally presumed to be
principally low and moderate income persons. Activities that
exclusively serve a group of persons in any one of the following
categories may be presumed to benefit persons, 51 percent of whom are
low-and moderate-income: abused children, battered spouses, elderly
persons, adults meeting the Bureau of the Census' current Population
Reports definition of ``severely disabled'', homeless persons,
illiterate adults, persons living with AIDS, and migrant workers; or
(ii) Require information on family size and income so that it is
evident that at least 51 percent of the clientele are

[[Page 40099]]

persons whose family income does not exceed the low and moderate income
limit; or
(iii) Have income eligibility requirements which limit the activity
exclusively to low and moderate income persons; or
(iv) Be of such nature and be in such location that it may be
concluded that the activity's clientele will primarily be low and
moderate income persons.
(2) An activity that serves to remove material or architectural
barriers to the mobility or accessibility of elderly persons or adults
meeting the Bureau of the Census' Current Population Reports definition
of ``severely disabled'' will be presumed to qualify under this
criterion if it is restricted, to the extent practicable, to the
removal of such barriers by assisting:
(i) The reconstruction of a public facility or improvement, or
portion thereof, that does not qualify under Sec. 953.208(a); or
(ii) The rehabilitation of a privately-owned nonresidential
building or improvement that does not qualify under Sec. 953.208 (a) or
(d); or
(iii) The rehabilitation of the common areas of a residential
structure that contains more than one dwelling unit.
(3) A microenterprise assistance activity carried out in accordance
with the provisions of Sec. 953.201(l) with respect to those owners of
microenterprises and persons developing microenterprises assisted under
the activity during the grant period who are low and moderate income
persons. For purposes of this paragraph, persons determined to be low
and moderate income may be presumed to continue to qualify for up to a
three year period.
(4) An activity designed to provide job training and placement and/
or other employment support services, including but not limited to,
peer support programs, counseling, child care, transportation, and
other similar services, in which the percentage of low and moderate
income persons assisted is less than 51 percent may qualify under this
paragraph in the following limited circumstance:
(i) In such cases where such training or provision of supportive
services assists business(es), the only use of ICDBG assistance for the
project is to provide the job training and/or supportive services; and
(ii) The proportion of the total cost of the project borne by ICDBG
funds is no greater than the proportion of the total number of persons
assisted who are low or moderate income.
(c) Housing activities. An eligible activity carried out for the
purpose of providing or improving permanent residential structures
which, upon completion, will be occupied by low and moderate income
households. This would include, but not necessarily be limited to, the
acquisition or rehabilitation of property, conversion of non-
residential structures, and new housing construction. Funds expended
for activities which qualify under the provisions of this paragraph
shall be counted as benefiting low and moderate income persons but
shall be limited to an amount determined by multiplying the total cost
(including ICDBG and non-ICDBG costs) of the acquisition, construction
or rehabilitation by the percent of units in such housing to be
occupied by low and moderate income persons. If the structure assisted
contains two dwelling units, at least one must be occupied by low and
moderate income households, and if the structure contains more than two
dwelling units, at least 51 percent of the units must be so occupied.
Where two or more rental buildings being assisted are or will be
located on the same or contiguous properties, and the buildings will be
under common ownership and management, the grouped buildings may be
considered for this purpose as a single structure. For rental housing,
occupancy by low and moderate income households must be at affordable
rents to qualify under this criterion. The grantee shall adopt and make
public its standards for determining ``affordable rents'' for this
purpose. The following shall also qualify under this criterion:
(1) When less than 51 percent of the units in a structure will be
occupied by low and moderate income households, ICDBG assistance may be
provided in the following limited circumstances:
(i) The assistance is for an eligible activity to reduce the
development cost of the new construction of a multifamily, non-elderly
rental housing project;
(ii) Not less than 20 percent of the units will be occupied by low
and moderate income households at affordable rents; and
(iii) The proportion of the total cost of developing the project to
be borne by ICDBG funds is no greater than the proportion of units in
the project that will be occupied by low and moderate income
households.
(2) When ICDBG funds are used for housing services eligible under
Sec. 953.201(j), such funds shall be considered to benefit low-and
moderate-income persons if the housing for which the services are
provided is to be occupied by low-and moderate-income households.
(d) Job creation or retention activities. An activity designed to
create or retain permanent jobs where at least 51 percent of the jobs,
computed on a full time equivalent basis, involve the employment of low
and moderate persons. For purposes of determining whether a job is held
by or made available to a low or moderate income person, the person may
be presumed to be a low or moderate income person if: he/she resides
within a census tract (or block numbering area) where not less than 70
percent of the residents have incomes at or below 80 percent of the
area median; or, if he/she resides in a census tract (or block
numbering area) which meets the Federal Empowerment Zone or Enterprise
Community eligibility criteria; or, if the assisted business is located
in and the job under consideration is to be located in such a tract or
area. As a general rule, each assisted business shall be considered to
be a separate activity for purposes of determining whether the activity
qualifies under this paragraph. However, in certain cases such as where
ICDBG funds are used to acquire, develop or improve a real property
(e.g., a business incubator or an industrial park) the requirement may
be met by measuring jobs in the aggregate for all the businesses which
locate on the property, provided such businesses are not otherwise
assisted by ICDBG funds. Where ICDBG funds are used to pay for the
staff and overhead costs of a CBDO under the provisions of Sec. 953.204
making loans to businesses from non-ICDBG funds, this requirement may
be met by aggregating the jobs created by all of the businesses
receiving loans during any one year period. For an activity that
creates jobs, the grantee must document that at least 51 percent of the
jobs will be held by, or will be available to, low and moderate income
persons. For an activity that retains jobs, the grantee must document
that the jobs would actually be lost without the ICDBG assistance and
that either or both of the following conditions apply with respect to
at least 51 percent of the jobs at the time the ICDBG assistance is
provided: The job is known to be held by a low or moderate income
person; or the job can reasonably be expected to turn over within the
following two years and that steps will be taken to ensure that it will
be filled by, or made available to, a low or moderate income person
upon turnover. Jobs will be considered to be available to low and
moderate income persons for these purposes only if:
(1) Special skills that can only be acquired with substantial
training or

[[Page 40100]]

work experience or education beyond high school are not a prerequisite
to fill such jobs, or the business agrees to hire unqualified persons
and provide training; and
(2) The grantee and the assisted business take actions to ensure
that low and moderate income persons receive first consideration for
filling such jobs.
(e) Additional criteria. (1) Where the assisted activity is
acquisition of real property, a preliminary determination of whether
the activity addresses the primary objective may be based on the
planned use of the property after acquisition. A final determination
shall be based on the actual use of the property, excluding any short-
term, temporary use.
(2) Where the assisted activity is relocation assistance that the
grantee is required to provide, such relocation assistance shall be
considered to address the primary objective as addressed by the
displacing activity.
(3) In any case where the activity undertaken for the purpose of
creating or retaining jobs is a public improvement and the area served
is primarily residential, the activity must meet the requirements of
paragraph (a) of this section as well as those of paragraph (d) of this
section in order to qualify as benefiting low and moderate income
persons.
(4) Expenditures for activities meeting the criteria for benefiting
low and moderate income persons shall be used in determining the extent
to which the grantee's overall program benefits such persons. In
determining the percentage of funds expended for such activities:
(i) Costs of administration and planning, eligible under
Sec. 953.205 and Sec. 953.206 respectively, will be assumed to benefit
low and moderate income persons in the same proportion as the remainder
of the ICDBG funds and, accordingly, shall be excluded from the
calculation.
(ii) Funds expended for the acquisition, new construction or
rehabilitation of property for housing those qualified under
Sec. 953.208(c) shall be counted for this purpose, but shall be limited
to an amount determined by multiplying the total cost (including ICDBG
and non-ICDBG costs) of the acquisition, construction, or
rehabilitation by the percent of units in such housing occupied by low
and moderate income persons.
(iii) Funds expended for any other activity which qualifies under
Sec. 953.208 shall be counted for this purpose in their entirety.

Subpart D--Single Purpose Grant Application and Selection Process

Sec. 953.300 Application requirements.

(a) Application information. A Notice of Funding Availability
(NOFA) shall be published in the Federal Register not less than 30 days
before the deadline for application submission. The NOFA will provide
information relating to the date and time for application submission,
the form and content requirements of the application, specific
information regarding the rating and ranking criteria to be used, and
any other information pertinent to the application process.
(b) Costs incurred by applicant. Costs incurred by an applicant
prior to the submission of the single purpose grant application to HUD
will not be recognized by HUD as eligible ICDBG expenses.
(c) HUD will not normally reimburse or recognize costs incurred
before HUD approval of the application for funding. However, under
unusual circumstances, the Area ONAP may consider and approve written
requests to recognize and reimburse costs incurred after submission of
the application where failure to do so would impose undue hardship on
the applicant. Such written authorization will be made only before the
costs are incurred and where the requirements for reimbursement have
been met in accordance with 24 CFR 58.22 and with the understanding
that HUD has no obligation whatsoever to approve the application or to
reimburse the applicant should the application be disapproved.

(Approved by the Office of Management and Budget under control
number 2577-0191)

Sec. 953.301 Selection process.

(a) Threshold requirements. In order for applications that have
passed the initial screening tests listed in the NOFA to be rated and
ranked, Area ONAPs must determine that the following requirements have
been met:
(1) Community development appropriateness. (i) The project costs
are reasonable;
(ii) The project is appropriate for the intended use; and
(iii) The project is usable or achievable (generally within a two-
year period).
If in the judgment of the Area ONAP, available data indicate that
the proposed project does not meet these requirements, the Area ONAP
shall reject the project from further consideration.
(2) Capacity. The applicant possesses, or will acquire, the
managerial, technical, or administrative staff necessary to carry out
the proposed program. If the Area ONAP determines that the applicant
does not have or cannot obtain the capacity to undertake the proposed
program, the application will be rejected from further consideration.
(3) Performance.--(i) Community development. Performance
determinations are made through the Area ONAP's assessment process.
Applicants that have been advised in writing of negative findings on
previous grants, for which a schedule of corrective actions has been
established, will not be consider

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A96-19350. Public record. Not legal advice.