Office of the Assistant Secretary for Community Planning and Development; Streamlining the Emergency Shelter Grants Program

SUMMARY: This final rule amends HUD's regulations for the Emergency

Shelter Grants (ESG) Program. In an effort to comply with the

President's regulatory reform initiatives, this rule will streamline

the regulations by eliminating provisions that are redundant of

statutes or are otherwise unnecessary. This final rule will make the

ESG regulations clearer and more concise. In addition, this rule will

reflect provisions implementing legislation that has amended the

program since the last general rule amending the ESG regulations. The

legislation has, among other changes to the program: Extended program

entitlements to Indian tribes; established new limits on expenditures

for specified purposes, including administrative costs, services, and

prevention activities; reduced the amount required to be matched by

grantees and recipients, especially those non-State recipients that are

least capable of meeting matching funds requirements; and mandated

habitability standards and required the implementation of procedures to

ensure confidentiality of records relating to family violence services.

EFFECTIVE DATE: November 1, 1996.

FOR FURTHER INFORMATION CONTACT: Mark Johnston, Director, Program

Coordination and Analysis Division, Office of Community Planning and

Development, Room 7262, telephone (202) 708-1226. For questions on

program requirements for Indian tribes, contact: Bruce Knott, Director,

Housing and Community Development Division, Office of Native American

Programs, Room B-133, telephone (202) 755-0068. (These telephone

numbers are not toll-free.) For hearing- and speech-impaired persons,

these numbers may be accessed via TTY (text telephone) by calling the

Federal Information Relay Service at 1-800-877-8339.

The address for both of these persons is: Department of Housing and

Urban Development, 451 Seventh Street, SW., Washington, DC 20410.

SUPPLEMENTARY INFORMATION:

Background

On March 4, 1995, President Clinton issued a memorandum to all

Federal departments and agencies regarding regulatory reinvention. In

response to this memorandum, the Department of Housing and Urban

Development conducted a page-by-page review of its regulations to

determine which can be eliminated, consolidated, or otherwise improved.

HUD has determined that the regulations for the ESG Program can be

improved and streamlined by eliminating unnecessary provisions.

Several provisions in the regulations repeat statutory language. It

is unnecessary to maintain statutory requirements in the Code of

Federal Regulations (CFR), because those requirements are otherwise

fully accessible and binding. Furthermore, if regulations contain

statutory language, HUD must amend the regulations whenever Congress

amends the statute. Therefore, this final rule removes repetitious

statutory language and replaces it with a citation to the specific

statutory section for easy reference.

Several other provisions in the regulations apply to more than one

program, and therefore HUD repeated these provisions in different

parts. This repetition is unnecessary, and updating these scattered

provisions is cumbersome and often creates confusion. Therefore, this

final rule consolidates duplicative and related provisions, maintaining

appropriate cross-references for the reader's convenience. For example,

requirements for environmental review have been moved into the section

on ``Other federal requirements'' (Sec. 576.57) and have been

streamlined by reference to a new rule on these requirements that was

published on April 30, 1996 (61 FR 19120). This April 30 rule also

permits streamlining of references to flood hazards and coastal

barriers in Sec. 576.57.

Similarly, provisions that are not regulatory requirements--for

example, provisions containing nonbinding guidance or explanations--

have been removed. Although this information can be helpful to program

participants, HUD will more appropriately provide this information

through handbook guidance or other materials, rather than maintain it

in the CFR.

Justification for Final Rulemaking

HUD generally publishes a rule for public comment before issuing a

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

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

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

public participation. The good cause requirement is satisfied when

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

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

to publish portions of this rule for effect without first soliciting

public comment. This rule merely removes unnecessary regulatory

provisions and does not establish or affect substantive policy.

Therefore, prior public comment is unnecessary.

Some portions of this rule have been subject to notice-and-comment

rulemaking in the past. A proposed rule that was published in 58 FR

17766 (April 5, 1993) included statutory provisions applicable to

Indian tribe allocations, and was based on the first Notice of Funding

Availability (NOFA) that the Department used to distribute Emergency

shelter grant (ESG) amounts to Indian tribes. Normally, the Department

would not allow a final rule to be based on a proposed rule for which

so much time has lapsed. Because this very limited portion of the

program has been operating in accordance with the statutory

requirements and expressly based upon the methodology included in the

proposed rule, and because this is the first general rule that the

Department has published on this program subsequent to the proposed

rule (upon which the Department received no comments), an exception is

being made to the standard rulemaking policy. The Department

emphasizes, however, that any provisions in the proposed rule that are

made final in this rule are based strictly upon the statutory

provisions and are allowed primarily because inclusion in this rule

provides better notice to affected parties.

Similarly, this rule also makes final a very limited interim rule

on the reallocation of unused ESG amounts that was published on

November 19, 1992 (57 FR 54505) and has remained in effect since that

time. The Department received three comments on the interim rule, one

of which praised the rule and two which suggested changes. Based on its

experience in operating under the provision contained in the interim

rule, the Department does not believe that the administrative mechanism

chosen to distribute the unused funds is unfair, as suggested by one of

the commenters. The regulations already ensure a preference for using

grant amounts in the jurisdiction to which they were allocated. A

change suggested by

[[Page 51547]]

another commenter, regarding advance notification by the Department

before an action to recover unspent grant amounts, does not require a

regulation for implementation. Therefore, in issuing this final

streamlining rule, the Department is not changing the provision on

reallocation of unused grant amounts.

The ESG Program

The more general regulations applicable to the ESG Program (24 CFR

part 576) were amended most recently by a final rule published on

November 7, 1989 (54 FR 46799). Today's streamlining rule incorporates

provisions in two subsequent statutes that contain numerous amendments

to subtitle B of title IV of the Stewart B. McKinney Homeless

Assistance Act (42 U.S.C. 11371-11377) (the McKinney Act), the

authorizing legislation for the ESG program: (1) section 832 (104 Stat.

4359) of the National Affordable Housing Act (Pub. L. 101-625, approved

November 28, 1990) (NAHA); and (2) section 1402 (106 Stat. 4012) of the

Housing and Community Development Act of 1992 (Pub. L. 102-550,

approved October 28, 1992) (1992 Act).

Changes in NAHA

Section 832(b) of NAHA permits recipients to use up to 5% of an

annual ESG Program grant for administrative purposes. Section 832(c)

increased from 20% to 30% the percentage of a grant that may be used to

provide essential services. Section 832(d) withdraws homelessness

prevention activities from categorization as ``essential services'',

and imposes a separate limit of 30% of the aggregate amount of

assistance to a State (including each territory), local government, or

Indian tribe that may be used for efforts to prevent homelessness.

Section 832(e) reduced by $100,000 the amount that States are

required to provide as a match to assistance received under the ESG

program. The $100,000 reduction is required to be implemented by each

State in a manner that will benefit those participating local

governments, Indian tribes, agencies, and nonprofit organizations that

are least able to contribute to the State's matching funds. The

Department is revising Sec. 576.51 (as redesignated) to reflect the

determination under which the Department has been operating that a

territory is not required to provide matching funds. This revision,

which is authorized as a matter of the Department's discretion by 48

U.S.C. 1469a(d), ensures that the funds allocated to the territories

can be provided whether or not they are able to meet the matching

requirements otherwise applicable under this program.

Section 832(e) of NAHA requires each recipient to certify that it

will develop and implement procedures to ensure the confidentiality of

records pertaining to any individual provided family violence

prevention or treatment services with ESG Program assistance. In

addition, the address or location of any ESG-assisted housing used as a

family violence shelter may not be made public without the written

authorization of persons responsible for the operation of the shelter.

Section 832(f) expressly extends eligibility for assistance under

the ESG Program to Indian tribes. This extension is reflected in

numerous sections of this rule. Additional requirements that will be

applicable to Indian tribes interested in competing for ESG set-aside

funds will be included in periodic NOFAs published in the Federal

Register, as provided in Sec. 576.31 of this final rule.

Section 832(g) mandates the Secretary to prescribe standards for

emergency shelters that ensure appropriate privacy, safety, and health-

related living conditions. Section 576.55 of this rule continues to

require that buildings used for emergency shelters comply with local

government safety and sanitation standards.

Changes in Housing and Community Development Act of 1992

Section 1402(b) of the 1992 Act requires a certification regarding

the involvement of homeless individuals and families in providing work

or services pertaining to facilities or activities assisted under the

ESG program. Section 1402(c) requires each unit of local government,

Indian tribe, and nonprofit recipient that receives ESG funds to

provide for the participation of homeless individuals on its board of

directors or other policymaking entity. Section 1402(d) provides that

grantees and recipients may terminate assistance provided to an

individual or family who violates program requirements only in

accordance with a formal process. Section 1402(e) expressly authorizes

as an eligible activity the use of not more than 10 percent of any ESG

grant for costs of staff.

Policy Emphasis

The Department seeks to emphasize that emergency shelters are

intended to be part of a process for ending homelessness. Thus,

emergency shelter grant funds are also appropriately targeted on

efforts to avoid homelessness for families and individuals at imminent

risk of becoming homeless. This policy is reflected in language added

to Sec. 576.1, ``Applicability and purpose''.

While the Department is not expanding its definition of

``homeless'', it is restating in this preamble its understanding of the

scope of that definition. The Department does not believe that the

limited resources of the ESG program were intended by Congress to be

used to serve persons who are poorly housed; the primary purpose of the

program is to help persons who lack shelter. Therefore, in this program

the Department is concerned with persons who are, or may soon become,

homeless, rather than persons who are living in overcrowded or

substandard housing. Other programs administered by the Department,

such as the Section 8 housing assistance payments programs, public and

Indian housing, and the HOME Program, target persons living in

overcrowded or substandard housing.

The Department would correct several omissions from the current

regulations by adding paragraphs (h) and (i) to Sec. 576.57 (as

redesignated). Paragraph (h) refers to statutory lobbying and

disclosure requirements. Paragraph (i) clarifies that the Davis-Bacon

Act (40 U.S.C. 276a-276a-5), which establishes minimum wage

requirements, does not apply to this Program. Although the Davis-Bacon

Act was never incorporated into the McKinney Act and therefore is not

applicable to the ESG program, a specific statement to this effect was

not included in the program regulations. Similar references may be

found in other McKinney Act programs administered by HUD.

Findings and Certifications

Paperwork Reduction Act Statement.

The information collection requirements contained in Secs. 576.21,

576.31, 576.57, 576.43, 576.59, and 576.61 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 numbers 2506-0117 and 2506-0089. 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.

Regulatory Flexibility Act

In accordance with the Regulatory Flexibility Act (5 U.S.C.

605(b)), the Secretary has reviewed this rule before publication and by

approving it certifies that this rule will not have a significant

economic impact on a substantial

[[Page 51548]]

number of small entities. The rule is largely in the nature of

technical amendments to existing regulations for the purpose of

recognizing specific statutory requirements under which the program

already is operating. The remainder of the rule merely streamlines

regulations by removing unnecessary provisions. The rule will have no

adverse or disproportionate economic impact on small businesses.

Environmental Review

This rulemaking does not have an environmental impact. This

rulemaking simply amends existing regulations by streamlining and

updating provisions and does not alter the environmental effect of the

regulations being amended. A Finding of No Significant Impact with

respect to the environment was made in accordance with HUD regulations

in 24 CFR part 50 that implement section 102(2)(C) of the National

Environmental Policy Act of 1969 (42 U.S.C. 4332) at the time of

development of the ESG program regulations. That Finding remains

applicable to this rule, and 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.

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 will not have federalism implications, because

the regulatory changes either: (1) Would not have substantial direct

effects on States, including units of local government and other

political subdivisions established by the States; on the relationship

between the Federal Government and the States; or on the distribution

of power and responsibilities among the various levels of government;

or (2) would merely implement statutory changes to the Emergency

Shelter Grants Program. A more comprehensive review under Executive

Order 12612 of any of these changes is not required because the

implementation of the statutes leaves little discretion with the

Department to lessen these impacts.

Executive Order 12606, The Family

The General Counsel, as the Designated Official under Executive

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

potential for significant impact on family formation, maintenance, and

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

Order. No significant change in existing HUD policies or programs would

result from promulgation of this rule.

Unfunded Mandates Reform Act

The Secretary has reviewed this rule before publication and by

approving it certifies, in accordance with the Unfunded Mandates Reform

Act of 1995 (2 U.S.C. 1532), that this rule does not impose a Federal

mandate that will result in the expenditure by State, local, and tribal

governments, in the aggregate, or by the private sector, of $100

million or more in any one year. This rule is limited to simplifying

and streamlining the Emergency Shelter Program regulations.

The Catalog of Federal Domestic Assistance program number is

14.231.

List of Subjects in 24 CFR Part 576

Community facilities, Emergency shelter grants, Grant programs--

housing and community development, Grant programs--social programs,

Homeless, Reporting and recordkeeping requirements.

For the reasons stated in the preamble, part 576 of title 24 of the

Code of Federal Regulations is amended as follows:

PART 576--EMERGENCY SHELTER GRANTS PROGRAM: STEWART B. McKINNEY

HOMELESS ASSISTANCE ACT

1. The authority citation for part 576 continues to read as

follows:

Authority: 42 U.S.C. 3535(d) and 11376.

Subpart A--General

2. Section 576.1 is revised to read as follows:

Sec. 576.1 Applicability and purpose.

This part implements the Emergency Shelter Grants program contained

in subtitle B of title IV of the Stewart B. McKinney Homeless

Assistance Act (42 U.S.C. 11371-11378). The program authorizes the

Secretary to make grants to States, units of general local government,

territories, and Indian tribes (and to private nonprofit organizations

providing assistance to homeless individuals in the case of grants made

with reallocated amounts) for the rehabilitation or conversion of

buildings for use as emergency shelter for the homeless, for the

payment of certain operating expenses and essential services in

connection with emergency shelters for the homeless, and for homeless

prevention activities. The program is designed to be the first step in

a continuum of assistance to enable homeless individuals and families

to move toward independent living as well as to prevent homelessness.

3. Section 576.3 is amended as follows:

a. By revising the first sentence in the definition of

``Consolidated plan.'';

b. By revising the definitions of ``Conversion'', ``Homeless'',

``Major rehabilitation'', ``Metropolitan city'', ``Private nonprofit

organization'', ``Rehabilitation'', ``Renovation'', and ``Urban

county'';

c. By removing the definition for ``Emergency shelter grant amounts

or grant amounts'';

d. By redesignating paragraphs (a) through (h) of the definition of

``Essential services'' as paragraphs (1) through (8), respectively; and

e. By redesignating paragraphs (a) through (f) of the definition of

``Homeless prevention'' as paragraphs (1) through (6), respectively;

and

f. By adding definitions in alphabetical order of ``Administrative

costs'', ``Indian tribe'', and ``Responsible entity''; to read as

follows:

Sec. 576.3 Definitions.

* * * * *

Administrative costs means as the term is defined in 583.135(b) of

this part, except that the exclusion relates to the costs of carrying

out eligible activities under Sec. 576.21(a).

Consolidated plan means the plan prepared in accordance with part

91 of this title. * * *

Conversion means a change in the use of a building to an emergency

shelter for the homeless under this part, where the cost of conversion

and any rehabilitation costs exceed 75 percent of the value of the

building after conversion.

* * * * *

Formula city or county means a metropolitan city or urban county

that is eligible to receive an allocation of grant amounts under

Sec. 576.5.

* * * * *

Homeless means as the term is defined in 42 U.S.C. 11302.

* * * * *

Indian tribe means as the term is defined in 42 U.S.C. 5302(a).

Major rehabilitation means rehabilitation that involves costs in

excess of 75 percent of the value of the building before

rehabilitation.

Metropolitan city means a city that was classified as a

metropolitan city under 42 U.S.C. 5302(a) for the fiscal year

immediately preceding the fiscal year for which emergency shelter grant

amounts are made available.

* * * * *

[[Page 51549]]

Private nonprofit organization means as the term is defined in 42

U.S.C. 11371.

Rehabilitation means the labor, materials, tools, and other costs

of improving buildings, other than minor or routine repairs. The term

includes where the use of a building is changed to an emergency shelter

and the cost of this change and any rehabilitation costs does not

exceed 75 percent of the value of the building before the change in

use.

Renovation means rehabilitation that involves costs of 75 percent

or less of the value of the building before rehabilitation.

Responsible entity means as the term is defined in Sec. 58.2 of

this title, as applied though Sec. 58.1(b)(3) of this title and

Sec. 576.57(e).

* * * * *

Urban county means a county that was classified as an urban county

under 42 U.S.C. 5302(a) for the fiscal year immediately preceding the

fiscal year for which emergency shelter grant amounts are made

available.

* * * * *

4. A new Sec. 576.5 is added in subpart A, to read as follows:

Sec. 576.5 Allocation of grant amounts.

(a) Territories. HUD will set aside for allocation to the

territories an amount equal to 0.2 percent of the total amount of each

appropriation under this part in any fiscal year. HUD will allocate

this set-aside amount to each territory based upon its proportionate

share of the total population of all territories.

(b) States, metropolitan cities, urban counties, and Indian tribes.

HUD will allocate the amounts that remain after the set-aside to

territories under paragraph (a) of this section, to States,

metropolitan cities, urban counties, and Indian tribes, as provided in

42 U.S.C. 11373. HUD will subsequently distribute the amount set aside

for Indian tribes under this paragraph as provided in Sec. 576.31.

(c) Notification of allocation amount. HUD will notify in writing

each State, metropolitan city, urban county, and territory that is

eligible to receive an allocation under this section of the amount of

its allocation.

Subpart B--Eligible Activities

5. Section 576.21 is revised to read as follows:

Sec. 576.21 Eligible activities.

(a) Eligible activities. Emergency shelter grant amounts may be

used for one or more of the following activities relating to emergency

shelter for the homeless:

(1) Renovation, major rehabilitation, or conversion of buildings

for use as emergency shelters for the homeless;

(2) Provision of essential services to the homeless, subject to the

limitations in paragraph (b) of this section;

(3) Payment for shelter maintenance, operation, rent, repairs,

security, fuel, equipment, insurance, utilities, food, and furnishings.

Not more than 10 percent of the grant amount may be used for costs of

staff;

(4) Developing and implementing homeless prevention activities,

subject to the limitations in 42 U.S.C. 11374(a)(4) and paragraph (c)

of this section. Grant funds may be used under this paragraph to assist

families that have received eviction notices or notices of termination

of utility services only if the conditions stated in 42 U.S.C.

11374(a)(4) are met; and

(5) Administrative costs, in accordance with 42 U.S.C. 11378.

(b) Limitations on provision of essential services. (1) Grant

amounts provided by HUD to units of general local government,

territories, or Indian tribes, and grant amounts provided by a State to

State recipients, may be used to provide an essential service under

paragraph (a)(2) of this section only if the service is a new service,

or is a quantifiable increase in the level of a service above that

which the unit of general local government (or, in the case of a

nonprofit organization, the unit of general local government in which

the proposed activities are to be located), territory, or Indian tribe,

as applicable, provided with local funds during the 12 calendar months

immediately before the grantee or State recipient received initial

grant amounts.

(2) Limits on the use of assistance for essential services

established in 42 U.S.C. 11374(a)(2) are applicable even when the unit

of local government, territory, or Indian tribe provides some or all of

its grant funds to a nonprofit recipient. This limitation may be waived

in accordance with 42 U.S.C. 11374.

(c) Limitation on homeless prevention activities. Limits on the use

of assistance for homeless prevention activities established in 42

U.S.C. 11374(a)(4) are applicable even when the unit of local

government, territory, or Indian tribe provides some or all of its

grant funds to a nonprofit recipient.

Secs. 576.22 and 576.23 [Redesignated as Secs. 576.23 and 576.25]

6. Sections 576.22 and 576.23 are redesignated as Secs. 576.23 and

576.25, respectively, and are revised to read as follows:

Sec. 576.23 Limitations--Primarily religious organizations.

(a) Provision of assistance. (1) Assistance may be provided under

this part to a grantee or recipient that is a primarily religious

organization if the primarily religious organization agrees to provide

all eligible activities under this program in a manner that is free

from religious influences and in accordance with the following

principles:

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

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

give preference in employment to persons on the basis of religion;

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

shelter or any of the eligible activities under this part on the basis

of religion and will not limit such housing or other eligible

activities or give preference to persons on the basis of religion; and

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

conduct no religious services or worship (not including voluntary

nondenominational prayer before meetings), engage in no religious

proselytizing, and exert no other religious influence in the provision

of shelter and other eligible activities under this part.

(2) HUD may provide reallocated amounts to a recipient that is a

primarily religious organization if the assistance will not be used by

the organization to acquire a structure (in the case of homeless

prevention activities under Sec. 576.21(a)(4)), or to rehabilitate a

structure owned by the organization, except as described in paragraph

(b) of this section.

(b) Rehabilitation or conversion of emergency shelters. Grants may

be used to rehabilitate or convert to an emergency shelter a structure

that is owned by a primarily religious organization, only if:

(1) The structure (or portion thereof) that is to be renovated,

rehabilitated, or converted with HUD assistance has been leased to an

existing or newly established wholly secular organization;

(2) The HUD assistance is provided to the secular organization (and

not the religious organization) to make the improvements;

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

purposes available to all persons;

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

do not exceed the fair market rent for the structure before the

renovation, rehabilitation, or conversion;

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

unleased

[[Page 51550]]

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

religious organization; and

(6) The primarily religious organization agrees that if the

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

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

religious organization will pay to the original grantee (from which the

amounts used to renovate, rehabilitate, or convert the building were

derived) an amount equal to the residual value of the improvements. A

private nonprofit organization must remit to HUD this amount if the

organization is the lessee as well as the grantee. The original grantee

is expected to use this amount to alleviate homelessness in its

jurisdiction, but there is no requirement that funds received after the

close of the grant period be used in accordance with the requirements

of this part.

(c) Assistance to a wholly secular private nonprofit organization.

(1) A primarily religious organization may establish a wholly secular

private nonprofit organization to serve as a recipient. The secular

organization may be eligible to receive all forms of assistance

available under this part, subject to the following:

(i) The secular organization must agree to provide shelter and

services eligible under this part in a manner that is free from

religious influences and in accordance with the principles set forth in

paragraph (a)(1) of this section.

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

religious organization to provide essential services or undertake

homeless prevention activities. The religious organization must agree

in the contract to carry out its contractual responsibilities in a

manner free from religious influences and in accordance with the

principles set forth in paragraph (a)(1) of this section.

(iii) The rehabilitation, conversion, or renovation of emergency

shelters are subject to the requirements of paragraph (b) of this

section.

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

the secular organization before the selection of its application. In

such a case, the religious organization may apply on behalf of the

secular organization. The application will be reviewed on the basis of

the religious organization's financial responsibility and capacity, and

its commitment to provide appropriate resources to the secular

organization after formation. After formation, a secular organization

that is not in existence at the time of the application will be

required to demonstrate that it meets the definition of private

nonprofit organization contained in Sec. 576.3. The obligation of funds

will be conditioned upon compliance with these requirements.

Sec. 576.25 Who may carry out eligible activities.

(a) Generally. As provided in 42 U.S.C. 11373 eligible activities

may be carried out by all State recipients and grantees, except States.

(b) States. All of a State's formula allocation, except for

administrative costs, must be made available to the following entities:

(1) Units of general local government in the State, which may

include formula cities and counties even if such cities and counties

receive grant amounts directly from HUD; or

(2) Private nonprofit organizations, in accordance with 42 U.S.C.

11373(c).

(c) Nonprofit recipients. Units of general local government,

territories, and Indian tribes may distribute all or part of their

grant amounts to nonprofit recipients to be used for emergency shelter

grant activities.

Subparts C and D--[Removed]

7. Subparts C and D are removed.

Subparts E through H [Redesignated as Subparts C through F]

8. Subparts E through H are redesignated as subparts C through F

Subpart C--Award and Use of Grant Amounts

Sec. 576.51 [Redesignated as Sec. 576.31]

9. Section 576.51 is redesignated as Sec. 576.31 and is revised to

read as follows:

Sec. 576.31 Application requirements.

(a) Indian tribes. After funds are set aside for allocation to

Indian tribes under Sec. 576.5, HUD will publish a Notice of Funding

Availability (NOFA) in the Federal Register. The NOFA will specify the

requirements and procedures applicable to the allocation and

competitive awarding of these set-aside funds to eligible Indian tribe

applicants.

(b) States, territories, and formula cities and counties. To

receive emergency shelter grant amounts, a State, territory, or formula

city or county must:

(1) Submit documentation required under this part, part 5 of this

title, or any other applicable provisions of Federal law; and

(2) Submit and obtain HUD approval of a consolidated plan that

includes activities to be funded under this part. This consolidated

plan serves as the jurisdiction's application for funding under this

part.

Sec. 576.52 [Removed]

10. Section 576.52, ``Environmental review'', is removed.

Sec. 576.53 [Redesignated as Sec. 576.33 and amended]

11. Section 576.53, ``Review and approval of applications'', is

redesignated as Sec. 576.33 and is amended by removing the reference

``576.89'' and adding in its place the reference ``576.69''.

Sec. 576.55 [Redesignated as Sec. 576.35 and amended]

12. Section 576.55 is redesignated as Sec. 576.35 and is amended by

revising (a)(1), (b), and (c), to read as follows:

Sec. 576.35 Deadlines for using grant amounts.

(a)(1) States. Each State must make available to its State

recipients all emergency shelter grant amounts that it was allocated

under Sec. 576.5 within 65 days of the date of the grant award by HUD.

Funds set aside by a State for homeless prevention activities under

Sec. 576.21(a)(4) must be made available to State recipients within 180

days of the grant award by HUD.

* * * * *

(b) Formula cities and counties, territories and Indian tribes--

Expenditure of grant funds. Each formula city or county, territory, and

Indian tribe must spend all of the grant amounts it was allocated or

awarded under Secs. 576.5 or 576.31 within 24 months of the date of the

grant award by HUD.

(c) Failure to meet deadlines. (1) Any emergency shelter grant

amounts that are not made available or obligated within the applicable

time periods specified in paragraphs (a)(1) or (b) of this section will

be reallocated under Sec. 576.45.

(2) The State must recapture any grant amounts that a State

recipient does not obligate and spend within the time periods specified

in paragraph (a)(2) of this section. The State, at its option, must

make these amounts and other amounts returned to the State (except

amounts referred to in Sec. 576.22(b)(6) available as soon as

practicable to other units of general local government for use within

the time period specified in paragraph (a)(2) of this section or to HUD

for reallocation under Sec. 576.45.

[[Page 51551]]

Subpart D--Reallocations

Sec. 576.61 [Redesignated as Sec. 576.41 and amended]

13. Section 576.61 is redesignated as Sec. 576.41 and is amended

by:

a. Revising the section heading;

b. Revising paragraphs (b), (d)(1), (d)(2), (e), (f), and (g); and

c. Revising the heading of paragraph (c) to read as follows:

Sec. 576.41 Reallocation; lack of approved consolidated plan--formula

cities and counties.

* * * * *

(b) Grantee. HUD will make available to the State in which the city

or county is located the amounts that a city or county referred to in

paragraph (a) of this section would have received.

(c) Notification of availability. * * *

(d) * * *

(1) Execute a grant agreement with HUD for the fiscal year for

which the amounts to be reallocated were initially made available.

(2) If necessary, submit an amendment to its application for that

fiscal year for the reallocation amounts it wishes to receive. The

amendment must be submitted to the responsible HUD field office no

later than 30 days after notification is given to the State under

paragraph (c) of this section.

(e) Amendment review and approval. (1) Section 576.33 governs the

review and approval of application amendments under this section. HUD

will endeavor to make grant awards within 30 days of the application

amendment deadline, or as soon thereafter as practicable.

(2) Program activities represented by proposed amendments are

subject to environmental review under Sec. 576.57 in the same manner as

original proposals.

(f) Deadlines for using reallocated grant amounts. Section 576.35

governs the use of amounts reallocated under this section.

(g) Amounts that cannot be reallocated. Any grant amounts that

cannot be reallocated to a State under this section will be reallocated

as provided by Sec. 576.43. Amounts that are reallocated under this

section, but that are returned or unused, will be reallocated under

Sec. 576.45.

Sec. 576.63 [Redesignated as Sec. 576.43 and amended]

14. Section 576.63 is redesignated as Sec. 576.43 and is amended:

a. By revising the section heading;

b. By revising paragraphs (a) and (b);

c. By revising the first sentence of paragraph (c);

d. By revising the introductory text of paragraph (d);

e. By revising paragraph (d)(2);

f. By removing the parenthetical ``(except paragraph (e))'' in the

introductory text of paragraph (e); and

g. By revising paragraphs (f), (g), and (h), to read as follows:

Sec. 576.43 Reallocation of grant amounts; lack of approved

Consolidated Plan--States, territories, and Indian tribes.

(a) Applicability. This section applies when:

(1) A State, territory, or Indian tribe fails to obtain approval of

its consolidated plan within 90 days of the date upon which amounts

under this part first become available for allocation in any fiscal

year; or

(2) Grant amounts cannot be reallocated to a State under

Sec. 576.41.

(b) Grantees. (1) HUD will reallocate the amounts that a State or

Indian tribe referred to in paragraph (a)(1) of this section would have

received:

(i) In accordance with 42 U.S.C. 11373(d)(3); and

(ii) If grant amounts remain, then to territories that demonstrate

extraordinary need or large numbers of homeless individuals.

(2) HUD will make available the amounts that a territory under

paragraph (a)(1) of this section would have received to other

territories that demonstrate extraordinary need or large numbers of

homeless individuals.

(c) Notification of funding availability. HUD will make

reallocations to States and Indian tribes under this section by direct

notification or Federal Register notice that will set forth the terms

and conditions under which amounts under this section are to be

reallocated and grant awards made. In the case of reallocations to

territories, the responsible HUD field office will promptly notify each

territory of any reallocation amounts under this section and will

indicate the terms and conditions under which reallocation amounts are

to be made available and grant awards made.

(d) Eligibility for reallocation amounts. In order to receive

reallocation amounts under this section, the formula city or county,

State, territory, or Indian tribe must:

(1) * * *

(2) Execute a grant agreement with HUD for the fiscal year for

which the amounts to be reallocated were initially made available.

* * * * *

(f) Grant amounts. HUD may make a grant award for less than the

amount applied for or for fewer than all of the activities identified

in the application amendment.

(g) Deadlines for using reallocated amounts. Section 576.35 governs

the use of amounts reallocated under this section.

(h) Amounts not reallocated. Any grant amounts that are not

reallocated under this section, or that are reallocated, but are

unused, will be reallocated under Sec. 576.45(d). Any amounts that are

reallocated, but are returned, will be reallocated under

Sec. 576.45(c).

Sec. 576.67 [Redesignated as Sec. 576.45 and amended]

15. Section 576.67 is redesignated as Sec. 576.45, and is amended

as follows:

a. In paragraph (c)(1), by italicizing the first sentence and by

removing the reference ``Sec. 576.43'' and adding in its place the

reference ``Sec. 576.5'';

b. By redesignating paragraphs (c) (2) and (3) as paragraphs (c)

(3) and (4), respectively;

c. By adding a new paragraph (c)(2);

d. By revising paragraphs (c)(3) and (c)(4), as redesignated;

e. In paragraph (c)(9), by removing the reference to

``Sec. 576.52'' and adding in its place a reference to ``576.57'';

f. In paragraph (d), by removing the reference to ``subpart D'' and

adding in its place a reference to ``Sec. 576.5'';

g. By revising the heading of paragraph (f); and

h. By revising paragraph (f)(2) to read as follows:

Sec. 576.45 Reallocation of grant amounts; returned or unused amounts.

* * * * *

(c) * * *

(1) States and formula cities and counties. * * *

(2) Indian tribes. Returned grant amounts that were allocated to an

Indian tribe will be made available to other Indian tribes.

(3) Territories. Returned grant amounts that were allocated to a

territory will be made available, first, to other territories and, if

grant amounts remain, then to States.

(4) Further reallocation: States, formula cities and counties,

territories, and Indian tribes. HUD will reallocate under paragraph (e)

of this section any grant amounts that remain after applying the

preceding provisions of paragraph (c) of this section or that are

returned to HUD after reallocation under those provisions.

* * * * *

(f) Definitions--returned or unused grant amounts. * * *

(2) For purposes of this section, emergency shelter grant amounts

are considered ``unused'' (i.e., Federal deobligation):

(i) When they become available for reallocation by HUD after a

grantee has

[[Page 51552]]

executed a grant agreement with HUD for those amounts; or

(ii) The amounts remain after reallocation under Sec. 576.43 or

paragraph (c) of this section.

Subpart E--Program Requirements

Sec. 576.71 [Redesignated as Sec. 576.51 and revised]

16. Section 576.71 is redesignated as Sec. 576.51 and is revised to

read as follows:

Sec. 576.51 Matching funds.

(a) General. Each grantee, other than a territory, must match the

funding provided by HUD under this part as set forth in 42 U.S.C.

11375. The first $100,000 of any assistance provided to a recipient

that is a State is not required to be matched, but the benefit of the

unmatched amount must be shared as provided in 42 U.S.C. 11375(c)(4).

Matching funds must be provided after the date of the grant award to

the grantee. Funds used to match a previous ESG grant may not be used

to match a subsequent grant award under this part. A grantee may comply

with this requirement by providing the matching funds itself, or

through matching funds or voluntary efforts provided by any State

recipient or nonprofit recipient (as appropriate).

(b) Calculating the matching amount. In calculating the amount of

matching funds, in accordance with 42 U.S.C. 11375(a)(3), the time

contributed by volunteers shall be determined at the rate of $5 per

hour. For purposes of this paragraph, the grantee will determine the

value of any donated material or building, or of any lease, using a

method reasonably calculated to establish a fair market value.

Sec. 576.73 [Redesignated as Sec. 576.53 and amended]

17. Section 576.73 is redesignated as Sec. 576.53, and is amended

by revising paragraph (a) and the introductory text of paragraph (b),

to read as follows:

Sec. 576.53 Use as an emergency shelter.

(a)(1) Restrictions and definition. Period of use restrictions

applicable to assistance provided under this part are governed by 42

U.S.C. 11375(a). Use of grant amounts for developing and implementing

homeless prevention activities does not trigger period of use

requirements.

(2) For purposes of the requirements under this section, the term

same general population means either the same types of homeless persons

originally served with ESG assistance (i.e., battered spouses, runaway

children, families, or mentally ill individuals), or persons in the

same geographic area.

(b) Calculating the applicable period. The 3- and 10-year periods

applicable under paragraph (a) of this section begin to run:

* * * * *

Sec. 576.75 [Redesignated as Sec. 576.55]

18. Section 576.75 is redesignated as Sec. 576.55 and is revised to

read as follows:

Sec. 576.55 Building standards.

(a) Any building for which emergency shelter grant amounts are used

for conversion, major rehabilitation, rehabilitation, or renovation

must meet local government safety and sanitation standards.

(b) For projects of 15 or more units, when rehabilitation costs

are:

(1) 75 percent or more of the replacement cost of the building,

that project must meet the requirements of Sec. 8.23(a) of this title;

or

(2) Less that 75 percent of the replacement cost of the building,

that project must meet the requirements of Sec. 8.23(b) of this title.

Sec. 576.77 [Redesignated as Sec. 576.56]

19. Section 576.77 is redesignated as Sec. 576.56, and is revised

to read as follows:

Sec. 576.56 Homeless assistance and participation.

(a) Assistance. (1) Grantees and recipients must assure that

homeless individuals and families are given assistance in obtaining:

(i) Appropriate supportive services, including permanent housing,

medical health treatment, mental health treatment, counseling,

supervision, and other services essential for achieving independent

living; and

(ii) Other Federal, State, local, and private assistance available

for such individuals.

(2) Requirements to ensure confidentiality of records pertaining to

the provision of family violence prevention or treatment services with

assistance under this part are set forth in 42 U.S.C. 11375(c)(5).

(3) Grantees and recipients may, in accordance with 42 U.S.C.

11375(e), terminate assistance provided under this part to an

individual or family who violates program requirements.

(b) Participation. (1) Each unit of local government, Indian tribe,

and nonprofit recipient that receives funds under this part must

provide for the participation of homeless individuals on its

policymaking entity in accordance with 42 U.S.C. 11375(d).

(2) Each State, territory, Indian tribe, unit of local government,

and nonprofit recipient that receives funds under this part must

involve homeless individuals and families in providing work or services

pertaining to facilities or activities assisted under this part, in

accordance with 42 U.S.C. 11375(c)(7).

Sec. 576.79 [Redesignated as Sec. 576.57 and amended]

20. Section 576.79 is redesignated as Sec. 576.57, and is amended

as follows:

a. By revising paragraphs (e) and (f);

b. By redesignating paragraph (h) as paragraph (j); and

c. By adding new paragraphs (h) and (i) to read as follows:

Sec. 576.57 Other Federal requirements.

* * * * *

(e) Environmental review responsibilities.--(1) Generally.

Responsible entities must assess the environmental effects of each

application under part 58 of this title. An applicant must include in

its application an assurance that the applicant will assume all the

environmental review responsibility that would otherwise be performed

by HUD as the responsible Federal official under the National

Environmental Policy Act of 1969 (NEPA) and related authorities listed

in part 58 of this title. The grant award is subject to completion of

the environmental responsibilities set out in part 58 of this title

within a reasonable time period after notification of the award. This

provision does not preclude the applicant from enclosing its

environmental certification and Request for Release of Funds with its

application.

(2) Awards to States. In the case of emergency shelter grants to

States that are distributed to:

(i) Units of general local government, the unit of general local

government shall be the responsible entity, and the State will assume

HUD's functions with regard to the release of funds; or

(ii) Nonprofit organizations, the State shall be the responsible

entity, and HUD will perform functions regarding release of funds under

part 58 of this title.

(3) Release of funds. HUD will not release funds for an eligible

activity if the grantee, recipient, or any other party commits

emergency shelter grant funds before the grantee submits, and HUD

approves, any required Request for Release of Funds.

(f) Audit. The financial management systems used by a State,

formula city or county, governmental entity, or an Indian tribe that is

a grantee under this program must provide for audits in

[[Page 51553]]

accordance with part 44 of this title. A private nonprofit organization

is subject to the audit requirements of OMB Circular A-133, as set

forth in part 45 of this title. (OMB Circulars are available from the

Executive Office of the President, Publication Service, 725 17th

Street, NW., Suite G-2200, Washington, DC 20503, Telephone, 202-395-

7332.)

* * * * *

(h) Lobbying and disclosure requirements. The disclosure

requirements and prohibitions of 42 U.S.C. 3537a and 3545 and 31 U.S.C.

1352 (the Byrd Amendment), and the implementing regulations at parts 4

and 87 of this title.

(i) Davis-Bacon Act. The provisions of the Davis-Bacon Act (40

U.S.C. 276a-276a-5) do not apply to this program.

Sec. 576.80 [Redesignated as Sec. 576.59]

21. Section 576.80, ``Relocation and acquisition'', is redesignated

as Sec. 576.59.

Subpart F--Grant Administration

Sec. 576.81 [Redesignated as Sec. 576.61 and amended]

22. Section 576.81 is redesignated as Sec. 576.61, and is amended

by revising the second sentence and adding paragraphs (a) and (b), to

read as follows:

Sec. 576.61 Responsibility for grant administration.

* * * The State, territory, Indian tribe, or unit of local

government is responsible for ensuring that its recipients carry out

the recipients' emergency shelter grant programs in compliance with all

applicable requirements in the case of:

(a) A State making grant amounts available to State recipients; or

(b) A territory, Indian tribe, or unit of general local government

distributing grant amounts to nonprofit recipients.

Sec. 576.83 [Redesignated as Sec. 576.63 and amended]

23. Section 576.83, ``Method of payment'', is redesignated as

Sec. 576.63, and is amended by removing the last sentence.

Sec. 576.87 [Redesignated as Sec. 576.65]

24. Section 576.87 is redesignated as Sec. 576.65 and is revised to

read as follows:

Sec. 576.65 Recordkeeping.

(a) Each grantee must ensure that records are maintained for a 4-

year period to document compliance with the provisions of this part.

(b) Requirements to ensure confidentiality of records pertaining to

the provision of family violence prevention or treatment services with

assistance under this part are set forth in 42 U.S.C. 11375(c)(5).

Sec. 576.89 [Redesignated as Sec. 576.67 and amended]

25. Section 576.89, ``Sanctions'', is redesignated as Sec. 576.67,

and is amended as follows:

a. By removing a reference in paragraph (b) to

``Sec. 576.55(a)(2)'' and adding in its place a reference to

``Sec. 576.35(a)(2)''; and

b. By removing references in paragraphs (b) and (c) to

``Sec. 576.67(d)'' and adding in their places references to

``Sec. 576.45(d)''.

Dated: September 20, 1996.

Andrew Cuomo,

Assistant Secretary for Community Planning and Development.

[FR Doc. 96-25054 Filed 10-1-96; 8:45 am]

BILLING CODE 4210-29-P