Public Housing Drug Elimination Program Formula Allocation

SUMMARY: This proposed rule would amend HUD regulations to replace the

competitive distribution of HUD's Public and Indian Housing Drug

Elimination Program (PHDEP) funds with a formula allocation funding

system. The purpose of this amendment is to provide a more timely,

predictable and equitable allocation of PHDEP funds. The competitive

distribution of funding through the Assisted Housing component of the

Drug Elimination Program would not be affected by this rule.

DATES: Comment Due Date: July 12, 1999.

ADDRESSES: Interested persons are invited to submit comments to the

Rules Docket Clerk, Office of the General Counsel, Room 10276,

Department of Housing and Urban Development, 451 Seventh Street, SW,

Washington, DC 20410-0500. Communications should refer to the above

docket number and title. Facsimile (FAX) responses are not acceptable.

A copy of each response will be available for public inspection and

copying during regular business hours (7:30 a.m. to 5:30 p.m. Eastern

Time at the above address).

FOR FURTHER INFORMATION CONTACT: Bertha M. Jones, Program Analyst,

Community Safety and Conservation Division, Office of Public and Indian

Housing, Department of Housing and Urban Development, 451 Seventh

Street, SW, Washington, DC 20410, telephone (202) 708-1197 x.4237; or

Tracy C. Outlaw, National Office of Native American Programs,

Department of Housing and Urban Development, 1999 Broadway, Suite 3390,

Denver, CO 80202, telephone (303) 675-1600 (these are not toll-free

numbers). Hearing or speech-impaired individuals may access this number

via TTY by calling the toll-free Federal Information Relay Service at

1-800-877-8339. Also, please see HUD's website at http://www.hud.gov/

pih/legis/titlev.html for additional PHDEP information.

SUPPLEMENTARY INFORMATION:

I. Background

Section 586 of the Quality Housing and Work Responsibility Act of

1998 (Pub. L. 105-276, 112 Stat. 2461, approved October 21, 1998)

(Public Housing Reform Act) makes certain amendments to the Public and

Assisted Housing Drug Elimination Act of 1990, including authorizing

HUD to make renewable grants to public housing agencies (PHAs). HUD is

to provide preference in funding to these public housing agencies, but

this preference does not preclude selection by the Secretary of other

meritorious public housing agencies that need funding to address urgent

or serious crime problems.

On February 18, 1998 (64 FR 8210), HUD published an Advance Notice

of Proposed Rulemaking (ANPR) to solicit comments on possible methods

and elements of a need based formula and performance criteria. Further,

HUD welcomed any formula methods for consideration that housing

agencies or other interested members of the public may have devised.

Public comments received in response to this notice were considered in

the development of this proposed rule on formula funding for PHDEP, and

are discussed in the following section.

II. Public Comment on the ANPR

HUD received 60 comments on the ANPR. The commenters addressed the

options for PHDEP funding, and offered several recommendations on how

funding may be allocated. This proposed rule takes into consideration

the comments received on the ANPR, as discussed below.

Opposition to Formula Funding

Several commenters opposed the change to formula allocation. Their

concern was that providing funding to a somewhat greater number of

applicants under a formula would reduce the amount that was previously

made available to individual applicants who successfully competed for

funding.

HUD remains convinced that formula allocation for this program is

the better method for allocating PHDEP funds. First, formula allocation

of funding for a period of years eliminates the uncertainty of

competitive funding and permits the development and implementation of

long range plans. Second, as many commenters pointed out, success in

funding competitions is often related to the ``creative writing''

ability of an applicant, an applicant's capacity to hire a professional

grants writer, and the subjective preferences of reviewers. These

unfavorable characteristics would be avoided under a formula system of

funding. Third, the timing of funding availability under a formula

process will be more consistent and regular than under a competitive

process. Fourth, a formula will relieve the administrative burden on

PHAs and HUD, by eliminating the competitive NOFA process. For these

reasons, HUD has determined that a formula approach to PHDEP funding

will provide a more timely, predictable and equitable allocation of

PHDEP funds.

Criticisms of Funding Formula

Although many of the commenters supported the idea of formula

funding, the formula itself was criticized on several points. Among the

criticisms was that the formula was difficult to understand; that it

used incomplete or invalid data; that the same bedroom mix factor was

used more than once; that the weights assigned to the formula's

components were not justified, and that the results were not

replicable.

This rule proposes to address these criticisms by using a greatly

simplified formula for the allocation of PHDEP funding. The amount that

will be made available to an applicant qualifying for funding will be

based upon the applicant's share of the total number of units of all

applicants that qualify for funding, with a maximum award of $35

million and a minimum award of $25,000.

Minimum Amount of Funding

Several commenters addressed the issue of the minimum amount of

formula funding. Some favored maintaining the $50,000 minimum available

under the competitive system; some favored the suggested $25,000

minimum; and others supported a minimum without specifying an amount.

This rule proposes to go forward with the $25,000 minimum amount of

funding. The certainty of funding over five years is proposed to

compensate for any problems resulting from the drop in minimum funding.

The great majority of beneficiaries of the minimum funding amount is

expected to be small applicants that were not previously funded and

that would be able to undertake meaningful activities with the minimum

amount.

Establish Two Pools of PHDEP Funding

Several commenters suggested that PHDEP funding be divided into two

pools, one to be allocated according to a formula, and the other

awarded on the basis of a competition.

HUD does not support such a system because it would substantially

[[Page 25737]]

compromise the savings in administrative burden to PHAs and HUD that

would be available under a formula system.

III. Changes in This Proposed Rule

This rule proposes to amend the Drug Elimination Program (DEP)

regulations at 24 CFR part 761 to implement Public Housing Reform Act

section 586. In particular, it would amend the way that public housing

drug elimination funds are distributed, as explained in the following

discussion.

Statutory Changes to DEP Funding and Eligibility

Section 586(e) of the Public Housing Reform Act amends section 5125

of the Anti-Drug Abuse Act of 1988 (ADAA) (the Public and Assisted

Housing Drug Elimination Program is authorized under sections 5121

through 5130 of ADAA). Before being amended by section 586(e), section

5125(b) provided that HUD ``shall approve applications under this

chapter based exclusively on'' a list of four factors. This language

placed strict limitations on the manner in which HUD could distribute

drug elimination funds. Section 586(e) redesignates paragraphs (b)

through (d) of section 5125 as paragraphs (c) through (e),

respectively, and amends the limiting language in redesignated

paragraph (c) to provide that HUD ``shall approve applications under

subsection (b) that are not subject to a preference under subsection

(b)(2)(A) on the basis of thresholds or criteria such as'' followed by

the same four factors.

Section 586 adds both structure and flexibility to the funding

process of the drug elimination program. By replacing the tightly

controlling parameters of ``based exclusively on'' with the expansive

``on the basis of thresholds or criteria such as'', section 586

provides HUD with greater flexibility in the way DEP funds are

distributed. Section 586 also introduces non-competitive, renewable

grants as a way of distributing drug elimination funds. The new

subsection (b) added to ADAA section 5125 by Public Housing Reform Act

section 586 reads as follows:

(b) One-Year Renewable Grants--

(1) In General--An eligible applicant that is a public housing

agency may apply for a 1-year grant under this chapter that, subject

to the availability of appropriated amounts, shall be renewed

annually for a period of not more than 4 additional years, except

that such renewal shall be contingent upon the Secretary finding,

upon an annual or more frequent review, that the grantee agency is

performing under the terms of the grant and applicable laws in a

satisfactory manner and meets such other requirements as the

Secretary may prescribe. The Secretary may adjust the amount of any

grant received or renewed under this paragraph to take into account

increases or decreases in amounts appropriated for these purposes or

such other factors as the Secretary determines to be appropriate.

(2) Eligibility and Preference--The Secretary may not provide

assistance under this chapter to an applicant that is a public

housing agency unless--

(A) the agency will use the grants to continue or expand

activities eligible for assistance under this chapter, as in effect

immediately before the effective date under section 503(a) of the

Quality Housing and Work Responsibility Act of 1998, in which case

the Secretary shall provide preference to such applicant; except

that preference under this subparagraph shall not preclude selection

by the Secretary of other meritorious applications that address

urgent or serious crime problems nor be construed to require

continuation of activities determined by the Secretary to be

unworthy of continuation; or

(B) the agency is in the class established under paragraph (3).

(3) PHA's Having Urgent or Serious Crime Problems--The Secretary

shall, by regulations issued after notice and opportunity for public

comment, set forth criteria for establishing a class of public

housing agencies that have urgent or serious crime problems. The

Secretary may reserve a portion of the amount appropriated to carry

out this chapter in each fiscal year only for grants for public

housing agencies in such class, except that any amounts from such

portion reserved that are not obligated to agencies in the class

shall be made available only for agencies that are subject to a

preference under paragraph (2)(A).

(4) INAPPLICABILITY TO FEDERALLY ASSISTED LOW-INCOME HOUSING--

The provisions of this subsection shall not apply to federally

assisted low-income housing.

In Senate colloquy before passage of the Public Housing Reform Act,

Senator Mack noted that the amendments made to the Public and Assisted

Housing Drug Elimination Act of 1990 represent a significant

improvement in the program. The Senator stated:

The amendments will provide renewable grants for agencies that

meet performance standards established by HUD. In addition, housing

authorities with urgent or serious crime needs are protected and

will be assured an equitable amount of funding.

* * * [T]he intent of these provisions is to provide more

certain funding for agencies with clear needs for funds and to

assure that both current funding recipients and other agencies with

more urgent or serious crime problems are appropriately assisted by

the program. The provisions will also reduce the administrative

costs of the current application process which entails a substantial

paperwork burden for agencies and HUD. Under the terms of the

amendments, HUD can establish a fixed funding mechanism in which the

relative needs of housing authorities are addressed with a greater

amount of certainty. (Congressional Record of October 8, 1998,

S.11842)

The new language of ADAA section 5125(b), as revised by Public

Housing Reform Act section 586(e)(6), addresses the manner in which the

categories of eligible DEP applicants (PHAs, RMCs, NAHASDA recipients,

consortia, and owners of federally assisted low income housing) are to

be funded. PHAs are divided into two categories for funding purposes.

The first category consists of PHAs that will ``use the grants to

continue or expand activities eligible for assistance'' under the drug

elimination program. The requirement that funds must be used to

``continue or expand'' activities indicates that PHAs in this category

must have previously received DEP funding, or they would not have any

activities that could be continued or expanded. HUD has determined that

PHAs that successfully competed for PHDEP funding under at least one of

the Notices of Funding Availability for Federal Fiscal Years (FFYs)

1996, 1997 and 1998 would have activities to continue or expand and

would constitute the first category of PHAs that qualify for funding.

Further, revised section 5125(b)(2)(A) states that PHAs in this

category are to be provided a preference for funding. How HUD will fund

these ``preference PHAs'' is explained below in the discussion of the

funding formula proposed by this rule.

The second category of PHAs that qualify for funding is covered by

an exception to the preference. This exception is also found in section

5125(b)(2)(A), in the language which states, ``except that preference

under this subparagraph shall not preclude selection by the Secretary

of other meritorious applications that address urgent or serious crime

problems''. The funding formula discussed below would define what PHAs

fall into this ``needs'' category and the amount of funding each would

qualify to receive.

RMCs and NAHASDA recipients would also qualify for ``needs''

funding under the exception language of section 5125(b)(2)(A), on the

basis of ``meritorious applications that address urgent or serious

crime problems''. The determination of how NAHASDA recipients and RMCs

qualify for needs funding and the amounts they would receive are

explained under the formula funding discussion, below.

A consortium of eligible applicants would qualify for at least the

amount of funding for which its individual members would qualify on a

preference or a needs basis. Consortia are more fully discussed under a

separate heading in this preamble, below.

[[Page 25738]]

HUD is seeking comment in particular on methods and the

desirability of providing more of a financial incentive for consortia.

Federally assisted low-income housing is specifically excluded from

the provisions of revised section 5125(b) of ADAA, by section

5125(b)(4). Assisted housing DEP funding will continue to be made

available on a competitive basis under periodic NOFAs published in the

Federal Register.

Proposed PHDEP Formula Funding

This rule proposes to distribute all PHDEP funding in a

noncompetitive manner through the use of a funding formula. The new

language in revised ADAA section 5125(c), discussed above, provides HUD

with the flexibility to follow this formula approach. The funding

formula process satisfies the section 5125(c) requirement that HUD

``approve applications under subsection (b) that are not subject to a

preference under subsection (b)(2)(A) on the basis of thresholds or

criteria such as'' the four listed factors. The manner in which

eligible applicants qualify for funding through the formula process is

sufficient to satisfy the new, more expansive ``such as'' requirement

which replaced the exclusive reliance upon the four listed ADAA

factors.

The application of a funding cut-off point, or threshold, to the

ranking of eligible applicants derived through the formula process also

satisfies the requirement of the ``needs'' exception in section

5125(b)(2)(A), that the selection ``of other meritorious applications

that address urgent or serious crime problems'' not be precluded. This

rule provides that non-preference PHAs, NAHASDA recipients, and RMCs in

the top 50% (the cut-off point or threshold) of the unit-weighted

distribution of an index of a rolling average rate of violent crimes of

the community have needs that qualify for funding. Needs in the top 50%

are above average needs, and this broad approach to addressing ``urgent

or serious crime problems'' will assure the broad distribution of PHDEP

funding. Needs in the bottom 50% are below average and, therefore,

difficult to characterize as ``urgent or serious''.

The crime rate used in this needs determination formula is the

rate, from the most recent years feasible, of FBI violent crimes per

10,000 residents of the community (or communities). If this information

is not available for a particular applicant's community, HUD will use

the average of data from recipients of the same or a comparable State

and size category of PHA (less than 500 units, 500 to 1249 units, and

more than 1250 units). If fewer than five PHAs have data for a given

size category within a State, then the average of PHAs for a given size

category within the census region will be used.

The use of a funding cut-off point in the ranking also addresses

the preference requirement for previously funded (in FFYs 1996, 1997 or

1998) PHAs. These PHAs will be funded regardless of any ranking,

providing them with the preference of assured funding. Renewal of

funding under section 5125(b)(1) of ADAA for preference PHAs is

contingent only upon ``the Secretary finding, upon an annual or more

frequent review, that the grantee agency is performing under the terms

of the grant and applicable laws in a satisfactory manner and meets

such other requirements as the Secretary may prescribe.'' Of course, as

section 5125(b)(2)(A) of ADAA also provides, the preference shall not

be ``construed to require continuation of activities determined by the

Secretary to be unworthy of continuation''.

In addition to addressing the preference requirement and

determining what ``needs'' applicants will qualify for funding, a

formula would determine the amount each applicant that qualifies for

funding would receive. The proposed formula at Sec. 761.13 would

distribute PHDEP funding based upon a qualified applicant's (an

applicant that qualifies on the basis of preference or need) share of

the total number of units of all eligible applicants that qualify for

funding, with a maximum award of $35 million and a minimum award of

$25,000. The amount an applicant that qualifies for funding would

receive in any given FFY would vary in proportion to the amounts

appropriated annually for the DEP, but would not exceed the established

maximum or minimum amounts.

The Department specifically requests comment on whether the

proposed formula funding is appropriate for NAHASDA recipients, and

will consider implementing alternative methods of funding this category

of eligible applicants. Also, please see the discussion under the

heading, ``Funding of NAHASDA Recipients,'' below in this preamble.

DEP Application and Plan Requirement

To qualify for funding, an eligible applicant must still meet the

ADAA section 5125(a) requirement of submitting a plan for addressing

the problem of drug-related or violent crime in and around the

recipient's housing. This rule addresses the plan requirement by

providing, at Sec. 761.15, that a PHA must include a DEP plan with its

PHA Plan, submitted pursuant to 24 CFR part 903, as a qualification for

DEP funding. Similarly, as a qualification for DEP funding, a NAHASDA

recipient must include a DEP plan with its Indian Housing Plan (IHP),

submitted pursuant to subpart C of 24 CFR part 1000. As for RMCs, a

qualification for funding is that an RMC must submit a PHDEP plan to

its PHA. The PHA must then submit, with its PHA Plan, the RMC's PHDEP

plan. The minimum requirements for the contents of a PHDEP plan are

contained in a new Sec. 761.21. The PHDEP plan serves as the

application for PHDEP funding, and an otherwise qualified recipient

that does not submit a PHDEP plan as required will not be funded.

HUD specifically solicits comments on ways to further streamline

the PHDEP plan and performance reporting. HUD is continuing to develop

model outcome measures with specific, measurable goals for PHDEP-funded

activities, including the overall reduction of violent crime and drug

use.

AHDEP applicants will continue to apply in accordance with the

requirements of NOFAs published in the Federal Register.

Recipients who qualify and receive funding will be reviewed at

least annually as grantees to determine if they meet the performance

requirements proposed in a new Sec. 761.23. A grantee that fails to

satisfy the performance requirements of this section may be subject to

the sanctions listed in Sec. 761.30(f)(2).

Consortia

This rule would also establish the requirements for the eligibility

and funding of consortia. The rule permits eligible applicants to join

together and form a consortium to apply under PHDEP, whether or not

each member would individually qualify for funding as a preference PHA

or a needs recipient in the top 50% of the formula ranking. To qualify

for funding, the consortium members must prepare and submit a

consortium DEP plan that meets the requirements of a DEP plan contained

in Sec. 761.21. The act of two or more eligible applicants joining

together to form a consortium, and identifying related crime problems

and eligible activities to address those problems pursuant to a

consortium PHDEP plan, qualifies the consortium for PHDEP funding to

the extent the individual applicants qualify. The consortium's DEP plan

must include a written agreement, signed by an authorized

representative of each consortium member, that designates a lead

applicant for purposes of grant funding and administration, and as a

[[Page 25739]]

central point of contact, and describes the activities and

responsibilities that each consortium member is bound to undertake.

Each member must submit the consortium plan with its PHA plan or IHP,

as appropriate.

HUD will make the determination of the amount of funding the

consortium as a whole will receive upon first receipt and favorable

review of a consortium's plan. The amount of funding made available to

the consortium will be the total of the amounts that each individual

member would otherwise qualify to receive, on either a preference or

needs basis, under the funding formula. The Department specifically

requests comment on methods and the desirability of providing more of a

financial incentive for consortia.

Funding of NAHASDA Recipients

An option HUD wishes to present for comment is whether to establish

a separate pool to fund NAHASDA recipients. The lack of full FBI data

on Indian Country and the difficulty of formulating appropriate

comparable data make it difficult to fund NAHASDA recipients on the

same basis as PHAs. Rather than including NAHASDA recipients in the

same funding pool with PHAs, HUD would make separate DEP funding

available for NAHASDA recipients. The amount of funding available would

be set at a level that is significantly greater percentage of the total

amounts made available than the average of the amounts received by

Indian tribes, IHAs, or tribally designated housing entities (TDHEs) in

FFYs 1996, 1997 and 1998. The increase under such a formulation would

be in keeping with the overall increase in HUD funding that took place

when Native American housing assistance was consolidated under NAHASDA.

HUD welcomes suggestions on the basis on which additional NAHASDA

recipients may be permitted to qualify, short of requiring the

submission and verification of extensive data, because it is HUD's goal

to streamline the funding process for all categories of PHDEP

applicants.

IV. Findings and Certifications

Paperwork Reduction Act Statement

The proposed information collection requirements contained in this

rule, and the additional PHDEP requirements at 24 CFR part 761 not

affected by this rule, including the changeover in the reporting

requirements under Sec. 761.35 from a hardcopy format to an electronic

format, have been submitted to the Office of Management and Budget

(OMB) for review under section 3507(d) of the Paperwork Reduction Act

of 1995 (44 U.S.C. Chapter 35).

Estimate of the total reporting and recordkeeping burden that will

result from the collection of information:

Reporting and Recordkeeping Burden

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

Est. avg. time

Number of Annual freq. for Est. annual

Section reference parties of requirement requirement burden (hrs.)

(hours)

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

761.17.......................................... 600 1 16 9,600

761.21.......................................... 1100 1 25 27,500

761.23.......................................... 1100 1 8 8,800

761.25.......................................... 7000 1 1 7,000

761.30.......................................... 1100 1 16 17,600

761.35.......................................... 1100 7 22 169,400

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

Total Reporting and Recordkeeping Burden .............. .............. .............. 239,900

(Hours)....................................

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

In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments

from members of the public and affected agencies concerning this

collection of information to:

(1) Evaluate whether the proposed collection of information is

necessary for the proper performance of the functions of the agency,

including whether the information will have practical utility;

(2) Evaluate the accuracy of the agency's estimate of the burden of

the proposed collection of information;

(3) Enhance the quality, utility, and clarity of the information to

be collected; and

(4) Minimize the burden of the collection of information on those

who are to respond; including through the use of appropriate automated

collection techniques or other forms of information technology, e.g.,

permitting electronic submission of responses.

Interested persons are invited to submit comments regarding the

information collection requirements in this proposal. Comments must be

received within sixty (60) days from the date of this proposal.

Comments must refer to the proposal by name and docket number (FR-4451)

and must be sent to:

Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and

Budget, New Executive Office Building, Washington, DC 20503;

and

Mildred Hamman, Reports Liaison Officer, Office of the Assistant

Secretary for Public and Indian Housing, Department of Housing & Urban

Development, 451--7th Street, SW, Room 4244, Washington, DC 20410.

Additional information on these information collection requirements

may be obtained from the Reports Liaison Officer or from the HUD web

site at http://www.hud.gov/pih/programs/ph/de/cscd.html.

Executive Order 12866

The Office of Management and Budget (OMB) has reviewed this

advanced notice of proposed rulemaking (ANPR) under Executive Order

12866, Regulatory Planning and Review, issued by the President on

September 30, 1993. Any changes made in this ANPR subsequent to its

submission to OMB are identified in the docket file, which is available

for public inspection during regular business hours in the Office of

the Rules Docket Clerk, Office of the General Counsel, Room 10276, U.S.

Department of Housing and Urban

[[Page 25740]]

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

Regulatory Flexibility Act

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

U.S.C. 605(b)), has reviewed and approved this proposed rule, and in so

doing certifies that this rule will not have a significant economic

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

begins the rulemaking process to implement changes for the distribution

of Public Housing Drug Elimination Program funds under the Quality

Housing and Work Responsibility Act of 1998. A significant economic

impact on a substantial number of small entities is not expected

because under this proposal, all small entities previously funded will

continue to be funded at comparable levels. Although HUD has determined

that this proposed rule would not have a significant economic impact on

a substantial number of small entities, HUD welcomes comments regarding

any less burdensome alternatives to this rule that will meet HUD's

objectives as described in this preamble. The rule will have no adverse

or disproportionate economic impact on small businesses.

Environmental Impact

In accordance with 40 CFR 1508.4 of the regulations of the Council

on Environmental Quality and 24 CFR 50.19(c)(2) of the HUD regulations,

this rule amends an existing document, the regulations at 24 CFR part

761, which as a whole would not fall within an exclusion, but the

amendment by itself would do so. Therefore, the actions proposed in

this document are determined not to have the potential of having a

significant impact on the quality of the human environment and further

review under the National Environmental Policy Act is not necessary and

no FONSI is needed.

Executive Order 12612, Federalism

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

of Executive Order 12612, Federalism, has determined that this rule

will not have substantial direct effects on States or their political

subdivisions, or the relationship between the Federal Government and

the States, or on the distribution of power and responsibilities among

the various levels of government. No programmatic or policy changes

will result from this rule that would affect the relationship between

the Federal Government and State and local governments.

List of Subjects in 24 CFR Part 761

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

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

moderate income housing, Indians, Public housing, Reporting and

recordkeeping requirements.

Catalog of Domestic Assistance Numbers

The Catalog of Domestic Assistance numbers for the Public Housing

Drug Elimination Program is 14.854.

Accordingly, for the reasons stated in the preamble, part 761 of

title 24 of the Code of Federal Regulations is amended as follows:

PART 761--DRUG ELIMINATION PROGRAMS

1. The authority citation for 24 CFR part 761 continues to read as

follows:

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

2. In part 761, all references to ``drug-related crime'' are

revised to read ``drug-related and violent crime'' and all references

to ``Indian housing authorities (IHAs)'' are revised to read ``NAHASDA

recipients''.

3. In Sec. 761.1, the introductory text is revised to read as

follows:

Sec. 761.1 Purpose and scope.

This part 761 contains the regulatory requirements for the Assisted

Housing Drug Elimination Program (AHDEP) and the Public Housing Drug

Elimination Program (PHDEP). The purposes of these programs are to:

* * * * *

4. Section 761.5, is revised to read as follows:

Sec. 761.5 Public housing; encouragement of resident participation.

For the purposes of the Public Housing Drug Elimination Program,

the elimination of drug-related and violent crime within public housing

developments requires the active involvement and commitment of public

housing residents and their organizations. To enhance the ability of

PHAs to combat drug-related and violent crime within their

developments, Resident Councils (RCs), Resident Management Corporations

(RMCs), and Resident Organizations (ROs) will be permitted to undertake

management functions specified in this part, notwithstanding the

otherwise applicable requirements of 24 CFR part 964.

5. In Sec. 761.10, the introductory text is revised, the definition

of Recipient of assistance under the Native American Housing Assistance

and Self-Determination Act of 1996 (NAHASDA recipient) is added in

alphabetical order, and the definition of Resident Management

Corporation (RMC) is revised, to read as follows:

Sec. 761.10 Definitions.

The definitions Department, HUD, and Public Housing Agency (PHA)

are defined in 24 CFR part 5.

* * * * *

Recipient of assistance under the Native American Housing

Assistance and Self-Determination Act of 1996 (NAHASDA recipient) shall

have the same meaning as recipient provided in section 4 of the Native

American Housing Assistance and Self-Determination Act of 1996 (25

U.S.C. 4101 et seq.).

* * * * *

Resident Management Corporation (RMC), for purposes of the Public

Housing Program, means the entity that proposes to enter into, or that

enters into, a management contract with a PHA under 24 CFR part 964 in

accordance with the requirements of that part.

* * * * *

6. The heading of subpart B is revised to read as follows:

Subpart B--Grant Funding

7. A new Sec. 761.13 is added to read as follows:

Sec. 761.13 Amount of funding.

(a) PHDEP formula funding. (1) Funding share formula. The amount of

funding made available each FFY to an applicant that qualifies for

funding in accordance with Sec. 761.15(a) is based upon the applicant's

share of the total number of units of all applicants that qualify for

funding, with a maximum award of $35 million and a minimum award of

$25,000.

(2) Consortium funding. The amount of funding made available to a

consortium will be the total of the amounts that each individual member

would otherwise qualify to receive under the PHDEP funding formula in

accordance with paragraph (a)(1) of this section.

(3) Adjustments to funding. The amount of funding made available

each FFY to an applicant in accordance with paragraphs (a)(1) and

(a)(2) of this section may be adjusted as follows:

(i) An applicant must submit a PHDEP plan that meets the

requirements of Sec. 761.21, as required by Sec. 761.15(a)(5), each FFY

year to receive that FFY's funding. An applicant that does not submit a

PHDEP plan for a FFY as

[[Page 25741]]

required will not receive that FFY's funding.

(ii) Ineligible activities, described at Sec. 761.17(b), are not

eligible for funding. Activities proposed for funding in an applicant's

PHDEP plan that are determined to be ineligible will not be funded, and

the applicant's funding for that FFY may be reduced accordingly.

(iii) In accordance with Sec. 761.15(a)(6), an applicant that does

not meet the performance requirements of Sec. 761.23 may not be funded,

in whole or in part.

(iv) Any amounts that become available because of adjustments to an

applicant's funding will be distributed to every other applicant that

qualifies for funding in accordance with paragraphs (a)(1) and (a)(2)

of this section.

(b) AHDEP funding. Information concerning funding made available

under AHDEP for a given FFY will be contained in Notices of Funding

Availability (NOFAs) published in the Federal Register.

8. Section 761.15 is revised to read as follows:

Sec. 761.15 Qualifying for funding.

(a) Qualifications for PHDEP funding. (1) Eligible applicants. The

following are eligible applicants for PHDEP funding:

(i) A PHA;

(ii) A NAHASDA recipient;

(iii) An RMC; and

(iv) A consortium of PHAs.

(2) Preference PHAs. A PHA that successfully competed for PHDEP

funding under at least one of the PHDEP NOFAs for FFY 1996, FFY 1997 or

FFY 1998 qualifies to receive PHDEP funding.

(3) Needs qualification for funding. A PHA that does not qualify to

receive PHDEP funding under paragraph (a)(2) of this section, a NAHASDA

recipient, or an RMC must be in the top 50% of the unit-weighted

distribution of an index of a rolling average rate of violent crimes of

the community, as computed for each Federal Fiscal Year (FFY) to

qualify for funding. The crime rate used in this needs determination

formula is the rate, from the most recent years feasible, of FBI

violent crimes per 10,000 residents of the community (or communities).

If this information is not available for a particular applicant's

community, HUD will use the average of data from recipients of a

comparable State and size category of PHA (less than 500 units, 500 to

1249 units, and more than 1250 units). If fewer than five PHAs have

data for a given size category within a State, then the average of PHAs

for a given size category within the census region will be used.

(4) Consortium of eligible applicants. Eligible applicants may join

together and form a consortium to apply for funding, whether or not

each member would individually qualify for PHDEP funding under

paragraphs (a)(2) or (a)(3) of this section. The act of two or more

eligible applicants joining together to form a consortium, and

identifying related crime problems and eligible activities to address

those problems pursuant to a consortium PHDEP plan, qualifies the

consortium for PHDEP funding of an amount as determined under

Sec. 761.13(a)(2).

(5) PHDEP plan requirement. (i) PHAs. To receive PHDEP funding, a

PHA that qualifies to receive PHDEP funding must include a PHDEP plan

that meets the requirements of Sec. 761.21 with its PHA Plan submitted

pursuant to 24 CFR part 903.

(ii) NAHASDA recipients. To receive PHDEP funding, a NAHASDA

recipient that qualifies to receive PHDEP funding must include a PHDEP

plan that meets the requirements of Sec. 761.21 with its Indian Housing

Plan (IHP) submitted pursuant to subpart C of 24 CFR part 1000.

(iii) RMCs. To receive PHDEP funding, an RMC that qualifies to

receive PHDEP funding must submit a PHDEP plan that meets the

requirements of Sec. 761.21 to its PHA. That PHA may submit, with its

PHA Plan submitted pursuant to 24 CFR part 903, the RMC's PHDEP plan.

(iv) Consortia. To receive PHDEP funding, the consortium members

must prepare and submit a consortium PHDEP plan that meets the

requirements of Sec. 761.21, including the additional requirements that

apply to consortia. Each member must submit the consortium plan with

its PHA plan, submitted pursuant to 24 CFR part 903, or IHP, submitted

pursuant to subpart C of 24 CFR part 1000, as appropriate.

(6) An otherwise qualified recipient PHA, NAHASDA recipient, RMC or

consortium may not be funded if HUD determines, on a case-by-case

basis, that it does not meet the performance requirements of

Sec. 761.23.

(b) Qualifications for AHDEP funding. Under AHDEP, eligible

applicants are owners of federally assisted low-income housing, as the

term Federally assisted low-income housing is defined in Sec. 761.10.

Notices of Funding Availability (NOFAs) published in the Federal

Register will contain specific information concerning funding

requirements and eligible and ineligible applicants and activities.

9. A new Sec. 761.17 is added to read as follows:

Sec. 761.17 Eligible and ineligible activities for funding.

(a) Eligible activities. One or more of the eligible activities

described in 42 U.S.C. 11903 and in this Sec. 761.17(a) are eligible

for funding under PHDEP or AHDEP, as further explained or limited in

paragraph (b) of this section and, for AHDEP, in separate annual

Notices of Funding Availability (NOFAs). All personnel funded by these

programs in accordance with an eligible activity must meet, and

demonstrate compliance with, all relevant Federal, State, tribal, or

local government insurance, licensing, certification, training,

bonding, or other similar law enforcement requirements.

(1) Employment of security personnel, as provided in 42 U.S.C.

11903(a)(1), with the following additional requirements:

(i) Security guard personnel. (A) Contract security personnel

funded by this program must perform services not usually performed by

local law enforcement agencies on a routine basis.

(B) The applicant, the cooperating local law enforcement agency,

and the provider (contractor) of the security personnel are required,

as a part of the security personnel contract, to enter into and execute

a written agreement that describes the following:

(1) The activities to be performed by the security personnel, their

scope of authority, and how they will coordinate their activities with

the local law enforcement agency;

(2) The types of activities that the security personnel are

expressly prohibited from undertaking.

(ii) Employment of HA police. (A) If additional HA police are to be

employed for a service that is also provided by a local law enforcement

agency, the applicant must provide a cost analysis that demonstrates

the employment of HA police is more cost efficient than obtaining the

service from the local law enforcement agency.

(B) Additional HA police services to be funded under this program

must be over and above those that the existing HA police, if any,

provides, and the tribal, State or local government is contractually

obligated to provide under its Cooperation Agreement with the applying

HA (as required by the HA's Annual Contributions Contract). An

applicant seeking funding for this activity must first establish a

baseline by describing the current level of services provided by both

the local law enforcement agency and the HA police, if any (in terms of

the kinds of services provided, the number of officers and equipment

and the actual percent of their time assigned to the developments

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proposed for funding), and then demonstrate that the funded activity

will represent an increase over this baseline.

(C) The applicant and the cooperating local law enforcement agency

are required to enter into and execute a written agreement that

describes the following:

(1) The activities to be performed by the HA police, their scope of

authority, and how they will coordinate their activities with the local

law enforcement agency;

(2) The types of activities that the HA police are expressly

prohibited from undertaking.

(2) Reimbursement of local law enforcement agencies for additional

security and protective services, as provided in 42 U.S.C. 11903(a)(2),

with the following additional requirements:

(i) Additional security and protective services to be funded must

be over and above those that the tribal, State, or local government is

contractually obligated to provide under its Cooperation Agreement with

the applying HA (as required by the HA's Annual Contributions

Contract). An application seeking funding for this activity must first

establish a baseline by describing the current level of services (in

terms of the kinds of services provided, the number of officers and

equipment, and the actual percent of their time assigned to the

developments proposed for funding) and then demonstrate that the funded

activity will represent an increase over this baseline.

(ii) Communications and security equipment to improve the

collection, analysis, and use of information about drug-related or

violent criminal activities in a public housing community may be

eligible items if used exclusively in connection with the establishment

of a law enforcement substation on the funded premises or scattered

site developments of the applicant. Funds for activities under this

section may not be drawn until the grantee has executed a contract for

the additional law enforcement services.

(3) Physical improvements to enhance security, as provided in 42

U.S.C. 11903(a)(3). For purposes of PHDEP, the following provisions in

paragraphs (a)(3)(i) through (a)(3)(iv) of this section apply:

(i) An activity that is funded under any other HUD program shall

not also be funded by this program.

(ii) Funding is not permitted for physical improvements that

involve the demolition of any units in a development.

(iii) Funding is not permitted for any physical improvements that

would result in the displacement of persons.

(iv) Funding is not permitted for the acquisition of real property.

(4) Employment of investigating individuals, as provided in 42

U.S.C. 11903(a)(4). For purposes of PHDEP, the following provisions in

paragraphs (a)(4)(i) and (a)(4)(ii) of this section apply:

(i) If one or more investigators are to be employed for a service

that is also provided by a local law enforcement agency, the applicant

must provide a cost analysis that demonstrates the employment of

investigators is more cost efficient than obtaining the service from

the local law enforcement agency.

(ii) The applicant, the cooperating local law enforcement agency,

and the investigator(s) are required, before any investigators are

employed, to enter into and execute a written agreement that describes

the following:

(A) The nature of the activities to be performed by the

investigators, their scope of authority, and how they will coordinate

their activities with the local law enforcement agency;

(B) The types of activities that the investigators are expressly

prohibited from undertaking.

(5) Voluntary tenant patrols, as provided in 42 U.S.C. 11903(a)(5).

For purposes of PHDEP, the following provisions in paragraphs (a)(5)(i)

through (a)(5)(iv) of this section apply:

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

related equipment (including uniforms), for use by voluntary tenant

patrols acting in cooperation with officials of local law enforcement

agencies is permitted. Grantees are required to obtain liability

insurance to protect themselves and the members of the voluntary tenant

patrol against potential liability for the activities of the patrol.

The cost of this insurance will be considered an eligible program

expense.

(ii) The applicant, the cooperating local law enforcement agency,

and the members of the tenant patrol are required, before putting the

tenant patrol into effect, to enter into and execute a written

agreement that describes the following:

(A) The nature of the activities to be performed by the tenant

patrol, the patrol's scope of authority, and how the patrol will

coordinate its activities with the local law enforcement agency;

(B) The types of activities that a tenant patrol is expressly

prohibited from undertaking, to include but not limited to, the

carrying or use of firearms or other weapons, nightsticks, clubs,

handcuffs, or mace in the course of their duties under this program;

(C) The type of initial tenant patrol training and continuing

training the members receive from the local law enforcement agency

(training by the local law enforcement agency is required before

putting the tenant patrol into effect).

(iii) Tenant patrol members must be advised that they may be

subject to individual or collective liability for any actions

undertaken outside the scope of their authority and that such acts are

not covered under a HA's or RMC's liability insurance.

(iv) Grant funds may not be used for any type of financial

compensation for voluntary tenant patrol participants. However, the use

of program funds for a grant coordinator for volunteer tenant foot

patrols is permitted.

(6) Drug prevention, intervention, and treatment programs, as

provided in 42 U.S.C. 11903(a)(6).

(7) Funding resident management corporations (RMCs), resident

councils (RCs), and resident organizations (ROs). For purposes of the

Public Housing Program, funding may be provided for PHAs that receive

grants to contract with RMCs and incorporated RCs and ROs to develop

security and drug abuse prevention programs involving site residents,

as provided in 42 U.S.C. 11903(a)(7).

(8) Youth sports. Sports programs and sports activities that serve

primarily youths from public or other federally assisted low-income

housing projects and are operated in conjunction with, or in

furtherance of, an organized program or plan designed to reduce or

eliminate drugs and drug-related problems in and around such projects,

as provided in 42 U.S.C. 11903(a)(8).

(9) Eliminating drug-related and violent crime in PHA-owned

housing, under the Public Housing Program, as provided in 42 U.S.C.

11903(b).

(b) Ineligible activities. For purposes of PHDEP, funding is not

permitted:

(1) For activities not included under paragraph (a) of this

section;

(2) For costs incurred before the effective date of the grant

agreement;

(3) For the costs related to screening or evicting residents for

drug-related crime. However, investigators funded under this program

may participate in judicial and administrative proceedings;

(4) For previously funded activities determined by HUD on a case-

by-case basis to be unworthy of continuation.

10. Section 761.20 is revised to read as follows:

Sec. 761.20 Selection requirements.

(a) PHDEP selection. Every PHA, NAHASDA recipient, RMC and

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consortium that meets the requirements of Sec. 761.15 in a FFY will be

selected for funding in that FFY and, subject to meeting the

performance requirements of Sec. 761.23, for four additional FFYs.

(b) AHDEP selection. HUD will publish specific Notices of Funding

Availability (NOFAs) in the Federal Register to inform the public of

the availability of AHDEP grant amounts under this part 761. The NOFAs

will provide specific guidance with respect to the grant process,

including identifying the eligible applicants; deadlines for the

submission of grant applications; the limits (if any) on maximum grant

amounts; the information that must be submitted to permit HUD to score

each of the selection criteria; the maximum number of points to be

awarded for each selection criterion; the contents of the plan for

addressing drug-related and violent crime that must be included with

the application; the listing of any certifications and assurances that

must be submitted with the application; and the process for ranking and

selecting applicants. NOFAs will also include any additional

information, factors, and requirements that HUD has determined to be

necessary and appropriate to provide for the implementation and

administration of AHDEP under this part 761.

10. A new Sec. 761.21 is added to read as follows:

Sec. 761.21 Plan requirement.

(a) General requirement. To receive funding under this part, each

PHDEP qualified recipient or AHDEP applicant must submit to HUD a plan

for addressing the problem of drug-related and violent crime in and

around the housing covered by the plan. If the plan covers more than

one development, it does not have to address each development

separately if the same activities will apply to each development. The

plan must address each development separately only where program

activities will differ from one development to another. The plan must

include a description of the planned activity or activities, a

description of the role of plan partners and their contributions to

carrying out the plan, a budget and timetable for implementation of the

activities, and the funding source for each activity, identifying in

particular all activities to be funded under this part. In addition,

the plan must set measurable performance goals and interim milestones

for the PHDEP-supported activities and describe the system for

monitoring and evaluating these activities. Measurable goals must be

established for each category of funded activities, including drug

prevention, drug intervention, drug treatment, tenant patrols, and

physical improvements. The plan under this section serves as the

application for PHDEP funding, and an otherwise qualified recipient

that does not submit a PHDEP plan as required will not be funded. For

AHDEP funding, NOFAs published in the Federal Register may provide

additional information on plan requirements for purposes of this

section. Plans must meet the requirements of this section before grant

funds are distributed. HUD will review the submitted plans for a

determination of whether they meet the requirements of this section.

(b) Additional requirements for consortia. In addition to meeting

the requirements of paragraph (a) of this section, to receive funding

under this part, a consortium's plan must include a written agreement,

signed by an authorized representative of each consortium member, that

designates a lead applicant for purposes of grant funding and

administration, and as a central point of contact, and describes the

activities and responsibilities that each consortium member is bound to

undertake.

11. A new Sec. 761.23 is added to read as follows:

Sec. 761.23 Grantee performance requirements.

(a) Basic grantee requirements. (1) Compliance with civil rights

requirements. Grantees must be in compliance with all fair housing and

civil rights laws, statutes, regulations, and executive orders as

enumerated in 24 CFR 5.105(a). Federally recognized Indian tribes must

comply with the Age Discrimination Act of 1975 and the Indian Civil

Rights Act.

(2) Adherence to the grant agreement. The grant agreement between

HUD and the grantee incorporates the grantee's application and plan for

the implementation of grant-funded activities.

(3) Compliance with ``baseline'' funding requirement. Grantees may

not use grant funds to reimburse law enforcement agencies for

``baseline'' community safety services. Grantees must adhere to 24 CFR

761.17(a)(2)(i), reimbursement of local law enforcement agencies for

additional security and protective services. In addition, grantees must

provide to HUD a description of the baseline of services for the unit

of general local government in which the jurisdiction of the agency is

located.

(4) Partnerships. Grantees must provide HUD with evidence of

partnerships--in particular, firm commitments by organizations

providing funding, services, or other in-kind resources for PHDEP-

funded activities (e.g., memorandum of agreement, letter of firm

commitment). The partnership agreement must cover the applicable

funding period.

(5) MTCS reporting. Grantees must maintain a level of compliance

with MTCS reporting requirements that is satisfactory to HUD.

(b) Planning and reporting requirements. (1) Planning consistency.

PHDEP funded activities must be consistent with the most recent HUD-

approved PHA Plan or Indian Housing Plan, as appropriate. AHDEP funded

activities must be consistent with the most recent Consolidated Plan

under 24 CFR part 91 for the community.

(2) Demonstration of coordination with other law enforcement

efforts. Each grantee must demonstrate to HUD that it consulted with

local law enforcement authorities and other local entities in the

preparation of its plan for addressing the problem of drug-related and

violent crime under Sec. 761.21. Furthermore, a grantee must

demonstrate to HUD that its grant-funded activities are coordinated

with other anti-crime and anti-drug programs, such as Operation Safe

Home, Operation Weed and Seed, and the Safe Neighborhoods Action

Program operating in the community, if applicable.

(3) Compliance with reporting requirements. Grantees must provide

periodic reports consistent with this part at such times and in such

form as is required by HUD.

(4) Reporting on drug-related and violent crime. Grantees must

report any change or lack of change in crime statistics--especially

drug-related crime and violent crime--or other relevant indicators

drawn from the applicant's or grantee's evaluation and monitoring plan,

IHP or PHA Plan. The grantee must also indicate, if applicable, how it

is adequately addressing any recommendations emanating from other anti-

crime and anti-drug programs, such as Operation Safe Home, Operation

Weed and Seed, and the Safe Neighborhoods Action Program, operating in

the community and is taking appropriate actions, in view of available

resources, such as post-enforcement measures, to take full advantage of

these programs.

(c) Performance requirements. (1) Timely obligation and expenditure

of grant funds. The HA must obligate and expend funds in compliance

with all funding notifications, regulations, notices, and grant

agreements. In

[[Page 25744]]

addition, the HA must obligate at least 50 percent of funds under a

particular grant within 12 months of the execution of the grant

agreement, and must expend at least 25 percent of funds under a

particular grant within 12 months of the execution of the grant

agreement.

(2) Operational monitoring and evaluation system. The grantee must

demonstrate that it has a fully operational system for monitoring and

evaluating its grant-funded activities. A monitoring and evaluation

system must collect quantitative evidence of the number of persons and

units served, including youth served as a separate category, types of

services provided, and the impact of such services on the persons

served. Also, the monitoring and evaluation system must collect

quantitative and qualitative evidence of the impact of grant-funded

activities on the public housing or other housing, the community and

the surrounding neighborhood.

(3) Reduction of violent crime and drug use. The grantee must

demonstrate that it has established, and is attaining, measurable goals

for PHDEP-funded activities with respect to the overall reduction of

violent crime and drug use.

(d) Other requirements. HUD reserves the right to add additional

performance factors consistent with this rule and other related

statutes and regulations on a case-by-case basis.

(e) Sanctions. A grantee that fails to satisfy the performance

requirements of this section may be subject to the sanctions listed in

Sec. 761.30(f)(2).

12. In Sec. 761.40, paragraphs (e), (f) and (g) are revised to read

as follows:

Sec. 761.40 Other Federal requirements.

* * * * *

(e) Indian preference. For purposes of PHDEP, NAHASDA recipients

are subject to the Indian Civil Rights Act (24 U.S.C. 1301), and the

provisions of section 7(b) of the Indian Self-Determination and

Education Assistance Act (25 U.S.C. 450e(b)). These provisions require

that, to the greatest extent feasible, preference and opportunities for

training and employment be given to Indians, and that preference in the

award of subcontracts and subgrants be given to Indian Organizations

and Indian Owned Economic Enterprises.

(f) Intergovernmental Review. The requirements of Executive Order

12372 (3 CFR, 1982 Comp., p. 197) and the regulations issued under the

Order in 24 CFR part 52, to the extent provided by Federal Register

notice in accordance with 24 CFR 52.3, apply to these programs.

(g) Environmental review. Grants under this part 761 are

categorically excluded from review under the National Environmental

Policy Act of 1969 (NEPA) (42 U.S.C. 4321), in accordance with 24 CFR

50.19(b)(4), (b)(12), or (b)(13). If grant funds will be used to cover

the cost of any non-exempt activities, HUD will perform an

environmental review to the extent required by 24 CFR part 50, prior to

grant awards.

Dated: April 21, 1999.

Deborah Vincent,

General Deputy Assistant Secretary for Public and Indian Housing.

[FR Doc. 99-11918 Filed 5-11-99; 8:45 am]

BILLING CODE 4210-33-P