[Federal Register Volume 61, Number 55 (Wednesday, March 20, 1996)]
[Rules and Regulations]
[Pages 11474-11482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6418]
[[Page 11473]]
_______________________________________________________________________
Part II
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 570
Office of the Assistant Secretary for Community Planning and
Development; Community Development Block Grant Program; Streamlining;
Final Rule
Federal Register / Vol. 61, No. 55 / Wednesday, March 20, 1996 /
Rules and Regulations
[[Page 11474]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 570
[Docket No. FR-3978-F-01]
RIN 2506-AB77
Office of the Assistant Secretary for Community Planning and
Development; Community Development Block Grant Program; Streamlining
Final Rule
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends HUD's regulations for the Community
Development Block Grant (CDBG) Program. In an effort to comply with the
President's regulatory reform initiatives, this rule will streamline
the CDBG regulations by eliminating provisions that are redundant of
statutes or are otherwise unnecessary. This final rule will make the
CDBG regulations clearer and more concise.
EFFECTIVE DATE: April 19, 1996.
FOR FURTHER INFORMATION CONTACT: Deirdre Maguire-Zinni, Director,
Entitlement Communities Division, Room 7282, Department of Housing and
Urban Development, 451 Seventh Street, SW., Washington, DC 20410,
telephone number (202) 708-1577. (This telephone number is not toll-
free). Hearing- or speech-impaired persons may access this number via
TDD by calling the Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: 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. While the Community Development Block Grant
regulations serve as important program guidance, HUD has determined
that the regulations can be improved and streamlined by eliminating
unnecessary provisions.
Several provisions in the CDBG regulations repeat statutory
language from the Housing and Community Development Act of 1974, as
amended (42 U.S.C. 5301 et seq.) (the Act), and other statutes. It is
unnecessary to maintain statutory requirements in the Code of Federal
Regulations (CFR), since 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 will remove repetitious statutory
language and replace it with a citation to the specific statutory
section for easy reference.
Other provisions in the CDBG regulations apply to more than one
program, and therefore HUD repeated these provisions in different
subparts within part 570. This repetition is unnecessary, and updating
these scattered provisions is cumbersome and often creates confusion.
Therefore, this final rule will consolidate these duplicative
provisions.
Some provisions in the CDBG regulations are obsolete. For instance,
Congress has not appropriated funds for the Urban Development Action
Grant (UDAG) program since Fiscal Year 1988. While several approved
grants have not yet reached the final close-out stage, it is
unnecessary for HUD to maintain all of the regulations for these
grants. Therefore, this rule removes many of the UDAG provisions from
subpart G of part 570, such as those related to the submission and
approval of applications for new grants. This rule also removes
obsolete regulations regarding Urban Renewal projects in subpart N.
Loans and grants are no longer authorized under the Urban Renewal
program. All of the existing projects are the subject of close-out
agreements that contain all the regulatory provisions. Therefore, HUD
can remove the obsolete regulations in subpart N.
This final rule makes the following specific amendments:
1. Amends Sec. 570.1 by updating paragraphs (a)(4) and (b) to refer
to Special Purpose Grants, rather than the Secretary's Fund program;
2. Moves the essential language of Sec. 570.2 into a new paragraph
(c) in Sec. 570.1, and removes the unnecessary remainder of Sec. 570.2;
3. Amends Sec. 570.3 by removing the statutory language from
several definitions, by updating the definition of ``CDBG funds'' to
include funds received under Sec. 570.405 or under section 108(q) of
the Housing and Community Development Act of 1974, and by updating the
definition of ``Discretionary grant'' to refer to Special Purpose
Grants, rather than to the Secretary's Fund;
4. Adds a streamlined Sec. 570.5, which contains a reference to
HUD's waiver authority in the CDBG program. This section was
inadvertently removed in the General HUD Program Requirements final
rule, published in the Federal Register on February 9, 1996 (61 FR
5198);
5. Amends Sec. 570.200(a)(3) by removing the statutory language and
clarifying the requirements for the HUD-administered Small Cities
Program. This rule also corrects Sec. 570.200(a)(3), which was recently
amended in a final rule published on November 9, 1995 (60 FR 56892), to
clarify that Insular areas must use 70 percent of their CDBG funds for
activities that benefit low- to moderate-income persons each year;
6. Removes obsolete provisions regarding the New Communities
program, maintaining a savings clause in Sec. 570.403;
7. Corrects Sec. 570.420(e)(2) to refer to Sec. 570.208(d)(5) or
(6), in addition to Sec. 570.208(a);
8. Removes obsolete provisions regarding the UDAG program from
subpart G;
9. Consolidates, to the extent possible, the provisions in
Secs. 570.488 and 570.606, which are essentially the same. In effect,
this rule removes most of the information in Sec. 570.488, maintaining
a cross-reference to Sec. 570.606, and makes minor conforming changes
to Sec. 570.606 so that it applies both to grantees and States/state
recipients. This rule makes no substantive changes to the requirements
in Sec. 570.606;
10. Removes the statutory and other repetitive language in
Secs. 570.600, 570.601, 570.603, 570.604, 570.605, 570.608, 570.701,
and 570.706, maintaining statutory citations for easy reference;
11. Makes conforming changes to Secs. 570.703(d) and 570.704 to
reflect the consolidation of Secs. 570.488 and 570.606;
12. Removes obsolete provisions regarding Urban Renewal projects
from subpart N, maintaining a savings clause in Sec. 570.800; and
13. Makes conforming changes to Sec. 570.904 to reflect this rule's
amendment to Sec. 570.601.
This final rule will eliminate approximately 34 pages of unnecessary
regulations from 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).
[[Page 11475]]
HUD finds that good cause exists to publish 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.
Other Matters
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this final rule, and in so
doing certifies that this rule will not have a significant economic
impact on a substantial number of small entities. This rule streamlines
the Community Development Block Grant regulations by removing
unnecessary provisions. The rule will have no adverse or
disproportionate economic impact on small businesses.
Environmental Impact
This rule does not have an environmental impact. This rule simply
amends existing regulations by consolidating and streamlining
provisions; it does not alter the environmental effect of the
regulations being amended. At the time of development of regulations in
part 570, 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). 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, Office of
General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street, SW, Washington, DC.
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.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule will not have
the potential for significant impact on family formation, maintenance,
or general well-being, and thus is not subject to review under the
Order. No significant change in existing HUD policies or programs will
result from promulgation of this rule.
List of Subjects in 24 CFR Part 570
Administrative practice and procedure, American Samoa, Community
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Lead poisoning, Loan
programs--housing and community development, Low and moderate income
housing, New communities, Northern Mariana Islands, Pacific Islands
Trust Territory, Pockets of poverty, Puerto Rico, Reporting and
recordkeeping requirements, Small cities, Student aid, Virgin Islands.
Accordingly, 24 CFR part 570 is amended as follows:
PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS
1. The authority citation for part 570 continues to read as
follows:
Authority: 42 U.S.C. 3535(d) and 5300-5320.
Subpart A--General Provisions
2. Section 570.1 is amended by revising the section heading,
paragraph (a)(4), and the second sentence of paragraph (b); and by
adding a new paragraph (c), to read as follows:
Sec. 570.1 Purpose and primary objective.
(a) * * *
(4) Special Purpose Grants (subpart E);
* * * * *
(b) * * * In the application of the subparts to Special Purpose
Grants or the Urban Development Action Grant program, the reference to
funds in the form of grants in the term ``CDBG funds'', as defined in
Sec. 570.3, shall mean the grant funds under those programs. * * *
(c) The primary objective of the programs authorized under title I
of the Housing and Community Development Act of 1974, as amended, is
described in section 101(c) of the Act (42 U.S.C. 5301(c)).
Sec. 570.2 [Removed]
3. Section 570.2 is removed.
4. Section 570.3 is amended by adding introductory text; and by
revising the definitions of ``Age of housing'', ``Buildings for the
general conduct of government'', ``CDBG funds'', ``Discretionary
grant'', ``Extent of growth lag'', ``Extent of housing overcrowding'',
``Indian tribe'', ``Metropolitan area'', ``Metropolitan city'',
``Microenterprise'', ``Nonentitlement area'', ``State'', ``Unit of
general local government'', and ``Urban county''; to read as follows:
Sec. 570.3 Definitions.
The terms HUD and Secretary are defined in 24 CFR part 5. All of
the following definitions in this section that rely on data from the
United States Bureau of the Census shall rely upon the data available
from the latest decennial census.
* * * * *
Age of housing means the number of year-round housing units, as
further defined in section 102(a)(11) of the Act.
* * * * *
Buildings for the general conduct of government shall have the
meaning provided in section 102(a)(21) of the Act.
CDBG funds means Community Development Block Grant funds, including
funds received in the form of grants under subpart D, F, or
Sec. 570.405 of this part, funds awarded under section 108(q) of the
Housing and Community Development Act of 1974, loans guaranteed under
subpart M of this part, urban renewal surplus grant funds, and program
income as defined in Sec. 570.500(a).
* * * * *
Discretionary grant means a grant made from the various Special
Purpose Grants in accordance with subpart E of this part.
* * * * *
Extent of growth lag shall have the meaning provided in section
102(a)(12) of the Act.
Extent of housing overcrowding shall have the meaning provided in
section 102(a)(10) of the Act.
* * * * *
Indian tribe shall have the meaning provided in section 102(a)(17)
of the Act.
* * * * *
Metropolitan area shall have the meaning provided in section
102(a)(3) of the Act.
Metropolitan city shall have the meaning provided in section
102(a)(4) of the Act.
Microenterprise shall have the meaning provided in section
102(a)(22) of the Act.
* * * * *
Nonentitlement area shall have the meaning provided in section
102(a)(7) of the Act.
* * * * *
[[Page 11476]]
State shall have the meaning provided in section 102(a)(2) of the
Act.
Unit of general local government shall have the meaning provided in
section 102(a)(1) of the Act.
Urban county shall have the meaning provided in section 102(a)(6)
of the Act. For the purposes of this definition, HUD will determine
whether the county's combined population contains the required
percentage of low- and moderate-income persons by identifying the
number of persons that resided in applicable areas and units of general
local government based on data from the most recent decennial census,
and using income limits that would have applied for the year in which
that census was taken.
* * * * *
5. Section 570.5 is revised to read as follows:
Sec. 570.5 Wavers.
HUD's authority for the waiver of regulations and for the
suspension of requirements to address damage in a Presidentially
declared disaster area is described in 24 CFR part 5 and in section 122
of the Act, respectively.
Subpart C--Eligible Activities
6. Section 570.200 is amended by revising the introductory text of
paragraph (a)(3) to read as follows:
Sec. 570.200 General policies.
(a) * * *
(3) Compliance with the primary objective. The primary objective of
the Act is described in section 101(c) of the Act. Consistent with this
objective, Entitlement recipients and recipients of the HUD-
administered Small Cities program in Hawaii must ensure that over a
period of time specified in their certification not to exceed three
years, not less than 70 percent of the aggregate of CDBG fund
expenditures shall be for activities meeting the criteria under
Sec. 570.208(a) or Sec. 570.208(d)(5) or (6) for benefitting low- and
moderate-income persons; Insular area recipients must meet this
requirement for each separate grant. The requirements for the HUD-
administered Small Cities program in New York are in
Sec. 570.420(e)(2). Additional requirements for the HUD-administered
Small Cities program in Hawaii are in Sec. 570.430(e). In determining
the percentage of funds expended for such activities:
* * * * *
7. Section 570.403 is revised to read as follows:
Sec. 570.403 New Communities.
The regulations for New Communities grants in this section, that
were effective immediately before April 19, 1996, will continue to
govern the rights and obligations of recipients and HUD with respect to
grants under the New Communities program.
Subpart F--Small Cities
8. Section 570.420 is amended by revising the first sentence of
paragraph (e)(2) to read as follows:
Sec. 570.420 General.
* * * * *
(e) * * *
(2) In addition to the objectives described in paragraph (e)(1) of
this section, with respect to grants made through the Small Cities
Program, not less than 70 percent of the total of grant funds from each
grant and Section 108 loan guarantee funds received under subpart M of
this part within a fiscal year must be expended for activities which
benefit low- and moderate-income persons under the criteria of
Sec. 570.208(a) or Sec. 570.208(d)(5) or (6). * * *
* * * * *
Subpart G--Urban Development Action Grants
9. Section 570.450 is revised to read as follows:
Sec. 570.450 Purpose.
The purpose of urban development action grants is to assist cities
and urban counties that are experiencing severe economic distress to
help stimulate economic development activity needed to aid in economic
recovery. This subpart G contains those regulations that are essential
for the continued operation of this grant program.
Secs. 570.451, 570.452, 570.453, 570.454, 570.455, 570.458, 570.459,
and 570.460 [Removed]
10. Sections 570.451, 570.452, 570.453, 570.454, 570.455, 570.458,
570.459, and 570.460 are removed.
11. Section 570.461 is revised to read as follows:
Sec. 570.461 Post-preliminary approval requirements; Lead-based paint.
The recipient may receive preliminary approval prior to the
accomplishment of notification, inspection, testing, and abatement as
described in Sec. 570.608, but no funds will be released until such
actions are complete and evidence of compliance is submitted to HUD.
Sec. 570.462 [Removed]
12. Section 570.462 is removed.
13. Section 570.463 is amended by revising the undesignated
sentence of paragraph (a) to read as follows:
Sec. 570.463 Project amendments and revisions.
(a) * * * The applicant must hold at least one public hearing prior
to making a significant revision to the application.
* * * * *
14. Section 570.466 is revised to read as follows:
Sec. 570.466 Additional application submission requirements for
Pockets of Poverty--employment opportunities.
Applicants for Action Grants under the Pockets of Poverty provision
must describe the number and, to the extent possible, the types of new
jobs (construction and permanent) that will be provided to the low- and
moderate-income residents of the Pocket of Poverty as a direct result
of the proposed project. If the application calls for job training
programs (such as those related to the CETA program) or job recruiting
services for the pocket's residents, then such proposed activities must
be clearly and fully explained. HUD requires applicants to ensure that
at least 75 percent of whatever permanent jobs initially result from
the project are provided to low- and moderate-income persons and that
at least 51 percent of whatever permanent jobs initially result from
the project are provided to low- and moderate-income residents from the
pocket. HUD encourages applicants to ensure that at least 20 percent of
all permanent jobs are filled by persons from the pocket qualified to
participate in the CETA program on a continuous basis. HUD requires all
applicants to continuously use best efforts to ensure that at least 75
percent of all permanent jobs resulting from any Action Grant-assisted
project are provided to low- and moderate-income persons and that at
least 51 percent of all permanent jobs resulting from any Action Grant-
assisted project are provided to low- and moderate-income residents
from the pocket. The application should clearly describe how the
applicant intends to meet initial and continuous job requirements.
Private participating parties must meet these employment requirements
in the aggregate. To enable the private participants to do so, lease
agreements executed by a private participating party shall include:
(a) Provisions requiring lessees to follow hiring practices that
the private participating party has determined will enable it to meet
these requirements in the aggregate; and
(b) Provisions that will enable the private participating party to
declare a default under the lease agreement if the lessees do not
follow such practices.
[[Page 11477]]
Sec. 570.467 [Removed]
15. Section 570.467 is removed. Subpart I--State Community
Development Block Grant Program
16. Section 570.480 is amended by revising the last sentence of
paragraph (a) to read as follows:
Sec. 570.480 General.
(a) * * * Other subparts of part 570 are not applicable to the
State CDBG Program, except as expressly provided otherwise.
* * * * *
17. Section 570.488 is revised to read as follows:
Sec. 570.488 Displacement, relocation, acquisition, and replacement of
housing.
The requirements for States and state recipients with regard to the
displacement, relocation, acquisition, and replacement of housing are
in Sec. 570.606 and 24 CFR part 42.
Subpart K--Other Program Requirements
18. Section 570.600 is amended by revising paragraph (a) to read as
follows:
Sec. 570.600 General.
(a) This subpart K enumerates laws that the Secretary will treat as
applicable to grants made under section 106 of the Act, other than
grants to States made pursuant to section 106(d) of the Act, for
purposes of the Secretary's determinations under section 104(e)(1) of
the Act, including statutes expressly made applicable by the Act and
certain other statutes and Executive Orders for which the Secretary has
enforcement responsibility. This subpart K applies to grants made under
the Insular areas program in Sec. 570.405, with the exception of
Sec. 570.612. The absence of mention herein of any other statute for
which the Secretary does not have direct enforcement responsibility is
not intended to be taken as an indication that, in the Secretary's
opinion, such statute or Executive Order is not applicable to
activities assisted under the Act. For laws that the Secretary will
treat as applicable to grants made to States under section 106(d) of
the Act for purposes of the determination required to be made by the
Secretary pursuant to section 104(e)(2) of the Act, see Sec. 570.487.
* * * * *
19. Section 570.601 is revised to read as follows:
Sec. 570.601 Public Law 88-352 and Public Law 90-284; affirmatively
furthering fair housing; Executive Order 11063.
(a) The following requirements apply according to sections 104(b)
and 107 of the Act:
(1) Public Law 88-352, which is title VI of the Civil Rights Act of
1964 (42 U.S.C. 2000d et seq.), and implementing regulations in 24 CFR
part 1.
(2) Public Law 90-284, which is the Fair Housing Act (42 U.S.C.
3601-3620). In accordance with the Fair Housing Act, the Secretary
requires that grantees administer all programs and activities related
to housing and community development in a manner to affirmatively
further the policies of the Fair Housing Act. Furthermore, in
accordance with section 104(b)(2) of the Act, for each community
receiving a grant under subpart D of this part, the certification that
the grantee will affirmatively further fair housing shall specifically
require the grantee to assume the responsibility of fair housing
planning by conducting an analysis to identify impediments to fair
housing choice within its jurisdiction, taking appropriate actions to
overcome the effects of any impediments identified through that
analysis, and maintaining records reflecting the analysis and actions
in this regard.
(b) Executive Order 11063, as amended by Executive Order 12259 (3
CFR, 1959-1963 Comp., p. 652; 3 CFR, 1980 Comp., p. 307) (Equal
Opportunity in Housing), and implementing regulations in 24 CFR part
107, also apply.
20. Section 570.603 is revised to read as follows:
Sec. 570.603 Labor standards.
(a) Section 110(a) of the Act contains labor standards that apply
to nonvolunteer labor financed in whole or in part with assistance
received under the Act. In accordance with section 110(a) of the Act,
the Contract Work Hours and Safety Standards Act (40 U.S.C. 327 et
seq.) also applies. However, these requirements apply to the
rehabilitation of residential property only if such property contains
not less than 8 units.
(b) The regulations in 24 CFR part 70 apply to the use of
volunteers.
21. Section 570.604 is revised to read as follows:
Sec. 570.604 Environmental standards.
For purposes of section 104(g) of the Act, the regulations in 24
CFR part 58 specify the other provisions of law which further the
purposes of the National Environmental Policy Act of 1969, and the
procedures by which grantees must fulfill their environmental
responsibilities. In certain cases, grantees assume these environmental
review, decisionmaking, and action responsibilities by execution of
grant agreements with the Secretary.
22. Section 570.605 is revised to read as follows:
Sec. 570.605 National Flood Insurance Program.
Notwithstanding the date of HUD approval of the recipient's
application (or, in the case of grants made under subpart D of this
part or HUD-administered small cities recipients in Hawaii, the date of
submission of the grantee's consolidated plan, in accordance with 24
CFR part 91), section 202(a) of the Flood Disaster Protection Act of
1973 (42 U.S.C. 4106) and the regulations in 44 CFR parts 59 through 79
apply to funds provided under this part 570.
23. Section 570.606 is revised to read as follows:
Sec. 570.606 Displacement, relocation, acquisition, and replacement of
housing.
(a) General policy for minimizing displacement. Consistent with the
other goals and objectives of this part, grantees (or States or state
recipients, as applicable) shall assure that they have taken all
reasonable steps to minimize the displacement of persons (families,
individuals, businesses, nonprofit organizations, and farms) as a
result of activities assisted under this part.
(b) Relocation assistance for displaced persons at URA levels. (1)
A displaced person shall be provided with relocation assistance at the
levels described in, and in accordance with the requirements of 49 CFR
part 24, which contains the government-wide regulations implementing
the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (URA) (42 U.S.C. 4601-4655).
(2) Displaced person. (i) For purposes of paragraph (b) of this
section, the term ``displaced person'' means any person (family,
individual, business, nonprofit organization, or farm) that moves from
real property, or moves his or her personal property from real
property, permanently and involuntarily, as a direct result of
rehabilitation, demolition, or acquisition for an activity assisted
under this part. A permanent, involuntary move for an assisted activity
includes a permanent move from real property that is made:
(A) After notice by the grantee (or the state recipient, if
applicable) to move permanently from the property, if the move occurs
after the initial official submission to HUD (or the State, as
[[Page 11478]]
applicable) for grant, loan, or loan guarantee funds under this part
that are later provided or granted.
(B) After notice by the property owner to move permanently from the
property, if the move occurs after the date of the submission of a
request for financial assistance by the property owner (or person in
control of the site) that is later approved for the requested activity.
(C) Before the date described in paragraph (b)(2)(i)(A) or (B) of
this section, if either HUD or the grantee (or State, as applicable)
determines that the displacement directly resulted from acquisition,
rehabilitation, or demolition for the requested activity.
(D) After the ``initiation of negotiations'' if the person is the
tenant-occupant of a dwelling unit and any one of the following three
situations occurs:
(1) The tenant has not been provided with a reasonable opportunity
to lease and occupy a suitable decent, safe, and sanitary dwelling in
the same building/complex upon the completion of the project, including
a monthly rent that does not exceed the greater of the tenant's monthly
rent and estimated average utility costs before the initiation of
negotiations or 30 percent of the household's average monthly gross
income; or
(2) The tenant is required to relocate temporarily for the activity
but the tenant is not offered payment for all reasonable out-of-pocket
expenses incurred in connection with the temporary relocation,
including the cost of moving to and from the temporary location and any
increased housing costs, or other conditions of the temporary
relocation are not reasonable; and the tenant does not return to the
building/complex; or
(3) The tenant is required to move to another unit in the building/
complex, but is not offered reimbursement for all reasonable out-of-
pocket expenses incurred in connection with the move.
(ii) Notwithstanding the provisions of paragraph (b)(2)(i) of this
section, the term ``displaced person-'' does not include:
(A) A person who is evicted for cause based upon serious or
repeated violations of material terms of the lease or occupancy
agreement. To exclude a person on this basis, the grantee (or State or
state recipient, as applicable) must determine that the eviction was
not undertaken for the purpose of evading the obligation to provide
relocation assistance under this section;
(B) A person who moves into the property after the date of the
notice described in paragraph (b)(2)(i)(A) or (B) of this section, but
who received a written notice of the expected displacement before
occupancy.
(C) A person who is not displaced as described in 49 CFR
24.2(g)(2).
(D) A person who the grantee (or State, as applicable) determines
is not displaced as a direct result of the acquisition, rehabilitation,
or demolition for an assisted activity. To exclude a person on this
basis, HUD must concur in that determination.
(iii) A grantee (or State or state recipient, as applicable) may,
at any time, request HUD to determine whether a person is a displaced
person under this section.
(3) Initiation of negotiations. For purposes of determining the
type of replacement housing assistance to be provided under paragraph
(b) of this section, if the displacement is the direct result of
privately undertaken rehabilitation, demolition, or acquisition of real
property, the term ``initiation of negotiations'' means the execution
of the grant or loan agreement between the grantee (or State or state
recipient, as applicable) and the person owning or controlling the real
property.
(c) Residential antidisplacement and relocation assistance plan. In
accordance with section 104(d) of the Act, each grantee must adopt,
make public, and certify (or, as applicable, each State must ensure
that each state recipient adopts, makes public, and certifies to the
State) that it is following a residential antidisplacement and
relocation assistance plan providing one-for-one replacement units
(paragraph (c)(1) of this section), and relocation assistance
(paragraph (c)(2) of this section). As applicable, section 106(d)(5)(A)
of the Act requires the state recipient also to certify to the State
that it will minimize displacement of persons as a result of assisted
activities. Except with regard to the State CDBG Program, the plan
shall also indicate the steps that will be taken consistent with other
goals and objectives of this part to minimize the displacement of
families and individuals from their homes and neighborhoods as a result
of any activities assisted under this part.
(1) One-for-one replacement of low/moderate-income dwelling units.
(i) All occupied and vacant occupiable low/moderate-income dwelling
units that are demolished or converted to a use other than as low/
moderate-income dwelling units in connection with an activity assisted
under this part must be replaced with low/moderate-income dwelling
units.
(ii) Replacement low/moderate-income dwelling units may be provided
by any government agency or private developer, and must meet the
following requirements:
(A) The units must be located within the jurisdiction of the
grantee (or the state recipient, as applicable). To the extent feasible
and consistent with other statutory priorities, the units shall be
located within the same neighborhood as the units replaced.
(B) The units must be sufficient in number and size to house no
fewer than the number of occupants who could have been housed in the
units that are demolished or converted. The number of occupants who
could have been housed in units shall be determined in accordance with
applicable local housing occupancy codes. The grantee (or state
recipient, as applicable) may not replace those units with smaller
units (e.g., a 2-bedroom unit with two 1-bedroom units), unless the
grantee (or state recipient, as applicable) has provided the
information required under paragraph (c)(1)(iii)(G) of this section.
(C) The units must be provided in standard condition. Replacement
low/moderate-income dwelling units may include units that have been
raised to standard from substandard condition if:
(1) No person was displaced from the unit as a direct result of an
assisted activity (see definition of ``displaced person'' in paragraph
(c)(3)(ii) of this section; and
(2) The unit was vacant for at least three months before execution
of the agreement between the grantee and the property owner.
(D) The units must initially be made available for occupancy at any
time during the period beginning one year before the grantee's (or
state recipient's, as applicable) submission of the information
required under paragraph (c)(1)(iii) of this section and ending three
years after the commencement of the demolition or rehabilitation
related to the conversion.
(E) The units must be designed to remain low/moderate-income
dwelling units for at least 10 years from the date of initial
occupancy. Replacement low/moderate-income dwelling units may include,
but are not limited to, public housing, or existing housing receiving
Section 8 project-based assistance under the United States Housing Act
of 1937.
(iii) Before the grantee (or state recipient, as applicable) enters
into a contract committing it to provide funds under this part for any
activity that will directly result in the demolition of low/moderate-
income dwelling units or the conversion of low/moderate-income dwelling
units to another use, the grantee (or state recipient, as applicable)
must make public, and submit the
[[Page 11479]]
following information in writing to the HUD Field Office (or State, as
applicable) for monitoring purposes:
(A) A description of the proposed assisted activity;
(B) The location on a map and number of dwelling units by size
(number of bedrooms) that will be demolished or converted to a use
other than for low/moderate-income dwelling units as a direct result of
the assisted activity;
(C) A time schedule for the commencement and completion of the
demolition or conversion;
(D) The location on a map and the number of dwelling units by size
(number of bedrooms) that will be provided as replacement dwelling
units. If such data are not available at the time of the general
submission, the submission shall identify the general location on an
area map and the approximate number of dwelling units by size, and
information identifying the specific location and number of dwelling
units by size shall be submitted and disclosed to the public as soon as
it is available;
(E) The source of funding and a time schedule for the provision of
replacement dwelling units;
(F) The basis for concluding that each replacement dwelling unit
will remain a low/moderate-income dwelling unit for at least 10 years
from the date of initial occupancy; and
(G) Information demonstrating that any proposed replacement of
dwelling units with smaller dwelling units (e.g., a 2-bedroom unit with
two 1-bedroom units) is consistent with the needs analysis contained in
the HUD-approved consolidated plan; or, for purposes of the State CDBG
program, consistent with the housing needs of low- and moderate-income
households in the jurisdiction. A grantee that is not required to
submit a consolidated plan to HUD must submit information demonstrating
that the proposed replacement is consistent with the housing needs of
low- and moderate-income households in the jurisdiction.
(iv)(A) The one-for-one replacement requirement of paragraph (c)(1)
of this section does not apply to the extent the Field Office
determines, based upon objective data, that there is an adequate supply
of vacant low/moderate-income dwelling units in standard condition
available on a nondiscriminatory basis within the jurisdiction of the
grantee (or state recipient, as applicable). In determining the
adequacy of supply, HUD will consider whether the demolition or
conversion of the low/moderate-income dwelling units will have a
material impact on the ability of low- and moderate-income households
to find suitable housing. HUD will consider relevant evidence of
housing supply and demand including, but not limited to, the following
factors: the housing vacancy rate in the jurisdiction; the number of
vacant low/moderate-income dwelling units in the jurisdiction
(excluding units that will be demolished or converted); the number of
eligible families on waiting lists for housing assisted under the
United States Housing Act of 1937 in the jurisdiction; the needs
analysis contained in any applicable HUD-approved consolidated plan;
and relevant past or predicted demographic changes.
(B) HUD may consider the supply of vacant low/moderate-income
dwelling units in a standard condition available on a nondiscriminatory
basis in an area that is larger than the jurisdiction of the grantee
(or state recipient, as applicable). Such additional dwelling units
shall be considered if the Field Office determines that the units would
be suitable to serve the needs of the low- and moderate-income
households that could be served by the low/moderate-income dwelling
units that are to be demolished or converted to another use. HUD will
base this determination on geographic and demographic factors, such as
location and access to places of employment and to other facilities.
(C) The grantee (or state recipient, as applicable) must submit the
request for determination under paragraph (c)(1)(iv) of this section
directly to the Field Office (or State, as applicable). Simultaneously
with the submission of the request, the grantee (or state recipient, as
applicable) must make the submission public and inform interested
persons that they have 30 days from the date of submission to provide
to HUD (or to the State, as applicable) additional information
supporting or opposing the request. For purposes of the State CDBG
program, if the State, after considering the submission and the
additional data, agrees with the request, the State must provide its
recommendation with supporting information to HUD.
(2) Relocation assistance under section 104(d) of the Act. Under
section 104(d), each ``displaced person'' (defined in paragraph
(c)(3)(ii) of this section) is entitled to choose to receive either
assistance at URA levels (see paragraph (b) of this section) or the
following relocation assistance:
(i) Advisory services at the levels described in 49 CFR part 24,
subpart C (General Relocation Requirements). Tenants shall be advised
of their rights under the Fair Housing Act (42 U.S.C. 3601-19) and of
replacement housing opportunities in such a manner that, to the extent
feasible, will provide a choice between relocating within their
neighborhoods and other neighborhoods consistent with the
responsibility of the grantee (or the state recipient, as applicable)
to affirmatively further fair housing;
(ii) Payment for moving expenses at the levels described in 49 CFR
part 24, subpart D.
(iii) The reasonable and necessary cost of any security deposit
required to rent the replacement dwelling unit, and for credit checks
required to rent or purchase the replacement dwelling unit.
(iv) Interim living costs. The grantee (or state recipient, as
applicable) shall reimburse a person for actual reasonable out-of-
pocket costs incurred in connection with temporary relocation,
including moving expenses and increased housing costs, if:
(A) The person must relocate temporarily because continued
occupancy of the dwelling unit constitutes a substantial danger to the
health or safety of the person or the public; or
(B) The person is displaced from a ``low/moderate-income dwelling
unit,'' none of the comparable replacement dwelling units to which the
person has been referred qualifies as a low/moderate-income dwelling
unit (defined in paragraph (c)(3)(iii) of this section), and a suitable
low/moderate-income dwelling unit is scheduled to become available in
accordance with paragraph (c)(1) of this section. (Because a
``comparable replacement dwelling unit'' may be made affordable to a
person through a rental assistance payment and its market rent may
exceed the Fair Market Rent (FMR) under the Section 8 Existing Housing
Program, it may not meet the definition of a ``low/moderate-income
dwelling unit''.)
(v) Replacement housing assistance. Persons are eligible to receive
one of the following two forms of replacement housing assistance:
(A) Each person must be offered rental assistance equal to 60 times
the amount necessary to reduce the monthly rent and estimated average
monthly cost of utilities for a replacement dwelling (comparable
replacement dwelling or decent, safe, and sanitary replacement dwelling
to which the person relocates, whichever costs less) to the ``Total
Tenant Payment,'' as determined under Sec. 813.107 of this title. All
or a portion of this assistance may be offered through a certificate or
housing voucher for rental assistance (if available) provided through
the Local Public Agency under Section 8 of the United States Housing
Act of 1937. If a Section
[[Page 11480]]
8 certificate or housing voucher is provided to a person, the grantee
(or state recipient, as applicable) must provide referrals to
comparable replacement dwelling units for which the owner is willing to
participate in the Section 8 Existing Housing Program. To the extent
that cash assistance is provided, it will be provided in installments.
(B) If the person purchases an interest in a housing cooperative or
mutual housing association and occupies a decent, safe, and sanitary
dwelling in the cooperative or association, the person may elect to
receive a lump sum payment. This lump sum payment shall be equal to the
capitalized value of 60 monthly installments of the amount that is
obtained by subtracting the ``Total Tenant Payment,'' as determined
under Sec. 813.107 of this title, from the monthly rent and estimated
average monthly cost of utilities at a comparable replacement dwelling
unit. To compute the capitalized value, the installments shall be
discounted at the rate of interest paid on passbook savings deposits by
a Federally insured bank or savings and loan institution conducting
business within the jurisdiction of the grantee (or state recipient, as
applicable). To the extent necessary to minimize hardship to the
household, the grantee (or state recipient, as applicable) shall,
subject to appropriate safeguards, issue a payment in advance of the
purchase of the interest in the housing cooperative or mutual housing
association.
(C) Displaced low/moderate income tenants shall be advised of their
right to elect relocation assistance pursuant to the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 and the
regulations appearing at 49 CFR part 24 as an alternative to the
relocation assistance available under paragraph (c)(2) of this section.
(3) Definitions. For purposes of providing section 104(d)
assistance under paragraph (c) of this section:
(i) Comparable replacement dwelling unit. The term ``comparable
replacement dwelling unit'' means a dwelling unit that:
(A) Meets the criteria of 49 CFR 24.2(d) (1) through (6); and
(B) Is available at a monthly cost for rent plus estimated average
monthly utility costs that does not exceed the ``Total Tenant Payment''
determined under Sec. 813.107 of this title, after taking into account
any rental assistance the household would receive.
(ii) Displaced person. (A) The term ``displaced person'' means any
low/moderate-income family or individual that moves from real property,
or moves his or her personal property from real property, permanently
and involuntarily, as a direct result of the conversion of a low/
moderate-income dwelling unit (defined in paragraph (c)(3)(iv) of this
section) or demolition in connection with an activity assisted under
this part. A permanent involuntary move for an assisted activity
includes a permanent move from real property that is made:
(1) After notice by the grantee (or state recipient, as applicable)
to move permanently from the property, if the move occurs after the
initial official submission to HUD for grant, loan, or loan guarantee
funds under this part that are later granted; or, for purposes of the
State CDBG Program, if the move occurs after the initial submission of
an application to the State by the recipient requesting assistance
under this subpart that is later granted for the requested activity.
(2) After notice by the property owner, to move permanently from
the property, if the move occurs after the date of submission of a
request for financial assistance by the property owner (or person in
control of the site) that is later approved for the requested activity.
(3) Before the date described in paragraph (c)(3)(ii)(A) (1) or (2)
of this section, if either HUD or the grantee (or State or state
recipient, as applicable) determines that the displacement directly
resulted from the conversion of a low/moderate-income dwelling unit or
demolition in connection with the requested activity.
(4) After the execution of the agreement by the grantee (or state
recipient, as applicable) covering the rehabilitation or demolition, if
the person is the tenant-occupant of a dwelling unit and any one of the
following three situations occurs:
(i) The tenant has not been provided with a reasonable opportunity
to lease and occupy a suitable decent, safe, and sanitary dwelling in
the same building/complex upon completion of the project, including a
monthly rent that does not exceed the greater of the tenant's monthly
rent and estimated average utility costs before the execution of such
agreement (or, for purposes of the State CDBG Program, before the
``initiation of negotiations''), or the ``Total Tenant Payment'' for
the person as determined under Sec. 813.107 of this title; or
(ii) The tenant, required to relocate temporarily for the activity,
does not return to the building/complex; and either the tenant is not
offered payment for all reasonable out-of-pocket expenses incurred in
connection with the temporary location (including the cost of moving to
and from the temporary location and any increased housing costs), or
other conditions of the temporary relocation are not reasonable; or
(iii) The tenant is required to move to another unit in the
building/complex, but is not offered reimbursement for all reasonable
out-of-pocket expenses incurred in connection with the move.
(B) Notwithstanding the provisions of paragraph (c)(3)(ii)(A) of
this section, the term ``displaced person'' does not include:
(1) A person who is evicted for cause based upon serious or
repeated violations of material terms of the lease or occupancy
agreement. To exclude a person on this basis, the grantee (or state
recipient, as applicable) must determine that the eviction was not
undertaken for the purpose of evading the obligation to provide
relocation assistance under this section;
(2) A person who moves into the property after the date of the
notice described in paragraph (c)(3)(ii)(A) (1) or (2) of this section,
but received a written notice of the expected displacement before
commencing occupancy.
(3) A person who is not displaced as defined under 49 CFR
24.2(g)(2).
(4) A person who the grantee (or State, as applicable) determines
is not displaced as a direct result of the conversion of a low/
moderate-income dwelling or demolition in connection with an assisted
activity. For a grantee or State to exclude a person on this basis, HUD
must concur in that determination.
(C) A grantee may, at any time, request HUD to determine whether a
person is a displaced person under paragraph (c) of this section.
(iii) Low/moderate-income dwelling unit. The term ``low/moderate-
income dwelling unit'' means a dwelling unit with a market rent
(including utility costs) that does not exceed the applicable Fair
Market Rent (FMR) for existing housing established under 24 CFR part
888, except that the term does not include a unit that is owned and
occupied by the same person before and after the assisted
rehabilitation.
(iv) Standard condition and substandard condition suitable for
rehabilitation. (A) If the grantee has a HUD-approved consolidated
plan, the definitions of ``standard condition'' and ``substandard
condition suitable for rehabilitation'' established in the plan will
apply.
(B) For purposes of the State CDBG program, a State may define the
terms ``standard condition'' and ``substandard condition suitable for
rehabilitation'', or
[[Page 11481]]
it may allow the state recipient to establish and make public its
definition of these terms. If a State permits the recipient to
establish its definition of these terms, the State must determine if
the state recipient's definition is acceptable.
(v) Vacant occupiable dwelling unit. The term ``vacant occupiable
dwelling unit'' means a vacant dwelling unit that is in a standard
condition; a vacant dwelling unit that is in a substandard condition,
but is suitable for rehabilitation; or a dwelling unit in any condition
that has been occupied (except by a squatter) at any time within the
period beginning one year before the date of execution of the agreement
by the grantee (or state recipient, as applicable) covering the
rehabilitation or demolition.
(d) Optional relocation assistance. Under section 105(a)(11) of the
Act, the grantee may provide (or the State may permit the state
recipient to provide, as applicable) relocation payments and other
relocation assistance to persons displaced by activities that are not
subject to paragraphs (b) or (c) of this section. The grantee may also
provide (or the State may also permit the state recipient to provide,
as applicable) relocation assistance to persons receiving assistance
under paragraphs (b) or (c) of this section at levels in excess of
those required by these paragraphs. Unless such assistance is provided
under State or local law, the grantee (or state recipient, as
applicable) shall provide such assistance only upon the basis of a
written determination that the assistance is appropriate (see, e.g., 24
CFR 570.201(i), as applicable). The grantee (or state recipient, as
applicable) must adopt a written policy available to the public that
describes the relocation assistance that the grantee (or state
recipient, as applicable) has elected to provide and that provides for
equal relocation assistance within each class of displaced persons.
(e) Acquisition of real property. The acquisition of real property
for an assisted activity is subject to 49 CFR part 24, subpart B.
(f) Appeals. If a person disagrees with the determination of the
grantee (or the state recipient, as applicable) concerning the person's
eligibility for, or the amount of, a relocation payment under this
section, the person may file a written appeal of that determination
with the grantee (or state recipient, as applicable). The appeal
procedures to be followed are described in 49 CFR 24.10. In addition, a
low- or moderate-income household that has been displaced from a
dwelling may file a written request for review of the grantee's
decision to the HUD Field Office. For purposes of the State CDBG
program, a low- or moderate-income household may file a written request
for review of the state recipient's decision with the State.
(g) Responsibility of grantee or State. (1) The grantee (or State,
if applicable) is responsible for ensuring compliance with the
requirements of this section, notwithstanding any third party's
contractual obligation to the grantee to comply with the provisions of
this section. For purposes of the State CDBG program, the State shall
require state recipients to certify that they will comply with the
requirements of this section.
(2) The cost of assistance required under this section may be paid
from local public funds, funds provided under this part, or funds
available from other sources.
(3) The grantee (or State and state recipient, as applicable) must
maintain records in sufficient detail to demonstrate compliance with
the provisions of this section.
(Approved by the Office of Management and Budget under OMB control
number 2506-0102.)
24. Section 570.608 is amended by revising paragraph (a) to read as
follows:
Sec. 570.608 Lead-based paint.
(a) Prohibition against the use of lead-based paint. Section 401(b)
of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4831(b))
and regulations in 24 CFR part 35, subpart B apply to residential
structures constructed or rehabilitated with assistance provided under
this part 570.
* * * * *
Subpart M--Loan Guarantees
25. Section 570.701 is amended by revising the definition of
``Public entity'', to read as follows:
Sec. 570.701 Definitions.
* * * * *
Public entity shall have the meaning provided for the term
``Eligible public entity'' in section 108(o) of the Act.
* * * * *
26. Section 570.703 is amended by revising paragraphs (d)(1) and
(d)(2), to read as follows:
Sec. 570.703 Eligible activities.
* * * * *
(d) * * *
(1) Required under the provisions of Sec. 570.606(b) or (c); or
(2) Determined by the public entity to be appropriate under the
provisions of Sec. 570.606(d).
* * * * *
27. Section 570.704 is amended by revising paragraphs (a)(2)(i)(D),
(b)(8)(vii), and (e); to read as follows:
Sec. 570.704 Application requirements.
(a) * * *
(2) * * *
(i) * * *
(D) The proposed activities likely to result in displacement and
the public entity's plans, consistent with the policies developed under
Sec. 570.606 for minimizing displacement of persons as a result of its
proposed activities.
* * * * *
(b) * * *
(8) * * *
(vii) It will comply with the requirements governing displacement,
relocation, real property acquisition, and the replacement of low and
moderate income housing described in Sec. 570.606.
* * * * *
(e) Displacement, relocation, acquisition, and replacement of
housing. The public entity (or the designated public agency) shall
comply with the displacement, relocation, acquisition, and replacement
of low/moderate-income housing requirements in Sec. 570.606 in
connection with any activity financed in whole or in part with
guaranteed loan funds.
28. Section 570.706 is revised to read as follows:
Sec. 570.706 Federal guarantee; subrogation.
Section 108(f) of the Act provides for the incontestability of
guarantees by HUD under subpart M of this part in the hands of a holder
of such guaranteed obligations. If HUD pays a claim under a guarantee
made under section 108 of the Act, HUD shall be fully subrogated for
all the rights of the holder of the guaranteed debt obligation with
respect to such obligation.
Subpart N--Urban Renewal Provisions
29. Section 570.800 is revised to read as follows:
Sec. 570.800 Urban Renewal regulations.
The regulations governing urban renewal projects and neighborhood
development programs in subpart N of this part, that were effective
immediately before April 19, 1996, will continue to govern the rights
and obligations of recipients and HUD with respect to such projects and
programs.
Secs. 570.801, 570.802, 570.803, and 570.804 [Removed]
30. Sections 570.801, 570.802, 570.803, and 570.804 are removed.
[[Page 11482]]
Subpart O--Performance Reviews
31. Section 570.904 is amended by revising the introductory text of
paragraph (b), and by revising paragraph (c), to read as follows:
Sec. 570.904 Equal Opportunity and Fair Housing Review Criteria.
* * * * *
(b) Review for equal opportunity. Title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d et seq.), and implementing regulations in 24
CFR part 1, together with section 109 of the Act (see Sec. 570.602),
prohibit discrimination in any program or activity funded in whole or
in part with funds made available under this part.
* * * * *
(c) Fair housing review criteria. See the requirements in the Fair
Housing Act (42 U.S.C. 3601-20), as well as Sec. 570.601(a), which sets
forth the grantee's responsibility to certify that it will
affirmatively further fair housing.
* * * * *
Dated: March 7, 1996.
Mark C. Gordon,
General Deputy Assistant Secretary for Community Planning and
Development.
[FR Doc. 96-6418 Filed 3-19-96; 8:45 am]
BILLING CODE 4210-29-P
