[Federal Register Volume 62, Number 227 (Tuesday, November 25, 1997)]
[Rules and Regulations]
[Pages 62912-62920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30940]
[[Page 62911]]
_______________________________________________________________________
Part VI
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 570
Community Development Block Grants: New York Small Cities Program;
Final Rule
Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 /
Rules and Regulations
[[Page 62912]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 570
[Docket No. FR-4155-F-02]
RIN 2506-AB91
Community Development Block Grants: New York Small Cities Program
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Final rule.
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SUMMARY: This rule amends the regulations for the Community Development
Block Grants (CDBG) Small Cities Program for the State of New York.
This rule eliminates the use of multiyear plans in the Small Cities
Program for any NOFA published in calendar year 1997 or later. This
rule also limits the maximum grant award under the annual Small Cities
NOFA to any single, eligible unit of general local government to
$400,000, except that counties may apply for a maximum of $600,000. HUD
will honor grant awards for multiyear plans approved in response to
NOFAs issued prior to calendar year 1997. In order to implement the
reduction of grant limits, HUD intends to restrict competition under
future annual Small Cities NOFAs to single purpose grants. This rule
also makes minor technical and clarifying changes to the regulations.
EFFECTIVE DATE: December 26, 1997.
FOR FURTHER INFORMATION CONTACT: Cornelia Robertson Terry, State and
Small Cities Division, Office of Community Planning and Development,
Department of Housing and Urban Development, Room 7184, 451 Seventh
Street, SW., Washington, DC 20410; telephone (202) 708-1322 (voice).
(This is not a toll-free number.) Persons with hearing or speech
impairments may access this number via TTY by calling the Federal
Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: Title I of the Housing and Community
Development Act of 1974 (42 U.S.C. 5300-5320) permits each State to
elect to administer all aspects of the Community Development Block
Grant (CDBG) Program annual fund allocation for the nonentitlement
areas within its jurisdiction. The policies and procedures for HUD's
CDBG Small Cities Program in 24 CFR part 570, subpart F, apply to
grants for nonentitlement areas in States such as New York that did not
elect to administer the CDBG Program.
Section 226 of the Departments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies Appropriations Act, 1996
(Pub. L. 104-134; approved April 26, 1996) (the Act) requires that HUD
issue proposed and final rules for the requirements of the CDBG program
for the State of New York before issuing a Notice of Funding
Availability for funds made available for fiscal year (FY) 1997. In
accordance with section 226, HUD published a proposed rule on June 11,
1997 (62 FR 31944) in order to solicit public comments on the
requirements of the New York CDBG Small Cities Program in 24 CFR part
570, subpart F. (Although Secs. 570.429 and 570.430 also appear in
subpart F and are set forth in this final rule, these sections only
apply to the Small Cities Program in Hawaii.) HUD also solicited
comments on two proposed changes to the New York Small Cities Program,
as described below.
New York Small Cities Program Design
On June 11, 1997, HUD proposed to remove paragraph (a)(3) of
Sec. 570.421, and to add a new paragraph (f), which would eliminate the
use of multiyear plans in the New York Small Cities Program for NOFAs
published in calendar year 1997 or later. HUD will, however, continue
to honor multiyear plans approved in response to NOFAs published prior
to calendar year 1997. HUD also proposed to add a new paragraph (g) to
the current regulations to provide that the maximum grant amount that
HUD will award to an eligible unit of general local government in
response to a NOFA for the annual Small Cities competition published in
calendar year 1997 or later is $400,000, except that counties could
apply for a maximum of $600,000 in HUD-administered Small Cities grant
funds. HUD will, however, award larger grants as necessary to honor the
terms of multiyear plans approved under the provisions of NOFAs
published prior to calendar year 1997.
Discussion of Public Comments
The deadline for public comments on the July 11, 1997 proposed rule
was July 11, 1997. HUD received only 10 comments.
Grant Limits
Several commenters offered support for HUD's proposal to limit
maximum future grant amounts. These commenters included a private
consultant and public and private housing and community development
organizations. These commenters remarked that the grant limits will
help spread the extremely limited funds to worthwhile projects in small
communities across the State.
Other commenters disagreed, however, arguing that communities need
larger comprehensive grants in order to avert infrastructure
dilapidation or to provide substantial housing assistance or economic
development. These commenters included a United States Senator, a State
senator, and others that commented on behalf of local communities.
Although HUD recognizes that there are certain advantages of higher
grant limits, HUD has determined that the grant limits contained in the
June 11, 1997 proposed rule are appropriate and has adopted them in
this final rule. In addition, in order to encourage units of general
local government to act cooperatively to resolve regional problems that
affect more than one locality, this final rule amends Sec. 570.422 to
provide that the grant limit for joint applications will be the maximum
single purpose grant limit established in Sec. 570.421(g) or a NOFA,
multiplied by the number of participating governments in the
cooperation agreement that was established to submit the joint
application. For the purpose of determining such a multiple grant
limit, and in order to receive such amount, this rule clarifies that a
participating joint applicant must receive a substantial direct benefit
from the activities proposed in the application and must not be acting
solely on behalf of, or in conjunction with, another jurisdiction
solely to raise the maximum grant amount that may be awarded. In
addition, this rule provides that the statistics of each participant
counted for maximum grant limits shall also be used for purposes of the
selection factors referred to in Sec. 570.421(a).
Multiyear Commitments
Some of the commenters agreed with HUD's proposal to eliminate the
use of multiyear plans in the Small Cities Program. These commenters
included a private consultant and public and private housing and
community development organizations.
In response to previous suggestions from Small Cities grantees, HUD
offered multiyear grant commitments in FY 1995, along with the increase
in grant limits in FY 1996, to assist communities with longer term
development programs within the context of a comprehensive strategy.
These multiyear commitments assure continued funding during the second
and/or third year, provided the applicant submits an acceptable
application with the required
[[Page 62913]]
certifications and is able to demonstrate continued administrative
capacity for carrying out grant activities, and sufficient appropriated
funds are available. Multiyear plans are particularly beneficial for
smaller communities, which lack full-time staff and must turn to high-
priced consultants to prepare Small Cities applications each year.
The granting of multiyear commitments does not, however, unfairly
reduce the pool of funds available for competition in future years. In
the 5-year period from FY 1990 to FY 1994, prior to the offering of
multiyear commitments, 46 communities received at least 3 annual
grants. In effect, these 46 communities, based on the depth of their
needs and the rating quality of their applications, had achieved a de
facto multiyear status. In the last 2 fiscal years, the Small Cities
Program has only extended multiyear commitments to 29 grantees
(including 17 3-year commitments and 12 2-year commitments). Most of
these multiyear commitments were awarded in single purpose grants to
the smallest communities. Therefore, the multiyear commitments did not
significantly change the availability of the funds, but reduced the
administrative burden and cost of annual applications.
In response to the support of the commenters, however, this final
rule eliminates the use of multiyear plans in the Small Cities Program
for NOFAs published in calendar year 1997 or later, as provided in the
June 11, 1997 proposed rule.
Small Cities Funds in Entitlement Communities
Two commenters remarked that Small Cities funds should not go to
communities that are eligible for CDBG entitlement funds. Since the
metropolitan areas are generally covered by entitlement funds, these
commenters stressed that these areas should not also be able to make
use of the Small Cities funds.
Under the current regulations, entitlement communities are not
eligible applicants for Small Cities CDBG nonentitlement funds. Section
570.421(e) provides, however, that ``[a]n applicant may conduct
eligible CDBG activities outside its boundaries. These activities must
be demonstrated to be appropriate to meeting the applicant's needs and
objectives, and must be consistent with State and local law.'' This
provision allows a nonentitlement county, for example, to use funds in
a metropolitan city or an urban county. HUD did not propose to change
these requirements in the June 11, 1997 proposed rule.
As some of the commenters noted, the strength of the Small Cities
CDBG Program is that local communities can and should determine how the
funds should be used. HUD supports such local decisionmaking about how
best to meet local needs. Therefore, HUD has decided not to change the
current regulations regarding the use of Small Cities CDBG funds in
entitlement areas in response to the two commenters.
Set-Asides
Two commenters expressed concern regarding the ``set-asides''
provided for in the Small Cities regulations for public service
activities (Sec. 570.421(d)), imminent threats to public health and
safety (Sec. 570.424), and economic development (Sec. 570.421(a)(5) of
this rule; Sec. 570.421(a)(6) of the regulations prior to the
effectiveness of this rule). These commenters argue that such ``set-
asides'' remove funds from the general competition that would otherwise
be available for worthy community development activities.
Although HUD appreciates the comments received on these provisions,
there is no set-aside for public services. The regulations merely
provide that no more than 15 percent of the State's nonentitlement
allocation may be used for public services. This provision is
consistent with the CDBG program as a whole. This is not a new
provision; HUD did not specifically propose changes to this provision
in the June 11, 1997 proposed rule. HUD has never held a separate
competition for ``public service'' grants and has no authority to do so
under the regulations.
Imminent threat grants address health and safety related needs in
communities. Only 15 percent of Small Cities funds may be used for such
grants, and the actual percentage of imminent threat grants is far
lower. This is not a new provision, and HUD proposed no changes to this
provision. Therefore, notwithstanding the two comments received on this
issue, this final rule retains the imminent threat set-aside to enable
quick responses to disasters or emergencies that small cities face.
Section 570.421(a)(5) of this rule, which allows HUD to fund
economic development grants under certain circumstances, is not a new
provision, and HUD proposed no changes to that provision.
Notwithstanding the two comments HUD received, HUD has determined that
it should retain this provision.
Minor Technical Changes and Clarifications
HUD is also taking the opportunity in this final rule to make
several minor technical changes and clarifications to the regulations
for the Small Cities CDBG Program. These changes include correcting an
inconsistency in Sec. 570.430(a) regarding the limitation on planning
and administrative costs in the Hawaii program. This paragraph refers
to Sec. 570.200(g) of the regulations for the Entitlement Program,
under which the planning and administrative costs cap is calculated
based on obligated funds. The Small Cities provision in
Sec. 570.430(a), however, had relied upon expenditures. This final rule
corrects that provision so that it consistently relies upon obligated
funds.
Findings and Certifications
Environmental Impact
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. 4223). The Finding 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 7th Street, SW, Washington, DC
20410.
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication, and by
approving it certifies that this rule would not have a significant
economic impact on a substantial number of small entities. This rule
would make limited changes that would not have a significant impact on
small entities.
Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that this rule
would not have substantial direct effects on States or their political
subdivisions, or the relationship between the Federal Government and
the States, or on the distribution of power and responsibilities among
the various levels of government. This rule would make limited changes
that would not have Federalism implications. As a result, this rule is
not subject to review under the Order.
[[Page 62914]]
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for Federal
agencies to assess the effects of their regulatory actions on State,
local, and tribal governments, and on the private sector. This rule
would not impose any Federal mandates on any State, local, or tribal
governments, or on the private sector, within the meaning of the UMRA.
Catalogue of Federal Domestic Assistance
The Catalogue of Federal Domestic Assistance program number is
14.219, Community Development Block Grants--Small Cities Program.
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, for the reasons set out in the preamble, 24 CFR part
570 is amended as follows:
PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS
1. The authority citation for 24 CFR part 570 is revised to read as
follows:
Authority: 42 U.S.C. 3535(d) and 5301-5320.
2. Subpart F is revised to read as follows:
Subpart F--Small Cities Program
Sec.
570.420 General.
570.421 New York Small Cities Program design.
570.422 Applications from joint applicants.
570.423 Application for the HUD-administered New York Small Cities
Grants.
570.424 Grants for imminent threats to public health and safety.
570.425 HUD review and actions on applications for New York State
applicants.
570.426 Program income.
570.427 Program amendments.
570.428 Reallocated funds.
570.429 Hawaii general and grant requirements.
570.430 Hawaii program operation requirements.
570.431 Citizen participation.
570.432 Repayment of Section 108 loans.
Subpart F--Small Cities Program
Sec. 570.420 General.
(a) HUD administration of nonentitlement CDBG funds. Title I of the
Housing and Community Development Act of 1974 permits each State to
elect to administer all aspects of the Community Development Block
Grant (CDBG) Program annual fund allocation for the nonentitlement
areas within its jurisdiction. This subpart sets forth policies and
procedures applicable to grants for nonentitlement areas in States that
have not elected, in a manner and time prescribed by the Secretary, to
administer the CDBG Program. States that elected to administer the
program after the close of fiscal year 1984 cannot return
administration of the program to HUD. A decision by a State to
discontinue administration of the program would result in the loss of
CDBG funds for nonentitlement areas in that State and the reallocation
of those funds to all States in the succeeding fiscal year.
(b) Scope and applicability. (1) This subpart describes the
policies and procedures of the Small Cities Program which apply to
nonentitlement areas in States where HUD administers the CDBG Program.
HUD currently administers the Small Cities Program in only two States--
New York and Hawaii. This subpart principally addresses the
requirements for New York, and Secs. 570.429 and 570.430 identify
special procedures applicable to Hawaii.
(2) The allocation of formula CDBG funds for use in nonentitlement
areas of Hawaii and New York is as provided in subpart A of this part.
The policies and procedures set forth in the following identified
subparts of this part 570 apply to the HUD-administered Small Cities
Program, except as modified or limited under the provisions thereof or
this subpart:
(i) Subpart A--General Provisions;
(ii) Subpart C--Eligible Activities;
(iii) Subpart J--Grant Administration;
(iv) Subpart K--Other Program Requirements; and
(v) Subpart O--Performance Reviews.
(c) Public notification requirements. (1) Section 102 of the
Department of Housing and Urban Development Reform Act of 1989 (42
U.S.C. 3545) contains a number of provisions that are designed to
ensure greater accountability and integrity in the provision of certain
types of assistance administered by HUD. All competitive grants in the
HUD-administered Small Cities Program in New York are affected by this
legislation, and the requirements identified at 24 CFR part 4 apply to
them. Imminent threat grants under Sec. 570.424 and section 108
repayment grants under Sec. 570.432 are not affected by section 102 as
they are not competitive grants.
(2) The Hawaii HUD-administered Small Cities Program is not subject
to section 102, since the funds are not distributed in a competitive
manner.
(d) Abbreviated consolidated plan. Applications for the HUD-
administered Small Cities Program which contain housing activities must
include a certification that the proposed housing activities are
consistent with the applicant's consolidated plan as described at 24
CFR part 91.
(e) National and primary objectives. (1) Each activity funded
through the Small Cities Program must meet one of the following
national objectives as defined under the criteria in Sec. 570.208. Each
activity must:
(i) Benefit low- and moderate-income families;
(ii) Aid in the prevention or elimination of slums or blight; or
(iii) Be an activity which the grantee certifies is designed to
meet other community development needs having a particular urgency
because existing conditions pose a serious and immediate threat to the
health or welfare of the community where other financial resources are
not available to meet such needs.
(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
Secs. 570.208(a), or 570.208(d) (5) or (6). In the case of multiyear
plans in New York State approved in response to NOFAs published prior
to calendar year 1997, not less than 70 percent of the total funding
for grants approved pursuant to a multiyear plan for a time period of
up to 3 years must be expended for activities which benefit low- and
moderate-income persons. Thus, 70 percent of the grant for year 1 of a
multiyear plan approved in response to NOFAs published prior to
calendar year 1997 must meet the 70 percent requirement, 70 percent of
the combined grants from years 1 and 2 must meet the requirement, and
70 percent of the combined grants from years 1, 2, and 3 must meet the
requirement. In determining the percentage of funds expended for such
activity, the provisions of
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Sec. 570.200(a)(3) (i), (iii), (iv), and (v) shall apply.
(Approved by the Office of Management and Budget under control
number 2506-0060).
Sec. 570.421 New York Small Cities Program design.
(a) Selection system--(1) Competitive applications. Each
competitive application will be rated and scored against at least the
following factors:
(i) Need-absolute number of persons in poverty as further explained
in the NOFA;
(ii) Need-percent of persons in poverty as further explained in the
NOFA;
(iii) Program Impact; and
(iv) Fair Housing and Equal Opportunity, which may include the
applicant's Section 3 plan and implementation efforts with respect to
actions to affirmatively further fair housing. The NOFA described in
paragraph (b) of this section will contain a more detailed description
of these factors, and the relative weight that each factor will be
given.
(2) In addition HUD reserves the right to establish minimal
thresholds for selection factors and otherwise select grants in
accordance with Sec. 570.425 and the applicable NOFA.
(3) Imminent threats to public health and safety. The criteria for
these grants are described in Sec. 570.424.
(4) Repayment of Section 108 loans. The criteria for these grants
are described in Sec. 570.432.
(5) Economic development grants. HUD intends to use the Section 108
loan guarantee program to the maximum extent feasible to fund economic
development projects in the nonentitlement areas of New York. In the
event that there are not enough Section 108 loan guarantee funds
available to fund viable economic development projects, if a project
needs a grant in addition to a loan guarantee to make it viable, or if
the project does not meet the requirements of the Section 108 program
but is eligible for a grant under this subpart, HUD may fund Economic
Development applications as they are determined to be fundable in a
specific amount by HUD up to the sum set aside for economic development
projects in a notice of funding availability, notwithstanding paragraph
(g) of this section. HUD also has the option in a NOFA of funding
economic development activities on a competitive basis, as a
competitive application as described in paragraph (a)(1) of this
section. In order for an applicant to receive Small Cities grant funds
on a noncompetitive basis, the field office must determine that the
economic development project will have a substantial impact on the
needs identified by the applicant.
(b) Notice of funding availability. HUD will issue one or more
Notice(s) of Funding Availability (NOFA) each fiscal year which will
indicate the amount of funds available, the annual grant limits per
grantee, type of grants available, the application requirements, and
the rating factors that will be used for those grants which are
competitive. A NOFA may set forth, subject to the requirements of this
subpart, additional selection criteria for all grants.
(c) Eligible applicants. (1) Eligible applicants in New York are
units of general local government, excluding: Metropolitan cities,
urban counties, units of general local government which are
participating in urban counties or metropolitan cities, even if only
part of the participating unit of government is located in the urban
county or metropolitan city. Indian tribes are also ineligible for
assistance under this subpart. An application may be submitted
individually or jointly by eligible applicants.
(2) Counties, cities, towns, and villages may apply and receive
funding for separate projects to be done in the same jurisdiction. Only
one grant will be made under each funding round for the same type of
project to be located within the jurisdiction of a unit of general
local government (e.g., both the county and village cannot receive
funding for a sewer system to be located in the same village, but the
county can receive funding for a sewer system that is located in the
same village as a rehabilitation project for which the village receives
funding). The NOFA will contain additional information on applicant
eligibility.
(3) Counties may apply on behalf of units of general local
government located within their jurisdiction when the unit of general
local government has authorized the county to apply. At the time that
the county submits its application for funding, it must submit a
resolution by the governing body of the unit of local government that
authorizes the county to submit an application on behalf of the unit of
general local government. The county will be considered the grantee and
will be responsible for executing all grant documents. The county is
responsible for ensuring compliance with all laws, regulations, and
Executive Orders applicable to the CDBG Program. HUD will deal
exclusively with the county with respect to issues of program
administration and performance, including remedial actions. The unit of
general local government will be considered the grantee for the purpose
of determining grant limits. The unit of general local government's
statistics will be used for purposes of the selection factors referred
to in Sec. 570.421(a).
(d) Public service activities cap. Public service activities may be
funded up to a maximum of fifteen (15) percent of a State's
nonentitlement allocation for any fiscal year. HUD may award a grant to
a unit of general local government for public service activities with
up to 100 percent of the funds intended for public service activities.
HUD will apply the 15 percent statewide cap to public service
activities by funding public service activities in the highest rated
applications in each NOFA until the cap is reached.
(e) Activities outside an applicant's boundaries. An applicant may
conduct eligible CDBG activities outside its boundaries. These
activities must be demonstrated to be appropriate to meeting the
applicant's needs and objectives, and must be consistent with State and
local law. This provision includes using funds provided under this
subpart in a metropolitan city or an urban county.
(f) Multiyear plans. HUD will not make any new multiyear
commitments for NOFAs published in calendar year 1997 or later. HUD
will continue to honor the terms of the multiyear plans that were
approved under the provisions of NOFAs published prior to calendar year
1997.
(g) Maximum grant amount. The maximum grant amount that will be
awarded to a single unit of general local government in response to the
annual Small Cities NOFA published in calendar year 1997 or later is
$400,000, except that counties may apply for up to $600,000 in HUD-
administered Small Cities funds. HUD may specify lower grant limits in
the NOFA, which may include different limits for different types of
grants available or different types of applicants. This paragraph (g)
does not apply to multiyear plans that were approved under the
provisions of NOFAs published prior to calendar year 1997, nor does it
apply to grants awarded in connection with paragraphs (a)(3) through
(a)(5) of this section. The maximum limits in this paragraph (g) apply
to grants for economic development projects awarded under NOFAs in
which there is no set-aside of funds for such projects.
Sec. 570.422 Applications from joint applicants.
Units of general local government may submit a joint application
which addresses common problems faced by the jurisdictions, to the
extent permitted
[[Page 62916]]
by the NOFA. A joint application must be pursuant to a written
cooperation agreement submitted with the application. The cooperation
agreement must authorize one of the participating units of government
to act as the lead applicant which will submit the application to HUD,
and must delineate the responsibilities of each participating unit of
government with respect to the Small Cities Program. The lead applicant
is responsible for executing the application, certifications, and grant
agreement, and ensuring compliance with all laws, regulations, and
Executive Orders applicable to the CDBG Program. HUD reserves the right
to deal exclusively with the lead applicant with respect to issues of
program administration and performance, including remedial actions. In
the event of poor performance, HUD reserves the right to deny and/or
restrict future funding to all units of general local government that
are parties to the cooperation agreement. The maximum amount that may
be awarded pursuant to a joint application is the maximum single grant
limit established in a NOFA or pursuant to Sec. 570.421(g) multiplied
by the number of participants in the cooperation agreement, provided
that for the purpose of determining such a multiple grant limit, and in
order to receive such amount, a participating joint applicant must
receive a substantial direct benefit from the activities proposed in
the application, and must not be acting solely on behalf of, or in
conjunction with, another jurisdiction for the sole purpose of raising
the maximum grant amount that may be awarded. In addition, the
statistics of each participant counted for maximum grant limits
purposes shall also be used for purposes of the selection factors
referred to in Sec. 570.421(a).
Sec. 570.423 Application for the HUD-administered New York Small
Cities Grants.
(a) Proposed application. The applicant shall prepare and publish a
proposed application and comply with citizen participation requirements
as described in Sec. 570.431. The applicant should follow the citizen
participation requirements of 24 CFR part 91 if it submits a complete
consolidated plan.
(b) Final application. The applicant shall submit to HUD a final
application containing its community development objectives and
activities. This final application shall be submitted, in a form
prescribed by HUD, to the appropriate HUD office. The application also
must contain a priority nonhousing community development plan, in
accordance with 24 CFR 91.235.
(c) Certifications. (1) Certifications shall be submitted in a form
prescribed by HUD. If the application contains any housing activities,
the applicant shall certify that the proposed housing activities are
consistent with its abbreviated consolidated plan, as described at 24
CFR part 91.
(2) In the absence of evidence (which may, but need not, be derived
from performance reviews or other sources) which tends to challenge in
a substantial manner the certifications made by the applicant, the
certifications will be accepted by HUD. However, if HUD does have
available such evidence, HUD may require the submission of additional
information or assurances before determining whether an applicant's
certifications are satisfactory.
(d) Thresholds. The HUD Office may use any information available to
it to make the threshold judgments required by the applicable NOFA,
including information related to the applicant's performance with
respect to any previous assistance under this subpart. The annual
performance and evaluation report required under Sec. 570.507(a) is the
primary source of this information. The HUD Office may request
additional information in cases where it is essential to make the
required performance judgments.
(Approved by the Office of Management and Budget under control
number 2506-0060).
Sec. 570.424 Grants for imminent threats to public health and safety.
(a) Criteria. The following criteria apply for an imminent threat
to public health or safety:
(1) The Director of Community Planning and Development of the HUD
office may, at any time, invite an application for funds available
under this subpart in response to a request for assistance to alleviate
an imminent threat to public health or safety that requires immediate
resolution. HUD shall verify the urgency and the immediacy of the
threat with an appropriate authority other than the applicant prior to
acceptance of the application, and the Director of Community Planning
and Development of the HUD Office shall review the claim to determine
if, in fact, an imminent threat to public health or safety does exist.
For example, an applicant with documented cases of disease resulting
from a contaminated drinking water supply has an imminent threat to
public health, while an applicant ordered to improve the quality of its
drinking water supply over the next 2 years does not have an imminent
threat within the definition of this paragraph (a). A natural disaster
is prima facie evidence of an imminent threat to public health or
safety. These funds are to be used to deal with those threats that
represent a unique and unusual circumstance, not for the type of threat
that occurs with frequency in a number of communities within the State
of New York.
(2) The applicant does not have sufficient local resources, and
other Federal or State resources are unavailable to alleviate the
imminent threat.
(3) All imminent threat projects must meet the requirement of
Sec. 570.420(e).
(b) HUD action. (1) Fifteen percent of the funds allocated to New
York State in the Small Cities Program may be reserved to alleviate
imminent threats to the public health or safety unless a lesser amount
is specified in a NOFA. Applications shall be submitted in accordance
with Sec. 570.423.
(2) Applications which meet the requirements of this section may be
approved by the Director of Community Planning and Development of the
HUD Office without competition.
(3) The only funds reserved for imminent threats to the public
health or safety are those specified by this section as modified by the
NOFA. After the funds have been depleted, HUD shall not consider
further requests for grants relating to imminent threats during that
fiscal year.
(c) Letter to proceed. Notwithstanding Sec. 570.425(a)(3), after a
determination has been made that an imminent threat exists, HUD may
issue the applicant a letter to proceed to incur costs to alleviate the
imminent threat. Reimbursement of such costs is dependent upon HUD
approval of the final application.
(d) Environmental review. Pursuant to 24 CFR 58.34(a)(10), grants
for imminent threats to public health or safety are excluded from some
or all of the environmental review requirements of 24 CFR part 58, to
the extent provided therein.
Sec. 570.425 HUD review and actions on applications for New York State
applicants.
(a) Final application submission--(1) Submission deadline. HUD will
establish a time period during which final applications must be
submitted to the appropriate office. The dates for this period will be
published in a notice in the Federal Register.
(2) Incomplete applications. Applications must contain the
information required by HUD. Information relative to the application
will not be accepted or considered if received after the submission
deadline,
[[Page 62917]]
unless the information is specifically requested in writing by HUD.
(3) Pre-agreement costs. HUD authorizes a unit of general local
government to incur costs during a Federal fiscal year in which a grant
is made or the prior fiscal year for preparation of a CDBG grant
application, planning costs eligible under Sec. 570.205, environmental
assessments, and project engineering and design costs for eligible
activities under Secs. 570.201 through 570.204 before the establishment
of a formal grant relationship between the applicant and HUD. Costs of
such activities for the funded application may be charged to the grant
should it be funded, provided that the activities are undertaken in
accordance with the requirements of this subpart, and 24 CFR part 58.
It is understood that the incurring of costs described in this
paragraph creates no obligation on HUD to approve the application.
(b) HUD action on final application--(1) Review and notification.
Following the review of the applications, HUD will promptly notify each
applicant of the action taken with regard to its application.
Documentation which supports HUD's decisions on applications will be
available to the public.
(2) Conditional approval. HUD may make a conditional approval, in
which case the grant will be approved but the obligation and
utilization of funds will be restricted. The reasons for the
conditional approval and the actions necessary to remove the condition
will be specified. Failure to satisfy the condition may result in a
termination of the grant.
(3) HUD will not make a Small Cities grant when it is determined
that the grant will only have a minimal or insignificant impact on the
grantee.
(4) Individual grant amounts. In determining appropriate grant
amounts to be awarded, HUD may take into account the size of the
applicant, the level of demand, the scale of the activity proposed
relative to need and operational capacity, the number of persons to be
served, the amount of funds required to achieve project objectives and
the administrative capacity of the applicant to complete the activities
in a timely manner.
(c) Streamlined application requirement for previous applicants.
HUD may provide pursuant to a NOFA that if an applicant notifies HUD in
writing within the application period specified in a NOFA that it
wishes to be so considered, HUD will consider unfunded applications
from the prior round or competition that meet the threshold
requirements of the NOFA. The applicant will have the option of
withdrawing its application, or amending or supplementing the
application for succeeding rounds of competition. If there is no
significant change in the application involving new activities or
alteration of proposed activities that will significantly change the
scope, location or objectives of the proposed activities or
beneficiaries, there will be no further citizen participation
requirement to keep the application active for succeeding rounds of
competition. Applicants availing themselves of the option to have an
application from the previous round or competition reconsidered by HUD
must submit a new abbreviated or full consolidated plan, if the new
competitive funding round is in a different fiscal year than the
funding round or competition for which the application was originally
submitted.
Sec. 570.426 Program income.
(a) The provisions of Sec. 570.504(b) apply to all program income
generated by a specific grant and received prior to grant closeout.
(b) If the unit of general local government has another ongoing
CDBG grant at the time of closeout, the program income will be
considered to be program income of the ongoing grant. The grantee can
choose which grant to credit the program income to if it has multiple
open CDBG grants.
(c) If the unit of general local government has no open ongoing
CDBG grant at the time of closeout, program income of the unit of
general local government or its subrecipients which amounts to less
than $25,000 per year will not be considered to be program income
unless needed to repay a Section 108 guaranteed loan. When more than
$25,000 of program income is generated from one or more closed out
grants in a year after closeout, the entire amount of the program
income is subject to the requirements of this part. This will be a
subject of the closeout agreement described in Sec. 570.509(c).
Sec. 570.427 Program amendments.
(a) HUD approval of certain program amendments. Grantees shall
request prior HUD approval for all program amendments involving new
activities or alteration of existing activities that will significantly
change the scope, location, or objectives of the approved activities or
beneficiaries. Approval is subject to the following:
(1) Programs or projects that include new or significantly altered
activities are rated in accordance with the criteria for selection
applicable at the time the original preapplication or application
(whichever is applicable) was rated. The rating of the program or
projects proposed which include the new or altered activities proposed
by the amendment must be equal to or greater than the lowest rating
received by a funded project or program during that cycle of ratings.
(2) Consideration shall be given to whether any new activity
proposed can be completed promptly.
(3) If the grant was received on a noncompetitive basis, the
proposed amended project must be able to be completed promptly, and
must meet all of the threshold requirements that were required for the
original project. If the proposal is to amend the project to a type of
project that was rated competitively in the fiscal year that the
noncompetitive project was funded, the new or altered activities
proposed by the amendment must receive a rating equal to or greater
than the lowest rating received by a funded project or program during
that cycle of ratings.
(b) Documentation of program amendments. Any program amendments
that do not require HUD approval must be fully documented in the
grantee's records.
(c) Citizen participation requirements. Whenever an amendment
requires HUD approval, the requirements for citizen participation in
Sec. 570.431 must be met.
Sec. 570.428 Reallocated funds.
(a) General. This section governs reallocated funds originally
allocated for use under 24 CFR part 570, subpart F (Small Cities
Program).
(b) Assignment of funds to be reallocated. Reallocated funds may
be:
(1) Used at any time necessary for a Section 108 repayment grant
under Sec. 570.432;
(2) Added to the next Small Cities Program competition;
(3) Used to fund any application not selected for funding in the
most recent Small Cities competition, because of a procedural error
made by HUD; or
(4) Used to fund the most highly ranked unfunded application or
applications from the most recent Small Cities Program competition.
(c) Timing. Funds which become available shall be used as soon as
practicable.
Sec. 570.429 Hawaii general and grant requirements.
(a) General. This section applies to the HUD-administered Small
Cities Program in the State of Hawaii.
(b) Scope and applicability. Except as otherwise provided in this
section, the policies and procedures outlined in
[[Page 62918]]
subparts A, C, J, K, O of this part, and in Secs. 570.420, 570.430, and
570.432, apply to the HUD-administered Small Cities Program in the
State of Hawaii.
(c) Grant amounts. (1) For each eligible unit of general local
government, a formula grant amount will be determined which bears the
same ratio to the total amount available for the nonentitlement area of
the State as the weighted average of the ratios between:
(i) The population of that eligible unit of general local
government and the population of all eligible units of general local
government in the nonentitlement areas of the State;
(ii) The extent of poverty in that eligible unit of general local
government and the extent of poverty in all the eligible units of
general local government in the nonentitlement areas of the State; and
(iii) The extent of housing overcrowding in that eligible unit of
general local government and the extent of housing overcrowding in all
the eligible units of general local government in the nonentitlement
areas of the State.
(2) In determining the average of the ratios under this paragraph
(c), the ratio involving the extent of poverty shall be counted twice
and each of the other ratios shall be counted once. (0.25 + 0.50 + 0.25
= 1.00).
(d) Adjustments to grants. Grant amounts under this section may be
adjusted where an applicant's performance is judged inadequate,
considering:
(1) Capacity to utilize the grant amount effectively and
efficiently;
(2) Compliance with the requirements of Sec. 570.902(a) for timely
expenditure of funds beginning with grants made in FY 1996. In making
this calculation, all outstanding grants will be considered. For the FY
1995 grant the requirement is substantial compliance with the
applicant's schedule or schedules submitted in each previously funded
application;
(3) Compliance with other program requirements based on monitoring
visits and audits.
(e) Reallocation. (1) Any amounts that become available as a result
of adjustments under paragraph (d) of this section, or any reductions
under subpart O of this part, shall be reallocated in the same fiscal
year to any remaining eligible applicants on a pro rata basis.
(2) Any formula grant amounts reserved for an applicant that
chooses not to submit an application shall be reallocated to any
remaining eligible applicants on a pro rata basis.
(3) No amounts shall be reallocated under paragraph (e) of this
section in any fiscal year to any applicant whose grant amount was
adjusted under paragraph (d) of this section or reduced under subpart O
of this part.
(f) Required submissions. In order to receive its formula grant
under this subpart, the applicant must submit a consolidated plan in
accordance with 24 CFR part 91. That part includes requirements for the
content of the consolidated plan, for the process of developing the
plan, including citizen participation provisions, for the submission
date, for HUD approval, and for the amendment process.
(g) Application approval. HUD will approve an application if the
jurisdiction's submissions have been made and approved in accordance
with 24 CFR part 91 and the certifications required therein are
satisfactory to the Secretary. The certifications will be satisfactory
to the Secretary for this purpose unless the Secretary has determined
pursuant to subpart O of this part that the grantee has not complied
with the requirements of this part, has failed to carry out its
consolidated plan as provided under Sec. 570.903, or has determined
that there is evidence, not directly involving the grantee's past
performance under this program, that tends to challenge in a
substantial manner the grantee's certification of future performance.
If the Secretary makes any such determination, however, further
assurances may be required to be submitted by the grantee as the
Secretary may deem warranted or necessary to find the grantee's
certification satisfactory.
(h) Grant agreement. The grant will be made by means of a grant
agreement executed by both HUD and the grantee.
(i) Conditional grant. The Secretary may make a conditional grant
in which case the obligation and use of grant funds for activities may
be restricted. Conditional grants may be made where there is
substantial evidence that there has been, or there will be, a failure
to meet the performance requirements or criteria described in subpart O
of this part. In such case, the conditional grant will be made by means
of a grant agreement, executed by HUD, which includes the terms of the
condition specifying the reason for the conditional grant, the actions
necessary to remove the condition and the deadline for taking those
actions. The grantee shall execute and return such an agreement to HUD
within 60 days of the date of its transmittal. Failure of the grantee
to execute and return the grant agreement within 60 days may be deemed
by HUD to constitute rejection of the grant by the grantee and shall be
cause for HUD to determine that the funds provided in the grant
agreement are available for reallocation in accordance with section
106(c) of the Act. Failure to satisfy the condition may result in a
reduction in the grant amount pursuant to Sec. 570.911.
(Approved by the Office of Management and Budget under control
number 2506-0060)
Sec. 570.430 Hawaii program operation requirements.
(a) Limitation on planning and administrative costs. For grants
made with allocations prior to FY 1995, no more than 20 percent of the
sum of the grant plus program income received during the grant period
shall be expended for planning and program administrative costs. For
grants received from allocations in FY 1995 and thereafter, a grantee
will be considered to be in conformance with the requirements of
Sec. 570.200(g) if funds obligated for planning and administration
during the most recently completed program year do not exceed 20
percent of the sum of the grant made for that program year and the
program income received from post FY 1994 grants during that program
year.
(b) Performance and evaluation reports. Grantees will follow the
requirements of Sec. 570.507(a) for entitlement grant recipients for
all grants received in FY 1995 and thereafter. Grantees will continue
following the requirements of Sec. 570.507(a) for HUD-administered
small cities grants for grants received prior to FY 1995 until those
grants are closed out.
(c) Grant closeouts. Grants received prior to FY 1995 shall be
closed out in accordance with the procedures in Sec. 570.509. Grants
received in FY 1995 and thereafter shall not be closed out
individually. A grantee's entire program shall be closed upon program
completion if a grantee ceases its participation in the Small Cities
Program.
(d) Public Services. Starting with the FY 1996 grant, grantees may
follow the provisions of Sec. 570.201(e)(1) that refer to entitlement
grantees, allowing grantees to use 15 percent of the program income
received in the previous program year in addition to 15 percent of the
grant amount for public services.
(e) Compliance with the primary objective. Starting with the FY
1995 grant, grantees may select a time period of one, two or three
program years in which to meet the requirement that not less than 70
percent of the aggregate of CDBG fund expenditures be for activities
benefitting low- and moderate-
[[Page 62919]]
income persons. Grants made from allocations prior to FY 1995 will be
considered individually for meeting the primary objective, and
expenditures for grants from pre-FY 1995 allocations made during and
after FY 1995 will not be considered in determining whether the primary
objective has been met for post-1994 allocations. If the State of
Hawaii decides to administer the Community Development Block Grant
Program for nonentitlement units of general local government in Hawaii,
the State will be bound by the time period for meeting the primary
objective that was chosen by each nonentitlement grantee within the
State until those time periods have expired.
(f) Program amendments for grants received prior to FY 1995.
Grantees must follow the requirements of 24 CFR 91.505 when amending
their program with regard to grants received prior to FY 1995. For
purposes of this paragraph (f), the term consolidated plan as used in
24 CFR 91.505 means an application submitted under the Hawaii program
for pre-FY 1995 funds. Also for purposes of this paragraph (f), to
comply with the requirements of 24 CFR 91.505, grantees must refer to
their current citizen participation plans (adopted in accordance with
24 CFR 91.505) to determine the criteria for substantial amendment and
the citizen participation process to be followed.
(Approved by the Office of Management and Budget under control
number 2506-0020.)
Sec. 570.431 Citizen participation.
(a) General. An applicant that is located in a nonentitlement area
of a State that has not elected to distribute funds shall comply with
the citizen participation requirements described in this section,
including requirements for the preparation of the proposed application
and the final application. The requirements for citizen participation
do not restrict the responsibility or authority of the applicant for
the development and execution of its community development program.
(b) Citizen participation plan. The applicant must develop and
follow a detailed citizen participation plan and must make the plan
public. The plan must be completed and available before the application
for assistance is submitted to HUD, and the applicant must certify that
it is following the plan. The plan must set forth the applicant's
policies and procedures for:
(1) Giving citizens timely notice of local meetings and reasonable
and timely access to local meetings, information, and records relating
to the grantee's proposed and actual use of CDBG funds including, but
not limited to:
(i) The amount of CDBG funds expected to be made available for the
coming year, including the grant and anticipated program income;
(ii) The range of activities that may be undertaken with those
funds;
(iii) The estimated amount of those funds proposed to be used for
activities that will benefit low- and moderate-income persons;
(iv) The proposed CDBG activities likely to result in displacement
and the applicant's plans, consistent with the policies developed under
Sec. 570.606(b), for minimizing displacement of persons as a result of
its proposed activities; and
(v) The types and levels of assistance the applicant plans to make
available (or to require others to make available) to persons displaced
by CDBG-funded activities, even if the applicant expects no
displacement to occur;
(2) Providing technical assistance to groups representative of
persons of low- and moderate-income that request assistance in
developing proposals. The level and type of assistance to be provided
is at the discretion of the applicant. The assistance need not include
the provision of funds to the groups;
(3) Holding a minimum of two public hearings, for the purpose of
obtaining citizens' views and formulating or responding to proposals
and questions. Each public hearing must be conducted at a different
stage of the CDBG program. Together, the hearings must address
community development and housing needs, development of proposed
activities and review of program performance. There must be reasonable
notice of the hearings and the hearings must be held at times and
accessible locations convenient to potential or actual beneficiaries,
with reasonable accommodations including material in accessible formats
for persons with disabilities. The applicant must specify in its plan
how it will meet the requirement for hearings at times and locations
convenient to potential or actual beneficiaries;
(4) Meeting the needs of non-English speaking residents in the case
of public hearings where a significant number of non-English speaking
residents can reasonably be expected to participate;
(5) Responding to citizen complaints and grievances, including the
procedures that citizens must follow when submitting complaints and
grievances. The applicant's policies and procedures must provide for
timely written answers to written complaints and grievances within 15
working days of the receipt of the complaint, where practicable; and
(6) Encouraging citizen participation, particularly by low- and
moderate-income persons who reside in slum or blighted areas, and in
other areas in which CDBG funds are proposed to be used.
(c) Publication of proposed application. (1) The applicant shall
publish a proposed application consisting of the proposed community
development activities and community development objectives in order to
afford affected citizens an opportunity to:
(i) Examine the application's contents to determine the degree to
which they may be affected;
(ii) Submit comments on the proposed application; and
(iii) Submit comments on the performance of the applicant.
(2) The requirement for publishing in paragraph (c)(1) of this
section may be met by publishing a summary of the proposed application
in one or more newspapers of general circulation, and by making copies
of the proposed application available at libraries, government offices,
and public places. The summary must describe the contents and purpose
of the proposed application, and must include a list of the locations
where copies of the entire proposed application may be examined.
(d) Preparation of a final application. An applicant must prepare a
final application. In the preparation of the final application, the
applicant shall consider comments and views received related to the
proposed application and may, if appropriate, modify the final
application. The final application shall be made available to the
public and shall include the community development objectives and
projected use of funds, and the community development activities.
(e) New York grantee amendments. To assure citizen participation on
program amendments to final applications that require HUD approval
under Sec. 570.427, the grantee shall:
(1) Furnish citizens information concerning the amendment;
(2) Hold one or more public hearings to obtain the views of
citizens on the proposed amendment;
(3) Develop and publish the proposed amendment in such a manner as
to afford affected citizens an opportunity to examine the contents, and
to submit comments on the proposed amendment;
(4) Consider any comments and views expressed by citizens on the
proposed amendment and, if the grantee finds it appropriate, modify the
final amendment accordingly; and
[[Page 62920]]
(5) Make the final amendment to the community development program
available to the public before its submission to HUD.
Sec. 570.432 Repayment of section 108 loans.
Notwithstanding any other provision of this subpart, a unit of
general local government in a nonentitlement area where the State has
not elected to administer the CDBG program shall be eligible for Small
Cities Grant assistance hereunder for the sole purpose of paying any
amounts due on debt obligations issued by such unit of general local
government (or its designated public agency) and guaranteed by the
Secretary pursuant to section 108 of the Act (see subpart M of this
part). The award of grant assistance for such purpose shall be
consistent with section 106(d)(3)(B) of the Act, in such amount, and
subject to such conditions as the Secretary may determine. Since
guaranteed loan funds (as defined in Sec. 570.701) are required to be
used in accordance with national and primary objective requirements,
and other applicable requirements of this part, any grant made to make
payments on the debt obligations evidencing the guaranteed loan shall
be presumed to meet such requirements, unless HUD determines that the
guaranteed loan funds were not used in accordance with such
requirements. Any such determination by HUD shall not prevent the
making of the grant in the amount of the payment due, but it may be
grounds for HUD to take appropriate action under subpart O of this part
based on the original noncompliance.
Dated: November 19, 1997.
Jacquie Lawing,
General Deputy Assistant Secretary for Community Planning and
Development.
[FR Doc. 97-30940 Filed 11-21-97; 10:06 am]
BILLING CODE 4210-29-P
