[Federal Register Volume 59, Number 75 (Tuesday, April 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9227]


[[Page Unknown]]

[Federal Register: April 19, 1994]


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Part III





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Secretary



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24 CFR Part 92




HOME Investment Partnerships Program; Final Rule and Notice
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 92

[Docket No. R-94-1648; FR-3411-I-03]
RIN 2501-AB50

 
HOME Investment Partnerships Program

AGENCY: Office of the Secretary, HUD.

ACTION: Interim rule.

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SUMMARY: This interim rule amends the existing interim rule for the 
HOME Investment Partnerships Program by implementing amendments enacted 
by the Housing and Community Development Act of 1992 and by making a 
number of clarifying changes.

DATES: Effective Date: May 19, 1994 through June 30, 1995.
    Comments due date: Comments on this interim rule must be submitted 
on or before June 20, 1994.

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim rule to the Rules Docket Clerk, Office of General Counsel, 
room 10276, Department of Housing and Urban Development, 451 Seventh 
Street SW., Washington, DC 20410. Communications should refer to the 
above docket number and title. A copy of each communication submitted 
will be available for public inspection and copying between 7:30 a.m. 
and 5:30 p.m. weekdays at the above address. FAXED comments will not be 
accepted.

FOR FURTHER INFORMATION CONTACT: Mary Kolesar, Director, Program Policy 
Division, Office of Affordable Housing Programs, 451 Seventh Street 
SW., Washington, DC 20410, telephone (202) 708-2470, TDD (202) 708-
2565. (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

    The information collection requirements for the HOME Investment 
Partnerships Program have been approved by the Office of Management and 
Budget, under section 3504(h) of the Paperwork Reduction Act of 1980 
(44 U.S.C. 3501-3520), and assigned OMB control number 2501-0013. This 
interim rule does not contain additional information collection 
requirements.

II. Background

    The HOME Investment Partnerships Program (HOME) was enacted under 
title II (42 U.S.C. 12701-12839) of the Cranston-Gonzalez National 
Affordable Housing Act (NAHA) (Pub. L. 101-625, approved November 28, 
1990). On March 19, 1991, the Department published a proposed rule (56 
FR 11592) to implement the HOME Program. The Department received 119 
public comments in response to the proposed rule. After reviewing and 
considering these comments, HUD published an interim rule on December 
16, 1991 (56 FR 65313), inviting additional comments on the program.
    The Department received 118 public comments on the interim rule. In 
partial response to these comments and HUD's experience in implementing 
the program, an interim rule to make necessary changes on an expedited 
basis to the December 16, 1991 interim rule was developed. In addition, 
the Housing and Community Development Act of 1992 (HCDA 1992) (Pub. L. 
102-550, approved October 28, 1992) included a substantial number of 
amendments to the HOME program. Some of the HCDA 1992 amendments that 
were determined to be immediately effective were included in the 
``necessary changes'' interim rule, which was published on December 22, 
1992 (57 FR 60960). The remaining HCDA 1992 amendments determined to be 
immediately effective were published in an interim rule on June 23, 
1993 (58 FR 34130).
    Other HCDA 1992 changes were determined to require the publication 
of a proposed rule with an opportunity for public notice and comment 
before they could be implemented. A proposed rule for this purpose was 
published on April 29, 1993 (58 FR 26048). The Department received 21 
comments in response to the proposed rule. Twelve were from state 
agencies; four were from local agencies; and five comments were from 
associations. This rule implements the April 29, 1993 proposed rule as 
an interim rule. This rule is being published as an interim rule and 
not as a final rule because the HOME program regulation at 24 CFR part 
92 has not yet been issued as a final rule.
    In addition to implementing the April 29 proposed rule, this 
interim rule addresses two additional areas of necessary amendments to 
the HOME regulation. First, a number of clarifying revisions are made 
to the HOME regulation to provide additional guidance for program 
participants, as explained below in the discussion of changes made to 
individual sections. Second, Departmental staff reviewed the HOME rule 
in relationship to the Community Development Block Grant (CDBG) 
Program, and developed a number of recommendations for greater 
compatibility between the HOME and CDBG regulations which are included 
in this interim rule.
    The following discussion, arranged according to the sequence of the 
HOME rule sections being considered, summarizes and responds to the 
comments received, and describes the changes made to the HOME Program 
regulation in this interim rule. Unless otherwise indicated in this 
preamble, the portions of this rule that were a part of the proposed 
rule remain the same.
    In Sec. 92.2, the definition of commitment is revised. The 
Department believes greater flexibility in the definition of commitment 
is required to give participating jurisdictions additional time to use 
their HOME allocations. In addition to commitments to specific projects 
which are recognized as legally binding agreements between PJs and 
project owners, the Department is expanding the definition of 
commitment. The expanded definition would count as commitments legally 
binding agreements with State recipients, subrecipients, contractors or 
reservation of funds by Community Housing Development Organizations 
(CHDOs).
    Initially, the Department believed that additional flexibility was 
warranted for FY1992 funds because of the slow start-up of the program 
based on initial statutory complexity. With both significant statutory 
amendments of the Housing and Community Development Act of 1992 and 
regulatory simplification by the Department, the ability of States and 
local governments to operate the HOME Program has now been increased. 
Nonetheless, the Department recognizes that to build upon the momentum 
of these changes, an expansion of the definition will provide 
regulatory relief to allow funds to be committed to both state 
recipients, subrecipients and CHDOs in a more orderly and equitable 
fashion. States can work with small cities and recently formed 
nonprofits to build capacity without fear of losing funds in the short 
term. Local participating jurisdictions may also take on more difficult 
rental projects with nonprofits which serve very-low income families or 
special populations, which often require greater development time.
    The Department will provide additional guidance on how these 
commitments will be documented for purposes of meeting the commitment 
deadlines. While the Department is providing greater flexibility on 
commitments, it will continue to collect information on commitments to 
specific projects and will maintain its emphasis on this aspect of the 
program both in reporting and monitoring of participating 
jurisdictions. All cash and management procedures will remain in effect 
with regard to reporting and disbursement of HOME funds.
    The definition of commit to a specific local project, included 
within the definition of commitment, is revised by changing the start 
construction period for publicly owned projects from six months to 
twelve months. This change will make the start construction period for 
publicly owned projects consistent with the start construction period 
for privately owned projects.
    The definition of community housing development organization in 
Sec. 92.2 is revised to specify that this term means a private 
nonprofit organization that has a tax-exempt ruling from the Internal 
Revenue Service under section 501(c) (3) or (4) of the Internal Revenue 
Code of 1986. The definition did not previously include the reference 
to paragraph (3) or (4) of section 501.
    The definition of housing in Sec. 92.2 is revised to include elder 
cottage housing opportunity (ECHO) units.
    One comment recommended that the ``footprint'' foundation 
requirements present in the definition of reconstruction should be 
eased to give participating jurisdictions (PJs) the decision-making 
ability to waive the requirement if the situation warrants. The 
Department agrees that additional flexibility may be needed, for 
example, to permit PJs to meet current zoning requirements that would 
affect the reconstruction site. The definition of reconstruction at 
Sec. 92.2 is modified to permit a unit to be reconstructed anywhere on 
the existing lot. However, all other Federal requirements of subpart H 
would still be applicable to the project.
    A new Sec. 92.4 is added to implement a Department-wide policy that 
provides for the expiration of interim rules within a set period of 
time if they are not issued in final form before the end of the period. 
The expiration period may be extended by notice published in the 
Federal Register. The expiration date for the HOME interim rule is June 
30, 1995.
    While reconstruction is considered a rehabilitation activity for 
the general purposes of the HOME Program, this would not always be the 
case for complying with the environmental review requirements at 
Sec. 92.352. If a HOME-assisted project is reconstructed upon the same 
foundation or footprint as the original structure, it may be treated as 
a rehabilitation project for the purposes of complying with part 50 and 
part 58. However, the reconstruction of a structure on another portion 
of the lot must be treated as new construction for purposes of part 50 
and part 58.
    The treatment of administrative costs as eligible HOME costs is 
clarified in this rule. The definition of administrative costs is 
removed from Sec. 92.2 and incorporated into Sec. 92.207, a section 
previously held in reserve, where administrative and planning costs are 
listed as eligible costs. The reference to project delivery costs that 
were a part of the definition of administrative costs is deleted and a 
more specific and useful reference is made to staff and overhead costs 
directly related to a project. In addition, participating jurisdictions 
are given the option of charging such staff and overhead costs as a 
``related soft cost'' of a project, under a new Sec. 92.206(c)(6), or 
as an administrative cost under Sec. 92.207. If charged as an 
administrative cost, these costs are included in the ten percent cap 
applicable to administrative and planning costs. If charged to specific 
projects as related soft costs, these costs must be prorated among 
HOME-assisted units, and are subject to the maximum per unit subsidy 
limits and matching requirements.
    A typographical error in the definition of single room occupancy in 
Sec. 92.2 is corrected by replacing, in the third sentence of the 
definition, the word ``residual'' with ``residential.''
    Section 92.50(f) is redesignated as Sec. 92.50(d)(5), and its 
applicability is limited to paragraph 92.50(d) to conform to the intent 
expressed in Amendment No. 15 on page 14 of H.Rept. 103-273, the 
Conference Report for the Department's 1994 Fiscal Year appropriations 
with regard to minimum thresholds.
    The reference to ``housing strategy'' is deleted from the title of 
Sec. 92.61, since insular areas are no longer required to have one.
    A correction to Sec. 92.64(a)(1) (dealing with the applicability of 
HOME program requirements to insular areas) is made to delete 
references to Secs. 92.208 through 92.210, which have been revised 
since first being cited in this section, and to the prohibition against 
using HOME funds to defray administrative costs.
    Section 92.150(b)(2) is revised to include the new eligible 
activities--administrative expenses, and community housing development 
organization (CHDO) operating expenses--as required in the program 
description that participating jurisdictions must submit.
    A conforming change is made to Sec. 92.204(a)(1) to remove the 
reference to Secs. 92.208 through 92.210, which is no longer relevant 
because of amendments made to these sections.
    In Sec. 92.205(a)(1), the reference to specific eligible costs at 
the end of the paragraph is revised to include Secs. 92.206 through 
92.209, in accordance with the reorganization of sections dealing with 
eligible costs, as described in the following preamble paragraph.
    The listing of eligible costs is reorganized in this rule. Rather 
than listing all eligible costs at Sec. 92.206, eligible costs are 
listed, starting at Sec. 92.206 and continuing through previously 
reserved Secs. 92.207, 92.208, and 92.209, by the type of cost. Thus, 
Sec. 92.206 now covers only eligible project costs; Sec. 92.207 covers 
eligible administrative and planning costs; Sec. 92.208 deals with 
eligible CHDO operating expense costs; and Sec. 92.209 covers eligible 
costs related to tenant-based rental assistance. Within these sections, 
clarifying changes are made as explained below. In addition, conforming 
changes throughout part 92 to reflect the new section numbers of 
eligible costs are made by this rule.
    Section 92.206(a)(2) is amended to permit the refinancing of 
secured, existing debt on a single family, owner-occupied unit when 
lending program funds to rehabilitate the unit, if overall housing 
costs of the borrower will be reduced and made more affordable. This 
means a PJ can make one loan to the homeowner to repay existing private 
debt and provide the rehabilitation loan. HOME funds cannot be used to 
pay the transaction costs of privately refinancing the existing debt.
    Section 92.206(a)(3) is revised to clarify the eligibility of 
demolition, utility connections and site improvements associated with 
new construction and rehabilitation. This section clarifies that off-
site utility connections from the property line to the adjacent street 
are eligible. It also provides that site improvements may include on-
site roads and water and sewer lines necessary to the development of 
the project. The project site is defined as the property, owned by the 
project owner, upon which the project is located.
    Section 92.206(c)(5) is clarified by adding the modifier 
``project'' before ``operating expenses'' to distinguish these costs 
from CHDO operating expenses, which are now covered under Sec. 92.208.
    As discussed above, a new Sec. 92.206(c)(6) makes staff and 
overhead costs eligible as a ``related soft cost'' of a project.
    A new Sec. 92.206(c)(7) is added to make the payment of impact fees 
that are commonly charged for all projects within a jurisdiction, an 
eligible cost for new construction and rehabilitation, and the 
prohibition against impact fees at Sec. 92.214(a)(8) is deleted.
    Section 92.206(g) is redesignated as Sec. 92.208, and a technical 
correction is made in this section to change the reference concerning 
requirements and limitations on the receipt of operating expenses by 
community housing development organizations from Sec. 92.301 (e) and 
(f) to Sec. 92.300 (e) and (f). Capacity building costs under 
Sec. 92.300(b) are also specifically listed as eligible HOME costs in 
Sec. 92.208(b).
    A request was received for clarification of Sec. 92.211(a)(2), 
amended by the December 22,1992 interim rule to implement an HCDA 1992 
amendment that replaces the use of the Section 8 waiting list as the 
selection criterion for families eligible to receive HOME-funded 
tenant-based rental assistance. This assistance is now provided in 
accordance with a participating jurisdiction's written tenant selection 
policies and criteria that are consistent with the purposes of 
providing housing to very low- and low-income families and are 
reasonably related to preference rules established under section 
6(c)(4)(A) of the Housing Act of 1937 (42 U.S.C. 1437 et. seq.) 
Questions arise because of uncertainty concerning the meaning of 
``reasonably related to'' the preference rules under section 6(c)(4)(A) 
of the Housing Act of 1937. These preference rules provide for local 
rental assistance programs in which at least 70% of the families 
assisted meet Federal preferences and 30% meet local preferences. For 
example, a Federal preference exists for homeless families. The HOME 
tenant-based rental assistance (TBRA) written selection policy may 
provide a preference to families that, although not presently homeless, 
are likely to be homeless in the near future. This may be the case for 
families in transitional housing, which is provided for only a set time 
period, or for families living temporarily with relatives or friends. 
Section 92.211(a)(2) is amended by adding a clarifying sentence to 
state that ``reasonably related'' means that the PJs may provide TBRA 
to families who currently meet a Federal preference or who because of 
circumstances would qualify in the near future for one of the three 
Federal preferences under section 6(c)(4)(A) of the Housing Act of 1937 
without tenant-based rental assistance. These preferences are: (1) 
Families that occupy substandard housing (including families that are 
homeless or living in a shelter for homeless families); (2) families 
that are paying more than 50 percent of family income for rent; or (3) 
families that are involuntarily displaced.
    Comments were received that objected to the requirements at 
Sec. 92.211(f)(3) that limit a PJ's ability to establish TBRA payment 
standards based on local market conditions and a determination of rent 
reasonableness. The Department agrees that participating jurisdictions 
should be given greater discretion in the implementation of the HOME 
program, and Sec. 92.211(f)(3) is amended accordingly.
    In response to several questions concerning eligible acquisition 
costs, the list of prohibited activities at Sec. 92.214 is revised to 
prohibit the use of HOME funds to acquire property owned by a 
participating jurisdiction, except for property acquired by the 
participating jurisdiction with HOME funds, or property acquired in 
anticipation of carrying out a HOME project. Such a transaction could 
not be considered a bona fide acquisition, since the participating 
jurisdiction owns the property and is providing assistance to buy the 
property. The element of an arm's length transaction is not present. 
This prohibition is added as paragraph (a)(8), which previously 
referred to impact fees.
    In addition to the change (which appeared in the proposed rule) to 
Sec. 92.218(a) to substitute ``housing that qualifies as affordable 
housing under the HOME program'' for ``affordable housing assisted with 
HOME funds,'' Sec. 92.218(c) is revised to give the new citations to 
the references to eligible costs. A new paragraph (e) is also added to 
Sec. 92.218 to clarify that contributions that have been or will be 
counted towards satisfying a matching requirement of another Federal 
grant or award may not count toward satisfying the matching 
contribution requirement for the HOME program. This clarification is 
based on the language in the Department's common rule on uniform 
requirements for grants to State and local governments at 24 CFR 
85.24(b)(3).
    Eight comments opposed the policy outlined in the proposed rule 
that a PJ's contribution to a state or local tenant-based rental 
assistance program is not eligible as match. One comment pointed out 
some State constitutions prohibit the use of State funds for the 
development of private property. These States often have extensive TBRA 
programs to provide affordable housing. If TBRA is not allowable for 
match purposes, then these States would be limited in their ability to 
meet their match requirements.
    The Department has been convinced by such arguments to permit local 
contributions to TBRA (but not related administrative costs) to be used 
for match. Section 92.219(b) is amended to permit match credit for TBRA 
which meets the provisions of Secs. 92.210, 92.211 and 92.253(a) and 
(b). This parallels the approach taken for local contributions to 
affordable housing which is not HOME-assisted, but which must still 
conform to certain HOME requirements to be considered ``affordable.''
    This interim rule also provides clarification, made in response to 
a number of comments that requested additional guidance, on what HOME 
requirements apply to projects in which state or local investment of 
funds are being counted as match. PJs must establish a procedure to 
monitor these HOME-eligible projects to ensure continued compliance 
with the requirements of 92.203 (income determinations), 92.210 (TBRA-
security deposits), 92.211 (TBRA, except for 92.211(c), Term of rental 
assistance contract) 92.252 (rental) 92.253 (tenant protections) and 
92.254 (ownership), but the units are not subject to the annual on-site 
inspections or recertification of income and rents as HOME projects 
are. HOME administrative funds may be used to monitor these projects 
for compliance with HOME requirements. No other HOME requirements 
apply, including the cross-cutting requirements of subpart H of part 
92, to non-assisted projects counted as match. Investment in units 
other than affordable units does not count as match, and Sec. 92.219(c) 
is amended to reflect this.
    In general, contributions in HOME-eligible projects will be counted 
in the same manner as match contributions in HOME-assisted projects. A 
contribution will be counted only to the extent it is a permanent 
contribution and repayments are placed in the HOME local account. Once 
deposited in the HOME account the funds must be used for HOME-eligible 
projects; funds from repayments do not have to be matched but can not 
count as match. The contribution itself may be for any eligible forms 
of match except those in Sec. 92.220(a) (2) and (4), which by statute 
must be made for affordable housing assisted with HOME funds.
    Section 92.220(a)(1) is expanded to clarify that repayments of 
matching contributions in HOME-assisted projects, or in affordable 
housing projects that are not HOME-assisted in accordance with 
Sec. 92.219(b), must be made to the local HOME account to earn match 
credit for the full loan amount. In both cases, HOME-assisted and non-
HOME-assisted affordable housing projects, the contribution must be 
contributed permanently to the project in order to qualify as match.
    Section 92.220(a)(2) is revised and expanded to permit as an 
eligible form of match contribution all taxes, fees, and other charges 
that are imposed or charged on projects and waived by a State or local 
government. Before this change, only such charges waived by a 
participating jurisdiction were eligible.
    Additional guidance on the match eligibility of contributions of 
land is provided in this rule. The general rule that the value of land 
not acquired with federal resources is a permissible form of matching 
contribution is still applicable. The reason for excluding land 
acquired with federal resources is that the authorizing statute for the 
HOME Program permits cash contributions only from non-federal resources 
as an eligible form of match. The ineligibility of federal resources 
cannot be circumvented by purchasing land with federal resources (for 
example, with CDBG funds) and then contributing the land to a HOME 
project in order to obtain match credit.
    However, the question has arisen of whether or not the difference 
between the fair market value and the purchase price of land acquired 
with federal resources and donated to affordable housing would be an 
eligible form of match. The Department recognizes that this difference 
in value could qualify as an eligible contribution, but also recognizes 
that there are inherent difficulties in distinguishing between when 
such a transaction would merely be a ``good buy'' and when it would 
constitute a true contribution for match purposes. To provide guidance 
on this question so that match credit may be recognized for this form 
of contribution, Sec. 92.220(a)(3) is revised to state that the 
acquisition cost in such a transaction must be demonstrably below the 
appraised value and must be acknowledged by the seller as a donation to 
affordable housing at the time of acquisition. Property that is 
acquired with federal assistance must be acquired specifically for 
HOME-assisted housing or for affordable housing that will be counted as 
match pursuant to Sec. 92.219(b)(2). If these conditions are met, the 
full value of the difference in price may be claimed for match credit.
    Two comments disagreed with the prohibition in 
Sec. 92.220(a)(5)(iii) against permitting carryover of excess match 
related to bond proceeds to apply to subsequent years' 25 percent 
limitation. Upon reconsideration, the Department agrees that such a 
carryover is appropriate, and this interim rule permits it.
    In Sec. 92.221, the provision that defines when bond proceeds are 
recognized as match, which appeared as paragraph (b)(6) in the proposed 
rule, is added as paragraph (a)(7). This is because in the period 
between the publication of the proposed rule and this interim rule, an 
interim rule was published on June 23, 1993 (58 FR 34130) that revised 
the structure of Sec. 92.221. In addition, a new paragraph (c) is added 
to Sec. 92.221 to clarify which entity receives match credit for a 
contribution. The general rule is that the PJ that makes the match 
investments in HOME-assisted or HOME-eligible projects is the entity 
that receives the match credit. If a non-PJ makes a contribution for 
affordable housing to a PJ, the PJ receives the match credit. By way of 
additional clarification, the interim rule also declares that a State 
that makes a contribution to a local participating jurisdiction to be 
used for affordable housing, whether or not HOME-assisted, may take the 
match credit for itself or may permit the local participating 
jurisdiction to recognize the match credit.
    Seven comments were received on the proposed revisions to 
Sec. 92.222 on reduction of the matching contribution requirement. 
These comments were generally favorable, especially concerning the two 
year match reduction period provision at Sec. 92.222(a)(4). A few 
comments suggested alternative criteria to use for local government 
participating jurisdictions, but these criteria are established by 
statute, and the interim rule merely repeats the statutory language. 
There were also suggestions to use other distress criteria, such as 
changes in non-agricultural employment or in State taxes collected, for 
State participating jurisdictions. However, for the reasons stated in 
the preamble to the proposed rule, this portion of the interim rule 
remains unchanged. The list of State participating jurisdictions that 
qualify for this match reduction is published as a Notice elsewhere in 
this issue of the Federal Register.
    In response to a number of inquiries, this interim rule provides 
clarification of the adjustment of HOME rents. Section 92.252(a)(1) 
requires that in order to qualify as affordable housing, a project must 
bear rents not greater than the lesser of FMR or 30 percent of the 
adjusted income of a family whose gross income equals 65 percent of the 
median income for the area. Section 92.252(a)(2) requires further rent 
limitations on the 20 percent of units in each project which must be 
occupied by very low-income families. The adjustment of qualifying 
rents is addressed in Sec. 92.252(d), which is amended to clarify that 
the rent ceilings for HOME projects do not fall below the HOME rent for 
the project in effect at the time of project commitment. This is 
permitted to ensure the continued financial viability of the project 
and for consistency with the low-income housing tax credit statute.
    Section 92.252(a)(2) includes as a rent limitation for the 
qualification of projects with three or more rental units as affordable 
housing that not less than 20 percent of the units be occupied by very 
low-income families and bear rents not greater than 30 percent of the 
gross income of a family whose income equals 50 percent of the median 
income for the area. The Department has received indications that, 
depending upon the FMR or the differences in adjusted and gross income, 
the use of this formula, which is intended to produce a lower HOME rent 
than that computed under Sec. 92.252(a)(1), results in a higher rent 
than under Sec. 92.252(a)(1). To prevent very low-income families from 
potentially paying more rent than low-income families, a new 
Sec. 92.252(a)(2)(iii) is added to specify that the lowest rent 
computed under either Secs. 92.252(a) (1) or (2) is applicable to units 
occupied by very low-income families.
    A correction is made in this interim rule concerning the 
foreclosure provisions of Sec. 92.252(a)(5) to parallel the revision 
made in the June 23, 1993 interim rule to Sec. 92.254(a)(4)(i)(B).
    A number of clarifying amendments are being made to the 
homeownership affordability requirements of Sec. 92.254(a). In response 
to comments criticizing the length of the affordability period imposed 
upon first-time homebuyers regardless of the amount of HOME assistance 
received, this interim rule amends Sec. 92.254(a) to make it conform to 
the Sec. 92.252(a)(5) table that provides differing affordability 
periods for rental units depending upon the amount of the HOME 
investment. The 20-year affordability period for newly constructed 
housing, regardless of the amount of HOME funds invested, has been 
eliminated for homeownership activities.
    Two additional clarifying changes are made to Sec. 92.254(a) in 
this rule. A sentence is added to Sec. 92.254(a)(4)(ii)(C) to specify 
that the HOME investment subject to recapture is the HOME assistance 
that enabled the first-time homebuyer to buy the dwelling unit, 
including any HOME assistance that reduced the purchase price from fair 
market value to an affordable price, such as subsidizing construction 
financing costs or other development costs. The second change to this 
section provides guidance with respect to two-to-four unit first-time 
homebuyer projects. New paragraph (a)(4)(ii)(D) states that when HOME 
funds are used in two-to-four unit first-time homebuyer projects, upon 
recapture of the HOME funds the affordability periods on the rental 
units may be terminated.
    Technical corrections to change the references to 24 CFR 203.18(b) 
in Secs. 92.254(a)(1)(i) and 92.254(b)(1)(i) to 24 CFR 203.18b are made 
by this rule.
    Six comments were received regarding the ``floating'' units 
amendment to Sec. 92.255, all of them favorable. As explained in the 
preamble to the proposed rule, the Department is amending the procedure 
for housing project owners to designate those units in a property that 
are HOME-assisted units. Formerly, specific units were designated as 
the HOME units, and that designation was fixed for the term of the 
affordability period. To provide more program flexibility, this interim 
rule adds new language to Sec. 92.255 that permits the participating 
jurisdiction to use a system of ``floating'' units that may be changed 
over the affordability period, so long as the total number of units 
remains the same and the substituted units are at least comparable in 
terms of size, features, and number of bedrooms to the originally 
designated HOME-assisted units.
    Additional guidance is provided in Sec. 92.256 by clarifying that 
the requirement that residential living space must constitute at least 
51 percent of the project space is significant only for purposes of 
counting the contribution in the non-residential portion of the 
property as match. The concern in making this change is that this 
section was being misinterpreted to mean that a project required at 
least 51 percent residential living space to permit the use of HOME 
funds.
    The ECHO housing provisions of Secs. 92.259 and 92.625 were 
addressed in two comments that were generally favorable. One of the 
comments pointed out differences in the two sections and recommended 
that they be made uniform. The two sections are, in fact, identical 
except for the differences necessary to accommodate the general HOME 
program and the program as modified for Indian tribes in subpart M of 
the rule.
    In Sec. 92.300(b), the language concerning the availability of a 
percentage of the minimum CHDO setaside for capacity building is 
amended from ``may be expended'' to ``may be committed'' to allow 
participating jurisdictions more flexibility in using HOME funds for 
this purpose. Corrections are made to change the references in 
Secs. 92.300 (e) and (f) from operating expenses provided under 
Sec. 92.206(g) to operating expenses provided under Sec. 92.208, and to 
change the reference in Sec. 92.300(f) from administrative funds under 
Sec. 92.206(f) to administrative funds under Sec. 92.207, to conform 
these citations to this rule's reorganization of eligible costs.
    Section 92.354(a) is revised to clarify the applicability of the 
Davis-Bacon Act to the HOME Program. The revision makes clear that the 
Davis-Bacon wage provisions apply if HOME funds are used for any 
project costs (as defined at Sec. 92.206), including construction or 
nonconstruction costs, of housing with 12 or more assisted units. Once 
applicable, these wage provisions apply to all laborers and mechanics 
employed in the development of the entire project, as defined in 
Sec. 92.2, including portions other than the assisted units. The 
interim rule specifies that if HOME funds are only used to assist 
first-time homebuyers to acquire single-family housing and not for any 
other project costs, these wage provisions apply to the construction of 
housing containing 12 or more units when there is a written agreement 
with the owner or developer of the housing that the HOME funds will be 
used to assist first-time homebuyers to buy the housing.
    A conforming change is made to Sec. 92.502(b)(1) that is necessary 
because of the amendment made to the definition of commitment in 
Sec. 92.2, discussed above.
    This interim rule eases the requirements of Sec. 92.504(e)(1) by 
permitting on-site review once within a two-year period for rental 
housing containing 25 HOME-assisted units or less.
    Finally, in Sec. 92.508, paragraph (a)(4)(v) is revised to make a 
conforming change, related to the reorganization of eligible costs, 
from a reference to Sec. 92.206(g) to a reference to Sec. 92.208.

III. Findings and Certifications

Environmental Review

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969. The Finding of No Significant Impact is available for 
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the 
Office of the Rules Docket Clerk.

Regulatory Planning and Review

    This interim rule has been reviewed and approved in accordance with 
Executive Order 12866, issued by the President on September 30, 1993 
(58 FR 51735, October 4, 1993). Any changes to the interim rule 
resulting from this review are available for public inspection between 
7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules Docket 
Clerk.

Impact on Small Entities

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 
605(b)), the undersigned hereby certifies that this interim rule does 
not have a significant economic impact on a substantial number of small 
entities, because jurisdictions that are statutorily eligible to 
receive formula allocations are relatively larger cities, counties or 
States.

Regulatory Agenda

    This interim rule was listed as item number 1472 in the 
Department's Semiannual Agenda of Regulations published on October 25, 
1993 (58 FR 56402, 56416) under Executive Order 12291 and the 
Regulatory Flexibility Act.

Federalism Impact

    The General Counsel has determined, as the Designated Official for 
HUD under section 6(a) of Executive Order 12612, Federalism, that this 
interim rule does not have federalism implications concerning the 
division of local, State, and federal responsibilities. While the HOME 
Program interim rule amended by this interim rule was determined to be 
a rule with federalism implications and the Department submitted a 
Federalism Assessment concerning the interim rule to OMB, this amending 
rule only makes limited adjustments to the interim rule and does not 
significantly affect any of the factors considered in the Federalism 
Assessment for the interim rule.

Impact on the Family

    The General Counsel, as the designated official under Executive 
Order 12606, The Family, has determined that this interim rule would 
not have significant impact on family formation, maintenance, and 
general well-being. Assistance provided under this interim rule can be 
expected to support family values, by helping families achieve security 
and independence; by enabling them to live in decent, safe, and 
sanitary housing; and by giving them the means to live independently in 
mainstream American society. This interim rule would not, however, 
affect the institution of the family, which is requisite to coverage by 
the Order. Even if this interim rule had the necessary family impact, 
it would not be subject to further review under the Order, since the 
provision of assistance under this interim rule is required by statute, 
and is not subject to agency discretion.

    The Catalog of Federal Domestic Assistance Number for the HOME 
Program is 14.239.

List of Subjects in 24 CFR Part 92

    Administrative practice and procedure, Grant programs--housing and 
community development, Grant programs--Indians, Indians, Low and 
moderate income housing, Manufactured homes, Rent subsidies, Reporting 
and recordkeeping requirements.

    Accordingly, the Department amends part 92 of title 24 of the Code 
of Federal Regulations as follows:

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

    1. The authority citation for part 92 continues to read as follows:

    Authority: 42 U.S.C. 3535(d) and 12701-12839.

    2. In Sec. 92.2, the definition for ``Administrative costs'' is 
removed, and the definitions for ``Commit to a specific local project 
or commitment'', paragraph (4) of ``Community housing development 
organization'', ``Housing'', ``Reconstruction'', and ``Single room 
occupancy (SRO)'', are revised to read as follows:


Sec. 92.2  Definitions.

* * * * *
    Commitment means:
    (1) The participating jurisdiction has entered into a legally 
binding agreement with a state recipient, a subrecipient, or a 
contractor to use a specific amount of HOME funds to produce affordable 
housing or provide tenant-based rental assistance or has entered into a 
written agreement reserving a specific amount of funds to a CHDO, or 
commit to a specific local project, as defined in paragraph (2) of this 
definition.
    (2) Commit to a specific local project, which means:
    (i) For a project which is privately owned when the commitment is 
made:
    (A) If the project is for rehabilitation or new construction, a 
written legally binding agreement between the participating 
jurisdiction and the project owner under which the participating 
jurisdiction (or other entity receiving HOME funds directly from HUD, 
state recipient, or subrecipient) agrees to provide HOME assistance to 
the owner for an identifiable project as defined in this part that can 
reasonably be expected to start construction within twelve months of 
the agreement and in which the owner agrees to start construction 
within that period.
    (B) If funds are used for tenant-based rental assistance, the 
participating jurisdiction (or other entity receiving HOME funds 
directly from HUD, state recipient, or subrecipient) has entered into a 
rental assistance contract with the owner or the tenant in accordance 
with the provisions of Sec. 92.211.
    (C) If the project is for acquisition, a written legally binding 
agreement, i.e., contract for sale, between the participating 
jurisdiction (or other entity receiving HOME funds directly from HUD, 
state recipient, or subrecipient) and the project owner under which the 
participating jurisdiction (or other entity receiving HOME funds 
directly from HUD, state recipient, or subrecipient) agrees to provide 
HOME assistance to the owner for purchase of the project that can 
reasonably be expected to be accomplished within six months of the 
agreement and in which the owner agrees to transfer title within that 
period.
    (ii) For a project that is publicly owned when the commitment is 
made, the Project Set-Up Report submitted under the Cash and Management 
Information System which identifies a specific project that will start 
construction within twelve months of receipt of the Project Set-Up 
Report.
    (iii) Under both paragraphs (2)(i) and (ii) of this definition, the 
date HUD enters into the Cash and Management Information System 
(Sec. 92.502) an acceptable Project Set-Up Report for a project is 
deemed to be the date of project commitment.
    Community housing development organization means a private 
nonprofit organization that
* * * * *
    (4) Has a tax exempt ruling from the Internal Revenue Service under 
section 501(c)(3) or (4) of the Internal Revenue Code of 1986;
* * * * *
    Housing includes manufactured housing and manufactured housing 
lots. Housing also includes elder cottage housing opportunity (ECHO) 
units that are small, free-standing, barrier-free, energy-efficient, 
removable, and designed to be installed adjacent to existing single-
family dwellings. Housing does not include emergency shelters.
* * * * *
    Reconstruction means the rebuilding, on the same lot, of housing 
standing on a site at the time of project commitment. The number of 
housing units on the lot may not be decreased or increased as part of a 
reconstruction project, but the number of rooms per unit may be 
increased or decreased. The reconstructed housing must be substantially 
similar (i.e., single- or multi-family housing) to the original 
housing. Reconstruction also includes replacing an existing substandard 
unit of manufactured housing with a new or standard unit of 
manufactured housing. Reconstruction is rehabilitation for purposes of 
this part.
* * * * *
    Single room occupancy (SRO) housing means housing consisting of 
single room dwelling units that is the primary residence of its 
occupant or occupants. The unit must contain either food preparation or 
sanitary facilities (and may contain both) if the project consists of 
new construction, conversion of non-residential space, or 
reconstruction. For acquisition or rehabilitation of an existing 
residential structure, neither food preparation or sanitary facilities 
is required to be in the unit. If the units do not contain sanitary 
facilities, the building must contain sanitary facilities that are 
shared by tenants. SRO does not include facilities for students.
* * * * *
    3. Section 92.4 is added to read as follows:


Sec. 92.4  Expiration of interim rule.

    This part shall expire and shall not be in effect after June 30, 
1995, unless it is published as a final rule or the Department 
publishes a notice in the Federal Register to extend the effective 
date.
    4. In Sec. 92.50, paragraph (f) is redesignated as paragraph (d)(5) 
and revised to read as follows:


Sec. 92.50  Formula allocation.

* * * * *
    (d) * * *
    (5) For the purpose of determining the formula allocation in fiscal 
years in which Congress appropriates less than $1.5 billion of HOME 
funds, $335,000 is substituted for $500,000 each time it appears in 
this paragraph (d), and $167,500 is substituted for $250,000 each time 
it appears in this paragraph (d).
* * * * *
    5. In Sec. 92.61, the section heading is revised to read,


Sec. 92.61  Program description.

    6. In Sec. 92.64, paragraph (a)(1) is revised to read as follows:


Sec. 92.64  Applicability of requirements to insular areas.

    (a) * * *
    (1) Subpart E (Program Requirements): Administrative costs, as 
described in Sec. 92.207, are eligible costs for insular areas in an 
amount not to exceed 15 percent of the HOME funds provided to the 
insular area. The matching contribution requirements in this part do 
not apply.
* * * * *
    7. In Sec. 92.150, paragraph (b)(2) is revised to read as follows:


Sec. 92.150  Submission of program description and certifications.

* * * * *
    (b) * * *
    (2) For a local participating jurisdiction, the estimated use of 
HOME funds and of matching contributions (consistent with its approved 
housing strategy) for each of the following categories of eligible 
activities: New construction, substantial rehabilitation, other 
rehabilitation, acquisition (not involving new construction or 
rehabilitation), tenant-based rental assistance, administrative 
expenses, and community housing development organization (CHDO) 
operating expenses, and an estimate of whether units assisted will be 
rental or owner-occupied;
* * * * *
    8. In Sec. 92.204, paragraph (a)(1) is revised to read as follows:


Sec. 92.204  Applicability of requirements to entities that receive a 
reallocation of HOME funds, other than participating jurisdictions.

    (a) * * *
    (1) Subpart E (Program Requirements) of this part: The matching 
contribution requirements in Sec. 92.218 through Sec. 92.221 do not 
apply.
* * * * *
    9. In Sec. 92.205, paragraph (a)(1) is revised to read as follows:


Sec. 92.205  Eligible activities: General.

    (a) * * *
    (1) HOME funds may be used by a participating jurisdiction to 
provide incentives to develop and support affordable rental housing and 
homeownership affordability through the acquisition (including 
assistance to first-time homebuyers), new construction, reconstruction, 
or moderate or substantial rehabilitation of non-luxury housing with 
suitable amenities, including real property acquisition, site 
improvement, conversion, demolition, and other expenses, including 
financing costs, relocation expenses of any displaced persons, 
families, businesses, or organizations, to provide tenant-based rental 
assistance, including security deposits; to provide payment of 
reasonable administrative and planning costs; and to provide for the 
payment of operating expenses of community housing development 
organizations. The housing must be permanent or transitional housing, 
and includes permanent housing for disabled homeless persons, and 
single-room occupancy housing. The specific eligible costs for these 
activities are set forth in Secs. 92.206 through 92.209.
* * * * *
    10. In Sec. 92.206, the section heading, paragraphs (a)(2), (a)(3), 
paragraph (b), the introductory text of paragraph (c), and paragraphs 
(c)(5), (d) and (e) are revised; paragraphs (c)(6) and (c)(7) are 
added; and paragraphs (f) and (g) are removed, to read as follows:


Sec. 92.206  Eligible project costs.

    (a) * * *
    (2) For rehabilitation, costs:
    (i) To meet the applicable rehabilitation standards of the 
participating jurisdiction or correct substandard conditions to, 
minimally, the housing quality standards at Sec. 882.109 of this title;
    (ii) To make essential improvements, including energy-related 
repairs or improvements, improvements necessary to permit use by 
handicapped persons, and the abatement of lead-based paint hazards, as 
required by Sec. 92.355, and to repair or replace major housing systems 
in danger of failure; and
    (iii) To refinance existing debt secured by a single-family owner-
occupied unit when loaning HOME funds to rehabilitate the unit, if the 
overall housing costs of the borrower will be reduced and made more 
affordable.
    (3) For both new construction and rehabilitation, costs:
    (i) To demolish existing structures;
    (ii) To make utility connections including off-site connections 
from the property line to the adjacent street; and
    (iii) To make improvements to the project site that are in keeping 
with improvements of surrounding, standard projects. Site improvements 
may include on-site roads and sewer and water lines necessary to the 
development of the project. The project site is the property, owned by 
the project owner, upon which the project is located.
    (b) Acquisition costs. Costs of acquiring improved or unimproved 
real property, including acquisition by first-time homebuyers.
    (c) Related soft costs. Other reasonable and necessary costs 
incurred by the owner or participating jurisdiction and associated with 
the financing, or development (or both) of new construction, 
rehabilitation or acquisition of housing assisted with HOME funds. 
These costs include, but are not limited to:
* * * * *
    (5) For new construction or substantial rehabilitation, the cost of 
funding an initial operating deficit reserve, which is a reserve to 
meet any shortfall in project income during the period of project rent-
up (not to exceed 18 months) and which may only be used to pay project 
operating expenses, reserve for replacement payments, and debt service. 
Any HOME funds placed in an operating deficit reserve that remain 
unexpended when the reserve terminates must be returned to the 
participating jurisdiction's local HOME Investment Trust Fund account.
    (6) Staff and overhead costs directly related to carrying out the 
project, such as work specifications preparation, loan processing 
inspections, and other services related to assisting potential owners, 
tenants, and homebuyers, e.g., housing counseling, may be charged to 
project costs only if the project is funded and the individual becomes 
the owner or tenant of the HOME-assisted project. For multi-unit 
projects, such costs must be allocated among HOME-assisted units in a 
reasonable manner and documented.
    (7) For both new construction and rehabilitation, costs for the 
payment of impact fees that are charged for all projects within a 
jurisdiction.
    (d) Community housing development organization (CHDO) project 
specific assistance under Sec. 92.301.
    (e) Relocation costs. The cost of relocation payments and other 
relocation assistance to persons displaced by the project are eligible 
costs.
    (1) Relocation payments include replacement housing payments, 
payments for moving expenses, and payments for reasonable out-of-pocket 
costs incurred in the temporary relocation of persons.
    (2) Other relocation assistance means staff and overhead costs 
directly related to providing advisory and other relocation services to 
persons displaced by the project, including timely written notices to 
occupants, referrals to comparable and suitable replacement property, 
property inspections, counseling, and other assistance necessary to 
minimize hardship.
    11. Section 92.207 is added to read as follows:


Sec. 92.207  Eligible administrative and planning costs.

    A participating jurisdiction may expend, for payment of reasonable 
administrative and planning costs of the HOME program, an amount of 
HOME funds that is not more than ten percent of the fiscal year HOME 
basic formula allocation plus any funds received in accordance with 
Sec. 92.102(b) to meet or exceed participation threshold requirements 
that fiscal year. A State that transfers any HOME funds in accordance 
with Sec. 92.102(b) must exclude these funds in calculating the amount 
it may expend for administrative and planning costs. A participating 
jurisdiction may also use up to ten percent of any return of the HOME 
investment, as defined in Sec. 92.503, calculated at the time of 
deposit in its local HOME account, for administrative and planning 
costs. Reasonable administrative and planning costs includes:
    (a) General management, oversight and coordination. Reasonable 
costs of overall program management, coordination, monitoring, and 
evaluation. Such costs include, but are not limited to, necessary 
expenditures for the following:
    (1) Salaries, wages, and related costs of the participating 
jurisdiction's staff. In charging costs to this category the 
participating jurisdiction may either include the entire salary, wages, 
and related costs allocable to the program of each person whose primary 
responsibilities with regard to the program involves program 
administration assignments, or the prorated share of the salary, wages, 
and related costs of each person whose job includes any program 
administration assignments. The participating jurisdiction may use only 
one of these methods. Program administration includes the following 
types of assignments:
    (i) Developing systems and schedules for ensuring compliance with 
program requirements;
    (ii) Developing interagency agreements and agreements with entities 
receiving HOME funds;
    (iii) Monitoring HOME-assisted housing for progress and compliance 
with program requirements;
    (iv) Developing agreements and monitoring housing not assisted with 
HOME funds that the participating jurisdiction designates as a matching 
contribution in accordance with Sec. 92.219(b) for compliance with 
applicable program requirements;
    (v) Preparing reports and other documents related to the program 
for submission to HUD;
    (vi) Coordinating the resolution of audit and monitoring findings;
    (vii) Evaluating program results against stated objectives; and
    (viii) Managing or supervising persons whose primary 
responsibilities with regard to the program include such assignments as 
those described in paragraph (a)(1) (i) through (vii) of this section;
    (2) Travel costs incurred for official business in carrying out the 
program;
    (3) Administrative services performed under third party contracts 
or agreements, including such services as general legal services, 
accounting services, and audit services; and
    (4) Other costs for goods and services required for administration 
of the program, including such goods and services as rental or purchase 
of equipment, insurance, utilities, office supplies, and rental and 
maintenance (but not purchase) of office space.
    (5) Costs of administering tenant-based rental assistance programs.
    (b) Staff and overhead. Staff and overhead costs directly related 
to carrying out the project, such as work specifications preparation, 
loan processing inspections, and other services related to assisting 
potential owners, tenants, and homebuyers (e.g., housing counseling). 
Staff and overhead costs directly related to providing advisory and 
other relocation services to persons displaced by the project, 
including timely written notices to occupants, referrals to comparable 
and suitable replacement property, property inspections, counseling, 
and other assistance necessary to minimize hardship. These costs may be 
charged as administrative costs or as project costs under Sec. 92.206 
(c)(6) and (e)(2), at the discretion of the participating jurisdiction.
    (c) Public information. The provision of information and other 
resources to residents and citizen organizations participating in the 
planning, implementation, or assessment of projects being assisted with 
HOME funds.
    (d) Fair housing. Activities that affirmatively further fair 
housing.
    (e) Indirect Costs. Indirect costs may be charged to the HOME 
program under a cost allocation plan prepared in accordance with OMB 
Circulars A-87 or A-122 as applicable.
    (f) Submission of the housing strategy. Preparation of the housing 
strategy required under 24 CFR part 91. Preparation includes the costs 
of public hearings, consultations, and publication.
    12. Section 92.208 is added to read as follows:


Sec. 92.208  Eligible CHDO operating expense and capacity building 
costs.

    (a) Up to 5 percent of a participating jurisdiction's fiscal year 
HOME allocation may be used for the operating expenses of community 
housing development organizations (CHDOs). These funds may not be used 
to pay operating costs incurred by a CHDO acting as a subrecipient or 
contractor under the HOME Program. The requirements and limitations on 
the receipt of these funds by CHDOs are set forth in Sec. 92.300 (e) 
and (f).
    (b) HOME funds may be used for capacity building costs under 
Sec. 92.300(b).
    13. Section 92.209 is added to read as follows:


Sec. 92.209  Eligible costs related to tenant-based rental assistance.

    Eligible costs are the rental assistance and security deposit 
payments made to provide tenant-based rental assistance for a family. 
Administration of tenant-based rental assistance is eligible only under 
general management oversight and coordination at Sec. 92.207(a).
    14. In Sec. 92.211, paragraphs (a)(2) and (f)(3) are revised, and 
paragraph (a)(3) is added, to read as follows:


Sec. 92.211  Tenant-based rental assistance.

    (a) * * *
    (2) The participating jurisdiction selects families in accordance 
with written tenant selection policies and criteria that are consistent 
with the purposes of providing housing to very low- and low-income 
families and are reasonably related to preference rules established 
under section 6(c)(4)(A) of the Housing Act of 1937 (42 U.S.C. 1437 et. 
seq.). Selection policies and criteria meet the ``reasonably related'' 
requirement if at least 70% of the families assisted qualify, or would 
qualify in the near future without the tenant-based rental assistance, 
for one of the three Federal preferences under section 6(c)(4)(A) of 
the Housing Act of 1937. These are families that occupy substandard 
housing (including families that are homeless or living in a shelter 
for homeless families); families that are paying more than 50 percent 
of (gross) family income for rent; or families that are involuntarily 
displaced. The participating jurisdiction may select low-income 
families currently residing in units that are designated for 
rehabilitation or acquisition under the participating jurisdiction's 
HOME program without requiring that the family meet the written tenant 
selection policies and criteria. Families so selected may use the 
tenant-based assistance in the rehabilitated or acquired unit or in 
other qualified housing.
    (3) A participating jurisdiction may require the family to use the 
tenant-based assistance within the participating jurisdiction's 
boundaries or may permit the family to use the assistance outside its 
boundaries.
* * * * *
    (f) * * *
    (3) The participating jurisdiction's rent standard for a unit size 
must based on:
    (i) Local market conditions; or
    (ii) May not be less, for each unit size, than 80 percent of the 
published Section 8 Existing Housing fair market rent (in effect when 
the payment standard amount is adopted) nor more than the fair market 
rent or HUD-approved community-wide exception rent (in effect when the 
participating jurisdiction adopts its rent standard amount). 
(Community-wide exception rents are maximum gross rents approved by HUD 
for the Rental Certificate Program under 882.106(a)(3) of this title 
for a designated municipality, county, or similar locality, which apply 
to the whole PHA jurisdiction.) A participating jurisdiction may 
approve on a unit-by-unit basis a subsidy based on a rent standard that 
exceeds the applicable fair market rent by up to 10 percent for 20 
percent of units assisted.
* * * * *
    15. In Sec. 92.214, paragraph (a)(8) is revised to read as follows:


Sec. 92.214  Prohibited activities.

    (a) * * *
    (8) Pay for the acquisition of property owned by the participating 
jurisdiction, except for property acquired by the participating 
jurisdiction with HOME funds, or property acquired in anticipation of 
carrying out a HOME project.
* * * * *
    16. In Sec. 92.218, paragraphs (a) introductory text and (c) are 
revised, and a new paragraph (e) is added, to read as follows:


Sec. 92.218  Amount of matching contribution.

    (a) Each participating jurisdiction must make contributions to 
housing that qualifies as affordable housing under the HOME program, 
throughout a fiscal year. The contributions must total not less than:
* * * * *
    (c) HOME funds used for administrative and planning costs (pursuant 
to Sec. 92.207), CHDO operating expenses (pursuant to Sec. 92.208) and 
capacity building (pursuant to Sec. 92.300(b)) of community housing 
development organizations are not required to be matched.
* * * * *
    (e) Contributions that have been or will be counted towards 
satisfying a matching requirement of another Federal grant or award may 
not count toward satisfying the matching contribution requirement for 
the HOME program.
    17. Section 92.219 would be revised to read as follows:


Sec. 92.219  Recognition of matching contribution.

    (a) Match contribution to HOME-assisted housing. A contribution is 
recognized as a matching contribution if:
    (1) It is made with respect to a tenant who is assisted with HOME 
funds; or
    (2) It is made with respect to HOME-assisted housing; or
    (3) It is made with respect to any portion of a project (including 
a mixed-use project under Sec. 92.256) not less than 50 percent of the 
dwelling units of which are HOME-assisted.
    (b) Match contribution to affordable housing that is not HOME-
assisted. The following requirements apply for recognition of matching 
contributions made to affordable housing that is not HOME-assisted:
    (1) For tenant-based rental assistance (TBRA) that is not HOME-
assisted: (i) The contribution must be made with respect to a tenant 
who is assisted with tenant-based rental assistance that meets the 
requirements of Secs. 92.203 (income determinations), 92.210 (security 
deposits), 92.211 (TBRA, except for 92.211(c), term of rental 
assistance contract), and 92.253(a) and (b) (tenant protections); and
    (ii) The participating jurisdiction must demonstrate in writing 
that such assistance meets the provisions of Secs. 92.203, 92.210, 
92.211, and 92.253(a) and (b).
    (2) For affordable housing projects that are not HOME-assisted: (i) 
The contribution must be made with respect to housing that qualifies as 
affordable housing under Sec. 92.252 or Sec. 92.254.
    (ii) The participating jurisdiction or its instrumentality must 
execute, with the owner of the housing (or, if the participating 
jurisdiction is the owner, with the manager or developer), a written 
agreement that imposes and enumerates all of the affordability 
requirements from Sec. 92.252 and Sec. 92.253(a) and (b) (tenant 
protections), or Sec. 92.254, whichever are applicable, the property 
standards requirements of Sec. 92.251, and income determinations made 
in accordance with Sec. 92.203. This written agreement must be executed 
before any match contributions may be made.
    (iii) A participating jurisdiction must establish a procedure to 
monitor these HOME match-eligible projects to ensure continued 
compliance with the requirements of Secs. 92.203 (income 
determinations), 92.252(rental), 92.253(a) and (b) (tenant protections) 
and 92.254 (ownership). No other HOME requirements apply.
    (iv) The match contribution may be in any eligible form of match 
except those in Secs. 92.220(a)(2) and (4).
    (v) Match contributions to mixed-use or mixed-income projects that 
contain affordable housing units will be recognized only if the 
contribution is made to the project's affordable housing units.
    (c) In addition to the requirements of paragraphs (a) and (b) of 
this section, a cash contribution is recognized as a matching 
contribution only if it is used for costs eligible under Secs. 92.206 
or 92.209, or for the following costs (which are not eligible costs for 
HOME funds): The cost of removing and relocating an ECHO housing unit 
to accommodate an eligible tenant, a project reserve account for 
replacements, a project reserve account for unanticipated increases in 
operating costs, operating subsidies, or costs relating to the portion 
of a mixed-income or mixed-use HOME-assisted project not related to the 
affordable housing units.
    18. In Sec. 92.220, paragraphs (a)(1) introductory text, (a)(2), 
(a)(3) and (a)(5) are revised to read as follows:


Sec. 92.220  Form of matching contribution.

    (a) * * *
    (1) Cash contributions from nonfederal sources. Except for 
contributions made to affordable housing that is not assisted with HOME 
funds and bond proceeds to which the provisions of Sec. 92.220(a)(5) 
are applicable, to be a cash contribution, funds must be contributed 
permanently to the HOME program, regardless of the form of investment 
the jurisdiction provides to a project. Therefore all repayment, 
interest, or other return on investment of the contribution must be 
deposited in the local account of the participating jurisdiction's HOME 
Investment Trust Fund to be used for eligible HOME activities in 
accordance with the requirements of this part. A cash contribution to 
affordable housing that is not assisted with HOME funds must be 
contributed permanently to the project. Repayments of matching 
contributions in affordable housing projects, as defined in 
Sec. 92.219(b), that are not HOME-assisted, must be made to the local 
account of the participating jurisdiction's HOME Investment Trust Fund 
to get match credit for the full loan amount.
* * * * *
    (2) The value, based on customary and reasonable means for 
establishing value, of State or local taxes, fees, or other charges 
that are normally and customarily imposed or charged by a State or 
local government on all transactions or projects in the conduct of 
State or local government operations but are waived, foregone, or 
deferred (including State low-income housing tax credits) in a manner 
that achieves affordability of housing assisted with HOME funds. Fees 
or charges that are associated with the HOME Program only (rather than 
normally and customarily imposed or charged on all transactions or 
projects) are not eligible forms of matching contributions. The amount 
of any real estate taxes may be based on post-improvement property 
value, using customary and reasonable means of establishing value. For 
taxes, fees, or charges that are given for future years, the value is 
the present discounted cash value, based on a rate equal to the rate 
for the Treasury security with a maturity closest to the number of 
years for which the taxes, fees, or charges are waived, foregone, or 
deferred.
    (3) The value, before the HOME assistance is provided and minus any 
debt burden, lien, or other encumbrance, of donated land or other real 
property.
    (i) Property not acquired with federal resources is a contribution 
in the amount of 100% of the value.
    (ii) Property that is acquired with federal assistance must be 
acquired specifically for HOME-assisted housing or for affordable 
housing that will be counted as match pursuant to Sec. 92.219(b)(2). 
Such property is a contribution in the amount of the difference between 
the acquisition cost and the appraised value at the time of acquisition 
with the federal assistance, provided that the property is acquired by 
the HOME project owner (or owner of the affordable housing that will be 
counted as match) with the federal assistance. It also may be given to 
the HOME project owner (or owner of the affordable housing that will be 
counted as match) by the entity acquiring the property with federal 
assistance or sold to the HOME project owner (or owner of the 
affordable housing that will be counted as match) at a price equal to 
or less than the amount of the federal assistance used to acquire the 
property. The acquisition cost paid with the federal assistance must be 
demonstrably below the appraised value and must be acknowledged by the 
seller as a donation to affordable housing at the time of the 
acquisition with the federal assistance.
    (iii) Property must be appraised in conformance with established 
and generally recognized appraisal practice and procedures in common 
use by professional appraisers. Opinions of value must be based on the 
best available data properly analyzed and interpreted. The appraisal of 
land and structures must be performed by an independent, certified 
appraiser.
* * * * *
    (5) Proceeds from multi-family affordable housing and single-family 
project bond financing validly issued by a State or local government, 
or an agency, instrumentality, or political subdivision of a State, as 
follows:
    (i) Fifty percent of the loan amount made from bond proceeds to a 
multi-family affordable housing project owner may qualify as match.
    (ii) Twenty-five percent of the loan amount from bond proceeds made 
to a single-family affordable housing project owner may qualify as 
match.
    (iii) Loans made from bond proceeds may not constitute more than 25 
percent of a participating jurisdiction's total annual match 
contribution. Loans made from bond proceeds in excess of 25 percent of 
a participating jurisdiction's total annual match contribution may be 
carried over to subsequent fiscal years as excess match, but may not 
constitute more than 25 percent of a participating jurisdiction's total 
annual match contribution in any one year.
* * * * *
    19. In Sec. 92.221, paragraphs (a)(7) and (c) are added to read as 
follows:


Sec. 92.221  Match credit.

    (a) * * *
    (7) A loan made from bond proceeds under Sec. 92.220(a)(5) is 
credited at the time of the loan closing.
* * * * *
    (c) The participating jurisdiction that makes the match 
contributions to HOME-assisted or HOME match eligible projects (match 
pursuant to Sec. 92.219(b) for contributions to affordable housing, 
including tenant-based rental assistance, that is not assisted with 
HOME funds) is the participating jurisdiction that receives the match 
credit. A State that provides funding to a local participating 
jurisdiction to be used for a contribution to affordable housing, 
whether or not HOME-assisted, may take the match credit for itself or 
may permit the local participating jurisdiction to receive the match 
credit.
    20. In Sec. 92.222, paragraph (a)(2) is added to read as follows:


Sec. 92.222  Reduction of matching contribution requirement.

    (a) * * *
    (2) Distress criteria for participating jurisdictions that are 
States. As determined and published annually by HUD, if a State 
satisfies at least 2 of the 3 distress factors in paragraphs (a)(2)(i) 
through (iii) of this section, it is in severe fiscal distress and its 
match requirement will be reduced 100% for the period specified in 
paragraph (a)(3) of this section. If a State satisfies any 1 of the 3 
distress factors in paragraphs (a)(2)(i) through (iii) of this section, 
it is in fiscal distress and its match requirement will be reduced by 
50 percent, for the period specified in paragraph (a)(4) of this 
section.
    (i) Poverty rate. The average poverty rate in the State was equal 
to or greater than 125 percent of the average national poverty rate 
during the calendar year for which the most recent data are available, 
as determined according to information of the Bureau of the Census.
    (ii) Per capita income. The average per capita income in the State 
was less than 75 percent of the average national per capita income, 
during the calendar year for which the most recent data are available, 
as determined according to information of the Bureau of the Census.
    (iii) Personal income growth. The average personal income growth 
rate in the State over the most recent four quarters for which the data 
are available was less than 75 percent of the average national personal 
income growth rate during that period, as determined according to 
information of the Bureau of Economic Analysis.
* * * * *
    21. In Sec. 92.252, a new paragraph (a)(2)(iii) is added, and 
paragraph (a)(5) text (the table remains unchanged) and paragraph (d) 
are revised, to read as follows:


Sec. 92.252  Qualification as affordable housing and income targeting: 
Rental housing.

    (a) * * *
    (2) * * *
    (iii) The rent applicable to a unit under paragraph (a)(2) of this 
section shall be the lowest rent computed under paragraphs (a)(1) and 
(a)(2) of this section.
* * * * *
    (5) Will remain affordable without regard to the term of any 
mortgage or the transfer of ownership, pursuant to deed restrictions, 
covenants running with the land, or other mechanisms approved by HUD, 
for not less than the appropriate period, beginning after project 
completion, as specified in the following table, except that the 
affordability restrictions may terminate upon foreclosure or transfer 
in lieu of foreclosure. The participating jurisdiction may use purchase 
options, rights of first refusal or other preemptive rights to purchase 
the housing before foreclosure or deed in lieu of foreclosure to 
preserve affordability. The affordability restrictions shall be revived 
according to the original terms if, during the original affordability 
period, the owner of record before the foreclosure, or deed in lieu of 
foreclosure, or any entity that includes the former owner or those with 
whom the former owner has or had family or business ties, obtains an 
ownership interest in the project or property. * * *
* * * * *
    (d) Adjustment of qualifying rent. (1) Changes in fair market rents 
and in median income over time should be sufficient to maintain the 
financial viability of a project within the qualifying rent standards 
in paragraphs (a) (1) and (2) of this section. Regardless of changes in 
fair market rents and in median income over time, the qualifying rents 
are not required to be lower than the HOME rent for the project in 
effect at the time of project commitment.
    (2) HUD may adjust the qualifying rents established for a project 
under paragraphs (a) (1) and (2) of this section, only if HUD finds 
that an adjustment is necessary to support the continued financial 
viability of the project and only by an amount that HUD determines is 
necessary to maintain continued financial viability of the project. HUD 
expects that this authority will be used sparingly.
    22. In Sec. 92.254, paragraphs (a)(1)(i), (a)(4) introductory text, 
(a)(4)(ii)(C) and (b)(1) are revised, and paragraph (a)(4)(ii)(D) is 
added to read as follows:


Sec. 92.254  Qualification as affordable housing: homeownership.

    (a) * * *
    (1)(i) Has an initial purchase price that does not exceed 95% of 
the median purchase price for the type of single-family housing (1- to 
4-family residence, condominium unit, cooperative unit, combination 
manufactured home and lot, or manufactured home lot) for the 
jurisdiction as determined by HUD, and which may be appealed in 
accordance with 24 CFR 203.18b; and
* * * * *
    (4) Is subject--for minimum periods of: 5 years where the per unit 
amount of HOME funds provided is less than $15,000; 10 years where the 
per unit amount of HOME funds provided is $15,000 to $40,000; and 15 
years where the per unit amount of HOME funds provided is greater than 
$40,000--to resale restrictions or recapture provisions that are 
established by the participating jurisdiction and determined by HUD to 
be appropriate to either:
* * * * *
    (ii) * * *
    (C) The HOME investment that is subject to recapture is the HOME 
assistance that enabled the first-time homebuyer to buy the dwelling 
unit. This includes any HOME assistance, whether a direct subsidy to 
the homebuyer or a construction or development subsidy, that reduced 
the purchase price from fair market value to an affordable price. The 
recaptured funds must be used to assist other first-time homebuyers. If 
no HOME funds will be subject to recapture, the provisions at 
Sec. 92.254(a)(4)(i) apply.
    (D) Upon recapture of the HOME funds used in a single-family, 
first-time homebuyer project with two to four units, the affordability 
period on the rental units may be terminated at the discretion of the 
participating jurisdiction.
    (b) Rehabilitation not involving purchase. Housing that is 
currently owned by a family qualifies as affordable housing only if--
    (1) The value of the property, after rehabilitation, does not 
exceed 95% of the median purchase price for the type of single-family 
housing (1- to 4-family residence, condominium unit, combination 
manufactured home and lot, or manufactured home lot) for the 
jurisdiction as determined by HUD, and which may be appealed in 
accordance with 24 CFR 203.18b; and
* * * * *
    23. Section 92.255 would be revised to read as follows:


Sec. 92.255  Mixed-income project.

    (a) Housing that accounts for less than 100 percent of the dwelling 
units in a project qualifies as affordable housing if the housing meets 
the criteria of Sec. 92.252 or Sec. 92.254. Each building in the 
project must contain housing that meets the requirements of Sec. 92.252 
or Sec. 92.254. See Sec. 92.219 for matching contribution requirements 
concerning mixed-income projects.
    (b) For purposes of meeting affordable housing requirements for a 
project, the dwelling units counted as affordable housing may be 
changed over the affordability period, so long as the total number of 
affordable housing units remains the same, and the substituted units 
are, at a minimum, comparable in terms of size, features, and number of 
bedrooms to the originally designated affordable housing units.

(Approved by the Office of Management and Budget under OMB control 
number 2501-0013)

    24. Section 92.256 would be revised to read as follows:


Sec. 92.256  Mixed-use project.

    Housing in a project that is designed in part for uses other than 
residential use qualifies as affordable housing if such housing meets 
the criteria of Sec. 92.252 or Sec. 92.254. A project that contains, in 
addition to dwelling units, laundry and community facilities for the 
exclusive use of the project residents and their guests, does not 
constitute a project that is designed in part for uses other than 
residential use. Residential living space must constitute at least 51 
percent of the project space for contributions to the non-residential 
portion of the property to count as match.
    25. In subpart F, a new Sec. 92.259 would be added to read as 
follows:


Sec. 92.259  Elder cottage housing opportunity (ECHO) units.

    (a) General. HOME funds may be used for the initial purchase and 
initial placement costs of elder cottage housing opportunity (ECHO) 
units that meet the requirements of this section, and that are small, 
free-standing, barrier-free, energy-efficient, removable, and designed 
to be installed adjacent to existing single-family dwellings.
    (b) Eligible owners. The owner of a HOME-assisted ECHO unit may be:
    (1) The owner of the single-family host property on which the ECHO 
unit will be located;
    (2) A participating jurisdiction; or
    (3) A non-profit organization.
    (c) Eligible tenants. During the affordability period, the tenant 
of a HOME-assisted ECHO unit must be an elderly, handicapped or 
disabled family as defined in part 812 of this title, and must also be 
a low income family.
    (d) Applicable requirements. The requirements of Sec. 92.252 of 
this part apply to HOME-assisted ECHO units, except as specified in 
this section, including the following requirements:
    (1) Only one ECHO unit may be provided per host property.
    (2) The ECHO unit owner may choose whether or not to charge the 
tenant of the ECHO unit for rent, but if a rent is charged, it must 
meet the requirements of Sec. 92.252.
    (3) The ECHO housing must remain affordable for the period 
specified in Sec. 92.252(a)(5). If within the affordability period the 
original occupant no longer occupies the unit, the ECHO unit owner 
must:
    (i) Rent the unit to another eligible occupant on site;
    (ii) Move the ECHO unit to another site for occupancy by an 
eligible occupant; or
    (iii) If the owner of the ECHO unit is the host property owner, in 
accordance with the requirements of Sec. 92.254(a)(4)(ii), the 
participating jurisdiction must recapture the HOME investment to be 
used for additional HOME activities.
    (4) The participating jurisdiction has the responsibility to 
enforce the project requirements applicable to ECHO units.
    26. In Sec. 92.300, paragraphs (b), (e) and (f) are revised to read 
as follows:


Sec. 92.300  Set-aside for community housing development organizations 
(CHDOs).

* * * * *
    (b) Each participating jurisdiction must make reasonable efforts to 
identify community housing development organizations that are capable, 
or can reasonably be expected to become capable, of carrying out 
elements of the jurisdiction's approved housing strategy and to 
encourage such community housing development organizations to do so. If 
during the first 24 months of its participation in the HOME Program a 
participating jurisdiction cannot identify a sufficient number of 
capable CHDOs, up to 20 percent of the minimum CHDO setaside of 15 
percent specified in paragraph (a) of this section (but not more than 
$150,000 during the 24 month period) may be committed to develop the 
capacity of CHDOs in the jurisdiction.
* * * * *
    (e) If funds for operating expenses are provided under Sec. 92.208 
to a community housing development organization that is not also 
receiving funds under paragraph (a) of this section for housing to be 
developed, sponsored or owned by the community housing development 
organization, the participating jurisdiction must enter into a written 
agreement with the community housing development organization that 
provides that the community housing development organization is 
expected to receive funds under paragraph (a) of this section within 24 
months of receiving the funds for operating expenses, and specifies the 
terms and conditions upon which this expectation is based.
    (f) Limitation. A community housing development organization may 
not receive HOME funding for any fiscal year in an amount that provides 
more than 50 percent or $50,000, whichever is greater, of the community 
housing development organization's total operating expenses in that 
fiscal year. This includes organization support and housing education 
provided under Sec. 92.302 (c)(1), (c)(2), and (c)(6), as well as funds 
for operating expenses provided under Sec. 92.208 and administrative 
funds provided under Sec. 92.207 (if the community housing development 
organization is a subrecipient or contractor of the participating 
jurisdiction).
    27. In Sec. 92.354, paragraph (a) is revised to read as follows:


Sec. 92.354  Labor.

    (a) General. (1) Every contract for the construction 
(rehabilitation or new construction) of housing that includes 12 or 
more units assisted with HOME funds must contain a provision requiring 
the payment of not less than the wages prevailing in the locality, as 
predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act 
(40 U.S.C. 276a-276a-5), to all laborers and mechanics employed in the 
development of any part of the housing. Such contracts must also be 
subject to the overtime provisions, as applicable, of the Contract Work 
Hours and Safety Standards Act (40 U.S.C. 327-332).
    (2) The contract for construction must contain these wage 
provisions if HOME funds are used for any project costs (as defined in 
Sec. 92.206), including construction or nonconstruction costs, of 
housing with 12 or more HOME-assisted units. Where 12 or more units in 
a project are assisted under this part, the wage provisions must be 
contained in the construction contract so as to apply to all laborers 
and mechanics employed in the development of the entire project, as 
defined in Sec. 92.2, including portions other than the assisted units. 
If HOME funds are only used to assist first-time homebuyers to acquire 
single-family housing and not for any other project costs, the wage 
provisions apply to the construction of housing containing 12 or more 
units when there is a written agreement with the owner or developer of 
the housing that the HOME funds will be used to assist first-time 
homebuyers to buy the housing.
    (3) Participating jurisdictions, contractors, subcontractors, and 
other participants must comply with regulations issued under these Acts 
and with other federal laws and regulations pertaining to labor 
standards and HUD Handbook 1344.1 (Federal Labor Standards Compliance 
in Housing and Community Development Programs), as applicable. 
Participating jurisdictions must require certification as to compliance 
with the provisions of this section before making any payment under 
such contract.
* * * * *
    28. In Sec. 92.502, paragraph (b)(1) is revised to read as follows:


Sec. 92.502  Cash and Management Information System; disbursement of 
HOME funds.

* * * * *
    (b) * * *
    (1) After the participating jurisdiction executes the HOME 
Investment Partnership Agreement, complies with the environmental 
requirements under part 58 of this title for release of funds, and 
submits the appropriate banking and security documents, the 
participating jurisdiction may identify (set up) specific investments 
in the C/MI System. Investments that require the set-up of projects in 
the C/MI System are the acquisition, new construction, or moderate or 
substantial rehabilitation of real property, and investments of HOME 
funds to provide tenant-based rental assistance. Within 12 calendar 
days of project set-up, the participating jurisdiction is required to 
submit a Project Set-Up Report to HUD for each project set up in the C/
MI System. Until an acceptable Project Set-Up Report is received and 
entered in the C/MI System, HOME funds for the project are not 
considered committed to a specific project (as defined in Sec. 92.2).
* * * * *
    29. In Sec. 92.504, paragraph (e)(1) is revised to read as follows:


Sec. 92.504  Participating jurisdiction responsibilities; written 
agreements; monitoring.

* * * * *
    (e) * * *
    (1) Not less than annually, the participating jurisdiction must 
review the activities of owners of rental housing assisted with HOME 
funds to assess compliance with the requirements of this part, as forth 
in the written agreement under paragraphs (b) and (c) of this section. 
For multi-family housing, each review must include on-site inspection 
to determine compliance with housing codes and the requirements of this 
part. For rental projects containing 25 HOME-assisted units or less, an 
on-site review must be made once within each two year period. The 
results of each review must be included in the participating 
jurisdiction's performance report required by part 91 of this title and 
must be made available to the public.
* * * * *
    30. In Sec. 92.508, paragraph (a)(4)(v) is revised to read as 
follows:


Sec. 92.508  Recordkeeping.

    (a) * * *
    (4) * * *
    (v) Records of the written agreement the participating jurisdiction 
must enter into under Sec. 92.300(e) with the community housing 
development organization if funds for operating expenses are provided 
under Sec. 92.208 to the community housing development organization 
that is not also receiving funds under Sec. 92.300(a).
* * * * *
    31. In subpart M, under the undesignated center heading ``Project 
Requirements,'' a new Sec. 92.625 is added to read as follows:


Sec. 92.625  Elder cottage housing opportunity (ECHO) units.

    (a) General. HOME funds may be used for the initial purchase and 
initial placement costs of elder cottage housing opportunity (ECHO) 
units that meet the requirements of this section, and that are small, 
free-standing, barrier-free, energy-efficient, removable, and designed 
to be installed adjacent to existing single-family dwellings.
    (b) Eligible owners. The owner of a HOME-assisted ECHO unit may be:
    (1) The owner of the single-family host property on which the ECHO 
unit will be located;
    (2) An Indian tribe; or
    (3) A non-profit organization.
    (c) Eligible tenants. During the affordability period, the tenant 
of a HOME-assisted ECHO unit must be an elderly, handicapped or 
disabled family as defined in Sec. 905.102 of this title, and must also 
be a low income family.
    (d) Applicable requirements. The requirements of Sec. 92.614 apply 
to HOME-assisted ECHO units, except as specified in this section, 
including the following requirements:
    (1) Only one ECHO unit may be provided per host property.
    (2) The ECHO unit owner may choose whether or not to charge the 
tenant of the ECHO unit for rent, but if a rent is charged, it must 
meet the requirements of Sec. 92.614.
    (3) The ECHO housing must remain affordable for the period 
specified in Sec. 92.614(a)(5). If within the affordability period the 
original occupant no longer occupies the unit, the ECHO unit owner 
must:
    (i) Rent the unit to another eligible occupant on site;
    (ii) Move the ECHO unit to another site for occupancy by an 
eligible occupant; or
    (iii) If the owner of the ECHO unit is the host property owner, in 
accordance with the requirements of Sec. 92.615(a)(4)(ii), the 
participating jurisdiction must recapture the HOME investment to be 
used for additional HOME activities.
    (4) The Indian tribe has the responsibility to enforce the project 
requirements applicable to ECHO units.

    Dated: April 6, 1994.
Henry G. Cisneros,
Secretary.
[FR Doc. 94-9227 Filed 4-18-94; 8:45 am]
BILLING CODE 4210-32-P