[Federal Register Volume 59, Number 137 (Tuesday, July 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-17496]


[[Page Unknown]]

[Federal Register: July 19, 1994]


_______________________________________________________________________

Part IV





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Assistant Secretary for Community Planning and 
Development



_______________________________________________________________________



24 CFR Part 583




Supportive Housing Program; Final Rule
=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Community Planning and 
Development

24 CFR Part 583

[Docket No. R-94-1631; FR-3379-F-01]
RIN A506-AB45

 
Supportive Housing Program

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Final rule.

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

SUMMARY: This is the final rule for the Supportive Housing Program, a 
program to provide assistance for housing and supportive services for 
homeless persons authorized by title IV, subtitle C of the Stewart B. 
McKinney Homeless Assistance Act, 42 U.S.C. 11381 (McKinney Act).

EFFECTIVE DATE: August 18, 1994.

FOR FURTHER INFORMATION CONTACT: The Office of Special Needs Assistance 
Programs, Room 7262, Department of Housing and Urban Development, 451 
Seventh Street SW, Washington, DC 20410; (202) 708-1234 or, TDD for 
hearing and speech-impaired, (202) 708-2565. (These are not toll-free 
numbers.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

    The information collection requirements contained in this rule have 
been submitted to the Office of Management and Budget (OMB) for review 
under the Paperwork Reduction Act of 1980, and approved under OMB 
control number 2506-0112.

II. Background

    Section 1403 of the 1992 HCD Act amended title IV of the McKinney 
Act by striking subtitles C and D (the Supportive Housing Demonstration 
and SAFAH programs, respectively), and replacing them with a new 
subtitle C, which authorizes the Supportive Housing Program. (The 
Supportive Housing Demonstration program consisted of the Transitional 
Housing and the Permanent Housing for Handicapped Homeless programs.) 
On March 15, 1993, the Department published an interim rule (58 FR 
13870), hereafter referred to as the ``first interim rule,'' 
implementing the Supportive Housing Program. The first interim rule is 
codified at 24 CFR 583. On May 10, 1994, the Department published a 
second interim rule at 52 FR 24252 which amended the application and 
selection criteria provisions of the rule and clarified the 
Comprehensive Housing Affordability provisions.
    The Supportive Housing Program combines the features of the 
Demonstration programs and the SAFAH program into one single program of 
assistance to governmental entities and private nonprofit organizations 
to provide housing and supportive services to homeless persons.
    As stated in the first interim rule, Transitional Housing, 
Permanent Housing for Handicapped Homeless, and SAFAH projects 
previously approved under those program regulations (24 CFR parts 577, 
578, and 579, respectively) will continue to be subject to those 
regulations. However, projects that are renewed under the new 
Supportive Housing Program are subject to these regulations.
    Finally, the Department is publishing this final rule for effect 
immediately upon publication. Generally, in accordance with section 
7(o) of the Department of Housing and Urban Development Act, the 
Department does not publish a rule or regulation for effect until after 
the expiration of the 30-day calendar period beginning on the day after 
the rule or regulation is published. However, because section 427 of 
the Stewart B. McKinney Homeless Assistance Amendments Act of 1992 (42 
U.S.C. 11387) provides that the final rule implementing the new 
Supportive Housing Program is to be ``effective upon issuance,'' this 
provision of section 7(o) does not apply to this final rule.

III. Discussion of Public Comments From Interim Rule

    The Department received 17 public comments in response to the 
interim rule. The comments were from local governments, housing 
authorities, and nonprofit organizations and advocacy groups for 
homeless individuals. The final rule contains changes made to the 
interim rule in response to public comments. The following discussion 
summarizes the comments and provides HUD's responses to those comments.

Definitions: Sec. 583.5

Homeless Family
    Several commenters suggested that HUD broaden the definition of 
homeless family with children to include parent/child relationships 
that exist without legal recognition of that relationship. One 
commenter suggested that the definition also include a dependent child 
over 18 who is mentally or physically disabled. One commenter 
recommended that homeless parents who have been separated from their 
children through foster care be permitted to enter SHPs with their 
children.
    The Department does not believe that the definition of homeless 
families with children restricts serving families that include these 
types of relationships. A dependent child over 18 who is mentally or 
physically disabled can certainly be served. The term ``homeless family 
with children'' is defined in the rule only so that the Department can 
determine that it meets the statutory requirement that at least 25 
percent of the funds appropriated for the program be used for homeless 
families with children. Therefore, the definition has not been changed.
Homeless Person
    A number of commenters felt that HUD should expand the definition 
of homeless person. Several commenters recommended that the definition 
include a person who will be evicted from a dwelling unit within 30 
days, released from an institution within 30 days, or required to leave 
within the time an opening is likely to be available in the supportive 
housing program. One commenter recommended that the definition include 
individuals who are doubled or tripled up with family or friends. One 
commenter stated that the term ``adequate'' was vague in the definition 
(``fixed, regular and adequate nighttime residence'').
    HUD does not believe that the current interpretation of 
homelessness need be expanded as suggested. The Department's focus 
remains on serving the most needy. This is most readily determined by 
the test that a person is homeless if, without HUD assistance, she or 
he would have to spend the night in a shelter or in a place not meant 
for human habitation. With regard to the term ``adequate'', the 
definition in the rule reflects the statutory language exactly.
Permanent Housing for Homeless Persons With Disabilities
    The interim rule defines permanent housing for homeless persons 
with disabilities to mean community-based housing for homeless persons 
with disabilities that provides long-term housing and supportive 
services for not more than (1) 8 such persons in a single structure or 
contiguous structure; (2) 16 such persons, but only if not more than 20 
percent of the units in a structure are designated for such persons; or 
(3) more than 16 persons if the applicant demonstrates that local 
market conditions dictate the development of a large project and such 
development will achieve the neighborhood integration objectives of the 
program within the context of the affected community.
    One commenter objected to the requirement, in the definition of 
permanent housing for homeless persons with disabilities, that an 
applicant must demonstrate that local market conditions justify the 
development of a permanent supportive housing project for more than 16 
persons. This requirement is imposed by section 424(c)(1) of the 
McKinney Act, which requires that an applicant provide a 
``justification'' for a permanent supportive housing project with more 
than 16 persons.
Supportive Services
    Several commenters recommended that the definition of supportive 
services be expanded to include providing legal assistance to obtain 
permanent housing, housing subsidies, and other entitlements such as 
income support, food and medical assistance. The Department does not 
believe that the current definition of supportive services excludes 
legal assistance to obtain permanent housing, housing subsidies and 
other entitlements. Not every eligible supportive service is listed in 
the definition. However, for clarification, the regulatory definition 
has been expanded to specifically state that supportive services 
include ``but are not limited to'' the services listed. Grantees and 
participants are reminded that most homeless persons qualify for free 
legal assistance and that, except for filing lawsuits, persons other 
than licensed attorneys may provide the services mentioned by the 
commenters, most likely at a lower cost.

Use of SHP Funds

Eligible Activities/Projects: Sec. 583.1

    The interim rule provides in Sec. 583.1 that supportive housing 
funds may be used for: (1) Transitional housing to facilitate the 
movement of homeless individuals and families to permanent housing; (2) 
permanent housing that provides long-term housing for homeless persons 
with disabilities; (3) housing that is, or is part of, a particularly 
innovative project for, or alternative methods of, meeting the 
immediate and long-term needs of homeless persons; or (4) supportive 
services for homeless persons not provided in conjunction with 
supportive housing.
    Two commenters objected to restricting permanent housing projects 
under the Supportive Housing Program to disabled homeless persons. 
While section 424(a) of the McKinney Act restricts projects under the 
permanent housing component to homeless persons with disabilities, the 
Department does have the authority to make SHP funds available for 
permanent housing projects for other homeless persons under the 
innovative component.
    One commenter objected to the use of SHP funds to provide services 
for homeless persons unrelated to housing. Because section 425 of the 
McKinney Act authorizes the provision of supportive services for 
homeless persons not provided in conjunction with supportive housing, 
and section 429 of the McKinney Act requires that at least 10% of 
appropriations be allocated for providing supportive services not 
provided in conjunction with supportive housing, the rule remains 
unchanged in this regard.
    One commenter suggested that HUD expand the rule to include new 
construction of supportive service facilities. Because new construction 
of supportive service facilities is not an eligible activity under 
Sec. 423(a)(2) of the McKinney Act, the Department does not have the 
authority to expand the rule in this respect.

Improving Existing Facilities: Sec. 583.100

    One commenter suggested that HUD allow SHP funds to be used to 
rehabilitate projects to preserve and bring existing housing stock up 
to code. Another commenter argued that recipients should be allowed to 
use SHP funds to improve existing transitional housing facilities, or 
to complete projects in progress.
    Currently, SHP funds may be used to expand existing facilities in 
order to increase the number of homeless persons served and to provide 
additional supportive services. The Department agrees that existing 
facilities may also be improved to the extent that such improvements 
are needed for public health and safety, and has modified Sec. 583.100 
to reflect this. Finally, with regard to the use of SHP funds for 
completion of projects in process, HUD does not believe that it is 
necessary to broaden the use of SHP funds to cover completion of 
projects in progress since presumably projects in progress are already 
funded through completion.

Property Damages: Sec. 583.115(b)(2)

    One commenter felt that grant funds should be available to pay for 
property damages caused by a program participant. The Department 
agrees, and has added as an eligible leasing cost the use of up to one 
month's rent to pay a landlord who is not the recipient for any damage 
to housing due to the action of a homeless participant.

Grants for Supportive Services Costs: Sec. 583.120

    One commenter objected to the limitation of six months for 
providing supportive services after a homeless person leaves a 
transitional housing project, and recommended that recipients provide 
supportive services following placement in permanent housing for up to 
12 months. The Department believes that providing supportive services 
beyond six months following placement in permanent housing expands the 
definition of transitional housing beyond what the statute envisions. 
SHP funds can be used for permanent housing resources for homeless 
persons with disabilities.

Grants for Operating Costs: Sec. 583.125

    One commenter suggested that maintenance reserve be included as an 
operating cost. HUD does not believe that it is necessary to include 
maintenance reserve as an operating cost. Because of recent changes in 
the homeless programs' financial system, recipients do not lose 
unexpended operating funds at the end of each year; they are carried 
over to the next operating year. Since the operating budget may include 
a repair and maintenance line item, it is no longer necessary to set up 
a separate reserve account to ensure that funds are available each 
year; the balance of repair and maintenance grant funds will carry 
over.

Commitment of Grant Amounts for Leasing, Supportive Services, and 
Operating Costs: Sec. 583.130

    One commenter questioned whether the reference in Sec. 583.130 to 
HUD's obligation of funds for a period ``not to exceed five operating 
years'' meant that grants for supportive services will be available for 
up to five years. The Department agrees that this point requires 
clarification, and has modified Sec. 583.120 to show that grants for 
supportive services will also be available for up to five years.

Administrative Costs: Sec. 583.135

    Several commenters objected to the limitation of 5% for 
administrative expenses, and suggested that the Department increase the 
cap on administrative expenses to between 7% and 10%. Because section 
426(i) of the McKinney Act establishes a 5% cap on administrative 
expenses, the Department does not have the authority to increase the 
cap.

Limitations on Use of Assistance: Sec. 583.150

    Several commenters objected to the prohibition against using SHP 
funding in structures assisted under other Federal programs. This 
provision has been frequently misinterpreted due, in part, to its 
complex language and, in part, to a more stringent provision contained 
in the proposed rule published on January 6, 1992 for the Supportive 
Housing Demonstration Program. The restriction in the first interim 
rule prohibited using SHP funds to assist a structure that has been 
assisted with other Federal funds. The first interim rule did not 
prohibit using SHP funds to assist residents of a structure, where 
either the structure or the residents have been assisted with other 
Federal funds. For example, applicants could provide supportive 
services funded by SHP to such residents. Another commenter felt that 
SHP funds should be allowed to be used for units in any structure 
receiving Federal assistance, except directly to units receiving HUD 
rental assistance. Again, the first interim rule did not prevent SHP 
funds from assisting a pro rata share of the units. That is, if only a 
portion of a structure's units have been assisted with Federal funds, 
the unassisted units could be assisted with SHP funds.
    Nevertheless, HUD believes that this provision is counterproductive 
with regard to encouraging the development of permanent affordable 
housing. This is particularly true given the limited rent-paying 
ability of homeless participants and the likelihood that recipients 
will need other resources to meet operating costs. The section has been 
deleted from the rule.

Predevelopment Costs

    One commenter suggested that HUD allow SHP grants to be used for 
certain predevelopment costs incurred prior to award of HUD funding. 
HUD does not agree. It has been a long-standing practice not to 
reimburse for costs such as those incurred to determine project 
feasibility, options to secure site control, and other costs associated 
with preparing an application.

Program Requirements

Grants for Acquisition and Rehabilitation; New Construction

    Several commenters objected to the development cost caps for 
acquisition and rehabilitation and new construction in Secs. 583.105 
and 583.110. Because section 423(a) of the McKinney Act establishes 
development cost caps for acquisition and rehabilitation, and new 
construction, HUD does not have the authority to eliminate or raise the 
development cost caps.

Matching Requirements: Sec. 583.145

    Several commenters suggested that HUD reduce the matching 
requirement of Sec. 583.145 from a 100% match, and permit the use of 
non-cash resources for matching. Because section 426(e) of the McKinney 
Act requires a 100% cash match of any grant for acquisition, 
rehabilitation or new construction under the Supportive Housing 
Program, the rule remains unchanged in this regard.

Sharing of Supportive Service Costs

    One commenter suggested that HUD require a 25% share of supportive 
service costs of sponsors for each year of the grant. Since section 
423(a)(5) of the McKinney Act authorizes HUD to pay 100% of the cost of 
supportive services the rule remains unchanged in this regard.

Habitability Standards: Sec. 583.300(b)

    Several commenters recommended that HUD modify the habitability 
standards in Sec. 583.300(b) with respect to space and security, and 
interior air quality. Several commenters recommended that the 
regulations specifically prohibit funding projects for congregate 
temporary shelters. A few commenters suggested that each resident 
should be guaranteed private living space with a lock on the door. One 
commenter felt that HUD should require that bedroom sizes in supportive 
housing projects conform with other federal housing programs, and that 
families have private food storage and preparation facilities. With 
respect to interior air quality, one commenter suggested more detailed 
regulatory requirements, including a requirement which assures that 
building ventilation is sufficient to reduce the risk of transmission 
of airborne illnesses.
    While there are many ways in which the standards could be expanded 
to address more specific issues, the Department believes that the 
standards as set forth in Sec. 583.300(b), together with applicable 
local health and safety standards, adequately address habitability.

Ongoing Assessment of Supportive Services: Sec. 583.300(d)

    Several commenters recommended that HUD modify Sec. 583.300(d) to 
require that if a recipient determines that a participant needs a 
particular service which is not provided by the recipient, the 
recipient must either provide the service, contract out the needed 
service, or refer the participant to another agency. The Department 
believes that a regulatory provision requiring the recipient to provide 
supportive services for any identified need of a participant would 
unreasonably burden recipients. However, the Department expects that 
recipients who are unable to provide needed services will coordinate 
with other providers to assure their availability, to the extent 
practicable.

Residential Supervision: Sec. 583.300(e)

    Several commenters objected to the residential supervision 
requirement for scattered site projects. The Department agrees that in 
some situations residential supervision may not be necessary, and that 
recipients should make the determination whether residential 
supervision is appropriate. Section 583.300(e) has been modified to 
reflect this.

Participation of Homeless Persons: Sec. 583.300(f)

    Section 583.300(f) requires that at least one homeless person or 
formerly homeless person participate on the board of directors or an 
equivalent policymaking entity of the Supportive Housing project. This 
requirement is waived if an applicant is unable to meet it and presents 
a plan, for HUD approval, to otherwise consult with homeless or 
formerly homeless persons in considering and making such policies and 
decisions. One commenter suggested that a waiver to Sec. 583.300(f) be 
granted only where clear evidence exists that homeless persons are 
being involved in the decision-making process in meaningful ways. HUD 
has not received any requests for a waiver of Sec. 583.300(f) and would 
not grant one except where clearly warranted. As with any other 
regulatory requirement, grantees who do not meet the provisions of the 
rule are subject to the normal sanctions of the program.
    One commenter asked to what extent should homeless persons be 
involved in the supportive housing facility. As indicated in the 
statute, homeless persons should be involved in supportive housing 
activities to the maximum extent practicable.

Confidentiality: Sec. 583.300(h)

    Two commenters felt that Sec. 583.300(h) should be expanded to 
ensure that all sensitive participant information is confidential. The 
Department believes that the current regulations adequately address the 
issue of confidentiality, and is not aware of any problems involving 
the disclosure of confidential information concerning homeless 
individuals. If in the future problems arise, the Department will 
revisit this issue at that time.

Termination of Housing Assistance: Sec. 583.300(i)

    Several commenters were concerned that Sec. 583.300(i) did not 
provide adequate due process protections prior to termination of 
housing assistance, and argued that participants should be treated as 
tenants for purposes of due process prior to eviction. Several 
commenters suggested that the Department make clear that the 
regulations not preempt any state or local law which guarantees greater 
protections during the termination process. Two commenters felt that 
the regulations should be more explicit as to the procedures required 
prior to termination of housing assistance, and notify homeless 
participants of their rights prior to termination. One commenter also 
felt that HUD should carefully monitor a recipient's adherence to due 
process requirements. Two commenters argued that a violation of program 
requirements should not serve as basis for termination of housing 
assistance to residents.
    Section 583.300(i) requires that a recipient provide a formal 
process to a homeless participant that recognizes the homeless 
participant's right to due process, prior to termination of a homeless 
participant's housing assistance. Currently, the regulations require, 
at a minimum, that recipients must provide: (1) Written notice to the 
participant which contains a clear statement of the reasons for 
termination; (2) a review of the decision, in which the participant is 
given the opportunity to present written or oral objections to a person 
other than the person (or subordinate of such person) who made or 
approved the termination decision; and (3) prompt written notice of the 
final decision to the participant. The Department believes that the 
current regulations adequately protect a homeless person's due process 
rights. With regard to the preemption concern, the Department cannot 
affirm that the regulations do not preempt any state or local law. The 
Transitional Housing component with its 24-month limitation preempts 
such laws.
    Finally, the issue of whether a violation of the SHP rules is a 
basis for termination of housing assistance has been subject to 
considerable debate within the Department. Section 426(i) of the 
McKinney Act allows a recipient to terminate assistance if a homeless 
participant violates program requirements. Section 583.300(i) allows a 
recipient to determine which program violations will result in a 
termination of housing assistance; however, section 583.300(i) also 
provides that recipients should only terminate assistance in the most 
severe cases. At this time, the Department believes that recipients 
should continue to have the discretion and flexibility to determine 
which program violations serve as the basis of termination of 
assistance.

Term of Commitment; Repayment of Grants; Prevention of Undue Benefits: 
Sec. 583.305

    One commenter objected to the conversion of a project which is no 
longer needed for supportive housing to one that serves low income 
persons, arguing that if a project is no longer needed for supportive 
housing then the project should be approved only for use for the very 
low income, rather than just for low income persons. Section 423(b)(3) 
of the McKinney Act authorizes the conversion of a project which is no 
longer needed for supportive housing to a project for low income 
persons. As such, the Department does not have the authority to limit 
conversion of SHP projects to serve only very low income persons, 
rather than just low income persons.
    One commenter objected to the requirement that grantees operate for 
at least 20 years a project which was acquired, rehabilitated or 
constructed under the SHP unless HUD also provides operating and 
supportive service funding for 20 years. Section 423(b)(1) of the 
McKinney Act requires that projects which were acquired, rehabilitated 
or constructed under the SHP be operated by grantees for the purpose 
specified in the application for at least 20 years.

Application Process/Selection Criteria

Rating Criteria: Sec. 583.215

    Several commenters recommended that the Department modify the 
rating criteria in Sec. 583.215 to specifically include: (a) 
Participation of homeless and formerly homeless; (b) provision of 
employment opportunities for homeless in the project, (c) due process 
protections to be adopted for a particular project; (d) proven 
effectiveness of an applicant; or (e) site control by the applicant. 
One commenter objected to targeting the ``hardest to serve'' homeless 
as a rating criterion, arguing that it was too restrictive. One 
commenter objected to the use of innovation as a rating criterion. Two 
commenters recommended that the determination of ``hardest to serve'' 
be made on the local level. One commenter felt that the current rating 
criteria will discriminate against rural and suburban communities with 
few or no shelters and with a homeless population which is living with 
friends and family.
    Section 426(b) of the McKinney Act requires that the rating 
criteria include: (1) Ability of the applicant to develop and operate a 
project; (2) innovative quality of the proposal in providing a project; 
(3) need for the type of project proposed by the applicant in the area 
to be served; (4) extent to which the amount of assistance to be 
provided under this part will be supplemented with resources from other 
public and private sources; (5) cost effectiveness of the proposed 
project; and (6) extent to which the applicant has demonstrated 
coordination with other Federal, State, local, private and other 
entities serving homeless persons in the planning and operation of the 
project, to the extent practicable.
    Section 426(b)(7) also authorizes the Secretary to add additional 
criteria, if appropriate, to carry out the SHP in an effective and 
efficient manner. In accordance with Sec. 426(b)(7), the first interim 
rule added two additional rating criteria: (7) extent to which the 
project targets homeless persons living in emergency shelters or in 
places not designed for, or ordinarily used as, a regular sleeping 
accommodation for human beings; and (8) quality of the project. Earlier 
this year, the Department published a second interim rule for SHP in 
which the rating criteria were revised to reflect the statutory 
flexibility allowed. Accordingly, the first interim rule was modified 
by deleting the rating criteria that do not appear in the statute 
(i.e., criterion 7 (extent of targeting) and criterion 8 (quality of a 
project)), and including the statutory language that allows such other 
rating factors as the Department determines to be appropriate. Any 
additional rating criteria will now appear in the annual notice of 
funds availability (NOFA) and may be adjusted from year to year based 
upon experience.

Selecting Applicants: Sec. 583.220

    One commenter recommended that HUD modify Sec. 583.220(c) so that 
in the event of a tie between applicants HUD would use two rating 
criteria, rather than one, to break the tie. This commenter also 
suggested that the Department use the rating criteria in 583.215(b)(6) 
(``extent to which the applicant has demonstrated coordination with 
other Federal, State, local, private and other entities serving 
homeless persons in the planning and operation of the project'') and 
Sec. 583.215(b)(8) (``quality of the project'') to break a tie, rather 
than the rating criterion in Sec. 583.215(b)(3) (``need for the type of 
project proposed by the applicant in the area to be served'').
    The second interim rule made this an issue to be covered in the 
annual NOFA rather than in the regulations. Moreover, based upon HUD's 
experience in similar programs and the predecessor programs to the SHP, 
the Department does not believe that the use of one factor as a tie 
breaker is problematic. (The Department has never had a tie among 
applicants at the funding line in the SHP program or predecessor 
programs.)

Competitive Distribution of SHP Funds

    One commenter objected to the competitive process for selecting 
recipients, and suggested that SHP funds be distributed to localities 
on a needs basis instead. Section 426(b) of the McKinney Act requires 
that the Secretary select applicants through a national competition 
based upon statutory selection criteria, and other selection criteria 
established by the Secretary.

Miscellaneous Comments

Renewal Grants

    One commenter objected to the use of October 28, 1992 in 
Sec. 583.235(a) as an arbitrary cutoff date for renewal of grants on a 
noncompetitive basis. The Department selected October 28, 1992 as the 
cutoff date because that is the date of enactment of the 1992 HCD Act. 
No grantee has been excluded from renewing a grant in a predecessor 
program as a result of the October 28, 1992 cutoff date.
    One commenter suggested that HUD allow grantees who are recipients 
of multiple grants to combine these grants into one at the annual 
renewal date of any grant to provide administrative cost savings to HUD 
and the grantee. The Department agrees that there may be situations 
where it is cost effective to combine grants for renewal purposes. 
However, this may be done only on a case by case basis, and will not be 
addressed in the program regulations.

Technical Assistance: Sec. 583.140

    One commenter suggested that HUD provide technical assistance to 
help nonprofit providers build the capacity to successfully develop 
facilities and programs. Another commenter recommended that HUD provide 
technical assistance to service providers on ways to minimize risk of 
transmission of infectious diseases.
    The first suggestion, since it appears to be for supportive housing 
projects, would be an eligible use of technical assistance funds under 
the regulations. The second suggestion would be an eligible use of 
technical assistance funds under the regulations, if done in 
conjunction with supportive housing projects.
    Because the first interim rule was ambiguous as to whether HUD 
staff could provide technical assistance, the rule has been revised to 
make clear that HUD staff may do so. Technical assistance for 
supportive housing activities can often be provided most effectively by 
HUD staff.
    The rule has also been revised to delete the two percent provision 
and to clarify the purpose of the technical assistance. While HUD 
anticipates reserving no more than two percent annually, the provision 
now enables HUD to spend more than that percent as necessary to improve 
the capacity of homeless providers and achieve the purpose of the 
program.

Resident Rent: Sec. 583.315

    Two commenters suggested that Sec. 583.315(b), which addresses the 
use of rent, prohibit rent which is set aside for the participant's use 
in moving to permanent housing from counting as available income for 
public assistance programs. The Department does not have the authority 
in this program to exclude rent which is set aside for a participant's 
use in moving to permanent housing from counting as available income 
for public assistance programs. However, the Department is discussing 
this issue with the Department of Health and Human Services.

Waiting Lists

    One commenter recommended that the final rule address a housing 
authority's use of waiting lists for the SHP. The Department does not 
believe that a housing authority's waiting list should necessarily be 
used to fill spaces in a supportive housing project. Homeless persons 
are often transient, and the Department does not believe that the use 
of a waiting list is the most effective way of identifying homeless 
persons.

Advertising SHP Projects

    Several commenters felt that HUD should add a detailed regulatory 
provision for advertising the availability of supportive housing 
projects. Some of the suggestions included requiring recipients to post 
notices throughout the community, and send written notice to those on 
waiting lists with a federal preference based on homelessness. One 
commenter felt that a more detailed regulatory provision is necessary 
to assure that supportive housing projects are filled in accordance 
with fair housing requirements. HUD believes the current regulatory 
provisions are adequate with regard to fair housing requirements and 
advertising. The language in section 583.325 (b) and (c) addresses 
these issues specifically. The regulation states that use of assistance 
under this program must comply with the requirements of the Fair 
Housing Act and title VI of the Civil Rights Act of 1964, and that 
applicants must ensure that homeless persons can obtain information 
concerning the availability of supportive housing. Compliance with 
these requirements is a matter which is subject to monitoring by HUD.

Serving Community Residents

    One commenter suggested that the SHP be more flexible and permit 
nonprofit agencies to serve community residents in addition to families 
or individuals residing in their facilities. Section 424 of the 
McKinney Act authorizes supportive services for homeless persons. The 
Department does not have the authority to permit nonprofit agencies to 
provide supportive services to community residents who are not 
homeless.

Technical Corrections

Commitment of Grant Amounts for Leasing, Supportive Services, and 
Operating Costs: Sec. 583.130

    This section is amended to clarify that HUD will obligate funds 
upon execution of a grant agreement, rather than upon approval of an 
application for assistance, as stated in the first interim rule. This 
section was in conflict with Sec. 583.410, which states that funds are 
obligated when HUD and the applicant execute a grant agreement.

Limitations on Use of Assistance: Sec. 583.150

    The Department has added Sec. 583.150(c), Participant control of 
site, to clarify that certain uses of SHP funds are not practicable 
where a homeless family or individual will eventually own or control 
the site. Applicants requesting acquisition, rehabilitation, or new 
construction funds must certify that the site will be used for homeless 
persons for not less than 20 years. As a practical matter, no applicant 
will be able to make this certification where the participant will 
eventually control the site. Therefore, this section precludes 
applicants from requesting acquisition, rehabilitation, or new 
construction funds under such circumstances.

Displacement, Relocation, and Acquisition: Sec. 583.310

    The Department is making three changes to this section. At section 
583.310(f) the rule is clarified regarding the definition of 
``displaced person'' when site changes occur. The rule states that one 
of the determining factors is the date the recipient submits a request 
for an application amendment to HUD.
    At section 583.310(g) the term ``selection of the project site, if 
later'' is deleted because it is unnecessary. Formerly the sentence 
indicated that the term initiation of negotiations occurred at the time 
of execution of grant agreement or at project selection, if later. 
However, site control must be obtained before grant agreement execution 
and, therefore, could not occur at a later time.
    A definition of ``project'' consistent with the use of the term 
under the Uniform Relocation Act is added at section 583.310(h).

Resident Rent: Sec. 583.315

    This section is amended to include the age of family members in the 
calculation of resident rent in Sec. 583.315(a)(1). This was 
inadvertently left out of the interim rule.

IV. Other Matters

A. Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was made on the Interim Rule in accordance with HUD regulations in 24 
CFR Part 50 which implements Section 102(2)(C) of the National 
Environmental Policy Act of 1969, 42 U.S.C. 4332. That Finding is 
available for public inspection during regular business hours in the 
Office of the Rules Docket Clerk, Office of the General Counsel, 
Department of Housing and Urban Development, Room 10276, 451 Seventh 
Street SW, Washington, DC 20410. Since the environmental provisions of 
this Final Rule are unchanged from those published in the Interim Rule, 
the original Finding of No Significant Impact is still valid.

B. Executive Order 12612, Federalism

    The General Counsel has determined, as the Designated Official for 
HUD under section 6(a) of Executive Order 12612, Federalism, that the 
provisions in the rule requiring applicants to assume the 
responsibilities for environmental review, decisionmaking, and action 
under NEPA and other environmental authorities have Federalism 
implications. While the assignment of these responsibilities under 
section 104(g) of the Housing and Community Development Act of 1974 is 
discretionary with HUD, it is authorized by and clearly the intent of 
section 443 of the McKinney Act. Therefore, the policy is not subject 
to review under Executive Order 12612.

C. Executive Order 12606, the Family

    The General Counsel, as the designated official under Executive 
Order 12606, The Family, has determined that some of the policies in 
this proposed rule may have a potential significant impact on the 
formation, maintenance, and general well-being of participating 
homeless families. Participation of families in the program can be 
expected to support family values, by helping families remain together; 
by enabling them to live in decent, safe, and sanitary housing; and by 
offering the supportive services that are necessary to acquire the 
skills and means to live independently in mainstream American society. 
Since the impact on the family is considered to be a beneficial one, no 
further review is necessary.

D. Regulatory Flexibility Act

    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 does not have a significant 
economic impact on a substantial number of small entities. The program 
has been designed to allow applicants to design programs that provide 
housing and supportive services to homeless families and individuals 
with as little regulation as possible under the existing law.

E. Regulatory Agenda

    This rule was listed as item no. 1653 in the Department's 
Semiannual Agenda of Regulations published on April 25, 1994 (59 FR 
20424, 20462) under Executive Order 12866 and the Regulatory 
Flexibility Act.

List of Subjects in 24 CFR Part 583

    Homeless, Rent subsidies, Reporting and recordkeeping requirements, 
Supportive housing programs--housing and community development, 
Supportive services.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance program numbers are 
14.235 and 14.236.
    For the reasons stated in the preamble, 24 CFR part 583 is amended 
by adopting the interim rule published in the Federal Register on March 
15, 1993 (58 FR 13870) and amended by an interim rule published in the 
Federal Register on May 10, 1994 (59 FR 24252) as final with the 
following amendments to read as follows:

PART 583--SUPPORTIVE HOUSING PROGRAM

    1. The authority citation for part 583 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 11389.

    2. In Sec. 583.5, the introductory text for the definition of 
``Supportive services'' is revised to read as follows:


Sec. 583.5   Definitions.

* * * * *
    Supportive services means services, which may be designed by the 
recipient or program participants, designed to address the special 
needs of the homeless persons to be served by the project. Supportive 
services include, but are not limited to: * * *
* * * * *
    3. In Sec. 583.100, paragraphs (b)(3), (b)(4) and (b)(5) are 
redesignated (b)(4), (b)(5) and (b)(6), respectively, and a new 
paragraph (b)(3) is added to read as follows:


Sec. 583.100   Types and uses of assistance.

* * * * *
    (b) * * *
    (3) Bring existing facilities up to a level that meets State and 
local government health and safety standards;
* * * * *
    4. In Sec. 583.115, paragraph (b)(2) is amended by adding a 
sentence to the end, to read as follows:


Sec. 583.115   Grants for leasing.

* * * * *
    (b) * * *
    (2) Leasing individual units. * * * Recipients may use grant funds 
in an amount up to one month's rent to pay the non-recipient landlord 
for any damages to leased units by homeless participants.
    5. In Sec. 583.120, paragraph (a) is amended by revising the first 
sentence, to read as follows:


Sec. 583.120   Grants for supportive services costs.

    (a) General. HUD will provide grants to pay (as described in 
Sec. 583.130 of this part) for the actual costs of supportive services 
for homeless persons for up to five years. * * *
* * * * *
    6. Section 583.130 is revised to read as follows:


Sec. 583.130   Commitment of grant amounts for leasing, supportive 
services, and operating costs.

    Upon execution of a grant agreement covering assistance for 
leasing, supportive services, or operating costs, HUD will obligate 
amounts for a period not to exceed five operating years. The total 
amount obligated will be equal to an amount necessary for the specified 
years of operation, less the recipient's share of operating costs.

(Approved by the Office of Management and Budget under OMB Control 
Number 2506-0112)

    7. Section 583.140 is revised to read as follows:


Sec. 583.140   Technical assistance.

    (a) General. HUD may set aside funds annually to provide technical 
assistance, either directly by HUD staff or indirectly through third-
party providers, for any supportive housing project. This technical 
assistance is for the purpose of promoting the development of 
supportive housing and supportive services as part of a continuum of 
care approach, including innovative approaches to assist homeless 
persons in the transition from homelessness, and promoting the 
provision of supportive housing to homeless persons to enable them to 
live as independently as possible.
    (b) Uses of technical assistance. HUD may use these funds to 
provide technical assistance to prospective applicants, applicants, 
recipients, or other providers of supportive housing or services for 
homeless persons, for supportive housing projects. The assistance may 
include, but is not limited to, written information such as papers, 
monographs, manuals, guides, and brochures; person-to-person exchanges; 
and training and related costs.
    (c) Selection of providers. From time to time, as HUD determines 
the need, HUD may advertise and competitively select providers to 
deliver technical assistance. HUD may enter into contracts, grants, or 
cooperative agreements, when necessary, to implement the technical 
assistance.
    8. In Sec. 583.150, paragraph (b) is removed, paragraph (c) is 
redesignated as (b), and a new paragraph (c) is added to read as 
follows:


Sec. 583.150   Limitations on use of assistance.

* * * * *
    (c) Participant control of site. Where an applicant does not 
propose to have control of a site or sites but rather proposes to 
assist a homeless family or individual in obtaining a lease, which may 
include assistance with rent payments and receiving supportive 
services, after which time the family or individual remains in the same 
housing without further assistance under this part, that applicant may 
not request assistance for acquisition, rehabilitation, or new 
construction.
    9. In Sec. 583.300, paragraph (e) is amended by revising the first 
sentence, to read as follows:


Sec. 583.300  General operation.

* * * * *
    (e) Residential supervision. Each recipient of assistance under 
this part must provide residential supervision as necessary to 
facilitate the adequate provision of supportive services to the 
residents of the housing throughout the term of the commitment to 
operate supportive housing. * * *
* * * * *
    10. In Sec. 583.310, paragraphs (f)(1)(i) and (g) are revised, and 
paragraph (h) is added, to read as follows:


Sec. 583.310  Displacement, relocation, and acquisition.

* * * * *
    (f) Definition of displaced person. (1) For purposes of this 
section, the term ``displaced person'' means a person (family, 
individual, business, nonprofit organization, or farm) that moves from 
real property, or moves personal property from real property 
permanently as a direct result of acquisition, rehabilitation, or 
demolition for supportive housing projects assisted under this part. 
The term ``displaced person'' includes, but may not be limited to:
    (i) A person that moves permanently from the real property after 
the property owner (or person in control of the site) issues a vacate 
notice, or refuses to renew an expiring lease in order to evade the 
responsibility to provide relocation assistance, if the move occurs on 
or after the date the recipient submits to HUD the application or 
application amendment designating the project site.
* * * * *
    (g) Definition of initiation of negotiations. For purposes of 
determining the formula for computing the replacement housing 
assistance to be provided to a residential tenant displaced as a direct 
result of privately undertaken rehabilitation, demolition, or 
acquisition of the real property, the term ``initiation of 
negotiations'' means the execution of the agreement between the 
recipient and HUD.
    (h) Definition of project. For purposes of this section, the term 
``project'' means an undertaking paid for in whole or in part with 
assistance under this part. Two or more activities that are integrally 
related, each essential to the others, are considered a single project, 
whether or not all component activities receive assistance under this 
part.
    11. In Sec. 583.315, paragraph (a)(1) is revised to read as 
follows:


Sec. 583.315  Resident rent.

    (a) Site control. (1) 30 percent of the family's monthly adjusted 
income (adjustment factors include the number of people in the family, 
age of family members, medical expenses, and child care expenses);
* * * * *
    Dated: July 6, 1994.
Andrew Cuomo,
Assistant Secretary for Community Planning and Development.
[FR Doc. 94-17496 Filed 7-18-94; 8:45 am]
BILLING CODE 4210-29-P