[Federal Register Volume 60, Number 17 (Thursday, January 26, 1995)]
[Rules and Regulations]
[Pages 5280-5286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1932]




[[Page 5279]]

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Part V





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner



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24 CFR Part 261



Federally Assisted Low Income Housing Drug Elimination Program; Final 
Rule

  Federal Register / Vol. 60, No. 17 / Thursday, January 26, 1995 / 
Rules and Regulations   
[[Page 5280]] 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner

24 CFR Part 261

[Docket No. R-95-1741; FR-3467-F-02]
RIN 2502-AG07


Federally Assisted Low Income Housing Drug Elimination Program

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Final rule.

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

SUMMARY: This final rule implements the Assisted Housing Drug 
Elimination Program, as authorized by the National Affordable Housing 
Act and the Housing and Community Development Act of 1992. This program 
authorizes HUD to make drug elimination grants to owners of federally 
assisted low-income housing, while previously these grants were only 
available for public housing agencies and Indian housing authorities. 
HUD will award these grants for use in eliminating drug-related crime 
and the problems associated with it.

EFFECTIVE DATE: February 27, 1995.

FOR FURTHER INFORMATION CONTACT: Lessley Wiles, Office of Multifamily 
Housing Management, Operations Division, Room 6176, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 
20410; telephone (202) 708-2654, or (202) 708-3938 (TDD for speech- or 
hearing-impaired). (These are not toll free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act Statement

    The information collection requirements contained in this rule 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 2502-0476.

I. Background

    On August 9, 1994 (59 FR 40764), HUD published a proposed rule that 
would implement the Assisted Housing Drug Elimination Program, as 
authorized by section 581 of the National Affordable Housing Act (42 
U.S.C. 11901-11909) (NAHA), and as amended by section 161 of the 
Housing and Community Development Act of 1992 (Pub. L. 102-550, 
approved October 18, 1992) (HCDA 1992). The preamble to the proposed 
rule contains a detailed explanation of the ways in which NAHA amended 
the Public Housing Drug Elimination Program, including the addition of 
authorization to make grants to private, for-profit and nonprofit 
owners of federally assisted low-income housing for use in eliminating 
drug-related crime. Section 581 of NAHA also permits HUD to establish 
other criteria, in addition to those applicable to the Public Housing 
Drug Elimination Program, for the evaluation of funding applications 
submitted by owners of federally assisted low-income housing.
    HUD solicited public comments on the proposed rule. By the 
expiration of the public comment period on October 11, 1994, HUD 
received six comments. HUD carefully considered all the public comments 
received, and has decided to make no changes from the proposed rule. 
The following section of the preamble presents a summary of the 
comments received and HUD's responses to those comments.

II. Public Comment on Proposed Rule

    1. Two commenters suggested changes in the selection criteria 
(Sec. 261.15(a)). One commenter suggested that HUD should specifically 
target the elderly and disabled as priority populations due to their 
special vulnerability. This commenter would change Sec. 261.15(a)(1) of 
the rule to include the vulnerability of the populations at risk due to 
the drug-related crimes, as well as the extent of the substance abuse 
in the applicant's development.
    Another commenter suggested that the order of the criteria should 
be changed to reflect different priorities. This commenter suggested 
that the first criterion should be the capability of the applicant to 
carry out the plan, rather than the extent of the drug-related crime 
problem in the applicant's development. The commenter explained that 
this would be more effective; while ``there (are) no shortage of 
serious (drug-related crime) problems, * * * there are too few able 
organizations with effective plans to make the best use of the meager 
resources available to combat drugs.'' According to this commenter, the 
second criterion should be the quality of the plan, the third criterion 
should be the extent of local participation and involvement, and the 
fourth criterion should be the extent of the drug-related crime 
problem.
    HUD Response: In the preamble to the proposed rule, HUD 
specifically invited comments on additional criteria for selecting 
grant recipients. Section 581 of NAHA requires, however, that 
additional criteria shall be designed only to reflect--(1) relevant 
differences between the financial resources and other characteristics 
of public housing authorities and owners of federally assisted low-
income housing, or (2) relevant differences between the problem of 
drug-related crime in public housing and the problem of drug-related 
crime in federally assisted low-income housing. The suggestions by the 
commenters, while having merit, do not reflect these differences as 
outlined in the statute.
    With regard to the priority of the criteria, section 5125(b) of the 
Anti-Drug Abuse Act of 1988 (42 U.S.C. 11904(b)), which is the 
authorizing statute for this drug elimination program, specifies the 
primary selection criteria for grants under this drug elimination 
program. This rule reflects the criteria in the statute in the order 
stated.
    2. One commenter objected to the fact that alcohol abuse programs 
will not be eligible for funding under this drug elimination program, 
due to the specific exclusion of alcohol from the definition of 
controlled substance in Sec. 261.5. This commenter asserted that 
``alcohol is increasingly the prime reason for abuse and other domestic 
problems encountered in housing developments,'' and that a drug 
elimination program cannot be effective unless it addresses the problem 
of alcohol abuse.
    HUD Response: HUD cannot include alcohol in the definition of 
controlled substance in Sec. 261.5 because this definition is 
statutorily prescribed. Section 5126(1) of the Anti-Drug Abuse Act of 
1988 (42 U.S.C. 11905(1)) incorporates the definition of controlled 
substance as provided in section 102 of the Controlled Substances Act 
(21 U.S.C. 802). This definition specifically excludes alcohol. 
Therefore, alcohol abuse programs are not eligible for funding under 
this drug elimination program.
    3. One commenter stated that HUD should not encourage voluntary 
tenant patrols as an eligible activity (Sec. 261.10(b)(5)), because 
they pose an unacceptable risk of harm to residents where drug-related 
crime is at very serious levels. This commenter explained that while 
tenant patrols may be appropriate in areas with mild crime problems, 
these areas are less likely to receive grant awards under this program.
    HUD Response: HUD does not encourage the use of tenant patrols. The 
inclusion of tenant patrols as an eligible activity, however, is 
statutorily prescribed in section 5124(5) of the Anti-Drug Abuse Act of 
1988 (42 U.S.C. 11903(5)). [[Page 5281]] 
    4. One commenter proposed that, in keeping with HUD's comprehensive 
approach to solving drug-related crime problems, HUD should include the 
provision of new community space as an eligible activity in 
Sec. 261.10(b) of the rule. This commenter suggested that to be 
eligible for funding, the applicant would have to meet the following 
conditions: (1) Absence of space on-site; (2) Absence of alternative 
space off-site; (3) HUD concurs to either the creation of new space or 
taking a unit off-line for this purpose; (4) The space must be provided 
in turn-key condition within three months of the first drawdown of 
funds; and (5) The applicant must specify a social program, whether 
existing or fundable through the grant, to accompany the request for 
new space. This commenter noted that previous grants have been used to 
refurbish existing community space.
    HUD Response: Given the costs of construction and the limited 
amount of funds available under this drug elimination program, HUD is 
not encouraging the construction of new buildings. Rental or leasing of 
space near the property, where activities such as classes and 
counseling sessions can take place, would be a preferred option. 
However, HUD has permitted the retrofitting of existing available space 
as an eligible physical improvement, provided no units are taken off-
line. HUD also permitted the siting of a surplussed mobile classroom to 
provide the needed space, since this involved minimal cost.
    5. One commenter raised two concerns about the selection process 
for the drug elimination grant proposals. First, the commenter asserted 
that proposals are not judged on the basis of need, but on the quantity 
of information provided by the applicant. Specifically, this commenter 
asserted that applications from areas of high drug-related crime have 
lost points for ``lack of crime statistics.'' The commenter stated that 
the lack of such data should not be a hindrance in determining 
eligibility for a grant, and that other support documentation should be 
considered if such data is not available.
    Second, this commenter expressed concern about unintentional 
geographic bias in awarding grants under drug elimination programs. The 
commenter suggested that the panel reviewing the grant applications 
should consist of individuals from geographically diverse areas in 
order to avoid this bias.
    HUD Response: In response to the first concern, there have been 
allegations in the past that HUD awarded drug grants to public housing 
projects with no evidence of drug-related criminal activity. Therefore, 
obtaining specific statistics on the extent of this activity is 
necessary to assure that the problems to be addressed by this program 
do, in fact, exist.
    In response to the second concern about geographical bias, local 
HUD offices will review and score applications for the Federal fiscal 
year (FY) 1995 drug elimination grants. The funding, based on scores 
received, will take place at geographically disbursed sites. This 
should reduce the possibility of bias in project funding selections.
    6. Two commenters expressed concern with the way the rule would 
apply to an applicant seeking funding for a multi-year project. One 
commenter encouraged HUD to streamline the application process for 
applicants seeking funds for a continuing program activity. The rule 
provides that applicants for grants to continue current program 
activities may apply on the same basis as other applicants 
(Sec. 261.10(b)(7)). This commenter remarked that this process is 
burdensome, and that ``HUD offices will effectively be discouraged from 
awarding continuation funds.'' In the alternative, this commenter 
suggested that HUD make funding for subsequent years conditional upon: 
(1) the property's first year score being sufficient to earn an award 
in the following year; and (2) confirmation from the HUD drug grant 
coordinator that the property is in compliance with the requirements of 
previously received grant funds.
    The other commenter suggested changing the grant term provisions in 
Sec. 261.26(b) to allow for initial one-year terms, with second- and 
third-year extensions. This would allow the grantee to undertake 
``ambitious plans without the additional concern of searching for 
additional funding'' early in the program. This commenter further 
argued that a longer term would encourage outside funding, since the 
potential funder would have more of a performance record on which to 
base its determination.
    HUD Response: HUD's Office of Housing has no assurance that it will 
receive funds for more than one year. Consequently, the program can 
only permit funding for one year. In addition, due to the limitation on 
the amount of funds available in any given year, HUD's goal is to 
spread the funds as far as possible and give all eligible applicants a 
fair chance of receiving funding. Therefore, each grant application 
must stand alone, without any assumption of additional funding, as both 
commenters suggested.
    7. One commenter argued that the maximum grant amount would have to 
be increased. This commenter remarked that while security personnel are 
eligible for funding under this drug elimination program, the only 
effective approach would be to hire off-duty police. According to the 
commenter, an off-duty police patrol would cost approximately $200,000 
per year (two patrol officers at $15 per hour; two 8-hour shifts per 
weekday, three 8-hour shifts on weekends), which may exceed the maximum 
grant amount.
    HUD Response: HUD does not encourage hiring off-duty police; 
rather, it hopes to find other solutions to drug-related criminal 
problems that are more cost-effective. As mentioned above, the limited 
amount of money available forces HUD and the applicants to seek maximum 
benefit from limited funds.

III. Other Matters

Environmental Impact

    At the time of the development of the proposed rule, a Finding of 
No Significant Impact with respect to the environment was made in 
accordance with HUD's regulations at 24 CFR part 50, which implement 
section 102(2)(C) of the National Environmental Policy Act of 1969 (42 
U.S.C. 4332). The Finding of No Significant Impact remains applicable 
to this final rule and is available for public inspection between 7:30 
a.m. and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk, 
Room 10276, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Washington, DC 20410.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed 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 rule 
provides grants to eliminate drug-related crime in federally assisted 
low-income housing. Although small entities in the form of owners of 
federally assisted low-income housing could participate in the program, 
the rule is not intended to and would not have a significant economic 
impact on them.

Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this rule has the 
potential for a positive, although indirect, impact on family 
formation, maintenance, and general well-being. [[Page 5282]] The rule 
implements a program that encourages owners of federally assisted low-
income housing to develop a plan for addressing the problem of drug-
related crime, and makes available grants to carry out this plan. As 
such, the program is intended to improve the quality of life of 
federally assisted low-income housing residents, including families, by 
reducing the incidence of drug-related crime. Accordingly, since any 
impact on the family from the rule will be positive, no further review 
is considered necessary.

Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this rule will not have substantial direct effects on 
States or their political subdivisions, or the relationship between the 
Federal government and the States, or on the distribution of power and 
responsibilities among the various levels of government. As a result, 
the rule is not subject to review under the Order. The program helps 
combat serious drug-related crime problems in federally assisted low-
income housing. The rule generally tracks the statute and involves 
little implementing discretion.

Regulatory Agenda

    The rule was listed as Item No. 1765 in HUD's Semiannual Agenda of 
Regulations published on November 14, 1994 (59 FR 57632, 57634) in 
accordance with Executive Order 12866 and the Regulatory Flexibility 
Act.

Catalog of Federal Domestic Assistance

    The program number for this Assisted Housing Drug Elimination 
Program is 14.854.

List of Subjects in 24 CFR Part 261

    Drug abuse, Drug traffic control, Grant programs--housing and 
community development, Grant programs--low and moderate income housing, 
Reporting and recordkeeping requirements.

    Accordingly, part 261, consisting of Secs. 261.1 through 261.29, is 
added to 24 CFR chapter II, as follows:

PART 261--ASSISTED HOUSING DRUG ELIMINATION PROGRAM

Subpart A--General

Sec.
261.1 Purpose and scope.
261.5 Definitions.

Subpart B--Use of Grant Funds

261.10 Applicants and activities.

Subpart C--Application and Selection

261.15 Application selection and requirements.
261.18 Resident comments on grant application.

Subpart D--Grant Administration

261.26 Grant administration.
261.28 Grantee reports.
261.29 Other federal requirements.

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

Subpart A--General


Sec. 261.1  Purpose and scope.

    The purposes of the Assisted Housing Drug Elimination Program are 
to:
    (a) Eliminate drug-related crime and the problems associated with 
it in and around the premises of federally assisted low-income housing;
    (b) Encourage owners of federally assisted low-income housing to 
develop a plan that includes initiatives that can be sustained over a 
period of several years for addressing drug-related crime and the 
problems associated with it in and around the premises of assisted 
housing proposed for funding under this part; and
    (c) Make available federal grants to help owners of federally 
assisted low-income housing carry out their plans.


Sec. 261.5  Definitions.

    Act means The United States Housing Act of 1937 (42 U.S.C. 1437 et 
seq.).
    Chief executive officer of a State or a unit of general local 
government means the elected official, or the legally designated 
official, who has the primary responsibility for the conduct of that 
entity's governmental affairs. Examples of the ``chief executive 
officer'' of a unit of general local government are: The elected mayor 
of a municipality; the elected county executive of a county; the 
chairperson of a county commission or board in a county that has no 
elected county executive; or the official designated pursuant to law by 
the governing body of the unit of general local government. The chief 
executive officer of an Indian tribe is the tribal governing official.
    Controlled substance means a drug or other substance or immediate 
precursor included in schedule I, II, III, IV, or V of section 102 of 
the Controlled Substances Act (21 U.S.C. 802). The term does not 
include distilled spirits, wine, malt beverages, or tobacco as those 
terms are defined in Subtitle E of the Internal Revenue Code of 1954.
    Drug intervention means a process to identify assisted housing 
resident drug users and assist them in modifying their behavior and/or 
refer them to drug treatment to eliminate drug abuse.
    Drug prevention means a process to provide goods and services 
designed to alter factors, including activities, environmental 
influences, risks, and expectations, that lead to drug abuse.
    Drug-related crime means the illegal manufacture, sale, 
distribution, use, or possession with intent to manufacture, sell, 
distribute, or use, a controlled substance.
    Drug treatment means a program for the residents of an applicant's 
development that strives to end drug abuse and to eliminate its 
negative effects through rehabilitation and relapse prevention.
    Federally assisted low-income housing (includes the term ``assisted 
housing'' as used in this rule) means housing assisted under:
    (1) Section 221(d)(3), section 221(d)(4) or 236 of the National 
Housing Act (12 U.S.C. 1701 et seq.) (Note: However, section 221(d)(4) 
and section 221(d)(3) market rate projects without project-based 
assistance contracts are not considered federally assisted low-income 
housing. Therefore, section 221(d)(4) and section 221(d)(3) market rate 
projects with tenant-based assistance contracts are not considered 
federally assisted low-income housing and are not eligible for 
funding.);
    (2) Section 101 of the Housing and Urban Development Act of 1965 
(12 U.S.C. 1701s); or
    (3) Section 8 of the United States Housing Act of 1937 (42 U.S.C. 
1437f note) (not including tenant-based assistance).
    Governmental jurisdiction means the unit of general local 
government, State, or area of operation of an Indian tribe in which the 
housing development administered by the applicant is located.
    HUD or Department means the United States Department of Housing and 
Urban Development.
    In and around means within, or adjacent to, the physical boundaries 
of a housing development.
    Local law enforcement agency means a police department, sheriff's 
office, or other entity of the governmental jurisdiction that has law 
enforcement responsibilities for the community at large, including the 
housing developments owned by the applicant.
    Problems associated with drug-related crime means the negative 
physical, social, educational and economic impact of drug-related crime 
on assisted housing residents, and the deterioration of the assisted 
housing environment because of drug-related crime. [[Page 5283]] 
    Resident Organization (RO) means an incorporated or unincorporated 
nonprofit organization or association that meets each of the following 
requirements:
    (1) It must be representative of the residents it purports to 
represent;
    (2) It may represent residents in more than one housing 
development, but it must fairly represent residents from each 
development that it represents;
    (3) It must adopt written procedures providing for the election of 
specific officers on a regular basis (but at least once every three 
years); and
    (4) It must have a democratically elected governing board. The 
voting membership of the board must consist of residents of the 
development or developments that the resident organization represents.
    Single State Agency means an agency responsible for licensing and 
monitoring State or tribal drug abuse programs.
    State means any of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments. The term does not include any 
public or Indian housing agency under the United States Housing Act of 
1937.
    Unit of general local government means any city, county, town, 
municipality, township, parish, village, local public authority or 
other general purpose political subdivision of a State.

Subpart B--Use of Grant Funds


Sec. 261.10  Applicants and activities.

    Applicants and activities eligible for funding under the Assisted 
Housing Drug Elimination Program are listed in this section. The 
applicants and activities eligible under any particular funding round 
may be limited in a Notice of Funding Availability (NOFA) published in 
the Federal Register. Additional details concerning eligible and 
ineligible applicants and activities will also be published in the 
NOFAs for this program.
    (a) Eligible applicants. The applicant must be the owner of a 
federally assisted low-income housing project under:
    (1) Section 221(d)(3), section 221(d)(4) or 236 of the National 
Housing Act (Note: However, section 221(d)(4) and section 221(d)(3) 
market rate projects without project-based assistance contracts are not 
considered federally assisted low-income housing. Therefore, section 
221(d)(4) and section 221(d)(3) market rate projects with tenant-based 
assistance contracts are not considered federally assisted low-income 
housing and are not eligible for funding.);
    (2) Section 101 of the Housing and Urban Development Act of 1965; 
or
    (3) Section 8 of the United States Housing Act of 1937 (not 
including tenant-based assistance).
    (b) Eligible activities. An application for funding under this 
program may be for one or more of the following eligible activities, as 
further specified in program NOFAs:
    (1) Employment of security personnel.
    (2) Reimbursement of local law enforcement agencies for additional 
security and protective services.
    (3) Physical improvements to enhance security.
    (4) Employment of one or more individuals:
    (i) To investigate drug-related crime, and the problems associated 
with it, on or about the real property comprising any federally 
assisted low-income housing project; and
    (ii) To provide evidence relating to such crime in any 
administrative or judicial proceeding.
    (5) The provision of training, communications equipment, and other 
related equipment for use by voluntary tenant patrols acting in 
cooperation with local law enforcement officials.
    (6) Drug-abuse prevention, intervention and treatment programs to 
reduce the use of drugs.
    (7) Continuation of current program activities. Current or previous 
Assisted Housing Drug Elimination Program grant recipients who are 
eligible under Sec. 261.10(a) of this subpart may apply, on the same 
basis as other applicants, for grants to continue their grant 
activities or implement other program activities. The Department will 
evaluate an applicant's performance under any previous Drug Elimination 
Program grants within the past five years. Subject to evaluation and 
review are the applicant's financial and program performance; reporting 
and special condition compliance; accomplishment of stated goals and 
objectives under the previous grant; and program adjustments made in 
response to previous ineffective performance. If the evaluation 
discloses a pattern under past grants of ineffective performances with 
no corrective measures attempted, it will result in a deduction of 
points from the current application. Since this is a competitive 
program, HUD does not guarantee continued funding of any previously 
funded Drug Elimination Program grant.

Subpart C--Application and Selection


Sec. 261.15  Application selection and requirements.

    (a) Selection criteria. HUD will review each application that it 
determines meets the requirements of this part and assign points in 
accordance with the selection criteria. The number of points that an 
application receives will depend on the extent to which the application 
is responsive to the information requested in Notices of Funding 
Availability (NOFAs) published for this program. Each application 
submitted for a grant under this part will be evaluated on the basis of 
the following selection criteria:
    (1) First criterion: The extent of the drug-related crime problem 
in the applicant's development or developments proposed for assistance.
    (2) Second criterion: The quality of the plan to address the crime 
problem in the developments proposed for assistance, including the 
extent to which the plan includes initiatives that can be sustained 
over a period of several years.
    (3) Third criterion: The capability of the applicant to carry out 
the plan.
    (4) Fourth criterion: The extent to which tenants, the local 
government and the local community support and participate in the 
design and implementation of the activities proposed to be funded under 
the application.
    (b) Plan requirement. Each application must include a plan for 
addressing the problem of drug-related crime and the problems 
associated with drug-related crime on the premises of the housing for 
which the application is being submitted. For applications that cover 
more than one housing development, the plan does not have to address 
each development separately if the same activities will apply to each 
development. Only where program activities will differ from one 
development to another must the plan address each development 
separately.
    (c) Notice of Funding Availability. HUD will publish Notices of 
Funding Availability (NOFAs) in the Federal Register, as appropriate, 
to inform the public of the availability of grant amounts under this 
part. NOFAs will provide specific guidance with respect to the grant 
process, including the deadlines for the submission of grant 
applications; the limits (if any) on maximum grant amounts; the 
eligible applicants and activities; the information that must be 
submitted to permit HUD to score each of the selection criteria; the 
maximum number of points to be awarded for each [[Page 5284]] selection 
criterion; the contents of the plan for addressing the problem of drug-
related crime that must be included with the application; the listing 
of any certifications and assurances that must be submitted with the 
application; and the process for ranking and selecting applicants. 
NOFAs will also include any additional information, factors, and 
requirements that the Department has determined to be necessary and 
appropriate to provide for the implementation and administration of the 
program under this part.

(Approved by the Office of Management and Budget under control 
number 2502-0476.)

    (d) Environmental review. Grants under this part are categorically 
excluded from review under the National Environmental Policy Act of 
1969 (NEPA)(42 U.S.C. 4321), in accordance with 24 CFR 50.20(p). 
However, prior to an award of grant funds under this part, HUD will 
perform an environmental review to the extent required by HUD's 
environmental regulations at 24 CFR part 50, including the applicable 
related authorities at 24 CFR 50.4.


Sec. 261.18  Resident comments on grant application.

    The applicant must provide the residents of developments proposed 
for funding under this part, as well as any resident organizations that 
represent those residents, with a reasonable opportunity to comment on 
its application for funding under this program. The applicant must give 
these comments careful consideration in developing its plan and 
application as well as in the implementation of funded programs. Copies 
of all written comments submitted must be maintained by the grantee for 
three years.

Subpart D--Grant Administration


Sec. 261.26  Grant administration.

    (a) General. Each grantee is responsible for ensuring that grant 
funds are administered in accordance with the requirements of this 
part, any Notice of Funding Availability (NOFA) issued for this 
program, 24 CFR part 85, applicable laws and regulations, applicable 
OMB circulars, HUD fiscal and audit controls, grant agreements, grant 
special conditions, the grantee's approved budget (SF-424A), budget 
narrative, plan, and activity timetable.
    (b) Grant term extensions.--(1) Grant term. Terms of the grant 
agreement may not exceed 12 months, unless an extension is approved by 
the local HUD Office. The maximum extension allowable for any grant is 
6 months. Any funds not expended at the end of the grant term shall be 
remitted to HUD.
    (2) Extension. Grantees may be granted an extension of the grant 
term in response to a written request for an extension stating the need 
for the extension and indicating the additional time required.
    (3) Receipt. The request must be received by the local HUD Office 
before the termination of the grant, and requires approval by the local 
HUD Office with jurisdiction over the grantee.
    (4) Term. The maximum extension allowable for any program period is 
6 months. Requests for retroactive extension of program periods will 
not be considered. Only one extension will be permitted. Extensions 
will only be considered if the extension criteria of paragraph (b)(5) 
of this section are met by the grantee at the time the request for the 
extension of the deadline is submitted for approval.
    (5) Extension criteria. The following criteria must be met by the 
grantee when submitting a request to extend the expenditure deadline 
for a program or set of programs.
    (i) Financial status reports. There must be on file with the local 
HUD Office current and acceptable Financial Status Reports, SF-269As.
    (ii) Grant agreement special conditions. All grant agreement 
special conditions must be satisfied except those conditions that must 
be fulfilled in the remaining period of the grant. This also includes 
the performance and resolution of audit findings in a timely manner.
    (iii) Justification. A narrative justification must be submitted 
with the program extension request. Complete details must be provided, 
including the circumstances which require the proposed extension, and 
explanation of the impact of denying the request.
    (6) HUD action. The local HUD Office will attempt to take action on 
an extension request within 15 working days after receipt of the 
request.
    (c) Duplication of funds. To prevent duplicate funding of any 
activity, the grantee must establish controls to assure that an 
activity or program that is funded by other HUD programs, or programs 
of other Federal agencies, shall not also be funded by the Drug 
Elimination Program. The grantee must establish an auditable system to 
provide adequate accountability for funds that it has been awarded. The 
grantee is responsible for ensuring that there is no duplication of 
funds.
    (d) Insurance. Each grantee is required to obtain adequate 
insurance coverage to protect itself against any potential liability 
arising out of the eligible activities under this part. In particular, 
applicants are required to assess their potential liability arising out 
of the employment or contracting of security personnel, law enforcement 
personnel, investigators, and drug treatment providers, and the 
establishment of voluntary tenant patrols; to evaluate the 
qualifications and training of the individuals or firms undertaking 
these functions; and to consider any limitations on liability under 
State or local law. Grantees are required to obtain liability insurance 
to protect the members of the voluntary tenant patrol against potential 
liability as a result of the patrol's activities under 
Sec. 261.10(b)(5). Voluntary tenant patrol liability insurance costs 
are eligible program expenses. Subgrantees are required to obtain their 
own liability insurance.
    (e) Failure to implement program. If the grant plan, approved 
budget and timetable, as described in the approved application, are not 
operational within 60 days of the grant agreement date, the grantee 
must report by letter to the local HUD Office the steps being taken to 
initiate the plan and timetable, the reason for the delay, and the 
expected starting date. Any timetable revisions which resulted from the 
delay must be included. The local HUD Office will determine if the 
delay is acceptable, approve/disapprove the revised plan and timetable, 
and take any additional appropriate action.
    (f) Sanctions. (1) HUD may impose sanctions if the grantee:
    (i) Is not complying with the requirements of this part or of other 
applicable Federal law;
    (ii) Fails to make satisfactory progress toward its drug 
elimination goals, as specified in its plan and as reflected in its 
performance and financial status reports under Sec. 261.28;
    (iii) Does not establish procedures that will minimize the time 
elapsing between drawdowns and disbursements;
    (iv) Does not adhere to grant agreement requirements or special 
conditions;
    (v) Proposes substantial plan changes to the extent that, if 
originally submitted, would have resulted in the application not being 
selected for funding;
    (vi) Engages in the improper award or administration of grant 
subcontracts;
    (vii) Does not submit reports; or
    (viii) Files a false certification.
    (2) HUD may impose the following sanctions:
    (i) Temporarily withhold cash payments pending correction of the 
deficiency by the grantee or subgrantee; [[Page 5285]] 
    (ii) Disallow all or part of the cost of the activity or action not 
in compliance;
    (iii) Wholly or partly suspend or terminate the current award for 
the grantee's or subgrantee's program;
    (iv) Require that some or all of the grant amounts be remitted to 
HUD;
    (v) Condition a future grant and elect not to provide future grant 
funds to the grantee until appropriate actions are taken to ensure 
compliance;
    (vi) Withhold further awards for the program; or
    (vii) Take other remedies that may be legally available.

(Approved by the Office of Management and Budget under control 
number 2502-0476).


Sec. 261.28  Grantee reports.

    Grantees are responsible for managing the day-to-day operations of 
grant and subgrant supported activities. Grantees must monitor grant 
and subgrant supported activities to assure compliance with applicable 
Federal requirements and that performance goals are being achieved. 
Grantee monitoring must cover each program, function, or activity of 
the grant.
    (a) Final performance report--(1) Evaluation. Grantees are required 
to provide the local HUD Office with a final cumulative performance 
report that evaluates the grantee's overall performance against its 
plan. This report shall include in summary form (but is not limited to) 
the following: Any change or lack of change in crime statistics or 
other indicators drawn from the applicant's plan assessment (such as 
vandalism, etc.) and an explanation of any difference; successful 
completion of any of the strategy components identified in the 
applicant's plan; a discussion of any problems encountered in 
implementing the plan and how they were addressed; an evaluation of 
whether the rate of progress meets expectations; a discussion of the 
grantee's efforts in encouraging resident participation; and a 
description of any other programs that may have been initiated, 
expanded or deleted as a result of the plan, with an identification of 
the resources and the number of people involved in the programs and 
their relation to the plan.
    (2) Reporting period. The final performance report shall cover the 
period from the date of the grant agreement to the termination date of 
the grant agreement. The report is due to the local HUD Office within 
90 days after termination of the grant agreement.
    (b) Semi-annual financial status reporting requirements--(1) Form. 
The grantee shall provide a semi-annual financial status report. The 
grantee shall use the SF-269A, Financial Status Report--Long Form, to 
report the status of funds for nonconstruction programs. The grantee 
shall use SF-269A, Block 12, ``Remarks,'' to report on the status of 
programs, functions, or activities within the program.
    (2) Reporting period. Semi-annual financial status reports (SF-
269A) covering the first 180 days of funded activities must be 
submitted to the local HUD Office between 190 and 210 days after the 
date of the grant agreement. If the SF-269A is not received on or 
before the due date (210 days after the date of the grant agreement) by 
the local HUD Office, grant funds will not be advanced until the 
reports are received.
    (c) Final financial status report (SF-269A)--(1) Cumulative 
summary. The final report will be a cumulative summary of expenditures 
to date and must indicate the exact balance of unexpended funds. The 
grantee must remit all Drug Elimination Program funds (including any 
unexpended funds) owed to HUD within 90 days after the termination of 
the grant agreement.
    (2) Reporting period. The final financial status report shall cover 
the period from the date of the grant agreement to the termination date 
of the grant agreement. The report is due to the local HUD Office 
within 90 days after the termination of the grant agreement.
    (d) Report submission. The grantee shall submit all required 
reports to the local HUD Office.

(Approved by the Office of Management and Budget under control 
number 2502-0476).


Sec. 261.29  Other federal requirements.

    Use of grant funds requires compliance with the following 
additional Federal requirements:
    (a) Labor standards. (1) Where grant funds are used to undertake 
physical improvements to increase security under Sec. 261.10(b)(3), the 
following labor standards apply:
    (i) The grantee and its contractors and subcontractors must pay the 
following prevailing wage rates, and must comply with all related 
rules, regulations and requirements:
    (A) For laborers and mechanics employed in the program, the wage 
rate determined by the Secretary of Labor pursuant to the Davis-Bacon 
Act (40 U.S.C. 276a et seq.) to be prevailing in the locality with 
respect to such trades;
    (B) For laborers and mechanics employed in carrying out non-routine 
maintenance in the program, the HUD-determined prevailing wage rate. As 
used in this paragraph (a), non-routine maintenance means work items 
that ordinarily would be performed on a regular basis in the course of 
upkeep of a property, but have become substantial in scope because they 
have been put off, and that involve expenditures that would otherwise 
materially distort the level trend of maintenance expenses. Non-routine 
maintenance may include replacement of equipment and materials rendered 
unsatisfactory because of normal wear and tear by items of 
substantially the same kind. Work that constitutes reconstruction, a 
substantial improvement in the quality or kind of original equipment 
and materials, or remodeling that alters the nature or type of housing 
units is not non-routine maintenance.
    (ii) The employment of laborers and mechanics is subject to the 
provisions of the Contract Work Hours and Safety Standards Act (40 
U.S.C. 327-333).
    (2) The provisions of paragraph (a)(1) of this section shall not 
apply to labor contributed under the following circumstances:
    (i) Upon the request of any resident organization, HUD may, subject 
to applicable collective bargaining agreements, permit residents to 
volunteer a portion of their labor;
    (ii) An individual may volunteer to perform services if:
    (A) The individual does not receive compensation for the voluntary 
services, or is paid expenses, reasonable benefits, or a nominal fee 
for voluntary services; and
    (B) Is not otherwise employed at any time in the work subject to 
paragraph (a)(1)(i) (A) or (B) of this section.
    (b) Nondiscrimination and equal opportunity. The following 
nondiscrimination and equal opportunity requirements apply to this 
program:
    (1) The requirements of The Fair Housing Act (42 U.S.C. 3601-19) 
and implementing regulations issued at 24 CFR part 100; Executive Order 
11063 (Equal Opportunity in Housing) and implementing regulations at 24 
CFR part 107; and Title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d-2000d-4) (Nondiscrimination in Federally Assisted Programs) and 
implementing regulations issued at 24 CFR part 1;
    (2) The prohibitions against discrimination on the basis of age 
under the Age Discrimination Act of 1975 (42 U.S.C. 6101-07) and 
implementing regulations at 24 CFR part 146, and the prohibitions 
against discrimination against handicapped individuals under section 
504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing 
regulations at 24 CFR part 8;
    (3) The requirements of Executive Order 11246 (Equal Employment 
Opportunity) and the regulations issued under the Order at 41 CFR 
chapter 60; [[Page 5286]] 
    (4) The requirements of section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u) (Employment Opportunities for 
Lower Income Persons in Connection with Assisted Projects); and 
implementing regulations at 24 CFR part 135; and
    (5) The requirements of Executive Orders 11625, 12432, and 12138. 
Consistent with HUD's responsibilities under these Orders, recipients 
must make efforts to encourage the use of minority and women's business 
enterprises in connection with funded activities.
    (c) Use of debarred, suspended, or ineligible contractors. Use of 
grant funds under this program requires compliance with the provisions 
of 24 CFR part 24 relating to the employment, engagement of services, 
awarding of contracts, or funding of any contractors or subcontractors 
during any period of debarment, suspension, or placement in 
ineligibility status.
    (d) Flood insurance. Grants will not be awarded for proposed 
activities that involve acquisition, construction, reconstruction, 
repair, or improvement of a building or mobile home located in an area 
that has been identified by the Federal Emergency Management Agency 
(FEMA) as having special flood hazards unless:
    (1) The community in which the area is situated is participating in 
the National Flood Insurance Program in accordance with 44 CFR parts 
59-79; or
    (2) Less than a year has passed since FEMA notification to the 
community regarding such hazards; and
    (3) Flood insurance on the structure is obtained in accordance with 
section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 
4001).
    (e) Lead-based paint. The provisions of section 302 of the Lead-
Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and 
implementing regulations at 24 CFR part 965, subpart H (51 FR 27789-
27791, August 1, 1986) apply to activities under this program as set 
out below. This section is promulgated pursuant to the authority 
granted in 24 CFR 35.24(b)(4) and supersedes, with respect to all 
housing to which it applies, the requirements (not including 
definitions) prescribed by subpart C of 24 CFR part 35.
    (1) Applicability. The provisions of this section shall apply to 
all housing constructed or substantially rehabilitated before January 
1, 1978, and for which assistance under this part is being used for 
physical improvements to enhance security under Sec. 261.10(b)(3).
    (2) Definitions. The term applicable surfaces means all intact and 
nonintact interior and exterior painted surfaces of a residential 
structure.
    (3) Exceptions. The following activities are not covered by this 
section:
    (i) Installation of security devices;
    (ii) Other similar types of single-purpose programs that do not 
involve physical repairs or remodeling of applicable surfaces of 
residential structures; or
    (iii) Any non-single purpose rehabilitation that does not involve 
applicable surfaces and that does not exceed $3,000 per unit.
    (f) Conflicts of interest. No person, as described in paragraphs 
(f)(1) and (2) of this section, may obtain a personal or financial 
interest or benefit from an activity funded under this program, or have 
an interest in any contract, subcontract, or agreement with respect 
thereto, or the proceeds thereunder, either for him or herself or for 
those with whom he or she has family or business ties, during his or 
her tenure, or for one year thereafter:
    (1) Who is an employee, agent, consultant, officer, or elected or 
appointed official of the grantee that receives assistance under the 
program and who exercises or has exercised any functions or 
responsibilities with respect to assisted activities; or
    (2) Who is in a position to participate in a decision making 
process or gain inside information with regard to such activities.
    (g) Drug Free Workplace Act of 1988. The requirements of the Drug-
Free Workplace Act of 1988 at 24 CFR part 24, subpart F apply to this 
program.
    (h) Anti-lobbying provisions under section 319. The use of funds 
under this part is subject to the disclosure requirements and 
prohibitions of section 319 of the Department of the Interior and 
Related Agencies Appropriations Act for Fiscal Year 1990 (31 U.S.C. 
1352), and implementing regulations at 24 CFR part 87. These 
authorities prohibit recipients and subrecipients of Federal contracts, 
grants, cooperative agreements, and loans from using appropriated funds 
for lobbying the Executive or Legislative Branches of the Federal 
Government in connection with a specific contract, grant, or loan. The 
prohibition also covers the awarding of contracts, grants, cooperative 
agreements, or loans unless the recipient has made an acceptable 
certification regarding lobbying. Under 24 CFR part 87, applicants, 
recipients, and subrecipients of assistance exceeding $100,000 must 
certify that no Federal funds have been or will be spent on lobbying 
activities in connection with the assistance. However, since grantees 
sometimes may expect to receive additional grant funds through 
reallocations, all potential grantees are required to submit the 
certification, and to make the required disclosure if the grant amount 
exceeds $100,000. The law provides substantial monetary penalties for 
failure to file the required certification or disclosure.
    (i) Intergovernmental review. The requirements of Executive Order 
12372 and the regulations issued under the order at 24 CFR part 52, to 
the extent provided by Federal Register notice in accordance with 24 
CFR 52.3 apply to this program.


    Dated: January 19, 1995.
Nicolas P. Retsinas,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 95-1932 Filed 1-25-95; 8:45 am]
BILLING CODE 4210-27-P