[Federal Register Volume 60, Number 34 (Tuesday, February 21, 1995)]
[Rules and Regulations]
[Pages 9734-9748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4119]




[[Page 9733]]

_______________________________________________________________________

Part III





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Assistant Secretary for Community Planning and 
Development



_______________________________________________________________________



24 CFR Part 585



Opportunities for Youth: Youthbuild Program; Final Rule

  Federal Register / Vol. 60, No. 34 / Tuesday, February 21, 1995 / 
Rules and Regulations   
[[Page 9734]] 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Community Planning and 
Development

24 CFR Part 585

[Docket No. R-95-1675; FR-3450-F-02]
RIN 2506-AB52


Opportunities for Youth: Youthbuild Program

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

ACTION: Final rule.

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

SUMMARY: This is the final rule for the Youthbuild Program. The 
Youthbuild Program provides funding assistance for a wide range of 
multi-disciplinary activities and services to assist economically 
disadvantaged young adults. The opportunities are designed to help 
disadvantaged young adults who have dropped out of high school to 
obtain the education and employment skills necessary to achieve 
economic self-sufficiency and develop leadership skills and a 
commitment to community development in low-income communities. 
Implementation grant funds can be used to fund eligible educational and 
supportive services and activities composed of basic skills instruction 
and remedial education, employment skills and leadership development, 
and counseling, referral and support services. Planning grant funds can 
be used to develop a Youthbuild program that includes the activities of 
an implementation grant.
    Another important objective of the Youthbuild program is to expand 
the supply of permanent affordable housing for homeless persons and 
members of low- and very low-income families. By giving disadvantaged 
young adults participating in the program meaningful on-site training 
experiences constructing or rehabilitating housing as a community 
service, they are helping to meet the housing needs of homeless and 
low-income families in their community.

EFFECTIVE DATE: March 23, 1995.

FOR FURTHER INFORMATION CONTACT: The Office of Economic Development, 
Department of Housing and Urban Development, Room 7136, 451 Seventh 
Street, SW, Washington, DC 20410. Telephone (202) 708-2035; TDD (202) 
708-1455. (These telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Information Collection Requirements

    The information collection requirements contained in this rule have 
been approved under the Paperwork Reduction Act of 1980 (44 U.S.C. 
3501-3520) by the Office of Management and Budget (OMB) and have been 
assigned OMB control number 2506-0142; expiration date August 31, 1996.

II. Background

    Section 164 of the Housing and Community Development Act of 1992 
(Pub.L. 102-550) authorized the Youthbuild program under subtitle D of 
title IV of the National Affordable Housing Act (42 U.S.C. 8011). On 
September 23, 1993, the Department published a proposed rule (58 FR 
49830) and a Notice of Funds Availability (NOFA) (58 FR 49849) for this 
program.
    The Department is now publishing the final rule to be effective 30 
days from the date of publication. This final rule does not contain the 
detailed selection criteria and application processing steps contained 
in the NOFA for Fiscal Year 1993. Information appropriate for a 
specific funding competition will now be contained in the NOFA 
published for the current competition and will not be part of the final 
rule. The final rule published here is presented in its entirety to 
reflect the addition of section numbers and all modifications made as a 
result of public comments and as a result of the Department's 
experience in running the first competition for Youthbuild grant fund.

III. Discussion of Public Comments on Proposed Rule

    The Department received public comments from seven organizations 
(one state agency, one local government agency, two housing authorities 
and three nonprofit organizations) in response to the proposed rule 
published on September 23, 1993, at 58 FR 49830. The following 
discussion summarizes the comments and provides HUD's responses to 
those comments.
    Comment: Participant eligibility should be extended to include 
juvenile offenders held in custody at state-operated training 
facilities. These juveniles meet the qualifications of economically 
disadvantaged young adults who have dropped out of high school and are 
in need of assistance to obtain education and employment skills. [one 
state agency]
    Response: Such juvenile offenders would be eligible for a 
Youthbuild program without any changes to the regulations.
    Comment: The paragraph entitled ``Lease'' included in the 
provisions on tenant protections under ``Project-related restrictions 
applicable to Youthbuild residential rental housing'' [Sec. 585.309 
(b)(1)] calls for a model lease to become an addendum to the grant 
agreement, remaining in force for ten years. Housing authorities and 
other owners may have to make changes in lease provisions as required 
by HUD and state statutes. Provisions must be made to amend leases. 
[one housing authority]
    Response: For grants covered by the requirements of section 
585.309(b)(1), if the provisions of the model lease change, such 
changes will require approval by HUD. No change to the regulations is 
needed.
    Comment: There is a conflict between Sec. 585.309(b)(2) and 24 CFR 
966.4(a)(1) and (3) relating to the rules to be followed by a Public 
Housing Authority for termination of tenancy. [one housing authority]
    Response: The provisions of 24 CFR part 966 take precedence for 
public housing authorities.
    Comment: Does the Youthbuild program require a justification of new 
construction through market and/or feasibility studies? [one nonprofit 
organization]
    Response: No.
    Comment: Is a mixed use project an eligible Youthbuild activity 
and, and if so, are there specific criteria involved? [one nonprofit 
organization]
    Response: Mixed-use projects are eligible as long as the Youthbuild 
dollars are only used in conjunction with the housing and housing 
related facilities. See definition of ``related facilities'' in 
Sec. 585.4.
    Comment: Does the Youthbuild program require that one-third of the 
housing units assisted be accessible to handicapped people? [one 
nonprofit organization]
    Response: Youthbuild applicants are required to certify that they 
will comply with the requirements of Section 504 of the Rehabilitation 
Act of 1973, which specifies the handicapped accessibility standards 
for housing created with Federal funds.
    Comment: Several sources questioned HUD's use of 10 years to define 
``the remaining useful life'' of a Youthbuild assisted property. One 
commenter thought that 10 years was too long and two thought it was too 
short. [one housing authority and two nonprofit organizations.]
    Response: HUD considered a longer period, but found that a 10-year 
period [[Page 9735]] was consistent with similar HUD programs. Any 
Youthbuild recipient organization that wishes to impose longer 
restrictions on the use of a property could do so on its own.
    Comment: HUD should not limit tenants with incomes between 60 and 
80 percent of the area median income to only one year. This restriction 
should be removed. [two public housing authorities]
    Response: HUD agrees that the one year limit may be too restrictive 
and has raised it to two years in Sec. 585.309(a).
    Comment: When project-related restrictions apply to Youthbuild 
residential rental housing, the requirement that units be advertised 
for low-income people should be reduced from 90-day periods to 60-day 
periods. [one housing authority]
    Response: Because the maximum length of time that a tenant with an 
income between 60 and 80 percent of the area median income is allowed 
to rent a Youthbuild-assisted building has been raised from one to two 
years (see above), HUD believes it is necessary to maintain the 90-day 
requirement to ensure availability to lower-income tenants.
    Comment: When a recipient has successfully completed the activities 
of a planning grant, it would be rare for such an investment of time 
and money to yield no workable program. HUD should guarantee that all 
planning recipients be awarded an implementation grant in the next 
funding cycle. [one public housing authority]
    Response: While HUD agrees that a planning recipient will likely 
have a viable project at the end of its planning grant term, it may 
need additional time to be ready to implement a program that is 
superior to those of other applicants that did not receive planning 
grants. Further, given the number of planning grants awarded during the 
first funding round, there are insufficient funds to award 
implementation grants to each planning grant recipient. Each funding 
round is statutorily required to be a competition for funds, and 
fairness dictates that each application for funding be evaluated on its 
merits, regardless of whether the applicant received a previous 
planning grant. HUD also believes that the process of planning for a 
Youthbuild implementation grant is a valuable exercise, whether or not 
a HUD-funded Youthbuild implementation program is the result.
    Comment: HUD should not require programs to channel participants 
into programs leading to a high school diploma or post-secondary 
education, because some participants may not be capable of reaching 
those goals and such expectations may lead them to drop out of the 
program. [one public housing authority]
    Response: HUD believes that earning a high school diploma or its 
equivalent is crucial to achieving self-sufficiency. However, the 
educational component of the program does not require that participants 
achieve a high school equivalency, but merely requires recipients to 
provide services and activities designed to meet the basic education 
needs of participants. This requirement is sufficiently flexible to 
allow recipients to provide educational services that are appropriate 
to their individual participants.
    Comment: HUD should not require applicants for planning grants to 
present information on the need for the program, considering that 
feasibility studies are eligible activities under the planning grant. 
[one public housing authority]
    Response: Need, based on distress of the community, is a statutory 
selection criterion and is fundamentally different from feasibility 
studies. To present information on the degree of economic distress in a 
community in response to the Need rating criterion, an applicant must 
do research on the poverty, unemployment, dropout rate, and other 
factors currently existing in the community. Feasibility studies are 
eligible activities under the planning grant. Instead of assessing the 
current level of economic distress of the community, a feasibility 
study would focus on the physical environment, housing stock, and the 
social, human, and financial resources available for a Youthbuild 
program.
    Comment: Given that HUD may approve more than the $1 million 
maximum if the application proposes to serve a large number of 
participants, HUD should indicate whether the number of participants is 
a factor in the rating of an application, and, if so, should specify 
the average expected number of participants. [one public housing 
authority]
    Response: HUD does not have strict participant enrollment 
requirements but does consider the reasonableness of cost per student 
in rating program quality and feasibility. HUD also recognizes that 
costs may vary depending on the location of the program.
    Comment: HUD should allow program recipients to make stipends high 
enough to compete with illegal endeavors by participants. [one public 
housing authority]
    Response: HUD does not stipulate a stipend level, and leaves the 
amount up to the individual applicants. Unreasonable and excessive 
stipend levels will be considered in rating program quality and 
feasibility.
    Comment: HUD should state in the rule that stipends may not result 
in a rent increase for program participants. [one public housing 
authority]
    Response: The enabling statute and rule state that the Youthbuild 
program is subject to section 142 of the Job Training Partnership Act. 
Section 142(b) of the JTPA states that such wages and stipends are not 
considered as income for any Federal or Federally-assisted program 
based on need, other than those under the Social Security Act.
    Comment: HUD should strike the requirement that applicants may not 
commit or expend State, local or other funds to undertake property 
acquisition, rehabilitation or construction until a grant agreement is 
executed by HUD. [one city housing agency]
    Response: This provision only applies when Youthbuild funds have 
been requested to acquire, rehabilitate, or newly construct a property. 
The purpose is to allow HUD to conduct an environmental review on the 
property, which the statute requires to be done before an application 
can be approved. Applicants that expend their own or other funds on a 
proposed property are in jeopardy of using their funds on a property 
that could potentially be deemed ineligible as a result of the 
environmental review. If an applicant proposes to fund the acquisition, 
rehabilitation, or new construction entirely with non-Youthbuild funds, 
there is no restriction on using those funds before notification of 
grant award. Section 585.307(a)(3) has been changed to clarify this 
distinction.
    Comment: The provision that makes Davis-Bacon prevailing wage rates 
not applicable to program participants should be expanded to include 
state and local wage rate restrictions. [one city housing agency]
    Response: The provision making Davis-Bacon wage rates inapplicable 
to Youthbuild trainees is required by a specific statutory provision. 
HUD has no authority to declare State and local wage regulations 
inapplicable on the basis of an employee's status as a Youthbuild 
trainee. However, in this final rule, the Department has revised the 
provision in the proposed rule regarding the need to apply Davis-Bacon 
prevailing wage rates to Youthbuild trainees where additional Federal 
assistance is provided. Subsequent to the issuance of the proposed 
rule, the Department's attention was drawn to a decision of the United 
States Department of Labor's Wage Appeals Board in in the matter of 
[[Page 9736]] 100 Court Ave. Street Project, Kurtz Building, UDAG Proj. 
No. B-83-AA-19-0020, Des Moines, Iowa (WAB Case No. 88-9, March 16, 
1990). That case concerned a project involving training under the Job 
Training Partnership Act (JTPA), which excludes trainees from Davis-
Bacon requirements, as well as assistance under the Urban Development 
Action Grant (UDAG) program, which has its own Davis-Bacon provisions. 
The Wage Appeals Board determined that JTPA's statutory Davis-Bacon 
exclusion for trainees applied to exclude a JTPA trainee from Davis-
Bacon rate requirements even where the trainee was employed on the UDAG 
project. Since the Housing and Community Development Act of 1992 
applies the JTPA Davis-Bacon provision (and its exclusion of trainees 
from Davis-Bacon rates) to the Youthbuild program, the Department has 
concluded that the Wage Appeals Board's ruling is applicable to the 
Youthbuild program. Accordingly, the final rule provides that Davis-
Bacon wage rates are not applicable to Youthbuild trainees, regardless 
of whether other Federal assistance is involved. However, neither the 
JTPA provision nor the Wage Appeals Board decision excludes trainees 
from wage rates other than Davis-Bacon wage rates. Therefore, the rule 
notes that Youthbuild trainees must be paid HUD-determined wage rates 
on public and Indian housing work where those rates would be applicable 
to trainees under the United States Housing Act of 1937 (e.g., on work 
such as ``non-routine maintenance''). However, where HUD wage rates are 
applicable to trainees, the rates determined by HUD to apply to 
Youthbuild trainees will be trainee wage rates rather than 
journeyperson rates.
    Comment: Limitations on profit imposed on housing should not apply 
to projects which are owned by governmental agencies. [one city housing 
agency]
    Response: This is a statutory restriction, that has been 
interpreted to apply only when construction is financed, in whole or in 
part, with Youthbuild funds. (See Sec. 585.309)
    Comment: The rule should include all of the essential purposes of 
the program that were stated in the legislation. [one nonprofit 
organization]
    Response: The purpose of the Youthbuild program in Sec. 585.2 has 
been revised accordingly.
    Comment: HUD should state that construction site supervisors 
essential for the training of the participants are not considered 
construction or rehabilitation costs. [one nonprofit organization]
    Response: Section 585.306 has been added to make that 
clarification.
    Comment: Related facilities which stand alone should be considered 
appropriate construction sites for trainees. [one nonprofit 
organization]
    Response: HUD construes the term ``housing and related facilities'' 
to mean residential property, which does not include stand-alone 
facilities that do not include housing.
    Comment: The definition of the term ``self-sufficiency'' should be 
providing for oneself and one's immediate ``dependents,'' not 
``family.'' [one nonprofit organization]
    Response: The definition of ``self-sufficiency'' has been deleted 
from the final rule.
    Comment: In the list of ``Other activities'' as delineated in the 
discussion of program components, ``short-term placement with private 
contractors as internships to enhance the participant's preparation for 
unsubsidized employment'' should be added. [one nonprofit organization]
    Response: The list of ``other activities'' is not exclusive, and a 
variety of other activities can be done under this heading.
    Comment: The Corporation for National and Community Service should 
be added to the list of other Federal entities from which applicants 
are encouraged to enlist support. [one nonprofit organization]
    Response: The list of potential resources in Sec. 585.105 comes 
from the statute, and is not intended to be a comprehensive list or 
limitation of all possible resources that can be used in the program.
    Comment: The requirements for the Performance Evaluation Report and 
Quarterly Progress Report should include additional information. [one 
nonprofit organization]
    Response: All specific reporting elements of the required reports 
have been deleted from the Rule and are now contained in Youthbuild 
Program Reports (HUD-40201).
    Comment: Additional points should be given for counseling and 
leadership development services; the points for housing resources and 
the housing priority points seem excessive; the requirements for public 
support are not realistic. [one nonprofit organization]
    Response: The rule has been amended to state only the statutory 
rating criteria. The point awards and subcategories of statutory and 
administratively imposed criteria will be announced for each 
competition in the NOFA for that fiscal year.
    Comment: The discussion of Geographic Diversity provides that lower 
ranked applications will be selected if any of the 10 HUD Regions 
receive substantially fewer awards; this language does not reflect the 
differences in need and interest between the HUD regions. [one 
nonprofit organization]
    Response: HUD regions have been abolished under the Department's 
recent reorganization. HUD reserves the right to invoke this provision 
to ensure fairness and meet the needs of distressed communities.

Other Matters

    a. Environmental Impact. A Finding of No Significant Impact with 
respect to the environment for this rule has been made in accordance 
with HUD regulations at 24 CFR part 50, which implement section 
102(2)(C) of the National Environmental Policy Act of 1969. The Finding 
of No Significant Impact is available for public inspection between 
7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules Docket 
Clerk, Office of the General Counsel, Department of Housing and Urban 
Development, Room 10276, 451 Seventh Street, S.W., Washington, D.C. 
20410.
    b. 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 
would not have a significant economic impact on a substantial number of 
small entities because the Youthbuild program affects primarily 
economically disadvantaged young adults by providing assistance for a 
wide range of multi-disciplinary activities to assist those young 
adults. The opportunities are designed to help disadvantaged young 
adults who have dropped out of high school to obtain the education and 
employment skills necessary to achieve economic self-sufficiency and 
develop leadership skills and a commitment to community development in 
low-income communities. A related objective of the program is to add to 
the supply of permanent affordable housing for homeless persons and 
members of low- and very low-income families by giving young adults 
participating in the program meaningful on-site training experiences in 
construction and rehabilitation of housing. It is anticipated that 
fewer than 120 projects will receive assistance under this program.
    c. Executive Order 12612, Federalism. The General Counsel, as the 
Designated Official under section 6(a) of Executive Order 12612, 
Federalism, has determined that this rule does not have ``federalism 
implications'' because it [[Page 9737]] does not have substantial 
direct effects on the States (including their political subdivisions), 
or on the distribution of power and responsibilities among the various 
levels of government.
    d. 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 of this rule would have a 
potential significant impact on family formation, maintenance, and 
general well-being. The expected expansion of the housing supply for 
homeless and low- and very-low income persons and the provision of 
opportunities to economically disadvantaged young adults to enhance 
their education and employment skills will provide a positive impact on 
the family maintenance and general well-being. However since the impact 
on the family is beneficial and the rule involves very little HUD 
discretion, no further review is necessary.
    e. Semi-Annual Agenda of Regulations. This rule was listed as item 
number 1843 in the Department's Semiannual Agenda of Regulations 
published on November 14, 1994 (59 FR 57632, 57663) in accordance with 
Executive Order 12866 and the Regulatory Flexibility Act.
    f. Catalog of Federal Domestic Assistance. The Catalog of Federal 
Domestic Assistance Program number assigned to this program is 14.243.

List of Subjects in 24 CFR Part 585

    Grant programs--housing and community development, Homeless, Low- 
and very low-income families, Reporting and record keeping 
requirements.

    Accordingly, Subchapter C of Chapter V of Title 24 of the Code of 
Federal Regulations is amended to add a new part 585, consisting of 
subparts A through F, to read as follows:

PART 585--YOUTHBUILD PROGRAM

Subpart A--General

Sec.
585.1  Authority.
585.2  Program purpose.
585.3  Program components.
585.4  Definitions.

Subpart B--Application and Grant Award Process

585.100  Notice of funds availability.
585.101  Emergency funds.
585.102  Application requirements.
585.103  Combined planning and implementation applications.
585.104  Selection criteria.
585.105  Support of other Federal, State, local or private entities.
585.106  Selection process.
585.107  Prohibition of disclosure.

Subpart C--Youthbuild Planning Grants

585.201  Purpose.
585.202  Award limits.
585.203  Grant term.
585.204  Locational considerations.
585.205  Eligible activities.

Subpart D--Youthbuild Implementation Grants

585.301  Purpose.
585.302  Award limits.
585.303  Grant term.
585.304  Locational considerations.
585.305  Eligible activities.
585.306  Designation of costs.
585.307  Environmental procedures and standards.
585.308  Relocation assistance and real property acquisition.
585.309  Project-related restrictions applicable to Youthbuild 
residential rental housing.
585.310  Project-related restrictions applicable to Youthbuild 
transitional housing for the homeless.
585.311  Project-related restrictions applicable to Youthbuild 
homeownership housing.
585.312  Wages, labor standards, and nondiscrimination.
585.313  Labor standards.

Subpart E--Administration

585.401  Recordkeeping by recipients.
585.402  Grant agreement.
585.403  Reporting requirements.
585.404  Program changes.
585.405  Obligation and deobligation of funds.
585.406  Primarily religious organizations.
Subpart F--Applicability of Other Federal Requirements
585.501  Application of OMB Circulars.
585.502  Certifications.
585.503  Conflict of interest.
585.504  Use of debarred, suspended, or ineligible contractors.

    Authority: 42 U.S.C. 3535(d) and 8011.

Subpart A--General


Sec. 585.1  Authority.

    (a) General. The Youthbuild program is authorized under subtitle D 
of title IV of the National Affordable Housing Act (42 U.S.C. 8011), as 
added by section 164 of the Housing and Community Development Act of 
1992 (Pub. L. 102-550).
    (b) Authority restriction. No provision of the Youthbuild program 
may be construed to authorize any agency, officer, or employee of the 
United States to exercise any direction, supervision, or control over 
the curriculum, program of instruction, administration, or personnel of 
any educational institution, school, or school system, or over the 
selection of library resources, textbooks, or other printed or 
published instructional materials used by any educational institution 
or school system participating in a Youthbuild program.


Sec. 585.2  Program purpose.

    The purposes of the Youthbuild program are:
    (a) To provide economically disadvantaged young adults with 
opportunities to obtain education, employment skills and meaningful on-
site work experience as a service to their communities and a means to 
achieve self-sufficiency;
    (b) To foster the development of leadership skills and commitment 
to community; and
    (c) To expand the supply of permanent affordable housing for 
homeless and low- and very low-income persons by providing planning 
grants for program design and implementation grants for carrying out a 
Youthbuild Program.


Sec. 585.3  Program components.

    A Youthbuild implementation program uses comprehensive and multi-
disciplinary approaches designed to prepare young adults who have 
dropped out of high school for educational and employment opportunities 
by employing them as construction trainees on work sites for housing 
designated for homeless persons and low- and very low-income families. 
A Youthbuild planning grant is designed to give recipients sufficient 
time and financial resources to develop a comprehensive Youthbuild 
program that can be effectively implemented. Youthbuild programs must 
contain the three components described in paragraphs (a), (b) and (d) 
of this section. Other activities described in paragraph (c) of this 
section are optional:
    (a) Educational Services, including:
    (1) Services and activities designed to meet the basic educational 
needs of participants. For example, a Youthbuild program may include 
basic skills instruction and remedial education, bilingual education 
for individuals with limited English proficiency, secondary educational 
services and activities designed to lead to the attainment of a high 
school diploma or its equivalency (GED), or counseling and assistance 
in attaining post-secondary education and required financial aid;
    (2) Vocational classroom courses geared to construction terminology 
and concepts; and
    (3) Strategies to coordinate with local trade unions and 
apprenticeship programs where possible.
    (b) Leadership Training, Counseling and Other Support Activities, 
including:
    (1) Activities designed to develop employment and leadership 
skills, including support for youth councils; [[Page 9738]] 
    (2) Counseling services to assist trainees in personal, health, 
housing, child care, family or legal problems and/or referral services 
to appropriate social service resources;
    (3) Support services and stipends necessary to enable individuals 
to participate in the program and, for a period not to exceed 12 months 
after completion of training, to assist participants through continued 
support services;
    (4) Job development and placement activities and post-graduation 
follow-up assistance; and
    (5) Pre-employment training plan aimed at developing job seeking 
skills.
    (c) Other activities. A local program may be designed to include 
other, special activities such as:
    (1) Entrepreneurial training and courses in small business 
development;
    (2) Assistance to correct learning disabilities; or
    (3) Drivers' education courses.
    (d) On-site training, through actual housing rehabilitation and/or 
construction work. This component must include:
    (1) Access to housing sites where construction/ rehabilitation work 
is being carried out;
    (2) Work site training plan for a closely supervised construction 
site;
    (3) Construction or rehabilitation plan and timetable; and
    (4) Approaches to work site safety.
    (e) The Youthbuild implementation program must be structured so 
that 50 percent of each full-time participant's time is spent in 
educational services and activities [paragraphs (a), (b), and (c) of 
this section] and 50 percent is spent in on-site training [paragraph 
(d) of this section]. Youthbuild planning grant applications must 
contain strategies, plans and approaches to be used during the planning 
process to ultimately implement these program requirements.


Sec. 585.4  Definitions.

    As used in this part:
    1937 Act means the United States Housing Act of 1937.
    1992 Act means the Housing and Community Development Act of 1992.
    Access to housing applies to Youthbuild implementation grants 
required to document that the program has access to the housing 
project(s) for young adult on-site training, e.g. program participants 
have permission to work on the housing site.
    Adjusted income has the meaning given the term ``adjusted income'' 
in section 3(b) of the United States Housing Act of 1937.
    Applicable residential rental housing quality standards shall mean 
those standards of the applicable HUD or other Federal, State or local 
program providing assistance for residential rental housing involved in 
a Youthbuild implementation grant as used under section 455(a), 
Youthbuild Program Requirements, of the Act.
    Applicant means a public or private nonprofit agency, including:
    (1) A community-based organization;
    (2) An administrative entity designated under section 103(b)(1)(B) 
of the Job Training Partnership Act;
    (3) A community action agency;
    (4) A State or local housing development agency;
    (5) A community development corporation;
    (6) A public and/or Indian housing authority and resident 
management corporations, resident councils and resident organizations;
    (7) A State or local youth service or conservation corps; and
    (8) Any other entity (including States, units of general local 
government, and Indian Tribes) eligible to provide education and 
employment training.
    Combined Youthbuild application means the submission by an 
applicant of a single application to HUD for a planning and 
implementation grant request for one Youthbuild program.
    Community Based Organization means a private nonprofit organization 
that:
    (1) Maintains, through significant representation on the 
organization's governing board or otherwise, accountability to low-
income community residents and, to the extent practicable, low-income 
beneficiaries of programs receiving assistance under this subtitle; and
    (2) Has a history of serving the local community or communities 
where a program receiving assistance under this subtitle is located.
    Consolidated Plan means the document that is submitted to HUD that 
serves as the planning documents (comprehensive housing affordability 
strategy and community development plan) of the jurisdiction and an 
application for funding under any of the Community Planning and 
Development formula grant programs which is prepared in accordance with 
the process described in 24 CFR part 91.
    Full-Time Participation for program eligible participants is 
limited to not less than 6 months and not more than 24 months.
    Graduates are those participants who have completed the full-time 
education/on-site training components of a Youthbuild program and who 
are eligible to take advantage of meaningful opportunities in continued 
education, in owning their own businesses, in meaningful employment or 
in other means by which the participant can attain economic self-
sufficiency.
    Homeless Act means the Stewart B. McKinney Homeless Assistance Act, 
as amended, (42 U.S.C. 11301 et seq.).
    Homeless individual has the meaning given the term in section 103 
of the Stewart B. McKinney Homeless Assistance Act.
    Housing development agency means any agency of a State or local 
government, or any private nonprofit organization that provides housing 
for homeless or low-income families.
    Indian Tribe has the same meaning given such term in section 
102(a)(17) of the Housing and Community Development Act of 1974 [42 
U.S.C. 5302(a)(17)].
    Individual who has dropped out of high school means an individual 
who is neither attending any school nor subject to a compulsory 
attendance law and who has not received a secondary school diploma or a 
certificate of equivalency for such diploma.
    Institution of Higher Education has the meaning given the term in 
section 120(a) of the Higher Education Act of 1965.
    JTPA means the Job Training Partnership Act (P.L. 102-235), as 
amended.
    Limited-English proficiency has the meaning given the term in 
section 7003 of the Bilingual Education Act.
    Low-income Family has the meaning given the term in section 3(b) of 
the United States Housing Act of 1937.
    Offender means any adult or juvenile with a record of arrest or 
conviction for a criminal offense.
    Participant means:
    (1) An individual who is:
    (i) 16 to 24 years of age, inclusive, at time of enrollment;
    (ii) A very low-income individual or a member of a very low-income 
family; and
    (iii) An individual who has dropped out of high school.
    (2) An exception of not more than 25 percent of all full-time 
participants is permitted for young adults who do not meet the 
program's income or educational requirements but who have educational 
needs despite attainment of a high school diploma or its equivalent.
    Private Nonprofit Organization means any private nonprofit 
organization that:
    (1) Is organized and exists under Federal, State, local, or tribal 
law;
    (2) Has no part of its earnings inuring to the benefit of any 
individual, corporation, or other entity;
    (3) Has a voluntary board;
    (4) Has an accounting system or has designated a fiscal agent in 
accordance [[Page 9739]] with requirements established by HUD; and
    (5) Practices nondiscrimination in the provision of assistance.
    Project-related restrictions mean Youthbuild housing restrictions 
applicable only in cases where a Youthbuild implementation grant is 
providing assistance to residential rental, transitional or 
homeownership housing projects for specific costs relating to property 
acquisition, architectural and engineering fees, construction, 
rehabilitation, operating costs, or replacement reserves.
    Recipient means any entity that receives assistance under this 
part.
    Related facilities include cafeterias or dining halls, community 
rooms or buildings, child care centers, appropriate recreation 
facilities, and other essential service facilities that are physically 
attached to the housing to be constructed or rehabilitated. Related 
facilities which stand alone are not appropriate construction sites for 
trainees.
    Secretary means the Secretary of Housing and Urban Development.
    State means any of the several States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Commonwealth of the Northern 
Mariana Islands, the Virgin Islands, Guam, American Samoa, the Trust 
Territories of the Pacific Islands, or any other territory or 
possession of the United States.
    Title IV means title IV of the National Affordable Housing Act, as 
amended (42 U.S.C. 1437).
    Transitional housing means a project that has as its purpose 
facilitating the movement of homeless individuals and families to 
permanent housing within a reasonable amount of time (usually 24 
months). Transitional housing includes housing primarily designed to 
serve deinstitutionalized homeless individuals and other homeless 
individuals with mental or physical disabilities and homeless families 
with children.
    Useful life shall mean a period of 10 years upon construction 
completion and issuance of an occupancy permit applicable to a 
residential rental, transitional or homeownership property acquired, 
constructed or rehabilitated (including architectural and engineering 
fees), or maintained (i.e., operating costs or replacement reserves), 
in whole or in part, with Youthbuild implementation grant funds (as 
used in section 455(a), Youthbuild Program Requirements, of the Act).
    Very low-income family has the meaning given the term in section 
3(b) of the United States Housing Act of 1937.

Subpart B--Application and Grant Award Process


Sec. 585.100  Notice of funds availability.

    When funds are made available for assistance, HUD will publish a 
notice of funds availability (NOFA) in the Federal Register in 
accordance with the requirements of 24 CFR part 12. The notice will:
    (a) Give the location for obtaining application packages, which 
will provide the application requirements and specify the application 
deadline for the competition;
    (b) State the amount of funding available and the kind of grants to 
be funded under the notice;
    (c) Describe the factors relative to each selection criteria and 
the weight or relative importance given to each criteria as they will 
be applied to the competition announced in the notice; and
    (d) Provide other appropriate program information and guidance.


Sec. 585.101  Emergency funds.

    (a) The Secretary may reserve up to five percent of each Fiscal 
Year's program funds for implementation grants for emergency purposes 
to respond quickly to vital needs to stimulate the provision of 
services to disadvantaged young adults and to expand the supply of 
affordable housing for the homeless and low- and very low-income 
persons.
    (b) Unforeseen emergency needs may result from natural and other 
disasters including hurricanes, tornadoes, earthquakes, fires, floods, 
etc. Other unpredictable and sudden circumstances, such as civil 
disturbances, may affect the provision of services to young adults or 
result in housing deprivation and increased demand for housing for low-
income persons and the homeless. The Secretary will determine whether 
the emergency is of sufficient severity to warrant use of Youthbuild 
funds.
    (c) The Secretary will establish a separate and expedited process 
to award funds for emergency purposes. Specific instructions governing 
the use of these funds may be published by notice in the Federal 
Register, as necessary. If the set-aside funds are not used for 
emergency purposes by the time that awards for each fiscal year's funds 
are to be announced, these funds will be made available for the general 
implementation grant competition for that year.


Sec. 585.102  Application requirements.

    Applications for grants must be submitted in the form prescribed by 
HUD in the application kit, must meet the requirements of this part, 
and must be submitted within the time period established by HUD in the 
NOFA or application kit. HUD reserves the right to reject applications 
from any applicant with an outstanding obligation to HUD that is in 
arrears or for which a payment schedule has not been agreed to, or 
whose response to an audit finding is overdue or unsatisfactory. 
Applicants should refer to the Youthbuild application package for 
further instructions.

(Approved by the Office of Management and Budget under control 
number 2506-0142)


Sec. 585.103  Combined planning and implementation applications.

    (a) If permitted in the NOFA, applicants may apply for both types 
of grants using one application. In such competitions, the application 
package will provide instructions on submitting a combined Youthbuild 
application. Combined planning and implementation grant applications 
will compete separately during the competition, based on the criteria 
defined in the NOFA. In such cases, an implementation grant request 
will be disqualified from the implementation grant competition if its 
companion planning grant request is not selected for the planning grant 
competition. However, any implementation grant request failing to be 
selected under the implementation grant competition will not cause its 
companion planning grant application to be disqualified from the 
planning grant competition provided the planning grant qualifies and 
HUD has determined that the activities proposed in the planning grant 
request stand alone and are not contingent upon activities proposed in 
the implementation grant request.
    (b) When both parts of a combined application are approved, the 
receipt of the implementation grant award is conditioned upon the 
successful completion of the eligible activities funded by the planning 
grant and submission of the recipient's plan and performance evaluation 
report to HUD for approval. Upon HUD approval, reserved implementation 
grant funds would be released to the recipient in accordance with the 
grant agreement.

(Approved by the Office of Management and Budget under control 
number 2506-0142)


Sec. 585.104  Selection criteria.

    HUD will review applications and assign rating scores based upon 
the following criteria, which will be [[Page 9740]] described in more 
detail in the notice published in the Federal Register for each funding 
competition:
    (a) Capability.
    (b) Need.
    (c) Program quality and feasibility.
    (d) Program resources.
    (e) Housing program priority points (Implementation only).
    (f) Other factors: HUD may use additional factors to rate an 
application as defined in the NOFA for an individual competition.


Sec. 585.105  Support of other Federal, State, local or private 
entities.

    Applicants are encouraged to use existing housing programs 
administered by HUD or other Federal, State, local or private housing 
programs as part of their Youthbuild programs. Use of other Federal, 
State, local or private funds for vocational, adult and bilingual 
education programs or for job training under the JTPA Act and the 
Family Support Act of 1988 is also encouraged. The selection process 
for Youthbuild grants described in a NOFA provides for applicants to 
receive points where grant applications contain evidence of proposed 
plans to finance, in whole or in part, Youthbuild activities from other 
Federal, State, local, or private sources.


Sec. 585.106  Selection process.

    (a) Clarification of Application Information: Procedures for 
clarifying application information or curing deficiencies in technical 
information that does not affect an applications's score will be 
explained in the notice of funds availability. For implementation 
applications such deficiencies include, but are not limited to:
    (1) Failure to structure the proposed Youthbuild program so that 
fifty percent of the time spent by program participants is devoted to 
educational services and activities and fifty percent to on-site 
training;
    (2) Failure to target the outreach and recruitment efforts to be 
used by the program to disadvantaged young adults between the ages of 
16 and 24 years;
    (3) Failure to identify the housing to be used for the on-site 
training;
    (4) Incomplete documentation showing that the applicant has 
obtained access to the housing site(s) if the applicant does not own 
the site(s).
    (5) Failure to designate the housing to be produced in conjunction 
with the program for the use of the homeless and low- and very low-
income families.
    (b) Potential environmental disqualification: HUD reserves the 
right to disqualify an implementation application where one or more 
environmental thresholds are exceeded and it is determined that the 
environmental review cannot be conducted and satisfactorily completed 
by HUD within the HUD review period. (Refer to Sec. 585.307, 
Environmental procedures and standards, for further information.)
    (c) Selecting applicants. HUD will rank applications according to 
total points assigned. Applications will be selected for funding from 
the rank order. However, HUD reserves the right to select lower rated 
applications if necessary to achieve geographic diversity.
    (d) Breaking tie scores. The NOFA for the funding round will 
indicate which selection criteria will be used to break a tie if two or 
more applications receive the same number of points and sufficient 
funds are not available to fund all such applications.
    (e) Reduction in requested grant amount. HUD will approve an 
application for an amount lower than the amount requested or adjust 
line items in the proposed budget within the amount requested (or both) 
if it determines that:
    (1) The amount requested for one or more eligible activities is not 
supported in the application or is unreasonable related to the service 
or activity proposed for the population to be served or the housing to 
be provided;
    (2) An activity proposed for funding does not qualify as an 
eligible activity;
    (3) The amount requested exceeds the cost limitation established 
for a Youthbuild grant; or
    (4) There are insufficient funds remaining to fund the applicant's 
original grant request.
    (f) Notification of approval or disapproval. After completion of 
the ranking and selection of applications, but no later than four 
months after the date applications are due under the applicable NOFA, 
HUD will notify the selected applicants and the applicants that have 
not been selected. HUD's notification to the applicant of the grant 
award amount, based on the approved application, will constitute a 
preliminary approval by HUD, subject to HUD and recipient execution of 
a grant agreement to initiate program activities.


Sec. 585.107  Prohibition of disclosure.

    The selection process for assistance under this part is subject to 
the prohibition of disclosure of covered information regarding the 
selection process, as described in 24 CFR part 4. Applicants for or 
recipients of assistance who have received covered selection 
information may be subject to appropriate sanctions.

Subpart C--Youthbuild Planning Grants.


Sec. 585.201  Purpose.

    HUD will award Youthbuild planning grants to eligible applicants 
for the purpose of developing Youthbuild programs in accordance with 
subtitle D of title IV of the National Affordable Housing Act. 
Applications will be selected in a national competition in accordance 
with the selection process described in the current NOFA.


Sec. 585.202  Award limits.

    Maximum awards. The maximum amount of a Youthbuild planning grant 
is $150,000 unless a lower amount is established in the NOFA. HUD may 
for good cause approve a grant in a higher amount.


Sec. 585.203  Grant term.

    Funds awarded for planning grants are expected to be used within 12 
months of the effective date of the planning grant agreement. The award 
of a Youthbuild planning grant does not obligate HUD to fund the 
implementation of the program upon completion of the approved planning 
activities (unless the companion implementation grant was submitted as 
a combined application and funded in the implementation grant 
competition).


Sec. 585.204  Locational considerations.

    HUD will not approve multiple applications for planning grants in 
the same jurisdiction unless it determines that the jurisdiction is 
sufficiently large to justify approval of more than one application.


Sec. 585.205  Eligible activities.

    Planning grant activities to develop a Youthbuild program may 
include:
    (a) The undertaking of studies and research efforts to determine 
the feasibility and need for a Youthbuild program in a selected 
location including whether a proposed program can meet the education 
and training needs of young adults, aid in the expansion of affordable 
housing to meet the needs of the community, and achieve financial 
feasibility;
    (b) The formation and establishment of a consortium among Federal, 
State, or local training and education programs, service providers, 
housing programs and providers including but not limited to homeless 
providers, housing owners, developers, and other organizations 
necessary for the establishment of a Youthbuild program;
    (c) The preliminary identification and potential selection of 
housing for the Youthbuild program including an assessment of the type 
of housing [[Page 9741]] program to be used and the method by which 
program participants will have access to the housing project;
    (d) The planning and identification of resources required for basic 
skills instruction and education, job training and job development, 
leadership and employment skills development, counseling, referral, and 
other related support services that will be provided as part of the 
Youthbuild program;
    (e) The preparation of an application for an implementation grant.
    (f) Preliminary architectural and engineering (A & E) work for the 
Youthbuild proposed housing including:
    (1) The development of cost and time estimates associated with the 
amount of work to be done through new construction or the 
rehabilitation of existing housing;
    (2) Technical studies to evaluate environmental problems and to 
determine whether mitigation is feasible on the potential site; and
    (3) The identification and initiation of the permit process 
required to commence work on the selected site;
    (g) The planning and development of multi-disciplinary educational 
and employment training curricula, leadership development training, 
counseling, and other supportive services and activities for the 
Youthbuild program including the identification and training of staff 
assigned to each program component;
    (h) The identification and establishment of relationships with 
local unions, apprenticeship programs, housing owners, local employers 
and public or private community organizations for job training, 
development, and placement opportunities;
    (i) Administration. Youthbuild funds for administrative costs may 
not exceed 15 percent of the total amount of Youthbuild program and 
project costs or such higher percentage as HUD determines is necessary 
to support capacity development by a private nonprofit organization.

Subpart D--Youthbuild Implementation Grants


Sec. 585.301  Purpose.

    HUD will award Youthbuild implementation grants to eligible 
applicants for the purpose of carrying out Youthbuild programs in 
accordance with subtitle D of title IV of the National Affordable 
Housing Act. Applications will be selected in a national competition in 
accordance with the selection process described in the current NOFA.
Sec. 585.302  Award limits.

    Maximum awards. The maximum award for a Youthbuild implementation 
grant will be defined in the NOFA for each competition and may vary by 
competition. HUD may for good cause approve a grant in a higher amount 
than the specified limit.


Sec. 585.303  Grant term.

    Funds awarded for implementation grants are expected to be used 
within 30 months of the effective date of the implementation grant 
agreement.


Sec. 585.304  Locational considerations.

    Each application for an implementation grant may only include 
activities to carry out one Youthbuild program, i.e., to start a new 
Youthbuild program or to fund new classes of Youthbuild participants 
for an existing program. The same applicant organization may submit 
more than one application in the current competition if the proposed 
programs are in different jurisdictions. HUD will not approve multiple 
applications for implementation grants in the same jurisdiction unless 
it determines that the jurisdiction is sufficiently large to justify 
approval of more than one application.


Sec. 585.305  Eligible activities.

    Implementation grant activities to conduct a Youthbuild program may 
include:
    (a) Acquisition of housing and related facilities to be used for 
the purposes of providing homeownership, residential rental housing, or 
transitional housing for the homeless and low- and very low-income 
persons and families;
    (b) Architectural and engineering work associated with Youthbuild 
housing;
    (c) Construction of housing and related facilities to be used for 
the purposes of providing homeownership, residential rental housing, or 
transitional housing for the homeless and low- and very low-income 
persons and families;
    (d) Rehabilitation of housing and related facilities to be used for 
the purposes of providing homeownership, residential rental housing, or 
transitional housing for the homeless and low- and very low-income 
persons and families;
    (e) Operating expenses and replacement reserves for the housing 
assisted in the Youthbuild program;
    (f) Relocation payments and other assistance required to comply 
with Sec. 585.308, legal fees, and construction management;
    (g) Outreach and recruitment activities, emphasizing special 
outreach efforts to be undertaken to recruit eligible young women 
(including young women with dependent children);
    (h) Education and job training services and activities including 
work experience, basic skills instruction and remedial education, 
bilingual education; secondary education leading to the attainment of a 
high school diploma or its equivalent; counseling and assistance in 
attaining post-secondary education and required financial aid;
    (i) Wages, benefits and need-based stipends provided to 
participants;
    (j) Leadership development, counseling, support services, and 
development of employment skills;
    (k) Defraying costs for the ongoing training and technical 
assistance needs of the recipient that are related to developing and 
carrying out a Youthbuild program;
    (l) Job placement (including entrepreneurial training and business 
development), counseling, and support services for a period not to 
exceed 12 months after completion of training to assist participants; 
and
    (m) Administration. Youthbuild funds for administrative costs may 
not exceed 15 percent of the total amount of Youthbuild program and 
project costs or such higher percentage as HUD determines is necessary 
to support capacity development by a private nonprofit organization.


Sec. 585.306  Designation of costs.

    The following budget items are to be considered training or other 
costs under the Youthbuild implementation grant and should not be 
considered costs associated with acquisition, rehabilitation, or new 
construction for the purposes of Secs. 585.307, 585.309, 585.310, and 
585.311.
    (a) Trainees' tools and clothing.
    (b) Participant stipends and wages.
    (c) On-site trainee supervisors.
    (d) Construction management.
    (e) Relocation costs.
    (f) Legal fees.
    (g) Clearance and demolition.


Sec. 585.307  Environmental procedures and standards.

    (a) Environmental procedures. Applicants are encouraged to select 
hazard-free and problem-free properties for their Youthbuild projects. 
Environmental procedures apply to HUD approval of implementation grants 
when the applicant proposes to use Youthbuild funds to cover any costs 
for the lease, acquisition, rehabilitation, or new construction of real 
property that is proposed for housing project development. 
Environmental procedures do not apply to HUD [[Page 9742]] approval of 
implementation grants when applicants propose to use their Youthbuild 
funds solely to cover any costs for classroom and/or on-the-job 
construction training and supportive services. For those applicants 
that propose to use their Youthbuild funds to cover any costs of the 
lease, acquisition, rehabilitation, or new construction of real 
property, the applicant shall submit all relevant environmental 
information in its application to support HUD decision-making in 
accordance with the following environmental procedures and standards.
    (1) Before any Youthbuild implementation application that requests 
funds for acquisition, rehabilitation, or construction can be selected 
for funding, HUD shall determine whether any environmental thresholds 
are exceeded in accordance with 24 CFR part 50, which implements the 
National Environmental Policy Act (NEPA) and the related Federal 
environmental laws and authorities listed under 24 CFR 50.4.
    (i) If HUD determines that one or more of the thresholds are 
exceeded, HUD shall conduct a compliance review of the issue and, if 
appropriate, establish mitigating measures that the applicant shall 
carry out for the property;
    (ii) In performing its review, HUD may use previously issued 
environmental reviews prepared by local, State, or other Federal 
agencies for the proposed property;
    (iii)(A) The application for the Youthbuild implementation grant 
shall provide HUD with:
    (1) Applicant documentation for environmental threshold review; and
    (2) Any previously issued environmental reviews prepared by local, 
State, or other Federal agencies for the proposed property.
    (B) The applicant is encouraged to contact the local community 
development agency to obtain any previously issued environmental 
reviews for the proposed property as well as for other relevant 
information that can be used in the applicant documentation for the 
environmental threshold review. In using previous reviews by other 
sources, HUD must, however, conduct the environmental analysis and 
prepare the environmental review and be responsible for any required 
environmental findings.
    (2) HUD reserves the right to disqualify any application where one 
or more environmental thresholds are exceeded if HUD determines that 
the compliance review cannot be conducted and satisfactorily completed 
within the HUD review period for applications.
    (3) If Youthbuild funds are requested for acquisition, 
rehabilitation, or construction, applicants are prohibited from 
committing or expending State, local or other funds to undertake 
property acquisition (including lease), rehabilitation or construction 
under this program until notification of grant award.
    (b) Environmental thresholds: HUD shall determine whether a NEPA 
environmental assessment is required. Also, HUD shall determine whether 
the proposed property triggers thresholds for the applicable Federal 
environmental laws and authorities listed under 24 CFR 50.4 as follows:
    (1) For minor rehabilitation of a building and any property 
acquisition (including lease), Federal environmental laws and 
authorities may apply when the property is:
    (i) Located within designated coastal barrier resources;
    (ii) Contaminated by toxic chemicals or radioactive materials;
    (iii) Located within a floodplain;
    (iv) A building for which flood insurance protection is required;
    (v) Located within a runway clear zone at a civil airport or within 
a clear zone or accident potential zone at a military airfield; or
    (vi) Listed on, or eligible for listing on, the National Register 
of Historic Places; located within, or adjacent to, an historic 
district, or is a property whose area of potential effects includes a 
historic district or property.
    (2) For major rehabilitation of a building and also for substantial 
improvement in floodplains, in addition to paragraphs (b)(1) (i) 
through (vi) of this section, other Federal environmental laws and 
authorities may apply when the property:
    (i) Has significant impact to the human environment;
    (ii) Is a project involving five or more dwelling units severely 
noise-impacted; or
    (iii) Affects coastal zone management.
    (3) For new construction, conversion or increase in dwelling unit 
density, in addition to paragraphs (b)(1) (i) through (vi) and 
paragraphs (b)(2) (i) through (iii) of this section, other Federal 
environmental laws and authorities may apply when the property:
    (i) Is located near hazardous industrial operations handling fuels 
or chemicals of an explosive or flammable nature;
    (ii) Affects a sole source aquifer;
    (iii) Affects endangered species; or
    (iv) Is located within a designated wetland.
    (c) Qualified data sources. The environmental threshold information 
provided by applicants must be from qualified data sources. A qualified 
data source means any Federal, State, or local agency with expertise or 
experience in environmental protection (e.g., the local community 
development agency; the local planning agency; the State environmental 
protection agency; the State Historic Preservation Officer) or any 
other source qualified to provide reliable information on the 
particular property.
    (d) Minor rehabilitation means proposed fixing and repairs:
    (1) Whose estimated cost is less than 75 percent of the property 
value after completion;
    (2) That does not involve changes in land use from residential to 
nonresidential, or from nonresidential to residential;
    (3) That does not involve the demolition of one or more buildings, 
or parts of a building, containing the primary use served by the 
property; and
    (4) That does not increase unit density more than 20 percent.


Sec. 585.308  Relocation assistance and real property acquisition.

    The Youthbuild program is subject to the provisions of the Uniform 
Relocation Assistance and Real Property Acquisition Policies Act of 
1970, as amended (URA) and implementing regulations at 49 CFR part 24. 
HUD Handbook 1378, Tenant Assistance, Relocation and Real Property 
Acquisition, available from the Relocation and Real Estate Division at 
the address listed in this section, describes these policies and 
procedures. Any occupied property used in a Youthbuild program is 
subject to the URA regardless of the source of the property or 
construction funds. The URA requires recipients to provide relocation 
assistance to persons (families, individuals, businesses, and nonprofit 
organizations) that are displaced as a direct result of acquisition, 
rehabilitation or demolition for an assisted project. Property 
occupants who are not displaced also have certain rights. Therefore, if 
a proposed Youthbuild implementation program involves occupied 
property, before submitting the application the applicant should 
consult with staff of the Relocation and Real Estate Division, Office 
of Community Planning and Development, Department of Housing and Urban 
Development, Room 7154, 451 Seventh Street, SW, Washington, DC 20410; 
telephone: (202) 708-0336. TDD: (202) 708-1455. Fax: (202) 708-1744. 
(These are not toll-free numbers.) [[Page 9743]] 


Sec. 585.309  Project-related restrictions applicable to Youthbuild 
residential rental housing.

    Where the award of a Youthbuild implementation grant includes the 
eligible activities of acquisition, architectural and engineering fees, 
construction, rehabilitation, operating costs or replacement reserves 
for residential rental units, and where the costs for these activities 
are to be funded, in whole or in part, from the Youthbuild grant award, 
the recipient shall be required to comply with the following Youthbuild 
project-related restrictions for a period of not less than 10 years:
    (a) Occupancy by low- and very low-income families. (1) For the 10 
year period of the residential rental Youthbuild project, the recipient 
or rightful owner will be required to maintain at least a 90 percent 
level of occupancy for individuals and families with incomes less than 
60 percent of the area median income, adjusted for family size--``the 
90 percent category.'' The recipient or rightful owner must offer each 
available rental unit to the 60 percent of area median income group for 
an advertising period of not less than 90 days upon each vacancy 
occurrence throughout the 10 year period. Community-wide advertisements 
for tenants of this income group must be conducted.
    (2) In order to maintain the financial stability of the project and 
to provide flexibility in averting long-term vacancies in the 90 
percent category, the rightful owner is permitted, under certain 
circumstances described below, to execute temporary two year leases 
with individuals and families with incomes between 60 and 80 percent of 
the area median income. This temporary deviation is permitted when no 
qualifying tenant (with an income of 60 percent or less of median) 
leases the unit upon the end of the 90 day advertising period. The 
owner may then advertise the unit to individuals and families with 
incomes less than 80 percent of the area median income, adjusted for 
family size, for another advertisement period of 90 days. Temporary 
leases for tenants whose incomes are between 60 and 80 percent of the 
area median income (exclusive of the 10 percent allowance) shall be 
limited to two years. Temporary tenants are not covered by Youthbuild 
tenant protections regarding termination of tenancy [paragraph (b)(2) 
of this section], tenant selection plan [paragraph (b)(4) of this 
section] and tenant participation plan [paragraph (d) of this section].
    (3) The remaining 10 percent of the units must be made available to 
and occupied by low-income families--``the 10 percent category.'' The 
income test must be conducted for both the 90 percent and 10 percent 
categories only at time of entry for each unit available for occupancy.
    (b) Tenant protections. Upon submission of the implementation grant 
application, the applicant or rightful owner of the residential rental 
units covered under this paragraph shall certify to the following 
tenant protections:
    (1) Lease. As part of the Youthbuild implementation grant 
application, the applicant or rightful owner of the property shall 
provide a model lease containing terms and conditions acceptable to 
HUD. The model lease shall become an addendum to the executed grant 
agreement and shall remain in force for a period of 10 years. The lease 
between a tenant and the owner of residential rental housing shall be 
for a period of not less than one year, unless otherwise mutually 
agreed to by the tenant and the owner, and shall contain such terms and 
conditions as HUD determines to be appropriate. Any change to a lease 
must be approved by HUD.
    (2) Termination of tenancy. Upon submission of the implementation 
grant application, the applicant or other rightful owner of the 
property must certify that the following restrictions will be applied 
to all lease terminations initiated by the owner. The restrictions must 
state that an owner shall not terminate the tenancy or refuse to renew 
the lease of a tenant occupying a Youthbuild residential rental housing 
unit except for serious or repeated violations of the terms and 
conditions of the lease, or for violation of applicable Federal, State, 
or local laws, or for other good cause. Any termination or refusal to 
renew the lease must be preceded by not less than 30 days by the 
owner's service upon the tenant of a written notice specifying the 
grounds for the action. With regard to leases for tenants in units 
controlled by public housing authorities, 24 CFR part 966 shall take 
precedence over this provision.
    (3) Maintenance and replacements. Upon submission of the 
implementation grant application, the applicant or rightful owner of 
Youthbuild residential rental housing must certify that the premises 
will be maintained in compliance with all applicable housing quality 
standards and local code requirements for the 10 year period. HUD's 
Section 8 housing quality standards apply when no other public 
assistance is involved other than the Youthbuild grant. In other cases, 
the applicable HUD or other Federal, State or local program guidelines 
shall apply.
    (4) Tenant selection. The applicant or rightful owner of Youthbuild 
residential rental housing must develop and adopt a tenant selection 
plan containing selection policies and criteria that are consistent 
with HUD requirements. The tenant selection plan shall remain in force 
for the 10 year period. Upon submission of the implementation grant 
application, the applicant or owner of the property must certify that 
the plan complies with the following HUD requirements:
    (i) The plan is consistent with the purpose of providing housing 
for homeless and very low-income families and individuals;
    (ii) The plan is reasonably related to program eligibility and the 
applicant's or owner's ability to perform the obligations of the lease;
    (iii) The plan gives reasonable consideration to the housing needs 
of families that would qualify for a preference under section 
6(c)(4)(A) of the United States Housing Act of 1937;
    (iv) The plan provides for the selection of tenants from a written 
waiting list in the chronological order of their application, to the 
extent practicable, and for the prompt notification in writing of any 
rejected applicant of the grounds for any rejection; and
    (v) The plan acknowledges that a family holding tenant-based 
assistance under section 8 of the United States Housing Act of 1937 
will not be refused tenancy because of the status of the prospective 
tenant as a holder of such assistance.
    (c) Limitation on rental payments. Upon submission of the 
implementation grant application, the applicant or other rightful owner 
of Youthbuild residential rental housing project involved in a 
Youthbuild program shall certify that tenants in each rental unit shall 
be not required to pay rent in excess of the amount provided under 
section 3(a) of the United States Housing Act of 1937.
    (d) Tenant participation plan. The Youthbuild program shall require 
a tenant participation plan applicable to the rightful owner of 
Youthbuild residential rental housing, provided such owner is a 
nonprofit public or private organization. Upon submission of the 
implementation grant application, the nonprofit owner shall certify 
that the tenant participation plan is the plan to be adopted and 
followed for tenant participation in management decisions for the 10 
year period.
    (e) Limitations on profit. Youthbuild residential rental housing 
projects [[Page 9744]] meeting the requirements of this section shall 
be restricted from producing profit in excess of the following 
limitations:
    (1) Monthly rental limitation. The aggregate monthly rental for 
each eligible project may not exceed the operating costs of the project 
(including debt service, management, adequate reserves, and other 
operating costs) plus a 6 percent return on any equity investment of 
the project owner.
    (2) Profit limitations on partners. A nonprofit organization 
receiving Youthbuild assistance for a residential rental housing 
project shall agree to use any profit received from the operation, 
sale, or other disposition of the project for the purposes of providing 
housing for low- and moderate-income families. Profit-motivated 
partners in a nonprofit partnership may receive:
    (i) Not more than a 6 percent return on their equity investment 
from project operations; and
    (ii) Upon disposition of the project, not more than an amount equal 
to their initial equity investment plus a return on that investment 
equal to the increase in the Consumer Price Index for the geographic 
location of the project since the time of the initial investment of 
such partner in the project.
    (f) Restrictions on conveyance. Conveyance restrictions apply to 
Youthbuild residential rental housing project(s) meeting the 
requirements of this section. Ownership of the property may not be 
conveyed unless the instrument of conveyance requires a subsequent 
owner to comply with the same restrictions imposed upon the original 
owner for the balance of the 10 year period.
    (g) Ten year restriction. The restrictions listed in paragraphs (a) 
through (f) of this section shall remain in force for a period of not 
less than 10 years after construction completion and issuance of an 
occupancy permit for all Youthbuild residential rental housing projects 
receiving Youthbuild assistance.

(Approved by the Office of Management and Budget under control 
number 2506-0142)


Sec. 585.310  Project-related restrictions applicable to Youthbuild 
transitional housing for the homeless.

    Where the award of a Youthbuild implementation grant includes the 
eligible activities of acquisition, architectural and engineering fees, 
construction, rehabilitation, operating costs or replacement reserves 
of transitional housing units, and where the costs for these activities 
are funded, in whole or in part, with Youthbuild grant funds, the 
housing project shall be required to comply with the following 
Youthbuild project-related restrictions:
    (a) Limitations on profit. (1) Youthbuild transitional housing 
projects meeting the requirements of this section shall be restricted 
from producing profit in excess of the following limitations:
    (i) Monthly rental limitation. The aggregate monthly rental for 
each Youthbuild project may not exceed the operating costs of the 
project (including debt service, management, adequate reserves, and 
other operating costs) plus a six (6) percent return on any equity 
investment of the project owner.
    (ii) Profit limitations on partners. A nonprofit organization 
receiving Youthbuild assistance for a housing project shall agree to 
use any profit received from the operation, sale, or other disposition 
of the project for the purposes of providing housing for low- and 
moderate-income families.
    (2) Profit-motivated partners in a nonprofit partnership may 
receive:
    (i) Not more than a six (6) percent return on their equity 
investment from project operations; and
    (ii) Upon disposition of the project, not more than an amount equal 
to their initial equity investment plus a return on that investment 
equal to the increase in the Consumer Price Index for the geographic 
location of the project since the time of the initial investment of 
such partner in the project.
    (b) Restrictions on conveyance. Conveyance restrictions apply to 
Youthbuild transitional housing projects meeting the requirements of 
this section. Ownership of the property may not be conveyed unless the 
instrument of conveyance requires a subsequent owner to comply with the 
same restrictions imposed upon the original owner for the balance of 
the 10 year period.
    (c) Program requirements for Transitional housing. (1) Youthbuild 
transitional housing projects meeting the requirements of this section 
shall adhere to the requirements regarding service delivery, housing 
standards and rent limitations applicable to comparable housing 
receiving assistance under the Transitional Housing component of the 
Supportive Housing Program (title IV of the Stewart B. McKinney 
Homeless Assistance Act).
    (2) The Secretary may waive these requirements to permit the 
conversion of a Youthbuild transitional housing project to a permanent 
housing project only if such housing complies with the Youthbuild 
project-related restrictions for residential rental housing projects 
found in Sec. 585.309.
    (d) Ten Year Restriction. The restrictions listed in paragraphs A 
through C of this section shall remain in force for a period of not 
less than 10 years after construction completion and issuance of an 
occupancy permit for a Youthbuild transitional housing project 
receiving Youthbuild assistance.


Sec. 585.311  Project-related restrictions applicable to Youthbuild 
homeownership housing.

    Where the award of a Youthbuild implementation grant includes the 
eligible activities of acquisition, architectural and engineering fees, 
construction, or rehabilitation of homeownership housing, and where the 
costs for these activities are to be funded, in whole or in part, with 
Youthbuild grant funds, the housing project shall be required to comply 
with the following Youthbuild project-related restrictions:
    (a) Program compliance. Each homeownership project meeting the 
requirements of this section shall comply with the requirements of the 
HOPE II or HOPE III programs authorized under subtitles B or C 
respectively of title IV of the National Affordable Housing Act.
    (b) Restrictions on conveyance. Conveyance restrictions apply to 
Youthbuild homeownership housing projects meeting the requirements of 
this part. Ownership of the property may not be conveyed unless the 
instrument of conveyance requires a subsequent owner to comply with the 
same restrictions imposed upon the original owner for the balance of 
the 10 year period.
    (c) Ten Year Restriction. The restrictions listed in paragraphs (a) 
and (b) of this section shall remain in force for a period of not less 
than 10 years after construction completion and issuance of an 
occupancy permit for Youthbuild homeownership housing projects meeting 
the requirements of this part.


Sec. 585.312  Wages, labor standards, and nondiscrimination.

    Sections 142 (wages and benefits), 143 (labor standards), and 167 
(nondiscrimination) of the Job Training Partnership Act shall apply to 
Youthbuild programs as if the programs were conducted under the Job 
Training Partnership Act. This provision may not be construed to 
prevent Youthbuild recipients from using funds from non-Federal sources 
to increase wages and benefits under such programs, if appropriate.


Sec. 585.313  Labor standards.

    (a) Trainees. Davis-Bacon prevailing wage rate requirements are not 
applicable to trainees on housing [[Page 9745]] projects or in training 
programs assisted by Youthbuild grant funds, regardless of whether 
other Federal assistance is involved. However, where the trainees' 
performance of public and Indian housing work is subject to HUD-
determined prevailing wage rates under Section 12 of the United States 
Housing Act of 1937, trainees must be paid HUD-determined wage rates; 
as a matter of policy, the wage rates determined by HUD to apply to 
Youthbuild trainees will be the trainee wage rates rather than 
journeyperson rates.
    (b) Laborers and mechanics other than Youthbuild Trainees. (1) All 
laborers and mechanics (other than Youthbuild trainees) employed by 
contractors or subcontractors in any construction, alteration or 
repair, including painting and decorating, of housing that is assisted 
by a Youthbuild grant shall be paid at rates not less than those 
prevailing on similar construction in the locality, as determined by 
the Secretary of Labor in accordance with the Davis-Bacon Act (40 
U.S.C. 276a through 276a-5). The employment of such laborers and 
mechanics on assisted housing shall be subject to the provisions of the 
Contract Work Hours and Safety Standards Act (40 U.S.C. 327 through 
333). Where these requirements are applicable, recipients, sponsors, 
owners, contractors and subcontractors must comply with all related 
Department of Labor and HUD rules, regulations and requirements.
    (2) The labor standards requirements in paragraph (b)(1) of this 
section do not apply where a Youthbuild grant is provided solely for 
classroom and/or on-the-job training and supportive services for 
Youthbuild trainees, and the grant does not include costs for housing 
project development involving acquisition (including lease), 
rehabilitation or new construction of real properties; however, if 
other Federal programs provide assistance to the housing project, labor 
standards apply to laborers and mechanics other than Youthbuild 
trainees to the extent required by the other Federal programs. 
Applicants need to review applicable Federal regulations to determine 
which relevant requirements apply to their individual situations.

Subpart E--Administration


Sec. 585.401  Recordkeeping by recipients.

    (a) Each recipient of a planning or implementation Youthbuild grant 
award must keep records that will facilitate an effective audit to 
determine compliance with program requirements and that fully disclose:
    (1) The amount and disposition by the recipient of the planning or 
implementation Youthbuild grants received, including sufficient records 
that document the reasonableness, accuracy and necessity of each 
expenditure;
    (2) The amount and disposition of proceeds, if any, from financing 
obtained in connection with the Youthbuild program, e.g., housing sales 
to eligible low-income families, property sales to other public or 
private entities;
    (3) The total cost from all sources of funding for the Youthbuild 
program including all educational, training, counseling, placement, and 
housing activities and services;
    (4) The amount and nature of any other assistance, including cash, 
property, services, materials, in-kind contributions or other items 
contributed as a condition of receiving an implementation grant;
    (5) Any other proceeds received for, or otherwise used in 
connection with, the Youthbuild program.
    (6) Participant information. The recipient must maintain records on 
each Youthbuild participant, including such information as age, high 
school drop out status, income level, gender, employment status, and 
racial and ethnic characteristics.
    (7) Housing information. If Youthbuild grant funds are used for 
acquisition, architectural and engineering fees, construction, 
rehabilitation, operating costs or replacement reserves for housing 
used in a Youthbuild program, the recipient must maintain records on 
family size, income, and racial and ethnic characteristics of families 
renting or purchasing Youthbuild properties.
    (8) Relocation Assistance and Real Property Acquisition. The 
recipient shall maintain records sufficient to demonstrate compliance 
with relocation assistance and real property acquisition requirements, 
as described in Chapter 6 of HUD Handbook 1378, Tenant Assistance, 
Relocation and Real Property Acquisition. See Sec. 585.308.
    (b) Implementation grant recipients must submit reports pursuant to 
Section 3 regulations at 24 CFR part 135.
    (c) Access by HUD and the Comptroller General. For purposes of 
audit, examination, monitoring, and evaluation, each recipient must 
give HUD (including any duly authorized representatives and the 
Inspector General) and the Comptroller General of the United States 
(and any duly authorized representatives) access to any books, 
documents, papers, and records of the recipient that are pertinent to 
assistance received.

(Approved by the Office of Management and Budget under control 
number 2506-0142)


Sec. 585.402  Grant agreement.

    (a) General. The recipient will provide education and job training 
in accordance with the requirements of this part as incorporated in a 
grant agreement executed by HUD and the recipient.
    (b) Enforcement. HUD will enforce the obligations in the grant 
agreement through such actions as may be appropriate, including 
repayment of funds that have already been disbursed to the recipient.


Sec. 585.403  Reporting requirements.

    (a) Quarterly Progress Reports. Each recipient of a Youthbuild 
grant must submit a report on a quarterly basis. The form and substance 
of the quarterly progress report will be provided to recipients. The 
Performance Evaluation Report noted in paragraph (b) of this section 
will constitute the final Quarterly Report.
    (b) Performance Evaluation Report. Each recipient of a Youthbuild 
grant must submit a Performance Evaluation Report on activities 
undertaken and completed in accordance with the grant agreement. The 
form and substance of the Performance Evaluation Report shall be 
provided to recipients.

(Approved by the Office of Management and Budget under control 
number 2506-0142)


Sec. 585.404  Program changes.

    (a) There are three basic types of changes that recipients may wish 
to make to their programs:
    (1) Grant Agreement amendments.
    (2) Material changes, which include, but are not limited to changes 
in housing sites, changes in significant participating parties, and 
changes in approved activities. All material changes require HUD 
approval.
    (3) Self-implementing program changes, which may include changes in 
recipient staffing and content of curriculum. All self-implementing 
changes require documentation in the recipient's files.
    (b) Approval for Grant Agreement Amendments and material changes is 
contingent upon the application ranking remaining high enough after the 
approved change to have been competitively selected for funding in the 
year the application was selected.


Sec. 585.405  Obligation and deobligation of funds.

    (a) Obligation of funds. When HUD and the applicant execute a grant 
[[Page 9746]] agreement, funds are obligated to carry out approved 
activities consistent with Secs. 585.205 or 585.305 of this part and in 
accordance with the grant agreement.
    (b) Increases. After the initial obligation of funds, HUD will not 
make revisions to increase the amount obligated.
    (c) Deobligation. (1) HUD may deobligate all or parts of grants if 
the grant amounts are not expended within the term of the grant or if 
there is a condition of default as defined in the grant agreement.
    (2) HUD may award deobligated funds to applications previously 
submitted in response to the most recently published NOFA, and in 
accordance with subpart B of this part.


Sec. 585.406  Primarily religious organizations.

    (a) Provision of assistance to primarily religious organizations. 
(1) HUD will provide Youthbuild assistance to a recipient that is a 
primarily religious organization if it agrees to provide housing, 
educational and training activities or supportive services in a manner 
that is free from religious influences and in accordance with the 
following principles:
    (i) It will not discriminate against any employee or applicant for 
employment on the basis of religion and will not limit employment or 
give employment preference to persons on the basis of religion;
    (ii) It will not discriminate against any person applying for 
Youthbuild activities, supportive services or housing on the basis of 
religion and will not limit such activities or services or give 
preference to persons on the basis of religion; and
    (iii) It will provide no religious instruction or counseling, 
conduct no religious worship or services, engage in no religious 
proselytizing, and exert no other religious influence in the provision 
of housing, education, training activities, or support services.
    (2) HUD will provide Youthbuild assistance to a recipient that is a 
primarily religious organization if the assistance will not be used to 
construct or rehabilitate a property to be owned by the recipient, 
except as described in paragraph (b) of this section.
    (b) Rehabilitation and new construction of structures owned by a 
primarily religious organization. Grant funds may be used to 
rehabilitate or newly construct a structure owned by a primarily 
religious organization if the following conditions are met:
    (1) The structure (or portion of the structure) that is to be 
rehabilitated or newly constructed with HUD assistance has been leased 
to a recipient that is an existing or newly established wholly secular 
organization which may be established by the primarily religious 
organization under the provision of paragraph (c) of this section;
    (2) The HUD assistance is provided to the wholly secular 
organization (and not the primarily religious organization) to make the 
improvements;
    (3) The leased structure will be used exclusively for secular 
purposes available to all persons regardless of religion;
    (4) The lease payments paid to the primarily religious organization 
do not exceed the fair market rent of the structure before any 
rehabilitation was completed;
    (5) The portion of the costs of any improvements that benefit any 
unleased portion of the structure will be allocated to, and paid for 
by, the primarily religious organization;
    (6) The primarily religious organization agrees that, if the 
recipient does not retain the use of the leased premises for wholly 
secular purposes for the useful life of the improvements, the primarily 
religious organization will pay an amount equal to the residual value 
of the improvements to the secular organization, and the secular 
organization will remit the amount to HUD.
    (c) Assistance to a wholly secular private nonprofit organization 
established by a primarily religious organization.
    (1) A primarily religious organization may establish a wholly 
secular private nonprofit organization to serve as a recipient. The 
wholly secular organization may be eligible to receive other forms of 
assistance available under this part.
    (i) The wholly secular organization must agree to provide housing 
and support services in a manner that is free from religious influences 
and in accordance with the principles set forth in paragraph (a) of 
this section.
    (ii) The wholly secular organization may enter into a contract with 
the primarily religious organization to operate the housing or to 
provide support services. In such a case, the primarily religious 
organization must agree in the contract to carry out its contractual 
responsibilities in a manner free from religious influences and in 
accordance with the principles set forth in paragraph (a) of this 
section.
    (iii) The rehabilitation or new construction grants are subject to 
the requirements of paragraph (a) of this section.
    (2) HUD will not require the primarily religious organization to 
establish the wholly secular organization before the selection of its 
application. In such a case, the primarily religious organization may 
apply on behalf of the wholly secular organization. The application 
will be reviewed on the basis of the primarily religious organization's 
financial responsibility and capacity, and its commitment to provide 
appropriate resources to the wholly secular organization after 
formation. Access to the housing site is demonstrated if the primarily 
religious organization provides a commitment to transfer control of the 
site to the wholly secular organization after its formation. If such an 
application is selected for funding, the obligation of funds will be 
conditioned upon the establishment of a wholly secular organization 
that meets the definition of private nonprofit organization in 
Sec. 585.4.
Subpart F--Applicability of Other Federal Requirements


Sec. 585.501  Application of OMB Circulars.

    (a) The policies, guidelines and requirements of OMB Circular Nos. 
A-87 (Cost Principles Applicable to Grants, Contracts and other 
Agreements with State and Local Governments) and 24 CFR part 85 
(Administrative Requirements for Grants and Cooperative Agreements to 
State, Local and Federally Recognized Indian Tribal Governments) apply 
to the award, acceptance and use of assistance under the program by 
applicable entities, and to the remedies for non-compliance, except 
where inconsistent with the provisions of NAHA, other Federal statutes 
or this part. 24 CFR part 84 (Grants and Cooperative Agreements with 
Institutions of Higher Education, Hospitals, and other Nonprofit 
Organizations), OMB Circular A-122 (Cost Principles Applicable to 
Grants, Contracts and other Agreements with Nonprofit Institutions), 
and, as applicable, OMB Circular A-21 (Cost Principles for Educational 
Institutions) apply to the acceptance and use of assistance by covered 
organizations, except where inconsistent with the provisions of NAHA, 
other Federal statutes or this part. Recipients are also subject to the 
audit requirements of 24 CFR part 44 (Audit Requirements for State and 
Local Governments) and 24 CFR part 45 (Audit Requirements for 
Institutions of Higher Education and other Nonprofit Institutions), as 
applicable. HUD may perform or require additional audits as it finds 
necessary or appropriate.
    (b) Copies of OMB Circulars may be obtained from E.O.P. 
Publications, Room 2200, New Executive Office [[Page 9747]] Building, 
Washington, DC 20503, telephone (202) 395-7332. (This is not a toll-
free number.) There is a limit of two free copies.


Sec. 585.502  Certifications.
    In addition to the standard assurances of compliance with Federal 
rules and OMB Circulars contained in applications for Federal grant 
assistance, applicants must also make the following certifications:
    (a) Consolidated Plan. (1) Applicants that are States or units of 
general local government. The applicant must have a HUD-approved 
Consolidated Plan in accordance with 24 CFR part 91 for the current 
year and must submit a certification that the proposed activities are 
consistent with the HUD-approved Consolidated Plan.
    (2) Applicants that are not States or units of general local 
government. The applicant must submit a certification by the 
jurisdiction or jurisdictions in which the proposed program will be 
located that the applicant's proposed activities are consistent with 
the jurisdiction's current HUD-approved Consolidated Plan. A required 
certification must be made by the unit of general local government if 
it is required to have, or has, a Consolidated Plan. Otherwise the 
certification may be made by the State.
    (3) The Insular Areas of Guam, the Virgin Islands, American Samoa 
and the Northern Mariana Islands are not required to have a 
Consolidated Plan or to make a Consolidate Plan certification. An 
application by an Indian tribe or other applicant for a Youthbuild 
program that will be located on a reservation of an Indian tribe does 
not require a certification by the tribe or State. However, where an 
Indian tribe or an Indian Housing Authority (IHA) is the applicant for 
a Youthbuild program that will not be located on a reservation, the 
requirement for a certification by the jurisdiction or jurisdictions in 
which the Youthbuild program will be located under the preceding 
paragraph applies.
    (b) Fair Housing and Equal Opportunity. A certification that the 
applicant is in compliance and will continue to comply with the 
requirements of the Fair Housing Act, title VI of the Civil Rights Act 
of 1964, section 504 of the Rehabilitation Act of 1973, and the Age 
Discrimination Act of 1975, and will affirmatively further fair 
housing, or, in the case of a Youthbuild application from an Indian 
tribe or an Indian Housing Authority (IHA), a certification that the 
applicant will comply with the Indian Civil Rights Act (25 U.S.C. 1301 
et seq.), section 504 of the Rehabilitation Act of 1973, and the Age 
Discrimination Act of 1975.
    (c) Drug-free workplace. A certification that the applicant will 
comply with the requirements of the Drug-Free Workplace Act of 1988 (42 
U.S.C. 701) and HUD's implementing regulations at 24 CFR part 24, 
subpart F.
    (d) Employment opportunities. A certification that the applicant 
will comply with the requirements of section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 17017), as implemented by 24 CFR 
part 135. Section 3 requires that employment and other economic 
opportunities generated by HUD assisted housing and community 
development programs shall, to the greatest extent feasible, be 
directed toward section 3 residents and business concerns.
    (e) Anti-lobbying. In accordance with the disclosure requirements 
and prohibitions of section 319 of the Department of Interior and 
Related Agencies Appropriations Act for Fiscal Year 1990 (31 U.S.C. 
1352) (The Byrd Amendment) and the implementing regulations at 24 CFR 
part 87, applicants for and recipients 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. Applicants and 
recipients must also disclose where nonappropriated funds have been 
spent or committed for lobbying activities if those activities would be 
prohibited if paid with appropriated funds. Substantial monetary 
penalties may be imposed for failure to file the required certification 
or disclosure.
    (f) Relocation Assistance and Real Property Acquisition. A 
certification that the applicant will comply with the requirements of 
the Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970, as amended (URA), and implementing regulations at 
49 CFR part 24 and HUD Handbook 1378, Tenant Assistance, Relocation and 
Real Property Acquisition. See Sec. 585.308.
     (g) Use of Housing. A certification that the housing to be 
produced in conjunction with the Youthbuild program is to be provided 
for the homeless and low- and very low-income families.
    (h) Lead-Based Paint. A certification that the applicant will 
comply with the requirements of the Lead-Based Paint Poisoning 
Prevention Act and implementing regulations at 24 CFR part 35.
    (i) State and Local Standards. A certification that all educational 
programs and activities supported with funds provided under this 
subtitle shall be consistent with applicable State and local 
educational standards. Standards and procedures with respect to the 
awarding of academic credit and certifying educational attainment in 
such programs shall be consistent with applicable State and local 
educational standards.
    (j) Labor Standards. A certification that the applicant and related 
parties will comply with the provisions of the Davis-Bacon Act, as 
amended (40 U.S.C. 276a through 276a-5), the Contract Work Hours and 
Safety Standards Act (40 U.S.C. 327 through 333), and HUD Handbook 
1344.1, Revision 1, Federal Labor Standards in Housing and Community 
Development Programs, as applicable, available from the Office of 
Assistant to the Secretary for Labor Relations, room 7118, 451 Seventh 
Street, SW., Washington, DC 20410; Telephone (202) 708-0370; FAX, (202) 
619-8022; TDD, (202) 708-1455. (These are not toll-free numbers).

(Approved by the Office of Management and Budget under control 
number 2506-0142)


Sec. 585.503  Conflict of interest.

    (a) (1) In addition to the conflict of interest requirements in 24 
CFR parts 84 and 85, no person who is an employee, agent, consultant, 
officer, or elected or appointed official of the recipient or 
cooperating entity named in the application and who exercises or has 
exercised any functions or responsibilities with respect to assisted 
activities, or who is in a position to participate in a decision-making 
process or gain inside information with regard to such activities, may 
obtain a financial interest or benefit from the activity, or have an 
interest in any contract, subcontract, or agreement with respect 
thereto, or the proceeds thereunder, either for himself 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, except that a resident of an 
eligible property may acquire an ownership interest.
    (2) Exception. HUD may grant an exception to the exclusion in 
paragraph (a)(1) of this section on a case-by-case basis when it 
determines that such an exception will serve to further the purposes of 
the Youthbuild program. An exception may be considered only after the 
applicant or recipient has provided a disclosure of the nature of the 
conflict, accompanied by an assurance that there has been public 
disclosure of the conflict, a description of how the public disclosure 
was made, and an opinion of the applicant's or recipient's attorney 
that the interest for which the exception is sought would not violate 
State or local law. In determining whether to [[Page 9748]] grant a 
requested exception, HUD will consider the cumulative effect of the 
following factors, where applicable:
    (i) Whether the exception would provide a significant cost benefit 
or an essential degree of expertise to the Youthbuild program that 
would otherwise not be available;
    (ii) Whether an opportunity was provided for open competitive 
bidding or negotiation;
    (iii) Whether the person affected is a member of a group or class 
intended to be the beneficiaries of the activity and the exception will 
permit such person to receive generally the same interests or benefits 
as are being made available or provided to the group or class;
    (iv) Whether the affected person has withdrawn from his or her 
functions or responsibilities, or the decision-making process, with 
respect to the specific activity in question;
    (v) Whether the interest or benefit was present before the affected 
person was in a position as described in paragraph (a)(2) of this 
section;
    (vi) Whether undue hardship will result either to the applicant, 
recipient, or the person affected when weighed against the public 
interest served by avoiding the prohibited conflict; and
    (vii) Any other relevant considerations.
    (b) [Reserved]


Sec. 585.504  Use of debarred, suspended, or ineligible contractors.

    The provisions of 24 CFR part 24 apply 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.

    Dated: February 7, 1995.
Andrew Cuomo,
Assistant Secretary for Community Planning and Development.
[FR Doc. 95-4119 Filed 2-17-95; 8:45 am]
BILLING CODE 4210-29-P