[Federal Register Volume 60, Number 133 (Wednesday, July 12, 1995)]
[Proposed Rules]
[Pages 36012-36013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17016]




[[Page 36011]]

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Part III





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Secretary



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24 CFR Part 92



HOME Investment Partnerships Program; Proposed Rule





  Federal Register / Vol. 60, No. 133 / Wednesday, July 12, 1995 / 
Proposed Rules  

[[Page 36012]]


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 92

[Docket No. FR-3836-P-01]
RIN 2501-AB94


HOME Investment Partnerships Program

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to amend the HOME Investment Partnerships 
Program regulation with respect to the operation of the HOME formula; 
the threshold for applicability of the 20% very low-income requirement 
for rental housing; and, conflict of interest provisions as they apply 
to developers.

DATES: Comments due date: September 11, 1995.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Rules Docket Clerk, Office of General 
Counsel, Room 10278, Department of Housing and Urban Development, 451 
Seventh Street, S.W., Washington, D.C. 20410. Communications should 
refer to the above docket number and title. A copy of each 
communication submitted will be available for public inspection and 
copying between 7:30 a.m. and 5:30 p.m. weekdays at the above address. 
FAXED comments will not be accepted.

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

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

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

II. Background

    The HOME Investment Partnerships Program (HOME) was enacted under 
Title II (42 U.S.C. 12701-12839) of the Cranston-Gonzalez National 
Affordable Housing Act (NAHA)( Pub. L. 101-625, approved November 28, 
1990). Implementing regulations for the HOME Program are at 24 CFR part 
92.
    The original statute has been amended three times since enactment. 
The Housing and Community Development Act of 1992 (HCDA 1992) (Pub. L. 
102-550, approved October 28, 1992) included a substantial number of 
amendments to the HOME Program. These amendments were implemented in 
rules published on December 22, 1992 (57 FR 60960), June 23, 1993 (58 
FR 34130), and April 19, 1994 (59 FR 18626). The HUD Demonstration Act 
(Pub. L. 103-120, approved October 27, 1993) provided additional 
authorization for HOME Program technical assistance. The Multifamily 
Housing Property Disposition Reform Act of 1994 (MHPDRA) (Pub. L. 103-
233, approved April 11, 1994) included an additional number of 
amendments to the HOME Program. These amendments were implemented in a 
rule published on August 26, 1994 (59 FR 44258). An interim rule with 
clarifying changes to the HOME rule and a request for additional 
comments before the issuance of a final rule is also published in this 
issue of the Federal Register.
    One of the purposes of this rule is to propose a change in the 
operation of the HOME formula. Section 92.50(d)(3) would be revised to 
maximize the number of units of general local government which receive 
an initial allocation of HOME funds.
    Formerly, units of general local government, after an initial 
distribution of funds available for allocation, were eliminated at 
$250,000 and below. They were eliminated from the pool of eligible 
jurisdictions and their allocations were redistributed among other 
units of general local government. This redistribution technique 
continued until 95% of the funds had been distributed among units of 
general local government that received $500,000 or more. The new method 
would drop only one jurisdiction on each recalculation, and 
redistribute funds to all others, thus assuring that the maximum number 
of units of general local government receive an allocation.
    A further rule change is proposed to Sec. 92.252, Qualification as 
affordable housing and income targeting: Rental housing, that would 
change the threshold for the 20% very-low income occupancy requirement 
from a project with three or more rental units to a project with five 
or more rental units.
    Finally, this rule proposes to apply, as appropriate, the conflict 
of interest provisions at Sec. 92.356 to housing developers, whether 
private, for profit, or non-profit, of projects assisted with HOME 
funds. The general conflicts prohibition in Sec. 92.356(c) cannot be 
specifically applicable to such developers (including their employees, 
agents, consultants, and officers), because they do obtain a financial 
interest or benefit from a HOME assisted activity, for example, 
developer's fees. The conflict with respect to developers arises when 
they receive an unfair advantage for the HOME-assisted affordable 
housing. The range of situations in which a conflict may arise 
includes, for example, an individual who creates a non-profit, serves 
as executive director, receives HOME funds to construct rental housing, 
and then becomes the first to occupy a rental unit; or an individual 
employed as a receptionist at a non-profit that develops and manages a 
HOME-assisted project who becomes homeless, and applies for a newly-
vacated unit in the project. This rule proposes that no owner, 
employee, agent, consultant, or officer of a developer of a project 
assisted with HOME funds may occupy a HOME-assisted affordable housing 
unit in the project. As is the case with the present conflict of 
interest provision, the rule would permit requests for exceptions. 
However, rather than provide for HUD review, as is presently done for 
exception requests by participating jurisdictions, state recipients and 
subrecipients, this rule would permit participating jurisdictions to 
grant exceptions upon consideration of factors delineated in the rule.

III. Findings and Certifications

Environmental Review

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

Regulatory Planning and Review

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

Impact on Small Entities

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 
605(b)), the 

[[Page 36013]]
undersigned hereby certifies that this proposed rule does not have a 
significant economic impact on a substantial number of small entities, 
because jurisdictions that are statutorily eligible to receive formula 
allocations are relatively larger cities, counties or States.

Regulatory Agenda

    This proposed rule was not listed in the Department's Semiannual 
Agenda of Regulations published on May 8, 1995 (60 FR 23368, 23376) 
under Executive Order 12866 and the Regulatory Flexibility Act.

Federalism Impact

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

Impact on the Family

    The General Counsel, as the designated official under Executive 
Order 12606, The Family, has determined that this proposed rule would 
have an indirect, though beneficial, impact on family formation, 
maintenance, and general well-being. As such, it is not subject to 
further review under the Order.

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

List of Subjects in 24 CFR Part 92

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

    Accordingly, part 92 of title 24 of the Code of Federal 
Regulations, would be amended as follows:

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

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

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

    2. In Sec. 92.50, paragraph (d)(3) would be revised to read as 
follows:


Sec. 92.50  Formula allocation.

* * * * *
    (d) *  *  *
    (3) To determine the maximum number of units of general local 
government that receive a formula allocation, only one jurisdiction 
(the unit of general local government with the smallest allocation of 
HOME funds) is dropped from the pool of eligible jurisdictions on each 
successive recalculation. Then the amount of funds available for units 
of general local government is redistributed to all others. This 
recalculation/redistribution continues until all remaining units of 
general local government receive an allocation of $500,000 or more.
* * * * *
    3. In Sec. 92.252, the introductory text of paragraph (a)(2) would 
be revised to read as follows:


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

    (a) *  *  *
    (2) Has, in the case of projects with five or more rental units, 
not less than 20 percent of the rental units:
* * * * *
    4. In Sec. 92.356, a new paragraph (f) would be added to read as 
follows:


Sec. 92.356  Conflict of interest.

* * * * *
    (f)  Developers--(1) Prohibition. No owner, employee, agent, 
consultant, or officer of a developer, whether private, for profit, or 
non-profit, of a project assisted with HOME funds may occupy a HOME-
assisted affordable housing unit in the project.
    (2) Exceptions. Upon the written request of a housing developer, 
the participating jurisdiction may grant an exception to the provisions 
of paragraph (f)(1) of this section on a case-by-case basis when it 
determines that the exception will serve to further the purposes of the 
HOME program and the effective and efficient administration of the 
developer's HOME-assisted program or project. In determining whether to 
grant a requested exception, the participating jurisdiction shall 
consider the following factors:
    (i) Whether the person receiving the benefit is a member of a group 
or class of low-income persons intended to be the beneficiaries of the 
assisted 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;
    (ii) Whether the person has withdrawn from his or her functions or 
responsibilities, or the decisionmaking process with respect to the 
specific assisted activity in question;
    (iii) Whether the tenant protection requirements of Sec. 92.253 are 
being observed;
    (iv) Whether the affirmative marketing requirements of Sec. 92.351 
are being observed and followed;
    (v) Any other factor relevant to the participating jurisdiction's 
determination, including the timing of the requested exception.

    Dated: May 16, 1995.
Henry G. Cisneros,
Secretary.
[FR Doc. 95-17016 Filed 7-11-95; 8:45 am]
BILLING CODE 4210-32-P