[Federal Register Volume 61, Number 37 (Friday, February 23, 1996)]
[Rules and Regulations]
[Pages 7060-7063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3962]




[[Page 7059]]

_______________________________________________________________________

Part III





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Parts 510, 511, and 590



Streamlining of Affordable Housing Programs; Final Rule

  Federal Register / Vol. 61, No. 37 / Friday, February 23, 1996 / 
Rules and Regulations   

[[Page 7060]]


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Community Planning and 
Development

24 CFR Parts 510, 511, and 590

[Docket No. FR-3938-F-01]
RIN 2506-AB76


Streamlining of Affordable Housing Programs

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

ACTION: Final rule.

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

SUMMARY: This rule revises the regulations for certain affordable 
housing programs within the Office of Community Planning and 
Development to eliminate outdated provisions and to streamline and 
simplify the remaining provisions.

EFFECTIVE DATE: March 25, 1996.

FOR FURTHER INFORMATION CONTACT: Gordon McKay, Director, Office of 
Affordable Housing Programs, Room 7168, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410. Telephone: 
(202) 708-2685; TTY: 1-800-877-8339. (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION: President Clinton's memorandum of March 4, 
1995, titled ``Regulatory Reinvention Initiative'' directed heads of 
Federal departments and agencies to review all existing regulations to 
eliminate those that are outdated and modify others to increase 
flexibility and reduce burden. As a part of HUD's overall effort to 
reduce regulatory burden and streamline the content of title 24 of the 
Code of Federal Regulations, this rule revises 24 CFR parts 510, 511, 
and 590 to eliminate outdated provisions and to streamline and simplify 
the remaining provisions.

Part 510--Section 312 Rehabilitation Loan Program

    Part 510 is eliminated except for Sec. 510.105(h). Authority to 
make loans under the Section 312 Rehabilitation Loan Program was 
repealed as of October 1, 1991. However, since there are still loan 
collection functions associated with the program, Sec. 510.105(h) is 
retained and revised to refer to loan assumption, which it still 
governs. Section 510.105(h) is also revised to change ``Area Manager'' 
to ``Assistant Secretary for CPD,'' and to delete reference to local 
loan approval officers and to the statutory authority to approve loans 
because the collection functions are now administered centrally. The 
waiver provision in Sec. 510.104 is being consolidated into the 
Department-wide waiver regulation being promulgated separately.

Part 511--Rental Rehabilitation Grant Program

    Section 511.3, ``Technical Assistance,'' is eliminated because 
authority to make new grants under the program was repealed as of 
October 1, 1991, and no more technical assistance will be made 
available.
    Section 511.5, ``Waivers,'' is being consolidated into the 
Department-wide waiver regulation being promulgated separately.
    In Sec. 511.10, paragraph (d) is eliminated to remove a minimum 
project cost. This amendment will facilitate the use of small amounts 
of leftover program funds. A conforming change is made to 
Sec. 511.11(a). Paragraph (a) of Sec. 511.11 is also revised to remove 
the inflexible repayment requirement for incomplete projects. The last 
two sentences of Sec. 511.11(c)(2)(iii) are deleted for conforming 
reasons. Also, paragraph (g) of Sec. 511.11 (which lists the programs 
with which program grant amounts may not be used) is removed because 
the programs listed are governed by federally-imposed rent regulatory 
agreements or requirements and use of program funds in conjunction with 
these programs is not statutorily prohibited.
    Subpart D is eliminated, except for Sec. 511.33(c). Sections 
511.30, 511.31, and 511.34 relate to formula allocations, which are no 
longer being made. In Sec. 511.33, the references to reallocations in 
paragraphs (a), (b), and (d) are no longer applicable, since there is 
no remaining authority to ``reallocate funds.'' Section 511.33(c) 
becomes a separate section regarding the deobligation of rental 
rehabilitation grant amounts. In Sec. 511.33(c), the former first two 
sentences and the former fifth and sixth sentences are deleted because 
those provisions are now out of date and unnecessary. For similar 
reasons, in the former third (now second) sentence (requiring 
consultation with the grantee prior to deobligation), the reference to 
a reasonable start-up time for implementing a new program is deleted. 
In the former fourth (now first) sentence, the word ``will'' is changed 
to ``may'' and each of the time periods referred to therein is extended 
by one year, and clarifications are made. This assumes that the 
discretionary one-year extensions permitted by the former regulation 
were granted, and it authorizes, but no longer requires, HUD to 
deobligate uncommitted or unexpended grant funds after the extended 
time periods have expired. Finally, a new third sentence is added which 
authorizes the applicable HUD field office to direct a grantee to 
proceed to close-out its rental rehabilitation program and to 
deobligate remaining funds when the field office determines, after 
consultation with the grantee, that any remaining uncommitted funds 
cannot be committed within a reasonable time, only small amounts of 
funds remain, and any incomplete projects cannot be completed within a 
reasonable time. The net effect of these changes is to empower HUD 
field offices and grantees with the necessary authority and flexibility 
to close out rental rehabilitation programs on an orderly, but timely, 
basis.
    The first three sentences of Sec. 511.50 regarding a State's 
election to administer a State allocation are deleted because they are 
no longer needed; all such allocations have already been made.
    For similar reasons, in Sec. 511.51(a), the phrase ``that elects to 
administer its allocation in accordance with Sec. 511.50'' and 
paragraph (d) (regarding State administration of rental rehabilitation 
grant program for cities receiving a formula allocation) are deleted.
    Section 511.52, ``HUD-administered program,'' is eliminated because 
the authority to make new grants was repealed as of October 1, 1991. 
However, the rest of subpart F contains continuing, substantive 
requirements for States using grants obligated prior to repeal and, 
therefore, is retained.
    Section 511.76(h)(2) is revised to allow grantees increased 
flexibility by permitting the use of program income for other 
affordable housing projects (which might include State or locally 
assisted projects) and does not limit them to using this program income 
for only RRP, HOME, HOPE, or CDBG activities.
    Section 511.77(a) is revised to remove language regarding 
obligating funds for any fiscal year.
    Section 511.80(a) is revised to eliminate the introductory 
reference to reallocations under Sec. 511.33 because reallocations are 
no longer available under the program.
    Section 511.81(b) is eliminated. The annual performance report is 
still required for grantees which are still actively expending funds, 
but the content of the report need not be specified in regulations.
    Section 511.82(c)(2) is eliminated because conditioning the use of 
Rental Rehabilitation grant amounts from a succeeding fiscal year's 
allocation as a 

[[Page 7061]]
corrective or remedial action is no longer possible.
    Section 511.82(d) is revised to remove the first sentence referring 
to reallocation of grant amounts that become available from a 
succeeding fiscal year's allocation, because funds may not be 
reallocated to other grantees after October 1, 1991.

Part 590--Urban Homesteading Program

    Section 590.1 is revised to reflect that authority to reimburse 
Federal agencies for transfer of additional properties to LUHAs under 
this part was repealed effective October 1, 1991.
    Section 590.3, ``Waiver authority,'' is being consolidated into the 
Department-wide waiver regulation being promulgated separately.
    Section 590.5 is revised to remove the definitions of ``Federally-
owned property,'' ``FmHA,'' ``RTC,'' and ``VA,'' since no additional 
properties may be transferred from any source.
    In Sec. 590.7, paragraphs (a), (b), and (c) are revised to remove 
unnecessary provisions and to streamline and conform the remaining 
provisions.
    The following sections are eliminated because the authority to 
transfer properties under the program was repealed as of October 1, 
1991, and the sections are no longer necessary:

Sec. 590.9 ``Listing of Federally-owned properties''
Sec. 590.11 ``Applications''
Sec. 590.13 ``Standards for HUD review and approval of a local urban 
homesteading program''
Sec. 590.15 ``Urban homesteading program participation agreement''
Sec. 590.17 ``Transfer of HUD-owned property''
Sec. 590.18 ``Reimbursement to FmHA, VA and RTC''
Sec. 590.21 ``Reservation of funds''

    Section 590.19, ``Use of Section 810 funds,'' is revised to 
eliminate the first two sentences which reference the use of Section 
810 funds. With no Section 810 funds available, discussion of fund use 
is unnecessary.
    In Sec. 590.23, paragraphs (a) and (c) are revised, and paragraph 
(d) is removed, to streamline the provisions by removing unnecessary 
regulatory detail regarding close-out.
    In Sec. 590.29, paragraphs (a) and (c) are revised to streamline 
the language regarding the review of LUHA performance.
    In Sec. 590.31, paragraph (c) is deleted, since conditioning a 
future participation request is no longer possible.

Other Matters:

    Environmental Review. This rulemaking does not have an 
environmental impact. This rulemaking simply amends existing 
regulations by streamlining and simplifying the provisions and does not 
alter the environmental effect of the regulations being amended. 
Findings of No Significant Impact with respect to the environment were 
made in accordance with HUD regulations in 24 CFR part 50 that 
implement section 102(2)(C) of the National Environmental Policy Act of 
1969 (42 U.S.C. 4332) at the time of development of the implementing 
regulations. Those findings remain applicable to this rule and are 
available for public inspection between 7:30 a.m. and 5:30 p.m. 
weekdays in the Office of the Rules Docket Clerk at the above address.
    Regulatory Flexibility Act. The Secretary, in accordance with the 
Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this rule 
before publication and by approving it certifies that this rule does 
not have a significant economic impact on a substantial number of small 
entities because this rule pertains to the administrative matter of 
streamlining and simplifying provisions in title 24 of the Code of 
Federal Regulations.
    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 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.
    Executive Order 12606, The Family. The General Counsel, as the 
Designated Official under Executive Order 12606, The Family, has 
determined that this rule does not have potential significant impact on 
family formation, maintenance, and general well-being.

List of Subjects

24 CFR Part 510

    Lead poisoning, Loan programs--housing and community development, 
Relocation assistance, Reporting and recordkeeping requirements, Social 
security, Urban renewal.

24 CFR Part 511

    Administrative practice and procedure, Grant programs--housing and 
community development, Lead poisoning, Low and moderate income housing, 
Reporting and recordkeeping requirements, Technical assistance.

24 CFR Part 590

    Government property, Housing, Intergovernmental relations, Low and 
moderate income housing, Reporting and recordkeeping requirements, 
Urban renewal.

    Accordingly, the Department amends title 24 of the Code of Federal 
Regulations, subtitle B, chapter V, parts 510, 511, and 590, as 
follows:

PART 510--SECTION 312 REHABILITATION PROGRAM

    1. The authority for part 510 is revised to read as follows:

    Authority: 42 U.S.C. 1452b and 3535(d).

PART 510--[AMENDED]

    2. Part 510 is amended as follows:
    a. All sections of part 510 are removed, except for Sec. 510.105(h) 
(1), (2), and (3) which is redesignated as Sec. 510.1 (a), (b), and 
(c), ``Multi-family property loans.''


Sec. 510.1  [Amended]

    b. In newly redesignated Sec. 510.1(a), the phrase ``Area Manager'' 
is removed and, in its place, the phrase ``Assistant Secretary for 
CPD'' is added; the phrase ``, or the approving officer where a 
locality has local section 312 loan approval authority,'' is removed; 
and the phrase ``under section 312(a)(3) for approval'' is removed and, 
in its place, the phrase ``for assumption'' is added.

PART 511--RENTAL REHABILITATION GRANT PROGRAM

    3. The authority for part 511 continues to read as follows:

    Authority: 42 U.S.C. 1437o and 3535(d).


Secs. 511.3 and 511.5  [Removed and Reserved]

    4. Sections 511.3 and 511.5 are removed and reserved.


Sec. 511.10  [Amended]

    5. In Sec. 511.10, paragraph (d) is removed and reserved.
    6. Section 511.11 is amended by removing the last two sentences of 
paragraph (c)(2)(iii), by removing and reserving paragraph (g), and by 
revising paragraph (a), to read as follows:


Sec. 511.11  Project requirements.

    (a) Rehabilitation. To receive assistance under this part, a 
project must require rehabilitation, measured by whether the project 
before the assisted rehabilitation does not meet the rehabilitation 
standards under Sec. 511.10(e). If a project is terminated before 
completion of rehabilitation (as defined in Sec. 511.2), whether 
voluntarily 

[[Page 7062]]
by the grantee or otherwise, amounts equal to the rental rehabilitation 
grant amounts already dispersed for the project under the C/MI System 
are not eligible project costs, whether or not the grantee has already 
expended such grant amounts to pay for project costs. If such amount is 
not repaid, the grantee may be subject to corrective and remedial 
actions under Sec. 511.82.
* * * * *


Secs. 511.30, 511.31, 511.34  [Removed and Reserved]

    7. Sections 511.30, 511.31 and 511.34 are removed and reserved.
    8. Section 511.33 is revised to read as follows:


Sec. 511.33  Deobligation of rental rehabilitation grant amounts.

    (a) Before deobligating grant amounts, HUD will consult with the 
affected grantee and take into account factors such as timing of the 
grantee's program year; the timing of State distributions to State 
recipients, if applicable; the timing of expected project approvals for 
projects in the grantee's pipeline; climatic or other considerations 
affecting rehabilitation work schedules; and other relevant 
considerations. In addition to any remedial deobligation under 
Sec. 511.82, HUD may deobligate any rental rehabilitation grant amounts 
that are not:
    (1) Committed to specific local projects within 3 years of the date 
of obligation of the grant under Sec. 511.21(d) (4 years in the case of 
a State that distributes rental rehabilitation grant amounts to State 
recipients); or
    (2) Expended for eligible costs within 5 years of such date of 
obligation (6 years in the case of a State that distributes rental 
rehabilitation grant amounts to State recipients).
    (b) After such consultation, the HUD field office may direct the 
grantee to proceed with program closeout and may deobligate remaining 
unexpended grant amounts if the field office determines that any 
uncommitted funds will not be committed within a reasonable time, only 
small amounts of funds remain unexpended, or completion of uncompleted 
projects appears infeasible within a reasonable time. None of the time 
periods referred to in this section are extended by any suspensions of 
project set-ups or other remedial action imposed by HUD under this 
part.


Sec. 511.50  [Amended]

    9. In Sec. 511.50, paragraph (a) is amended by removing the first 
three sentences.


Sec. 511.51  [Amended]

    10. In Sec. 511.51, paragraph (a) is amended by removing the phrase 
``that elects to administer its allocation in accordance with 
Sec. 511.50,'' and paragraph (d) is removed.


Sec. 511.52  [Removed and Reserved]

    11. Section 511.52 is removed and reserved.
    12. In Sec. 511.76, paragraph (h)(2) is revised to read as follows:


Sec. 511.76  Program income.

* * * * *
    (h) * * *
    (2) Program income on hand at the time of program closeout or 
earned after program closeout may be contributed to HOME or HOPE 
program grantees as a cash matching contribution in accordance with 
applicable HOME or HOPE program rules, or may be used for activities 
that would be eligible under other affordable housing activities, as 
determined by the recipient.
    13. In Sec. 511.77, the introductory sentence is removed, and 
paragraph (a) is revised, to read as follows:


Sec. 511.77  Grant closeout.

    (a) Each individual fiscal year rental rehabilitation grant will be 
closed out when all grant amounts for the grant to be closed out have 
been drawn down and expended for completed projects and/or 
administrative costs, or grant amounts not drawn down and expended have 
been deobligated by HUD.
* * * * *


Sec. 511.80  [Amended]

    14. In Sec. 511.80, paragraph (a) is amended by removing the phrase 
``In addition to reviewing grantee performance for purposes of making 
reallocations under Sec. 511.33,'' from the first sentence.


Sec. 511.81  [Amended]

    15. In Sec. 511.81, paragraph (b) is removed and reserved.


Sec. 511.82  [Amended]

    16. In Sec. 511.82, paragraph (c)(2) is removed and reserved, and 
the first sentence of paragraph (d) is removed.

PART 590--URBAN HOMESTEADING

    17. The authority citation for part 590 continues to read as 
follows:

    Authority: 12 U.S.C. 1706e; 42 U.S.C. 3535(d).
    18. Section 590.1 is revised to read as follows:


Sec. 590.1  General.

    This part applies to the completion of activities remaining under 
the Urban Homesteading Program authorized under section 810(b) of the 
Housing and Community Development Act of 1974 (12 U.S.C. 1706e). 
Authority to reimburse Federal agencies for transfer of additional 
properties to LUHAs under this part was repealed effective October 1, 
1991.


Secs. 590.3, 590.9, 590.11, 590.13, 590.15, 590.17, 590.18, and 
590.21  [Removed and Reserved]

    19. Sections 590.3, 590.9, 590.11, 590.13, 590.15, 590.17, 590.18, 
and 590.21 are removed and reserved, and the first and second sentences 
of Sec. 590.19 are removed.


Sec. 590.5  [Amended]

    20. Section 590.5 is amended by removing the definitions of 
``Federally-owned property,'' ``FmHA,'' ``RTC,'' and ``VA.''


Sec. 590.7  [Amended]

    21. Section 590.7 is amended as follows:
    a. Paragraph (a) is removed and reserved;
    b. Paragraph (b)(6) is amended by removing the last two sentences;
    c. Paragraph (b)(8) is amended by removing the phrase ``consistent 
with the coordinated approach to neighborhood improvement'';
    d. Paragraph (c)(1) is amended by removing the second sentence, and 
to remove the phrase ``as described in Secs. 590.13-.15 of this part'' 
from the third sentence;
    e. Paragraph (c)(2)(i) is amended by removing the phrase ``VA, FmHA 
and RTC as described in Sec. 590.11(a)(7)'';
    f. Paragraph (c)(2)(iii) is revised; and
    g. Paragraphs (c)(3) and (c)(4) are removed, to read as follows:


Sec. 590.7  Program requirements.

* * * * *
    (c) * * *
    (2) * * *
    (iii) Designate, and enter into a written agreement with, a 
qualified community organization (as defined in the Act) to act as LUHA 
in accordance with this part.
    22. Section 590.23 is amended by revising paragraph (a), and by 
removing the last sentence of paragraph (c) and paragraph (d), to read 
as follows:


Sec. 590.23  Program close-out.

    (a) Initiation of close-out. The LUHA shall institute close-out 
procedures, as prescribed by HUD.
* * * * *
    23. In Sec. 590.29, paragraph (a) introductory text, paragraph 
(a)(4), and paragraph (c) are revised to read as follows: 

[[Page 7063]]



Sec. 590.29  HUD review of LUHA performance.

    (a) HUD may review the performance of each active LUHA as 
necessary, as determined by HUD, to determine whether:
* * * * *
    (4) The LUHA is making reasonable progress in moving properties 
through the stages of the homesteading process, including acquisition, 
homesteader selection, conditional conveyance, rehabilitation, and 
final conveyance.
* * * * *
    (c) LUHAs shall supply data and make available records necessary 
for HUD's monitoring of the LUHA's local urban homesteading program.


Sec. 590.31  [Removed and Reserved]

    24. In Sec. 590.31, paragraph (c) is removed and reserved.

    Dated: February 13, 1996.
Andrew M. Cuomo,
Assistant Secretary for Community Planning and Development.
[FR Doc. 96-3962 Filed 2-22-96; 8:45 am]
BILLING CODE 4210-29-P