[Federal Register Volume 61, Number 52 (Friday, March 15, 1996)]
[Rules and Regulations]
[Pages 10848-10852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6162]




[[Page 10847]]

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Part II





Department of Housing and Urban Development





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24 CFR Part 791



Allocation of Budget Authority for Housing Assistance; Final Rule

  Federal Register / Vol. 61, No. 52 / Friday, March 15, 1996 / Rules 
and Regulations  

[[Page 10848]]


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 791

[Docket No. FR-4024-F-01]
RIN 2501-AC17


Allocation of Budget Authority for Housing Assistance

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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

SUMMARY: This final rule amends HUD's regulations for the allocation of 
budget authority for housing assistance. In an effort to comply with 
the President's regulatory reform initiatives, this rule streamlines 
the regulations by eliminating provisions that are redundant of 
statutes or are otherwise unnecessary, making them clearer and more 
concise.
    In addition, this rule revises the regulations to reflect 
organizational initiatives within Headquarters, as well as the 
Department's reinvention of the field office structure in Fiscal Year 
1994, which eliminated the regional office management layer and 
delegated the authority to the State and Area offices.

EFFECTIVE DATE: April 15, 1996.

FOR FURTHER INFORMATION CONTACT: For the Public and Indian Housing 
programs, and the Section 8 voucher, certificate, and moderate 
rehabilitation programs: Nanci E. Gelb, Director, PIH Budget Division, 
Room 4230, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Washington, DC 20410-0500. Telephone: (202) 708-0614. 
Hearing- or speech-impaired individuals may call HUD's TDD number (202) 
708-0850.
    For other assisted housing programs: Karen Daly, Acting Director, 
Office of Policy, Assistant Secretary for Housing, Room 9220, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Washington, DC 20410-8000. Telephone: (202) 708-4135. Hearing- or 
speech-impaired individuals may call HUD's TDD number (202) 755-4594.
    (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION On March 4, 1995, President Clinton issued a 
memorandum to all Federal departments and agencies regarding regulatory 
reinvention. In response to this memorandum, the Department of Housing 
and Urban Development conducted a page-by-page review of its 
regulations to determine which can be eliminated, consolidated, or 
otherwise improved. HUD has determined that the regulations for the 
``Allocation of Budget Authority for Housing Assistance'' can be 
improved and streamlined by eliminating unnecessary provisions.
    Some provisions in the regulations are now obsolete. For instance, 
this rule removes Subpart B which contains obsolete regulations 
regarding the Housing Assistance Plan (HAP). The HAP has been 
superseded by the comprehensive affordability strategy (and 
consolidated plan). Moreover, the Department now uses a grant mechanism 
for the Section 202 program as a result of statutory changes in 1990; 
hence, references in the regulations to loan authority for the Section 
202 program, and in general, have been deleted.
    Finally, some provisions in the regulations are not statutory 
requirements. Section 791.403(a) included a statement that the 
Assistant Secretaries for Housing and for Public and Indian Housing 
would confer to determine how the available budget authority should be 
allocated. Given recent appropriations treatment of the Section 8 
programs, such consultation is no longer needed. Therefore, this 
provision has been eliminated.

Justification for Final Rulemaking

    HUD generally publishes a rule for public comment before issuing a 
rule for effect, in accordance with its own regulations on rulemaking 
in 24 CFR part 10. However, part 10 provides for exceptions to the 
general rule if the agency finds good cause to omit advance notice and 
public participation. The good cause requirement is satisfied when 
prior public procedure is ``impracticable, unnecessary, or contrary to 
the public interest'' (24 CFR 10.1). HUD finds that good cause exists 
to publish this rule for effect without first soliciting public 
comment. This rule merely removes unnecessary regulatory provisions and 
does not establish or affect substantive policy. Therefore, prior 
public comment is unnecessary.

Other Matters

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this rule before publication and by 
approving it certifies that this rule does not have a significant 
economic impact on a substantial number of small entities. The rule 
revises existing procedures for the allocation of housing assistance 
funds and for local government and HUD review of applications for 
housing assistance, but makes no change in the economic impact of these 
procedures on small entities.

Environmental Impact

    In accordance with 40 CFR 1508.4 of the regulations of the Council 
on Environmental Quality and 24 CFR 50.20(k) of the HUD regulations, 
the policies and procedures contained in this rule relate only to 
internal administrative procedures whose content does not constitute a 
development decision nor affect the physical condition of project areas 
or building sites, and therefore, are categorically excluded from the 
requirements of the National Environmental Policy Act.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this rule will not have substantial direct effects on 
states or their political subdivisions, or the relationship between the 
Federal Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Specifically, 
this rule will not substantially alter the established roles of HUD and 
the States and local governments, including PHAs, in administering the 
affected programs. As a result, the rule is not subject to review under 
the Order.

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 for significant impact on family formation, maintenance, and 
general well-being, and, thus, is not subject to review under the 
Order. No significant change in existing HUD policies or programs will 
result from promulgation of this rule, as those policies and programs 
relate to family concerns.

List of Subjects in 24 CFR Part 791

    Grant programs--housing and community development, Indians, 
Intergovernmental relations, Public housing, Rent subsidies.

    Accordingly, pursuant to the Secretary's authority under 42 U.S.C. 
3535(d), 24 CFR part 791 is revised as follows:

[[Page 10849]]


PART 791--REVIEW OF APPLICATIONS FOR HOUSING ASSISTANCE AND 
ALLOCATIONS OF HOUSING ASSISTANCE FUNDS

Subpart A--General Provisions

Sec.
791.101  Applicability and scope.
791.102  Definitions.

Subpart B--[Reserved]

Subpart C--Applications for Housing Assistance

791.301  General.
791.302  Finding of need for housing assistance.
791.303  Notification of local government.
791.304  Review and comment period.
791.305  HUD review of applications for housing assistance.

Subpart D--Allocation of Budget Authority for Housing Assistance

791.401  General.
791.402  Determination of low-income housing needs.
791.403  Allocation of housing assistance.
791.404  Field Office allocation planning.
791.405  Reallocations of budget authority.
791.406  Competition.
791.407  Headquarters Reserve.

    Authority: 42 U.S.C. 1439 and 3535(d).

Subpart A--General Provisions


Sec. 791.101  Applicability and scope.

    This part describes the roles and responsibilities of HUD and local 
governments under section 213 of the Housing and Community Development 
Act of 1974 (42 U.S.C. 1437). It applies to the allocation of budget 
authority, and the review and approval of applications for housing 
assistance under the United States Housing Act of 1937 (42 U.S.C. 1437-
1437q), section 101 of the Housing and Urban Development Act of 1965 
(12 U.S.C. 1701s), and with respect to subpart D only, section 202 of 
the Housing Act of 1959 (12 U.S.C. 1710q), except as follows:
    (a) This part does not apply to programs for public housing 
operating subsidy, public housing modernization, or rental 
rehabilitation grant assistance under section 9, 14, or 17 of the 
United States Housing Act of 1937; and
    (b) Subpart D of this part does not apply to the allocation of 
budget authority for housing development grant assistance under section 
17 of the U.S. Housing Act of 1937.


Sec. 791.102  Definitions.

    Act. The Housing and Community Development Act of 1974 (42 U.S.D. 
1437), as amended.
    Allocation area. A municipality, county, or group of municipalities 
or counties or Indian areas identified by the HUD field office for the 
purpose of allocating housing assistance.
    Application for housing assistance. The first submission to HUD for 
housing assistance under one of the programs identified in 
Sec. 791.101(a). For the purposes of this part, the term includes an 
application, a preliminary proposal, or a proposal, so long as it meets 
the applicable program regulations. For the public housing program, the 
first application identifying a project site will be considered the 
application for housing assistance.
    Assistant Secretary. The Assistant Secretary for Housing or the 
Assistant Secretary for Public and Indian Housing, as appropriate to 
the housing assistance under consideration.
    Budget authority. The maximum amount authorized by the Congress for 
payments over the term of assistance contracts.
    Chief executive officer. The elected official or legally designated 
official who has the primary responsibility for conducting the 
governmental affairs of a unit of general local government. Examples of 
the ``chief executive officer'' include: the elected mayor of a 
municipality; the elected county executive of a county; the presiding 
officer of a county commission or board in a county that has no elected 
county executive; the official designated by the governing body of the 
local government pursuant to law (e.g., the city manager or city 
administrator); and the chairman, governor, chief or president of an 
Indian tribe or Alaskan native village.
    Fiscal year. The official operating period of the Federal 
government, beginning on October 1 and ending on September 30.
    Household type. The three household types are: elderly, small 
family, and large family. References to household type shall mean the 
household type within the appropriate tenure type.
    Housing type. The three housing types are:
    (1) New construction;
    (2) Rehabilitation; and
    (3) Existing housing.
    Local government. Any city, county, town, township, parish, village 
or other unit of general local government which is a general purpose 
political subdivision of a State or the Commonwealth of Puerto Rico; 
Guam, the Commonwealth of the Northern Marianas, the Virgin Islands and 
American Samoa, or a general purpose political subdivision thereof; a 
combination of such political subdivisions recognized by the Secretary 
of HUD: the District of Columbia; the former Trust Territories of the 
Pacific Islands, as applicable ; Indian tribes, bands, groups and 
nations, including Alaska Indians, Aleuts and Eskimos; and any Alaskan 
native village of the United States. The term also includes a State or 
local public body or agency, community association, or other entity 
which is approved by HUD to provide public facilities or services to a 
new community meeting the requirements of Title IV of the Housing and 
Urban Development Act of 1968 (42 U.S.C. 3901) or Title VII of the 
Housing and Urban Development Act of 1970 (42 U.S.C. 4501).
    Metropolitan area. See MSA.
    MSA. A metropolitan statistical area established by the Office of 
Management and Budget. The term also includes primary metropolitan 
statistical areas (PMSAs), which are the component parts of larger 
urbanized areas designated as consolidated metropolitan statistical 
areas (CMSAs). Where an MSA is divided among two or more field offices, 
references to an MSA mean the portion of the MSA within the State/Area 
Office jurisdiction.
    Public housing agency. Any State, county, municipality, or other 
governmental entity or public body (or agency or instrumentality 
thereof) which is authorized to engage in or assist in the development 
or operation of housing for low-income families.
    Tenure type. The two tenure types are owners and renters.
    Urban county. Any county within a metropolitan area which is 
authorized under State law to undertake essential community development 
and housing assistance activities in its unincorporated areas, and 
which meets the other requirements of 24 CFR 570.307 for qualification 
as an urban county.

Subpart B--[Reserved]

Subpart C--Applications for Housing Assistance


Sec. 791.301  General.

    This subpart C establishes the policies and procedures governing 
reviews and determinations, pursuant to section 213(c) of the Act, with 
respect to applications for housing assistance, under the programs 
identified in Sec. 791.101(a).


Sec. 791.302  Finding of need for housing assistance.

    With respect to each application for housing assistance, the field 
office is required to make a determination as to whether there is a 
need for such housing and whether the public facilities and services 
available in the area will be adequate to serve the proposed housing.

[[Page 10850]]

    (a) The initial determination of need for housing assistance within 
an allocation area is made as part of the allocation process in 
Sec. 791.404. In making this determination, the field office shall give 
consideration to the contents of any applicable State or areawide 
housing plan proposing housing assistance in the area, as well as 
generally available data on population, poverty, housing overcrowding, 
housing vacancies, amount of substandard housing, or other objectively 
measurable conditions pertaining to low-income housing needs.
    (b) Prior to making a determination with regard to a specific 
application, the field office shall give the local government in which 
the proposed assistance is to be provided an opportunity to provide 
comments, during a 30-calendar-day period, concerning the need for 
housing assistance and the adequacy of public facilities and services. 
If the local government finding is negative, it must be accompanied by 
supporting evidence.


Sec. 791.303  Notification of local government.

    (a) The field office shall notify the chief executive officer no 
later than 10 working days after receipt (or completion of any 
preliminary review and determination that the application is acceptable 
for further processing) that an application for housing assistance to 
be provided in that jurisdiction has been received and is under 
consideration.
    (1) When the application is for housing assistance in newly 
constructed or rehabilitated housing within the overlapping 
jurisdictions of more than one local government (e.g., a municipality 
which is also within a county), the field office shall notify the chief 
executive officer of each local government.
    (2) When the application is for housing assistance in newly 
constructed or rehabilitated housing within several nonoverlapping 
political jurisdictions (e.g., a scattered site project), the field 
office shall notify the chief executive officer of each local 
government where housing assistance is proposed.
    (3) For a Section 8 existing housing, moderate rehabilitation, or 
housing voucher application submitted in accordance with 24 CFR part 
982, the field office shall notify the chief executive officers of the 
localities that are identified in the application as:
    (i) Primary areas from which households to be assisted under the 
existing housing program will be drawn; or
    (ii) Primary areas in which units will be rehabilitated under the 
moderate rehabilitation program.
    (b) The notification to the chief executive officer shall:
    (1) Indicate that the field office has received and is considering 
an application for housing assistance, and identify the housing 
program, the housing type, the number of units by bedroom size and 
household type, and the proposed location(s).
    (2) Invite the submission, within a period of 30 calendar days from 
the date of the field office letter, of a statement on behalf of the 
local government concerning the need for housing assistance and the 
adequacy of public facilities and services and any other comments which 
are relevant to a determination by the field office concerning the 
proposed housing assistance (e.g., comments on the site; whether the 
project is approvable under local codes and zoning ordinances).


Sec. 791.304  Review and comment period.

    The chief executive officer shall have a 30-calendar day comment 
period, beginning on the date of the notification letter described in 
Sec. 791.303, to submit written comments relevant to a determination by 
the field office concerning the approval of an application for housing 
assistance. The field office shall consider the comment period closed 
when the written comments are received. In no case shall the Program 
Office Director in the field office be obligated to consider subsequent 
or revised comments unless the initial response indicated that 
additional comments would be provided and such comments are received 
prior to the expiration of the 30-day comment period. As an alternative 
to this process, the chief executive officer may submit any comments on 
the application with the application at the time it is submitted to 
HUD. Such early comment shall state whether such comment is intended to 
be the final comment, notwithstanding the 30-day period otherwise 
provided under this paragraph.


Sec. 791.305  HUD review of applications for housing assistance.

    (a) The field office shall not approve an application for housing 
assistance prior to either:
    (1) Receipt of comments pursuant to Sec. 791.304; or
    (2) Expiration of the 30-day comment period, whichever occurs 
earlier.
    (b) In determining whether an application will be approved, the 
field office shall consider the comments provided by the local 
government including comments submitted by the chief executive officer 
on behalf of the local government. The field office shall make an 
independent determination as to whether there is a need for housing 
assistance and whether facilities and services are adequate before 
approving the application.
    (c) The field office shall promptly notify both the chief executive 
officer and the applicant of the HUD determination with respect to the 
approval or disapproval of the application for housing assistance.

Subpart D--Allocation of Budget Authority for Housing Assistance


Sec. 791.401  General.

    This subpart D establishes the procedures for allocating budget 
authority under section 213(d) of the Act for the programs identified 
in Sec. 791.101(a). It describes the allocation of budget authority by 
the appropriate Assistant Secretary to the applicable Program Office 
Director in the HUD field office, and by the Program Office Director to 
allocation areas within their jurisdiction.


Sec. 791.402  Determination of low-income housing needs.

    (a) Before budget authority is allocated, the Assistant Secretary 
for Policy Development and Research shall determine the relative need 
for low-income housing assistance in each HUD field office 
jurisdiction. This determination shall be based upon data from the most 
recent, available decennial census and, where appropriate, upon more 
recent data from the Bureau of the Census or other Federal agencies, or 
from the American Housing Survey.
    (b) Except for paragraph (c) of this section, the factors used to 
determine the relative need for assistance shall be based upon the 
following criteria:
    (1) Population. The renter population;
    (2) Poverty. The number of renter households with annual incomes at 
or below the poverty level, as defined by the Bureau of the Census;
    (3) Housing overcrowding. The number of renter-occupied housing 
units with an occupancy ratio of 1.01 or more persons per room;
    (4) Housing vacancies. The number of renter housing units that 
would be required to maintain vacancies at levels typical of balanced 
market conditions;
    (5) Substandard housing. The number of housing units built before 
1940 and occupied by renter households with annual incomes at or below 
the poverty level, as defined by the Bureau of the Census; and

[[Page 10851]]

    (6) Other objectively measurable conditions. Data indicating 
potential need for rental housing assistance, such as the number of 
renter households with incomes below specified levels and paying a 
gross rent of more than 30 percent of household income.
    (c)(1) For the section 202 elderly program, the data used shall 
reflect relevant characteristics of the elderly population. The data 
shall use the criteria specified in paragraph (b)(1) and (6) of this 
section, as modified to apply specifically to the needs of the elderly 
population.
    (2) Budget authority for the Indian housing program under 24 CFR 
part 905 shall be allocated on the basis of the relative housing needs 
of the Indian tribal population, as measured by the Bureau of Indian 
Affairs, and by data for non-BIA recognized groups served by the Indian 
housing program.
    (d) Based on the criteria in paragraphs (b) and (c)(1) of this 
section, the Assistant Secretary for Policy Development and Research 
shall establish housing needs factors for each county and independent 
city in the field office jurisdiction, and shall aggregate the factors 
into metropolitan and nonmetropolitan totals for the field office. The 
field office total for each metropolitan and nonmetropolitan factor is 
then divided by the respective national total for that factor. The 
resulting housing needs ratios under paragraph (b) of this section are 
then weighted to provide metropolitan and nonmetropolitan housing needs 
percentages for each field office, using the following weights: 
Population, 20 percent; poverty, 20 percent; housing overcrowding, 10 
percent; housing vacancies, 10 percent; substandard housing, 20 
percent; other objectively measurable conditions, 20 percent. For the 
section 202 elderly program, the two criteria described in paragraph 
(c)(1) of this section are weighted equally.
    (e) The Assistant Secretary for Policy Development and Research 
shall adjust the housing needs percentages derived in paragraph (d) of 
this section to reflect the relative cost of providing housing among 
the field office jurisdictions.


Sec. 791.403  Allocation of housing assistance.

    (a) The total budget authority available for any fiscal year shall 
be determined by adding any available, unreserved budget authority from 
prior fiscal years to any newly appropriated budget authority for each 
housing program. On a nationwide basis, at least 20 percent, but not 
more than 25 percent, of the total budget authority available for any 
fiscal year, which is allocated pursuant to paragraph (b)(2) of this 
section and any amounts which are retained pursuant to Sec. 791.407, 
shall be allocated for use in nonmetropolitan areas.
    (b) Budget authority available for the fiscal year, except for that 
retained pursuant to Sec. 791.407, shall be allocated to the field 
offices as follows:
    (1) Budget authority shall be allocated as needed for uses that the 
Secretary determines are incapable of geographic allocation by formula, 
including--
    (i) Amendments of existing contracts, renewal of assistance 
contracts, assistance to families that would otherwise lose assistance 
due to the decision of the project owner to prepay the project mortgage 
or not to renew the assistance contract, assistance to prevent 
displacement or to provide replacement housing in connection with the 
demolition or disposition of public and Indian housing, assistance in 
support of the property disposition and loan management functions of 
the Secretary;
    (ii) Assistance which is--
    (A) The subject of a line item identification in the HUD 
appropriations law, or in the table customarily included in the 
Conference Report on the appropriation for the Fiscal Year in which the 
funds are to be allocated;
    (B) Reported in the Operating Plan submitted by HUD to the 
Committees on Appropriations; or
    (C) Included in an authorization statute where the nature of the 
assistance, such as a prescribed set-aside, is, in the determination of 
the Secretary, incapable of geographic allocation by formula,
    (iii) Assistance determined by the Secretary to be necessary in 
carrying out the following programs authorized by the Cranston-Gonzalez 
National Affordable Housing Act: the Homeownership and Opportunity 
Through HOPE Act under title IV and HOPE for Elderly Independence under 
section 803.
    (2) Budget authority remaining after carrying out allocation steps 
outlined in paragraph (b)(1) of this section shall be allocated in 
accordance with the housing needs percentages calculated under 
paragraphs (b), (c), (d), and (e) of Sec. 791.402. HUD may allocate 
assistance under this paragraph in such a manner that each State shall 
receive not less than one-half of one percent of the amount of funds 
available for each program referred to in Sec. 791.101(a) in each 
fiscal year. If the budget authority for a particular program is 
insufficient to fund feasible projects, or to promote meaningful 
competition, at the field office level, budget authority may be 
allocated among the ten geographic areas of the country. The funds so 
allocated will be assigned by Headquarters to the field office(s) with 
the highest ranked applications within the ten geographic areas.
    (c) At least annually HUD will publish a notice in the Federal 
Register informing the public of all allocations under 
Sec. 791.403(b)(2).


Sec. 791.404  Field Office allocation planning.

    (a) General objective. The allocation planning process should 
provide for the equitable distribution of available budget authority, 
consistent with the relative housing needs of each allocation area 
within the field office jurisdiction.
    (b) Establishing allocation areas. Allocation areas, consisting of 
one or more counties or independent cities, shall be established by the 
field office in accordance with the following criteria:
    (1) Each allocation shall be to the smallest practicable area, but 
of sufficient size so that at least three eligible entities are viable 
competitors for funds in the allocation area, and so that all 
applicable statutory requirements can be met. (It is expected that in 
many instances individual MSAs will be established as metropolitan 
allocation areas.) For the section 202 program for the elderly, the 
allocation area must include sufficient units to promote a meaningful 
competition among disparate types of providers of such housing (e.g., 
local as well as national sponsors, minority as well as non-minority 
sponsors). The preceding sentence shall not apply to projects acquired 
from the Resolution Trust Corporation under section 21A(c) of the 
Federal Home Loan Bank Act.
    (2) Each allocation area shall also be of sufficient size, in terms 
of population and housing need, that the amount of budget authority 
being allocated to the area will support at least one feasible program 
or project.
    (3) In establishing allocation areas, counties and independent 
cities within MSAs should not be combined with counties that are not in 
MSAs.
    (c) Determining the amount of budget authority. Where the field 
office establishes more than one allocation area, it shall determine 
the amount of budget authority to be allocated to each allocation area, 
based upon a housing needs percentage which represents the needs of 
that area relative to the needs of the metropolitan or nonmetropolitan 
portion of the field office jurisdiction, whichever is appropriate. For 
each program, a composite housing needs percentage developed under 
Sec. 791.402

[[Page 10852]]
for those counties and independent cities comprising the allocation 
area shall be aggregated into allocation area totals.
    (d) Planning for the allocation. The field office should develop an 
allocation plan which reflects the amount of budget authority 
determined for each allocation area in paragraph (c). The plan should 
include a map or maps clearly showing the allocation areas within the 
field office jurisdiction. The relative share of budget authority by 
individual program type need not be the same for each allocation area, 
so long as the total amount of budget authority made available to the 
allocation area is not significantly reduced.


Sec. 791.405  Reallocations of budget authority.

    (a) The field office shall make every reasonable effort to use the 
budget authority made available for each allocation area within such 
area. If the Program Office Director determines that not all of the 
budget authority allocated for a particular allocation area is likely 
to be used during the fiscal year, the remaining authority may be 
allocated to other allocation areas where it is likely to be used 
during that fiscal year.
    (b) If the Assistant Secretary determines that not all of the 
budget authority allocated to a field office is likely to be used 
during the fiscal year, the remaining authority may be reallocated to 
another field office where it is likely to be used during that fiscal 
year.
    (c) Any reallocations of budget authority among allocation areas or 
field offices shall be consistent with the assignment of budget 
authority for the specific program type and established set-asides.
    (d) Notwithstanding the requirements of paragraphs (a) through (c) 
of this section, budget authority shall not be reallocated for use in 
another State unless the Program Office Director or the Assistant 
Secretary has determined that other allocation areas within the same 
State cannot use the available authority during the fiscal year.


Sec. 791.406  Competition.

    (a) All budget authority allocated pursuant to Sec. 791.403(b)(2) 
shall be reserved and obligated pursuant to a competition. Any such 
competition shall be conducted pursuant to specific criteria for the 
selection of recipients of assistance. These criteria shall be 
contained in a regulation promulgated after notice and public comment 
or, to the extent authorized by law, a notice published in the Federal 
Register.
    (b) This section shall not apply to assistance referred to in 
Secs. 791.403(b)(1) and 791.407.


Sec. 791.407  Headquarters Reserve.

    (a) A portion of the budget authority available for the housing 
programs listed in Sec. 791.101(a), not to exceed an amount equal to 
five percent of the total amount of budget authority available for the 
fiscal year for programs under the United States Housing Act of 1937 
listed in Sec. 791.101(a), may be retained by the Assistant Secretary 
for subsequent allocation to specific areas and communities, and may 
only be used for:
    (1) Unforeseen housing needs resulting from natural and other 
disasters, including hurricanes, tornadoes, storms, high water, wind 
driven water, tidal waves, tsunamis, earthquakes, volcanic eruptions, 
landslides, mudslides, snowstorms, drought, fires, floods, or 
explosions, which in the determination of the Secretary cause damage of 
sufficient severity and magnitude to warrant Federal housing 
assistance;
    (2) Housing needs resulting from emergencies, as certified by the 
Secretary, other than disasters described in paragraph (a)(1) of this 
section. Emergency housing needs that can be certified are only those 
that result from unpredictable and sudden circumstances causing housing 
deprivation (such as physical displacement, loss of Federal rental 
assistance, or substandard housing conditions) or causing an unforeseen 
and significant increase in low-income housing demand in a housing 
market (such as influx of refugees or plant closings);
    (3) Housing needs resulting from the settlement of litigation; and
    (4) Housing in support of desegregation efforts.
    (b) Applications for funds retained under paragraph (a) of this 
section shall be made to the field office, which will make 
recommendations to Headquarters for approval or rejection of the 
application. Applications generally will be considered for funding on a 
first-come, first-served basis. Specific instructions governing access 
to the Headquarters Reserve shall be published by notice in the Federal 
Register, as necessary.
    (c) Any amounts retained in any fiscal year under paragraph (a) of 
this section that are not reserved by the end of such fiscal year shall 
remain available for the following fiscal year in the program under 
Sec. 791.101(a) from which the amount was retained. Such amounts shall 
be allocated pursuant to Sec. 791.403(b)(2).

    Dated: March 7, 1996.
Henry G. Cisneros,
Secretary.
[FR Doc. 96-6162 Filed 3-14-96; 8:45 am]
BILLING CODE 4210-32-P