[Federal Register Volume 61, Number 180 (Monday, September 16, 1996)]
[Rules and Regulations]
[Pages 48796-48800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23574]


      

[[Page 48795]]


_______________________________________________________________________

Part V





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Part 572



Homeownership of Single Family Homes Program (HOPE 3); Streamlining 
Final Rule

  Federal Register / Vol. 61, No. 180 / Monday, September 16, 1996 / 
Rules and Regulations  

[[Page 48796]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 572

[Docket No. FR-3857-F-02]
RIN 2506-AB71


Office of the Assistant Secretary for Community Planning and 
Development; Homeownership of Single Family Homes Program (HOPE 3); 
Streamlining Final Rule

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

ACTION: Final rule.

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

SUMMARY: This rule completes the rulemaking process for an interim rule 
on HUD's regulations for the HOPE for Homeownership of Single Family 
Homes Program (HOPE 3) Program and further amends the regulations to 
comply with the President's regulatory reform initiatives. The rule 
streamlines HOPE 3 program regulations by eliminating provisions that 
are redundant of statutes or are otherwise unnecessary, and will make 
the regulations clearer and more concise. Additional HOPE 3 
streamlining proposals that require notice-and-comment rulemaking will 
be included in a separate proposed rule that HUD expects to publish 
soon in the Federal Register.

EFFECTIVE DATE: October 16, 1996.

FOR FURTHER INFORMATION CONTACT: Gordon McKay, Director, Office of 
Affordable Housing Programs, Room 7168, Department of Housing and Urban 
Development, 451 7th Street, SW, Washington, DC 20410, telephone number 
(202) 708-2685 (this is not a toll-free number). For hearing- and 
speech-impaired persons, this number may be accessed via TTY (text 
telephone) by calling the Federal Information Relay Service at 1-800-
877-8339.

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 determined that the regulations for the HOPE 
for Homeownership of Single Family Homes Program (42 U.S.C. 12891-
12898a) (HOPE 3) Program could be improved and streamlined.
    On July 12, 1995 (60 FR 36016), HUD published an interim rule that 
streamlined program implementation, clarified inconsistencies in 
previous regulatory provisions, and facilitated grantees' performance 
of HOPE 3 programs. HUD received only one comment in response to the 
interim rule, from a Housing Authority. The commenter agreed with the 
changes made by the final rule, stating that the changes seem to remove 
operational burdens and streamline program implementation.
    Today's rule makes additional streamlining changes and makes final 
changes that were implemented in the interim rule, including: 
correcting an inconsistency involving grantee performance in 
transferring HOPE 3 properties; lengthening the time grantees are 
allowed to use sale and resale proceeds; eliminating a prohibition 
against commingling grant or match funds with sale or resale proceeds; 
clarifying that the cost of required rehabilitation must be counted, 
whenever incurred, when determining whether a homebuyer can afford a 
HOPE 3 unit; modifying the definition of income in order to establish a 
consistent approach to determining a family's eligibility for the 
program and its required monthly payment; updating the references to 
the consolidated planning process under part 91 of this title; adding a 
paragraph authorizing program closeout procedures; and reducing the 
match requirement from 33 to 25 percent for grants awarded after April 
11, 1994.
    The additional amendments in this rule to Secs. 572.115(a)(2) and 
572.210(f) will give HUD Field Offices greater authority to extend 
deadlines for transferring homeownership interests and spending 
implementation grant funds. This will allow the Field Offices to 
provide greater flexibility to grantees when appropriate.
    This final rule also removes several provisions in the regulations 
that repeat statutory language from title IV, subtitle C, of the 
National Affordable Housing Act, 42 U.S.C. 12891-12898) (NAHA), for 
example, see Sec. 572.140, Third party rights, which is a grant of 
jurisdiction in lawsuits.
    It is unnecessary to maintain in the Code of Federal Regulations 
(CFR) language that merely repeats statutory requirements, because 
those requirements are otherwise fully accessible and binding. 
Furthermore, if regulations contain statutory language, HUD must amend 
the regulations whenever Congress amends the statute. Therefore, this 
final rule removes repetitious statutory language.
    In this rule HUD has also consolidated redundant provisions within 
part 572. For example, provisions in Sec. 572.210(e) on matching 
requirements will now only appear in Sec. 572.220, a separate section 
on matching requirements.
    In the separate proposed rule, HUD will streamline the competitive 
funding provisions in part 572. In the exercise of its discretion with 
respect to funding awards, and in view of extremely limited funds that 
might become available through repayments, HUD also is clarifying in 
this preamble that a previously approved grant amount will not be 
amended to increase the grant amount.
    Some provisions in the regulations do not have to be maintained in 
the Code of Federal Regulations, because of the status of the HOPE 3 
program. At this time, HUD does not have significant unobligated HOPE 3 
funds, and does not anticipate requesting a new appropriation for HOPE 
3 funds. Therefore, HUD is removing provisions on the selection process 
and criteria applicable to planning grants. However, because authority 
for the program has not been repealed, receipt of resale proceeds will 
continue into the future, and the statute specifies a requirement for 
certain regulations applicable to planning grants, HUD will maintain 
current provisions on planning grants by means of savings clauses in 
this final rule (see Secs. 572.200, 572.205, and 572.315). (Similar 
provisions on the selection process and criteria relating to 
implementation grants, which are not subject to a statutory requirement 
for regulations, are proposed for removal in the separate proposed 
rule)
    HUD does not expect to make any planning grants under the program 
in the future, and any current planning grants are already beyond the 
original deadline for completion of activities. However, in the event 
that planning grants are made in the future, HUD will recodify the 
applicable provisions in full. Existing awards remain subject to grant 
agreements and the regulatory provisions applicable to those 
agreements.
    Lastly, HUD is simplifying some language and removing some 
provisions in the regulations that do not contain regulatory 
requirements. For example, several sections in the regulations contain 
nonbinding guidance or explanations (see Secs. 572.130(d) (3) and (4) 
and 572.220(b)(2)(ii)). While this information is very helpful to 
recipients, HUD will more appropriately provide this information 
through other sources, rather than maintaining it in the CFR. For 
immediate convenience, an

[[Page 48797]]

uncodified appendix to this rule includes such information that is 
being removed from the CFR.

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). A number of the provisions in this 
final rule were published for comment in an interim rule (60 FR 36016, 
July 12, 1995); the one comment received agreed with the changes in 
those provisions. HUD finds that good cause exists to publish other 
changes included in this rule for effect without first soliciting 
public comment. These additional changes merely remove unnecessary 
regulatory provisions. Therefore, prior public comment on the 
additional changes is unnecessary.

Other Matters

Paperwork Reduction Act Statement

    The information collection requirements contained in Secs. 572.225, 
572.300, and 572.425 of the HOPE 3 regulations have been submitted to 
the Office of Management and Budget for an extension of the control 
number, in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520), and assigned OMB control number 2506-0128. A notice 
requesting public comment on this extension will be published in the 
Federal Register. When assigned, the OMB control number will be 
published by a separate notice in the Federal Register. An agency may 
not conduct or sponsor, and a person is not required to respond to, a 
collection of information unless the collection displays a valid 
control number.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this final rule, and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. This rule merely 
makes final program changes that are already in effect and streamlines 
regulations by removing unnecessary provisions. The rule will have no 
adverse or disproportionate economic impact on small businesses.

Environmental Impact

    This rulemaking does not have an environmental impact. This 
rulemaking simply makes final an existing regulation and consolidates 
and streamlines provisions; it does not alter the environmental effect 
of the regulations being amended. A Finding of No Significant Impact 
with respect to the environment was 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 the interim rule. That finding remains applicable to this rule, and 
is available for public inspection between 7:30 a.m. and 5:30 p.m. 
weekdays in the Office of the Rules Docket Clerk, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW, Washington, DC.

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 
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. No programmatic or policy changes 
will result from this rule that would affect the relationship between 
the Federal Government and State and local governments.

Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this rule will not have 
the potential for significant impact on family formation, maintenance, 
or 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.

    The Catalog of Federal Domestic Assistance number for this 
program is 14.240.

List of Subjects in 24 CFR Part 572

    Condominiums, Cooperatives, Fair housing, Government property, 
Grant programs--housing and community development, Low and moderate 
income housing, Nonprofit organizations, Reporting and recordkeeping 
requirements.

    Accordingly, for the reasons set out in the preamble, the 
amendments included in the interim rule at 60 FR 36016 (July 12, 1995) 
are adopted as final and part 572 of title 24 of the Code of Federal 
Regulations is further amended as follows:

PART 572--HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES PROGRAM 
(HOPE 3)

    1. The authority citation for part 572 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 12891.


Sec. 572.1  [Amended]

    2. Section 572.1 is amended by removing paragraph (b) and by 
removing the paragraph designation and heading ``Purpose'' of paragraph 
(a).
    3. Section 572.5 is amended by revising the definitions of 
``Displaced homemaker'', ``First-time homebuyer'', and ``Single 
parent'', to read as follows:


Sec. 572.5  Definitions.

* * * * *
    Displaced homemaker means as the term is defined in 42 U.S.C. 
12704. The individual must not have worked full-time, full-year in the 
labor force for at least 2 years.
* * * * *
    First-time homebuyer means as the term is defined in 42 U.S.C. 
12704.
* * * * *
    Single parent means as the term is defined in 42 U.S.C. 12896.
    4. Section 572.110 is amended by revising the first sentence of 
paragraph (b)(1), to read as follows:


Sec. 572.110  Identifying and selecting eligible families for 
homeownership.

* * * * *
    (b) * * * (1) In making selections for the program, each recipient 
must give first preference to qualified residents who legally occupied 
units on the date the recipient's application for the implementation 
grant was submitted to HUD and to persons residing in the units at the 
time the properties are selected. * * *
* * * * *
    5. Section 572.115 is amended by revising paragraph (a)(2) to read 
as follows:


Sec. 572.115  Transfer of homeownership interests.

    (a) * * *
    (2) The HUD Field Office may approve a request for an extension of 
the deadline in paragraph (a)(1) of this section on a per-program or 
per-unit basis if the Field Office determines that all program 
activities will be completed in accordance with the timing requirements 
of Sec. 572.210(f) (including

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any extension granted under Sec. 572.210(f)).
* * * * *


Sec. 572.130  [Amended]

    6. Section 572.130 is amended by removing the examples at the end 
of paragraphs (d)(3) and (4).
    7. Section 572.140 is revised to read as follows:


Sec. 572.140  Third party rights.

    The rights of third parties are governed by 42 U.S.C. 12895(d) and 
apply to the requirements of this part.
    8. Section 572.200 is revised to read as follows:


Sec. 572.200  Planning grants.

    Any planning grants made by HUD under the HOPE 3 program will 
continue to be governed by the provisions in this section in effect 
immediately before October 16, 1996. When or before HUD announces the 
availability of funds for planning grants under this part, these 
provisions will be recodified.
    9. Section 572.205 is revised to read as follows:


Sec. 572.205  Planning grants--eligible activities.

    Any planning grants made by HUD under the HOPE 3 program will 
continue to be governed by the provisions in this section in effect 
immediately before October 16, 1996. When or before HUD announces the 
availability of funds for planning grants under this part, these 
provisions will be recodified.
    10. Section 572.210 is amended by revising paragraphs (a) and (f) 
and by removing and reserving paragraph (e) to read as follows:


Sec. 572.210  Implementation grants.

    (a) General authority. HUD will make implementation grants to HOPE 
3 applicants for the purpose of carrying out homeownership programs 
approved under this part. Applications will be selected in accordance 
with selection criteria to be published in a NOFA.
* * * * *
    (e) [Reserved]
    (f) Deadline for completion. A recipient must spend all 
implementation grant amounts within 4 years from the effective date of 
the grant agreement. The appropriate HUD Field Office may approve a 
request to extend the deadline when it determines that an extension is 
warranted.
* * * * *
    11. Section 572.220 is amended by:
    a. Revising paragraph (a)(1);
    b. Adding a new paragraph (a)(3);
    c. Revising paragraph (b)(1)(ii)(C);
    d. Revising the second sentence in paragraph (b)(2)(i); and
    e. Removing the example at the end of paragraph (b)(2)(ii), to read 
as follows:


Sec. 572.220  Implementation grants--matching requirements.

    (a) * * *
    (1) Except as provided in paragraph (a)(3) of this section, each 
recipient must assure that matching contributions equal to not less 
than 33 percent (or 25 percent for grants awarded after April 11, 1994) 
of the amount of the implementation grant shall be provided from non-
Federal sources to carry out the homeownership program. Amounts 
contributed to the match must be used for eligible activities or in 
accordance with the requirements of this section.
    (2) * * *
    (3) When the recipient is an IHA, and the IHA (acting in that 
capacity) has not received, and will not receive, amounts under title I 
of the Housing and Community Development Act of 1974 for the fiscal 
year in which HUD obligates HOPE grant funds, the match requirements 
under this section will not apply.
    (b) * * *
    (1) * * *
    (ii) * * *
    (C) Income from a Federal grant earned after the end of the award 
period, if no Federal programmatic requirements govern the disposition 
of the program income.
    (2) * * *
    (i) * * * This limitation is in addition to the 15 percent 
limitation on administrative costs (see Sec. 572.215(o)).
* * * * *
    12. Section 572.315 is revised to read as follows:


Sec. 572.315  Rating criteria for planning grants.

    Any planning grants made by HUD under the HOPE 3 program will 
continue to be governed by the provisions in this section in effect 
immediately before October 16, 1996. When or before HUD announces the 
availability of funds for planning grants under this part, these 
provisions will be recodified.
    13. Section 572.420 is amended by revising paragraphs (b) and (h) 
and by removing and reserving paragraphs (c) and (d), to read as 
follows:


Sec. 572.420  Miscellaneous requirements.

* * * * *
    (b) Requirements in 24 CFR part 5. The Disclosure requirements; 
provisions on Debarred, suspended or ineligible contractors; and Drug-
Free Workplace requirements, as identified in Sec. 5.105 (b), (c), and 
(d) of this title, apply to this program.
    (c) [Reserved]
    (d) [Reserved]
* * * * *
    (h) Lead-based paint. Residential property assisted under this 
program constitutes HUD-associated housing for purposes of the 
requirements of part 35 of this title. Unless otherwise provided, 
recipients are responsible for testing and abatement activities.

    Dated: September 3, 1996.
Andrew Cuomo,
Assistant Secretary for Community Planning and Development.

    Note: The following Appendix will not be codified in the Code of 
Federal Regulation.

Appendix

    The material contained in this appendix to the HOPE 3 final rule 
published on September 16, 1996 is provided for the convenience of 
users of the HOPE 3 regulations. The appendix contains material 
removed from codification in 24 CFR part 572 (title 24 of the Code 
of Federal Regulations, part 572).

Examples

    Calculation under Sec. 572.130(d)(3): The following example 
illustrates a calculation under paragraph (3) of Sec. 572.130(d), 
which addresses the amount payable under a promissory note with 
respect to a sale by an initial homeowner after the first 6 years 
and through the 20th year after acquisition.
    Example: If the family sells at the end of the 13th year of 
homeownership (at the halfway point between the end of the 6th year 
and the end of the 20th year of ownership), 84/168 (or one-half) of 
the note would be forgiven, and only half of the principal amount of 
the note would be payable from sales proceeds. The family could 
retain all remaining proceeds, including proceeds due to normal 
market value increases in the value of the property. If the initial 
homeowner retains ownership for 20 or more years, the entire amount 
of the note would be forgiven.
    Calculation under Sec. 572.130(d)(4): The following example 
illustrates a calculation under paragraph (4) of Sec. 572.130(d), 
which addresses the amount payable on a promissory note that is 
required to be executed by a subsequent purchaser who purchases the 
property for less than the fair market value during the 20-year 
period, as measured by the term of the initial promissory note.
    Example: If the subsequent homeowner acquires the property from 
an initial homeowner at the end of year 4, there are 192 months (16 
years  x  12 months/year) remaining in the 20-year period. The term 
of the promissory note is 16 years. If the subsequent homeowner 
sells at the end of year 10, having owned the property for 72 months 
(6 years  x  12 months/year), 72/192 (37.5 percent) of the note 
would be forgiven,

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and 62.5 percent of the principal amount of the note would be 
payable from sales proceeds. The family could retain all remaining 
proceeds, including proceeds due to normal market value increases in 
the value of the property. If the subsequent homeowner retains 
ownership until the end of the initial 20-year period (for 16 years, 
in the example), the entire amount of the note would be forgiven.
    Examples of non-Federal resources that may apply toward matching 
requirements as cash contributions, under Sec. 570.220(b)(1)(ii)(C) 
(income from a Federal grant earned after the end of the award 
period, if no programmatic requirements govern the disposition of 
the program income): Repayments from closed out grants under the 
Urban Development Action Grant Program (24 CFR part 570, subpart G), 
the Housing Development Grant Program (24 CFR part 850), and the 
Rental Rehabilitation Program (RRP) when all RRP grant years of 
participation by an RRP recipient have been closed out by HUD.
    Calculation under Sec. 572.220(b)(2)(ii): The following example 
illustrates a calculation under Sec. 572.220(b)(2)(ii), which 
addresses the valuation of administrative services contributed 
toward the matching requirement applicable to implementation grants.
    Example: If the grant amount is $600,000, the recipient must 
assure the provision of at least $198,000 (33 percent of grant) or 
$150,000 (25 percent of the grant, if awarded after April 11, 1994)) 
from non-Federal sources, as applicable. Contributions for 
administrative costs that may be counted toward the match may not 
exceed $42,000 (7 percent of the grant amount of $600,000). Although 
a recipient can spend more than this on administrative costs, it may 
not be counted towards the match. In addition, the recipient must 
provide contributions covering the remaining $156,000 ($198,000-
$42,000) or the remaining $108,000 ($150,000-$42,000 for grants 
awarded after April 11, 1994) required for the match from non-
Federal sources.

Planning Grants--Provisions in Effect Immediately Before September 16, 
1996:

    The following provisions relating to planning grants under the 
HOPE 3 program were moved from the CFR by the final rule published 
on September 16, 1996. In the event that planning grants are made in 
the future, HUD will recodify the applicable provisions in full. 
Existing projects remain subject to grant agreements and the 
regulatory provisions contained therein:

Former Sec. 572.200--Planning Grants

    (a) General authority. HUD will make HOPE 3 planning grants to 
applicants for the purpose of developing HOPE 3 homeownership 
programs under this part. Applications will be selected in a 
national competition in accordance with the selection and NOFA 
process described in subpart D of this part. The maximum amount of a 
planning grant will be specified in the NOFA.
    (b) Overall limitations. (1) If two or more fundable 
applications for planning grants propose substantially the same 
general locations, the highest ranking application will be selected. 
However, HUD may reduce the scope of an application if the size of 
the jurisdiction is sufficiently large to justify approval of more 
than one grantee. HUD may also approve a planning grant in an area 
where an implementation grant already exists or is being approved in 
the current funding round as long as the program that could result 
from the planning grant will not lead to substantial competition 
among grant recipients for eligible properties. However, if a 
determination is made that the approval of both a planning grant and 
implementation grant will lead to substantial competition for 
eligible properties, only the implementation grant will be approved.
    (2) A single applicant may apply for more than one planning in 
response to any NOFA, but HUD will not approve more than one 
planning grant for any one applicant.
    (3) An applicant who has previously received a HOPE 3 planning 
grant or implementation grant is not eligible for an additional HOPE 
3 planning grant.
    (4) No amendments to increase previously approved grant amounts 
are allowed.
    (c) Scope of program. (1) Applications that identify a public 
body as the entity to execute the grant agreement may only propose a 
program to be carried out within the jurisdiction of that entity. 
Applications that identify a private nonprofit organization as the 
entity to execute the grant agreement may propose a program to be 
carried out within two or more jurisdictions. No application may 
propose a program to be carried out in more than one State, except 
for Indian tribes or IHAs whose jurisdiction covers more than one 
State.
    (2) An applicant must demonstrate that at least 10 units in 
eligible properties will be available for use in the area proposed 
for the program through evidence of current availability or evidence 
of availability during the 12-month period prior to submission of 
the application.
    (d) Deadline for completion of activities.
    (1) Activities under a planning grant, including the 
requirements outlined in paragraph (d)(2) of this section, must be 
carried out within 12 months of the effective date of the planning 
grant agreement. HUD Field Offices may extend the period up to 60 
days. HUD may deobligate amounts not drawn down by the approved 
completion date. HUD Headquarters may approve a request for an 
additional extension for costs related to the preparation of an 
implementation grant application where it determines an extension is 
necessary.
    (2) Each recipient must submit either:
    (i) An implementation grant application by the deadline date 
stated in a HOPE 3 NOFA issued within 12 months of the effective 
date of the planning grant agreement; or
    (ii) A report on activities undertaken under the planning grant 
agreement, including the recipient's determination whether it is 
feasible for it to undertake a homeownership program and an 
assessment of the factors used to make the determination.

Former Sec. 572.205  Planning Grants--Eligible Activities

    Planning grants may be used for the reasonable costs of eligible 
activities necessary to develop homeownership programs under this 
part. No additional activities may be approved. Applicants are not 
required to request funding for each type of eligible activity. Only 
costs incurred on or after the effective date of the grant agreement 
qualify for funding under this part. Activities eligible under a 
planning grant are:
    (a) Assessing stock of eligible properties. Assessing the 
availability on an ongoing basis of eligible properties of the 
appropriate condition, type, and price in specific neighborhoods or 
areas to implement a homeownership program. For example, planning 
grants may be used to fund the costs of obtaining and analyzing 
lists of potentially eligible properties from appropriate Federal, 
State, and local agencies and inspecting representative properties, 
including inspection for the purpose of evaluating potential lead-
based paint hazards. Technical studies to evaluate environmental 
problems and to determine whether mitigation is feasible are 
eligible.
    (b) Training and technical assistance for grant recipients. 
Training of and technical assistance to grant recipients related to 
development of a specific homeownership program. This may include, 
for example, courses in real estate financing and examining 
alternative approaches for carrying out a homeownership program. 
Training and technical assistance may only be provided by qualified 
entities other than the recipient and may not be provided to any 
individual or group other than the grant recipient and any 
cooperating entity named in the approved application.
    (c) Feasibility studies. Studies of the feasibility of a 
specific homeownership program, including whether the program can be 
designed to meet the affordability standards under Sec. 572.120 and 
achieve financial feasibility.
    (d) Preliminary architectural and engineering work. Preliminary 
architectural and engineering work, including developing estimates 
of the amount of work necessary to support rehabilitation of a 
typical unit that may be acquired by an eligible family under the 
program and other cost estimates to be included in a HOPE 3 
implementation grant application.
    (e) Identification of counseling and training curricula and 
sources. Identification of course curricula and sources that can 
provide homebuyer and homeowner counseling and training, including 
such subjects as personal financial management, home maintenance, 
home repair, construction skills (to the extent appropriate, 
especially where eligible families will do some of the 
rehabilitation (``sweat equity''), and general rights and 
responsibilities of a homeowner. Development of new curricula is not 
an eligible cost.
    (f) Economic development planning. Planning for economic 
development activities that are eligible implementation grant 
activities under Sec. 572.215. The aggregate amount of planning and 
implementation grants that may be used for economic development 
activities related to any one HOPE 3 program may not exceed 
$250,000.
    (g) Security plans. Development of security plans. This activity 
may cover, where

[[Page 48800]]

necessary, such costs as assessing the need for negotiating 
agreements with local law enforcement agencies and for planning 
security systems.
    (h) Application for an implementation grant. Preparation of an 
application for an implementation grant to carry out a homeownership 
program under this part.
    (i) Administrative costs. Administrative costs necessary to 
carry out the eligible activities specified in the approved 
application.

Former Sec. 572.315--Rating Criteria for Planning Grants

    HUD will review each application for a planning grant that 
qualifies for additional consideration under the screening 
procedures described in Sec. 572.300(c), in accordance with the 
following rating criteria:
    (a) Capability. The ability of the applicant to develop a HOPE 3 
homeownership program in a reasonable time and in a successful 
manner. In assigning points for this criterion, HUD will consider 
evidence in the application that demonstrates:
    (1) The capability of the applicant to develop a HOPE 3 
homeownership program, demonstrated through previous experience of 
the applicant or key staff in managing acquisition, rehabilitation, 
construction, real estate financing, counseling and training, or 
other relevant activities, or by an explanation of how such 
capability will be obtained.
    (2) The ability of the applicant to handle financial resources, 
demonstrated through such evidence as previous experience of the 
applicant or key staff and existing financial control procedures, or 
an explanation of how such capability will be obtained.
    (b) Public/private support. In assigning points for this 
criterion, HUD shall consider:
    (1) The extent of interest of the unit of general local 
government (or Indian tribe, where applicable), or State or 
territorial government, and other public agencies, in support of a 
homeownership program, demonstrated through evidence of intent to 
provide assistance, such as supportive services (including 
counseling and training), rehabilitation loans or grants, interest 
rate subsidies, water and sewer improvements, street and sidewalk 
improvements, and tax abatements.
    (2) The extent of interest of the private sector and nonprofit 
organizations (including places of worship, banks, neighborhood or 
community organizations, the business community, or other community 
groups) in support of a home ownership program, demonstrated through 
evidence of intent to provide assistance such as the donation of 
labor or materials, interest rate reductions or other financing 
subsidies, and volunteer assistance in some aspect of the program 
(activities of the applicant will not be considered under this 
subcriterion).
    (c) Need for homeownership program. In assigning points for this 
criterion, HUD will consider the relative percentage of the total 
number of rental households consisting of persons with incomes at or 
below the poverty level, as determined by the Bureau of Census, in 
the applicable jurisdiction or jurisdictions.
    (d) Planning approach. HUD will consider the extent to which the 
proposal represents a sound approach to planning, demonstrates an 
understanding of the nature and scope of activities required to 
successfully implement a homeownership program, and is likely to 
result in a successful homeownership program.

[FR Doc. 96-23574 Filed 9-13-96; 8:45 am]
BILLING CODE 4210-29-P