[Federal Register Volume 66, Number 152 (Tuesday, August 7, 2001)]
[Notices]
[Pages 41432-41438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19652]



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Part III





Department of Housing and Urban Development





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Notice Inviting Applications: Designation of Forty Renewal Communities

  Federal Register / Vol. 66, No. 152 / Tuesday, August 7, 2001 / 
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4663-N-02]


Notice Inviting Applications: Designation of Forty Renewal 
Communities

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

ACTION: Notice inviting applications.

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SUMMARY: The Community Renewal Tax Relief Act of 2000 (CRTR Act) 
authorizes HUD to designate up to 40 Renewal Communities within which 
special tax incentives would be available. This Notice invites 
applications for designation of nominated areas as Renewal Communities 
(RCs) in accordance with the designation process described in this 
Notice.

APPLICATION DUE DATE: To be eligible, a complete application (one 
original and 2 copies) must be received no later than October 12, 2001. 
See below for specific procedures applicable to the type of delivery 
used (e.g., mailed, express mail, overnight delivery). No facsimile 
(FAX) applications will be accepted for consideration by HUD.
    Delivered Applications. Complete applications (one original and two 
copies) must be received no later than 5:00 PM eastern time, on October 
12, 2001. Up until 5:00 PM on the deadline date, completed applications 
will be accepted at the address and room number specified below.
    Mailed Applications. Applications will be considered timely if 
postmarked on or before October 12, 2001.
    Applications Sent by Overnight Delivery. Overnight delivery items 
will be considered filed on time if received on or before October 12, 
2001.
    Electronic Submission of Application Information. Information 
submitted electronically using the RC/EZ On-line Application System 
must be submitted not later than 5 PM, Eastern Time on October 12, 
2001. This is done by hitting the ``Submit'' button at the appropriate 
location in the software. The system will not be available after the 
deadline.

ADDRESSES: Address for submitting applications. All paper application 
materials (one original and two copies) must be submitted to: 
Department of Housing and Urban Development, Office of Community 
Planning and Development, c/o Processing and Control Unit, Room 7255, 
451 Seventh Street, SW, Washington, DC 20410. Some information may also 
be submitted electronically, as provided elsewhere in this notice.
    For Application and Other Materials. For a copy of all RC 
publications, including the Application Guide, Nomination Forms, and 
the interim rule (24 CFR part 599, published July 9, 2001, 66 FR 
35850), please call the Community Connections Information Clearinghouse 
at (800) 998-9999. The RC publications are also available from HUD's 
web site at: http://www.hud.gov/offices/cpd/ezec. Requests for 
application materials should be made immediately to allow sufficient 
time for application preparation. Hearing- or speech-impaired persons 
should use the Federal Information Relay Service telephone number, 
(800) 877-8339, to obtain application materials.
    The Renewal Community publications consist of:
    (1) This Notice Inviting Applications;
    (2) The Renewal Communities Interim Rule (24 CFR part 599, 
published July 9, 2001, 66 FR 35850);
    (3) Renewal Communities Application Guide, 2001 (RC Application 
Guide); and
    (4) Tax Incentive Guide for Businesses in the Renewal Communities, 
Empowerment Zones, and Enterprise Communities.

FOR FURTHER INFORMATION: For technical questions, contact John Haines, 
Renewal Community Initiative, Office of Community Planning and 
Development, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Room 7130, Washington, DC 20410, (202) 708-6339. Hearing- 
or speech-impaired individuals may call (800) 877-8339 (the Federal 
Information Relay Service-TTY). HUD prefers to receive technical 
questions by email to hud.gov">john_haines@hud.gov or by facsimile (FAX) to 
(202) 401-7615 or (202) 708-3363, since email or FAX enables the 
questions and answers to be communicated as rapidly as possible in 
writing.

SUPPLEMENTARY INFORMATION:

I. General Background

A. Purpose and Authority

    Section 1400E of the Internal Revenue Code of 1986 authorizes HUD 
to designate up to 40 Renewal Communities and provides the process by 
which the designations are to be made. Section 1400E was enacted by 
section 101 of the Community Renewal Tax Relief Act of 2000 (CRTR Act), 
which was part of the Omnibus Consolidated and Emergency Supplemental 
Appropriations Act for Fiscal Year 2001 (Omnibus Act) (Pub. L. 106-554, 
114 Stat. 2763, approved December 21, 2000). Section 101 adds a new 
Subchapter X (26 U.S.C. 1400E through 1400J) to Chapter 1 of the 
Internal Revenue Code of 1986. Although HUD is responsible for the 
designation process, the Federal tax incentives available in Renewal 
Communities are administered by the Treasury Department.
    Section 1400E establishes population and economic parameters for 
urban and rural areas to be eligible for designation, and requires that 
at least 12 of the 40 Renewal Community designations must be rural 
areas. The size of an area nominated for designation as a Renewal 
Community is not limited, as long as it has a continuous boundary and 
meets the population and economic condition requirements provided in 
the CRTR Act.

B. General Description of Tax Benefits

    The tax incentives available in Renewal Communities, administered 
by the Treasury Department, are authorized in secs. 1400F through 1400J 
of the Internal Revenue Code, and are generally available during the 
period beginning January 1, 2002 and ending December 31, 2009. A brief 
description of these incentives follows:
    1. Zero-percent capital gains rate. A zero-percent capital gains 
rate applies with respect to gain from the sale of a qualified 
community asset acquired after December 31, 2001, and before January 1, 
2010, and held for more than five years.
    2. Renewal community employment credit. A 15-percent wage credit is 
available to employers for the first $10,000 of qualified wages paid to 
each employee who is a resident of the renewal community and also 
performs substantially all employment services within the renewal 
community in a trade or business for the employer.
    3. Commercial revitalization deduction. Each State is permitted to 
allocate up to $12 million of ``commercial revitalization 
expenditures'' to each renewal community located within the State. A 
``commercial revitalization expenditure'' means the cost of a new 
building or the cost of substantially rehabilitating an existing 
building. A taxpayer can elect either to deduct one-half of the 
commercial revitalization expenditures for the taxable year the 
building is placed in service or amortize all the expenditures ratably 
over the 120-month period beginning with the month the building is 
placed in service.
    4. Additional section 179 expensing. A Renewal Community business 
is allowed an additional $35,000 of section 179 expensing for 
``qualified renewal property.'' The term ``qualified renewal

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property'' is similar to the definition of ``qualified zone property'' 
used in connection with Empowerment Zones.
    5. Extension of work opportunity tax credit (WOTC). The high-risk 
youth and qualified summer youth categories in the WOTC are expanded to 
include qualified individuals who live in a Renewal Community.

C. Notice of Intent To Apply

    Contact persons for State and local governments considering 
application for designation of an area as a Renewal Community are urged 
to notify HUD as soon as possible. Follow the instructions for the 
Notice of Intent to Apply available through HUD's RC/EZ On-line 
Application System. The system is located within HUD's web site at 
www.ezrc/hud.gov. Submission of the Notice of Intent to Apply is not 
mandatory, but it will enable HUD to estimate how many applications to 
expect and to plan accordingly. Use of the electronic approach for 
submitting this notice is strongly recommended, since it will enable an 
applicant to receive a User ID and password so that part of the 
application can be submitted on line. Contact persons also may submit 
their contact information (see bottom of page A-3 or A-9 of the RC 
Application Guide) by facsimile (FAX) to 202-401-7615 or 202-708-3363 
or by mail to the following address: U.S. Department of Housing and 
Urban Development, Mr. John Haines, RC/EZ Team, Room 7130, 451 Seventh 
St., SW, Washington, D.C. 20410.

D. Overview of Application and Selection Process

    The HUD rule at 24 CFR part 599 that implements section 1400E as 
authorized in the CRTR Act provides a streamlined, two-step process for 
the designation of nominated areas as RCs. First, the application for 
RC designation must demonstrate that a number of threshold requirements 
are met. These threshold requirements concern the location, population 
and economic characteristics of the area nominated for RC designation, 
and required certifications made by the nominating State and local 
governments of actions they have taken or will take in the nominated 
area. Every application that meets the threshold requirements moves on 
to the second step, rating and ranking. The rating and ranking is an 
objective process, based on census data for the nominated area.
    The selection of RCs is made in rank order, with two exceptions 
required by the statute: (1) Of the 40 RC designations that HUD is 
authorized to make, a preference with respect to the first 20 
designations must be provided to nominated areas that include one or 
more census tracts from areas that are Enterprise Communities (ECs) or 
Empowerment Zones (EZs) and, (2) at least 12 RC designations must be in 
rural areas.
    The following sections of this notice provide detailed information 
on the application requirements and selection procedures for 
designating an area as a Renewal Community. Individual sections discuss 
who must submit the application; identifying the area to be nominated; 
cooperation among the nominating governments and community-based 
organizations; required certifications; submission requirements; 
completeness and sufficiency review; threshold requirements; rating; 
ranking; number of communities to be designated; selection of 
communities; and notification of designations.

II. Application Requirements

A. Who Must Submit an Application

    1. Each State and local government in which the nominated area is 
located. Except as provided in section II.A.2. of this notice, 
immediately below, an application nominating an area for RC designation 
must be submitted by one or more local governments and the State or 
States in which the nominated area is located.
    2. The governing body of an Indian reservation in which the 
nominated area is located. In the case of a nominated area located on 
an Indian reservation, only the reservation governing body must submit 
the nomination. Any requirements in this notice that would apply to a 
State and/or local government in which a nominated area is located 
apply only to the reservation governing body for nominated areas within 
Indian reservations.
    3. Discussion. An area that is nominated for RC designation is not 
limited to being within the jurisdiction of a single local government 
or a single State. As long as the nominated area meets the requirements 
of section II.B. of this notice, below, under the heading ``Identifying 
the Area to Be Nominated,'' it can be located entirely in one State 
within the jurisdiction of a single local government, or it may cross 
State and local government boundaries. A ``local government'' is 
defined as any county, city, town, township, parish, village, or other 
general-purpose political subdivision of a State. If a nominated area 
is entirely within the jurisdiction of a single local government, the 
application must be submitted by both that local government and its 
State government. This does not mean that a nominated area located 
entirely within the jurisdiction of a city, which in turn is located in 
a county, must be nominated by the city, the county and the State. In 
such a case, only the city and State would have to submit the 
nomination. However, a nominated area that overlapped jurisdictions and 
was located partially within a city and partially in the county outside 
the city limits would have to be nominated by the city, county and 
State.
    Areas within Indian reservations are also eligible to be nominated 
as RCs. For nominated areas that are located on Indian reservations, 
only the reservation governing body has to submit the application; no 
other government body, State or local, has authority or responsibility 
over nominated areas within Indian reservations.
    For purposes of submitting the application and the certifications 
that are part of the application, a responsible official must sign on 
behalf of each nominating government. A responsible official is someone 
with the authority to sign the application and certifications on behalf 
of the nominating government. For example, in the case of a State 
government, the responsible official could be the governor of the 
State, or any official or employee with the duly delegated authority to 
submit and sign the application or certification on behalf of the 
State. In the case of a tribal government, the responsible official 
could be the head of the tribal council, or a tribal official or 
employee that has been authorized to submit and sign the application 
and certifications on behalf of the tribal government. In every case, 
the person signing on behalf of the State, tribal or local nominating 
government must have the authority to do so.

B. Identifying the Area To Be Nominated

    1. Census tracts. Census tracts are the basic building blocks of RC 
nominated areas. The first step in identifying an area to nominate for 
RC designation is to identify the census tracts that will make up the 
nominated area. Block groups may be used instead of census tracts for 
Alaska and Hawaii, and block numbering areas are to be used where 
census tracts are not delineated.
    2. Continuous boundary. A nominated area must have one continuous 
boundary, although it may enclose areas that are not included in the 
nomination.
    3. Population cap. The total population of any area nominated for 
RC designation may not be more than 200,000.

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    4. Two types of nominated areas. An RC nominated area may be urban 
or rural, as defined in sections II.B.5. and II.B.6., immediately 
following. At least 12 of the 40 available RC designations will be made 
for rural areas.
    5. Urban area. To qualify as an urban area, the nominated area must 
meet the following requirements:
    a. The nominated area must have a population of not more than 
200,000 and not less than 4,000; and
    b. The nominated area is not a rural area.
    6. Rural area. To qualify as a rural area, the nominated area must 
meet the following requirements:
    a. The nominated area must have a population of not more than 
200,000 and not less than 1,000; and
    i. If the nominated area is located entirely within a single local 
government jurisdiction, the jurisdiction must either have a population 
of less than 50,000 or be located outside a metropolitan area; or
    ii. If the nominated area crosses jurisdictional boundaries and is 
located within several local government jurisdictions, each of those 
local government jurisdictions either must have a population of less 
than 50,000 or must be located outside a metropolitan area; or
    iii. If the nominated area does not meet the requirements of either 
sections II.B.6.i. or II.B.6.ii., immediately above, of this notice, 
the nominated area is determined by HUD on a case-by-case basis, after 
consultation with the Secretary of Commerce, to be a rural area based 
on information submitted in the application to demonstrate that the 
nominated area should be considered as a rural area.
    b. The nominated area must be located entirely within an Indian 
reservation. A nominated area that is entirely within an Indian 
reservation is not subject to the eligibility requirements of paragraph 
II.B.6.a., immediately above, of this notice.
    7. Economic condition requirements.
    a. All nominated areas. Every nominated area, urban or rural, must 
meet each the following economic condition requirements:
    i. The area must be one of pervasive poverty, unemployment, and 
general distress. An explanation of how this requirement can be met is 
in section II.B.8., below, of this notice.
    ii. The unemployment rate in the area must be at least one and one-
half times (150% of) the national unemployment rate based on 1990 
census data.
    iii. The poverty rate for each population census tract within the 
nominated area must be at least 20 percent based on 1990 census data, 
i.e., at least 9.401 percent.
    b. Urban areas only. In addition to meeting each of the economic 
condition requirements of paragraph II.B.7.a., immediately above, of 
this notice, in an urban nominated area, at least 70 percent of the 
households living in the nominated area must have incomes below 80 
percent of the median income of households within the jurisdiction of 
the local government, based on 1990 census data.
    8. Pervasive poverty, unemployment and general distress.
    a. Pervasive poverty. Pervasive poverty is demonstrated by evidence 
that:
    i. Poverty, as indicated by the number of persons listed as being 
in poverty in the 1990 Decennial Census, is widespread throughout the 
nominated area; or
    ii. Poverty, as described above, has become entrenched over time 
(through comparison of 1980 and 1990 census data or other relevant 
evidence).
    b. Unemployment. Unemployment is demonstrated by:
    i. The most recent data available indicating that the annual rate 
of unemployment for the nominated area is not less than the national 
annual average rate of unemployment; or
    ii. Evidence of especially severe economic conditions, such as 
military base or plant closings or other conditions that have brought 
about significant job dislocation within the nominated area.
    c. General distress. General distress is evidenced by describing 
adverse conditions within the nominated urban area other than those of 
pervasive poverty and unemployment. Below average or decline in per 
capita income, earnings per worker, number of persons on welfare, per 
capita property tax base, average years of school completed, 
substantial population decline, and a high or rising incidence of 
crime, narcotics use, homelessness, high incidence of AIDS, abandoned 
housing, deteriorated infrastructure, school dropouts, teen pregnancy, 
incidence of domestic violence, incidence of certain health conditions 
and illiteracy are examples of appropriate indicators of general 
distress. This information may be presented in narrative form, through 
the use of tables or charts, or through any combination of these 
options.
    9. Nominated areas in Empowerment Zones (EZs) or Enterprise 
Communities (ECs). A local government with an Empowerment Zone or an 
Enterprise Community designation within its jurisdiction may apply for 
one of the 40 Renewal Community designations. If, however, the Renewal 
Community nominated area contains any census tracts already included in 
the local government's Empowerment Zone or Enterprise Community, then 
its Empowerment Zone or Enterprise Community designation ceases to be 
in effect as of the date that its Renewal Community designation takes 
effect. In addition, a preference is given for the first 20 Renewal 
Community designations to nominated areas that are, or that contain 
portions of, Empowerment Zones or Enterprise Communities, but the 
nominated area must meet all the Renewal Community requirements as 
well.

C. Cooperation Among the Nominating Governments and Community 
Organizations

    Every application for RC designation must contain a course of 
action describing the commitment to cooperation in the nominated area 
by the nominating governments and community organizations that meets 
the requirements of this section II.C. listed immediately below.
    1. Commitment to a course of action. A course of action is a 
written document, signed by the nominated area's State and local 
governments, or in the case of a nominated area located within an 
Indian reservation, the reservation governing body, and community-based 
organizations which commits each signatory to undertake and achieve 
measurable goals and actions within the nominated area upon its 
designation as a Renewal Community.
    2. Community-based organizations. For purposes of the course of 
action, ``community-based organizations'' includes for-profit and non-
profit private entities, businesses and business organizations, 
neighborhood organizations, and community groups. Community-based 
organizations are not required to be located in the nominated area as 
long as they commit to achieving the goals of the course of action in 
the Renewal Community.
    3. Timetable. The course of action must include a timetable that 
identifies the significant steps and target dates for implementing the 
goals and actions.
    4. Performance measures. The course of action must include a 
description of how the performance of the course of action will be 
measured and evaluated.
    5. Required goals and actions. The course of action must include at 
least four of the following:
    a. A reduction of tax rates or fees applying within the Renewal 
Community;

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    b. An increase in the level of efficiency of local services within 
the Renewal Community, such as services for residents funded through 
the Federal Temporary Assistance for Needy Families program and related 
Federal programs including, for example, job support services, child 
care and after school care for children of working residents, 
employment training, transportation services and other services that 
help residents become economically self-sufficient;
    c. Crime reduction strategies, such as crime prevention, including 
the provision of crime prevention services by nongovernmental entities;
    d. Actions to reduce, remove, simplify, or streamline governmental 
requirements applying within the Renewal Community, such as:
    i. Density bonus. Permission to develop or redevelop real property 
at a higher density level than otherwise permitted under the zoning 
ordinance, e.g., increased height or increased number of residential or 
business units;
    ii. Incentive zoning. Providing a density bonus or other real 
property-related incentive for the development, redevelopment, or 
preservation of a parcel in the designated area;
    iii. Comprehensive or one-stop permit. Streamlining construction or 
other development permitting processes, rather than requiring multiple 
applications for multiple permits, e.g., for demolition, site 
preparation, and construction, the developer or redeveloper submits 
asingle application that is circulated for the necessary reviews by the 
various planning, engineering, and other departments in the county or 
municipality;
    iv. Variance and exception policies. Counties or municipalities may 
pass ordinances that permit variances to or exceptions from certain 
zoning or other land use limitations. Examples include a reduced 
building set-back requirement or a reduced requirement for the 
provision of parking. The policy may be limited to a particular 
geographic area.
    v. Voluntary environmental compliance program. A shared or limited 
environmental liability program, with limited liability from certain 
legal or administrative action in exchange for undertaking an approved 
program of environmental investigation, hazard control, and on-going 
risk reduction activities. Typically, the liability limitation is for 
future environmental cleanup (and not against lawsuit for damages). 
Risk of cleanup may be shared by the developer or property owner and 
the government;
    e. Involvement in economic development activities by private 
entities, organizations, neighborhood organizations, and community 
groups, particularly those in the Renewal Community, including a 
commitment from such private entities to provide jobs and job training 
for, and technical, financial, or other assistance to, employers, 
employees, and residents from the Renewal Community;
    f. The gift or sale at below fair market value of surplus real 
property held by State or local governments, such as land, homes, and 
commercial or industrial structures in the Renewal Community to 
neighborhood organizations, community development corporations, or 
private companies.
    6. Recognition of past efforts. The course of action is not limited 
to future goals and actions. Past efforts within the previous eight 
years, either completed or on-going, of the nominating State or local 
governments in reducing the various burdens borne by employers and 
employees in the nominated area by undertaking any of the goals or 
actions listed in section II.C.5., above, of this notice may be used to 
meet the course of action requirement. If past efforts are used, the 
course of action must identify which of the required goals and actions 
listed in section II.C.5. they address; the timetable for their 
continued implementation, if on-going; the community-based 
organizations involved, if any; and an evaluation of their performance 
and the performance measures used.

D. Required Certifications

    Every application for RC designation must include certifications in 
accordance with the requirements of this section II.D. listed 
immediately below. Each certification must be signed by a responsible 
official from each of the nominating governments, that is, a person 
with the authority to sign the certifications on behalf of the 
nominating government. The documents with the original signatures must 
be delivered to HUD. To meet the certification requirements, applicants 
should use the forms that are provided in the RC Application Guide. 
Note that Form 1 in the Guide differs for urban and rural nominated 
areas. Also, the Form 1 in the Guide requires that certain data be 
attached. This data identifies the nominated census tracts and 
demonstrates to HUD that the nominated area meets the threshold 
poverty, unemployment, and in the case of urban areas, income level 
requirements. This data may be submitted electronically if the 
applicant uses HUD's RC/EZ On-line Application System. Form 1 also 
provides for the submission of information to demonstrate that the 
nominated area meets the threshold requirement of being an area of 
``pervasive poverty, unemployment, and general distress.''
    1. Certification for economic requirements. The State and the local 
governments, or in the case of a nominated area located within an 
Indian reservation, the reservation governing body, in which a 
nominated area is located must certify in writing for HUD's acceptance 
that:
    i. The nominated area is an area of pervasive poverty, 
unemployment, and general distress;
    ii. The nominated area has an unemployment rate at least one and 
one-half times (150% of) the national unemployment rate, based on 1990 
census data, i.e., at least 9.401 percent;
    iii. The poverty rate for each population census tract within the 
nominated area is at least 20 percent, based on 1990 census data. In 
the case of a nominated area that is within an Indian reservation, and 
cannot equivalently be described with census tracts, the poverty rate 
of the nominated area taken as a whole is considered for purposes of 
making this determination; and
    iv. In the case of a nominated urban area only, at least 70 percent 
of the households living in the nominated area have incomes below 80 
percent of the median income, as determined by HUD, of households 
within the jurisdiction of the local government or governments in which 
the nominated area is located.
    2. Economic growth promotion certification. The State and local 
governments, or the reservation governing body, in whose jurisdiction 
the nominated area is located must certify that they have repealed or 
reduced, will not enforce, or will reduce within the nominated area, 
except to the extent that a regulation of businesses and occupations is 
necessary for and well-tailored to the protection of health and safety, 
at least four of the following actions in paragraphs II.D.2.a. through 
e., below.
    With respect to past actions taken, the eight year period described 
in section II.C.6., above, applies. In addition, the nominating 
governments may modify the Certification of Economic Growth Promotion 
Incentives in the Application Guide by striking out ``, for at least 
the period that the area is designated as a RC''. The certification 
will often refer to efforts that will be taken in the future, and the 
``period that the area is designated as an RC'' applies to the entire 
process involved in such efforts, which may take years, and not just 
the

[[Page 41436]]

end result. Also with respect to future actions to be taken, HUD fully 
expects that these actions will be completed, but also recognizes the 
practical difficulties of guaranteeing future events, and the interim 
rule at Sec. 599.509 provides for requests to HUD to modify the State 
and local commitments made at the time of application. Such requests 
must provide evidence to support the proposed modifications. HUD will 
review the proposed modification for consistency with regulatory and 
statutory requirements and approve, suggest additional or alternate 
modifications or deny the request within 30 days:
    a. Licensing requirements for occupations that do not ordinarily 
require a professional degree;
    b. Zoning restrictions on home-based businesses which do not create 
a public nuisance;
    c. Permit requirements for street vendors who do not create a 
public nuisance;
    d. Zoning or other restrictions that impede the formation of 
schools or child care centers; and
    e. Franchises or other restrictions on competition for businesses 
providing public services, including taxicabs, jitneys, cable 
television, or trash hauling.
    3. Public notice of RC application certification. An application 
must include a certification, signed by a responsible official or 
employee of each nominating State and local government or reservation 
governing body in whose jurisdiction the nominated area is located, 
that the public was provided notice of, and an opportunity to 
participate in, the application development process. For the purposes 
of this certification, notice and opportunity to participate may 
include procedures such as placing announcements in newspapers or other 
media, holding public meetings, and soliciting comments.
    4. Certification requirement for crime incidence. If preference 
points are being sought for the nominated area because it qualifies for 
preference points in accordance with section II.E.2.a., below, of this 
notice, each nominating State and local government must certify to the 
1999 Local Crime Index rate per 100,000 inhabitants (LCI) determined 
for the nominated area.

E. Submission Requirements

    1. Identification of nominated area. HUD must receive a listing of 
the census tracts that identify the area nominated for RC designation. 
To assist applicants, HUD's RC/EZ On-line Application System allows for 
the electronic identification and submission of nominated areas. The 
RC/EZ On-line Application System can also be used as a tool to plan 
areas for potential nomination. The system is located within HUD's web 
site at www.ezrc.hud.gov. HUD strongly urges prospective applicants to 
use the system to electronically prepare and submit the data for the 
application, since this will reduce the potential for errors. Use of 
the electronic approach is recommended but not required. The RC 
Application Guide also contains paper forms for listing the census 
tracts to be nominated and for determining whether the nominated area 
meets the requirements described in this notice, but the submission of 
this information to HUD electronically is preferred and permits HUD to 
confirm that the nominated area is eligible more quickly. In addition, 
a map showing the boundaries of the nominated area must be submitted 
with the application. If the nominated area is being nominated as a 
rural area under a case-by-case HUD determination procedure in 
accordance with section II.B.6.iii., above, because it does not meet 
the requirements of either sections II.B.6.i. or II.B.6.ii., the 
application must include information to demonstrate that the nominated 
area should be considered as a rural area.
    a. Certification to economic condition requirements. Two of the 
three economic condition requirements that a rural nominated area must 
meet (poverty rate and unemployment rate), and three of the four 
economic condition requirements that an urban nominated area must meet 
(poverty rate, unemployment, and income levels) under section II.B.7., 
above, are addressed by submitting the certification for economic 
requirements in accordance with section II.D.1., above.
    b. Response for pervasive poverty, unemployment and general 
distress. To meet the economic condition requirement that a nominated 
area is an area of pervasive poverty, unemployment and general 
distress, applicable to both urban and rural areas, the application 
must include a response using narrative, tables or charts, or any 
combination of these, that demonstrates the area is one of pervasive 
poverty, unemployment, and general distress in accordance with section 
II.B.8., above, of this notice.
    c. More than one nominated area. Only one area may be nominated for 
RC designation by the same State and local governments. If the 
nominating governments submit more than one application, HUD will 
request the responsible officials to designate which application they 
want HUD to review and rate and rank in accordance with the procedure 
for corrections to deficient applications under section III.A. of this 
notice. If a single application is not designated within the correction 
period, all of the applications will be ineligible for further 
consideration.
    2. Course of action. HUD must receive a course of action for the 
nominated area that meets the requirements of section II.C., above, of 
this notice.
    3. Certifications. HUD must receive at least the certifications 
described in sections II.D.1., II.D.2. and II.D.3., above, of this 
notice.

III. Selection Procedures

    HUD will select nominated areas for RC designation in accordance 
with the following procedures:

A. Corrections To Deficient Applications

    HUD will notify an applicant in writing, or by FAX, of any 
technical deficiencies in the application, and HUD will maintain a log 
of such communications.
    The notification will specify the date by which HUD must receive 
the applicant's correction of all technical deficiencies, which shall 
be within five (5) calendar days from the date of HUD's notification. 
If the fifth day falls on a Saturday, Sunday, or holiday, the 
correction must be received by HUD on the next business day. The date 
and time of receipt of corrections by HUD shall be determined in the 
same way as the receipt of the application.
    Technical deficiencies relate to items that are not necessary for 
HUD review under the rating factors and that would not improve the 
substantive quality of the proposal. Examples of technical deficiencies 
would be a failure to submit proper certifications or failure to submit 
an application containing an original signature by an authorized 
official.
    If any of the items identified in HUD's written notification of 
technical deficiencies are not corrected and submitted within the 
correction period, the application will be ineligible for further 
consideration.

B. Threshold Requirements

    To qualify for rating and ranking, an application must demonstrate 
that all of the RC application threshold requirements are met. These 
threshold requirements are:
    1. Submission by all necessary parties. In accordance with section 
II.A., above, of this notice, the application must be submitted by one 
or more local governments and the State or States in which the 
nominated area is located or,

[[Page 41437]]

in the case of a nominated area located within an Indian reservation, 
by the reservation governing body.
    2. Nominated area meets all necessary requirements. The nominated 
area must meet all of the applicable boundary, population and economic 
condition requirements, depending upon whether the nominated area is 
rural or urban, of section II.B., above, of this notice.
    3. Submission of course of action. A course of action that meets 
the requirements of section II.C., above, for the nominated area must 
be submitted by the application due date.
    4. Submission of all necessary certifications. The certifications 
described in sections II.D.1., II.D.2., and II.D.3., above, of this 
notice must be submitted by the application due date. The crime 
incidence certification described in section II.D.4 is optional, and is 
only required if the application wants to qualify for crime incidence 
preference points as described in section II.F.2.a., above, of this 
notice.

C. Rating

    Each application that meets the threshold requirements identified 
in section III.B., above, of this notice, by the application due date 
will be rated and receive a final score consisting of its ranking score 
plus any preference points, as described below in this section:
    1. Ranking score. Each nominated area meeting the thresholds will 
be ranked from highest to lowest according to the area poverty rate, 
area unemployment rate, and for urban areas, the percentage of families 
below 80 percent of area median income. Urban nominated areas will be 
ranked separately from rural nominated areas. The percentile rank will 
be determined by dividing these rankings by the total number of 
nominated areas ranked and multiplying the result by 100. The average 
ranking will be determined by computing the simple average of the 
percentile ranks for each nominated area. To create a 100 point scale, 
the average rankings will be subtracted from 100.
    2. Preference points. Preference points will be added in accordance 
with sections III.C.3. and III.C.4., below, to the ranking score 
determined under section III.C.1., above, to determine the final score 
of a nominated area.
    3. Incidence of crime. A nominated area may receive a maximum of 1, 
2, or 4 crime incidence preference points as follows:
    a. One point awarded. A nominated area will receive 1 additional 
point if its 1999 Local Crime Index per 100,000 inhabitants (LCI), as 
determined on the basis of data from one or more State and local law 
enforcement authorities with jurisdiction in the nominated area, does 
not exceed by more than 25% the nation-wide 1999 Crime Index rate per 
100,000 inhabitants (CI) prepared as part of the FBI's Uniform Crime 
Reporting (UCR) Program. The CI is 4,266.8. To meet this requirement, 
the LCI must be more than 4,693.48 and less than 5,334.
    b. Two points awarded. A preference of 2 points will be added to 
the score of a nominated area with an LCI that does not exceed the CI 
by more than 10 percent. To meet this requirement, the LCI for the 
nominated area must be at least 4,266.8 and not more than 4,693.48.
    c. Four points awarded. A nominated area that has an LCI that is 
less than the CI will receive 4 preference points. To meet this 
requirement, the LCI for the nominated area must be less than 4,266.8.
    d. Qualifying for crime incidence preference points. To qualify for 
preference points based on the incidence of crime, the nominating 
governments must determine and then certify to the LCI determined for 
the nominated area, in accordance with section II.D.4., above, of this 
notice. The LCI for the nominated area is determined as follows:
    i. Since the nominated area is made up of census tracts, the number 
of LCI crimes for 1999 in each census tract of the nominated area is 
counted and then added together to get the total number of LCI crimes 
for the nominated area.
    ii. To make a valid comparison of the LCI and the CI, the same 
types of crimes must be counted. The offenses used in determining the 
CI, and which therefore must be used in determining the LCI, are the 
violent crimes of murder and nonnegligent manslaughter, forcible rape, 
robbery, and aggravated assault, and the property crimes of burglary, 
larceny-theft, motor vehicle theft, and arson.
    iii. Once the total number of LCI crimes for the nominated area is 
determined, that total number must be converted to the rate per 100,000 
population. For example, if the number of LCI crimes for the nominated 
area is 500, and the population of the nominated area (the population 
of each census tract in the nominated area added together) is 50,000, 
the LCI for the nominated area is 1000 per 100,000.
    4. Preference points for certain census tracts. A nominated area 
will receive one preference point if any of its census tracts is a 
census tract identified in GAO Report RCED-98-158R, dated May 12, 1998. 
This list of tracts is available from HUD's website at www.hud.gov/offices/cpd/ezec.

D. Ranking

    1. Initial ranking order. Rural and urban applications will be 
ranked separately according to their final scores as determined in 
accordance with section III.C., immediately above, with the highest 
scoring applications ranked first.
    2. Separate ranking categories. After initial ranking, both rural 
and urban applications will be separated into two ranking categories:
    a. Category 1. Applications for designation of nominated areas that 
include one or more census tracts from areas that are Enterprise 
Communities or Empowerment Zones will be placed into Category 1 in rank 
order.
    b. Category 2. Applications for designation of nominated areas that 
are not placed into or selected from Category 1 will be placed into 
Category 2 in rank order.

E. Number of Renewal Communities To Be Designated

    The total number of Renewal Communities to be designated, and the 
distribution of designations between urban and rural areas are as 
follows:
    1. Total number. The total number of nominated areas to be selected 
for designation as Renewal Communities is 40.
    2. Rural areas. HUD will select at least 12 rural areas for 
designation as Renewal Communities. If HUD does not receive at least 12 
eligible rural area applications for Renewal Community designation, the 
number of rural area designations will be the number of eligible rural 
area applications received by HUD.
    3. Urban areas. The number of urban areas selected for designation 
as Renewal Communities will be the number remaining after subtracting 
the number of rural areas selected from 40.
    4. Less than 40 eligible applications. If HUD receives fewer than 
40 eligible applications nominating areas, the total number of 
nominated areas to be selected for designation as Renewal Communities 
will be the total number of eligible applications.

F. Selection of Renewal Communities

    1. Selection of Category 1 applications.
    a. Six or less rural nominations. If there are six or fewer 
Category 1 rural area nominations, HUD will select all of the nominated 
rural areas in Category 1 for designation as Renewal Communities. HUD 
will then select the highest ranking Category 1 urban area

[[Page 41438]]

nominations, but will not exceed a total of 20 Category 1 designations.
    b. If there are more than six Category 1 rural area nominations, 
HUD will select the six highest ranked Category 1 rural applications, 
and will then select, in rank order, the highest ranking Category 1 
area nominations, whether urban or rural, until not more than a total 
of 20 Category 1 designations is made.
    2. Selection of Category 2 applications. After not more than 20 
Category 1 designations are made in accordance with paragraph (a) of 
this section, any remaining Category 1 applications will be placed back 
in rank order into Category 2, with selections for a combined Category 
1 and Category 2 total of not more than 40 designations made as 
follows:
    a. Less than six Category 1 rural applications. If the number of 
rural area applications selected in Category 1 is less than six, HUD 
will select the highest ranking rural area applications in Category 2 
until the total number of rural areas selected is 12. The remaining 
designations will be made from both rural and urban areas in rank 
order. If there are fewer than 12 eligible rural applications overall, 
counting both Category 1 and Category 2, all of the eligible rural 
applications will be selected.
    b. Six or more Category 1 rural applications. If the number of 
rural area applications selected in Category 1 is six or more, HUD will 
select the six highest Category 2 rural applications. The remaining 
designations will be made from both rural and urban areas in rank 
order.

G. Notification of Renewal Community Designations

    1. Notification and effective date. HUD will notify each applicant 
of the designation of its nominated area as a Renewal Community. The 
effective date of designation as a Renewal Community is the date a 
nominated area is selected in accordance with section III.F., above, of 
this notice.
    2. Federal Register publication. In addition to any other form of 
notification, HUD will publish a notice of the designation of Renewal 
Communities in the Federal Register.

IV. Findings and Certifications

A. Paperwork Reduction Act

    The information collection requirements contained in this notice 
have been approved by the Office of Management and Budget under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB 
control number 2506-0173. This approval has been granted on an 
emergency basis through July 31, 2001. In addition, HUD is seeking 
regular, non-emergency approval for these information collections. In 
accordance with the Paperwork Reduction Act, HUD may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless the collection displays a currently valid OMB 
control number.

B. Catalog

    The Catalog of Federal Domestic Assistance Program number assigned 
to this program is 14.244.

C. Environmental Impact

    This notice provides for the designation of Renewal Communities 
under 24 CFR part 599 which does not contain environmental review 
provisions because it concerns activities that are listed in 24 CFR 
50.19(b) as categorically excluded from environmental review under the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321) (NEPA). 
Accordingly, under 24 CFR 50.19(c)(5)(ii), this notice is categorically 
excluded from environmental review under NEPA.

D. Documentation and Public Access Policy

    (1) Documentation and public access requirements. HUD will ensure 
that documentation and other information regarding each application 
submitted pursuant to this Notice are sufficient to indicate the basis 
upon which assistance was provided or denied. This material, including 
any letters of support, will be made available for public inspection 
for a 5-year period beginning not less than 30 days after the award of 
the assistance. Material will be made available in accordance with the 
Freedom of Information Act (5 U.S.C. 552) and HUD's implementing 
regulations in 24 CFR part 15.
    (2) Disclosures. HUD will make available to the public for 5 years 
all applicant disclosure reports (HUD Form 2880) submitted in 
connection with this Notice. Update reports (also Form 2880) will be 
made available along with the applicant disclosure reports, but in no 
case for a period less than 3 years. All reports--both applicant 
disclosures and updates--will be made available in accordance with the 
Freedom of Information Act (5 U.S.C. 552) and HUD's implementing 
regulations at 24 CFR part 15.

    Dated: August 1, 2001.
Mel Martinez,
Secretary.
[FR Doc. 01-19652 Filed 8-6-01; 8:45 am]
BILLING CODE 4210-29-P