[Federal Register Volume 67, Number 190 (Tuesday, October 1, 2002)]
[Rules and Regulations]
[Pages 61752-61757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24820]



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Part III





Department of Housing and Urban Development





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24 CFR Part 92



HOME Investment Partnerships Program; Final Rule

  Federal Register / Vol. 67, No. 190 / Tuesday, October 1, 2002 / 
Rules and Regulations  

[[Page 61752]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 92

[Docket No. FR-4111-F-03]
RIN 2501-AC30


HOME Investment Partnerships Program

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: This final rule makes several streamlining and clarifying 
amendments to the regulations for the HOME Investment Partnerships 
Program (HOME Program). The final rule incorporates a number of 
statutory changes to the HOME Program. The final rule also updates the 
regulations to reflect the provision of housing assistance to Indian 
tribes under the Native American Housing Assistance and Self-
Determination Act of 1996. Further, the rule clarifies the consortia 
requalification requirements by codifying the streamlined approach 
adopted beginning with the Fiscal Year (FY) 1999 grant cycle. The final 
rule also adjusts the HOME allocation formula to reflect the use of 
2000 Census data, and requests public comment on this amendment. 
Further, the final rule increases the flexibility of participating 
jurisdictions in using program income to pay administrative costs. 
Additionally, the final rule makes several other non-substantive 
corrections and clarifications to the regulations.

DATES: Effective Date: October 31, 2002.

FOR FURTHER INFORMATION CONTACT: Virginia Sardone, Director, Program 
Policy Division, Office of Affordable Housing Programs, Room 7164, 451 
Seventh Street, SW, Washington, DC 20410. Telephone: (202) 708-2470. 
(This is not a toll-free number.) A telecommunications device for 
hearing- and speech-impaired persons (TTY) is available at 1-800-877-
8339 (Federal Information Relay Service).

SUPPLEMENTARY INFORMATION:

I. Background

    The HOME Investment Partnerships Program (HOME Program) is 
authorized under Title II of the Cranston-Gonzalez National Affordable 
Housing Act (Pub. L. 101-625, approved November 28, 1990) (NAHA). 
Through the HOME Program, HUD allocates funds by formula among eligible 
State and local governments to strengthen public-private partnerships 
and to expand the supply of decent, safe, sanitary, and affordable 
housing, with primary attention to rental housing, for very low-income 
and low-income families. Generally, HOME funds must be matched by 
nonfederal resources. State and local governments that become 
participating jurisdictions may use HOME funds to carry out multiyear 
housing strategies through acquisition, rehabilitation, and new 
construction of housing, and tenant-based rental assistance. 
Participating jurisdictions may provide assistance in a number of 
eligible forms, including loans, advances, equity investments, interest 
subsidies, and other forms of investment that HUD approves. HUD's 
regulations for the HOME Program are located in 24 CFR part 92 
(consisting of Sec. Sec.  92.1 through 92.552).
    This final rule makes a number of amendments to the HOME Program 
regulations to:
    1. Incorporate a number of statutory changes to the program made by 
the Departments of Veterans Affairs and Housing and Urban Development, 
and Independent Agencies Appropriations Act, 1998 (Pub. L. 105-65, 
approved October 27, 1997) (the FY 1998 HUD Appropriations Act) and the 
Quality Housing and Work Responsibility Act of 1998 (Public Law 105-
276, approved October 21, 1998) (QHWRA);
    2. Update the regulations to reflect the provision of block grant 
housing assistance to Indian tribes under the Native American Housing 
Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.) 
(NAHASDA) and HUD's implementing regulations at 24 CFR part 1000;
    3. Clarify the consortia requalification requirements by codifying 
the streamlined approach adopted beginning with the Fiscal Year 1999 
grant cycle;
    4. Make an adjustment to the HOME allocation formula to reflect the 
use of 2000 Census data and request public comment on this amendment;
    5. Increase the flexibility of participating jurisdictions in using 
a portion of program income to pay administrative costs; and
    6. Make several other non-substantive corrections and 
clarifications to the regulations.
    The following sections of this preamble describe the changes made 
by this final rule in greater detail.

II. Incorporation of Statutory Changes to the HOME Program (Sec. Sec.  
92.50, 92.209, 92.214, 92.217, and 92.254)

A. Section 214 of the FY 1998 HUD Appropriations Act--Revision to 
Minimum Participation Threshold (Sec.  92.50(d)(3) and (d)(4))

    Section 214 of the FY 1998 HUD Appropriations Act amended Title II 
of NAHA to permit participating jurisdictions whose annual HOME 
allocation falls below the $500,000 minimum participation threshold 
($335,000 in years in which the HOME appropriation is less than $1.5 
billion) to continue to receive HOME allocations (except for consortia 
that fail to renew the membership of all member jurisdictions). This 
statutory change eliminated the problem of participating jurisdictions 
with small allocations losing their allocations from such causes as a 
decrease in the HOME appropriation, an increase in the total amount of 
set-asides from the HOME appropriation, or an increase in the number of 
participating jurisdictions. Sections 92.50(d)(3) and (4) are amended 
to reflect this statutory change.

B. Section 514 of QHWRA--Elimination of Federal Preferences (Sec.  
92.209(c)(2) and (d)(3))

    Section 514 of QHWRA amended section 6(c)(4)(A) of the United 
States Housing Act of 1937 (42 U.S.C. 1437 et seq.) (1937 Act) to 
eliminate Federal preferences for selecting public housing residents 
and establish a system of local selection preferences. The HOME Program 
regulations reference this section of the 1937 Act with respect to 
eligibility for HOME tenant-based rental assistance and written tenant 
selection criteria for HOME-assisted rental housing. Accordingly, this 
final rule removes Sec.  92.209(c)(2), which requires that at least 50 
percent of families assisted with HOME tenant-based rental assistance 
qualify or would qualify in the near future for a Federal preference. 
The final rule also removes Sec.  92.209(d)(3), which requires that 
written tenant selection criteria for HOME-assisted rental housing give 
reasonable consideration to the housing needs of families that qualify 
for a Federal preference. The final rule also makes conforming changes 
to Sec. Sec.  92.209(c)(3)(iv), 92.209(c)(4), and 92.253(d)(3), which 
reference the Federal preference requirements currently contained in 
Sec.  902.209(c)(2) and (d)(3). Participating jurisdictions using HOME 
funds for tenant-based rental assistance programs may establish local 
preferences for the provision of this assistance.

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C. Section 522 of QHWRA--Prohibition on Use of HOME Funds for Public 
Housing Activities (Sec.  92.214)

    Section 522 of QHWRA amended section 9 of the 1937 Act, which had 
the effect of extending the prohibition in NAHA against the use of HOME 
funds for public housing modernization and operating subsidy to cover 
new construction of public housing as well. Accordingly, this final 
rule updates the HOME regulations at Sec.  92.214, which lists those 
activities for which the expenditure of HOME funds is prohibited, to 
reflect this statutory amendment.

D. Section 599B of QHWRA--Income Eligibility (Sec.  92.217; Sec.  
92.254(a)(7) and (a)(8))

    Section 599B of QHWRA eliminated the requirement that HOME-assisted 
homebuyers qualify as income eligible at the time of occupancy or when 
the HOME funds are invested, whichever is later. Section 599B requires 
the homebuyer to qualify as low-income: (1) In the case of a contract 
to purchase existing housing, at the time of purchase; (2) in the case 
of a lease-purchase agreement for existing housing or for housing to be 
constructed, at the time the agreement is signed; or (3) in the case of 
a contract to purchase housing to be constructed, at the time the 
contract is signed. This final rule amends Sec.  92.254(a)(7), which 
establishes the income eligibility requirements for lease-purchase 
agreements, to reflect the changes made by section 599B of QHWRA. The 
final rule also creates a new Sec.  92.254(a)(8) to address income 
eligibility requirements for contracts for purchase. Further, the final 
rule makes a conforming change to Sec.  92.217, which regards income 
targeting for homeownership. In addition, the final rule corrects the 
designations of current Sec. Sec.  92.254(a)(5)(ii)(A)(6) and (7), 
which should be properly designated as Sec. Sec.  92.254(a)(6) and (7).

III. Changes Regarding the Native American Housing Assistance and Self-
Determination Act of 1996 (NAHASDA) (Sec. Sec.  92.2 and 92.50(b))

    NAHASDA established a new Indian housing block grant program for 
Indian tribes and terminated grants by HUD to Indian tribes and Indian 
housing authorities under existing HUD housing programs, including the 
Indian HOME program. However, NAHASDA does not affect Sec.  
92.201(b)(5) of the HOME regulation, which provides that States may 
fund housing projects on Indian reservations. Accordingly, this final 
rule makes the following changes:

A. Definition of ``Homeownership'' (Sec.  92.2)

    This final rule amends the definition of the term ``homeownership'' 
in Sec.  92.2 to eliminate an inconsistency between the definition and 
a provision of NAHASDA. The definition of ``homeownership'' currently 
includes 99-year leasehold interests. This is inconsistent with section 
702 of NAHASDA, which only authorizes leases with terms not exceeding 
50 years. This inconsistency effectively precludes the use of HOME 
funds to provide homeownership opportunities on any trust or restricted 
Indian lands unless a waiver is obtained. Consequently, the HOME 
regulation is being amended so that, on trust or restricted Indian 
lands, a 50-year leasehold interest will constitute homeownership.

B. Set-Aside of HOME Funds for Indian Tribes (Sec.  92.50(b))

    Section 92.50(b) is amended to eliminate the reference to reserving 
a portion of each annual appropriation of HOME funds for Indian tribes. 
Section 217(a) of NAHA required that 1 percent of the annual HOME 
appropriation be set aside for use in a competitive program for Indian 
tribes (the Indian HOME Program). NAHASDA eliminated the Indian HOME 
Program. Accordingly, Indian tribes no longer receive HOME grants from 
HUD. This final rule removes the outdated reference to the set-aside 
for Indian tribes.

IV. Clarification of Consortia Requalification Requirements (Sec.  
92.101)

    Several years ago, HUD convened an internal working group to 
examine the consortia qualification and requalification process and 
make recommendations to simplify and streamline the process. The 
primary recommendation of the working group was to eliminate the 
practice of having each member jurisdiction sign a new consortium 
agreement at each requalification. This practice was imposing a 
significant burden on consortia, particularly geographically large, 
rural consortia comprised of many small jurisdictions. The working 
group recommended that the HOME consortium qualification guidance be 
revised to permit an ``opt out'' policy similar to that permitted for 
urban counties in the Community Development Block Grant (CDBG) Program.
    Beginning with the Fiscal Year 1999 consortium qualification cycle, 
HUD permitted consortia to adopt an automatic renewal process similar 
to the CDBG urban county process. If this option is exercised, the 
consortium's lead agency must notify each member jurisdiction of the 
requalification and of the right to elect not to continue to 
participate in the consortium for the ensuing three-year period. No 
action is required of member jurisdictions that wish to continue 
participation in a consortium, resulting in a significant reduction in 
burden. This streamlined approach is consistent with the requirements 
outlined in the HOME regulations at Sec.  92.101 and no amendment to 
the rule was required for its implementation. However, for purposes of 
greater clarity, HUD is amending the HOME regulations to reference this 
streamlined procedure.

V. Change to Allocation Formula (Sec.  92.50(c)(3))

    This final rule makes a minor revision to HOME allocation formula 
at Sec.  92.50(c) to reflect the use of data from the 2000 Census 
beginning with the FY 2003 HOME allocation. The HOME formula allocates 
funds based on six variables that all require use of data from the 
Census Bureau. Currently, HOME formula allocations are based on data 
from the 1990 Census. The lack of updated data during the decade has 
been a detriment to participating jurisdictions that have relative 
increases in affordable housing problems as reflected by the formula 
factors. Changes in local conditions such as poverty, inadequate rental 
housing and tight rental markets all affect the distribution of 
affordable housing problems over a decade.
    To better reflect these changes in local conditions, HUD intends to 
acquire and apply 2000 Census data for HOME formula allocations 
beginning with the FY 2003 allocation. The 2000 Census provides data 
for the HOME formula variables consistent with the current definitions 
of those variables, except for the pre-1950 renters-in-poverty variable 
described in Sec.  92.50(c)(3). The 1990 Census provides data 
concerning pre-1950 renter-family-households-in-poverty. Accordingly, 
Sec.  92.50(c)(3) refers to ``[r]ental units built before 1950 occupied 
by poor families'' (emphasis added). Under the 2000 Census, the only 
publicly available data concerns pre-1950 renter-households-in-poverty. 
Consequently, the switch to 2000 census data requires that Sec.  
92.50(c)(3) be updated to refer to ``poor households'' rather than 
``poor families.''

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    HUD's analysis of 1990 Census data shows that this regulatory 
change will have a relatively minor effect on HOME formula allocations. 
If pre-1950 renter-households (rather than renter families) had been 
used for the formula allocations based upon 1990 Census data, about 85 
percent of participating jurisdictions would have received allocations 
within 5 percent of the allocations that they did receive.
    HUD would need to procure a special tabulation of 2000 Census data 
from the Census Bureau in order to continue using the ``renter-families 
in poverty'' measure in future HOME formula allocations. However, a 
special tabulation of this data would not be available until late 2003, 
thereby further delaying the use of updated census data in HOME formula 
allocations. Further, using a special tabulation not only would deprive 
all participating jurisdictions from using the updated data, but also 
would preclude participating jurisdictions and other interested parties 
from independently accessing these data through public sources. The 
change will also be beneficial in that this formula factor will reflect 
pre-1950 households occupied by poor renters who are single and not 
living in a family household. However, like other poverty measures that 
focus on households rather than families, the revision will have the 
drawback of including non-family households composed entirely of 
college students among the poor.
    Although HUD has determined that the impact of this change on HOME 
formula allocations will be minimal, and that prior notice and comment 
is unnecessary, HUD invites interested members of the public to submit 
comments on the change. Comments should be submitted to the address 
provided in the FOR FURTHER INFORMATION CONTACT section of this 
preamble, above. HUD will consider whether further changes should be 
made to this section as a result of the issues raised by the 
commenters.

VI. Use of Program Income To Pay Administrative Costs (Sec.  92.207)

    This final rule amends Sec.  92.207 to provide participating 
jurisdictions with greater flexibility in the use of program income to 
pay administrative costs. The current HOME Program regulations state 
that a participating jurisdiction is permitted to use up to 10 percent 
of program income deposited in its local account during the program 
year for administrative and planning costs. This provision prohibits a 
participating jurisdiction from counting toward its administrative 
allowance a portion of any program income that it permitted State 
recipients or subrecipients to retain pursuant to a HOME written 
agreement. To count 10 percent of program income received by State 
recipients and subrecipients toward the participating jurisdiction's 
administrative allowance, the funds have to be returned to the 
participating jurisdiction's local HOME account. HUD did not intend to 
place such restrictions on the use of program income for administrative 
and planning costs. Consequently, Sec.  92.207 is amended to permit 
participating jurisdictions to use 10 percent of both program income 
deposited in the local HOME account and program income earned and 
reported by State recipients and subrecipients for eligible 
administrative and planning costs. Participating jurisdictions may 
permit State recipients and subrecipients to use this additional 
authority for administrative and planning costs or may use it for 
administrative costs of the participating jurisdiction, provided that 
the overall 10 percent limitation is not exceeded.

VII. Miscellaneous Corrections and Clarifications (Sec. Sec.  92.214, 
92.353, 92.504, 92.506, and 92.508)

A. Prohibited Activities (Sec.  92.214(a))

    This final rule clarifies Sec.  92.214(a) by adding an item to the 
list of activities for which expenditure of HOME funds is prohibited. 
Specifically, the final rule adds a new Sec.  92.214(a)(9), which 
specifies that delinquent taxes, fees, or charges levied on a property 
to receive HOME assistance may not be paid with HOME funds. HUD has 
interpreted the HOME statute to prohibit the use of HOME funds for 
these purposes since the inception of the program. HUD continues to 
receive questions, however, regarding the use of HOME funds to pay 
delinquent taxes, fees, and charges so frequently that they are being 
added to the list of prohibited activities in order to eliminate 
further confusion.
    HOME funds can be used to pay for reasonable acquisition costs. 
Back property taxes, construction liens, and similar encumbrances, 
however, are obligations incurred by the seller prior to the date of 
the purchase of the property with HOME funds rather than the costs of 
acquisition. There is no prohibition against the seller using the 
proceeds of a HOME-assisted purchase to satisfy these liens and deliver 
clear title to the purchaser.

B. Incorrect Subpart Reference (Sec.  92.353(e))

    This final rule amends Sec.  92.353(e) to correct a typographical 
error. The current regulation erroneously refers to 24 CFR part 42, 
subpart B. The correct reference is subpart C.

C. Written Agreements (Sec.  92.504)

    The HOME regulations at Sec.  92.504 provide details about the 
requirements that must be included in each type of HOME written 
agreement. Several applicable requirements of subpart H, however, are 
inadvertently omitted from Sec.  92.504(c)(3), which covers written 
agreements between participating jurisdictions and the owners, 
developers, and sponsors of HOME-assisted housing. Consequently, this 
final rule amends Sec.  92.504(c)(3)(v), which currently addresses only 
affirmative marketing requirements, to outline all subpart H 
requirements that must be included in these agreements.

D. Audit requirements (Sec.  92.506)

    Section 92.506 of the rule, which requires participating 
jurisdictions, State recipients, and subrecipients to obtain 
independent audits, is amended to reflect a change in citation. The 
regulations currently contain outdated cites to 24 CFR parts 44 and 45. 
The correct citations are now 24 CFR 84.26 and 24 CFR 85.26, 
respectively, for nonprofit organizations and for States and units of 
general local government.

E. Recordkeeping requirements (Sec.  92.508(a)(3)(xiii))

    This final rule adds a new Sec.  92.508(a)(3)(xiii) to correct a 
drafting oversight and makes explicit the requirement that 
participating jurisdictions maintain records documenting the results of 
the site and neighborhood standards review that they are required to 
undertake for rental of new construction projects. While HUD has 
included this information collection requirement in its submissions to 
the Office of Management and Budget (OMB) for approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), the requirement 
has not been made explicit in the recordkeeping section of the HOME 
regulations.

VIII. 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 advanced notice and 
public participation. The good cause requirement is satisfied when 
prior public procedure is ``impractical, unnecessary, or contrary to 
the public

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interest'' (see 24 CFR 10.1). For the following reasons, HUD finds that 
it is unnecessary and contrary to the public interest to delay the 
effectiveness of these regulatory amendments in order to solicit prior 
public comment. As described below, the amendments do not impose new 
substantive requirements, but update the HOME regulations to reflect 
existing program procedures, streamline existing requirements to 
minimize administrative burden on participating jurisdictions, and 
clarify the regulations by correcting typographical errors.
    First, the statutory changes made by the FY 1998 HUD Appropriations 
Act and QHWRA that are being incorporated by this final rule were 
determined by HUD to be immediately effective upon enactment of the 
legislation and HUD is not exercising any discretionary authority with 
respect to these changes. The changes regarding NAHASDA do not impose 
new regulatory requirements, but update the HOME regulations to reflect 
the establishment of the Indian Housing Block Grant program and the 
elimination of the separate Indian HOME Program. The regulatory 
amendment streamlining the consortium requalification process updates 
the HOME regulations to reflect existing practice, and provides a 
substantial benefit in the form of reduced administrative burden to 
HOME consortium without harming the interests of any other concerned 
party. The revision to the formula allocation requirements updates the 
HOME regulations to provide for the use of the most recent census data 
and better reflect changes in the demographics of poverty and the 
inadequacy of rental housing. The amendment regarding the use of 
program income corrects a drafting error that placed an undue 
restriction on the use of program income for administrative and 
planning costs. Finally, the final rule makes several miscellaneous 
corrections and clarifications that do not impose new substantive 
requirements, but merely correct typographical errors and clarify 
existing HUD procedures.

IX. Findings and Certifications

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, Regulatory Planning and Review. OMB determined 
that this rule is a ``significant regulatory action'' as defined in 
section 3(f) of the Order (although not an economically significant 
regulatory action under the Order). Any changes made to the rule as a 
result of that review are identified in the docket file, which is 
available for public inspection 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 20410-0500.

Impact on Small Entities

    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, because jurisdictions 
that are statutorily eligible to receive HOME formula allocations are 
relatively larger cities, counties or states.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969 (42 U.S.C. 4223). That Finding is available for public 
inspection between the hours of 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 20410-0500.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This final rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. This final rule does not impose any 
Federal mandates on any State, local, or tribal governments or the 
private sector within the meaning of the Unfunded Mandates Reform Act 
of 1995.

Catalog of Federal Domestic Assistance

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

List of Subjects in 24 CFR Part 92

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


    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR part 92 as follows:

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

    1. The authority citation for 24 CFR part 92 continues to read as 
follows:


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

    2. In Sec.  92.2, revise the definition of the term 
``homeownership'' by adding a new penultimate sentence to read as 
follows:


Sec.  92.2  Definitions.

* * * * *
    Homeownership * * * For purposes of housing located on trust or 
restricted Indian lands, homeownership includes leases of 50 years. * * 
*
* * * * *

    3. In Sec.  92.50, revise paragraphs (b), (c)(3), (d)(3), and the 
second sentence of paragraph (d)(4) to read as follows:


Sec.  92.50  Formula allocation.

* * * * *
    (b) Amounts available for allocation; State and local share. The 
amount of funds that are available for allocation by the formula under 
this section is equal to the balance of funds remaining after reserving 
amounts for insular areas, housing education and organizational 
support, other support for State and local housing strategies, and 
other purposes authorized by Congress, in accordance with the Act and 
appropriations.
* * * * *
    (c) * * *
    (3) Rental units built before 1950 occupied by poor households.
* * * * *
    (d) * * *
    (3) To determine the maximum number of units of general local 
government that receive a formula allocation, only one jurisdiction 
(the unit of general local government with the smallest allocation of 
HOME funds) is dropped from the pool of eligible

[[Page 61756]]

jurisdictions on each successive recalculation, except that 
jurisdictions that are participating jurisdictions (other than 
consortia that fail to renew the membership of all of their member 
jurisdictions) are not dropped. Then the amount of funds available for 
units of general local government is redistributed to all others. This 
recalculation/redistribution continues until all remaining units of 
general local government receive an allocation of $500,000 or more or 
are participating jurisdictions. Only units of general local government 
which receive an allocation of $500,000 or more under the formula or 
which are participating jurisdictions will be awarded an allocation. In 
fiscal years in which Congress appropriates less than $1.5 billion of 
HOME funds, $335,000 is substituted for $500,000.
    (4) * * * These reductions are made on a pro rata basis, except 
that no unit of general local government allocation is reduced below 
$500,000 (or $335,000 in fiscal years in which Congress appropriates 
less than $1.5 billion of HOME funds) and no participating jurisdiction 
allocation which is below this amount is reduced.
* * * * *

    4. In Sec.  922.101, revise paragraphs (a)(1) and (a)(3) and add 
paragraph (f), to read as follows:


Sec.  92.101  Consortia.

    (a) * * *
    (1) One or more members of a proposed consortium or an existing 
consortium whose consortium qualification terminates at the end of the 
fiscal year, must provide written notification to the HUD Field Office 
of its intent to participate as a consortium in the HOME Program for 
the following fiscal year. HUD shall establish the deadline for this 
submission.
* * * * *
    (3) Before the end of the fiscal year in which the notice of intent 
and documentation are submitted, HUD must determine that a proposed 
consortium has sufficient authority and administrative capability to 
carry out the purposes of this part on behalf of its member 
jurisdictions. HUD will endeavor to make its determination as quickly 
as practicable after receiving the consortium's documentation in order 
to provide the consortium an opportunity to correct its submission, if 
necessary. If the submission is deficient, HUD will work with the 
consortium to resolve the issue, but will not delay the formula 
allocations. HUD, at its discretion, may review the performance of an 
existing consortium that wishes to requalify to determine whether it 
continues to have sufficient authority and administrative capacity to 
successfully administer the program.
* * * * *
    (f) The consortium agreement may, at the option of its member units 
of general local government, contain a provision that authorizes 
automatic renewals for the successive qualification period of three 
Federal fiscal years. The provision authorizing automatic renewal must 
require the lead consortium member to give the consortium members 
written notice of their right to elect not to continue participation 
for the new qualification period.

    5. In Sec.  92.207, revise the third sentence of the introductory 
paragraph to read as follows:


Sec.  92.207  Eligible administrative and planning costs.

    * * * A participating jurisdiction may also expend, for payment of 
reasonable administrative and planning costs, a sum up to ten percent 
of the program income deposited into its local account or received and 
reported by its State recipients or subrecipients during the program 
year. A participating jurisdiction may expend such funds directly or 
may authorize its State recipients or subrecipients, if any, to expend 
all or a portion of such funds, provided total expenditures for 
planning and administrative costs do not exceed the maximum allowable 
amount. Reasonable administrative and planning costs include:
* * * * *

    6. In Sec.  92.209, remove paragraph (c)(2) and redesignate 
paragraphs (c)(3) and (c)(4) as (c)(2) and (c)(3), respectively; remove 
redesignated paragraph (c)(2)(iv); and revise the first sentence of 
redesignated paragraph (c)(3), to read as follows:


Sec.  92.209  Tenant-based rental assistance: Eligible costs and 
requirements.

* * * * *
    (c) * * *
    (3) Existing tenants in the HOME-assisted projects. A participating 
jurisdiction may select low-income families currently residing in 
housing units that are designated for rehabilitation or acquisition 
under the participating jurisdiction's HOME program. Participating 
jurisdictions using HOME funds for tenant-based rental assistance 
programs may establish local preferences for the provision of this 
assistance. * * *
* * * * *

    7. In Sec.  92.214, revise paragraph (a)(4), remove paragraph 
(a)(5), redesignate paragraphs (a)(6) through (a)(8) as paragraphs 
(a)(5) through (a)(7), respectively, and add new paragraph (a)(8) to 
read as follows:


Sec.  92.214  Prohibited activities.

    (a) * * *
    (4) Provide assistance authorized under section 9 of the 1937 Act 
(Public Housing Capital and Operating Funds);
* * * * *
    (8) Pay delinquent taxes, fees or charges on properties to be 
assisted with HOME funds.
* * * * *

    8. Revise Sec.  92.217 to read as follows:


Sec.  92.217  Income targeting: Homeownership.

    Each participating jurisdiction must invest HOME funds made 
available during a fiscal year so that with respect to homeownership 
assistance, 100 percent of these funds are invested in dwelling units 
that are occupied by households that qualify as low-income families.


Sec.  92.253  [Redesignated]

    9. In Sec.  92.253, remove paragraph (d)(3) and redesignate 
paragraphs (d)(4) and (d)(5) as (d)(3) and (d)(4), respectively.

    10. In Sec.  92.254, redesignate paragraphs (a)(5)(ii)(A)(6) and 
(7) as (a)(6) and (a)(7), respectively; revise redesignated paragraph 
(a)(7); and add paragraph (a)(8), to read as follows:


Sec.  92.254  Qualification as affordable housing: Homeownership.

    (a) * * *
    (7) Lease-purchase. HOME funds may be used to assist homebuyers 
through lease-purchase programs for existing housing and for housing to 
be constructed. The homebuyer must qualify as a low-income family at 
the time the lease-purchase agreement is signed. If HOME funds are used 
to acquire housing that will be resold to a homebuyer through a lease-
purchase program, the HOME affordability requirements for rental 
housing in Sec.  92.252 shall apply if the housing is not transferred 
to a homebuyer within forty-two months after project completion.
    (8) Contract to purchase. If HOME funds are used to assist a 
homebuyer who has entered into a contract to purchase housing to be 
constructed, the homebuyer must qualify as a low-income family at the 
time the contract is signed.
* * * * *

    11. Revise Sec.  92.353(e) to read as follows:

[[Page 61757]]

Sec.  92.353  Displacement, relocation, and acquisition.

* * * * *
    (e) Residential antidisplacement and relocation assistance plan. 
The participating jurisdiction shall comply with the requirements of 24 
CFR part 42, subpart C.
* * * * *

    12. Revise Sec.  92.504(c)(3)(v) to read as follows:


Sec.  92.504  Participating jurisdiction responsibilities; written 
agreements; on-site inspections.

* * * * *
    (c) * * *
    (v) Other program requirements. The agreement must require the 
owner, developer or sponsor to carry out each project in compliance 
with the following requirements of subpart H of this part:
    (A) If the project contains 5 or more HOME-assisted units, the 
agreement must specify the owner or developer's affirmative marketing 
responsibilities as enumerated by the participating jurisdiction in 
accordance with Sec.  92.351.
    (B) The federal requirements and nondiscrimination established in 
Sec.  92.350.
    (C) Any displacement, relocation, and acquisition requirements 
imposed by the participating jurisdiction consistent with Sec.  92.353.
    (D) The labor requirements in Sec.  92.354.
    (E) The conflict of interest provisions prescribed in Sec.  
92.356(f).
* * * * *

    13. Revise Sec.  92.506 to read as follows:


Sec.  92.506  Audit.

    Audits of the participating jurisdiction, State recipients, and 
subrecipients must be conducted in accordance with 24 CFR 84.26 and 
85.26.

    14. Add Sec.  92.508(a)(3)(xiii) to read as follows:


Sec.  92.508  Recordkeeping.

    (a) * * *
    (3) * * *
    (xiii) Records demonstrating that a site and neighborhood standards 
review was conducted for each project which includes new construction 
of rental housing assisted under this part to determine that the site 
meets the requirements of 24 CFR 983.6(b), in accordance with Sec.  
92.202.
* * * * *

    Dated: September 23, 2002.
Donna M. Abbenante,
General Deputy Assistant Secretary for Community Planning and 
Development.
[FR Doc. 02-24820 Filed 9-30-02; 8:45 am]
BILLING CODE 4210-29-P