[Federal Register Volume 69, Number 138 (Tuesday, July 20, 2004)]
[Proposed Rules]
[Pages 43488-43501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16390]



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Part II





Department of Housing and Urban Development





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24 CFR Part 583



Supportive Housing Program; Proposed Rule

  Federal Register / Vol. 69, No. 138 / Tuesday, July 20, 2004 / 
Proposed Rules  

[[Page 43488]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 583

[Docket No. FR-4616-P-01; HUD-2004-0001]
RIN 2506-AC07


Supportive Housing Program

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend HUD's Supportive Housing 
Program regulations. The regulations would be updated to improve the 
implementation of existing program requirements in conformance with 
recent statutory changes. The Department believes that the changes made 
by this proposed rule will promote a better understanding of the 
Supportive Housing Program by program participants and allow for the 
full implementation of the Stewart B. McKinney-Vento Homeless Act.

DATES: Comment Due Date: September 20, 2004.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410-0500. Comments should refer 
to the above docket number and title. A copy of each comment submitted 
will be available for public inspection and copying weekdays between 8 
a.m. and 5 p.m. at the above address. Comments submitted by facsimile 
(FAX) will not be accepted.
    Interested persons are also invited to submit comments 
electronically through http://www.epa.gov/fedocket. Commenters should 
follow the electronic submission instructions given on that site. A 
copy of the public comments submitted, and if applicable, other 
supporting documents will be available for viewing at that time.

FOR FURTHER INFORMATION CONTACT: Mark Johnston, Office of Special Needs 
Assistance Programs, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410-7000; telephone 202 708-1226 
(this is not a toll-free number). Hearing-or speech-impaired persons 
may access this number through TTY by calling the toll-free Federal 
Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    HUD's regulations at 24 CFR part 583 implement the Supportive 
Housing Program, which provides assistance for housing and supportive 
services for homeless persons, as authorized by Title IV, subtitle C, 
of the Stewart B. McKinney-Vento Homeless Assistance Act of 1987 (42 
U.S.C. 11381 et seq.) (the McKinney-Vento Act). Under the program, HUD 
provides grants to local governments or nonprofit entities for (1) 
acquisition, rehabilitation, new construction, and leasing of 
supportive housing, (2) operating costs in connection with supportive 
housing, and (3) supportive services provided to homeless persons. 
Supportive services may include services such as child care, employment 
assistance, outpatient health services, nutritional counseling, 
assistance in finding permanent housing, providing security 
arrangements necessary for the protection of residents and homeless 
persons using a facility, and providing assistance in obtaining 
assistance under other federal, state, and local programs.
    The current regulations require revision because statutory changes 
have occurred subsequent to the last regulatory revision in 1996. For 
example, the current regulations are written to apply to Indian tribes. 
However, the Native American Housing Assistance and Self-Determination 
Act of 1996 (25 U.S.C. 4101 et seq.) (NAHASDA) recognized the right of 
Native American tribes to self-governance by providing for a general 
federal grant to tribes, which the tribes then can use for various 
assisted housing programs. As a consequence, NAHASDA eliminated tribal 
participation in some assistance programs, including programs under the 
McKinney-Vento Act.
    In addition, the Fiscal Year (FY) 1999, 2000, and 2001 HUD 
appropriations acts (Pub. L. 105-276, approved October 21, 1998; Pub. 
L. 106-74, approved October 20, 1999; and Pub. L. 106-377, approved 
October 27, 2000, respectively) added requirements for local matching 
and permanent housing as a prerequisite for obtaining McKinney-Vento 
Act funds and modified the requirements regarding environmental 
reviews. The FY2001 appropriation for the Supportive Housing Program 
provides that ``not less than 30 percent of these funds shall be used 
for permanent housing, and all funding for services must be matched by 
25 percent in funding for each grantee.'' As a result, in order to 
obtain funding, grantees must be prepared to meet these requirements.
    Current HUD regulations allow grantees in the Supportive Housing 
Program to use their grant funds to purchase HUD-held, single family 
properties leased by the grantee for use as facilities for the homeless 
(see 24 CFR 583.100(b)(5) and 24 CFR part 291). However, HUD suspended 
leasing under this component of the Supportive Housing Program and has 
continued this suspension to the present. HUD does not plan currently 
to reinstate this aspect of the supportive housing program.
    In 1992, the Safe Havens for Homeless Individuals Demonstration 
Program (Safe Havens Program) was enacted into law. (See 42 U.S.C. 
11391-11399.) The purpose of the Safe Havens Program is to provide 
through grants to local nonprofit organizations and governmental 
entities extremely low-cost housing and supportive services to eligible 
homeless persons, that is, those who are mentally ill, reside in places 
not designed for human habitation, and are unwilling to participate in 
supportive services or mental health counseling. The types of 
supportive services eligible in the Safe Havens Program are those known 
as ``low demand services and referrals'' and include health care, 
mental health and substance abuse services, medication management, 
education, counseling, job training, and assistance in obtaining 
entitlement benefits and other supportive services. Although HUD funded 
Safe Havens Program activities through notices of funding availability 
(NOFAs), the program was not referenced specifically in the Supportive 
Housing Program regulations.

II. This Proposed Rule

    This proposed rule would amend 24 CFR part 583 to implement the 
statutory authority discussed above, as well as to make other changes 
designed to improve the program.
    Matching requirement. The Supportive Housing Program statute and 
current regulations require grant recipients to match the funds 
provided by HUD for acquisition, rehabilitation, and new construction 
of a facility to provide supportive housing or supportive services. 
(See 42 U.S.C. 11386(e) and 24 CFR 583.145.) In addition to this 
matching requirement, recent appropriations acts have imposed a grant 
recipient matching requirement for all supportive services, requiring 
grantees to pay 25 percent of such costs. (See Pub. L. 105-276, 112 
Stat. 2479, approved October 21, 1998; Pub. L. 106-74, 113 Stat. 1063, 
approved October 20, 1999; and Pub. L. 106-377, 114 Stat.

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1441, approved October 27, 2000.) Furthermore, the McKinney-Vento Act 
provides that grants for annual operating costs may not exceed 75 
percent of the annual operating costs for supportive housing.
    Consistent with the recent appropriations acts, HUD proposes to 
revise 24 CFR 583.145 to implement all these statutory provisions. 
Accordingly, the proposed rule would revise Sec.  583.145 to 
incorporate the requirement that the grantee pay for the portion of the 
assistance for supportive services and operating costs not provided by 
HUD. The proposed rule retains Sec.  583.145(a) of the current 
regulations, implementing statutory requirements for matching grants 
for acquisition, rehabilitation, and new construction. The regulations 
on grants for supportive services and operating costs, Sec. Sec.  
583.120 and 583.125, have been revised to cross-reference the new 
requirement in Sec.  583.145.
    Term of grant. In order to make the program more flexible, this 
rule proposes to eliminate 24 CFR 583.130. That section currently 
provides that HUD grant terms for leasing, supportive services, and 
operating costs not exceed five operating years. Instead, under the 
proposed rule, HUD grant agreements would be flexible as to operating 
term for such purposes, as long as the purposes are in compliance with 
the regulations under 24 CFR part 583.
    With respect to funding to construct, rehabilitate, or acquire 
structures, the rule retains the requirement of 24 CFR 583.305 
(proposed Sec.  583.355). This section requires that grantees receiving 
grants for new construction for supportive housing, or for acquisition 
or rehabilitation of buildings to provide supportive housing or 
supportive services, agree to continue to operate the supportive 
housing or supportive services for 20 years after the date of initial 
occupancy or initial provision of services. This period could be 
shortened upon a determination by HUD that the structure was no longer 
needed for supportive housing or supportive services and HUD's approval 
of its conversion for another use for the direct benefit of low-income 
persons. The proposed rule strengthens the 20-year commitment by 
requiring the grantee to record a deed restriction or covenant running 
with the land embodying this restriction, as well as a lien against the 
property in favor of HUD to secure HUD's interest in the repayment of 
the grant if the facility is not used for its intended purpose for the 
prescribed time.
    Relationship between grantee and other project sponsor. This 
proposed rule would include a new section to specify the relationship 
between the supportive housing grantee or other project sponsor, and 
the residents, a matter on which the current regulations are silent. 
Proposed 24 CFR 583.325 provides that project sponsors not be required 
to enter into a landlord-tenant relationship with the residents, but 
may enter into an ``occupancy agreement'' containing a procedure for 
termination of residency. The minimum requirements for such a procedure 
are written notice containing a clear statement of reasons for the 
termination, an opportunity for review of the termination decision 
before a person other than the person or persons who made the original 
decision, and prompt written notice to the resident of the final 
decision to terminate the occupancy agreement.
    The proposed rule would add a provision to clarify the 
administration of grants where the grantee is not the project sponsor, 
but rather contracts with another entity to operate the supportive 
housing project. In such a case, proposed 24 CFR 583.400 would provide 
that the grantee and project sponsor enter into a written agreement 
that contains the following basic elements: A statement of work; an 
agreement that the project sponsor follow 24 CFR part 583; an agreement 
as to records and reports that the project sponsor must maintain and 
prepare; the procedures and duties incumbent on the grantee; a 
requirement that the grantee monitor the goals and performance of the 
project sponsor; and a provision for suspension or termination of the 
project sponsor, if the sponsor materially fails to comply with any 
term of the grant. In addition, the grant agreement must incorporate 
the provisions of proposed Sec.  583.355. New Sec.  583.355 would, in 
the case of a grant for acquisition, new construction, or 
rehabilitation of a facility where there is a 20-year commitment, 
provide a schedule for the repayment of unused grant amounts and would 
prevent undue benefit to the grantee in the event the project is sold. 
If appropriate, the grant agreement also would incorporate the 
provisions of new Sec.  583.155. Section 583.155 (Sec.  583.150(b) of 
the current regulations) would govern grants to primarily religious 
organizations. Office of Management and Budget (OMB) Circular A-122, 
``Cost Principles for Non-profit Organizations,'' specifies allowable 
and unallowable costs.
    Safe Havens Program. The proposed rule incorporates the Safe Havens 
Program as an activity for which recipients may use grant funds. (See 
42 U.S.C. 11391-11399.) The Safe Havens Program is designed to reach 
the population of homeless persons who are unwilling or unable to 
receive mental health treatment or other supportive services. While the 
Safe Havens Program, enacted in 1992, was not previously incorporated 
into the Supportive Housing Program regulations, homeless assistance 
funds for this purpose have been made available through the NOFA 
process. The proposed rule adds safe havens as a component under 
proposed 24 CFR 583.3 (former Sec.  583.1(b)), and a definition for 
safe havens in Sec.  583.5. The rule also adds safe havens as a 
permissible use of grant assistance under Sec.  583.100(c).
    Program Income and Grant Closeout. The proposed rule adds two 
sections to clarify (1) disposition of program income, and (2) grant 
closeout procedures. Proposed Sec.  583.420 specifies that program 
income received prior to closeout of the grant generally must be 
treated as supportive housing funds, except for occupancy charges, 
which are governed by Sec.  583.330(b). Section 583.330(b) allows 
occupancy fees to be used to assist residents of transitional housing 
to move to permanent housing. Program income received after grant 
closeout need not be so treated except where the project involved is 
renewed with a new grant, in which case the program income is treated 
as income of the renewed project, in accordance with Sec.  583.420.
    Proposed Sec.  583.425 deals with grant closeout procedures. The 
criteria for closeout are based on usage of the grant funds as well as 
on completion of the activities for which the grant was provided. 
Section 583.425 also specifies the actions to be taken after the 
closeout, including grantee submission of all financial, final 
performance, and other reports as required within 90 days, deobligation 
of any unused grant amounts, which are returned to HUD, and repayment 
to HUD of disallowed costs, if any. Section 583.425 further provides 
that HUD will prepare a closeout agreement regarding any final 
obligations remaining after the grant closeout (e.g., identification of 
closeout costs eligible to be paid with supportive housing funds).
    Proposed Sec.  583.505 deals with nondiscrimination and equal 
opportunity requirements. Currently the regulations, at Sec.  583.325, 
recite that projects may serve designated populations of disabled 
persons without further explanation. Section 583.505 clarifies the 
rights of persons with disabilities to be assisted in a particular 
project. In very limited circumstances, a project may lawfully 
establish a

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preference for serving a specified type of disability. (See 24 CFR 
8.4(b)(iv).) This may be done only if the preference was proposed in 
the initial application to HUD, the project will provide services 
appropriate for the intended population, and if excluding other persons 
is necessary to serve the intended population as effectively as others 
are served elsewhere. HUD will determine the necessity on a case-by-
case basis, from information provided in the application. HUD 
anticipates that, in many cases, addiction treatment projects will be 
able to meet the necessity test. In projects with an established 
preference, the provider will be able to hold space open in the project 
for persons meeting the established preference.
    Projects that either do not seek or do not receive approval to 
establish a preference for a type of disability may still advertise 
themselves as offering services for a particular type of disability, 
which the rule calls ``targeted'' projects. If there is space available 
in a targeted project, it may not be held open for someone with the 
targeted disability. HUD expects that a person with a different type of 
disability who wishes to participate in the services will be offered 
the available space.
    Notwithstanding the establishment of these two categories of 
projects, HUD expects the majority of projects to serve persons with 
all types of disabilities and remind grantees and project sponsors that 
the McKinney-Vento Act requires them, to the extent practicable, to 
allow project participants to design the services provided by the 
project.
    Additionally, Sec.  583.505(b)(2) is updated to include reference 
to the provisions of Executive Order 13279, Equal Protection of the 
Laws for Faith-Based and Community Organizations, issued by the 
president on December 12, 2002 (67 FR 77141, December 16, 2002).
    Miscellaneous additional proposed changes. A number of additional 
changes are proposed to take into consideration new legal developments, 
such as removing references to Indian tribes, which are now covered by 
grants under (1) NAHASDA rather than under the Supportive Housing 
Program, and (2) HUD-owned single family housing, since such housing is 
not currently being made available for supportive housing. In addition, 
a number of sections are being amended for clarification or 
organizational purposes. For example, Sec. Sec.  583.105(b) and 
583.110(b) are proposed to be revised to clarify that the funding 
limitations in those sections apply to each structure to be acquired, 
rehabilitated, or built. Other sections proposed to be revised or 
amended for clarification or organizational purposes are the following:
    Section 583.105 clarifies that rehabilitation funds cannot be used 
on leased properties.
    Section 583.120 would be revised to reflect that only a portion of 
the supportive services costs may be funded under the Supportive 
Housing Program.
    Section 583.125(b) has a definition of ``operating costs'' that 
differs from the definition of the same term in Sec.  583.5. This rule 
proposes to amend Sec.  583.125(b) to cross-reference the definition of 
operating costs in Sec.  583.5.
    Section 583.140, which addresses technical assistance, is revised 
to update and clarify this section.
    Section 583.150 is revised to change the title from ``limitations 
on use of assistance'' to ``maintenance of effort'.
    Section 583.150(b) is redesignated as a new section, Sec.  583.155, 
but makes no changes to the regulatory text. The full text of what is 
now being redesignated as Sec.  583.155 was published in the final rule 
of September 30, 2003 (68 FR 56396).
    Section 583.230, captioned ``Environmental Review,'' is changed to 
show that for FY2001 and later, grants provided to private nonprofit 
organizations and limited or special purpose governmental agencies, 
including housing agencies under the Supportive Housing Program, are 
governed by section 443 of the McKinney-Vento Homeless Assistance Act 
as amended by the FY2001 HUD Appropriations Act (Pub. L. 106-377, 
approved October 27, 2000). The FY2001 Appropriations Act provides for 
the assumption of environmental responsibilities by a state or unit of 
local government, regardless of whether or not it is the recipient for 
such grants for FY2001 and later.
    New Sec.  583.210 (former Sec.  583.235) is amended to remove 
references to non-competitive renewal grants since these grants are now 
subject to the competitive award process.
    New Sec.  583.300 is amended to add a paragraph (d) on participant 
control of site.
    Section 583.505 identifies the eligibility of projects serving 
disabled persons and allows for targeting and establishing preferences 
for certain subpopulations.
    Subpart D is amended to change its title to ``Project 
Implementation,'' which more accurately identifies the subject of the 
subpart.
    The following existing sections are proposed to be redesignated for 
organizational purposes, in some cases moving subsections, which were 
substantively separate topics, into their own sections, making the rule 
easier to read:
    Section 583.150(b) is redesignated as Sec.  583.155 (the section 
title also is changed).
    Section 583.155, regarding the consolidated plan, is redesignated 
as Sec.  583.220, to conform to redesignations of other sections (also 
amended to remove references to the former comprehensive housing 
affordability strategy (CHAS), which has been replaced by the 
consolidated plan).
    Section 583.235 is redesignated as Sec.  583.210 to conform to the 
redesignation above.
    Section 583.300 is redesignated as Sec.  583.305 and the section 
title is changed to ``Property Standards,'' with each topic broken out 
into a separate section.
    Section 583.300(c), which addresses meals, is redesignated as Sec.  
583.316.
    Section 583.320, which addresses site control, is redesignated as 
Sec.  583.300.
    All sections in subpart E are redesignated to accommodate new 
sections.
    Sections 583.310, 583.325, and 583.330 are reorganized into a new 
subpart F, ``Other Program Requirements,'' for easier reference.
    The proposed rule removes Sec.  583.130, regarding commitment of 
grant amounts for leasing, supportive services and operating costs, 
because grant terms are now flexible. The rule adds the following new 
definitions in Sec.  583.5 for ``project sponsor,'' ``program income,'' 
and ``safe haven'' to reflect how the Supportive Housing Program has 
changed over the years. The rule also clarifies the definitions of 
``homeless persons,'' ``operating costs,'' ``date of initial 
occupancy,'' ``transitional housing,'' and ``permanent housing.''

III. Findings and Certifications

Paperwork Reduction Act

    The information collection requirements contained in this rule have 
been submitted to the Office of Management and Budget (OMB) for review 
under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). The 
information collection requirements contained in 24 CFR part 583 were 
approved previously by OMB under section 3507(d) of the Paperwork 
Reduction Act of 1995, and assigned OMB control number 2506-0145. This 
rule adds two new collections of information requirements at Sec. Sec.  
583.420 and 583.425, which have been submitted to OMB for review under 
section 3507(d)). These new collection

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of information requirements are not effective until such time as OMB 
grants its approval. The approval numbers will be published in the 
Federal Register by separate notice. Information on these requirements 
is provided as follows:
    Estimates of the total reporting and recordkeeping burden that will 
result from the collection of information are as follows:

                                       Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
                                                                              No. of minutes
        Section No. and procedure              No. of persons affected        per procedure       Burden hours
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24 CFR 583.420, recording program income  Dependent on grantee, but                        15                  5
                                           average 20.
24 CFR 583.425, Grantee's annual          Dependent on grantee, but                        60                 20
 progress report.                          average 20.
----------------------------------------------------------------------------------------------------------------

    Interested persons are invited to submit comments regarding the 
information collection requirements in this rule. Comments must be 
received within sixty days from the date of publication of this rule. 
Comments must refer to the rule by name and docket number (FR-4616) and 
must be sent to:

Mark D. Menchik, HUD Desk Officer, Office of Management and Budget, New 
Executive Office Building, Washington, DC 20503
     and
Sheila Jones, Reports Liaison Officer, Office of the Assistant 
Secretary for Community Planning and Development, Department of Housing 
& Urban Development, 451 7th Street, SW., Room 7232, Washington, DC 
20410-7000.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
for this rule 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). The Finding of No 
Significant Impact is available for public inspection between 8 a.m. 
and 5 p.m. weekdays in the Regulations Division, Office of the General 
Counsel, Department of Housing and Urban Development, Room 10276, 451 
Seventh Street, SW., Washington, DC 20410-5000.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this rule, and in so doing 
certifies that this rule would not have a significant economic impact 
on a substantial number of small entities. The rule would update 
existing regulations of a program that provides grants for State and 
local governments and nonprofit corporations to operate supportive 
housing for homeless persons. These revisions will not result in a 
significant economic impact on a substantial number of small entities.
    Notwithstanding HUD's determination that this rule would not have a 
significant effect on a substantial number of small entities, HUD 
specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

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 proposed rule does not have 
federalism implications and would not impose substantial direct 
compliance costs on State and local governments nor 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) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on State, local, and 
tribal governments, and on the private sector. This proposed rule does 
not impose any Federal mandates on any State, local, or tribal 
governments, nor on the private sector, within the meaning of the UMRA.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance (CFDA) program number is 
14.235.

List of Subjects in 24 CFR Part 583

    Homeless, Rent subsidies, Reporting and recordkeeping requirements, 
Supportive housing programs--housing and community development, 
Supportive services.

    Accordingly, for the reasons stated in the preamble, HUD proposes 
to amend 24 CFR part 583 as follows:

PART 583--SUPPORTIVE HOUSING PROGRAM

    1. The authority citation for 24 CFR part 583 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d), 11381-11389.

    2. Subpart A is revised to read as follows:

Subpart A--General

Sec.
583.1 Purpose and scope.
583.3 Components.
583.5 Definitions.


Sec.  583.1  Purpose and scope.

    The Supportive Housing Program is authorized by title IV of the 
Stewart B. McKinney-Vento Homeless Assistance Act (42 U.S.C. 11381-
11389) (McKinney-Vento Act). The Supportive Housing Program is designed 
to promote the development of supportive housing and supportive 
services for homeless persons to enable them to live as independently 
as possible.


Sec.  583.3  Components.

    Funds under this part may be used for:
    (a) Transitional housing to facilitate the movement of homeless 
individuals and families to permanent housing;
    (b) Permanent housing that provides long-term housing for homeless 
persons with disabilities;
    (c) Housing that is, or is part of, a particularly innovative 
project for, or alternative method of, meeting the immediate and long-
term needs of homeless persons;
    (d) Supportive services for homeless persons not provided in 
conjunction with supportive housing; or
    (e) Safe havens as defined in Sec.  583.5.


Sec.  583.5  Definitions.

    As used in this part:
    Applicant means a State, metropolitan city, urban county, 
governmental entity, private nonprofit organization, or community 
mental health association that is a public nonprofit organization that 
is eligible to receive and submits an

[[Page 43492]]

application for assistance under this part. For purposes of this 
definition, governmental entities include those that have general 
governmental powers (such as a city or county), as well as those that 
have limited or special powers (such as public housing agencies).
    Consolidated plan means the plan that a jurisdiction prepares and 
submits to HUD in accordance with 24 CFR part 91.
    Date of initial occupancy means the date that the supportive 
housing is initially occupied by a homeless person. If the assistance 
is for an existing homeless facility, the date of initial occupancy is 
the date that housing or services are first provided to the residents 
of supportive housing with funding under this part.
    Date of initial service provision means the date that supportive 
services are initially provided with funds under this part to homeless 
persons. This definition applies only to projects funded under this 
part that do not provide supportive housing.
    Disability means:
    (1) A disability as defined in section 223 of the Social Security 
Act (42 U.S.C. 423);
    (2) Having a physical, mental, or emotional impairment that:
    (i) Is expected to be of long-continued and indefinite duration;
    (ii) Substantially impedes an individual's ability to live 
independently; and
    (iii) Is of such a nature that such a disability could be improved 
by more suitable housing conditions;
    (3) A developmental disability as defined in section 102 of the 
Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 
15002); or
    (4) The disease of acquired immunodeficiency syndrome (AIDS) or any 
conditions arising from the etiological agent for acquired 
immunodeficiency syndrome. This paragraph shall not be construed to 
limit eligibility under paragraphs (1), (2), and (3) of this definition 
or the provisions referred to in those paragraphs.
    Homeless person means:
    (1) An individual or family who resides in places not meant for 
human habitation, such as cars, parks, streets, sidewalks, and 
abandoned buildings;
    (2) An individual or family who resides in an emergency shelter;
    (3) An individual or family who resides in transitional or 
supportive housing for homeless persons who previously resided in 
places categorized in paragraphs (1) and (2) of this definition;
    (4) An individual who resides in any of the places listed in 
paragraphs (1) through (3) of this definition but is spending up to 30 
consecutive days in a hospital or other institution;
    (5) An individual or family who is being evicted within the week 
from a private dwelling unit and no subsequent residence has been 
identified and the individual or family lacks the resources and support 
networks needed to obtain housing upon eviction; or
    (6) An individual who is being discharged within the week from an 
institution in which the individual has been a resident for more than 
30 consecutive days and no subsequent residence has been identified and 
the individual lacks the resources and support networks needed to 
obtain housing upon discharge.
    Metropolitan city is defined in section 102(a)(4) of the Housing 
and Community Development Act of 1974 (42 U.S.C. 5302(a)(4)). In 
general, metropolitan cities are those cities that are eligible for an 
entitlement grant under 24 CFR part 570, subpart D.
    New construction means the building of a structure where none 
existed or an addition to an existing structure that increases the 
floor area by more than 100 percent.
    Operating costs means expenses incurred by a grantee operating 
supportive housing with respect to:
    (1) Day-to-day management (including staff salaries), maintenance, 
repair, and security for the supportive housing;
    (2) Utilities, insurance, fuel, furnishings, and equipment for the 
supportive housing;
    (3) Relocation assistance under Sec.  583.500, including payments 
and services; and
    (4) Other costs associated with operating the supportive housing.
    Permanent housing for homeless persons with disabilities means 
community-based housing for homeless persons with disabilities that 
provides long-term housing and supportive services for not more than:
    (1) Eight such persons in a single-family structure or contiguous 
single-family structures;
    (2) Sixteen such persons in a multifamily structure, but only if 
not more than 20 percent of the units are designated for such persons; 
or
    (3) More than 16 persons, if the applicant demonstrates that local 
market conditions dictate the development of a large project and such 
development will achieve the neighborhood integration objectives of the 
program within the context of the affected community.
    Private nonprofit organization means an organization:
    (1) No part of the net earnings of which may inure to the benefit 
of any member, founder, contributor, or individual;
    (2) That has a voluntary board;
    (3) That has a functioning accounting system that is operated in 
accordance with generally accepted accounting principles, or has 
designated an entity that will maintain a functioning accounting system 
for the organization in accordance with generally accepted accounting 
principles; and
    (4) That practices nondiscrimination in the provision of 
assistance.
    Program income means gross income received by the grantee or 
project sponsor directly generated from the use of Supportive Housing 
Program funds.
    Project, except as provided in Sec.  583.500(h), means a supportive 
services only project or a structure or structures (or portion of such 
structure or structures) that is acquired, rehabilitated, constructed, 
or leased with assistance provided under this part or to which 
assistance for operating costs or supportive services are provided 
under this part. A project may provide supportive housing or supportive 
services in single room occupancy dwelling units that do not contain 
bathrooms or kitchen facilities and are appropriate for use as 
supportive housing or in projects containing some or all such dwelling 
units. A project may be for supportive housing or supportive services 
only. (Supportive services only projects are defined separately.)
    Project sponsor means the organization that is responsible for 
carrying out the daily operation of the project, if the organization is 
an entity other than the grantee. A project sponsor is a State, 
metropolitan city, urban county, governmental entity, private nonprofit 
organization, or community mental health association that is a public 
nonprofit organization.
    Rehabilitation means the improvement or repair of an existing 
structure or an addition to an existing structure that does not 
increase the floor area by more than 100 percent. Rehabilitation does 
not include minor or routine repairs.
    Safe haven means supportive housing in a structure, or clearly 
identifiable portion of a structure, that meets the following criteria: 
It--
    (1) Serves hard-to-reach homeless persons who have a severe mental 
illness, are on the streets, and have been

[[Page 43493]]

unable or unwilling to receive supportive services;
    (2) Provides 24-hour residence for an unspecified duration;
    (3) Provides private or semi-private accommodations; and
    (4) Has overnight occupancy limited to 25 persons. A safe haven may 
also provide supportive services on a drop-in basis to eligible persons 
who are not residents.
    State means each of the several states, the District of Columbia, 
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American 
Samoa, and the Commonwealth of the Northern Mariana Islands.
    Supportive housing (1) Supportive housing means housing in 
conjunction with which supportive services are provided for homeless 
persons if the housing:
    (i) Is transitional housing;
    (ii) Is permanent housing for homeless persons with disabilities;
    (iii) Is a safe haven; or
    (iv) Is or is a part of, a particularly innovative project for, or 
alternative method of, meeting the immediate and long-term needs of 
homeless persons.
    (2) In a supportive housing project, a project sponsor provides 
housing in one or more structures and delivers services, or arranges 
with other organizations to deliver services, to the residents.
    Supportive services means services designed to address the special 
needs of the homeless persons to be served by the project. Supportive 
services include, but are not limited to, providing:
    (1) Child care services for homeless families;
    (2) Employment assistance;
    (3) Outpatient health services, food, and case management;
    (4) Assistance in obtaining permanent housing, employment 
counseling, and nutritional counseling;
    (5) Assistance in obtaining other Federal, State, and local 
assistance available including mental health benefits, employment 
counseling, veterans' benefits, medical assistance, but not including 
major medical equipment, and income support assistance, such as 
supplemental security income benefits, general assistance, and food 
stamps; and
    (6) Other services as appropriate.
    Supportive services only project means a project in which a sponsor 
delivers services to homeless persons, but the sponsor does not provide 
housing to the same persons receiving the services. Supportive services 
can be delivered from a structure or they can be delivered independent 
of a structure (e.g., by street outreach).
    Technical assistance means the facilitating of skills and knowledge 
in planning, developing, and administering activities under the 
Supportive Housing Program for entities that may need, but do not 
possess, such skills and knowledge.
    Transitional housing means housing designed for homeless persons to 
reside in for at least three months that will facilitate movement to 
permanent housing within 24 months or within a longer period as 
described in Sec.  583.325. Emergency shelters are not considered 
transitional housing.
    Urban county is defined in section 102(a)(6) of the Housing and 
Community Development Act of 1974 (42 U.S.C. 5302(a)(6)). In general, 
urban counties are those counties that are eligible for an entitlement 
grant under 24 CFR part 570, subpart D.
    3. Sections 583.100, 583.105, 583.110, 583.115, 583.120, and 
583.125 are revised to read as follows:


Sec.  583.100  Types and uses of assistance.

    (a) Grant Assistance. Assistance in the form of grants is available 
for acquisition of structures, rehabilitation of structures, new 
construction for supportive housing, leasing, operating costs for 
supportive housing, and supportive services, as described in Sec. Sec.  
583.105 through 583.125 of this part.
    (b) Beneficiaries of grant assistance. Grants must be used to 
assist projects, including supportive services only projects, which 
provide assistance to homeless persons only.
    (c) Uses of grant assistance. Grant assistance may be used to:
    (1) Establish new supportive housing facilities or new facilities 
to provide supportive services;
    (2) Expand existing facilities in order to increase the number of 
homeless persons served;
    (3) Bring existing facilities up to a level that meets State and 
local government health and safety standards;
    (4) Provide additional supportive services for residents of 
supportive housing or for homeless persons not residing in supportive 
housing;
    (5) Continue funding supportive housing where the grantee has 
received funding under this part for leasing, supportive services, or 
operating costs;
    (6) Construct, rehabilitate, acquire, lease, or operate a structure 
for use as a safe haven for supportive housing; or
    (7) Replace the loss of nonrenewable funding from private, Federal, 
or other sources except from the State or local government. Grants may 
not be used to replace State or local government funds previously used, 
or designated for use, to assist homeless persons (except as provided 
in Sec.  583.150).
    (d) Structures used for multiple purposes. Structures used to 
provide supportive housing or supportive services may also be used for 
other purposes, except that assistance under this part will be 
available only in proportion to the use of the structure for supportive 
housing or supportive services.
    (e) Technical assistance. HUD may offer technical assistance, as 
described in Sec.  583.140.


Sec.  583.105  Grants for acquisition and rehabilitation.

    (a) Use. HUD may grant funds to:
    (1) Pay a portion of the cost of the acquisition of structures and 
real property for use in the provision of supportive housing (other 
than emergency shelter) or supportive services, including the repayment 
of any outstanding debt on a loan made to purchase property that has 
not been used previously as supportive housing or for supportive 
services; or
    (2) Pay a portion of the cost of rehabilitation of structures to 
provide supportive housing or supportive services, including cost-
effective energy measures and bringing an existing structure to a level 
that meets State and local government health and safety standards.
    (b) Amount. Except as provided in paragraph (c) of this section, 
the maximum grant available for acquisition, rehabilitation, or 
acquisition and rehabilitation is the lower of:
    (1) $200,000 per structure; or
    (2) The total cost of the acquisition, rehabilitation, or 
acquisition and rehabilitation minus the grantee's contribution toward 
these costs.
    (c) Increased amounts. In areas determined by HUD to have high 
acquisition and rehabilitation costs, grants of not more than $400,000 
per structure may be available.
    (d) Limitation. Rehabilitation Funds shall not be used to 
rehabilitate leased properties.


Sec.  583.110  Grants for new construction.

    (a) Use. HUD may grant funds to pay a portion of the cost of new 
construction, including cost-effective energy measures, and the cost of 
land associated with that construction, for use in the provision of 
supportive housing. If the grant funds are used for new construction, 
the grantee must demonstrate that the costs associated with new 
construction are substantially less than the costs associated with 
rehabilitation or that there is a lack of available appropriate units 
that could be rehabilitated at a cost less than new construction. For 
purposes of this cost comparison, costs associated with

[[Page 43494]]

rehabilitation or new construction may include the cost of real 
property acquisition.
    (b) Amount. The maximum grant available for new construction is the 
lower of:
    (1) $400,000 per structure; or
    (2) The total cost of the new construction, including the cost of 
land associated with that construction, minus the grantee's 
contribution toward the cost of same.


Sec.  583.115  Grants for leasing.

    (a) General. HUD may provide grants to pay for the actual costs of 
leasing a structure or structures (including security deposits), or 
portions thereof, used to provide supportive housing or supportive 
services. Under no circumstances may leasing funds be used to lease 
units or structures owned by the project sponsor, the grantee, their 
parent organization, a partnership of which the sponsor or grantee is a 
member, or any other related organization.
    (b) Leasing structures. Where grants are used to pay rent for all 
or part of a structure, the rent paid must be reasonable in relation to 
rents being charged in the area for comparable space. In addition, the 
rent paid may not exceed rents currently being charged by the same 
owner for comparable space.
    (c) Leasing individual units. Where grants are used to pay rent for 
an individual housing unit, the rent paid must be reasonable in 
relation to rents being charged for comparable units, taking into 
account the location, size, type, quality, amenities, facilities, and 
management services. In addition, the rent may not exceed rents 
currently being charged by the same owner for comparable unassisted 
units, and the portion of rent paid with grant funds may not exceed the 
HUD-determined fair market rent. Grantees may use grant funds in an 
amount up to one month's rent to pay the landlord for any damages by 
homeless participants to a leased unit.


Sec.  583.120  Grants for supportive services costs.

    (a) General. HUD may provide grants to pay a portion (as described 
in Sec.  583.145(b)) of the actual costs of supportive services for 
homeless persons. Homeless persons receiving supportive services need 
not be residents of supportive housing. All or part of the supportive 
services may be provided directly by the grantee or project sponsor or 
by arrangement with public or private service providers.
    (b) Supportive services costs. Costs associated with providing 
supportive services include salaries paid to providers of supportive 
services and any other cost directly associated with providing such 
services. Supportive services costs also include the costs of services 
provided to former residents of supportive housing to assist in their 
adjustment to independent living. Such services may be provided for up 
to six months after the former residents leave the supportive housing 
facility.


Sec.  583.125  Grants for operating costs.

    (a) General. HUD may provide grants to pay a portion (as described 
in Sec.  583.145(c)) of the actual operating costs of supportive 
housing.
    (b) Operating costs. Operating costs are as defined in Sec.  583.5.


Sec.  583.130  [Removed]

    4. Section 583.130 is removed.
    5. Sections 583.135, 583.140, and 583.145 are revised to read as 
follows:


Sec.  583.135  Administrative costs.

    (a) General. Up to five percent of any grant awarded under this 
part may be used for the purpose of paying costs of administering the 
assistance.
    (b) Administrative costs. Administrative costs include the costs 
associated with accounting for the use of grant funds, preparing 
reports for submission to HUD, obtaining project audits, similar costs 
related to administering the grant after the award, and staff salaries 
associated with these administrative costs. Administrative costs do not 
include the costs of carrying out eligible activities under Sec. Sec.  
583.105 through 583.125.


Sec.  583.140  Technical assistance.

    (a) General. HUD may set aside funds annually to provide technical 
assistance either directly by HUD staff or indirectly through third-
party providers. This technical assistance is for the purpose of 
promoting the development of supportive housing and supportive 
services, including innovative approaches to assist homeless persons in 
the transition from homelessness, and promoting the provision of 
supportive housing to homeless persons to enable them to live as 
independently as possible.
    (b) Uses of technical assistance. HUD may use these funds to 
provide technical assistance to prospective applicants, applicants, 
grantees, project sponsors, or other providers of supportive housing or 
supportive services for homeless persons.
    (c) Selection of providers. As HUD determines the need, HUD may 
advertise and competitively select providers to deliver technical 
assistance. HUD may enter into contracts, grants, or cooperative 
agreements, when necessary, to implement the technical assistance.


Sec.  583.145  Matching requirements.

    (a) Grantee share of acquisition, rehabilitation, and new 
construction costs. The grantee must match the funds provided by HUD 
for grants for acquisition, rehabilitation, and new construction with 
an equal amount of funds from other sources for these activities.
    (b) Grantee share of supportive services costs. Assistance for 
supportive services will be available for 80 percent of the total 
supportive service costs. The grantee must contribute 20 percent of the 
total supportive services costs. At the end of each operating year, the 
grantee must demonstrate that it has met its share of the costs for 
that year. While the grantee's contribution equals 20 percent of the 
total supportive services costs, it simultaneously represents 25 
percent of the HUD Supportive Housing Program assistance requested for 
supportive services.
    (c) Grantee share of operating costs. Assistance for operating 
costs will be available for up to 75 percent of the total operating 
costs. The grantee must contribute 25 percent of the total operating 
costs. At the end of each operating year, the grantee must demonstrate 
that it has met its share of the costs for that year.
    (d) Cash resources. The matching funds must be cash resources 
provided to the project by one or more of the following: The grantee, 
the Federal government, State government, local government, or private 
resources.


Sec.  583.155  [Removed]

    6. Section 583.155 is removed.
    7. Section 583.150 is amended as follows:
    a. Revise the section heading to read as set forth below;
    b. Remove the paragraph (a) designation and amend the paragraph by 
adding to the end of the paragraph the words ``except when State or 
local government funds were used as interim or emergency funding to 
continue a project which was unsuccessful in seeking renewal.''
    c. Remove paragraph (c);
    d. Remove the heading of paragraph (b) and redesignate paragraph 
(b) as new Sec.  583.155;
    e. Add a section heading to new Sec.  583.155 to read as set forth 
below; and
    f. In Sec.  583.155, former paragraphs (b)(1) through (6) are 
redesignated as paragraphs (a) through (f).

[[Page 43495]]

Sec.  583.150  Maintenance of effort.

* * * * *


Sec.  583.155  Grants involving primarily religious organizations.

* * * * *
    8. Revise subparts C, D, E, and F to read as follows:

Subpart C--Application and Grant Award Process

Sec.
583.200 Application and grant award.
583.210 Renewal grants.
583.220 Consolidated plan.
583.230 Environmental review.


Sec.  583.200  Application and grant award.

    When funds are made available for assistance, HUD will publish a 
notice of funding availability (NOFA) in the Federal Register, in 
accordance with the requirements of 24 CFR part 4. HUD will review and 
screen applications in accordance with the requirements in section 426 
of the McKinney-Vento Act (42 U.S.C. 11386) and the guidelines, 
selection criteria, and procedures published in the NOFA.


Sec.  583.210  Renewal grants.

    (a) General. Grants made under this part, and grants made under 
subtitles C and D (Supportive Housing Demonstration and Supplemental 
Assistance for Facilities to Assist the Homeless (SAFAH), respectively) 
of the McKinney-Vento Act as in effect before October 28, 1992, may be 
renewed on a competitive or noncompetitive basis to continue ongoing 
leasing, operations, and supportive services for additional years 
beyond the initial funding period. To be considered for renewal funding 
for leasing, operating costs, or supportive services, recipients must 
submit a request for such funding in the form specified by HUD, must 
meet the requirements of this part, and must submit requests within the 
time period established by HUD.
    (b) Assistance available. Assistance during each year of the 
renewal period, subject to maintenance of effort requirements under 
Sec.  583.100(c)(6) and Sec.  583.150 of this part, may be for up to 
the average annual amount awarded for leasing, operations, and 
supportive services in the previous grant.
    (c) HUD review. HUD will review and screen applicants in accordance 
with the requirements of section 426 of the McKinney-Vento Act (42 
U.S.C. 11386) and the guidelines, selection criteria, and procedures 
published in the NOFA.
    (d) Term of renewal grant. The grant term may be up to three years.


Sec.  583.220  Consolidated plan.

    (a) Applicants that are States or units of general local 
government. An applicant must have a HUD-approved complete or 
abbreviated consolidated plan, in accordance with 24 CFR part 91, and 
must submit a certification that the application for funding is 
consistent with the HUD-approved consolidated plan. Funded applicants 
must certify in a grant agreement that they are following the HUD-
approved consolidated plan.
    (b) Applicants that are not States or units of general local 
government. An applicant must submit a certification by the 
jurisdiction in which the proposed project will be located that the 
applicant's application for funding is consistent with the 
jurisdiction's HUD-approved consolidated plan. The certification must 
be made by the unit of general local government or the State, in 
accordance with the consistency certification provisions of the 
consolidated plan regulations, 24 CFR part 91, subpart F.
    (c) The Insular Areas of Guam, the U.S. Virgin Islands, American 
Samoa, and the Commonwealth of the Northern Mariana Islands. 
Notwithstanding any other provision of this section, these entities are 
not required to have a consolidated plan or to make consolidated plan 
certifications. (For a project that will be located on a reservation of 
an Indian tribe, a consolidated plan certification will not be 
required.)
    (d) Timing of consolidated plan certification submissions. Unless 
otherwise set forth in the NOFA, the required certification that the 
application for funding is consistent with the HUD-approved 
consolidated plan must be submitted by the funding application 
submission deadline announced in the NOFA.


Sec.  583.230  Environmental review.

    (a) Generally. Project selection is subject to completion of an 
environmental review of the proposed site, and the project may be 
modified or the site rejected as a result of that review. Activities 
under this part are subject to HUD's environmental regulations in 24 
CFR part 58, except that HUD will perform an environmental review in 
accordance with 24 CFR part 50 prior to its approval of any 
conditionally selected applications for fiscal year 2000 and prior 
years that were received directly from private nonprofit entities and 
governmental entities with special or limited purpose powers. For 
activities under a grant that generally would be subject to review 
under 24 CFR part 58, HUD may make a finding in accordance with 24 CFR 
58.11 and may itself perform the environmental review under the 
provisions of 24 CFR part 50. Among other reasons, this action may be 
initiated if the recipient objects in writing to the responsible entity 
performing the review under 24 CFR part 58. Irrespective of whether the 
responsible entity in accordance with 24 CFR part 58 (or HUD in 
accordance with 24 CFR part 50) performs the environmental review, the 
recipient shall supply all available, relevant information necessary 
for the responsible entity (or HUD, if applicable) to perform for each 
property any environmental review required by this part. The recipient 
also shall carry out all mitigating measures required by the 
responsible entity (or HUD, if applicable) or select alternate eligible 
property. HUD may eliminate from consideration any application that 
would require an environmental impact statement (EIS).
    (b) The recipient, its project partners, and their contractors may 
not acquire, rehabilitate, convert, lease, repair, dispose of, 
demolish, or construct property for a project under this part, or 
commit or expend HUD or local funds for such eligible activities under 
this part, until the responsible entity (as defined in 24 CFR 58.2) has 
completed the environmental review procedures required by 24 CFR part 
58 and the environmental certification and request for release of funds 
(RROF) have been approved or HUD has performed an environmental review 
under 24 CFR part 50 and the recipient has received HUD approval of the 
property. HUD will not release grant funds if the recipient or any 
other party commits grant funds (i.e., incurs any costs or expenditures 
to be paid or reimbursed with such funds) before the recipient submits 
and HUD approves its RROF (where such submission is required).

Subpart D--Project Implementation

Sec.
583.300 Site control.
583.305 Property standards.
583.310 Ongoing assessment of supportive services.
583.315 Residential supervision.
583.316 Provision for meals.
583.320 Participation of homeless persons in decisionmaking.
583.325 Relationship between grantee and supportive housing 
residents.
583.330 Occupancy charge.
583.335 Limitation of stay in transitional housing.
583.340 Confidentiality.
583.345 Records and reports.
583.350 Annual assurances.

[[Page 43496]]

583.355 Period of commitment; repayment of grants; prevention of 
undue benefits.


Sec.  583.300  Site control.

    (a) Site control. Where grant funds will be used for acquisition, 
rehabilitation, or new construction to provide supportive housing or 
supportive services, or where grant funds will be used for operating 
costs of supportive housing, or where grant funds will be used to 
provide supportive services except where grantee and project sponsor 
will provide services at sites not operated by the grantee or project 
sponsor, the grantee or project sponsor must demonstrate site control 
before HUD will execute a grant agreement (e.g., through a deed or 
other proof of ownership, executed lease agreement, executed contract 
of sale, executed option to purchase or lease). For projects financed 
by use of Low Income Housing Tax Credits, site control may be 
demonstrated by a limited partnership wherein the grantee or project 
sponsor is the general partner or owns a controlling interest in the 
general partner. If site control is not demonstrated within one year 
after initial notification of the award of assistance under this part, 
the grant will be deobligated as provided in paragraph (c) of this 
section.
    (b) Site change. (1) A grantee or project sponsor may obtain 
ownership or control of a suitable site different from the one 
specified in its application. Retention of an assistance award is 
subject to the new site's meeting all requirements under this part for 
suitable sites.
    (2) If the acquisition, rehabilitation, acquisition and 
rehabilitation, or new construction costs for the substitute site are 
greater than the amount of the grant awarded for the site specified in 
the application, the grantee or project sponsor must provide for all 
additional costs. If the grantee or project sponsor is unable to 
demonstrate to HUD that it is able to provide for the difference in 
costs, HUD may deobligate the award of assistance.
    (c) Failure to obtain site control within one year. HUD will 
recapture or deobligate any award for assistance under this part if the 
grantee or project sponsor is not in control of a suitable site before 
the expiration of one year after initial notification of an award.
    (d) Participant control of site. The site control requirement in 
paragraph (a) of this section does not apply where a project assists 
homeless families or individuals in obtaining a lease (which may 
include assistance with rent payments and receiving supportive 
services), after which time the family or individual remains in the 
same housing without further assistance under this part. Such projects 
may not receive assistance for acquisition, rehabilitation, or new 
construction.


Sec.  583.305  Property standards.

    (a) State and local requirements. Each grantee or project sponsor 
under this part must provide housing or services that are in compliance 
with all applicable State and local housing codes, licensing 
requirements, and any other requirement in the jurisdiction in which 
the project is located regarding the condition of the structure and the 
operation of the housing or services.
    (b) Habitability standards. Except for such variations as are 
proposed by the grantee and approved by HUD, supportive housing must 
meet the following requirements:
    (1) Structure and materials. The structures must be structurally 
sound so as to protect the residents from the elements and not pose any 
threat to their health or safety.
    (2) Location. The housing must be capable of being utilized without 
unauthorized use of other private properties. Structures must provide 
alternative means of egress in case of fire.
    (3) Space and security. Each resident must be afforded adequate 
space and security for himself/herself and his/her belongings. Each 
resident must be provided an acceptable place to sleep.
    (4) Interior air quality. Every room or space must be provided with 
natural or mechanical ventilation. Structures must be free of 
pollutants in the air at levels that threaten the health of residents.
    (5) Water supply. The water supply must be free from contamination.
    (6) Sanitary facilities. Residents must have access to sufficient 
sanitary facilities that are in proper operating condition, may be used 
in privacy, and are adequate for personal cleanliness and the disposal 
of human waste.
    (7) Thermal environment. The housing must have adequate heating or 
(as appropriate to the climate) cooling facilities in proper operating 
condition.
    (8) Illumination and electricity. The housing must have adequate 
natural or artificial illumination to permit normal indoor activities 
and to support the health and safety of residents. Sufficient 
electrical sources must be provided to permit use of essential 
electrical appliances while assuring safety from fire.
    (9) Food preparation and refuse disposal. All food preparation 
areas must contain suitable space and equipment to store, prepare, and 
serve food in a sanitary manner.
    (10) Sanitary condition. The housing and any equipment must be 
maintained in sanitary condition.
    (11) Fire safety. (i) Each unit must include at least one battery-
operated or hard-wired smoke detector, in proper working condition, on 
each occupied level of the unit. Smoke detectors must be located, to 
the extent practicable, in a hallway adjacent to a bedroom. If the unit 
is occupied by a hearing-impaired person, smoke detectors must have an 
alarm system designed for hearing-impaired persons in each bedroom 
occupied by a hearing-impaired person.
    (ii) The public areas of all housing must be equipped with a 
sufficient number, but no fewer than one for each area, of battery-
operated or hard-wired smoke detectors. Public areas include, but are 
not limited to, laundry rooms, community rooms, day care centers, 
hallways, stairwells, and other common areas.


Sec.  583.310  Ongoing assessment of supportive services.

    Each grantee under this part must conduct an ongoing assessment of 
the supportive services required by program participants, as well as 
the availability of such services, and make adjustments as appropriate.


Sec.  583.315  Residential supervision.

    Each grantee or project sponsor under this part must provide 
residential supervision as necessary throughout the term of the 
commitment to operate supportive housing. Residential supervision may 
include the employment of a full-or part-time residential supervisor 
with sufficient knowledge to provide or to supervise the provision of 
supportive services to the residents.


Sec.  583.316  Provision for meals.

    Each grantee under this part that provides supportive housing for 
homeless persons with disabilities must provide meals or meal 
preparation facilities for residents.


Sec.  583.320  Participation of homeless persons in decisionmaking.

    (a) Each grantee or project sponsor must provide for the 
participation of no fewer than one homeless person or formerly homeless 
person on the board of directors or equivalent policy-making entity, to 
the extent that such entity considers and makes policies and decisions 
regarding any project, supportive services, or assistance provided 
under this part. This requirement is waived if a grantee or project 
sponsor is unable to meet it and presents to HUD and obtains HUD's 
approval of a plan to consult otherwise

[[Page 43497]]

with homeless or formerly homeless persons in considering and making 
policies and decisions. (See also Sec.  583.525.)
    (b) Each grantee or project sponsor under this part must, to the 
maximum extent practicable, involve homeless individuals and families, 
through employment, volunteer services, or otherwise, in constructing, 
rehabilitating, maintaining, and operating the project and in providing 
supportive services for the project.


Sec.  583.325  Relationship between grantee and supportive housing 
residents.

    (a) Grantees or project sponsors using grant funds to provide 
supportive housing are not required to create a landlord-tenant 
relationship with residents of that supportive housing. Grantees or 
project sponsors may require residents to execute an occupancy 
agreement establishing conditions for residency.
    (b) Occupancy agreements shall include a process for termination of 
participation, which shall, at a minimum, consist of:
    (1) Written notice to the participant containing a clear statement 
of the reasons for termination;
    (2) A review of the decision, in which the participant is given the 
opportunity to present written or oral objections before a person other 
than the person (or subordinate of that person) who made or approved 
the termination decision; and
    (3) Prompt written notice of the final decision to the participant.


Sec.  583.330  Occupancy charge.

    (a) Calculation of occupancy charge. Homeless persons residing in 
supportive housing may be required to pay an occupancy charge in an 
amount determined by the grantee that may not exceed the highest of:
    (1) 30 percent of the family's monthly adjusted income (adjustment 
factors include the number of people in the family, age of family 
members, medical expenses, and child care expenses);
    (2) 10 percent of the family's monthly income; or
    (3) If the family is receiving payments for welfare assistance from 
a public agency and a part of the payments, adjusted in accordance with 
the family's actual housing costs, is specifically designated by the 
agency to meet the family's housing costs, the portion of the payments 
that is designated for housing costs.
    (b) Use of occupancy charge. The occupancy charge may be used in 
the operation of the project or may be reserved, in whole or in part, 
to assist residents of transitional housing in moving to permanent 
housing.
    (c) Fees. In addition to resident rent, residents may be charged 
reasonable fees for services not paid with grant funds.


Sec.  583.335  Limitation of stay in transitional housing.

    A homeless individual or family is expected to move to permanent 
housing within 24 months after entering transitional housing. However, 
the homeless individual or family may remain in transitional housing 
for a period longer than 24 months, if permanent housing for the 
individual or family has not been located or if the individual or 
family requires additional time to prepare for independent living. 
However, HUD may discontinue assistance for a transitional housing 
project if more than half of the homeless individuals or families 
remain in the project longer than 24 months.


Sec.  583.340  Confidentiality.

    Each grantee or project sponsor that provides family violence 
prevention or treatment services must develop and implement procedures 
to ensure the confidentiality of records pertaining to any individual 
provided services and that the address or location of any project 
assisted will not be made public, except with written authorization of 
the person or persons responsible for the operation of the project.


Sec.  583.345  Records and reports.

    Each grantee or project sponsor under this part must keep any 
records and make any reports (including those pertaining to race, 
ethnicity, gender, and disability status data) that HUD may require 
within the timeframe specified. At a minimum, this includes an annual 
progress report.


Sec.  583.350  Annual assurances.

    Grantees or project sponsors that receive assistance restricted to 
leasing, operating costs, or supportive services costs must provide an 
annual assurance for each year such assistance is received that the 
project will be operated for the purpose specified in the application.


Sec.  583.355  Period of commitment; repayment of grants; prevention of 
undue benefits.

    (a) Period of commitment and conversion. All grantees receiving 
assistance for acquisition, rehabilitation, or new construction must 
agree to operate the supportive housing or supportive services in 
accordance with the regulations in this part for a period of at least 
20 years from the date of initial occupancy or the date of initial 
service provision. If HUD determines during the 20-year period that a 
project is no longer needed for use as supportive housing or to provide 
supportive services and approves a different use of the project for the 
direct benefit of low-income persons pursuant to a request for such use 
by the grantee, HUD may authorize the grantee to convert the project 
for such use for the remaining time.
    (b) Repayment of grant. If the facility is not operated as 
supportive housing or to provide supportive services for homeless 
persons for 10 years following the date of initial occupancy or date of 
initial service provision, HUD shall require repayment of the entire 
amount of the grant used for acquisition, rehabilitation, or new 
construction, unless conversion of the project has been authorized by 
HUD under paragraph (a) of this section. If the supportive housing or 
supportive services facility is used for homeless persons for more than 
10 years, the grantee's repayment amount will be reduced by 10 percent 
for each full year beyond the 10-year period in which the project is 
used for homeless persons.
    (c) Prevention of undue benefits. If the assisted structure is sold 
or otherwise disposed of within the 20-year period, the grantee must 
comply with any terms or conditions that HUD may prescribe to prevent 
the grantee from unduly benefiting from the sale or disposition. HUD 
will not impose any terms or conditions when the sale or disposition 
results in the subsequent use of the assisted structure for the direct 
benefit of very low-income persons (below 50 percent of area median) or 
all the proceeds are used to provide supportive housing meeting the 
requirements of this part 583.
    (d) Recordation. Grantees shall be required to execute and file for 
record a deed restriction, covenant running with the land, or similar 
provision that will ensure, to HUD's satisfaction, compliance with the 
twenty-year term of commitment. In addition, grantees shall record a 
lien against the property, in a form to be prescribed by HUD, to secure 
HUD's interest in the repayment of the grant.

Subpart E--Administration

Sec.
583.400 Grant agreement.
583.405 Agreement with project sponsor.
583.410 Program changes.
583.415 Obligation and deobligation of funds.
583.420 Program income.
583.425 Grant closeout procedures.


Sec.  583.400  Grant agreement.

    (a) General. The duty to provide supportive housing or supportive

[[Page 43498]]

services as described in the application and in accordance with the 
requirements of this part will be incorporated in a grant agreement 
executed by HUD and the grantee.
    (b) Enforcement. HUD will enforce the obligations in the grant 
agreement through such action as may be appropriate, including 
requiring repayment of funds that have already been disbursed to the 
grantee.


Sec.  583.405  Agreement with project sponsor.

    (a) Before disbursing any Supportive Housing Program funds to a 
project sponsor, the grantee shall sign a written agreement with the 
project sponsor. The agreement shall remain in effect during the grant 
period.
    (b) At a minimum, the written agreement with the project sponsor 
shall include the following:
    (1) Statement of work. The agreement shall contain a description of 
the project's activities, time schedule, performance measures, program 
income, and budget, in accordance with the approved application and the 
Supportive Housing Program regulations. The agreement also shall state 
the overall goals of the McKinney-Vento Act homeless assistance 
programs--to help homeless persons achieve residential stability, 
increase their skill levels or incomes, and obtain greater self-
determination.
    (2) Agreement to follow part 583. The agreement shall specify that 
the project sponsor will abide by the regulations in this part.
    (3) Records and reports. The agreement shall specify the particular 
records the project sponsor must maintain and the particular reports 
the project sponsor must submit to assist the grantee in meeting its 
recordkeeping and reporting requirements.
    (4) Grantee duties. The agreement shall specify procedures and any 
other information pertinent to the grantee's release of grant funds to 
the project sponsor.
    (5) Monitoring. The agreement shall state that the grantee will 
monitor the performance of the project sponsor against the goals and 
performance standards in the agreement with the project sponsor. The 
agreement also shall state that contract suspension or termination 
procedures will be initiated if the project sponsor does not correct 
substandard performance within a reasonable period of time after being 
notified by the grantee.
    (6) Suspension and termination. The agreement shall specify that, 
in accordance with 24 CFR 85.43, suspension or termination may occur if 
the project sponsor materially fails to comply with any term of the 
award, and that the award may be terminated for convenience in 
accordance with 24 CFR 85.44.
    (7) Commitment, repayment and undue benefits. The agreement shall 
specify the term of commitment, repayment of grants, and the prevention 
of undue benefits or exceptions as set forth in Sec.  583.355.
    (8) Uniform administrative requirements. The agreement shall 
include a statement that the project sponsor will comply with the 
requirements and standards of OMB Circular A-122. A copy of the 
document shall be attached to the agreement with the project sponsor.
    (9) Conditions for religious organizations. Where applicable, the 
conditions prescribed in Sec.  583.155 for use of Supportive Housing 
Program funds by religious organizations shall be included in the 
agreement.


Sec.  583.410  Program changes.

    (a) HUD approval. (1) A grantee may not make any significant 
changes to an approved project without prior HUD approval. Significant 
changes include, but are not limited to, a change in the grantee, a 
change in the project site, additions or deletions in the types of 
activities listed in Sec.  583.100 approved for the project, a shift of 
more than 10 percent of funds from one approved type of activity to 
another, or a change in the category of participants to be served. 
Depending on the nature of the change, HUD may require a new 
certification of consistency with the consolidated plan (see Sec.  
583.220).
    (2) Approval for a change is contingent upon whether the proposed 
change would not reduce or lower the quality of the original project on 
any rating factor. HUD will not approve a change that departs from the 
integrity of the project as proposed in the application.
    (b) Documentation of other changes. Any change to an approved 
program that does not require prior HUD approval must be fully 
documented in the grantee's records.


Sec.  583.415  Obligation and deobligation of funds.

    (a) Obligation of funds. When HUD and the applicant execute a grant 
agreement, funds are obligated to cover the amount of the approved 
assistance under subpart B of this part.
    (b) Increases. After the initial obligation of funds, HUD will not 
make revisions to increase the amount obligated.
    (c) Deobligation. (1) HUD may deobligate all or parts of grants:
    (i) If the actual cost is less than the total cost anticipated in 
the application; or
    (ii) If proposed activities for which funding was approved are not 
begun within three months, or residents do not begin to occupy the 
facility within nine months after grant execution.
    (2) The grant agreement may set forth in detail other circumstances 
under which funds may be deobligated, as well as other sanctions that 
may be imposed.
    (d) Readvertisement. HUD may re-advertise the availability of funds 
that have been deobligated under this section in a NOFA under Sec.  
583.200, or award deobligated funds to applications previously 
submitted in response to the most recently published NOFA.


Sec.  583.420  Program income.

    (a) Recording program income. The receipt and expenditure of 
program income as defined in Sec.  583.5 shall be recorded as part of 
the financial transactions of the project.
    (b) Disposition of program income. (1) Program income received 
before grant closeout must be treated as additional Supportive Housing 
Program funds (except for occupancy charges) subject to all applicable 
requirements governing the use of Supportive Housing Program funds. 
Program income received before grant closeout must be used for 
previously approved eligible activities in the project. (See Sec.  
583.330(b) regarding the use of resident rent.)
    (2) Program income received before grant closeout must be used 
before additional cash withdrawals are made from the Supportive Housing 
Program grant account.
    (3) Program income received after closeout shall not be governed by 
the provisions of this part, except that, if the grant from which the 
program income was generated is renewed under Supportive Housing 
Program, funds received after closeout of the grant being renewed shall 
be treated as program income of the renewal project.
    (c) Disposition of program income received by project sponsors. The 
written agreement between the grantee and the project sponsor, as 
required by Sec.  583.405, shall specify that program income is to be 
used by the project sponsor according to Sec.  583.420(b).


Sec.  583.425  Grant closeout procedures.

    (a) Criteria for closeout. A grant will be closed out when HUD 
determines, in consultation with the grantee, that the following 
criteria have been met:
    (1) The grant term has expired and has not been extended.
    (2) All costs to be paid with Supportive Housing Program funds have

[[Page 43499]]

been incurred, with the exception of closeout costs (e.g., audit costs) 
and costs from contingent liabilities described in the closeout 
agreement in paragraph (c) of this section. Contingent liabilities 
include, but are not limited to, third-party claims against the 
grantee, as well as related administrative costs.
    (3) With respect to activities that are financed with Supportive 
Housing Program funds (excluding program income), the activities have 
actually been completed.
    (4) Other responsibilities of the grantee under the grant agreement 
and applicable laws and regulations have been carried out 
satisfactorily or there is no further Federal interest in keeping the 
grant agreement open for the purpose of securing performance.
    (b) Closeout actions. (1) Within 90 days of the grant term 
expiration date or earlier completion of the grant activities, the 
grantee shall submit to HUD its financial, final performance, and other 
reports, as required by the terms and conditions of the award.
    (2) Based on the information provided in the final performance 
report and other relevant information, HUD, in consultation with the 
grantee, will prepare a closeout agreement in accordance with paragraph 
(c) of this section.
    (3) HUD will deobligate any unused portion of the awarded grant, as 
required by the signed grant closeout agreement. Any unused grant funds 
that are in the possession of the grantee shall be refunded to or 
recaptured by HUD.
    (4) The grantee may be required to repay HUD any disallowed costs 
based on HUD reviews provided for in the closeout agreement.
    (c) Closeout agreement. Any obligation remaining as of the date of 
the closeout shall be covered by the terms of a closeout agreement. The 
agreement shall be prepared by HUD in consultation with the grantee. 
The agreement shall identify the grant being closed out, and include 
provisions with respect to the following:
    (1) Identification of any closeout costs or contingent liabilities 
subject to payment with Supportive Housing Program funds after the 
closeout agreement is signed;
    (2) Identification of any unused grant funds to be deobligated by 
HUD;
    (3) Identification of any program income on deposit in financial 
institutions at the time the closeout agreement is signed;
    (4) Description of the grantee's responsibility after closeout for:
    (i) Compliance with all program requirements, certifications, and 
assurances in using program income on deposit at the time the closeout 
agreement is signed and in using any other remaining Supportive Housing 
Program funds available for closeout costs and contingent liabilities;
    (ii) Use of real property assisted with Supportive Housing Program 
funds in accordance with the terms of commitment and principles 
described in Sec.  583.355;
    (iii) Use of personal property purchased with Supportive Housing 
Program funds; and
    (iv) Compliance with requirements governing program income received 
subsequent to grant closeout, as described in Sec.  583.420.
    (5) Other provisions appropriate to any special circumstances of 
the grant closeout, in modification of or in addition to the 
obligations in paragraphs (c)(1) through (c)(4) of this section. The 
agreement shall provide that findings of noncompliance may be taken 
into account by HUD as unsatisfactory performance of the grantee, in 
HUD's consideration of any future grant award under this part.

Subpart F--Other Program Requirements

Sec.
583.500 Displacement, relocation, and acquisition.
583.505 Nondiscrimination and equal opportunity requirements.
583.510 Applicability of OMB Circulars.
583.515 Lead-based paint.
583.520 Conflicts of interest.
583.525 Audits.
583.530 Davis-Bacon wage rates.


Sec.  583.500  Displacement, relocation, and acquisition.

    (a) Minimizing displacement. Consistent with the other goals and 
objectives of this part, grantees must ensure that they have taken all 
reasonable steps to minimize the displacement of persons (families, 
individuals, businesses, nonprofit organizations, and farms) as a 
result of supportive housing assisted under this part.
    (b) Relocation assistance for displaced persons. A displaced person 
(defined in paragraph (f) of this section) must be provided relocation 
assistance at the levels described in, and in accordance with, the 
requirements of the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970 (42 U.S.C. 4601-4655) (URA) and 
implementing regulations at 49 CFR part 24.
    (c) Real property acquisition requirements. The acquisition of real 
property for supportive housing is subject to the URA and the 
requirements described in 49 CFR part 24, subpart B.
    (d) Responsibility of grantee. (1) The grantee must certify (i.e., 
provide assurance) that it will comply with the URA, the regulations at 
49 CFR part 24, and the requirements of this section, and must ensure 
such compliance notwithstanding any third party's contractual 
obligation to the grantee to comply with these provisions.
    (2) The cost of required relocation assistance is an eligible 
project cost in the same manner and to the same extent as other project 
costs. Such costs also may be paid for with local public funds or funds 
available from other sources.
    (3) The grantee must maintain records in sufficient detail to 
demonstrate compliance with provisions of this section.
    (e) Appeals. A person who disagrees with the grantee's 
determination concerning whether the person qualifies as a ``displaced 
person,'' or the amount of relocation assistance for which the person 
is eligible, may file a written appeal of that determination with the 
grantee. A low-income person who is dissatisfied with the grantee's 
determination on his or her appeal may submit a written request for 
review of that determination to the HUD field office.
    (f) Definition of displaced person. (1) For purposes of this 
section, the term ``displaced person'' means a person (family, 
individual, business, nonprofit organization, or farm) that moves from 
real property, or moves personal property from real property 
permanently as a direct result of acquisition, rehabilitation, or 
demolition for a supportive housing project assisted under this part. 
The term ``displaced person'' includes, but may not be limited to:
    (i) A person who moves permanently from the real property after the 
property owner (or person in control of the site) issues a vacate 
notice, or refuses to renew an expiring lease in order to evade the 
responsibility to provide relocation assistance, if the move occurs on 
or after the date the grantee submits to HUD the application or 
application amendment designating the project site;
    (ii) Any person, including a person who moves before the date 
described in paragraph (f)(1)(i) of this section, if the grantee or HUD 
determines that the displacement resulted directly from acquisition, 
rehabilitation, or demolition for the assisted project; or
    (iii) A tenant-occupant of a dwelling unit who moves permanently 
from the building or complex on or after the date of the ``initiation 
of negotiations'' (see paragraph (g) of this section), if the move 
occurs before the tenant has been provided written notice offering him 
or

[[Page 43500]]

her the opportunity to lease and occupy a suitable, decent, safe, and 
sanitary dwelling in the same building or complex, under reasonable 
terms and conditions, upon completion of the project. Such reasonable 
terms and conditions must include a monthly rent and estimated average 
monthly utility costs that do not exceed the greater of:
    (A) The tenant's monthly rent before the initiation of negotiations 
and estimated average utility costs; or
    (B) 30 percent of gross household income. If the initial rent is at 
or near the maximum, there must be a reasonable basis for concluding at 
the time the project is initiated that future rent increases will be 
modest.
    (iv) A tenant of a dwelling who is required to relocate 
temporarily, but does not return to the building or complex, if either:
    (A) A tenant is not offered payment for all reasonable out-of-
pocket expenses incurred in connection with the temporary relocation, 
or
    (B) Other conditions of the temporary relocation are not 
reasonable.
    (v) A tenant of a dwelling who moves from the building or complex 
permanently after having been required to move to another unit in the 
same building or complex, if either:
    (A) The tenant is not offered reimbursement for all reasonable out-
of-pocket expenses incurred in connection with the move; or
    (B) Other conditions of the move are not reasonable.
    (2) Notwithstanding the provisions of paragraph (f)(1) of this 
section, a person does not qualify as a ``displaced person'' (and is 
not eligible for relocation assistance under the URA or this section), 
if:
    (i) The person has been evicted for serious or repeated violation 
of the terms and conditions of the lease or occupancy agreement, 
violation of applicable Federal, State, local, or tribal law, or for 
other good cause, and HUD determines that the eviction was not 
undertaken for the purpose of evading the obligation to provide 
relocation assistance;
    (ii) The person moved into the property after the submission of the 
application and, before signing a lease and commencing occupancy, was 
provided written notice of the project, its possible impact on the 
person (e.g., the person may be displaced, temporarily relocated, or 
suffer a rent increase) and the fact that the person would not qualify 
as a ``displaced person'' (or for any assistance provided under this 
section), if the project were approved;
    (iii) The person is ineligible under 49 CFR 24.2(g)(2); or
    (iv) HUD determines that the person was not displaced as a direct 
result of acquisition, rehabilitation, or demolition of the project.
    (3) The grantee may request, at any time, HUD's determination of 
whether a displacement is or would be covered under this section.
    (g) Definition of initiation of negotiations. For purposes of 
determining the formula for computing the replacement housing 
assistance to be provided to a residential tenant displaced as a direct 
result of privately undertaken rehabilitation, demolition, or 
acquisition of the real property, the term ``initiation of 
negotiations'' means the execution of the agreement between the grantee 
and HUD.
    (h) Definition of project. For purposes of this section, the term 
``project'' means an undertaking paid for in whole or in part with 
assistance under this part. Two or more activities that are integrally 
related, each essential to the others, are considered a single project, 
whether or not all component activities receive assistance under this 
part.


Sec.  583.505  Nondiscrimination and equal opportunity requirements.

    (a) Projects serving persons with disabilities. (1) General. 
Generally, all projects must be available to all eligible persons 
without regard to their type of disability.
    (2) Targeted. A grantee or project sponsor may advertise its 
project as offering services for a particular type of disability, 
however, the project shall be open to all otherwise eligible persons 
with disabilities who may benefit from services provided in the 
project.
    (3) Established preference. If proposed in the application, the 
grantee or project sponsor may establish a preference for individuals 
with specific types of disabilities in accordance with 24 CFR part 8 
if:
    (i) The project offers services appropriate for that population; 
and
    (ii) Serving this population in this manner is necessary to provide 
qualified individuals with disabilities housing, aid, benefit, or 
services that are as effective as those provided to others.
    (b) Other requirements in effect. (1) The prohibitions against 
discrimination on the basis of age under the Age Discrimination Act of 
1975 (42 U.S.C. 6101-07) and implementing regulations at 24 CFR part 
146, and the prohibitions against discrimination against handicapped 
individuals under section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794) and implementing regulations at 24 CFR part 8.
    (2) The requirements of Executive Order 11246 (3 CFR 1964-65, 
Comp., p. 339) (Equal Employment Opportunity), as amended by Executive 
Order 13279 (67 FR 77141, December 2, 2002) (3 CFR, 2002 Comp., p. 258) 
(Equal Protection of the Law for Faith-based and Community 
Organizations) and the regulations issued under the order at 41 CFR 
chapter 60.
    (3) The requirements of section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u) and the regulations at 24 CFR 
part 135.
    (4) The requirements of Executive order 11625, as amended by 
Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977 
Comp., p.39) (Minority Business Enterprises); Executive Order 12432 (3 
CFR, 1983 Comp., p. 198) (Minority Business Enterprises Development); 
and Executive Order 12138 (3 CFR, 1977 Comp., p. 393) (Women's Business 
Enterprises). Consistent with HUD's responsibilities under these 
orders, grantees must make efforts to encourage the use of minority and 
women's business enterprises in connection with funded activities.
    (c) Procedures. (1) If the procedures that the grantee intends to 
use to make known the availability of the supportive housing are 
unlikely to reach persons of any particular race, color, religion, sex, 
age, national origin, familial status, or handicap who may qualify for 
admission to the housing, the grantee must establish additional 
procedures that will ensure that such persons can obtain information 
concerning availability of the housing.
    (2) The grantee must adopt procedures to make available information 
on the existence and locations of facilities and services that are 
accessible to persons with a handicap and maintain evidence of 
implementation of the procedures.
    (d) Accessibility requirements. The grantee must comply with the 
new construction accessibility requirements of the Fair Housing Act and 
section 504 of the Rehabilitation Act of 1973, and the reasonable 
accommodation and rehabilitation accessibility requirements of section 
504 as follows:
    (1) All new construction must meet the accessibility requirements 
of 24 CFR 8.22 and, as applicable, 24 CFR 100.205: and
    (2) Projects of 15 or more units in which costs of rehabilitation 
are 75 percent or more of the replacement cost of the building must 
meet the requirements of 24 CFR 8.23(a). Other rehabilitation must meet 
the requirements of 24 CFR 8.23(b).

[[Page 43501]]

Sec.  583.510  Applicability of OMB Circulars.

    The policies, guidelines, and requirements of OMB Circular No. A-87 
(Cost Principles Applicable to Grants, Contracts and Other Agreements 
with State and Local Governments), 24 CFR part 84, and 24 CFR part 85 
apply to the award, acceptance, and use of assistance under this 
program by governmental entities. OMB Circular Nos. A-110 (Grants and 
Cooperative Agreements with Institutions of Higher Education, 
Hospitals, and Other Nonprofit Organizations) and A-122 (Cost 
Principles Applicable to Grants, Contracts and Other Agreements with 
Nonprofit Institutions) apply to the acceptance and use of assistance 
by private nonprofit organizations, except where inconsistent with the 
provisions of the McKinney-Vento Act, other Federal statutes, or this 
part. (Copies of OMB Circulars may be obtained from E.O.P. 
Publications, Room 2200, New Executive Office Building, Washington, DC 
20503-0009; telephone (202) 395-7332 (this is not a toll-free number). 
There is a limit of two free copies.


Sec.  583.515  Lead-based paint.

    The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-
4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 
(42 U.S.C. 4851-4856), and implementing regulations at 24 CFR part 35, 
subparts A, B, J, K, and R of this title apply to activities under this 
program.


Sec.  583.520  Conflicts of interest.

    (a) In addition to the conflict of interest requirements in 24 CFR 
part 84 and part 85, a person who is an employee, agent, consultant, 
officer, or elected or appointed official of the grantee and who either 
exercises or has exercised any functions or responsibilities with 
respect to assisted activities or is in a position to participate in a 
decision-making process or gain inside information with regard to such 
activities, may not obtain a personal or financial interest or benefit 
from the activity, nor have an interest in any contract, subcontract, 
or agreement with respect thereto, or the proceeds thereunder, either 
for himself/herself or for those with whom he/she has family or 
business ties, during his/her tenure or for one year thereafter. 
Participation in policy or decision-making under Sec.  583.320 by a 
homeless individual who is also a participant under the program does 
not constitute a conflict of interest.
    (b) Upon the written request of the grantee, HUD may grant an 
exception to the provisions of paragraph (a) of this section on a case-
by-case basis when it determines that the exception will serve to 
further the purposes of the program and the effective and efficient 
administration of the grantee's project. An exception may be considered 
only after the grantee has provided the following:
    (1) For states and other governmental entities, a disclosure of the 
nature of the conflict, accompanied by an assurance that there has been 
public disclosure of the conflict and a description of how the public 
disclosure was made; and
    (2) For all grantees, an opinion of the grantee's attorney that the 
interest for which the exception is sought would not violate State or 
local law.
    (c) In determining whether to grant a requested exception after the 
grantee has satisfactorily met the requirement of paragraph (b) of this 
section, HUD will consider the cumulative effect of the following 
factors, where applicable:
    (1) Whether the exception would provide a significant cost benefit 
or an essential degree of expertise to the project that would otherwise 
not be available;
    (2) Whether the person affected is a member of a group or class of 
eligible persons and the exception will permit such person to receive 
generally the same interests or benefits as are being made available or 
provided to the group or class;
    (3) Whether the affected person has withdrawn from the functions or 
responsibilities or from the decisionmaking process with respect to the 
specific assisted activity in question;
    (4) Whether the interest or benefit was present before the affected 
person was in a position as described in paragraph (a) of this section;
    (5) Whether undue hardship will result either to the grantee or to 
the person affected when weighed against the public interest served by 
avoiding the prohibited conflict; and
    (6) Any other relevant consideration.


Sec.  583.525  Audits.

    The financial management systems used by grantees under this 
program must provide for audits in accordance with 24 CFR part 44 or 
part 45, as applicable. HUD may perform or require additional audits as 
it finds necessary or appropriate.


Sec.  583.530  Davis-Bacon wage rates.

    Assistance under this part does not require payment of prevailing 
wage rates determined under the Davis-Bacon Act. Such wage rates may 
apply if a Supportive Housing Program project is also assisted with 
additional funds that carry a Davis-Bacon requirement.

    Dated: June 7, 2004.
Roy A. Bernardi,
Assistant Secretary for Community Planning and Development.
[FR Doc. 04-16390 Filed 7-19-04; 8:45 am]
BILLING CODE 4210-29-P