[Federal Register Volume 71, Number 27 (Thursday, February 9, 2006)]
[Rules and Regulations]
[Pages 6950-6971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1182]



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Part III





Department of Housing and Urban Development





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24 CFR Parts 91 and 570



Consolidated Plan Revisions and Updates; Final Rule

  Federal Register / Vol. 71, No. 27 / Thursday, February 9, 2006 / 
Rules and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 91 and 570

[Docket No. FR-4923-F-02]
RIN 2501-AD07


Consolidated Plan Revisions and Updates

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

ACTION: Final rule.

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SUMMARY: This rule makes streamlining and clarifying changes to the 
consolidated plan regulations of state and local governments so that 
the plans are more results-oriented and useful to communities in 
assessing their own progress toward addressing the problems of low-
income areas. The rule also eliminates obsolete and redundant 
provisions and makes other changes that conform these regulations to 
HUD's public housing regulations that govern the Public Housing Agency 
(PHA) Plan. A consolidated plan is a document that jurisdictions submit 
to HUD if they receive funding under any of HUD's Community Planning 
and Development formula grant programs. The consolidated plan also 
serves as the jurisdiction's planning document for the use of the funds 
received under these programs.

DATES: Effective Date: March 13, 2006.

FOR FURTHER INFORMATION CONTACT: Salvatore Sclafani, Office of 
Community Planning and Development, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Room 7240, Washington, DC 20410-
7000. Telephone: (202) 708-1817. (This is not a toll-free number.) 
Individuals with hearing and speech impairments may contact this 
telephone number through the toll-free Federal Information Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

    On December 30, 2004, HUD published the proposed rule to update and 
streamline the consolidated plan (69 FR 78830). The rule built on the 
existing framework that established the consolidated plan as a 
collaborative process whereby a community establishes a unified plan of 
housing and community development actions. That framework gave states 
and local governments the flexibility to use existing plans and 
strategies to help citizens understand the jurisdiction's priority 
needs, and assess the jurisdiction's progress toward meeting identified 
goals and objectives through measurable indicators.
    The proposed rule resulted from an extensive consultation process 
that involved stakeholders representing the interests of state and 
local governments and low-income persons. In Fiscal Year (FY) 2002, the 
President's Management Agenda directed HUD to work with local 
stakeholders to streamline the consolidated plan by making it more 
results-oriented and useful to communities in assessing their own 
progress toward addressing the problems of low-income areas. To launch 
this activity, several HUD Office of Community Planning and Development 
(CPD) field offices held focus group sessions with grantees and other 
stakeholders in February 2002 to discuss ways to streamline the 
consolidated plan and improve performance measurement. On March 14, 
2002, CPD convened a national planning meeting to introduce the concept 
of the Consolidated Plan Improvement Initiative. In attendance were 
public interest groups, grantees, other stakeholders, along with staff 
from HUD Headquarters and field offices, and from the Office of 
Management and Budget (OMB).
    At a meeting of these stakeholders, participants agreed that 
addressing the issues of streamlining and performance measurement would 
be best served by small working groups that represent the full range of 
people involved in and affected by the consolidated plan, including 
grantee practitioners, public interest groups, HUD staff, and other 
stakeholders. Six working groups were created to assess alternative 
planning requirements, examine and suggest performance measures, and 
identify communities that would be willing to test pilots of 
alternative planning procedures. The Department carefully considered 
ideas generated by the working groups concerning alternative planning 
requirements and suggestions for improving the consolidated plan. 
Representatives from the following national groups participated in the 
working groups: Council of State Community Development Agencies, 
National Community Development Association, National Association for 
County, Community and Economic Development, National Association of 
Housing and Redevelopment Officials, and National Low Income Housing 
Coalition.
    Alternative planning procedures were tested by representatives of 
state and local governments that participated in eight pilots. One 
pilot looked at streamlining the consolidated plan by referencing 
existing documents to avoid requiring redundant information. Another 
pilot evaluated alternative means of satisfying non-housing community 
development plan requirements. A third pilot addressed alternative 
formats for submission of consolidated plans, action plans, and 
performance reporting. A fourth pilot explored ways to enhance the 
citizen participation process. A fifth pilot involved development and 
use of templates. The sixth pilot involved coordination of consolidated 
plan and PHA plan. A seventh pilot explored the development and review 
of tools to submit consolidated plans, track results, and report 
performance. An eighth pilot documented useful practices for 
streamlining and performance measurement. An analysis of these pilots 
helped HUD determine how the consolidated planning process and 
regulatory requirements might be streamlined, made more results-
oriented, and ultimately made more useful to communities in addressing 
the needs of their low-income residents and areas.
    This rule also conformed the consolidated plan regulations to 
sections 568 and 583 of the Quality Housing and Work Responsibility Act 
of 1998 (Pub. L. 105-276, 112 Stat. 2461, approved October 21, 1998, 
codified at 42 U.S.C. 12705). Those sections required state and local 
consolidated plans to describe the manner in which the jurisdiction 
will help address the needs of public housing, and also mandated that a 
consolidated plan from a state or unit of general local government in 
which any troubled PHA is located must include a description of the 
manner in which the state or local government will provide financial or 
other assistance to remove the PHA's troubled designation. Those 
sections of the rule also made certain other conforming amendments and 
clarification changes.

II. This Final Rule

    This final rule takes into consideration the public comments 
received on the December 30, 2004, proposed rule. After reviewing the 
public comments, the significant changes described below have been 
incorporated into the final rule.

A. Executive Summary

    The Department believes an executive summary is useful and has 
included references to this requirement at Sec. Sec.  91.200, 91.220, 
91.300, and 91.320. The final rule does not specify the precise content 
or format. However, the executive summary must include a summary of 
objectives and outcomes

[[Page 6951]]

identified in the consolidated plan, and an evaluation of past 
performance.

B. Chronic Homelessness

    The references to including any persons that are chronically 
homeless in the inventory of facilities and services at Sec.  91.210 
and Sec.  91.310 have been modified to make it clear that a separate 
inventory identifying chronic homeless facilities and services is not 
required. Rather, the inventory should include an estimate of the 
percentage or number of beds and supportive services programs that are 
serving people that are chronically homeless, to the extent that 
information is available to the jurisdiction.

C. Relative Allocation Priorities

    The Department has decided to eliminate the requirement regarding 
relative allocation priorities and to allow jurisdictions to designate 
one. The regulation has also been revised to make it clear that the 
jurisdiction must describe the relationship between the allocation 
priorities and the extent of need given to each category of priority 
needs, particularly among extremely low-income, low-income, and 
moderate-income households. The plan should be explicit about what the 
jurisdiction plans to do with formula grant funds in the context of 
their larger strategy.

D. Objectives and Outcomes

    The consolidated plan's strategy requirements are modified to take 
into account the proposed performance measurement framework that was 
developed by a working group that included representatives from 
national groups, including the Council of State Community Development 
Agencies; the National Association for County, Community and Economic 
Development; and the National Community Development Association. 
Changes have been made to Sec.  91.215 and Sec.  91.315 indicating that 
these requirements will be provided in accordance with guidance issued 
by HUD.

E. Abandoned Buildings

    Data regarding the number of vacant or abandoned buildings should 
be included in the Housing Market Analysis section of the consolidated 
plan rather than in the section dealing with the non-housing community 
development plan. The estimate of the number of vacant or abandoned 
buildings and whether units are available that are suitable for 
rehabilitation should be provided to the extent information is 
available.

F. Resources

    The Department agreed that local jurisdictions should include Low-
Income Housing Tax Credits (LIHTCs) among the federal resources 
discussed in the consolidated plan, even though HUD does not administer 
them. The importance of the LIHTC program to jurisdictions cannot be 
overstated as a means of accomplishing the goals of a jurisdiction to 
provide housing for extremely low-income and low-income households.

III. Summary of Public Comments

    The comment period for the proposed rule closed on January 31, 
2005. HUD received 53 comments, including 20 from local governments or 
groups representing their interests, 22 from states or groups 
representing their interests, five from groups representing the 
interests of homeless or low-income persons, one from an organization 
representing a coalition of organizations advocating for the interests 
of persons with disabilities, two from trade associations representing 
home builders and manufactured housing, and three from individuals. 
Low-income advocates, cities, and states often expressed opposing views 
on the rule.
    For example, one of the groups representing low-income persons 
welcomed improvements in the rule that increased the emphasis on 
accountability and results, but indicated that many consolidated plans 
fail to demonstrate how funds allocated by the plan address the needs 
of extremely low-income persons. That group indicated that federal 
funds should be used to solve the most pressing problems and that 
failure to link spending decisions to priority needs should be a factor 
that HUD can use to disapprove a plan. On the other hand, one of the 
groups representing local governments thought some of the proposed 
changes to the rule went beyond the current statute and were too 
prescriptive, particularly in the area of assigning quantifiers to 
priority needs and requiring grantees to estimate the amount of funding 
in target areas. That group expressed concern that HUD might use these 
reports to penalize communities for not reaching their goals. Another 
group representing local governments said that requiring jurisdictions 
to address the chronically homeless in the strategic plan and to 
include specific action steps to end chronic homelessness in the action 
plan diminished the consolidated plan's ability to be a ``concise'' and 
``streamlined'' document. This new requirement would ask CPD formula 
programs to be accountable for yet another objective, making it less 
targeted and less streamlined. One state suggested that HUD, by 
focusing on trying to influence grantees to use their resources on 
assisting the homeless, especially the chronic homeless, was violating 
both the intent of the consolidated plan as well as Congress's 
directions to HUD that prevents HUD from conveying federal housing 
priorities to local governments.

IV. Summary of Public Comments From Local Governments and Interest 
Groups

A. Concise Action-Oriented Management Tool

    Groups representing local governments expressed support for making 
the consolidated plan a concise, action-oriented management tool. One 
group representing local governments was pleased that some concerns 
were addressed in the proposed rule but was disappointed that the 
``revisions and updates'' appeared to have usurped the ``streamlining 
effort'' in favor of additional requirements, particularly in the area 
of assigning quantifiers to priority needs and requiring grantees to 
estimate the amount of funding they will use in target areas. Another 
group representing local governments expressed support for the 
Consolidated Plan Management Process (CPMP) Tool as part of the 
streamlining effort, but felt the Tool did not produce a consumer-
friendly document that allowed community residents to understand the 
goals and achievements of their jurisdictions' federal grant programs. 
The group urged HUD to amend the CPMP Tool so that it generates a 
document that more simply communicates program goals. One county cited 
the addition or expansion of required narratives on homelessness and 
public housing as prime examples that made the process more burdensome 
and questioned why it was necessary to repeat information contained in 
other HUD documents in consolidated plans. It suggested that it would 
be far simpler to cross-reference the pages of the relevant document 
where the information could be found. One large city suggested that HUD 
permit localities with PHAs the option of cross-referencing materials 
contained in their approved PHA Plan or other similar documents. Two 
other cities also indicated that it was redundant to require 
jurisdictions to include needs identified in the PHA Plan.
    HUD response: The final rule provides more flexibility while also 
asking for more accountability in terms of the ability to track 
results. With

[[Page 6952]]

respect to the CPMP Tool, the Department plans to revise the tool so 
that it generates a document that more simply communicates program 
goals. The Department will also allow jurisdictions the option to 
cross-reference pages of relevant documents like the PHA Plan and 
Continuum of Care Plan in order to streamline the consolidated plan and 
make the process less burdensome. The Department will issue 
supplemental guidance on how local jurisdictions can implement some of 
these requirements.

B. Citizen Participation

    Representatives of county officials and local governments supported 
the language at Sec.  91.1 and Sec.  91.105 to include a broader list 
of stakeholders in the consolidated planning process and encouraging 
jurisdictions to explore alternative public involvement techniques such 
as focus groups and use of the Internet. A national group representing 
homebuilders also expressed support for widening the participation of 
stakeholders, which it suggested would help foster more public-private 
partnerships and leverage more community resources. Several cities and 
counties indicated to HUD that they had already undertaken efforts to 
broaden stakeholder involvement. One city, however, commented that 
broadening the scope of the required section would be a time-consuming 
administrative burden and should be deleted.
    HUD response: The Department has determined that including a 
broader list of stakeholders in the process and encouraging alternative 
public involvement techniques would not significantly increase the 
administrative burden.
    Executive Summary. The preamble of the proposed rule invited 
comment on whether an executive summary would be a useful tool for both 
citizens and jurisdictions. The preamble also indicated that HUD was 
particularly interested in comments on what specific information should 
be included in an executive summary and whether the benefit of an 
executive summary would outweigh the burden. Eleven local governments 
and one of the groups representing their interests expressed support 
for an executive summary, thought it might be useful, and indicated 
that many communities currently use one. Another group representing 
local governments, however, did not support an executive summary as a 
way of simplifying the information for the general public. Instead, it 
suggested that HUD reduce the scope and administrative burden of the 
consolidated plan itself, to what would essentially be an executive 
summary and argued an executive summary would add more work. Some 
commenters that support an executive summary indicated that the summary 
would be a powerful and meaningful document only if jurisdictions were 
allowed to present it in a format that was most consistent with local 
citizen participation and program management processes. Most local 
governments felt that because each jurisdiction knew the most effective 
way to provide that information to citizens and governing bodies, HUD 
should not be mandating the format. A group representing low-income 
housing advocates also thought a well-written executive summary would 
be a useful device for citizen participation and expressed support for 
maintaining citizen participation requirements and continuing to seek 
input on how to make citizen participation as effective and meaningful 
as possible. One local government indicated that it made extended use 
of an executive summary not only in its five-year plan and annual 
action plan but also in its Consolidated Annual Performance and 
Evaluation Report. The city suggested that the executive summary 
include not only short-term and long-term performance goals and the 
major activities and projects a city plans to fund, but also provide a 
strong evaluation of the previous year's results, information on 
targeting of consolidated plan funds, and information on how these 
funds directly affected neighborhoods. Three cities expressed 
reservations about an executive summary. One maintained that the 
strategic plan should be well organized so that it functions as an 
executive summary. Another indicated that an executive summary would 
become a burden to both citizens and jurisdictions unless other changes 
were made that condense or consolidate the changes. A third said it 
should be left to the option of grantees because, in trying an 
executive summary format in the past, the city found it raised more 
questions from readers than if one had not been written.
    HUD response: The Department believes an executive summary is 
useful and has included references to this requirement at Sec. Sec.  
91.200, 91.220, 91.300, and 91.320. The final rule does not specify the 
precise content or format. However, the executive summary must include 
a summary of objectives and outcomes identified in the consolidated 
plan, and an evaluation of past performance.

C. Clarification of Chronic Homelessness

    While representatives of county officials and local governments 
supported the goal of ending chronic homelessness, they cited the 
difficulty of identifying and tracking transient individuals and 
families. In addition, they cited the difficulty of asking CPD formula 
programs to be accountable for yet another objective, thereby making 
the plans less targeted and streamlined. One group expressed a concern 
that the definition of chronic homelessness was too broad and difficult 
to determine in most cases, and impossible in many. Several communities 
suggested expanding the definition to include families, while others 
indicated that funds were too limited. Others cited the expansion in 
the number of narratives dealing with chronic homelessness as 
burdensome and the need for a more explicit linkage with the Continuum 
of Care process. One city stated that a separate inventory identifying 
chronic homeless facilities was not needed, and that instead, it was 
the programs and priorities that should be identified.
    HUD response: The Department recognizes that jurisdictions may find 
it difficult to maintain documentation for a chronically homeless 
person and has developed technical assistance guides that describe 
methods for identifying and counting the homeless. These are available 
at: http://www.hud.gov/offices/cpd/homeless/hmis/assistance/index.cfm#materials. The Department believes there should be a more 
explicit linkage with the Continuum of Care process, and the definition 
of chronic homelessness is identical with the definition that is used 
in that process. The 2006 consolidated plan update for the city of 
Seattle, which is available at: http://www.cityofseattle.net/humanservices/director/consolidatedplan/default.htm, provides an 
example of the linkage between the Continuum of Care process, the King 
County/Seattle Ten Year Plan to End Homelessness, and the Consolidated 
Plan. In addition, the reference to including any persons that are 
chronically homeless in the inventory of facilities and services at 
Sec.  91.210 has been modified to make it clear that a separate 
inventory identifying chronic homeless facilities and services is not 
required. Rather, the inventory should include an estimate of the 
percentage or number of beds and supportive services programs that are 
serving people that are chronically homeless, to the extent that 
information on those subjects is available to the jurisdiction. With 
regard to the term ``disabling condition,'' the

[[Page 6953]]

term applies specifically to the sections of the consolidated plan that 
relate exclusively to chronically homeless people.

D. Removal of Barriers to Affordable Housing

    One representative of the local governments agreed with the 
constructiveness of working to remove barriers to affordable housing 
development. However, the representative did not think the HUD-27300 
Form would be useful in collecting information on regulatory barriers, 
since it did not ask specific-enough questions about regulatory 
barriers so that the results could be aggregated nationally. Two cities 
commented that the additional language contained in Sec.  91.220(j), 
which specified annual actions to address affordable housing barriers, 
was too restrictive and should be eliminated. While recognizing the 
importance of the topic, two other local jurisdictions opposed adding 
additional requirements and cited the complexity of the issue.
    HUD response: The Department believes that the removal of barriers 
to affordable housing is an important issue and has decided to include 
the additional clarifying language with the understanding that it is 
not imposing a new requirement.

E. Clarification of Strategic Plan Provisions

    Priorities and Priority Needs. Representatives of county officials, 
local governments, and most commenters did not find the current method 
of assigning ``relative'' allocation priorities of ``high,'' 
``medium,'' and ``low'' particularly useful. Some large cities 
suggested making it optional or assigning a federal, federal/local, 
local, or no-priority designation to more clearly communicate how a 
community intends to fund a need and with what resources (which could 
tie into the proposed measurement framework). One city argued that the 
designation should be linked not to the funding, but to whether the 
need is high, medium, or low. Another city indicated that only those 
needs that will be funded should be included in the consolidated plan, 
and that an amendment could be made with the new priorities if 
priorities changed later.
    HUD response: The Department has decided to eliminate the 
requirement regarding relative allocation priorities but to allow 
jurisdictions to designate one. The regulation has also been revised to 
make it clear that the jurisdiction must describe the relationship 
between the allocation priorities and the extent of need given to each 
category of priority needs, particularly among extremely low-income, 
low-income, and moderate-income households. The consolidated plan 
should be explicit about what the jurisdiction intends to do with 
formula grant funds in the context of their larger strategy. For 
example, jurisdictions may wish to indicate that they intend to 
allocate formula grant funds for gap financing, while using tenant-
based rental assistance or vouchers for low-income households that 
require a deeper subsidy. The rationale for establishing the allocation 
priorities should flow logically from the analysis. As part of the 
analysis, the jurisdiction must also identify any obstacles to 
addressing underserved needs.
    Summary of objectives. A number of commenters indicated that the 
consolidated plan's strategy requirements should be influenced by a 
proposed performance measurement framework that has been developed by a 
working group that included representatives from the Council of State 
Community Development Agencies; the National Association for County, 
Community and Economic Development; and the National Community 
Development Association. HUD has been working with the working group to 
develop workable outcome measures that will be acceptable to the 
Department and its grantees.
    HUD response: Changes are being made to Sec.  91.215(a)(4) 
indicating that these requirements would be provided in accordance with 
guidance issued by HUD.
    Non-homeless special needs. One national group representing persons 
with disabilities was concerned that the reference to persons with 
disabilities in the priority housing needs table is only to those 
persons who may require housing with supportive services. The group 
recommended the reference to persons with disabilities in the priority 
housing needs table not be limited to persons that may require housing 
with supportive services but to all people with disabilities, since 
many people with disabilities do not need supportive housing but do 
need decent, safe, and affordable housing. The group was also concerned 
that the proposed rule did not refer to the President's New Freedom 
Initiative, a nationwide effort that encourages both the removal of 
barriers to community living for people with disabilities, and the 
integration of persons with disabilities into local communities. 
Another group expressed a concern that the proposed rule did not 
promote integration between the consolidated plan and the Analysis of 
Impediments (AI) to Affirmatively Furthering Fair Housing (AFFH).
    HUD response: The Department agrees that the reference to persons 
with disabilities in the priority needs table should not be limited to 
persons that require supportive services, and will make the appropriate 
changes to the consolidated plan guidelines and instructions. With 
regard to the President's New Freedom Initiative, the consolidated plan 
rule requires communities to conduct an analysis to identify 
impediments to fair housing choice and take appropriate actions to 
overcome the effects of any impediments. In addition, the Department 
issued a notice (CPD Notice 05-03) addressing the President's New 
Freedom Initiative. This notice, which is available on HUD's Web site 
http://www.hud.gov/offices/cpd/lawsregs/notices/2005/index.cfm, 
encourages communities to develop ``comprehensive, effective working 
plans'' aimed at providing services to individuals with disabilities in 
the most integrated settings possible.
    With regard to the second comment, this final rule focuses on 
streamlining the consolidated plan and making it more results-oriented 
in accordance with the President's Management Agenda. The final rule 
does not address the topic of affirmatively furthering fair housing 
that the Department believes merits separate consideration and 
consultation with stakeholders. The Department is considering a 
proposed rule that would invite comments on better ways to integrate 
the Consolidated Plan and the Analysis of Impediments to AFFH. The 
Department is also considering issuing guidance dealing with AFFH and 
other fair housing issues.
    Dollars to address. Almost all commenters agreed with the proposal 
to eliminate the requirement to quantify ``dollars to address'' in the 
non-housing community development plan. One large city, however, argued 
for retention of the requirement to quantify ``dollars to address'' 
non-housing community development needs. It argued that the estimated 
``dollars to address'' has a practical utility for understanding the 
scope of unmet needs.
    HUD response: The Department has decided to eliminate the 
requirement to quantify ``dollars to address'' in the non-housing 
community development plan, but to allow jurisdictions to provide an 
estimate of ``dollars to address'' unmet needs or to identify estimated 
dollars that will be targeted to address the need.
    Abandoned Buildings. Most commenters said they did not

[[Page 6954]]

understand the intention behind mandating jurisdictions to estimate the 
number of abandoned buildings and that there appeared to be many 
logistical problems with this requirement, including definitional and 
data collection issues. One commenter indicated that the requirement to 
estimate the number of abandoned buildings in the non-housing community 
development plan would be redundant because the Housing Market Analysis 
of the plan includes data on the number of abandoned buildings as part 
of its calculation of the housing vacancy rate, and because the 
description of the condition of housing includes the number of 
abandoned (residential) buildings. Others indicated that collecting 
this information would be burdensome, unless there were specific plans 
for a site.
    HUD response: The Department agrees with the comment that this 
provision would be redundant because the Housing Market Analysis 
section of the consolidated plan should include both an estimate of the 
number of vacant or abandoned buildings as part of its calculation of 
the housing vacancy rate and the description of the condition of 
housing. Therefore, the Department has determined that data regarding 
the number of vacant or abandoned buildings should be included in the 
Housing Market Analysis section of the consolidated plan instead of the 
section dealing with the non-housing community development plan. The 
estimate of the number of vacant or abandoned buildings and whether 
units in the building are suitable for rehabilitation should be 
provided to the extent information is available.
    For jurisdictions that wish to use it, HUD will make data available 
from the U.S. Postal Service on the number of vacant addresses at the 
census tract level, and plans to provide updated data on the number of 
vacant addresses annually. The U.S. Postal Service collects data on 
addresses that are vacant 90 days or longer. The Department finds 
vacant and abandoned buildings depress property values, reduce tax 
revenues, attract crime, and serve as a good measure of neighborhood 
blight. Vacant properties also degrade the quality of life for 
remaining residents. A large number of vacant buildings in a 
neighborhood increases the likelihood that property values will 
continue to decline and that further abandonment will persist.
    Lead-based Paint Hazards. A national organization advocating 
solutions to childhood lead poisoning commented that jurisdictions 
should describe how their plan for the reduction of lead-based hazards 
will increase access to housing without such health hazards. In 
addition, one commenter on HUD regulations that address barriers to the 
production and rehabilitation of affordable housing stated that HUD 
should clarify that the consolidated plan should describe the 
relationship between plans for reducing lead hazards and the extent of 
lead poisoning and lead hazards.
    HUD response: The Department agrees and has modified Sec.  
91.215(i) accordingly. In addition, the description of the consultation 
process described in Sec.  91.200 is being modified to include a 
reference to consultations with state or local health and child welfare 
agencies regarding lead-based paint hazards conducted in accordance 
with Sec.  91.100(a)(3).

F. Action Plan

    Federal resources. With regard to describing resources, one city 
expressed concern that the clarified term ``federal resources'' 
included Section 8 resources made available to the jurisdictions and 
competitive McKinney-Vento Homeless Assistance Act funds. The city 
maintained that by including these funds as resources in the action 
plan, it might be inferred that these funds are available for 
allocation through the consolidated plan process, which is not the 
case. Another city argued that an estimate of Section 8 funding should 
be contained in the PHA's annual plan and that the best a jurisdiction 
could do for a tabulation of competitive McKinney-Vento resources would 
be an estimate. Another city indicated that only those jurisdictions 
that administer Section 8 vouchers and public housing programs should 
be required to report on the vast breadth of the public housing 
requirements listed in the consolidated plan. Therefore, jurisdictions 
should be mandated to report on public housing requirements on a more 
limited, scaled-down basis in the consolidated plan. This would help 
jurisdictions that might choose to fund an occasional public housing 
project without duplicating the reporting requirements that already 
exist in the Public Housing Agency Plan.
    HUD response: The Department recognizes that Section 8 funds and 
McKinney-Vento Homeless Assistance funds may be administered by other 
entities. The regulation only requires the jurisdiction to identify 
these programs as sources of funding.
    A national group representing homebuilders and one representing 
low-income housing advocates said it would also be useful to include 
expected allocations of LIHTC in its discussion of expected federal 
resources, even though HUD does not administer the LIHTC program. They 
pointed out that the importance of the LIHTC program to jurisdictions 
cannot be overstated and that jurisdictions should consider linking 
Section 8 rental assistance to LIHTC projects as a means of 
accomplishing their goals to provide housing for extremely low-income 
and low-income households.
    HUD response: The Department agrees that LIHTCs should be listed 
among the federal resources.
    Summary of annual objectives. One representative of the local 
governments expressed support for the provision requiring jurisdictions 
to submit a summary of annual objectives and also indicated that most 
of its members already meet this requirement. One city also asked for 
clarification as to whether the annual objectives identified in the 
action plan were a subset of the specific objectives identified in the 
strategic plan. Another city thought it was unclear whether this 
provision would actually enhance the quality, utility, and clarity of 
the action plan since objectives tend to be broad. Still another city 
thought the provision was unnecessary since it was addressed by other 
parts of the plan.
    HUD response: The Department believes a summary of annual specific 
objectives is a useful feature of the action plan since it identifies 
the subset of specific objectives that jurisdictions expect to achieve 
during the forthcoming program year.
    Activities to be undertaken. One group representing low-income 
housing advocates recommended that the consolidated plan include a 
stronger linkage between the priority needs identified in the plan and 
the action plan. It said jurisdictions should spend federal funds to 
solve the most pressing problems and that the failure of plans to link 
spending decisions to priority needs should be one of the factors that 
HUD considers when it approves a consolidated plan.
    HUD response: The Department agrees the consolidated plan must 
describe the linkage between priority needs identified in the plan and 
activities that are funded. Section 105(b)(8) of the Cranston-Gonzalez 
National Affordable Housing Act requires that the plan of the 
jurisdiction describe how the plan will address housing and homeless 
needs, describe the reasons for allocation priorities, and identify any 
obstacles to addressing underserved needs. Since the allocation of 
resources is described in the action plan, the Department has revised 
the section of the regulation dealing with

[[Page 6955]]

the description of activities to be undertaken by requesting grantees 
to describe the reasons for their allocation priorities and to identify 
any obstacles to addressing their underserved needs.
    Outcomes. Groups representing local governments expressed support 
for measuring outcomes and accomplishments in the consolidated plan so 
that the positive impact of CPD formula programs may be compellingly 
communicated at the national level. However, one group pointed out that 
it does not support reporting on outcomes if doing so becomes a means 
by which HUD uses these reports to penalize communities for not 
reaching their goals. Planning is not an exact science, and funding 
levels, lack of viable projects, along with many other factors can 
determine if goals will be met.
    Nine local governments commented on this provision. One large city 
recommended that HUD modify the provision by permitting localities to 
demonstrate that they currently provide appropriate housing and 
community development performance measures through other documents and 
by enabling these jurisdictions to meet the federal requirement by 
cross-referencing (e.g., providing the Internet site address for) 
materials published by the locality. The large city pointed out that 
requiring detailed outcome measures to somehow be reconfigured to fit 
the specific parameters of the consolidated plan would lead to 
additional burdensome accounting without necessarily improving the 
public's sense of the situation.
    Another city agreed that outcome measures should be included. 
However, the commenter argued that the use of outcome measures to 
measure the result of each activity was misguided and would result in 
redundant and duplicative entries. The commenter indicated that outcome 
measures measure long-term results, such as assessed valuation, crime 
rates, poverty rates, etc. It was that city's experience that it takes 
more than one activity to result in a significant change in an outcome 
measure. The city added that outcome measures should be associated with 
the achievement of a larger goal such as neighborhood revitalization, 
homeownership, and employment rates. For example, in its plan, the city 
could claim that up to ten different activities could be linked to a 
single outcome such as homeownership rate. The jurisdiction suggested 
that outcome measures be required to measure stated larger goals, 
rather than small activities, and then associate activities with each 
goal. This would eliminate a great deal of confusion and needless 
paperwork.
    Others supported outcome measures, but only if they were 
implemented in a meaningful way and did not place an undue burden on 
jurisdictions. Some jurisdictions felt that maximum flexibility must be 
provided to grantees in determining outcomes based on local program 
experience and knowledge of current housing and community development 
needs, and supported development of such outcome indicators from a 
broad spectrum, with input from residents, city departments, related 
city agencies, counties, states, other grantees, and non-profit and 
for-profit organizations. They did not think it necessary that either 
the Department, or the Office of Management and Budget needed to define 
national outcome measures. One large city thought that until outcome 
measures were further developed by the Department and published, it was 
premature to add this requirement to the rule. Another said it was not 
able to take a position since HUD had not released its guidance 
regarding specific outcome measures: It requested that HUD publish a 
proposed rule on the specific outcome measures rather than issuing 
guidance in order to allow an opportunity to review and submit comments 
on an area that would greatly impact the way jurisdictions do business. 
However, it strongly opposed the insertion of, as burdensome and of no 
practical or analytical use, a provision at Sec.  91.520 requiring that 
the performance report ``must explain variances between proposed and 
actual outcomes.''
    HUD response: The Department has decided to require outcomes in the 
consolidated plan rule in accordance with guidance to be issued by HUD. 
Accordingly, it has modified the provision at Sec.  91.520 by requiring 
that the performance report explain why progress was not made toward 
meeting goals and objectives. HUD published a notice outlining the 
framework for a draft performance measurement system for comment in the 
Federal Register on June 10, 2005 (70 FR 34004).
    Percentage of funds to target areas. Groups representing local 
governments expressed concern about this provision and did not 
understand the relevance of requiring a jurisdiction to estimate the 
percentage of funds the jurisdiction plans to dedicate to target areas, 
since at least 70 percent of the distribution of CDBG funds is mandated 
to be spent on projects that benefit low- and moderate-income persons. 
While expressing support for funding activities in target areas, one 
group opposing this requirement indicated that it suggests that HUD is 
pushing jurisdictions to spend funds in target areas, which also 
creates the impression that if grantees do not spend funds in target 
areas, they may be sanctioned or penalized in some manner. The group 
indicated that using a target area approach in funding activities is a 
locally determined decision and one that should remain as such.
    Eight local governments also commented on this provision. One city 
suggested that it would be better to require a listing, in the action 
plan, of any target areas as well as funds and projects dedicated to 
those target areas. Another indicated that there already is a 
requirement to provide a description of the geographic distribution of 
funds and that additional details required in federal regulations 
usually translate into extra research, documentation, recordkeeping, 
and reports. Some jurisdictions said they do not have target areas and 
jurisdictions and should have the flexibility to serve low- and 
moderate-income clients throughout the jurisdiction. Others urged HUD 
to make the designation of target areas (and specific objectives for 
those areas) optional, rather than having the federal government 
mandate the kind of system to be employed.
    HUD response: The Department believes that identification of the 
percentage of funds a jurisdiction plans to dedicate to target areas 
will be useful in determining the degree to which activities are being 
carried out in a concentrated manner.
    One-year housing goals. A representative of local governments 
argued that it is too narrow a requirement if jurisdictions must 
specify a goal for the number of homeless, non-homeless and special 
needs families to be assisted by three different categories of housing 
assistance. When a double breakdown of data like this is required, the 
numbers become artificial estimates and are confusing to the public. 
However, the group indicated that setting separate goals for the number 
of homeless, non-homeless and special needs families to be assisted is 
useful and would inform the public of the community's priorities. 
Similarly setting separate goals for the number of households to be 
served by rent assistance, new construction units, rehab, or 
acquisition is also good and would inform the public of the community's 
priorities. Several other cities thought this requirement might be 
redundant or duplicative of the goals required in the strategic plan.
    HUD response: The Department agrees with the point made by the 
group representing local governments and is clarifying the regulation 
to require two sets of annual housing goals. One set of

[[Page 6956]]

annual goals is for the number of households to be served by rent 
assistance, new construction units, rehabilitation, or acquisition 
during the year with funds made available by HUD to the jurisdiction. A 
second set of annual goals is for the number of homeless, non-homeless, 
and special needs families to be assisted during the program year with 
funds made available by HUD to the jurisdiction. The program funds 
providing the benefits (i.e., CDBG, HOME, HOPWA, ESG) may be from any 
funding year or combined funding years.
    Estimate amount of CDBG funds to benefit low/mod persons. One of 
the groups representing local governments expressed support for 
including an estimate of the amount of CDBG funds that would be used 
for activities benefiting low- and moderate-income persons. Two cities, 
however, commented that requiring an estimate of the amount of CDBG 
funds used for activities benefiting low- and moderate-income persons 
was redundant because the program already requires that at least 70 
percent of a jurisdiction's CDBG funding benefit this income group. A 
group representing low-income advocates, however, indicated that the 
consolidated plan requires an assessment of the number of extremely 
low-income, low-income, and moderate-income people who need affordable 
housing and to whom the jurisdiction will provide affordable housing. 
It thought it would be incongruous if jurisdictions were not expected 
to demonstrate how low-income people are actually aided by CDBG funds.
    HUD response: The Department believes this provision should be 
required by the regulation, since Section 104(a)(2) of the Housing and 
Community Development Act of 1974 requires the jurisdiction's statement 
of community development and housing activities include the estimated 
amount of funds proposed to be used for activities that will benefit 
persons of low- and moderate-income.

G. Submission Requirements

    Needs, Market Analysis, and Strategic Plan. One of the groups 
representing local governments and one local government strongly 
supported giving jurisdictions the flexibility to submit and update 
plans in a manner that facilitates orderly program management. A local 
government indicated that allowing for this flexibility will greatly 
improve the ability of urban counties to synchronize the consolidated 
planning process with the 3-year cooperation agreement cycle and other 
local planning and data collection cycles.
    Consolidated Plan Submission. Clarifying changes are made to Sec.  
91.15 and Sec.  91.200 identifying both the submissions that make up 
the component parts of the consolidated plan submission and the 
sections of the rule that contain the comprehensive housing 
affordability strategy for local jurisdictions.

H. Public and Assisted Housing

    Financial and other assistance for troubled housing. One group 
representing local governments commented that requirements related to 
public housing would seem to encumber the consolidated planning process 
rather than streamline it. Requiring a jurisdiction to ``describe the 
manner in which the jurisdiction will address the needs of public 
housing and the financial or other assistance the jurisdiction will 
provide to improve the operations of a public housing agency if that 
agency is designated as ``troubled'' is beyond the scope of CPD's 
formula grant programs and becomes a logistical nightmare for urban 
counties that have many PHAs within their jurisdictions. Three local 
jurisdictions also commented on these provisions. One jurisdiction said 
providing financial or other assistance for troubled PHAs constituted 
an unfunded mandate, especially to an agency that may not even be an 
agency of the grant recipient. Two jurisdictions thought it was 
appropriate to address the needs of public housing. Two jurisdictions 
also objected to giving HUD the ability to disapprove a plan or risk 
future funding if a jurisdiction either did not offer assistance or 
provide information on how it would help a PHA to remove a troubled 
designation.
    HUD response: As indicated in the preamble of the proposed rule, 
these amendments were made pursuant to the requirements of sections 568 
and 583 of the Quality Housing and Work Responsibility Act of 1998 (42 
U.S.C. 12705). The statute requires that the consolidated plan of a 
jurisdiction describe the manner in which the jurisdiction will address 
the needs of public housing and the financial or other assistance it 
will provide to improve the operations of a PHA designated as 
``troubled,'' in order to remove such designation. The statute also 
considers the failure to include a description of the manner in which a 
jurisdiction will provide financial or other assistance to remove a 
PHA's troubled designation as cause for HUD to disapprove a 
consolidated plan or determine that one is substantially incomplete. 
Also, HUD is clarifying that the provision at Sec.  91.500 applies to 
states as well as units of general local government. Such assistance 
need not be financial assistance but can include other assistance such 
as technical assistance provided by the jurisdiction.

V. Summary of Public Comments From State Governments and Interest 
Groups

A. Concise Action-Oriented Management Tool

    A group representing state community development agencies expressed 
support for HUD's efforts to streamline the consolidated plans and 
action plans and reduce the administrative burdens on states. However, 
they argued that several provisions would not streamline the 
preparation of plans or were inconsistent with the state role as a 
grantor agency. Among the issues raised were provisions that would 
require reporting on activities and outcomes that cannot be funded or 
achieved primarily with the formula grant programs covered by the 
consolidated plan. For example, state grantees would be required to 
describe their strategy for ``helping homeless persons (especially any 
persons that are chronically homeless) make the transition to permanent 
housing and independent living.'' Several states contended that 
requiring additional information regarding chronic homelessness, public 
housing, and outcome measurement would entail considerable additional 
work for which HUD has committed no additional administrative or 
planning funds. Several states also indicated that the proposed rule 
failed to take into account the unique nature of the small cities CDBG 
program as administered by the states. One state said it would make 
more sense to include some of the requirements in applications 
submitted by applicants instead of in the plan submitted to HUD. Some 
states indicated some of the requirements involving public housing 
would be redundant since some of this information was already included 
in local PHA plans. Many states expressed that putting outcome measures 
in the final rule was premature since more work was needed before this 
change was implemented.
    HUD response: HUD recognizes that the states as grantor agencies 
have less control over fulfillment of sections of the regulations 
dealing with annual goals and performance than do local jurisdictions. 
However, states are expected to provide the information to the extent 
that they are able to do so. HUD recognizes that states generally do 
not originate specific projects or activities, but offer programs 
through which local communities apply to

[[Page 6957]]

accomplish specific objectives. These local applications are submitted 
after the consolidated plan is submitted to HUD and approved. With 
regard to the provisions dealing with chronic homelessness, this 
section has been revised to require estimation ``to the extent 
practicable.'' The information about public housing has been included 
because it is a comprehensive housing affordability strategy (CHAS) 
statutory requirement. However, the Department will also allow states 
the option to cross-reference pages of relevant documents like the PHA 
plan and Continuum of Care Plan in order to streamline the consolidated 
plan and make the process less burdensome. Also, the Department may 
issue supplemental guidance on how states can implement some of these 
requirements.

B. Citizen Participation

    Representatives of state governments recommended that HUD continue 
to pursue ways that state grantees can use electronic and other forms 
of input, particularly to help states reach rural populations. In 
addition, representatives of state governments recommended that HUD 
allow input from local governments to meet citizen participation 
requirements, since they are representatives of citizens and are more 
likely to provide input to states than individual citizens. Several 
states were in agreement with provisions to include citizens, 
organizations, businesses, and other stakeholders among those that 
should be involved in the citizen participation process and exploring 
alternative public involvement techniques. However, one state objected 
to adding quantitative ways to measure efforts that encourage citizen 
participation. One state suggested the section be modified to state 
that ``the citizen participation process should encourage participation 
of citizens of the jurisdiction, and agencies, organizations, and 
private for-profit businesses and private non-profit entities that are 
involved with, or affected by, the programs or activities covered by 
the consolidated plan.'' Another state indicated that an analysis and 
evaluation of performance should be referenced and made available to 
citizens during the citizen participation process for the annual plan 
so that citizens and others could view the progress the grantee is 
making on addressing the identified needs in the strategy.
    Executive Summary. The preamble of the proposed rule invited 
comment on whether an executive summary would be a useful tool for 
citizens as well as jurisdictions. It also indicated that HUD was 
particularly interested in comments on what specific information should 
be included in an executive summary and whether the benefit of an 
executive summary would outweigh the burden. While some states 
considered the concept of an executive summary as having some benefit, 
they said it would be more useful to entitlement communities. Some 
thought that HUD's intent was to make local citizens aware of programs 
and activities, but argued that requiring that proposed projects and 
activities be stated would amount to restating the content of the 
consolidated plan and thus would hardly be a ``summary.'' Several 
states suggested that condensing state plans would not be worth the 
effort and a table of contents would be much more effective and could 
accomplish the same goal.
    HUD response: The Department has determined that including a 
broader list of stakeholders in the process and encouraging alternative 
public involvement techniques would not significantly increase the 
administrative burden. Accordingly, it has modified the section to make 
it clear that it refers to entities that are involved with or affected 
by programs covered by the consolidated plan. The Department also 
believes an executive summary is useful and has included references to 
this requirement at Sec. Sec.  91.300 and 91.320. To meet the concerns 
raised by the commenters, HUD will allow states to determine the format 
but that the executive summary must include a summary of objectives and 
outcomes identified in the consolidated plan and an evaluation of past 
performance.

C. Clarification of Chronic Homelessness

    A group representing state community development organizations 
indicated there were several problems associated with implementing the 
proposed changes involving chronic homelessness. Its first concern was 
that the definition of a ``chronically homeless person'' was far too 
restrictive and ignored the existence of chronically homeless families, 
including couples without children and disabled parents with children. 
Moreover, it expressed concern about the ability of grantees to 
document either such disabling conditions or the length of time that 
each individual has been homeless. Such documentation would require, at 
a minimum, a year's worth of high quality data in the grantee's 
Homeless Management Information System (HMIS). Also, the proposed 
addition to include an inventory of all facilities meeting the needs of 
the chronically homeless is unnecessary from the perspective of factors 
that may influence the state's method of distribution for the Emergency 
Shelter Grant program and is impractical at the state level, 
particularly since the provision does not limit the inventory of 
facilities to those that have received CDBG funding. One state claimed 
there was no basis in the statute for the definition of chronic 
homelessness and that while such priorities are reasonable for making 
competitive funding decisions, such requirements should not be imposed 
on the consolidated plan. Another state indicated that the resources 
for chronically homeless are not expected to be much different than 
they are for other homeless persons. Several states indicated that the 
proposed changes regarding the chronic homelessness provide tracking 
challenges. One state that was in the early stages of building its HMIS 
indicated that it eventually would be able to extract chronic homeless 
data from HMIS, but could not do so at present. Further, the chronic 
homeless definition includes persons who have been homeless at least 
three times in a year, and most states are not going to have data in 
their systems to determine whether a household meets that part of the 
homeless definition. Homeless shelters in small communities have small, 
usually volunteer staff and don't have time to spend an hour with each 
homeless person to determine if that person has a disabling condition, 
nor can they document how often the person has been homeless. The state 
pointed out that the federal, ten-year Census could not adequately 
document this and small organizations will have a difficult time 
providing this information, and the requirement could affect the amount 
they are funded. On the other hand, another state expressed a concern 
that the regulations did not include a discussion on ``coordinated 
discharge policy'' and asked for more guidance on this issue.
    HUD response: In response to these comments, the Department 
recognizes that states and local governments may find it difficult to 
maintain documentation for chronically homeless persons. The Department 
wishes to point out that the CHAS statute requires states and local 
jurisdictions to describe their strategy on addressing the emergency 
shelter and transitional housing needs of homeless persons (including a 
brief inventory of facilities and services that meet such needs). The 
statute does not limit the description to the projected use of 
Emergency Shelter Grant funds. However, the Department is modifying the 
reference to including

[[Page 6958]]

any persons that are chronically homeless in the inventory of 
facilities and services at Sec.  91.310, to make it clear that a 
separate inventory identifying chronic homeless facilities and services 
is not required. Rather, the inventory should include an estimate of 
the percentage or number of beds and supportive services programs that 
are serving people that are chronically homeless, to the extent that 
information is available to the state. States are encouraged to use 
information from their Continuum of Care applications to satisfy this 
requirement. The existing regulations at 24 CFR 91.310(c) currently 
require states to describe programs for ensuring that persons returning 
from mental and physical health institutions receive appropriate 
supportive housing. The regulations at Sec. Sec.  91.225 and 91.325 now 
require states and local jurisdictions to include a certification that 
they have developed a coordinated discharge policy. Such a policy 
should include policies and protocols for the discharge of persons from 
publicly funded institutions or systems of care (such as health care 
facilities, foster care, or other youth facilities, or correction 
programs and institutions) in order to prevent such discharge from 
immediately resulting in homelessness for such persons. HUD will issue 
supplemental guidance on what elements should be included in such a 
policy.

D. Removal of Barriers to Affordable Housing

    A group representing state community development agencies stated 
that it was difficult for states to meet goals for affordable housing 
barrier removal because states have very minimal control over the major 
barriers identified by HUD (zoning, local fees, etc). Zoning and land 
use decision-making are an inherently local process, subject to a range 
of influences including market forces and citizen input. One state 
indicated that it had already addressed those areas over which the 
state has regulatory control and that the existing regulatory relief 
barrier requirement on HUD's Notice of Funding Availability process is 
sufficient to reward those HUD applicants that have made efforts to 
reduce constraints on affordable housing. Another suggested that these 
issues could be addressed in the applicant's application, but they 
could not require a local jurisdiction to change its policies. Still 
another indicated it was not clear exactly what kinds of barriers HUD 
believes still exist and what specific information it has on such 
barriers in local communities. It suggested that HUD share this 
information with grantees so that they could better respond to these 
issues.
    HUD response: The Department recognizes that states have less 
control over barrier removal than do entitlement jurisdictions. The 
Department believes the removal of barriers to affordable housing is 
important and has decided to include the additional clarifying language 
with the understanding that it is not imposing a new requirement. The 
Department has also established a regulatory barrier clearinghouse at 
http://www.huduser.org/rbc/ that provides examples of how communities 
can identify and remove barriers to affordable housing.

E. Clarification of Strategic Plan Provisions

    Priorities and Priority Needs--Relative priorities. A group 
representing state community development agencies recommended that HUD 
remove this classification system for high, medium, or low priorities 
in favor of the overarching goals and outcomes established by each 
grantee, which will be required if other sections of this rule are 
implemented. The group argued that these goals and outcomes should 
become, in effect, the priorities established by the grantee to meet 
the intent of the statutory provision pertaining to priorities.
    Most of the states that commented welcomed the elimination of the 
requirement to designate relative priorities. One said the new 
performance and outcome measures should serve this purpose more 
effectively. Another indicated that a priority could be important to a 
state, but that it may not spend federally allocated money on that 
priority. Indicating where federal funds will be spent could easily be 
accomplished with a checkbox, or something similar and less able to be 
misconstrued. HUD and citizens should be able to discern the relative 
importance a jurisdiction has placed on funding a certain area by 
looking at the goals relative to unmet needs. The same state felt that 
general priorities and the reasons for allocation priorities are better 
described in narratives where program obstacles can be identified. 
Also, many programs are not designed to serve extremely low-income 
households, for instance, without supplementary operating subsidy. One 
state suggested local communities be able to assign their own 
priorities depending on local needs and suggested making ``high'' 
priority mean the needs are widespread or urgent, ``medium'' mean 
moderate in terms of extent and urgency, and ``low'' mean the activity 
may be funded at a very low level if funds are available. Another state 
suggested including only high priorities because it would be confusing 
and misleading if medium and low priorities were included that could 
not be addressed through the available funding allocation.
    HUD response: The Department has decided to eliminate the 
requirement regarding setting a relative allocation priority but to 
allow states to set one. The regulation has also been revised to make 
it clear that the state must describe the relationship between the 
allocation priorities and the extent of need given to each category of 
priority need, particularly among extremely low-income, low-income, and 
moderate-income households. The consolidated plan should be explicit 
about what the state intends to do with formula grant funds in the 
context of their larger strategy. For example, states may wish to 
indicate that they intend to allocate formula grant funds for projects 
that involve gap financing, while allocating low-income tax credits to 
projects for low-income households that require a deeper subsidy. The 
rationale for establishing the allocation priorities should flow 
logically from the analysis. Also as part of the analysis, the state 
must also identify any obstacles to addressing underserved needs.
    Several states objected to the provision at Sec.  91.315(b)(1) 
requiring states to identify how local market conditions led to the use 
of HOME funds for tenant-based assistance.
    HUD response: This provision is required by section 212(a)(3) of 
the Cranston-Gonzalez National Affordable Housing Act that requires 
states to specify the local market conditions that led to the choice of 
tenant-based rental assistance.
    Summary of Specific Objectives. A number of commenters indicated 
that the consolidated plan's strategy requirements should be influenced 
by a proposed performance measurement framework that has been developed 
by the working group that included representatives from the Council of 
State Community Development Agencies; the National Association for 
County, Community and Economic Development; and the National Community 
Development Association. HUD has been working with that group to 
develop workable outcome measures that will be acceptable to the 
Department and its grantees. One state pointed out that the purpose of 
a strategic plan is to identify categories and types and areas of need, 
and to develop strategies for addressing those needs. Annually, the 
performance report

[[Page 6959]]

should examine the needs of these population groups against the actual 
activities to determine how well their needs are being met. The state 
argued that if the strategy is created correctly, the types and 
magnitude of needs, goals, objectives, and priorities will become 
apparent and there would be no need to try to force communities to 
develop specific statements such as ``the grantee will install 983 
linear feet of sidewalks on Elm Street.'' The fact that the need for 
sidewalks has been identified as a need is sufficient. Therefore, the 
annual action plan would merely need to be evaluated and demonstrate 
that it makes progress toward addressing that need through specific 
activities.
    HUD response: The Department agrees that the consolidated plan's 
strategy requirements should be influenced by the proposed performance 
measurement framework that has been developed. Accordingly, changes 
have been made to Sec.  91.315 to indicate that these requirements 
would be provided in accordance with guidance issued by HUD.
    Antipoverty strategy. A group representing state community 
development agencies and several states suggested that the regulation 
involving the antipoverty strategy be revised to indicate that states 
can meet this requirement by referring to their statewide plans related 
to poverty.
    HUD response: The Department agrees that states can satisfy this 
requirement by referring to statewide plans related to poverty by 
allowing states the option to cross-reference pages of relevant 
documents like the Temporary Assistance for Needy Families (TANF) Plan 
in order to streamline the plan and make the process less burdensome. 
The Department will issue supplemental guidance on how states can 
implement some of these requirements.

F. Action Plan

    Summary of annual objectives. One state and group representing 
state community development agencies asked for clarification as to 
whether the summary of annual objectives was the same as the outcome 
measures a grantee would submit. Meanwhile, several states expressed 
support for the provision requiring jurisdictions to submit a summary 
of annual objectives. One state agreed that long-term objectives should 
be stated in the strategy and that short-term objectives should be 
covered in the action plan.
    HUD response: The Department believes that a summary of annual 
specific objectives is a useful feature of the plan since it identifies 
the subset of specific objectives (identified in the strategic plan) 
that will be addressed in the action plan.
    Outcomes. Although some states supported outcome measurement and 
indicated it was a good idea, many states felt that putting outcome 
measures in the final rule was premature since more work was needed 
before this change could be implemented. One state indicated that HUD's 
guidance for these measures should be flexible enough to recognize that 
many entitlement jurisdictions and states are charged with developing 
allocation and rating systems to be responsive to the needs of many 
different local communities. Any direction from HUD should preserve the 
flexibility of state and local jurisdictions to develop outcome 
measures that are consistent with the jurisdiction's approved 
allocation method and application rating system, but which do not 
narrow or preclude varying choices among eligible activities among 
grantees throughout the state. One state felt that measurements for 
outcomes/performance measurements would be more appropriately addressed 
within the content requirements of the Performance Evaluation Report 
and the Integrated Disbursement and Information System. Based on the 
nature of their programs as grantor agencies, several other states said 
they could only make estimates based on historical funding and past 
experience.
    HUD response: The Department has decided to require outcomes in the 
consolidated plan in accordance with guidance to be issued by HUD and 
has modified the provision at Sec.  91.520 to explain why progress was 
not made toward meeting goals and objectives. HUD recognizes that some 
of these estimates may be based on historical funding and past 
experience of states.
    Percentage of funds to target areas. While several states were 
unclear how this provision could be applied to their state, one, in 
expressing support for estimating the amount of funds spent in target 
areas, indicated that it would help show impact.
    HUD response: The Department believes that identification of the 
percentage of funds a state plans to dedicate to target areas, where 
appropriate, would be useful in determining the degree to which 
activities are being carried out in a concentrated manner.
    One-year housing goals. The preamble to the proposed rule added a 
new section requiring jurisdictions to specify one-year goals for the 
number of homeless, non-homeless, and special-needs households to be 
provided with affordable housing through activities that provide rental 
assistance, production of new units, rehabilitation of existing units, 
or acquisition of existing units with funds made available to the 
jurisdiction. One state asked HUD to clarify how these numbers should 
be counted.
    HUD response: The Department is clarifying the regulation to 
require two sets of annual housing goals. One set of annual goals is 
for the number of households to be served by rent assistance, new 
construction units, rehabilitation, or acquisition during the program 
year with funds made available to the jurisdiction. A second set of 
annual goals is for the number of homeless, non-homeless, and special-
needs households to be assisted during the program year. The program 
funds providing the benefits (i.e., CDBG, HOME, HOPWA, ESG) may be from 
any funding year or combined funding years.
    One state opposed the requirement for the number of homeless, non-
homeless, and special-needs households because the requirement implies 
that the federal government desires that federal funds be used for 
these categories of households. States may have non-federal funds that 
they use for addressing these categories of households. Consequently, 
states should not be judged negatively for not having goals for using 
federal funds for households that are as aggressive as HUD may wish, or 
for not allocating funds from programs that are not specifically 
required to be used for these populations. Another state indicated that 
it would be impossible to carry out this requirement to specify one-
year goals for the number of homeless, non-homeless, and special-needs 
families to be provided affordable housing with any level of accuracy. 
The states indicated that they can set priorities and forecast results 
after projects are chosen, and can later report on accomplishments. It 
would also be impossible to know who the tenants of an affordable 
housing project might be or the detailed characteristics of households 
that might receive down payment assistance before those events occur.
    HUD response: The Department recognizes that the states as grantor 
agencies have less control over fulfillment of sections of the 
regulations dealing with annual goals and performance that do local 
jurisdictions. However, states are expected to provide the information 
to the extent that they are able to do so.

G. Submission Requirements

    Needs, Market, and Strategic Plan. One state commented that it 
agreed with

[[Page 6960]]

the proposed rule that allows the submission of the housing and 
homeless needs assessment, housing market analysis, and strategic plan 
sections every five years, or at such time agreed upon by HUD and the 
state in order to facilitate orderly, program management, and to 
coordinate consolidated plans with time periods used for cooperation 
agreements, other plans, or the availability of data. The state 
encouraged adoption of this rule as a reasonable approach to using the 
most currently available data.
    Consolidated Plan Submission. A clarifying amendment has been made 
to Sec.  91.300 identifying the sections of the rule concerning a 
state's comprehensive housing affordability strategy.

H. Public and Assisted Housing

    Financial and other assistance for troubled housing. A group 
representing state community development agencies acknowledged that 
this requirement comes from the Quality Housing and Work Responsibility 
Act, but indicated the funds covered by the consolidated plan would 
likely not be used to assist troubled PHAs. It recommended use of a 
more appropriate document, other than the consolidated plan, for states 
to report this type of information. Several states also acknowledged 
the statutory requirement but some argued that states should not be 
held responsible for assisting a PHA with removing the ``troubled'' 
designation. Several states indicated that they have provisions in 
various programs that allow PHAs to participate and that they will 
continue to work with those PHAs to ensure that their programs are 
available to them. However, they maintain that PHAs are essentially an 
arm of local governments and that the state should not be held 
responsible for assisting a PHA with removing the ``troubled'' 
designation. Rather, assisting ``troubled'' PHAs should be a local 
government issue and a HUD issue. Two states and a group representing 
state community development agencies asked that HUD provide each state 
with a list of troubled PHAs in their state.
    HUD response: As indicated in the preamble of the proposed rule, 
these amendments were made pursuant to the requirements of sections 568 
and 583 of the Quality Housing and Work Responsibility Act of 1998 (42 
U.S.C. 12705). The statute requires that the plan of a state describe 
the manner in which the jurisdiction will address the needs of public 
housing and the financial or other assistance the jurisdiction will 
provide to improve the operations of a PHA designated as ``troubled'' 
in order to remove such designation. The regulation excludes PHAs that 
are entirely within the boundaries of a unit of general local 
government that must submit a consolidated plan to HUD. The statute 
also considers the failure to include a description of the manner in 
which a jurisdiction will provide financial or other assistance to 
remove a PHA's troubled designation as cause for HUD to disapprove a 
plan or determine that it is substantially incomplete. Also, the final 
rule clarifies that the provision at Sec.  91.500 applies to states as 
well as units of general local government. Such assistance need not be 
financial assistance but can include other assistance such as technical 
assistance provided by the jurisdiction. The Department will also 
provide each state with a list of troubled PHAs in their state in order 
to facilitate state grantee compliance with this requirement.

I. State Method of Distribution

    Most commenters agreed that the method of distribution should 
include all of the state's selection criteria used to select 
applications for funding. One state thought it added nothing and argued 
that it attempts to remove all program flexibility. The state also 
found the language insulting and inappropriate to reference perceived 
notions that senior management overturns staff decisions in the program 
and argued that it promotes a guilty-until-proven innocent mentality. 
Another state indicated that the section went well beyond 
reasonableness in requiring that any decisions made by senior 
management be included in the criteria description of the method of 
distribution. In addition, a group representing state community 
development agencies and six states objected to the provision that 
approval of the plan shall not be deemed to indicate that the method of 
distribution was in compliance with CDBG program requirements. The 
group argued that each state needs to have a point at the beginning of 
its program year when its method of distribution is officially approved 
by HUD. Most of the states that commented on this point argued that 
such a decision should be made in tandem with the approval of the 
consolidated plan. One state asked how states become aware in advance 
if their method of distribution will meet HUD's acceptability criteria 
when scrutinized by HUD during a future monitoring visit, what the 
penalty would be, and would all funds awarded become disallowed costs.
    HUD response: HUD acknowledges the desire among states to know that 
their method of distribution has been determined to be in compliance 
with program requirements before the state implements its method of 
distribution. However, HUD has long recognized that it is not practical 
to expect a state's annual action plan to contain every detail about a 
state's distribution process--otherwise a state would have to 
incorporate the contents of its application manuals into the action 
plan. To further streamline the consolidated plan, the proposed rule 
provided that a state's method of distribution could contain a summary 
of the state's selection criteria, so long as the details are contained 
in other readily available state documents. HUD has retained that 
provision in the final rule and has modified the final language to 
indicate that HUD may monitor the method of distribution as part of its 
audit and review responsibilities in order to determine compliance with 
program requirements.
    This final rule also makes several technical changes to the 
proposed rule. Duplicative language regarding the content of the method 
of distribution and provisions regarding records a state must keep to 
document its funding decisions, proposed at Sec.  91.320(j)(1), has 
been moved to Sec.  570.490(a), which is the section of the state CDBG 
regulations governing recordkeeping requirements.

VI. Findings and Certifications

Information Collections

    The information collection requirements contained in this final 
rule are currently approved by the Office of Management and Budget 
(OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520) and assigned OMB control number 2506-0117. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless the collection displays a currently 
valid OMB control number.

Regulatory Planning and Review

    The Office of Management and Budget (OMB) has reviewed this rule in 
accordance with Executive Order 12866, (captioned ``Regulatory Planning 
and Review''). OMB determined that this rule is a ``significant 
regulatory action'' as defined in section 3(f) of the Order (although 
not an economically significant regulatory action under the Order). Any 
changes to the rule resulting from this review are available for public 
inspection between 7:30 a.m. and 5:30 p.m. weekdays in the Office of 
the Rules Docket Clerk.

[[Page 6961]]

Regulatory Flexibility Act

    The undersigned, in accordance with the Regulatory Flexibility Act 
(5 U.S.C. 605(b)), has reviewed and approved this final rule, and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. This rule makes only 
clarifying and conforming changes to a regulation to make it more 
internally consistent and consistent with recent statutory changes.

Environmental Impact

    This rule does not direct, provide for assistance or loan and 
mortgage insurance for, or otherwise govern or regulate, real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise, or provide for 
standards for construction, or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule 
is categorically excluded from environmental review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).

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 rule does not have federalism 
implications and does not impose substantial direct compliance costs on 
state and local governments or preempt state law within the meaning of 
the Executive Order.

Unfunded Mandates Reform Act

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

Catalog of Federal Domestic Assistance

    The applicable Catalog of Federal Domestic Assistance (CFDA) 
program number is 14.218.

List of Subjects

24 CFR Part 91

    Aged, Grant programs--housing and community development, Homeless, 
Individuals with disabilities, Low- and moderate-income housing, 
Reporting and recordkeeping requirements.

24 CFR Part 570

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Loan programs--
housing and community development, Low- and moderate-income housing, 
Northern Mariana Islands, Pacific Islands Trust Territory, Puerto Rico, 
Reporting and recordkeeping requirements, Student aid, Virgin Islands.


0
Accordingly, for the reasons stated in the preamble, HUD amends 24 CFR 
parts 91 and 570 as follows:

PART 91--CONSOLIDATED SUBMISSIONS FOR COMMUNITY PLANNING AND 
DEVELOPMENT PROGRAMS

0
1. The authority citation for part 91 continues to read as follows:

    Authority: 42 U.S.C. 3535(d), 3601-3619, 5301-5315, 11331-11388, 
12701-12711, 12741-12756, and 12901-12912.


0
2. In Sec.  91.1, revise paragraph (b) to read as follows:


Sec.  91.1  Purpose.

* * * * *
    (b) Functions of plan. The consolidated plan serves the following 
functions:
    (1) A planning document for the jurisdiction, which builds on a 
participatory process among citizens, organizations, businesses, and 
other stakeholders;
    (2) A submission for federal funds under HUD's formula grant 
programs for jurisdictions;
    (3) A strategy to be followed in carrying out HUD programs; and
    (4) A management tool for assessing performance and tracking 
results.

0
3. Add Sec.  91.2(d) to read as follows:


Sec.  91.2  Applicability.

* * * * *
    (d) The Public Housing Agency Plan submission (PHA Plan) (see 24 
CFR part 903) includes a certification by the appropriate state or 
local official that the PHA Plan is consistent with the applicable 
consolidated plan for the jurisdiction in which the public housing 
agency is located and must describe the manner in which the applicable 
contents of the PHA Plan are consistent with the consolidated plan.

0
4. Amend Sec.  91.5 by adding alphabetically definitions for 
``chronically homeless person'' and ``disabling condition'' and 
revising the definition of ``consolidated plan'' to read as follows:


Sec.  91.5  Definitions.

* * * * *
    Chronically homeless person. An unaccompanied homeless individual 
with a disabling condition who has been continuously homeless for a 
year or more, or has had at least four episodes of homelessness in the 
past three years. To be considered chronically homeless, a person must 
have been sleeping in a place not meant for human habitation (e.g., 
living on the streets) and/or in an emergency shelter during that time.
    Consolidated plan or (``the plan''). The document that is submitted 
to HUD that serves as the comprehensive housing affordability strategy, 
community development plan, and submissions for funding under any of 
the Community Planning and Development formula grant programs (e.g., 
CDBG, ESG, HOME, and HOPWA), that is prepared in accordance with the 
process described in this part.
* * * * *
    Disabling condition. For the purposes of chronic homelessness, a 
disabling condition is a diagnosable substance use disorder, serious 
mental illness, developmental disability, or chronic physical illness 
or disability, including the co-occurrence of two or more of these 
conditions. A disabling condition limits an individual's ability to 
work or perform one or more activities of daily living.
* * * * *

0
5. Revise Sec.  91.15 to read as follows:


Sec.  91.15  Submission date.

    (a) General. (1) In order to facilitate continuity in its program 
and to provide accountability to citizens, each jurisdiction should 
submit its consolidated plan to HUD at least 45 days before the start 
of its program year. (But see Sec.  92.104 of this subtitle with 
respect to newly eligible jurisdictions under the HOME program.) With 
the exception of the August 16 date noted in paragraph (a)(2) of this 
section, HUD may grant a jurisdiction an extension of the submission 
deadline for good cause.
    (2) In no event will HUD accept a submission earlier than November 
15 or later than August 16 of the federal fiscal year for which the 
grant funds are appropriated. Failure to receive the plan

[[Page 6962]]

by August 16 will automatically result in a loss of the CDBG funds to 
which the jurisdiction would otherwise be entitled.
    (3) A jurisdiction may have a program year that coincides with the 
federal fiscal year (e.g., October 1, 2005 through September 30, 2006, 
for federal fiscal year 2006 funds). However, the consolidated plan may 
not be submitted earlier than November 15 of the federal fiscal year 
and HUD has the period specified in Sec.  91.500 to review the 
consolidated plan.
    (4) See Sec.  91.20 for HUD field office authorization to grant 
exceptions to these provisions.
    (b) Frequency of submission. (1) The summary of the citizen 
participation and consultation process, the action plan, and the 
certifications must be submitted on an annual basis.
    (2) The housing, and homeless needs assessment, market analysis, 
and strategic plan must be submitted at least once every five years, or 
as such time agreed upon by HUD and the jurisdiction in order to 
facilitate orderly program management, coordinate consolidated plans 
with time periods used for cooperation agreements, other plans, or the 
availability of data.
    (3) A jurisdiction may make amendments that extend the time period 
covered by their plan if agreed upon by HUD.

0
6. Revise Sec.  91.20 to read as follows:


Sec.  91.20  Exceptions.

    The HUD Field Office may grant a jurisdiction an exception from the 
submission deadline for plans and reports and from a requirement in the 
implementation guidelines for good cause, as determined by the field 
office and reported in writing to HUD Headquarters, unless the 
requirement is required by statute or regulation.

0
7. In Sec.  91.100, revise paragraphs (a) and (c) to read as follows:


Sec.  91.100  Consultation: local governments.

    (a) General. (1) When preparing the consolidated plan, the 
jurisdiction shall consult with other public and private agencies that 
provide assisted housing, health services, and social and fair housing 
services (including those focusing on services to children, elderly 
persons, persons with disabilities, persons with HIV/AIDS and their 
families, homeless persons) during preparation of the consolidated 
plan.
    (2) When preparing the portion of the consolidated plan describing 
the jurisdiction's homeless strategy, the jurisdiction shall consult 
with public and private agencies that provide assisted housing, health 
services, and social services to determine what resources are available 
to address the needs of any persons that are chronically homeless.
    (3) When preparing the portion of its consolidated plan concerning 
lead-based paint hazards, the jurisdiction shall consult with state or 
local health and child welfare agencies and examine existing data 
related to lead-based paint hazards and poisonings, including health 
department data on the addresses of housing units in which children 
have been identified as lead poisoned.
    (4) When preparing the description of priority nonhousing community 
development needs, a unit of general local government must notify 
adjacent units of general local government, to the extent practicable. 
The nonhousing community development plan must be submitted to the 
state, and, if the jurisdiction is a CDBG entitlement grantee other 
than an urban county, to the county.
    (5) The jurisdiction also should consult with adjacent units of 
general local government, including local government agencies with 
metropolitan-wide planning responsibilities, particularly for problems 
and solutions that go beyond a single jurisdiction.
* * * * *
    (c) Public housing. The jurisdiction shall consult with the local 
public housing agency (PHA) concerning consideration of public housing 
needs and planned programs and activities. This consultation will help 
provide a better basis for the certification by the authorized official 
that the PHA Plan is consistent with the consolidated plan and the 
local government's description of the manner in which it will address 
the needs of public housing and, where necessary, the manner in which 
it will provide financial or other assistance to a troubled PHA to 
improve its operations and remove such designation. It will also help 
ensure that activities with regard to local drug elimination, 
neighborhood improvement programs, and resident programs and services, 
funded under a PHA's program and those funded under a program covered 
by the consolidated plan, are fully coordinated to achieve 
comprehensive community development goals. If a PHA is required to 
implement remedies under a Section 504 Voluntary Compliance Agreement 
to provide accessible units for persons with disabilities, the local 
jurisdiction should consult with the PHA and identify actions it may 
take, if any, to assist the PHA in implementing the required remedies. 
A local jurisdiction may use CDBG funds for eligible activities or 
other funds to implement remedies required under a Section 504 
Voluntary Compliance Agreement.

0
8. In Sec.  91.105, paragraphs (a)(2)(ii) and (iii) are revised to read 
as follows:


Sec.  91.105  Citizen participation plan; local governments.

    (a) * * *
    (2) * * *
    (ii) These requirements are designed especially to encourage 
participation by low- and moderate-income persons, particularly those 
living in slum and blighted areas and in areas where CDBG funds are 
proposed to be used, and by residents of predominantly low- and 
moderate-income neighborhoods, as defined by the jurisdiction. A 
jurisdiction also is expected to take whatever actions are appropriate 
to encourage the participation of all its citizens, including 
minorities and non-English speaking persons, as well as persons with 
disabilities. The jurisdiction shall encourage the participation of 
local and regional institutions and other organizations (including 
businesses, developers, and community and faith-based organizations) in 
the process of developing and implementing the consolidated plan. The 
jurisdiction should also explore alternative public involvement 
techniques and quantitative ways to measure efforts that encourage 
citizen participation in a shared vision for change in communities and 
neighborhoods, and the review of program performance, e.g., use of 
focus groups, and use of the Internet.
    (iii) The jurisdiction shall encourage, in conjunction with 
consultation with public housing agencies, the participation of 
residents of public and assisted housing developments, in the process 
of developing and implementing the consolidated plan, along with other 
low-income residents of targeted revitalization areas in which the 
developments are located. The jurisdiction shall make an effort to 
provide information to the public housing agency about consolidated 
plan activities related to its developments and surrounding communities 
so that the public housing agency can make this information available 
at the annual public hearing required for the PHA Plan.
* * * * *

0
9. Revise Sec.  91.110 to read as follows:


Sec.  91.110  Consultation; states.

    When preparing the consolidated plan, the state shall consult with 
other public and private agencies that provide assisted housing 
(including any state

[[Page 6963]]

housing agency administering public housing), health services, and 
social and fair housing services (including those focusing on services 
to children, elderly persons, persons with disabilities, persons with 
HIV/AIDS and their families, and homeless persons) during preparation 
of the consolidated plan. When preparing the portion of the 
consolidated plan describing the state's homeless strategy, the state 
shall consult with public and private agencies that provide assisted 
housing, health services, and social services to determine what 
resources are available to address the needs of any persons that are 
chronically homeless. When preparing the portion of its consolidated 
plan concerning lead-based paint hazards, the state shall consult with 
state or local health and child welfare agencies and examine existing 
data related to lead-based paint hazards and poisonings, including 
health department data on the addresses of housing units in which 
children have been identified as lead poisoned. When preparing its 
method of distribution of assistance under the CDBG program, a state 
must consult with local governments in nonentitlement areas of the 
state.

0
10. Revise Sec.  91.115(a)(2) to read as follows:


Sec.  91.115  Citizen participation plan; states.

    (a) * * *
    (2) Encouragement of citizen participation. The citizen 
participation plan must provide for and encourage citizens to 
participate in the development of the consolidated plan, any 
substantial amendments to the consolidated plan, and the performance 
report. These requirements are designed especially to encourage 
participation by low- and moderate-income persons, particularly those 
living in slum and blighted areas and in areas where CDBG funds are 
proposed to be used and by residents of predominantly low- and 
moderate-income neighborhoods. A state also is expected to take 
whatever actions are appropriate to encourage the participation of all 
its citizens, including minorities and non-English speaking persons, as 
well as persons with disabilities. The state shall encourage the 
participation of statewide and regional institutions and other 
organizations (including businesses, developers, and community and 
faith-based organizations) that are involved with or affected by the 
programs or activities covered by the consolidated plan in the process 
of developing and implementing the consolidated plan. The state should 
also explore alternative public involvement techniques that encourage a 
shared vision of change for the community and the review of program 
performance, e.g., use of focus groups, and use of Internet.
* * * * *

0
11. Revise Sec.  91.200 to read as follows:


Sec.  91.200  General.

    (a) A complete consolidated plan consists of the information 
required in Sec.  91.200 through Sec.  91.230, submitted in accordance 
with instructions prescribed by HUD (including tables and narratives), 
or in such other format as jointly agreed upon by HUD and the 
jurisdiction. A comprehensive housing affordability strategy consists 
of the information required in Sec.  91.200 through Sec.  91.215(e), 
Sec.  91.215(h) through Sec.  91.215(l), Sec.  91.220(c), Sec.  
91.220(g), Sec.  91.225 and Sec.  91.230.
    (b) The jurisdiction shall describe the lead agency or entity 
responsible for overseeing the development of the plan and the 
significant aspects of the process by which the consolidated plan was 
developed, the identity of the agencies, groups, organizations, and 
others who participated in the process, and a description of the 
jurisdiction's consultations with social service, health, and child 
service agencies and other entities.
    (c) In order to facilitate citizen review and comment each year, 
the plan shall contain a concise executive summary that includes the 
objectives and outcomes identified in the plan as well as an evaluation 
of past performance. The plan shall also include a concise summary of 
the citizen participation process, public comments, and efforts made to 
broaden public participation in the development of the consolidated 
plan.

0
12. Revise Sec.  91.205 (a), (b), and (c) to read as follows:


Sec.  91.205  Housing and homeless needs assessment.

    (a) General. The consolidated plan must provide a concise summary 
of the jurisdiction's estimated housing needs projected for the ensuing 
five-year period. Housing data included in this portion of the plan 
shall be based on U.S. Census data, as provided by HUD, as updated by 
any properly conducted local study, or any other reliable source that 
the jurisdiction clearly identifies, and should reflect the 
consultation with social service agencies and other entities conducted 
in accordance with Sec.  91.100 and the citizen participation process 
conducted in accordance with Sec.  91.105. For a jurisdiction seeking 
funding on behalf of an eligible metropolitan statistical area under 
the HOPWA program, the needs described for housing and supportive 
services must address the unmet needs of low-income persons with HIV/
AIDS and their families throughout the eligible metropolitan 
statistical area.
    (b) Categories of persons affected. (1) The plan shall estimate the 
number and type of families in need of housing assistance for extremely 
low-income, low-income, moderate-income, and middle-income families, 
for renters and owners, for elderly persons, for single persons, for 
large families, for public housing residents, for families on the 
public housing and section 8 tenant-based waiting list, for persons 
with HIV/AIDS and their families, and for persons with disabilities. 
The description of housing needs shall include a concise summary of the 
cost burden and severe cost burden, overcrowding (especially for large 
families), and substandard housing conditions being experienced by 
extremely low-income, low-income, moderate-income, and middle-income 
renters and owners compared to the jurisdiction as a whole. (The 
jurisdiction must define in its consolidated plan the terms ``standard 
condition'' and ``substandard condition but suitable for 
rehabilitation.'')
    (2) For any of the income categories enumerated in paragraph (b)(1) 
of this section, to the extent that any racial or ethnic group has 
disproportionately greater need in comparison to the needs of that 
category as a whole, assessment of that specific need shall be 
included. For this purpose, disproportionately greater need exists when 
the percentage of persons in a category of need who are members of a 
particular racial or ethnic group in a category of need is at least 10 
percentage points higher than the percentage of persons in the category 
as a whole.
    (c) Homeless needs. The plan must provide a concise summary of the 
nature and extent of homelessness (including rural homelessness and 
chronically homeless persons), addressing separately the need for 
facilities and services for homeless individuals and homeless families 
with children, both sheltered and unsheltered, and homeless 
subpopulations, in accordance with a table prescribed by HUD. This 
description must include the characteristics and needs of low-income 
individuals and families with children (especially extremely low-
income) who are currently housed but threatened with homelessness. The 
plan also must contain a brief narrative description of the nature and 
extent of homelessness

[[Page 6964]]

by racial and ethnic group, to the extent information is available.
* * * * *

0
13. In Sec.  91.210, revise paragraphs (a), (b)(1), (b)(2), and (c) to 
read as follows:


Sec.  91.210  Housing market analysis.

    (a) General characteristics. Based on information available to the 
jurisdiction, the plan must describe the significant characteristics of 
the jurisdiction's housing market, including the supply, demand, and 
condition and cost of housing and the housing stock available to serve 
persons with disabilities, and to serve other low-income persons with 
special needs, including persons with HIV/AIDS and their families. Data 
on the housing market should include, to the extent information is 
available, an estimate of the number of vacant or abandoned buildings 
and whether units in these buildings are suitable for rehabilitation. 
The jurisdiction must also identify and describe any areas within the 
jurisdiction with concentrations of racial/ethnic minorities and/or 
low-income families, stating how it defines the terms ``area of low-
income concentration'' and ``area of minority concentration'' for this 
purpose. The locations and degree of these concentrations must be 
identified, either in a narrative or on one or more maps.
    (b) Public and assisted housing. (1) The plan must describe and 
identify the public housing developments and the number of public 
housing units in the jurisdiction, the physical condition of such 
units, the restoration and revitalization needs, results from the 
Section 504 needs assessment (i.e., assessment of needs of tenants and 
applicants on waiting list for accessible units, as required by 24 CFR 
8.25), and the public housing agency's strategy for improving the 
management and operation of such public housing and for improving the 
living environment of low- and moderate-income families residing in 
public housing. The consolidated plan must identify the public housing 
developments in the jurisdictions that are participating in an approved 
PHA Plan.
    (2) The jurisdiction shall include a description of the number and 
targeting (income level and type of family served) of units currently 
assisted by local, state, or federally funded programs, and an 
assessment of whether any such units are expected to be lost from the 
assisted housing inventory for any reason, such as expiration of 
Section 8 contracts.
    (c) Homeless facilities. The plan must include a brief inventory of 
facilities and services that meet the emergency shelter, transitional 
housing, permanent supportive housing, and permanent housing needs of 
homeless persons within the jurisdiction, including any persons that 
are chronically homeless. The inventory should also include (to the 
extent the information is available to the jurisdiction) an estimate of 
the percentage or number of beds and supportive services programs that 
are serving people that are chronically homeless.
* * * * *

0
14. Revise Sec.  91.215 to read as follows:


Sec.  91.215  Strategic plan.

    (a) General. For the categories described in paragraphs (b), (c), 
(d), (e), and (f) of this section, the consolidated plan must do the 
following:
    (1) Indicate the general priorities for allocating investment 
geographically within the jurisdiction (or within the EMSA for the 
HOPWA program) and among different activities and needs, as identified 
in tables prescribed by HUD.
    (2) Describe the rationale for establishing the allocation 
priorities given to each category of priority needs, particularly among 
extremely low-income, low-income, and moderate-income households;
    (3) Identify any obstacles to meeting underserved needs;
    (4) Summarize the priorities and specific objectives the 
jurisdiction intends to initiate and/or complete during the time period 
covered by the strategic plan and how funds that are reasonably 
expected to be available will be used to address identified needs. For 
each specific objective statement, identify proposed accomplishments 
and outcomes the jurisdiction hopes to achieve in quantitative terms 
over a specified time period (e.g., one, two, three or more years), or 
in other measurable terms as identified and defined by the 
jurisdiction. This information is to be provided in accordance with 
guidance to be issued by HUD.
    (b) Affordable housing. With respect to affordable housing, the 
consolidated plan must include the priority housing needs table 
prescribed by HUD and must do the following:
    (1) The affordable housing section shall describe how the 
characteristics of the housing market and the severity of housing 
problems and needs of extremely low-income, low-income, and moderate-
income renters and owners identified in accordance with Sec.  91.205 
provided the rationale for establishing allocation priorities and use 
of funds made available for rental assistance, production of new units, 
rehabilitation of existing units, or acquisition of existing units 
(including preserving affordable housing units that may be lost from 
the assisted housing inventory for any reason). Household and income 
types may be grouped together for discussion where the analysis would 
apply to more than one of them. If the jurisdiction intends to use HOME 
funds for tenant-based assistance, it must specify local market 
conditions that led to the choice of that option.
    (2) The affordable housing section shall include specific 
objectives that describe proposed accomplishments the jurisdiction 
hopes to achieve and must specify the number of extremely low-income, 
low-income, and moderate-income families to whom the jurisdiction will 
provide affordable housing as defined in 24 CFR 92.252 for rental 
housing and 24 CFR 92.254 for homeownership over a specific time 
period.
    (c) Public housing. The consolidated plan must describe the manner 
in which the plan of the jurisdiction will address the needs of public 
housing, including the need to increase the number of accessible units 
where required by a Section 504 Voluntarily Compliance Agreement. The 
consolidated plan must also describe the jurisdiction's activities to 
encourage public housing residents to become more involved in 
management and participate in homeownership. If the public housing 
agency is designated as ``troubled'' by HUD under 24 CFR part 902, the 
jurisdiction must describe the manner in which it will provide 
financial or other assistance to improve its operations and remove the 
``troubled'' designation.
    (d) Homelessness. With respect to homelessness, the consolidated 
plan must include the priority homeless needs table prescribed by HUD 
and must describe the jurisdiction's strategy for the following:
    (1) Helping low-income families avoid becoming homeless;
    (2) Reaching out to homeless persons and assessing their individual 
needs;
    (3) Addressing the emergency shelter and transitional housing needs 
of homeless persons; and
    (4) Helping homeless persons (especially any persons that are 
chronically homeless) make the transition to permanent housing and 
independent living.
    (e) Other special needs. With respect to special needs of the non-
homeless, the consolidated plan must provide a concise summary of the 
priority housing and supportive service needs of persons who are not 
homeless but who may or may not require supportive housing

[[Page 6965]]

(i.e., elderly, frail elderly, persons with disabilities (mental, 
physical, developmental), persons with alcohol or other drug addiction, 
persons with HIV/AIDS and their families, and public housing 
residents). If the jurisdiction intends to use HOME funds for tenant-
based assistance to assist one or more of these subpopulations, it must 
specify local market conditions that led to the choice of this option.
    (f) Nonhousing community development plan. If the jurisdiction 
seeks assistance under the Community Development Block Grant (CDBG) 
program, the consolidated plan must provide a concise summary of the 
jurisdiction's priority non-housing community development needs 
eligible for assistance under HUD's community development programs by 
CDBG eligibility category, in accordance with a table prescribed by 
HUD. This community development component of the plan must state the 
jurisdiction's specific long-term and short-term community development 
objectives (including economic development activities that create 
jobs), which must be developed in accordance with the primary objective 
of the CDBG program to develop viable urban communities by providing 
decent housing and a suitable living environment and expanding economic 
opportunities, principally for low-income and moderate-income persons.
    (g) Neighborhood Revitalization. Jurisdictions are encouraged to 
identify locally designated areas where geographically targeted 
revitalization efforts are carried out through multiple activities in a 
concentrated and coordinated manner. In addition, a jurisdiction may 
elect to carry out a HUD-approved neighborhood revitalization strategy 
that includes the economic empowerment of low-income residents with 
respect to one or more of its areas. If HUD approves such a strategy, 
the jurisdiction can obtain greater flexibility in the use of the CDBG 
funds in the revitalization area(s) as described in 24 CFR part 570, 
subpart C. This strategy must identify long-term and short-term 
objectives (e.g., physical improvements, social initiatives and 
economic empowerment), expressing them in terms of measures of outputs 
and outcomes the jurisdiction expects to achieve in the neighborhood 
through the use of HUD programs.
    (h) Barriers to affordable housing. The consolidated plan must 
describe the jurisdiction's strategy to remove or ameliorate negative 
effects of public policies that serve as barriers to affordable 
housing, as identified in accordance with Sec.  91.210(e), except that, 
if a State requires a unit of general local government to submit a 
regulatory barrier assessment that is substantially equivalent to the 
information required under this paragraph (h), as determined by HUD, 
the unit of general local government may submit its assessment 
submitted to the State to HUD and shall be considered to have complied 
with this requirement.
    (i) Lead-based paint hazards. The consolidated plan must outline 
actions proposed or being taken to evaluate and reduce lead-based paint 
hazards and increase access to housing without such health hazards, how 
the plan for the reduction of lead-based hazards is related to the 
extent of lead poisoning and hazards, and how the plan for the 
reduction of lead-based hazards will be integrated into housing 
policies and programs.
    (j) Anti-poverty strategy. The consolidated plan must provide a 
concise summary of the jurisdiction's goals, programs, and policies for 
reducing the number of poverty-level families and how the 
jurisdiction's goals, programs, and policies for producing and 
preserving affordable housing, set forth in the housing component of 
the consolidated plan, will be coordinated with other programs and 
services for which the jurisdiction is responsible and the extent to 
which they will reduce (or assist in reducing) the number of poverty-
level families, taking into consideration factors over which the 
jurisdiction has control. These policies may include the jurisdiction's 
policies for providing employment and training opportunities to section 
3 residents pursuant to 24 CFR part 135.
    (k) Institutional structure. (1) The consolidated plan must provide 
a concise summary of the institutional structure, including private 
industry, nonprofit organizations, community and faith-based 
organizations, and public institutions, through which the jurisdiction 
will carry out its housing, homeless, and community development plan, 
and which assesses the strengths and gaps in that delivery system.
    (2) The plan must provide a concise summary of what the 
jurisdiction will do to overcome gaps in the institutional structure 
for carrying out its strategy for addressing its priority needs.
    (l) Coordination. The consolidated plan must provide a concise 
summary of the jurisdiction's activities to enhance coordination 
between public and assisted housing providers and private and 
governmental health, mental health, and service agencies. With respect 
to the preparation of its homeless strategy, the jurisdiction must 
describe efforts in addressing the needs of persons that are 
chronically homeless. With respect to the public entities involved, the 
plan must describe the means of cooperation and coordination among the 
state and any units of general local government in the metropolitan 
area in the implementation of its consolidated plan. With respect to 
economic development, the jurisdiction should describe efforts to 
enhance coordination with private industry, businesses, developers, and 
social service agencies.

0
15. Revise Sec.  91.220 to read as follows:


Sec.  91.220  Action plan.

    The action plan must include the following:
    (a) Standard Form 424;
    (b) A concise executive summary that includes the objectives and 
outcomes identified in the plan as well as an evaluation of past 
performance, a summary of the citizen participation and consultation 
process (including efforts to broaden public participation) (24 CFR 
91.200 (b)), a summary of comments or views, and a summary of comments 
or views not accepted and the reasons therefore (24 CFR 91.105 (b)(5)).
    (c) Resources and objectives. (1) Federal resources. The 
consolidated plan must provide a concise summary of the federal 
resources (including grant funds and program income) expected to be 
made available. Federal resources should include Section 8 funds made 
available to jurisdictions, Low-Income Housing Tax Credits, and 
competitive McKinney-Vento Homeless Assistance Act funds, expected to 
be available to address priority needs and specific objectives 
identified in the strategic plan.
    (2) Other resources. The consolidated plan must indicate resources 
from private and state and local sources that are reasonably expected 
to be made available to address the needs identified in the plan. The 
plan must explain how federal funds will leverage those additional 
resources, including a description of how matching requirements of the 
HUD programs will be satisfied. Where the jurisdiction deems it 
appropriate, the jurisdiction may indicate publicly owned land or 
property located within the jurisdiction that may be used to address 
the needs identified in the plan;
    (3) Annual objectives. The consolidated plan must contain a summary 
of the annual objectives the jurisdiction expects to achieve during the 
forthcoming program year.
    (d) Activities to be undertaken. The action plan must provide a 
description of the activities the jurisdiction will

[[Page 6966]]

undertake during the next year to address priority needs and 
objectives. This description of activities shall estimate the number 
and type of families that will benefit from the proposed activities, 
the specific local objectives and priority needs (identified in 
accordance with Sec.  91.215) that will be addressed by the activities 
using formula grant funds and program income the jurisdiction expects 
to receive during the program year, proposed accomplishments, and a 
target date for completion of the activity. This information is to be 
presented in the form of a table prescribed by HUD. The plan must also 
describe the reasons for the allocation priorities and identify any 
obstacles to addressing underserved needs;
    (e) Outcome measures. Each jurisdiction must provide outcome 
measures for activities included in its action plan in accordance with 
guidance to be issued by HUD.
    (f) Geographic distribution. A description of the geographic areas 
of the jurisdiction (including areas of low-income and minority 
concentration) in which it will direct assistance during the ensuing 
program year, giving the rationale for the priorities for allocating 
investment geographically. When appropriate, jurisdictions should 
estimate the percentage of funds they plan to dedicate to target areas.
    (g) Affordable housing. The jurisdiction must specify one-year 
goals for the number of homeless, non-homeless, and special-needs 
households to be provided affordable housing using funds made available 
to the jurisdiction and one-year goals for the number of households to 
be provided affordable housing through activities that provide rental 
assistance, production of new units, rehabilitation of existing units, 
or acquisition of existing units using funds made available to the 
jurisdiction. The term affordable housing shall be as defined in 24 CFR 
92.252 for rental housing and 24 CFR 92.254 for homeownership.
    (h) Public housing. Actions it plans to take during the next year 
to address the needs of public housing and actions to encourage public 
housing residents to become more involved in management and participate 
in homeownership. If the public housing agency is designated as 
``troubled'' by HUD under part 902 of this title, the jurisdiction must 
describe the manner in which it will provide financial or other 
assistance to improve its operations and remove the ``troubled'' 
designation.
    (i) Homeless and other special needs activities. Activities it 
plans to undertake during the next year to address emergency shelter 
and transitional housing needs of homeless individuals and families 
(including subpopulations), to prevent low-income individuals and 
families with children (especially those with incomes below 30 percent 
of median) from becoming homeless, to help homeless persons make the 
transition to permanent housing and independent living, specific action 
steps to end chronic homelessness, and to address the special needs of 
persons who are not homeless identified in accordance with Sec.  
91.215(e);
    (j) Barriers to Affordable Housing. Actions it plans to take during 
the next year to remove or ameliorate the negative effects of public 
policies that serve as barriers to affordable housing. Such policies, 
procedures and processes include, but are not limited to, land use 
controls, tax policies affecting land, zoning ordinances, building 
codes, fees and charges, growth limitations, and policies affecting the 
return on residential investment.
    (k) Other actions. Actions it plans to take during the next year to 
address obstacles to meeting underserved needs, foster and maintain 
affordable housing, evaluate and reduce lead-based paint hazards, 
reduce the number of poverty-level families, develop institutional 
structure, and enhance coordination between public and private housing 
and social service agencies (see Sec.  91.215 (a), (b), (i), (j), (k), 
and (l)).
    (l) Program-specific requirements--(1) CDBG. (i) A jurisdiction 
must describe activities planned with respect to all CDBG funds 
expected to be available during the program year (including program 
income that will have been received before the start of the next 
program year), except that an amount generally not to exceed ten 
percent of such total available CDBG funds may be excluded from the 
funds for which eligible activities are described if it has been 
identified for the contingency of cost overruns.
    (ii) CDBG funds expected to be available during the program year 
includes the following:
    (A) Any program income that will have been received before the 
start of the next program year and that has not yet been programmed;
    (B) Proceeds from Section 108 loan guarantees that will be used 
during the year to address the priority needs and specific objectives 
identified in its strategic plan;
    (C) Surplus from urban renewal settlements;
    (D) Grant funds returned to the line of credit for which the 
planned use has not been included in a prior statement or plan; and
    (E) Income from float-funded activities. The full amount of income 
expected to be generated by a float-funded activity must be shown, 
whether or not some or all of the income is expected to be received in 
a future program year. To assure that citizens understand the risks 
inherent in undertaking float-funded activities, the recipient must 
specify the total amount of program income expected to be received and 
the month(s) and year(s) that it expects the float-funded activity to 
generate such program income.
    (iii) An ``urgent needs'' activity (one that is expected to qualify 
under Sec.  570.208(c) of this title) may be included only if the 
jurisdiction identifies the activity in the action plan and certifies 
that the activity is designed to meet other community development needs 
having a particular urgency because existing conditions pose a serious 
and immediate threat to the health or welfare of the community and 
because other financial resources are not available.
    (iv) The plan shall identify the estimated amount of CDBG funds 
that will be used for activities that benefit persons of low- and 
moderate-income. The information about activities shall be in 
sufficient detail, including location, to allow citizens to determine 
the degree to which they are affected.
    (2) HOME. (i) For HOME funds, a participating jurisdiction shall 
describe other forms of investment that are not described in Sec.  
92.205(b).
    (ii) If the participating jurisdiction intends to use HOME funds 
for homebuyers, it must state the guidelines for resale or recapture, 
as required in Sec.  92.254.
    (iii) If the participating jurisdiction intends to use HOME funds 
to refinance existing debt secured by multifamily housing that is being 
rehabilitated with HOME funds, it must state its refinancing guidelines 
required under 24 CFR 92.206(b). The guidelines shall describe the 
conditions under which the participating jurisdictions will refinance 
existing debt. At minimum, the guidelines must:
    (A) Demonstrate that rehabilitation is the primary eligible 
activity and ensure that this requirement is met by establishing a 
minimum level of rehabilitation per unit or a required ratio between 
rehabilitation and refinancing.
    (B) Require a review of management practices to demonstrate that 
disinvestment in the property has not occurred; that the long-term 
needs of the project can be met; and that the

[[Page 6967]]

feasibility of serving the targeted population over an extended 
affordability period can be demonstrated.
    (C) State whether the new investment is being made to maintain 
current affordable units, create additional affordable units, or both.
    (D) Specify the required period of affordability, whether it is the 
minimum 15 years or longer.
    (E) Specify whether the investment of HOME funds may be 
jurisdiction-wide or limited to a specific geographic area, such as a 
neighborhood identified in a neighborhood revitalization strategy under 
24 CFR 91.215(g) or a federally designated Empowerment Zone or 
Enterprise Community.
    (F) State that HOME funds cannot be used to refinance multifamily 
loans made or insured by any federal program, including CDBG.
    (iv) If the participating jurisdiction will receive funding under 
the American Dream Downpayment Initiative (ADDI) (see 24 CFR part 92, 
subpart M), it must include:
    (A) A description of the planned use of the ADDI funds;
    (B) A plan for conducting targeted outreach to residents and 
tenants of public and manufactured housing and to other families 
assisted by public housing agencies, for the purposes of ensuring that 
the ADDI funds are used to provide downpayment assistance for such 
residents, tenants, and families; and
    (C) A description of the actions to be taken to ensure the 
suitability of families receiving ADDI funds to undertake and maintain 
homeownership.
    (3) HOPWA. For HOPWA funds, the jurisdiction must specify one-year 
goals for the number of households to be provided housing through the 
use of HOPWA activities for: short-term rent, mortgage, and utility 
assistance payments to prevent homelessness of the individual or 
family; tenant-based rental assistance; and units provided in housing 
facilities that are being developed, leased, or operated with HOPWA 
funds and shall identify the method of selecting project sponsors 
(including providing full access to grassroots faith-based and other 
community organizations).

0
16. Amend Sec.  91.225 by adding paragraph (c)(10) to read as follows:


Sec.  91.225  Certifications.

* * * * *
    (c) * * *
    (10) A certification that the jurisdiction has established a policy 
for the discharge of persons from publicly funded institutions or 
systems of care (such as health care facilities, foster care or other 
youth facilities, or correction programs and institutions) in order to 
prevent such discharge from immediately resulting in homelessness for 
such persons.
* * * * *

0
17. Revise Sec.  91.300 to read as follows:


Sec.  91.300  General.

    (a) A complete consolidated plan consists of the information 
required in Sec.  91.300 through Sec.  91.330, submitted in accordance 
with instructions prescribed by HUD (including tables and narratives), 
or in such other format as jointly agreed upon by HUD and the state. A 
comprehensive housing affordability strategy consists of the 
information required in Sec.  91.300 through Sec.  91.315(e), Sec.  
91.315(h) through Sec.  91.315(m), Sec.  91.320(c), Sec.  91.320 (g), 
Sec.  91.225 and Sec.  91.330.
    (b) The state shall describe the lead agency or entity responsible 
for overseeing the development of the plan and the significant aspects 
of the process by which the consolidated plan was developed; the 
identity of the agencies, groups, organizations, and others who 
participated in the process; and a description of the state's 
consultations with social service, health, and child service agencies 
and other entities.
    (c) The plan shall contain a concise executive summary that 
includes the objectives and outcomes identified in the plan as well as 
an evaluation of past performance. The plan shall also contain a 
concise summary of the citizen participation process, public comments, 
and efforts made to broaden public participation in the development of 
the consolidated plan.

0
18. In Sec.  91.305, revise paragraphs (a), (b), and (c) to read as 
follows:


Sec.  91.305  Housing and homeless needs assessment.

    (a) General. The consolidated plan must provide a concise summary 
of the state's estimated housing needs projected for the ensuing five-
year period. Housing data included in this portion of the plan shall be 
based on U.S. Census data, as provided by HUD, as updated by any 
properly conducted local study, or any other reliable source that the 
state clearly identifies and should reflect the consultation with 
social service agencies and other entities conducted in accordance with 
Sec.  91.110 and the citizen participation process conducted in 
accordance with Sec.  91.115. For a state seeking funding under the 
HOPWA program, the needs described for housing and supportive services 
must address the unmet needs of low-income persons with HIV/AIDS and 
their families in areas outside of eligible metropolitan statistical 
areas.
    (b) Categories of persons affected. (1) The plan shall estimate the 
number and type of families in need of housing assistance for extremely 
low-income, low-income, moderate-income, and middle-income families, 
for renters and owners, for elderly persons, for single persons, for 
large families, for persons with HIV/AIDS and their families, and for 
persons with disabilities. The description of housing needs shall 
include a concise summary of the cost burden and severe cost burden, 
overcrowding (especially for large families), and substandard housing 
conditions being experienced by extremely low-income, low-income, 
moderate-income, and middle-income renters and owners compared to the 
state as a whole. (The state must define in its consolidated plan the 
terms ``standard condition'' and ``substandard condition but suitable 
for rehabilitation.'')
    (2) For any of the income categories enumerated in paragraph (b)(1) 
of this section, to the extent that any racial or ethnic group has 
disproportionately greater need in comparison to the needs of that 
category as a whole, assessment of that specific need shall be 
included. For this purpose, disproportionately greater need exists when 
the percentage of persons in a category of need who are members of a 
particular racial or ethnic group in a category of need is at least 10 
percentage points higher than the percentage of persons in the category 
as a whole.
    (c) Homeless needs. The plan must provide a concise summary of the 
nature and extent of homelessness (including rural homelessness and 
chronically homeless persons) within the state, addressing separately 
the need for facilities and services for homeless individuals and 
homeless families with children, both sheltered and unsheltered, and 
homeless subpopulations, in accordance with a table prescribed by HUD. 
This description must include the characteristics and needs of low-
income individuals and families with children (especially extremely 
low-income) who are currently housed but threatened with homelessness. 
The plan also must contain a brief narrative description of the nature 
and extent of homelessness by racial and ethnic group, to the extent 
information is available.
* * * * *

0
19. Revise Sec.  91.310(b) to read as follows:

[[Page 6968]]

Sec.  91.310  Housing market analysis.

* * * * *
    (b) Homeless facilities. The plan must include a brief inventory of 
facilities and services that meet the emergency shelter, transitional 
housing, permanent supportive housing, and permanent housing needs of 
homeless persons within the state. The inventory should also include 
(to the extent the information is available to the state) an estimate 
of the percentage or number of beds and supportive services programs 
that are serving people that are chronically homeless.
* * * * *

0
20. Revise Sec.  91.315 to read as follows:


Sec.  91.315  Strategic plan.

    (a) General. For the categories described in paragraphs (b), (c), 
(d), (e), and (f) of this section, the consolidated plan must do the 
following:
    (1) Indicate the general priorities for allocating investment 
geographically within the state and among different activities and 
needs.
    (2) Describe the rationale for establishing the allocation 
priorities given to each category of priority needs, particularly among 
extremely low-income, low-income, and moderate-income households.
    (3) Identify any obstacles to meeting underserved needs.
    (4) Summarize the priorities and specific objectives the state 
intends to initiate and/or complete during the time period covered by 
the strategic plan describing how the proposed distribution of funds 
will address identified needs. For each specific objective statement, 
identify proposed accomplishments and outcomes the state hopes to 
achieve in quantitative terms over a specified time period (e.g., one, 
two, three or more years), or in other measurable terms as identified 
and defined by the state. This information shall be provided in 
accordance with guidance to be issued by HUD.
    (b) Affordable housing. With respect to affordable housing, the 
consolidated plan must include the priority housing needs table 
prescribed by HUD and must do the following:
    (1) The affordable housing section shall describe how the 
characteristics of the housing market and the severity of housing 
problems and needs of extremely low-income, low-income, and moderate-
income renters and owners identified in accordance with Sec.  91.305 
provided the rationale for establishing allocation priorities and use 
of funds made available for rental assistance, production of new units, 
rehabilitation of existing units, or acquisition of existing units 
(including preserving affordable housing units that may be lost from 
the assisted housing inventory for any reason). Household and income 
types may be grouped together for discussion where the analysis would 
apply to more than one of them. If the state intends to use HOME funds 
for tenant-based assistance, it must specify local market conditions 
that led to the choice of that option.
    (2) The affordable housing section shall include specific 
objectives that describe proposed accomplishments the state hopes to 
achieve and must specify the number of extremely low-income, low-
income, and moderate-income families to whom the state will provide 
affordable housing as defined in 24 CFR 92.252 for rental housing and 
24 CFR 92.254 for homeownership over a specific time period.
    (c) Public housing. With respect to public housing, the 
consolidated plan must do the following:
    (1) Resident initiatives. For a state that has a state housing 
agency administering public housing funds, the consolidated plan must 
describe the state's activities to encourage public housing residents 
to become more involved in management and participate in homeownership;
    (2) Public housing needs. The consolidated plan must describe the 
manner in which the plan of the state will address the needs of public 
housing; and
    (3) Troubled public housing agencies. If a public housing agency 
located within a state is designated as ``troubled'' by HUD under part 
902 of this title, the strategy for the state or unit of local 
government in which any troubled public housing agency is located must 
describe the manner in which the state or unit of general local 
government will provide financial or other assistance to improve the 
public housing agency's operations and remove the ``troubled'' 
designation. A state is not required to describe the manner in which 
financial or other assistance is provided if the troubled public 
housing agency is located entirely within the boundaries of a unit of 
general local government that must submit a consolidated plan to HUD.
    (d) Homelessness. With respect to homelessness, the consolidated 
plan must include the priority homeless needs table prescribed by HUD 
and must describe the state's strategy for the following:
    (1) Helping low-income families avoid becoming homeless;
    (2) Reaching out to homeless persons and assessing their individual 
needs;
    (3) Addressing the emergency shelter and transitional housing needs 
of homeless persons; and
    (4) Helping homeless persons (especially any persons that are 
chronically homeless) make the transition to permanent housing and 
independent living.
    (e) Other special needs. With respect to supportive needs of the 
non-homeless, the consolidated plan must provide a concise summary of 
the priority housing and supportive service needs of persons who are 
not homeless but require supportive housing, i.e., elderly, frail 
elderly, persons with disabilities (mental, physical, developmental), 
persons with alcohol or other drug addiction, persons with HIV/AIDS and 
their families, and public housing residents. If the state intends to 
use HOME funds for tenant-based assistance to assist one or more of 
these subpopulations, it must specify local market conditions that led 
to the choice of this option.
    (f) Nonhousing community development plan. If the state seeks 
assistance under the CDBG program, the consolidated plan must concisely 
describe the state's priority nonhousing community development needs 
that affect more than one unit of general local government. These 
priority needs must be described by CDBG eligibility category, 
reflecting the needs of persons or families for each type of activity. 
This community development component of the plan must identify the 
state's specific long-term and short-term community development 
objectives (including economic development activities that create 
jobs), which must be developed in accordance with the primary objective 
of the CDBG program to develop viable urban communities by providing 
decent housing and a suitable living environment and expanding economic 
opportunities, principally for low-income and moderate-income persons.
    (g) Community Revitalization. States are encouraged to identify 
areas where geographically targeted revitalization efforts are carried 
out through multiple activities in a concentrated and coordinated 
manner. In addition, a state may elect to allow units of general local 
government to carry out a community revitalization strategy that 
includes the economic empowerment of low-income residents, in order to 
obtain the additional flexibility available as provided in 24 CFR part 
570, subpart I. A state must approve a local government's 
revitalization strategy before it may be implemented. If a state elects 
to allow revitalization strategies in its program, the method of

[[Page 6969]]

distribution contained in a state's action plan pursuant to Sec.  
91.320(k)(1) must reflect the state's process and criteria for 
approving local government's revitalization strategies. The strategy 
must identify the long-term and short-term objectives (e.g., physical 
improvements, social initiatives, and economic empowerment), expressing 
them in terms of measures of outputs and outcomes that are expected 
through the use of HUD programs. The state's process and criteria are 
subject to HUD approval.
    (h) Barriers to affordable housing. The consolidated plan must 
describe the state's strategy to remove or ameliorate negative effects 
of its policies that serve as barriers to affordable housing, as 
identified in accordance with Sec.  91.310.
    (i) Lead based paint. The consolidated plan must outline the 
actions proposed or being taken to evaluate and reduce lead-based paint 
hazards, and describe how the lead-based paint hazard reduction will be 
integrated into housing policies and programs.
    (j) Anti-poverty strategy. The consolidated plan must provide a 
concise summary of the state's goals, programs, and policies for 
reducing the number of poverty-level families and how the state's 
goals, programs, and policies for producing and preserving affordable 
housing, set forth in the housing component of the consolidated plan, 
will be coordinated with other programs such as Temporary Assistance 
for Needy Families as well as employment and training programs and 
services for which the state is responsible and the extent to which 
they will reduce (or assist in reducing) the number of poverty-level 
families, taking into consideration factors over which the state has 
control.
    (k) Institutional structure. (1) The consolidated plan must provide 
a concise summary of the institutional structure, including private 
industry, nonprofit organizations, and public institutions, through 
which the state will carry out its housing, homeless, and community 
development plan, assessing the strengths and gaps in that delivery 
system.
    (2) The plan must provide a concise summary of what the state will 
do to overcome gaps in the institutional structure for carrying out its 
strategy for addressing its priority needs.
    (l) Coordination. The consolidated plan must provide a concise 
summary of the state's activities to enhance coordination between 
public and assisted housing providers and private and governmental 
health, mental health, and service agencies. With respect to the 
preparation of its homeless strategy, the state must describe efforts 
in addressing the needs of persons that are chronically homeless. With 
respect to the public entities involved, the plan must describe the 
means of cooperation and coordination among the state and any units of 
general local government in the implementation of its consolidated 
plan. With respect to economic development, the state should describe 
efforts to enhance coordination with private industry, businesses, 
developers, and social service agencies.
    (m) Low-income housing tax credit. The consolidated plan must 
describe the strategy to coordinate the Low-Income Housing Tax Credit 
with the development of housing that is affordable to low-income and 
moderate-income families.
0
21. Revise Sec.  91.320 to read as follows:


Sec.  91.320  Action plan.

    The action plan must include the following:
    (a) Standard Form 424;
    (b) A concise executive summary that includes the objectives and 
outcomes identified in the plan as well as an evaluation of past 
performance, a summary of the citizen participation and consultation 
process (including efforts to broaden public participation) (24 CFR 
91.300 (b)), a summary of comments or views, and a summary of comments 
or views not accepted and the reasons therefore (24 CFR 91.115 (b)(5)).
    (c) Resources and objectives. (1) Federal resources. The 
consolidated plan must provide a concise summary of the federal 
resources expected to be made available. These resources include grant 
funds and program income.
    (2) Other resources. The consolidated plan must indicate resources 
from private and non-federal public sources that are reasonably 
expected to be made available to address the needs identified in the 
plan. The plan must explain how federal funds will leverage those 
additional resources, including a description of how matching 
requirements of the HUD programs will be satisfied. Where the state 
deems it appropriate, it may indicate publicly owned land or property 
located within the state that may be used to carry out the purposes 
identified in the plan;
    (3) Annual objectives. The consolidated plan must contain a summary 
of the annual objectives the state expects to achieve during the 
forthcoming program year.
    (d) Activities. A description of the state's method for 
distributing funds to local governments and nonprofit organizations to 
carry out activities, or the activities to be undertaken by the state, 
using funds that are expected to be received under formula allocations 
(and related program income) and other HUD assistance during the 
program year, the reasons for the allocation priorities, how the 
proposed distribution of funds will address the priority needs and 
specific objectives described in the consolidated plan, and any 
obstacles to addressing underserved needs.
    (e) Outcome measures. Each state must provide outcome measures for 
activities included in its action plan in accordance with guidance 
issued by HUD. For the CDBG program, this would include activities that 
are likely to be funded as a result of the implementation of the 
state's method of distribution.
    (f) Geographic distribution. A description of the geographic areas 
of the State (including areas of low-income and minority concentration) 
in which it will direct assistance during the ensuing program year, 
giving the rationale for the priorities for allocating investment 
geographically. When appropriate, the state should estimate the 
percentage of funds they plan to dedicate to target area(s).
    (g) Affordable housing goals. The state must specify one-year goals 
for the number of households to be provided affordable housing through 
activities that provide rental assistance, production of new units, 
rehabilitation of existing units, or acquisition of existing units 
using funds made available to the state, and one-year goals for the 
number of homeless, non-homeless, and special-needs households to be 
provided affordable housing using funds made available to the state. 
The term affordable housing shall be as defined in 24 CFR 92.252 for 
rental housing and 24 CFR 92.254 for homeownership.
    (h) Homeless and other special needs activities. Activities it 
plans to undertake during the next year to address emergency shelter 
and transitional housing needs of homeless individuals and families 
(including subpopulations), to prevent low-income individuals and 
families with children (especially those with incomes below 30 percent 
of median) from becoming homeless, to help homeless persons make the 
transition to permanent housing and independent living, specific action 
steps to end chronic homelessness, and to address the special needs of 
persons who are not homeless identified in accordance with Sec.  
91.315(e);
    (i) Barriers to Affordable Housing. Actions it plans to take during 
the next year to remove or ameliorate the negative effects of public 
policies that

[[Page 6970]]

serve as barriers to affordable housing. Such policies, procedures, and 
processes include but are not limited to: land use controls, tax 
policies affecting land, zoning ordinances, building codes, fees and 
charges, growth limitations, and policies affecting the return on 
residential investment.
    (j) Other actions. Actions it plans to take during the next year to 
implement its strategic plan and address obstacles to meeting 
underserved needs, foster and maintain affordable housing (including 
the coordination of Low-Income Housing Tax Credits with the development 
of affordable housing), evaluate and reduce lead-based paint hazards, 
reduce the number of poverty level families, develop institutional 
structure, enhance coordination between public and private housing and 
social service agencies, address the needs of public housing (including 
providing financial or other assistance to troubled public housing 
agencies), and encourage public housing residents to become more 
involved in management and participate in homeownership.
    (k) Program-specific requirements. In addition, the plan must 
include the following specific information:
    (1) CDBG. The action plan must set forth the state's method of 
distribution.
    (i) The method of distribution shall contain a description of all 
criteria used to select applications from local governments for 
funding, including the relative importance of the criteria, where 
applicable. The action plan must include a description of how all CDBG 
resources will be allocated among funding categories and the threshold 
factors and grant size limits that are to be applied. The method of 
distribution must provide sufficient information so that units of 
general local government will be able to understand and comment on it, 
understand what criteria and information their application will be 
judged, and be able to prepare responsive applications. The method of 
distribution may provide a summary of the selection criteria, provided 
that all criteria are summarized and the details are set forth in 
application manuals or other official state publications that are 
widely distributed to eligible applicants. HUD may monitor the method 
of distribution as part of its audit and review responsibilities, as 
provided in Sec.  570.493(a)(1), in order to determine compliance with 
program requirements.
    (ii) If the state intends to help nonentitlement units of general 
local government apply for guaranteed loan funds under 24 CFR part 570, 
subpart M, it must describe available guarantee amounts and how 
applications will be selected for assistance. If a state elects to 
allow units of general local government to carry out community 
revitalization strategies, the method of distribution shall reflect the 
state's process and criteria for approving local government's 
revitalization strategies.
    (2) HOME. (i) The state shall describe other forms of investment 
that are not described in 24 CFR 92.205(b).
    (ii) If the state intends to use HOME funds for homebuyers, it must 
state the guidelines for resale or recapture, as required in 24 CFR 
92.254.
    (iii) If the state intends to use HOME funds to refinance existing 
debt secured by multifamily housing that is being rehabilitated with 
HOME funds, it must state its refinancing guidelines required under 24 
CFR 92.206(b). The guidelines shall describe the conditions under which 
the state will refinance existing debt. At minimum, the guidelines 
must:
    (A) Demonstrate that rehabilitation is the primary eligible 
activity and ensure that this requirement is met by establishing a 
minimum level of rehabilitation per unit or a required ratio between 
rehabilitation and refinancing.
    (B) Require a review of management practices to demonstrate that 
disinvestment in the property has not occurred; that the long-term 
needs of the project can be met; and that the feasibility of serving 
the targeted population over an extended affordability period can be 
demonstrated.
    (C) State whether the new investment is being made to maintain 
current affordable units, create additional affordable units, or both.
    (D) Specify the required period of affordability, whether it is the 
minimum 15 years or longer.
    (E) Specify whether the investment of HOME funds may be state-wide 
or limited to a specific geographic area, such as a community 
identified in a neighborhood revitalization strategy under 24 CFR 
91.315(g), or a federally designated Empowerment Zone or Enterprise 
Community.
    (F) State that HOME funds cannot be used to refinance multifamily 
loans made or insured by any federal program, including the CDBG 
program.
    (iv) If the state will receive funding under the American Dream 
Downpayment Initiative (ADDI) (see 24 CFR part 92, subpart M), it must 
include:
    (A) A description of the planned use of the ADDI funds;
    (B) A plan for conducting targeted outreach to residents and 
tenants of public and manufactured housing and to other families 
assisted by public housing agencies, for the purposes of ensuring that 
the ADDI funds are used to provide downpayment assistance for such 
residents, tenants, and families; and
    (C) A description of the actions to be taken to ensure the 
suitability of families receiving ADDI funds to undertake and maintain 
homeownership, such as provision of housing counseling to homebuyers.
    (3) ESG. The state shall identify the process for awarding grants 
to state recipients and a description of how the state intends to make 
its allocation available to units of local government and nonprofit 
organizations (including community and faith-based organizations).
    (4) HOPWA. For HOPWA funds, the state must specify one-year goals 
for the number of households to be provided housing through the use of 
HOPWA activities for short-term rent; mortgage and utility assistance 
payments to prevent homelessness of the individual or family; tenant-
based rental assistance; and units provided in housing facilities that 
are being developed, leased or operated with HOPWA funds, and shall 
identify the method of selecting project sponsors (including providing 
full access to grassroots faith-based and other community-based 
organizations).

0
22. In Sec.  91.325, amend paragraph (c) by adding (c)(10) to read as 
follows:


Sec.  91.325  Certifications.

* * * * *
    (c) * * *
    (10) A certification that the state has established a policy for 
the discharge of persons from publicly funded institutions or systems 
of care (such as health care facilities, foster care, or other youth 
facilities, or correction programs and institutions) in order to 
prevent such discharge from immediately resulting in homelessness for 
such persons.
* * * * *

0
23. In Sec.  91.500, revise paragraph (b)(3) and add paragraph (b)(4) 
to read as follows:


Sec.  91.500  HUD approval action.

* * * * *
    (b) * * *
    (3) A plan for which a certification is rejected by HUD as 
inaccurate, after HUD has inspected the evidence and provided due 
notice and opportunity to the jurisdiction for comment; and
    (4) A plan that does not include a description of the manner in 
which the unit of general local government or state will provide 
financial or other assistance to a public housing agency if

[[Page 6971]]

the public housing agency is designated as ``troubled'' by HUD.
* * * * *

0
24. Amend Sec.  91.520 by adding paragraph (g) to read as follows:


Sec.  91.520  Performance reports.

* * * * *
    (g) The report will include a comparison of the proposed versus 
actual outcomes for each outcome measure submitted with the 
consolidated plan and explain, if applicable, why progress was not made 
toward meeting goals and objectives.

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

0
25. The authority citation for part 570 continues to read as follows:

    Authority: 42 U.S.C. 3535(d) and 5301-5320.


0
26. Revise Sec.  570.490(a) to read as follows:


Sec.  570.490  Recordkeeping requirements.

    (a) State records. (1) The state shall establish and maintain such 
records as may be necessary to facilitate review and audit by HUD of 
the state's administration of CDBG funds under Sec.  570.493. The 
content of records maintained by the state shall be as jointly agreed 
upon by HUD and the states and sufficient to enable HUD to make the 
determinations described at Sec.  570.493. For fair housing and equal 
opportunity purposes, and as applicable, such records shall include 
data on the racial, ethnic, and gender characteristics of persons who 
are applicants for, participants in, or beneficiaries of the program. 
The records shall also permit audit of the states in accordance with 24 
CFR part 85.
    (2) The state shall keep records to document its funding decisions 
reached under the method of distribution described in 24 CFR 
91.320(j)(1), including all the criteria used to select applications 
from local governments for funding and the relative importance of the 
criteria (if applicable), regardless of the organizational level at 
which final funding decisions are made, so that they can be reviewed by 
HUD, the Inspector General, the Government Accountability Office, and 
citizens pursuant to the requirements of Sec.  570.490(c).
* * * * *

    Dated: January 31, 2006.
Pamela H. Patenaude,
Assistant Secretary for Community Planning and Development.
[FR Doc. 06-1182 Filed 2-8-06; 8:45 am]
BILLING CODE 4210-67-P