[Federal Register Volume 76, Number 233 (Monday, December 5, 2011)]
[Rules and Regulations]
[Pages 75954-75994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-30938]



[[Page 75953]]

Vol. 76

Monday,

No. 233

December 5, 2011

Part II





Department of Housing and Urban Development





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24 CFR Parts 91, 576, 582, et al.





Homeless Emergency Assistance and Rapid Transition to Housing: 
Emergency Solutions Grants Program and Consolidated Plan Conforming 
Amendments; Defining ``Homeless''; Interim Rule and Final Rule

  Federal Register / Vol. 76 , No. 233 / Monday, December 5, 2011 / 
Rules and Regulations  

[[Page 75954]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 91 and 576

[Docket No. FR-5474-I-01]
RIN 2506-AC29


Homeless Emergency Assistance and Rapid Transition to Housing: 
Emergency Solutions Grants Program and Consolidated Plan Conforming 
Amendments

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

ACTION: Interim rule.

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SUMMARY: The Homeless Emergency Assistance and Rapid Transition to 
Housing Act of 2009 (HEARTH Act), enacted into law on May 20, 2009, 
consolidates three of the separate homeless assistance programs 
administered by HUD under the McKinney-Vento Homeless Assistance Act 
into a single grant program, and revises the Emergency Shelter Grants 
program and renames it as the Emergency Solutions Grants (ESG) program. 
The HEARTH Act also codifies into law the Continuum of Care planning 
process, a longstanding part of HUD's application process to assist 
homeless persons by providing greater coordination in responding to 
their needs.
    This interim rule revises the regulations for the Emergency Shelter 
Grants program by establishing the regulations for the Emergency 
Solutions Grants program, which replaces the Emergency Shelter Grants 
program. The change in the program's name, from Emergency Shelter 
Grants to Emergency Solutions Grants, reflects the change in the 
program's focus from addressing the needs of homeless people in 
emergency or transitional shelters to assisting people to quickly 
regain stability in permanent housing after experiencing a housing 
crisis and/or homelessness.

DATES: Effective date: January 4, 2012.
    Comment Due Date. February 3, 2012.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Regulations Division, Office of General Counsel, 451 
7th Street SW., Room 10276, Department of Housing and Urban 
Development, Washington, DC 20410-0500. Communications must refer to 
the above docket number and title. There are two methods for submitting 
public comments. All submissions must refer to the above docket number 
and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
http://www.regulations.gov Web site can be viewed by other commenters 
and interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at (202) 708-3055 (this 
is not a toll-free number). Individuals with speech or hearing 
impairments may access this number through TTY by calling the Federal 
Relay Service at (800) 877-8339. Copies of all comments submitted are 
available for inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Ann Marie Oliva, Director, Office of 
Special Needs Assistance Programs, Office of Community Planning and 
Development, Department of Housing and Urban Development, 451 7th 
Street SW., Washington, DC 20410-7000; telephone number (202) 708-4300 
(this is not a toll-free number). Hearing- and speech-impaired persons 
may access this number through TTY by calling the Federal Relay Service 
at (800) 877-8339 (this is a toll-free number).

SUPPLEMENTARY INFORMATION: 

I. Background--HEARTH Act

    On May 20, 2009, the President signed into law ``An Act to Prevent 
Mortgage Foreclosures and Enhance Mortgage Credit Availability,'' which 
became Public Law 111-22. This law implements a variety of measures 
directed toward keeping individuals and families from losing their 
homes. Division B of this law is the HEARTH Act, which consolidates and 
amends three separate homeless assistance programs carried out under 
title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11371 
et seq.) (McKinney-Vento Act) into a single grant program that is 
designed to improve administrative efficiency and enhance response 
coordination and effectiveness in addressing the needs of homeless 
persons. The HEARTH Act codifies into law and enhances the Continuum of 
Care planning process, the coordinated response for addressing the 
needs of homelessness established administratively by HUD in 1995. The 
single Continuum of Care program established by the HEARTH Act 
consolidates the following programs: the Supportive Housing program, 
the Shelter Plus Care program, and the Moderate Rehabilitation/Single 
Room Occupancy program. The Emergency Shelter Grants program is renamed 
the Emergency Solutions Grants program and revised to broaden existing 
emergency shelter and homelessness prevention activities and to add 
short- and medium-term rental assistance and services to rapidly re-
house homeless people. In addition the new Rural Housing Stability 
program replaces the Rural Homelessness Grant program.
    HUD commenced the process to implement the HEARTH Act with a 
proposed rule, which was published on April 20, 2010, (75 FR 20541) and 
titled ``Defining Homeless.'' That proposed rule sought to clarify and 
elaborate upon the new McKinney-Vento Act definitions for ``homeless'' 
and ``homeless individual with a disability.'' In addition, the 
proposed rule included recordkeeping requirements related to the 
revised definition of ``homeless.'' The final rule for the ``homeless'' 
definition and the related recordkeeping requirements appears elsewhere 
in today's Federal Register. Today's publication of the final rule for 
the homeless definition and this interim rule for the Emergency 
Solutions Grants program, which includes corresponding amendments to 
the Consolidated Plan, will be followed by separate proposed rules for 
the Continuum of Care program and the Rural Housing Stability program 
to implement other HEARTH Act

[[Page 75955]]

amendments to the McKinney-Vento Act. HUD will also soon publish a 
proposed rule establishing regulations for Homeless Management 
Information Systems (HMIS). The definition of ``homeless'' in this 
interim rule for the Emergency Solutions Grants program and the 
corresponding recordkeeping requirements are not the subject of further 
public comment. Public comment for this definition and the 
corresponding recordkeeping requirements were addressed in the Defining 
Homeless final rule published elsewhere in today's Federal Register.

II. This Interim Rule

    This interim rule revises the regulations for the Emergency Shelter 
Grants program at 24 CFR part 576 by establishing the new requirements 
for the Emergency Solutions Grants program and making corresponding 
amendments to HUD's Consolidated Plan regulations found at 24 CFR part 
91. The Emergency Solutions Grants (ESG) program builds upon the 
existing Emergency Shelter Grants program, but places greater emphasis 
on helping people quickly regain stability in permanent housing after 
experiencing a housing crisis and/or homelessness. The key changes that 
reflect this new emphasis are the expansion of the homelessness 
prevention component of the program and the addition of a new rapid re-
housing assistance component. The homelessness prevention component 
includes various housing relocation and stabilization services and 
short- and medium-term rental assistance to help people avoid becoming 
homeless. The rapid re-housing assistance component includes similar 
services and assistance to help people who are homeless move quickly 
into permanent housing and achieve stability in that housing.
    In developing regulations for the ESG program, HUD is relying 
substantially on its experience with its administration, and that of 
HUD's grantees, of the Homelessness Prevention and Rapid Re-Housing 
Program (HPRP), authorized and funded by the American Recovery and 
Reinvestment Act of 2009 (Recovery Act) (Pub. L. 111-5, approved 
February 17, 2009). The Recovery Act language that created HPRP was 
directly drawn from the proposed HEARTH Act, which was under 
consideration by Congress at the time the Recovery Act was enacted. 
HPRP is the first HUD program to fund, on a large scale ($1.5 billion), 
homelessness prevention and rapid re-housing assistance. HUD is 
therefore drawing from its recent program experience with HPRP, a 
temporary program, to establish the regulations for the ESG program, a 
permanent program. Because HPRP activities will continue, the interim 
rule is also directed at ensuring continuity between HPRP and ESG. This 
interim rule provides HPRP program recipients with an opportunity to 
comment on the policies implemented under HPRP and continued under the 
ESG program.
    This interim rule also implements HUD's longstanding interest in 
making its McKinney-Vento Act programs consistent, where appropriate, 
with other HUD programs such as the Community Development Block Grant 
(CDBG) program, the HOME Investment Partnerships (HOME) program, and 
the Housing Choice Voucher (HCV) program. To the extent that similar 
requirements in these programs can be made consistent, communities may 
be better able to implement coordinated plans and projects to prevent 
and end homelessness, while decreasing the administrative burden for 
recipients and subrecipients.
    This interim rule will become effective 30 days after today's date. 
Grantees are receiving two allocations of Fiscal Year (FY) 2011 funds. 
The first allocation was made and is subject to the Emergency Shelter 
Grants program regulations. The second allocation will be made after 
publication of this Emergency Solutions Grants program rule and must 
exclusively be used for homelessness prevention assistance, rapid re-
housing assistance, Homeless Management Information Systems (HMIS), and 
administration, in accordance with this interim rule. Each recipient 
may use up to 7.5 percent of its total FY 2011 amount for 
administrative costs as provided under this interim rule. In addition, 
if a recipient wishes to reprogram some or all of its first allocation 
funds to carry out homelessness prevention assistance, rapid re-housing 
assistance, or HMIS, the recipient must amend its consolidated plan in 
accordance with the requirements of the consolidated plan regulations 
as amended by this interim rule.
    The following sections of this overview highlight significant 
differences between the interim rule and the existing regulations for 
the Emergency Shelter Grants program. This overview does not address 
every regulatory provision of the interim rule. However, the reader is 
requested to review the entire interim rule, and HUD welcomes comment 
on all aspects of the rule. As previously mentioned, the definition of 
``homeless'' and the recordkeeping requirements related to that 
definition are included in a final rule published elsewhere in today's 
Federal Register. Note that the new definition of ``homeless'' and the 
related recordkeeping requirements are not subject to further public 
comment. Therefore, the new definition and related reporting 
requirements are not included in this interim rule, so as to avoid any 
confusion that HUD is reopening these provisions for additional public 
comment through this rule.

A. Emergency Solutions Grants Program Regulations (24 CFR Part 576)

    This interim rule amends the regulations at 24 CFR part 576, which 
have governed the Emergency Shelter Grants program and will govern, as 
revised, the Emergency Solutions Grant (ESG) program.
    This interim rule reflects HUD's comprehensive review and revision 
of part 576. In addition to making changes to implement the HEARTH Act 
amendments to the McKinney-Vento Act, this interim rule includes 
changes to reorganize the regulations in part 576 to make the 
regulations more intuitive and user-friendly; removes the cross-
references to the McKinney-Vento Act; provides greater elaboration of 
existing requirements where necessary or useful; updates requirements 
to reflect changes to the underlying law, such as the removal of Indian 
tribes as eligible grantees/recipients; builds from HUD's experience in 
developing and administering both the existing Emergency Shelter Grants 
program and HPRP; aligns the ESG program with the new Continuum of Care 
and Rural Housing Stability programs, to the extent feasible, in order 
to facilitate coordination and foster efficient use of resources; and 
align the requirements of the ESG program with HUD's other formula 
programs and rental assistance programs, to the extent feasible and 
beneficial, in order to increase efficiency and coordination among the 
different programs.
    In developing the regulations for the ESG program and other 
programs authorized under title IV of the revised McKinney-Vento Act, 
HUD has sought to provide grantees with the programmatic framework to: 
maximize communitywide planning and strategic use of resources to 
prevent and end homelessness; improve coordination and integration with 
mainstream services to marshal all available resources, capitalize on 
existing strengths, and increase efficiency; improve coordination 
within each community's homeless services, including services funded by 
other programs targeted to homeless people;

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build on lessons learned from years of practice and research, so that 
more resources are invested in demonstrated solutions to end 
homelessness, such as rapid re-housing; expand resources and services 
available to prevent homelessness; realign existing programs and 
systems to focus on shortening homelessness; direct funding to the most 
critical services to help people achieve long-term housing stability 
and avoid becoming homeless again; standardize eligibility 
determinations and improve the targeting of resources to help those 
most in need; improve data collection and performance measurement; and 
allow each community to tailor its program to the particular strengths 
and challenges within that community.
General Provisions (Subpart A)
    The major changes to this subpart include new definitions required 
by the HEARTH Act amendments and revisions to existing definitions 
where needed to conform to the new program requirements or to improve 
administration of the program.
Definitions (Section 576.2)
    At Risk of Homelessness. The interim rule clarifies the definition 
of ``at risk of homelessness'' under section 401(1) of the McKinney-
Vento Act. The definition includes three categories under which an 
individual or family may qualify as ``at risk of homelessness.'' For an 
individual or family to qualify as ``at risk of homelessness'' under 
the first category of the definition, the individual or family must 
meet two threshold criteria and must exhibit one or more specified risk 
factors. The two threshold criteria, as provided in the statute, are: 
(1) The individual or family has income below 30 percent of median 
income for the geographic area; and (2) the individual or family has 
insufficient resources immediately available to attain housing 
stability. Under the interim rule, the first criterion refers 
specifically to annual income and to median family income for the area, 
as determined by HUD. The second criterion is interpreted as, ``the 
individual or family does not have sufficient resources or support 
networks, e.g., family, friends, faith-based or other social networks, 
immediately available to prevent them from moving to an emergency 
shelter or another place described in paragraph (1) of the homeless 
definition [in Sec.  576.2].'' These clarifications are consistent with 
HUD's practice in administering its homeless assistance programs and 
will help ensure consistent application of these criteria.
    To further ensure consistency of interpretation, the interim rule 
also clarifies several of the risk factors that pertain to the first 
category of individuals and families who qualify as ``at risk of 
homelessness.'' As provided under the statute, the pertinent risk 
factors are as follows: (1) Has moved frequently because of economic 
reasons; (2) is living in the home of another because of economic 
hardship; (3) has been notified that their right to occupy their 
current housing or living situation will be terminated; (4) lives in a 
hotel or motel; (5) lives in severely overcrowded housing; (6) is 
exiting an institution; or (7) otherwise lives in housing that has 
characteristics associated with instability and an increased risk of 
homelessness.
    Under the interim rule, the words ``has moved frequently'' in the 
first risk factor are interpreted as ``2 or more times during the 60 
days immediately preceding the application for homelessness prevention 
assistance.'' This interpretation is consistent with HUD's 
interpretation of similar language in the ``homeless'' definition. 
However, HUD is still considering whether and how to clarify ``economic 
reasons'' in the first risk factor and ``economic hardship'' in the 
second risk factor. HUD believes at times, ``economic reasons'' and 
``economic hardship'' can have the same meaning, HUD specifically 
requests comments regarding these terms.
    The third risk factor, ``has been notified that their right to 
occupy their current housing or living situation will be terminated,'' 
is clarified by adding that the notice has to be in writing and that 
the termination has to be within 21 days after the date of application 
for assistance.
    The fourth risk factor, ``lives in a hotel or motel,'' is clarified 
by adding ``and the cost of the hotel or motel is not paid for by 
federal, state, or local government programs for low-income individuals 
or by charitable organizations.'' This change is being made to avoid 
overlap with the conditions under which an individual or family living 
in a hotel or motel qualifies as homeless under paragraph (1)(ii) of 
the ``homeless'' definition (section 103(a)(3) of the McKinney-Vento 
Act).
    The fifth risk factor, ``lives in severely overcrowded housing,'' 
is interpreted as ``lives in a single-room occupancy or efficiency 
apartment unit in which more than two persons, on average, reside or 
another type of housing in which there reside more than 1.5 persons per 
room, as defined by the U.S. Census Bureau.''
    The sixth risk factor, ``is exiting an institution,'' is 
interpreted as ``a publicly funded institution or system of care, such 
as a health-care facility, mental health facility, foster care or other 
youth facility, or correction program or institution.'' This language 
is derived from section 406 of the McKinney-Vento Act to include all 
public institutions and systems of care from which people may be 
discharged into homelessness.
    The seventh risk factor, ``otherwise lives in housing that has 
characteristics associated with instability and an increased risk of 
homelessness,'' remains as is, but requires the particular housing 
characteristics to be identified in the recipient's HUD-approved 
consolidated plan. This requirement strives to balance the need for 
consistent application of this risk factor with sensitivity to the 
differences in the conditions of each community's housing stock.
    The second and third categories under which individuals and 
families may qualify as ``at risk of homelessness'' are based on the 
last sentence of section 401(1) of the McKinney-Vento Act, which 
provides that the term ``at risk of homelessness'' includes all 
families with children and youth defined as homeless under other 
federal statutes. The term ``families with children and youth defined 
as homeless under other federal statutes'' is defined under section 
401(7) of the McKinney-Vento Act. Section 401(7) provides that this 
term means ``any children or youth that are defined as `homeless' under 
any Federal statute other than this subtitle, but are not defined as 
homeless under section 103, and shall also include the parent, parents, 
or guardian of such children or youth under subtitle B of title VII 
this Act (42 U.S.C. 11431 et seq.).''
    For the sake of clarity, the definition of ``at risk of 
homelessness'' this interim rule uses separate categories to describe 
the children and youth defined as homeless under other federal statutes 
and to describe the children and youth defined as homeless under 
subtitle B of title VII of the McKinney-Vento Act and their parent(s) 
or guardian(s). In light of comments received in response to the 
proposed rule concerning the definition of ``homeless'' HUD has 
provided specific citations to the other federal statutes that are 
applicable to the first of these two categories. As for the last 
category, the interim rule clarifies that the parent(s) or guardian(s) 
of the children or youth defined as homeless under subtitle B of title 
VII of the McKinney-Vento Act must be living with those children or 
youth to qualify as ``at risk of homelessness'' under that category.

[[Page 75957]]

    Emergency shelter. This interim rule revises certain definitions 
currently found in the existing part 576 regulations. The definition of 
``emergency shelter'' has been revised to distinguish this type of 
shelter from transitional housing. This distinction is necessitated by 
the McKinney-Vento Act's explicit distinction between what activities 
can or cannot be funded under the Continuum of Care program and the 
Rural Housing Stability program (see section 423(a)(2) and section 
491(b)(1)(E) of the McKinney-Vento Act). However, under the definition, 
any project that received funding in FY 2010 as an emergency shelter 
may continue to be funded under the ESG program, regardless of whether 
the project meets the revised definition.
    Homeless. The interim rule includes the definition of ``homeless'' 
which is made final by the Defining Homeless rule, published elsewhere 
in today's Federal Register. No further public comment is being 
solicited or taken on this definition.
    Metropolitan city. This interim rule revises the definition of 
``metropolitan city'' to clarify that the definition includes the 
District of Columbia, since the McKinney-Vento Act includes the 
District of Columbia in both its definitions of ``state'' and 
``metropolitan city''. HUD has decided to resolve this conflict in 
favor of treating the District of Columbia under the ESG program as a 
metropolitan city. This interpretation will provide the District of 
Columbia with the flexibility afforded to metropolitan cities and urban 
counties for carrying out activities directly, rather than being 
compelled to subgrant all ESG funds. In addition, the definition of 
``territory'' in 24 CFR 576.3 has been updated to exclude the Trust 
Territory of the Pacific Islands, which is no longer a U.S. territory.
    Private nonprofit organization; unit of general purpose local 
government. The changes to the definitions of ``private nonprofit 
organization'' and ``unit of general local government'' are intended to 
make clear that governmental organizations, such as public housing 
agencies or state or local housing finance agencies, are not eligible 
subrecipients under the ESG program. To recognize these entities under 
either definition would be inconsistent with section 411 of the 
McKinney-Vento Act, which refers specifically to ``private nonprofit 
organizations'' and ``unit of general purpose local government.''
    Recipient and subrecipient. In the interim rule, the terms 
``recipient'' and ``subrecipient'' replace the existing terminology for 
entities that received grants and subgrants under the ESG program. 
Under the McKinney-Vento Act, ``recipient'' means ``any governmental or 
private nonprofit entity approved by the Secretary [of HUD] as to 
financial responsibility'' (Sec. 42 U.S.C. 11371(6)). The interim rule 
clarifies that ``recipient'' means any state, territory, metropolitan 
city, or urban county, or in the case of reallocation, any unit of 
general purpose local government, approved by HUD to assume financial 
responsibility and which enters into a grant agreement with HUD to 
administer Emergency Solutions Grant (ESG). Private nonprofit 
organizations are excluded from the definition, because they are not 
direct recipients under the program. The interim rule defines 
``subrecipient'' as any unit of general purpose local government or 
private nonprofit organization to which a recipient awards ESG grant 
funds.
Allocation of Funding (Section 576.3)
    Under the interim rule, the existing set-aside of funding for the 
territories has been changed for the Emergency Solutions Grant program 
to ``up to 0.2 percent, but not less than 0.1 percent'' of the total 
fiscal year appropriation for Emergency Solutions Grant (ESG). This 
change provides HUD with greater administrative discretion if there are 
significant increases in the annual appropriations for ESG. In 
addition, the formula for distributing the set-aside among the 
territories has been modified for this program to incorporate the rate 
at which each territory has completed its expenditures by the previous 
expenditure deadline. In all other respects, the allocation of funding 
will remain the same as the current practice.
Eligible Activities (Subpart B)
    The major changes to this subpart of part 576 include the addition 
of an annual funding cap on street outreach and emergency shelter 
activities; clarification of the eligible costs for street outreach and 
emergency shelter activities; the expansion of the homelessness 
prevention component of the program and addition of a new rapid re-
housing assistance component, which both include rental assistance and 
housing relocation and stabilization services; expansion of the range 
of eligible administrative costs; and the addition of a new category of 
eligible activities for Homeless Management Information Systems (HMIS), 
to the extent that costs are necessary to meet the new HMIS 
participation requirement under the McKinney-Vento Act.
    General Provisions. In general, the interim rule allows ESG funds 
to be used for five program components (street outreach, emergency 
shelter, homelessness prevention, rapid re-housing assistance, and 
HMIS) and necessary administrative costs. However, in accordance with 
the McKinney-Vento Act, some restrictions apply to the amounts that can 
be spent on street outreach, emergency shelter, and administrative 
costs. Funds used for street outreach and emergency shelter activities 
will be limited to the greater of 60 percent of the recipient's total 
fiscal year grant for ESG or the hold-harmless amount established by 
the section 415(b) of the McKinney-Vento Act (``the amount expended by 
[the recipient] for such activities during fiscal year most recently 
completed before effective date under section 1503 of the [HEARTH 
Act]''). To reasonably and practicably implement the statute's hold-
harmless language, the interim rule makes the hold-harmless amount the 
amount of FY 2010 grant funds committed for street outreach and 
emergency shelter activities in FY 2010.
    In accordance with the amendments to the McKinney-Vento Act, the 
interim rule provides that the total funds that can be spent on 
administrative activities are 7.5 percent of the recipient's ESG grant. 
In addition, the interim rule clarifies that, subject to the cost 
principles in Office of Management and Budget (OMB) Circulars A-87 (2 
CFR part 225) and A-122 (2 CFR part 230),\1\ employee compensation and 
other overhead costs directly related to carrying out street outreach, 
emergency shelter, homelessness prevention, rapid re-housing, and HMIS 
activities are eligible costs of those activities and not subject to 
the spending limit for administrative costs. This clarification is in 
response to questions and concerns raised by HPRP grantees and 
subgrantees and the recent U.S. Government Accountability Office (GAO) 
study, Homelessness: Information on Administrative Costs for HUD's 
Emergency Shelter Grants Program (GAO-10-491).\2\
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    \1\ OMB Circular A-87 and the regulations at 2 CFR part 225 
pertain to ``Cost Principles for State, Local, and Indian Tribal 
Governments.'' OMB Circular A-122 and the regulations codified at 24 
CFR part 230 pertain to ``Cost Principles for Non-Profit 
Organizations.''
    \2\ See http://www.gao.gov/new.items/d10491.pdf.
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    Street outreach and emergency shelter components. Consistent with 
section 415(a)(2) of the McKinney-Vento Act, the interim rule clarifies 
that the costs of essential services related to street outreach are 
eligible costs under the ESG program. The eligible costs for street 
outreach activities differ from the eligible costs for essential 
services

[[Page 75958]]

related to emergency shelter, as they are limited to those necessary to 
provide emergency care on the street. To the extent possible, essential 
services related to emergency shelter and street outreach are the same 
as the eligible costs for supportive services under the Continuum of 
Care program. This consistency across these three sets of services is 
intended to improve understanding of the programs' requirements, 
facilitate coordination, and maximize efficiency.
    The interim rule revises the eligible costs for operating emergency 
shelters by removing the limit on staff costs, adding the cost of 
supplies, and allowing the cost of a hotel or motel stay under certain 
conditions.
    The interim rule clarifies the ``maintenance of effort'' 
requirement in two respects. First, the references to new service and 
quantifiable increase in services are eliminated in favor of simply 
prohibiting a unit of general purpose local government from using ESG 
funds to replace funds the local government provided for street 
outreach or emergency shelter services during the immediately preceding 
12-month period, unless HUD determines that the unit of general purpose 
local government is in a severe financial deficit. Second, the interim 
rule specifies how this determination would be made.
    Homelessness Prevention and Rapid Re-Housing Components. HUD has 
interpreted sections 415(a)(4) and (5) of the McKinney-Vento Act to 
authorize ESG funds to be used for short- and medium-term rental 
assistance and housing relocation and stabilization services for 
homelessness prevention and rapid re-housing of homeless individuals 
and families into permanent housing. Consistent with this 
interpretation and to serve HUD's programmatic goals, the interim rule 
categorizes the eligible activities under sections 415(a)(4) and (5) of 
the McKinney-Vento Act under two program components--one for 
homelessness prevention and one for rapid re-housing assistance. This 
organization is intended to be function/outcome-focused and helps 
emphasize the integral relationship between rental assistance and 
housing relocation and stabilization services in both homelessness 
prevention and rapid re-housing assistance. This organization also 
provides for differentiation between the conditions for providing 
homelessness prevention and the conditions for providing rapid re-
housing assistance. These conditions are intended to facilitate the 
strategic and efficient targeting of resources.
    Housing Relocation and Stabilization Services. The eligible costs 
and requirements for providing housing relocation and stabilization 
services are based on HUD's experience in developing and administering 
HPRP. For the purpose of determining compliance with the statutory 
limit on street outreach and emergency shelter activities, housing 
stability case management and legal services are distinguished from the 
case management and legal services in the essential services sections 
of street outreach and emergency shelter by when and for what purpose 
the case management and legal services are provided. Note that 
``housing relocation and stabilization services,'' the name of which 
comes from section 415(a)(5) of the McKinney-Vento Act, are not to be 
confused with the relocation assistance and payments required under the 
Uniform Relocation Assistance and Real Property Acquisition Policies 
Act of 1970 (URA) (42 U.S.C. 4601-4655). Costs arising under the URA 
are eligible for federal financial assistance in the same manner and to 
the same extent as other program or project costs (see 42 U.S.C. 
4631(a)), and are separately listed at Sec.  576.102 of this interim 
rule.
    Short-term and Medium-term Rental Assistance. Consistent with HPRP, 
HUD has interpreted short-term rental assistance to be up to 3 months 
of assistance. Unlike HPRP, HUD has interpreted medium-term rental 
assistance to be up to 24 months. This change is intended for 
consistency with the period for transitional housing in the Continuum 
of Care (CoC) program.
    The requirements for short- and medium-term rental assistance 
require that a program participant and a housing owner have a written 
lease for the provision of rental assistance. In addition, the interim 
rule also requires a rental assistance agreement between the recipient 
or subrecipient and the housing owner. Similar to HPRP, the interim 
rule gives Emergency Solutions Grant (ESG) recipients broad discretion 
in determining the type, amount, and duration of rental assistance a 
program participant can receive for homelessness prevention or rapid 
re-housing assistance. But where HPRP allows only tenant-based rental 
assistance, the interim rule allows rental assistance to be tenant-
based or project-based, as provided under section 415(a)(4) of the 
McKinney-Vento Act. However, the requirements for project-based rental 
assistance under this interim rule have been specially designed to 
accommodate both the impermanent nature of the rental assistance and 
the program goal of helping people quickly re-enter permanent housing 
and achieve long-term stability in that housing. For example, instead 
of requiring an individual or family to move from an assisted unit when 
the individual or family's assistance ends, the interim rule provides 
for the assistance to be suspended, terminated, or transferred to 
another unit.
    HUD specifically requests comments on how short- to medium-term 
project-based rental assistance can best be fashioned to avoid forcing 
each program participant to move at the end of the program 
participant's term of assistance and to make project-based rental 
assistance a feasible and useful alternative to tenant-based rental 
assistance.
    Similar to the rules of other HUD housing programs, the interim 
rule prohibits rental assistance from being provided for a housing 
unit, unless the total rent for the unit does not exceed the fair 
market rent established by HUD, as provided under 24 CFR 982.503, and 
complies with HUD's standard of rent reasonableness, as established 
under 24 CFR 982.507. These rent restrictions are intended to make sure 
that program participants can remain in their housing after their ESG 
assistance ends.
    HMIS Component. Section 416(f) of the McKinney-Vento Act requires 
for the first time that projects receiving funding under Emergency 
Solutions Grant (ESG) program participate in an HMIS. The interim rule 
makes certain HMIS costs eligible to the extent necessary to enable 
this participation. HUD will soon be publishing a proposed rule on HMIS 
to establish in 24 CFR part 580, the regulations that will govern HMIS. 
In addition to establishing HMIS regulations in a new part 580 
provisions, the HMIS rule will propose corresponding amendments to this 
interim rule regarding the use of Emergency Solutions Grant (ESG) funds 
for HMIS and the incorporation of the requirements under part 580 that 
will apply to ESG recipients.
    Administrative Activities. Under this interim rule, the eligible 
costs for administrative activities have been expanded to reflect most 
of the eligible administrative costs under the CDBG program. The 
revisions to the sharing requirement also clarify that, although not 
required, funds for administrative costs may be shared with private 
nonprofit organizations, and a reasonable amount must be shared with 
units of general purpose local government. This clarification is made 
in response to grantee and subgrantee concerns and questions raised 
through the recent GAO report, Homelessness: Information on 
Administrative Costs for

[[Page 75959]]

HUD's Emergency Shelter Grants Program (GAO-10-491).
    Indirect Costs. This interim rule reflects HUD's decision to adopt 
a consistent policy for indirect costs for the Emergency Solutions 
Grant (ESG), Continuum of Care and Rural Housing Stability Programs, in 
response to further grantee and subgrantee questions and concerns. The 
interim rule provides that Emergency Solutions Grant (ESG) funds may be 
used to pay indirect costs in accordance with OMB Circulars A-87 (2 CFR 
part 225) and A-122 (2 CFR part 230), as applicable. Indirect costs may 
be allocated to each eligible activity, so long as the allocation is 
consistent with an indirect cost rate proposal developed in accordance 
with OMB Circulars A-87 (2 CFR part 225) and A-122 (2 CFR part 230), as 
applicable. The indirect costs charged to an activity subject to an 
expenditure limit must be added to the direct costs charged for that 
activity when determining the total costs subject to the expenditure 
limit.
Award and Use of Grant Amounts (Subpart C)
    The major changes to this subpart include clarification of the 
submission requirements for territories, elaboration of the matching 
requirements, clarification of the obligation requirements, and the 
addition of minimum requirements for making timely drawdowns and 
payments to subrecipients.
    Submission Requirements. The application requirements generally 
remain the same as the current application requirements, except that 
territories will be required to submit a consolidated plan in 
accordance with the requirements that apply to local governments under 
HUD's Consolidated Plan regulations codified in 24 CFR part 91. The 
interim rule also clarifies that certain changes in the recipients' 
Emergency Solutions Grant (ESG) programs require an amendment to the 
consolidated plan in accordance with 24 CFR 91.505.
    Matching Requirements. The revisions to the matching contribution 
requirements (and recordkeeping requirements related to the matching 
requirements) integrate the matching requirements in 24 CFR 85.24 \3\ 
and provide further clarification on how matching contributions must be 
counted. The interim rule also specifies that program income is to be 
used as a match, rather than being treated as an addition to the (ESG) 
grant, because of the sizable matching requirement in Emergency 
Solutions Grant (ESG).
---------------------------------------------------------------------------

    \3\ HUD's regulations in 24 CFR part 85 address administrative 
requirements for grants and cooperative agreements to state, local, 
and federally recognized Indian tribal governments.
---------------------------------------------------------------------------

    Obligation, expenditure, and payment requirements. The interim rule 
clarifies the obligation of funds requirements and imposes new 
expenditure-of-funds requirements. The interim rule requires the 
recipient to draw down its funds from each year's allocation not less 
than once during each quarter of the recipient's program year. This 
requirement is based on HUD's experience in administering homeless 
assistance grants, and is intended to ensure the timely reimbursements 
from HUD to recipients. In addition, the recipient (and its 
subrecipients that are units of general purpose local government) will 
be required to make timely payments to each of its subrecipients within 
30 days after the date of receiving the subrecipient's complete payment 
request. This requirement is also based on HUD's experience in 
administering homeless assistance grants and is intended to ensure 
timely payment of private nonprofit organizations, which may not be 
able to cover their expenses for as long a period as state and local 
governments. As in the Emergency Shelter Grants program, all of the 
recipient's grant must be expended for eligible activity costs within 
24 months after the date HUD signs the grant agreement with the 
recipient.
Reallocation (Subpart D)
    The interim rule makes substantial changes to the Emergency 
Solutions Grant (ESG) reallocation provisions in order to improve 
administrative efficiency. For example, if the amount of unused or 
returned funds is not sufficient to justify the administrative burden 
of reallocating those funds, whether for HUD or ESG recipients, the 
interim rule provides for those funds to be added to the next fiscal 
year allocation.
Program Requirements (Subpart E)
    The major changes to this subpart include the addition of new 
requirements that facilitate coordination at the state and local levels 
as a means to prevent and reduce homelessness; elaboration on the 
requirements concerning the integration and use of appropriate 
assistance and services, termination of assistance, habitability 
standards, and conflicts of interest; modification of the homeless 
participation requirement to reasonably and practicably implement the 
statutory requirement; and clarification of the applicable requirements 
under other federal laws and regulations.
    Systems coordination. Consistent with sections 402(f) and 413(b) of 
the McKinney-Vento Act, the interim rule contains a new requirement for 
Emergency Solutions Grant (ESG) recipients to consult with Continuums 
of Care in allocating funds for eligible activities; developing 
performance standards, evaluating outcomes of (ESG)-assisted projects 
and developing funding, policies, and procedures for the administration 
and operation of the HMIS. This requirement will be discussed in 
further detail in regard to the revisions of the consolidated planning 
requirements at 24 CFR part 91 (section II.B of this preamble).
    The interim rule requires ESG recipients and subrecipients to 
coordinate and integrate, to the maximum extent practicable, ESG-funded 
activities with other programs targeted toward homeless people, as well 
as mainstream housing, health, social services, employment, education, 
and youth programs for which families and individuals at risk of 
homelessness and homeless individuals and families may be eligible. 
These requirements are consistent with recurring HUD appropriations 
language for the homeless assistance grants and with the Federal 
Strategic Plan to Prevent and End Homelessness (FSP).\4\
---------------------------------------------------------------------------

    \4\ See http://www.usich.gov/PDF/OpeningDoors_2010_FSPPreventEndHomeless.pdf.
---------------------------------------------------------------------------

    Centralized or coordinated assessment. This interim rule introduces 
a proposed requirement for ESG recipients and subrecipients to use a 
centralized or coordinated system to initially assess the eligibility 
and needs of each individual or family who seeks homeless assistance or 
homelessness prevention assistance. This centralized or coordinated 
assessment system would be developed and implemented by the Continuum 
of Care in accordance with minimum requirements to be established by 
HUD. HUD is currently developing its minimum requirements for these 
systems and will present these requirements for public review and 
comment in the upcoming proposed rule for the Continuum of Care 
program. Please note that this interim rule does not require any ESG 
recipient or subrecipient to use a centralized or coordinated 
assessment system until the Continuum of Care program final rule has 
been published and until the Continuum of Care for the area develops 
and implements a system that meets the minimum requirements in that 
final rule.
    Through the administration of the Rapid Re-Housing for Families 
Demonstration program and the

[[Page 75960]]

Homelessness Prevention and Rapid Re-Housing Program, as well as best 
practices identified in communities, HUD has learned that centralized 
or coordinated assessment systems are important in ensuring the success 
of homeless assistance and homeless prevention programs in communities. 
In particular, such assessment systems help communities systematically 
assess the needs of program participants and effectively match each 
individual or family with the most appropriate resources available to 
address that individual or family's particular needs.
    Therefore, HUD intends to require each Continuum of Care to develop 
and implement a centralized or coordinated assessment system in its 
geographic area. Such a system must be designed locally in response to 
local needs and conditions. For example, rural areas will have 
significantly different systems than urban ones. While the common 
thread between typical models is the use of a common assessment tool 
(such as a vulnerability index), the form, detail, and use of that tool 
will vary from one community to the next. Some examples of centralized 
or coordinated assessment systems include: A central location or 
locations within a geographic area where individuals and families must 
present for homeless services; a 211 or other hotline system that 
screens and directly connects callers to appropriate homeless housing/
service providers in the area; a ``no wrong door'' approach in which a 
homeless family or individual can present at any homeless service 
provider in the geographic area but is assessed using the same tool and 
methodology so that referrals are consistently completed across the 
Continuum of Care; a specialized team of case workers that provides 
assessment services to providers within the Continuum of Care; or in 
larger geographic areas, a regional approach in which ``hubs'' are 
created within smaller geographic areas.
    HUD recognizes that imposing a requirement for a centralized or 
coordinated assessment system may have certain costs and risks. Among 
the risks that HUD wishes specifically to address are the risks facing 
individuals and families fleeing domestic violence, dating violence, 
sexual assault, and stalking. In developing the baseline requirements 
for a centralized or coordinated intake system, HUD is considering 
whether victim service providers should be exempt from participating in 
a local centralized or coordinated assessment process, or whether 
victim service providers should have the option to participate or not. 
HUD is seeking comment specifically from ESG-funded victim service 
providers on this question. HUD also plans to require each Continuum of 
Care to develop a specific policy on how its particular system will 
address the needs of individuals and families who are fleeing, or 
attempting to flee, domestic violence, dating violence, sexual assault, 
or stalking, but who are seeking shelter or services from non-victim 
service providers. These policies could include reserving private areas 
at an assessment location for evaluations of individuals or families 
who are fleeing, or attempting to flee, domestic violence, dating 
violence, sexual assault, or stalking; a separate ``track'' within the 
assessment framework that is specifically designed for domestic 
violence victims; or the co-location of victim service providers with 
centralized assessment teams.
    HUD invites suggestions for ensuring that the requirements it 
imposes regarding centralized or coordinated assessment systems will 
best help communities use their resources effectively and best meet the 
needs of all families and individuals who need assistance. Some 
specific questions HUD asks commenters to address are: What barriers to 
accessing housing/services might a centralized or coordinated intake 
system pose to victims of domestic violence? How can those barriers be 
eliminated? What specific measures should be implemented to ensure 
safety and confidentiality for individuals and families who are fleeing 
or attempting to flee domestic violence situations? How should those 
additional standards be implemented to ensure that victims of domestic 
violence have immediate access to housing and services without 
increasing the burden on those victims? For communities that already 
have centralized or coordinated assessment systems in place, are 
victims of domestic violence and/or domestic violence service providers 
integrated into that system? In either scenario (they are integrated 
into an assessment process or they are not integrated into it), how 
does your community ensure the safety and confidentiality of this 
population, as well as access to homeless housing and services? What 
HUD-sponsored training would be helpful to assist communities in 
completing the initial assessment of victims of domestic violence in a 
safe and confidential manner?
    In addition to comments addressing the needs of victims of domestic 
violence, dating violence, sexual assault, and stalking, HUD invites 
general comments on the use of a centralized or coordinated assessment 
system, particularly from those in communities that have already 
implemented one of these systems who can share both what has worked 
well and how these systems could be improved. HUD specifically seeks 
comment on any additional risks that a centralized or coordinated 
assessment system may create for victims of domestic violence, dating 
violence, sexual assault, or stalking who are seeking emergency shelter 
services due to immediate danger, regardless of whether they are 
seeking services through a victim service provider or non-victim 
service provider.
    Standards for administering assistance and minimum assistance 
requirements. As discussed later in this preamble with respect to the 
revisions to HUD's Consolidated Plan regulations in 24 CFR part 91, 
this interim rule requires a number of written standards to be 
established by recipients and subrecipients for administering ESG 
assistance, in order to balance the broad discretion given to 
recipients in developing street outreach, emergency shelter, rapid re-
housing, and homelessness prevention programs to accommodate the unique 
needs, strengths, and other characteristics of their communities.
    The interim rule also specifies that all program participants must 
be assisted as needed in obtaining services and financial assistance 
through other homeless and public assistance programs. Furthermore, 
each program participant receiving homelessness prevention or rapid re-
housing assistance must be required to meet regularly with a case 
manager (except where prohibited by Violence Against Women Act (VAWA) 
and the Family Violence Prevention and Services Act (FVPSA)), and the 
assistance provider must develop an individualized plan to help that 
program participant retain permanent housing after the ESG assistance 
ends. These requirements are intended to help ensure that the ESG-
funded emergency, short-term or medium-term assistance will be 
effective in helping program participants regain long-term housing 
stability and avoid relapses into homelessness.
    Terminating Assistance. If a program participant who receives ESG 
assistance violates program requirements, the recipient or subrecipient 
may terminate the assistance in accordance with a formal process 
established by the recipient or subrecipient that protects the rights 
of the individuals affected. This applies to all forms of ESG 
assistance. In this interim rule, HUD enhances the minimum process

[[Page 75961]]

requirements for the termination of homelessness prevention or rapid 
re-housing assistance, in order to reflect the process set forth in the 
Supportive Housing Program (SHP) regulations. These enhanced process 
requirements are prompted by the longer duration and higher 
expectations involved in homelessness prevention and rapid re-housing 
assistance, as compared to the duration and expectations involved in 
street outreach or emergency shelter activities.
    To terminate rental assistance or housing relocation and 
stabilization services to a program participant, the minimum required 
formal process must consist of a written notice to the program 
participant containing a clear statement of the reasons for 
termination, a review of the decision, and a prompt written notice of 
the final decision to the program participant. The review of the 
decision must give the program participant the opportunity to present 
written or oral objections before a person other than the person (or a 
subordinate of that person) who made or approved the termination 
decision. In addition, the interim rule provides that the recipient or 
subrecipient may resume assistance to a family or individual whose 
assistance has been terminated.
    Shelter and Housing Standards. The revised habitability standards 
incorporate lead-based paint remediation and disclosure requirements. 
The revised standards for emergency shelters require all shelters to 
meet minimum habitability standards adopted from the SHP regulations 
and current Emergency Solutions Grant guidance. Shelters renovated with 
ESG funds are also required to meet state or local government safety 
and sanitation standards, as applicable, include energy-efficient 
appliances and materials. If ESG funds are used to help a program 
participant remain in or move into permanent housing, that housing must 
meet habitability standards.
    Conflicts of Interest. This interim rule clarifies the existing 
personal conflicts- of-interest provision by incorporating language 
from the CDBG program regulation. In addition, the interim rule adds a 
new provision to reduce organizational conflicts of interest, based on 
HUD's experience in administering HPRP.
    Homeless Participation. The interim rule revises the current 
homeless participation requirement so that if a recipient is unable to 
meet the participation of homeless individuals requirement in section 
416(d) of the McKinney-Vento Act, the recipient need not submit and 
obtain HUD approval of a formal waiver request, so long as the 
recipient develops a plan to consult with homeless or formerly homeless 
individuals in considering and making policies and decisions regarding 
any facilities, services, or other assistance that receive ESG funding; 
includes the plan in its annual action plan to be submitted under 24 
CFR part 91; and obtains HUD's approval of its annual action plan. This 
revision is intended to reduce administrative burden to both recipients 
and to HUD.
    Other Federal Requirements. In general, the revisions to the 
section on ``other Federal requirements'' clarify the degree to which 
certain requirements are applicable, remove certain requirements that 
are redundant or moved elsewhere in the rule for improved 
organizational purposes, and change certain requirements to correspond 
with changes in the McKinney-Vento Act or other changes made by this 
interim rule. Chief among these changes is the change to the 
environmental review requirements in accordance with the HEARTH Act's 
repeal of section 443 of the McKinney-Vento Act. Under this interim 
rule, Emergency Solutions Grant (ESG) activities would be made subject 
to environmental review by HUD under HUD's environmental regulations in 
24 CFR part 50, and HUD's environmental regulations in 24 CFR part 58 
will no longer be applicable to such activities.
    The interim rule does not retain the provision in the current 
Emergency Shelter Grants program regulation specifying that for 
purposes of this program, the term ``dwelling units'' under 24 CFR part 
8 includes ``sleeping accommodations.'' The language is being removed 
because it did not provide grantees with direction on how to apply this 
provision. Nevertheless, Section 504 of the Rehabilitation Act of 1973 
and HUD's implementing regulations at 24 CFR part 8 apply to the 
Emergency Solutions Grants program, including accessibility 
requirements under Subpart C--Program Accessibility. A recipient shall 
operate each existing program or activity receiving federal financial 
assistance so that the program or activity, when viewed in its 
entirety, is readily accessible to and usable by individuals with 
disabilities. Grantees are also required to provide reasonable 
accommodations for persons with disabilities in order to enable program 
participants with a disability to have an equal opportunity to 
participate in the program or activity.
    Grantees that undertake alterations to shelters may be subject to 
additional accessibility requirements in accordance with 24 CFR part 8. 
In certain instances, recipients undertaking alterations may be 
required to ensure that 5 percent of the total sleeping areas, such as 
5 percent (or at least one) of the sleeping rooms where a number of 
sleeping rooms are provided, and 5 percent (or at least one) of the 
total number of sleeping areas, such as beds, where a number of beds 
are provided in a room, are accessible for persons with mobility 
impairments and that an additional 2 percent of the total individual 
sleeping areas are accessible for persons with visual impairments. The 
Americans with Disabilities Act may also apply and require a greater 
level of accessibility in certain shelters.
    Relocation and Acquisition. The interim rule updates the relocation 
and acquisition requirements and makes them more consistent with the 
requirements in other HUD programs. Section 576.102 specifies that the 
cost of providing relocation assistance and payments arising out of the 
Uniform Act (URA) is an eligible activity, as per section 211 of the 
URA (42 U.S.C. 4631(a)). Temporary relocation and other alternatives to 
minimize displacement in other HUD programs that provide permanent 
housing are inapplicable due to the nature of the ESG program. 
Emergency shelters assisted under the ESG program provide temporary 
shelter for the homeless. Existing tenants would not fall within the 
program definition of ``homeless.'' Section 576.408(b) provides that 
temporary relocation is not an available alternative to permanently 
displacing a tenant who moves as a direct result of acquisition, 
demolition, or rehabilitation for a project assisted with ESG funds. 
Additionally, Sec.  576.408(b) provides that an agency cannot avoid 
treating such tenant as a displaced person by offering the tenant a 
unit in the same building/complex upon project completion. Finally, 
Sec.  576.408(d) of the interim rule clearly states that the URA 
applies to an acquisition undertaken in connection with an ESG-assisted 
project irrespective of the source of funding for the acquisition.
Grant Administration (Subpart F)
    The changes to this subpart substantially revise the Emergency 
Solutions Grant (ESG) recordkeeping and reporting requirements and the 
enforcement provisions. The changes to the recordkeeping requirements 
include the addition of specific documentation requirements to 
demonstrate compliance with ESG regulations, as well as new 
requirements regarding record retention periods, confidentiality, and 
rights of access to

[[Page 75962]]

records. The reporting requirements and the enforcement provisions are 
each expanded and further clarified.
    Recordkeeping and reporting requirements. Grant recipients under 
the ESG program have always been required to show compliance with the 
program's regulations through appropriate records. However, the 
existing regulations for the Emergency Shelter Grants program are not 
specific about the records to be maintained. The interim rule 
elaborates upon the recordkeeping requirements to provide sufficient 
notice and clarify the documentation that HUD requires for assessing 
compliance with the new requirements of the program. The recordkeeping 
requirements for documenting homeless status were published in the 
proposed rule for the homeless definition.\5\ Recordkeeping 
requirements with similar levels of specificity will apply to 
documentation of ``at risk of homelessness'' and ``annual income.'' 
Further requirements are modeled after the recordkeeping requirements 
for the HOME Investment Partnerships program (24 CFR 92.508) and other 
HUD regulations.
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    \5\ See the April 20, 2010, edition of the Federal Register at 
75 FR 20544.
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    Included along with these changes are new or expanded requirements 
regarding confidentiality, rights of access to records, record 
retention periods, and reporting requirements. Most significantly, to 
protect the safety and privacy of all program participants, the interim 
rule broadens program's confidentiality requirements. The McKinney-
Vento Act only requires procedures to ensure the confidentiality of 
records pertaining to any individual provided family violence 
prevention or treatment services under the ESG program. The interim 
rule requires written procedures to ensure the security and 
confidentiality of all records containing personally identifying 
information of any individual or family who applies for and/or receives 
Emergency Solutions Grant (ESG) assistance.
    Enforcement. The interim rule revises the sanctions section under 
the existing regulations for the Emergency Shelter Grants program, 
including the heading of the section on sanctions, to strengthen the 
enforcement procedures and the array of remedial actions and sanctions 
for recipients and subrecipients of Emergency Solutions Grant (ESG) 
funds. These revisions draw from the requirements at 24 CFR 85.43 and 
other HUD program regulations.

B. Consolidated Submissions for Community Planning and Development 
Programs (24 CFR Part 91)

    In addition to revising regulations for the Emergency Shelter 
Grants program at 24 CFR part 576 to establish the regulations for 
Emergency Solutions Grant (ESG), this interim rule revises selected 
sections of the consolidated planning regulations at 24 CFR part 91, in 
order to reflect both the HEARTH Act amendments to the McKinney-Vento 
Act and significant developments in HUD's homelessness policies and 
program administration over the last 15 years. In developing and 
implementing the Continuum of Care concept through the annual notices 
of funding availability (NOFAs) for its competitive programs, HUD 
sought to establish and standardize complementary planning requirements 
between the homeless components of the Consolidated Plan and the annual 
submission of the Continuum of Care Plan. The structure of the annual 
Continuum of Care Plan (CoC) plan and the plan's sections on community 
participation, needs assessment, inventory of housing and services, 
strategies, annual application, and performance were developed to 
harmonize with the Consolidated Plan's homelessness components. Many 
communities closely aligned the Consolidated Plan and the Continuum of 
Care Plan (CoC) Plan covering their jurisdiction.
    The HEARTH Act amendments to the McKinney-Vento Act contain 
provisions requiring coordination, collaboration, and consultation 
between Continuums of Care and ESG state and local government 
recipients. The McKinney-Vento Act requires ``collaborative 
applicants'' under the Continuum of Care program to participate in the 
Consolidated Plan for the geographic areas they serve and analyze 
patterns of use and evaluate outcomes for ESG projects in those areas. 
ESG recipients in turn must consult with these collaborative applicants 
on the allocation of ESG funds and participate in HMIS, which the 
collaborative applicants are required to establish.
    In describing these and related requirements for cross-program 
coordination, this interim rule uses the term ``Continuum of Care'' 
instead of ``collaborative applicant.'' The interim rule defines 
``Continuum of Care'' as the group composed of representatives of 
relevant organizations, which generally includes nonprofit homeless 
providers; victim service providers; faith-based organizations; 
governments; businesses; advocates; public housing agencies; school 
districts; social service providers; mental health agencies; hospitals; 
universities; affordable housing developers; law enforcement; 
organizations that serve homeless and formerly homeless veterans, and 
homeless and formerly homeless persons that are organized to plan for 
and provide, as necessary, a system of outreach, engagement, and 
assessment; emergency shelter; rapid re-housing; transitional housing; 
permanent housing; and prevention strategies to address the various 
needs of homeless persons and persons at risk of homelessness for a 
specific geographic area.
    The use of ``Continuum of Care'' instead of ``collaborative 
applicant'' is intended to maintain consistency with the terminology 
HUD has established and grantees have become familiar with in the 
Continuum of Care planning process for the Supportive Housing program, 
the Shelter Plus Care program, and the Moderate Rehabilitation/Single 
Room Occupancy program. The term ``collaborative applicant,'' as used 
in the McKinney-Vento Act, covers two distinct entities under the 
existing Continuum of Care planning process: One entity whose function 
is planning and facilitating collaboration and another entity whose 
function is applying for and managing the homeless assistance grant. 
Because HUD has always called the planning entity the Continuum of 
Care, HUD is continuing that practice in this interim rule.
    The interim rule strengthens and standardizes the homelessness 
elements affecting all jurisdictions required to submit a Consolidated 
Plan. The changes to the Consolidated Plan sections on homelessness 
have been guided by the larger purposes of the HEARTH Act and the 
principles and priorities put forth in the Federal Strategic Plan to 
Prevent and End Homelessness (FSP). The changes to the Consolidated 
Plan will foster closer coordination between not only Emergency 
Solutions Grant (ESG) and Continuum of Care (CoC) programs, but other 
mainstream housing and services programs that can provide greater 
resources to homeless persons and people at imminent risk of 
homelessness.
    Definitions. The Consolidated Plan regulations are modified to add 
and revise this section to conform to definitions used in this interim 
rule for 24 CFR part 576 and the proposed rule that will soon be 
published for the Continuum of Care program. A definition of rapid re-
housing assistance is added to bring coverage of general homeless 
assistance models in 24 CFR part 91 up-to-date. Other definitions are

[[Page 75963]]

eliminated because they will no longer be used in part 91 after the 
changes in the regulations to the McKinney-Vento Act programs.
    HUD specifically invites comments regarding the definition of 
chronically homeless. The McKinney-Vento Act defines ``chronically 
homeless'' as an individual or family who: (i) Is homeless and lives or 
resides in a place not meant for human habitation, a safe haven, or in 
an emergency shelter; (ii) has been homeless and living or residing in 
a place not meant for human habitation, a safe haven, or in an 
emergency shelter continuously for at least 1 year or on at least 4 
separate occasions in the last 3 years; and (iii) has an adult head of 
household (or a minor head of household if no adult is present in the 
household) with a diagnosable substance use disorder, serious mental 
illness, developmental disability (as defined in section 102 of the 
Developmental Disabilities Assistance and Bill of Rights Act of 2000 
(42 U.S.C. 15002)), post traumatic stress disorder, cognitive 
impairments resulting from a brain injury, or chronic physical illness 
or disability, including the co-occurrence of 2 or more of those 
conditions. Additionally, the statutory definition includes as 
chronically homeless a person who currently lives or resides in an 
institutional care facility, including a jail, substance abuse or 
mental health treatment facility, hospital or other similar facility, 
and has resided there for fewer than 90 days if such person met the 
other criteria for homeless prior to entering that facility. (See 42 
U.S.C. 11360(2))
    The regulatory definition of ``chronically homeless'' does not 
elaborate significantly on the statutory definition. However, HUD has 
determined that when an individual or family has not been continuously 
homeless for at least one year but has been homeless on at least four 
separate occasions in the last 3 years, each separate occasion must be 
at least 15 days in duration to ensure consistency for counting and 
eligibility purposes. HUD has determined that the 15-day minimum is an 
appropriate measure to distinguish the chronically homeless from the 
homeless population in general, so as to recognize chronically homeless 
people who have spent a significant amount of time as homeless.
    The regulatory definition also clarifies that a family will qualify 
as chronically homeless if the head of household has met all of the 
requirements in paragraphs (i) through (iii) of the statutory 
definition, given that a family's composition may fluctuate during the 
course of the head of household's homeless experience.
    Consultation: Local Governments/States. The interim rule revises 
the consultation requirements in 24 CFR part 91 to implement the 
McKinney-Vento Act's new requirement that ESG recipients consult with 
Continuums of Care when allocating their ESG funds to carry out 
eligible activities. In response to the concerns of prospective 
grantees under the Continuum of Care program, the interim rule includes 
several requirements to make it easier for Continuums of Care to meet 
their requirements under the McKinney-Vento Act, including 
participating in the Consolidated Plan for their jurisdiction and 
designing a collaborative process for evaluating the outcomes of ESG 
projects. Similar changes to facilitate the participation of Continuums 
of Care (CoCs) in the Consolidated Planning process are also made to 
the sections on citizen participation at 24 CFR 91.105 and 91.115.
    The consultation sections were also revised to conform to the FSP's 
emphasis not only on chronically homeless people, but on families with 
children, veterans and their families, and unaccompanied youth, and the 
FSP's emphasis on strengthening collaboration with programs and 
entities beyond the programs targeted to homeless people. The 
consultation sections refer specifically to ``publicly funded 
institutions and systems of care that may discharge people into 
homelessness (such as health-care facilities, mental health facilities, 
foster care and other youth facilities, and corrections programs and 
institutions).'' This is done to be consistent with the emphasis on 
discharge planning in section 406 of the McKinney-Vento Act. For this 
same reason, HUD also refers to these publicly funded institutions and 
systems of care in each section of the interim rule that specifically 
addresses the prevention of homelessness.
    Housing Needs Assessment; Local Governments/States. The interim 
rule adds a new category of persons for whom states and local 
jurisdictions are required to assess housing assistance needs: Formerly 
homeless families and individuals who are receiving rapid re-housing 
assistance and are nearing the termination of that assistance. The 
addition of this category is intended to help focus communities on 
helping these families stay housed after their rapid re-housing 
assistance ends.
    Homeless Needs Assessment; Local Government/States. The changes 
under the interim rule increase HUD's flexibility in establishing and 
modifying standards for collecting data on homeless populations and 
subpopulations and performance measures. The changes also provide 
additional definition to the description of the characteristics and 
needs of persons who are currently housed but threatened with 
homelessness. These changes permit HUD to more closely harmonize data 
included in each jurisdiction's Consolidated Plan with data that the 
Continuum(s) of Care for that jurisdiction will be required to collect 
and submit under the Continuum of Care program. The collection of 
consistent homeless needs data in these two planning processes will 
permit local and national assessment of progress in meeting the goals 
set forth in the FSP.
    Housing Market Analysis; Facilities, Housing, and Services for 
Homeless Persons; Local Governments/States. The interim rule allows HUD 
to establish and modify descriptions of the facilities, housing, and 
services for homeless persons to increase consistency between the 
Consolidated Plan and the Continuum of Care Plan. The interim rule adds 
mainstream services to the inventory of services meeting the needs of 
homeless persons, consistent with the overall emphasis on using and 
collaborating with mainstream assistance programs to prevent and end 
homelessness. Similar to changes made to other sections, the special 
focus accorded to chronically homeless people is broadened to include 
families with children, veterans and their families, and unaccompanied 
youth, in order to reflect the priorities in the FSP.
    Strategic Plan; Homelessness Strategies; Local Government/States. 
The interim rule refocuses the general homelessness-related strategies 
on the ultimate goals of reducing and ending homelessness and aligns 
them with Continuum of Care planning strategies and performance 
measures, such as shortening the period of time that persons experience 
homelessness and helping persons who were recently homeless avoid 
becoming homeless again. The changes under the interim rule also 
emphasize the priorities of the FSP. The strategic framework set out in 
this section is carried through in conforming changes to the Action 
Plan and performance reporting sections of the Consolidated Plan.
    Action Plan; Local Government/States. The changes to the Action 
Plan sections for local governments and States require the ESG 
recipient to consult with applicable Continuums of Care when allocating 
funds in the area(s) served by the Continuum(s) of Care and the ESG 
recipient and when

[[Page 75964]]

developing the performance standards for the assisted activities. These 
changes reflect the McKinney-Vento Act requirements that ESG recipients 
consult with Continuums of Care on their allocation of ESG funds and 
that Continuums of Care in turn analyze patterns of use of ESG funds 
and help evaluate outcomes for ESG-funded projects. These changes are 
also consistent with the statutory scheme of the HEARTH Act, which 
generally requires increased collaboration between Continuums of Care 
and ESG recipients.
    The changes under the interim rule for the ESG portion of the 
action plan require each local government seeking an ESG grant to 
specify the standards under which homelessness prevention and rapid re-
housing assistance will be administered and describe the centralized or 
coordinated assessments system(s) that will be used. By helping to 
ensure that the program is administered fairly and methodically, these 
requirements provide balance to the broad discretion that ESG 
recipients are given in the design of their ESG programs. Including 
these standards in the action plan allows the program design to be 
strengthened as the plan is developed and refined through the 
consultation and citizen participation stages in the planning process. 
The requirements for states differ slightly from those that apply to 
local governments, in order to accommodate for the restrictions on 
states' use of ESG funds and the variety of areas and Continuums of 
Care their programs encompass. Under the state programs, the written 
standards for providing ESG assistance may vary by subrecipient, 
Continuum of Care, or the geographic area over which services are 
coordinated.
    Certifications. The changes to the ESG certifications clarify the 
certifications and bring them into closer conformance with the 
corresponding requirements under part 576 and the McKinney-Vento Act.

III. Justification for Interim Rulemaking

    In accordance with its regulations on rulemaking at 24 CFR part 10, 
HUD generally publishes its rules for advance public comment. Notice 
and public procedures may be omitted, however, if HUD determines that, 
in a particular case or class of cases, notice and public procedure are 
``impracticable, unnecessary, or contrary to the public interest.'' 
(See 24 CFR 10.1.)
    In this case, HUD has determined that it would be contrary to the 
public interest to delay promulgation of the regulations for the 
Emergency Solutions Grants program because Congress has provided 
funding for this new program in the Department of Defense and Full-Year 
Continuing Appropriations Act, 2011 (Pub. L. 112-10, approved April 15, 
2011) (FY 2011 Appropriations Act). The FY 2011 Appropriations Act 
appropriates, in section 2241 of the statute, $1,905,000,000 for 
homeless assistance grants, of which at least $225,000,000 shall be for 
the Emergency Solutions Grant program. While many federal programs, 
including HUD programs, received a reduction in funding in the FY 2011 
Appropriations Act, Congress increased funding for HUD's homeless 
assistance grants, and for the first time, authorized funding for a 
program, (the Emergency Solutions Grants program). HUD interprets this 
increase in funding as recognition by Congress of the significant needs 
that remain to help America's homeless population and the expectation 
of Congress that HUD will move expediently to expend this funding to 
assist and serve the homeless through its programs. HUD interprets the 
substantial funding, a minimum of $225,000,000, for the Emergency 
Solutions Grant program, as recognition by Congress that this program, 
which is an expansion of the predecessor Emergency Shelter Grants 
program, and includes features that were part of the Recovery Act's 
HPRP, is one that can have an immediate impact in helping the homeless.
    Given what HUD sees as a congressional charge to move expediently, 
HUD is issuing this rule providing for regulations for the Emergency 
Solutions Grants program as an interim rule. Interim regulations in 
place will allow HUD to move forward in making FY 2011 funds available 
to grantees. As has been discussed in this preamble, the foundation for 
the regulations for the Emergency Solutions Grants program are those of 
its predecessor program, the Emergency Shelters Grant program, 
regulations with which HUD grantees are well familiar. HUD grantees are 
also familiar with the requirements of the HPRP and, as the preamble 
has highlighted, this interim rule adopts many of the features and 
requirements of HPRP.
    Although for the reasons stated above, HUD is issuing this rule to 
take immediate effect, HUD welcomes all comments on this interim rule 
and all comments will be taken into consideration in the development of 
the final rule.

IV. Findings and Certifications

Regulatory Planning and Review

    OMB reviewed this rule under Executive Order 12866, Regulatory 
Planning and Review. This rule was determined to be a ``significant 
regulatory action,'' as defined in section 3(f) of the order (although 
not an economically significant regulatory action under the order). As 
discussed earlier in this preamble, this interim rule establishes the 
regulations for the Emergency Solutions Grants program, which is the 
successor program to the Emergency Shelter Grants program. In 
establishing the regulations for the Emergency Solutions Grants 
program, the interim rule uses as its base the regulations for the 
Emergency Shelter Grants program and makes such changes as necessary to 
reflect the changes and focus of the Emergency Solutions Grants 
program. While emergency shelter remains an important component of the 
Emergency Solutions Grants program, the new Emergency Solutions Grants 
program places a greater focus on homelessness prevention for persons 
at risk of homelessness and rapid re-housing assistance for homeless 
persons. Accordingly, the rule does not alter the fundamental goal of 
the program, which is to assist those who are homeless and in danger of 
becoming homeless. Therefore, the administrative changes made by this 
rule do not result in an economic effect equal to $100 million, which 
would be approximately half of the program's funding ($225 million). 
HUD believes that the administrative changes made by the interim rule 
would also have no discernible impact upon the economy.
    The slight shift in emphasis from emergency shelter in the 
Emergency Shelter Grants program to homelessness prevention and rapid 
rehousing assistance in the Emergency Solutions Grants program does not 
represent a significant regulatory change. Rapid rehousing is already 
familiar to HUD's homeless grantee providers from funding received 
under the HPRP, a temporary program funded through the American 
Recovery and Reinvestment Act of 2009, and their experience with this 
program which continues to today. Because HPRP activities will continue 
through September 30, 2012, the interim rule is directed to ensuring 
continuity between HPRP and Emergency Solutions Grant (ESG) program.
    The docket file is available for public inspection in the 
Regulations Division, Office of the General Counsel, 451 7th Street 
SW., Room 10276, Washington, DC 20410-0500. Due to security measures at 
the HUD Headquarters

[[Page 75965]]

building, please schedule an appointment to review the docket file by 
calling the Regulations Division at (202) 708-3055 (this is not a toll-
free number). Individuals with speech or hearing impairments may access 
this number via TTY by calling the Federal Relay Service at (800) 877-
8339.

Environmental Impact

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding of 
No Significant Impact is available for public inspection between the 
hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office 
of General Counsel, Department of Housing and Urban Development, 451 
7th Street SW., Room 10276, Washington, DC 20410-0500. Due to security 
measures at the HUD Headquarters building, please schedule an 
appointment to review the FONSI by calling the Regulations Division at 
(202) 708-3055 (this is not a toll-free number). Individuals with 
speech or hearing impairments may access this number via TTY by calling 
the Federal Information Relay Service at (800) 877-8339.

Unfunded Mandates Reform Act

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

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. This rule solely 
addresses the allocation and use of grant funds under the new McKinney-
Vento Act homeless assistance programs as consolidated and amended by 
the HEARTH Act. As discussed in the preamble, the majority of the 
regulatory provisions in this rule track the regulatory provisions of 
the existing Emergency Shelter Grants program, with which prospective 
recipients of Emergency Solutions Grant (ESG) are familiar. 
Accordingly, the transition from the Emergency Shelter Grants program 
to the Emergency Solutions Grant program, in regard to funding and 
program requirements, should raise minimal issues because applicants 
and grantees are well-familiar with these requirements and, through the 
years, in soliciting information on the burden of the Emergency 
Solutions Grant requirements, grantees have not advised that such 
requirements are burdensome. Therefore, HUD has determined that this 
rule would not have a significant economic impact on a substantial 
number of small entities.
    Notwithstanding that determination, HUD specifically invites 
comments regarding any less burdensome alternatives to this rule that 
will meet HUD's objectives as described in this preamble.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either: (1) Imposes substantial direct compliance costs on state and 
local governments and is not required by statute, or (2) preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This final rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on state and local governments nor preempt state law 
within the meaning of the executive order.

Paperwork Reduction Act

    The information collection requirements contained in this interim 
rule have been submitted to OMB under the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501-3520). In accordance with the Paperwork Reduction 
Act, 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.
    The burden of the information collections in this interim rule is 
estimated as follows:

                                       Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
                                                     Response
     Information collection          Number of       frequency     Total annual    Burden hours    Total annual
                                    respondents      (average)       responses     per response        hours
----------------------------------------------------------------------------------------------------------------
576.400(a) Consultation With                 360               1             360            6.00           2,160
 Continuums of Care.............
576.400(b) Coordination With               2,360               1           2,360            8.00          18,880
 Other Targeted Homeless
 Services.......................
576.400(c) System and Program              2,360               1           2,360           16.00          37,760
 Coordination With Mainstream
 Resources......................
576.400(d) Centralized or                  2,000               1           2,000            3.00           6,000
 Coordinated Assessment.........
576.400(e) Written Standards for             808               1             808            5.00           4,040
 Determining the Amount of
 Assistance.....................
576.400(f) Participation in HMIS          78,000               1          78,000            0.50          39,000
576.401(a) Initial Evaluation...          50,000               1          30,000            1.00          30,000
576.401(b) Recertification......          20,000               2          40,000            0.50          20,000
576.401(d) Connection to                  78,000               3         234,000            0.25          58,500
 Mainstream Resources...........
576.401(e) Housing Retention              50,000               1          50,000            0.75          37,500
 Plan...........................
576.402 Terminating Assistance..             808               1             808            4.00           3,232
576.403 Habitability Review.....          52,000               1          52,000            0.6           31,200
576.405 Homeless Participation..           2,360              12          28,320            1.00          28,320
576.500 Recordkeeping                      2,360               1           2,360           12.75          30,009
 Requirements...................
576.501(b) Remedial Actions.....              20               1              20            8.00             160
576.501(c) Recipient Sanctions..             360               1             360           12.00           4,320
576.501(c) Subrecipient Response           2,000               1           2,000            8.00          16,000
                                 -------------------------------------------------------------------------------

[[Page 75966]]

 
    Total.......................  ..............  ..............  ..............  ..............         367,081
----------------------------------------------------------------------------------------------------------------

    Total estimated burden hours: 367,081.
    In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments 
from members of the public and affected agencies concerning this 
collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the affected 
agency, including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this rule. Comments must refer 
to the proposal by name and docket number (FR-5474-I-01) and be sent 
to: HUD Desk Officer, Office of Management and Budget, New Executive 
Office Building, Washington, DC 20503, Fax: (202) 395-6947, and Reports 
Liaison Officer, Office of the Assistant Secretary for Community 
Planning and Development, Department of Housing and Urban Development, 
Room 7233, 451 Seventh Street SW., Washington, DC 20410-7000.
    Interested persons may submit comments regarding the information 
collection requirements electronically through the Federal eRulemaking 
Portal at http://www.regulations.gov. HUD strongly encourages 
commenters to submit comments electronically. Electronic submission of 
comments allows the commenter maximum time to prepare and submit a 
comment, ensures timely receipt by HUD, and enables HUD to make them 
immediately available to the public. Comments submitted electronically 
through the http://www.regulations.gov Web site can be viewed by other 
commenters and interested members of the public. Commenters should 
follow the instructions provided on that site to submit comments 
electronically.

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 576

    Community facilities, Emergency solutions grants, Grant programs--
housing and community development, Grant program--social programs, 
Homeless, Reporting and recordkeeping requirements.

    Accordingly, for the reasons described in the preamble, parts 91 
and 576 of title 24 of the Code of Federal Regulations are amended as 
follows:

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

0
1. The authority citation for 24 CFR 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.  91.2, paragraph (a)(2) is revised to read as follows:


Sec.  91.2  Applicability.

    (a) * * *
    (2) The Emergency Solutions Grants (ESG) program (see 24 CFR part 
576);

0
3. In Sec.  91.5, the definitions of ``Chronically homeless person,'' 
``Disabling condition,'' ``Homeless family with children,'' and 
``Homeless subpopulations'' are removed; the definition of ``Emergency 
shelter'' is revised; and the definitions of ``At risk of 
homelessness,'' ``Chronically homeless,'' ``Continuum of Care,'' 
``Homeless Management Information System (HMIS),'' ``Rapid re-housing 
assistance,'' and ``Victim service provider'' are added to read as 
follows:


Sec.  91.5  Definitions.

* * * * *
    At risk of homelessness. (1) An individual or family who:
    (i) Has an annual income below 30 percent of median family income 
for the area, as determined by HUD;
    (ii) Does not have sufficient resources or support networks, e.g., 
family, friends, faith-based or other social networks, immediately 
available to prevent them from moving to an emergency shelter or 
another place described in paragraph (1) of the ``Homeless'' definition 
in this section; and
    (iii) Meets one of the following conditions:
    (A) Has moved because of economic reasons two or more times during 
the 60 days immediately preceding the application for homelessness 
prevention assistance;
    (B) Is living in the home of another because of economic hardship;
    (C) Has been notified in writing that their right to occupy their 
current housing or living situation will be terminated within 21 days 
after the date of application for assistance;
    (D) Lives in a hotel or motel and the cost of the hotel or motel 
stay is not paid by charitable organizations or by federal, State, or 
local government programs for low-income individuals;
    (E) Lives in a single-room occupancy or efficiency apartment unit 
in which there reside more than two persons or lives in a larger 
housing unit in which there reside more than 1.5 people per room, as 
defined by the U.S. Census Bureau;
    (F) Is exiting a publicly funded institution, or system of care 
(such as a health-care facility, a mental health facility, foster care 
or other youth facility, or correction program or institution); or
    (G) Otherwise lives in housing that has characteristics associated 
with instability and an increased risk of homelessness, as identified 
in the recipient's approved consolidated plan;
    (2) A child or youth who does not qualify as ``homeless'' under 
this section, but qualifies as ``homeless'' under section 387(3) of the 
Runaway and Homeless Youth Act (42 U.S.C. 5732a(3)), section 637(11) of 
the Head Start Act (42 U.S.C. 9832(11)), section 41403(6) of the 
Violence Against Women Act of 1994 (42 U.S.C. 14043e-2(6)), section 
330(h)(5)(A) of the Public Health Service Act (42 U.S.C.

[[Page 75967]]

254b(h)(5)(A)), section 3(m) of the Food and Nutrition Act of 2008 (7 
U.S.C. 2012(m)), or section 17(b)(15) of the Child Nutrition Act of 
1966 (42 U.S.C. 1786(b)(15)); or
    (3) A child or youth who does not qualify as ``homeless'' under 
this section, but qualifies as ``homeless'' under section 725(2) of the 
McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), and the 
parent(s) or guardian(s) of that child or youth if living with her or 
him.
* * * * *
    Chronically homeless. (1) An individual who:
    (i) Is homeless and lives in a place not meant for human 
habitation, a safe haven, or in an emergency shelter; and
    (ii) Has been homeless and living or residing in a place not meant 
for human habitation, a safe haven, or in an emergency shelter 
continuously for at least one year or on at least four separate 
occasions in the last 3 years, where each homeless occasion was at 
least 15 days; and
    (iii) Can be diagnosed with one or more of the following 
conditions: substance use disorder, serious mental illness, 
developmental disability (as defined in section 102 of the 
Developmental Disabilities Assistance Bill of Rights Act of 2000 (42 
U.S.C. 15002)), post-traumatic stress disorder, cognitive impairments 
resulting from brain injury, or chronic physical illness or disability;
    (2) An individual who has been residing in an institutional care 
facility, including a jail, substance abuse or mental health treatment 
facility, hospital, or other similar facility, for fewer than 90 days 
and met all of the criteria in paragraph (1) of this definition, before 
entering that facility; or
    (3) A family with an adult head of household (or if there is no 
adult in the family, a minor head of household) who meets all of the 
criteria in paragraph (1) of this definition, including a family whose 
composition has fluctuated while the head of household has been 
homeless.
* * * * *
    Continuum of Care. The group composed of representatives of 
relevant organizations, which generally includes nonprofit homeless 
providers, victim service providers, faith-based organizations, 
governments, businesses, advocates, public housing agencies, school 
districts, social service providers, mental health agencies, hospitals, 
universities, affordable housing developers, law enforcement, 
organizations that serve homeless and formerly homeless veterans, and 
homeless and formerly homeless persons that are organized to plan for 
and provide, as necessary, a system of outreach, engagement, and 
assessment; emergency shelter; rapid re-housing; transitional housing; 
permanent housing; and prevention strategies to address the various 
needs of homeless persons and persons at risk of homelessness for a 
specific geographic area.
    Emergency shelter. Any facility, the primary purpose of which is to 
provide a temporary shelter for the homeless in general or for specific 
populations of the homeless, and which does not require occupants to 
sign leases or occupancy agreements.
* * * * *
    Homeless Management Information System (HMIS). The information 
system designated by the Continuum of Care to comply with HUD's data 
collection, management, and reporting standards and used to collect 
client-level data and data on the provision of housing and services to 
homeless individuals and families and persons at risk of homelessness.
* * * * *
    Rapid re-housing assistance. The provision of housing relocation 
and stabilization services and short- and/or medium-term rental 
assistance as necessary to help a homeless individual or family move as 
quickly as possible into permanent housing and achieve stability in 
that housing.
* * * * *
    Victim service provider. A private nonprofit organization whose 
primary mission is to provide services to victims of domestic violence, 
dating violence, sexual assault, or stalking. This term includes rape 
crisis centers, battered women's shelters, domestic violence 
transitional housing programs, and other programs.
* * * * *

0
4. In Sec.  91.100, paragraph (a)(2) is revised and a new paragraph (d) 
is added to read as follows:


Sec.  91.100  Consultation; local governments.

    (a) * * *
    (2) When preparing the portions of the consolidated plan describing 
the jurisdiction's homeless strategy and the resources available to 
address the needs of homeless persons (particularly chronically 
homeless individuals and families, families with children, veterans and 
their families, and unaccompanied youth) and persons at risk of 
homelessness, the jurisdiction must consult with:
    (i) The Continuum(s) of Care that serve(s) the jurisdiction's 
geographic area;
    (ii) Public and private agencies that address housing, health, 
social service, victim services, employment, or education needs of low-
income individuals and families; homeless individuals and families, 
including homeless veterans; youth; and/or other persons with special 
needs;
    (iii) Publicly funded institutions and systems of care that may 
discharge persons into homelessness (such as health-care facilities, 
mental health facilities, foster care and other youth facilities, and 
corrections programs and institutions); and
    (iv) Business and civic leaders.
* * * * *
    (d) Emergency Solutions Grants (ESG). A jurisdiction that receives 
an ESG grant must consult with the Continuum of Care in determining how 
to allocate its ESG grant for eligible activities; in developing the 
performance standards for, and evaluating the outcomes of, projects and 
activities assisted by ESG funds; and in developing funding, policies, 
and procedures for the operation and administration of the HMIS.
* * * * *

0
5. In Sec.  91.105, paragraph (a)(2) is revised to read as follows:


Sec.  91.105  Citizen participation plan; local governments.

    (a) * * *
    (2) Encouragement of citizen participation. (i) The citizen 
participation plan must provide for and encourage citizens to 
participate in the development of any consolidated plan, any 
substantial amendment 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, as defined by the jurisdiction. A 
jurisdiction is also 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.
    (ii) The jurisdiction shall encourage the participation of local 
and regional institutions, the Continuum of Care and other 
organizations (including businesses, developers, nonprofit 
organizations, philanthropic organizations, and community-based

[[Page 75968]]

and faith-based organizations) in the process of developing and 
implementing the consolidated plan.
    (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 jurisdictions shall make an effort to 
provide information to the public housing agency (PHA) about 
consolidated plan activities related to its developments and 
surrounding communities so that the PHA can make this information 
available at the annual public hearing required for the PHA Plan.
    (iv) The jurisdiction should 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 the Internet.
* * * * *

0
6. Section 91.110 is revised to read as follows:


Sec.  91.110  Consultation; States.

    (a) When preparing the consolidated plan, the State shall consult 
with other public and private agencies that provide assisted housing 
(including any state 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.
    (b) When preparing the portions of the consolidated plan describing 
the State's homeless strategy and the resources available to address 
the needs of homeless persons (particularly chronically homeless 
individuals and families, families with children, veterans and their 
families, and unaccompanied youth) and persons at risk of homelessness, 
the State must consult with:
    (1) Each Continuum of Care within the state;
    (2) Public and private agencies that address housing, health, 
social services, victim services, employment, or education needs of 
low-income individuals and families; of homeless individuals and 
families, including homeless veterans; youth; and/or of other persons 
with special needs;
    (3) Publicly funded institutions and systems of care that may 
discharge persons into homelessness (such as health-care facilities, 
mental health facilities, foster care and other youth facilities, and 
corrections programs and institutions); and
    (4) Business and civic leaders.
    (c) 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.
    (d) 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.
    (e) The State must also consult with each Continuum of Care within 
the state in determining how to allocate its ESG grant for eligible 
activities; developing the performance standards for, and evaluating 
the outcomes of, projects and activities assisted by ESG funds; and 
developing funding, policies, and procedures for the operation and 
administration of the HMIS.

0
7. In Sec.  91.115, paragraph (a)(2) is revised to read as follows:


Sec.  91.115  Citizen participation plan; States.

    (a) * * *
    (2) Encouragement of citizen participation. (i) 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 is also 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.
    (ii) The State shall encourage the participation of local, 
regional, and statewide institutions, Continuums of Care, and other 
organizations (including businesses, developers, nonprofit 
organizations, philanthropic organizations, and community-based 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.
    (iii) The state should explore alternative public involvement 
techniques that encourage a shared vision of change for the community 
and the review of program performance; e.g., the use of focus groups 
and the Internet.
* * * * *

0
8. In Sec.  91.200, paragraph (b) is revised to read as follows:


Sec.  91.200  General.

* * * * *
    (b) The jurisdiction shall describe:
    (1) 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;
    (2) The identity of the agencies, groups, organizations, and others 
who participated in the process; and
    (3) A jurisdiction's consultations with:
    (i) The Continuum of Care that serves the jurisdiction's geographic 
area;
    (ii) Public and private agencies that address housing, health, 
social services, employment, or education needs of low-income 
individuals and families, of homeless individuals and families, of 
youth, and/or of other persons with special needs;
    (iii) Publicly funded institutions and systems of care that may 
discharge persons into homelessness (such as health-care facilities, 
mental health facilities, foster care and other youth facilities, and 
corrections programs and institutions);
    (iv) Other entities.
* * * * *

0
9. In Sec.  91.205, paragraph (b)(1) and paragraph (c) are revised to 
read as follows:


Sec.  91.205  Housing and homeless needs assessment.

* * * * *
    (b)(1)(i) The plan shall estimate the number and type of families 
in need of housing assistance for:
    (A) Extremely low-income, low-income, moderate-income, and middle-
income families;
    (B) Renters and owners;
    (C) Elderly persons;
    (D) Single persons;
    (E) Large families;
    (F) Public housing residents;
    (G) Families on the public housing and Section 8 tenant-based 
waiting list;
    (H) Persons with HIV/AIDS and their families;
    (I) Victims of domestic violence, dating violence, sexual assault, 
and stalking;

[[Page 75969]]

    (J) Persons with disabilities; and
    (K) Formerly homeless families and individuals who are receiving 
rapid re-housing assistance and are nearing the termination of that 
assistance.
    (ii) 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.'')
* * * * *
    (c) Persons who are homeless or at risk of homelessness. (1) The 
plan must describe, in a form prescribed by HUD, the nature and extent 
of unsheltered and sheltered homelessness, including rural 
homelessness, within the jurisdiction. At a minimum, the recipient must 
use data from the Homeless Management Information System (HMIS) and 
data from the Point-In-Time (PIT) count conducted in accordance with 
HUD standards.
    (i) The description must include, for each category of homeless 
persons specified by HUD (including chronically homeless individuals 
and families, families with children, veterans and their families, and 
unaccompanied youth), the number of persons experiencing homelessness 
on a given night, the number of persons who experience homelessness 
each year, the number of persons who lose their housing and become 
homeless each year, the number of persons who exit homelessness each 
year, the number of days that persons experience homelessness, and 
other measures specified by HUD.
    (ii) 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.
    (2) The plan must include a narrative description of the 
characteristics and needs of low-income individuals and families with 
children (especially extremely low-income) who are currently housed but 
threatened with homelessness. This information may be evidenced by the 
characteristics and needs of individuals and families with children who 
are currently entering the homeless assistance system or appearing for 
the first time on the streets. The description must also specify 
particular housing characteristics that have been linked with 
instability and an increased risk of homelessness.
* * * * *
    10. In Sec.  91.210, paragraph (c) is revised to read as follows:


Sec.  91.210  Housing market analysis.

* * * * *
    (c) Facilities, housing, and services for homeless persons. The 
plan must include a brief inventory of facilities, housing, and 
services that meet the needs of homeless persons within the 
jurisdiction, particularly chronically homeless individuals and 
families, families with children, veterans and their families, and 
unaccompanied youth.
    (1) The inventory of facilities and housing (e.g., emergency 
shelter, transitional housing, and permanent supportive housing) must 
be presented in a form specified by HUD.
    (2) The inventory of services must include both services targeted 
to homeless persons and mainstream services, such as health, mental 
health, and employment services to the extent those services are used 
to complement services targeted to homeless persons.
* * * * *
0
11. In Sec.  91.215, paragraphs (b), (d), (k), and (l) are revised to 
read as follows:


Sec.  91.215  Strategic plan.

* * * * *
    (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, persons at risk of homelessness, and 
homeless persons 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, the jurisdiction 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, that the 
jurisdiction hopes to achieve and must specify the number of extremely 
low-income, low-income, and moderate-income families, and homeless 
persons 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.
* * * * *
    (d) Homelessness. The consolidated plan must include the priority 
homeless needs table prescribed by HUD and must describe the 
jurisdiction's strategy for reducing and ending homelessness through:
    (1) Reaching out to homeless persons (especially unsheltered 
persons) and assessing their individual needs;
    (2) Addressing the emergency shelter and transitional housing needs 
of homeless persons;
    (3) Helping homeless persons (especially chronically homeless 
individuals and families, families with children, veterans and their 
families, and unaccompanied youth) make the transition to permanent 
housing and independent living, including shortening the period of time 
individuals and families experience homelessness, facilitating access 
for homeless individuals and families to affordable housing units, and 
preventing individuals and families who were recently homeless from 
becoming homeless again; and
    (4) Helping low-income individuals and families avoid becoming 
homeless, especially extremely low-income individuals and families who 
are:
    (i) Likely to become homeless after being discharged from publicly 
funded institutions and systems of care into homelessness (such as 
health-care facilities, mental health facilities, foster care and other 
youth facilities, and corrections programs and institutions) or
    (ii) Receiving assistance from public and private agencies that 
address housing, health, social services, employment, education, or 
youth needs.
* * * * *
    (k) Institutional structure. The consolidated plan must provide a 
concise summary of the institutional structure, including private 
industry; nonprofit organizations; community and faith-based 
organizations; philanthropic organizations; the Continuum of Care; and 
public institutions, departments and agencies through which the 
jurisdiction will carry out its housing, homeless, and community 
development plan; a brief assessment of the strengths

[[Page 75970]]

and gaps in that delivery system; and 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 among 
the Continuum of Care, public and assisted housing providers, and 
private and governmental health, mental health, and service agencies. 
The summary must address the jurisdiction's efforts to coordinate 
housing assistance and services for homeless persons (especially 
chronically homeless individuals and families, families with children, 
veterans and their families, and unaccompanied youth) and persons who 
were recently homeless but now live in permanent housing. 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
12. In Sec.  91.220, paragraph (i) is revised and a new paragraph 
(l)(4) is added to read as follows:


Sec.  91.220  Action plan.

* * * * *
    (i) Homeless and other special needs activities. (1) The 
jurisdiction must describe its one-year goals and specific actions 
steps for reducing and ending homelessness through:
    (i) Reaching out to homeless persons (especially unsheltered 
persons) and assessing their individual needs;
    (ii) Addressing the emergency shelter and transitional housing 
needs of homeless persons; and
    (iii) Helping homeless persons (especially chronically homeless 
individuals and families, families with children, veterans and their 
families, and unaccompanied youth) make the transition to permanent 
housing and independent living, including shortening the period of time 
that individuals and families experience homelessness, facilitating 
access for homeless individuals and families to affordable housing 
units, and preventing individuals and families who were recently 
homeless from becoming homeless again; and
    (iv) Helping low-income individuals and families avoid becoming 
homeless, especially extremely low-income individuals and families who 
are:
    (A) Being discharged from publicly funded institutions and systems 
of care, such as health-care facilities, mental health facilities, 
foster care and other youth facilities, and corrections programs and 
institutions; or
    (B) Receiving assistance from public and private agencies that 
address housing, health, social services, employment, education, or 
youth needs.
    (2) The jurisdiction must specify the activities that it plans to 
undertake during the next year to address the housing and supportive 
service needs identified in accordance with Sec.  91.215(e) with 
respect to persons who are not homeless but have other special needs.
* * * * *
    (l) * * *
    (4) ESG. (i) The jurisdiction must include its written standards 
for providing ESG assistance. The minimum requirements regarding these 
standards are set forth in 24 CFR 576.400(e)(1) and (e)(3).
    (ii) If the Continuum of Care for the jurisdiction's area has 
established a centralized or coordinated assessment system that meets 
HUD requirements, the jurisdiction must describe that centralized or 
coordinated assessment system. The requirements for using a centralized 
or coordinated assessment system, including the exception for victim 
service providers, are set forth under 24 CFR 576.400(d).
    (iii) The jurisdiction must identify its process for making 
subawards and a description of how the jurisdiction intends to make its 
allocation available to private nonprofit organizations (including 
community and faith-based organizations), and in the case of urban 
counties, funding to participating units of local government.
    (iv) If the jurisdiction is unable to meet the homeless 
participation requirement in 24 CFR 576.405(a), the jurisdiction must 
specify its plan for reaching out to and consulting with homeless or 
formerly homeless individuals in considering and making policies and 
decisions regarding any facilities or services that receive funding 
under ESG.
    (v) The jurisdiction must describe the performance standards for 
evaluating ESG activities.
    (vi) The jurisdiction must describe its consultation with each 
Continuum of Care that serves the jurisdiction in determining how to 
allocate ESG funds each program year; developing the performance 
standards for, and evaluating the outcomes of, projects and activities 
assisted by ESG funds; and developing funding, policies, and procedures 
for the administration and operation of the HMIS.

0
13. In Sec.  91.225, paragraph (c) is revised to read as follows:


Sec.  91.225  Certifications.

* * * * *
    (c) ESG. For jurisdictions that seek ESG funding under 24 CFR part 
576, the following certifications are required:
    (1) If an emergency shelter's rehabilitation costs exceed 75 
percent of the value of the building before rehabilitation, the 
jurisdiction will maintain the building as a shelter for homeless 
individuals and families for a minimum of 10 years after the date the 
building is first occupied by a homeless individual or family after the 
completed rehabilitation;
    (2) If the cost to convert a building into an emergency shelter 
exceeds 75 percent of the value of the building after conversion, the 
jurisdiction will maintain the building as a shelter for homeless 
individuals and families for a minimum of 10 years after the date the 
building is first occupied by a homeless individual or family after the 
completed conversion;
    (3) In all other cases where ESG funds are used for renovation, the 
jurisdiction will maintain the building as a shelter for homeless 
individuals and families for a minimum of 3 years after the date the 
building is first occupied by a homeless individual or family after the 
completed renovation;
    (4) In the case of assistance involving shelter operations or 
essential services related to street outreach or emergency shelter, the 
jurisdiction will provide services or shelter to homeless individuals 
and families for the period during which the ESG assistance is 
provided, without regard to a particular site or structure, so long as 
the jurisdiction serves the same type of persons (e.g., families with 
children, unaccompanied youth, disabled individuals, or victims of 
domestic violence) or persons in the same geographic area;
    (5) Any renovation carried out with ESG assistance shall be 
sufficient to ensure that the building involved is safe and sanitary;
    (6) The jurisdiction will assist homeless individuals in obtaining 
permanent housing, appropriate supportive services (including medical 
and mental health treatment, victim services, counseling, supervision, 
and other services essential for achieving independent living), and 
other Federal, State, local, and private assistance available for these 
individuals;

[[Page 75971]]

    (7) The jurisdiction will obtain matching amounts required under 24 
CFR 576.201;
    (8) The jurisdiction has established and is implementing procedures 
to ensure the confidentiality of records pertaining to any individual 
provided family violence prevention or treatment services under any 
project assisted under the ESG program, including protection against 
the release of the address or location of any family violence shelter 
project, except with the written authorization of the person 
responsible for the operation of that shelter;
    (9) To the maximum extent practicable, the jurisdiction will 
involve, through employment, volunteer services, or otherwise, homeless 
individuals and families in constructing, renovating, maintaining, and 
operating facilities assisted under the ESG program, in providing 
services assisted under the program, and in providing services for 
occupants of facilities assisted under the program;
    (10) All activities the jurisdiction undertakes with assistance 
under ESG are consistent with the jurisdiction's consolidated plan; and
    (11) The jurisdiction will establish and implement, to the maximum 
extent practicable and where appropriate, policies and protocols for 
the discharge of persons from publicly funded institutions or systems 
of care (such as health-care facilities, mental health facilities, 
foster care or other youth facilities, or correction programs and 
institutions) in order to prevent this discharge from immediately 
resulting in homelessness for these persons.
* * * * *

0
14. In Sec.  91.300, paragraph (b) is revised to read as follows:


Sec.  91.300  General.

* * * * *
    (b) The State shall describe:
    (1) 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;
    (2) The identity of the agencies, groups, organizations, and others 
who participated in the process;
    (3) The State's consultations with:
    (i) Continuums of Care;
    (ii) Public and private agencies that address housing, health, 
social services, employment, or education needs of low-income 
individuals and families, homeless individuals and families, youth, 
and/or other persons with special needs;
    (iii) Publicly funded institutions and systems of care that may 
discharge persons into homelessness (such as health-care facilities, 
mental health facilities, foster care and other youth facilities, and 
corrections programs and institutions); and
    (iv) Other entities.
* * * * *

0
15. In Sec.  91.305, paragraphs (b)(1) and (c) are revised to read as 
follows:


Sec.  91.305  Housing and homeless needs assessment.

* * * * *
    (b)(1)(i) The plan shall estimate the number and type of families 
in need of housing assistance for:
    (A) Extremely low-income, low-income, moderate-income, and middle-
income families;
    (B) Renters and owners;
    (C) Elderly persons;
    (D) Single persons;
    (E) Large families;
    (F) Public housing residents;
    (G) Families on the public housing and Section 8 tenant-based 
waiting list;
    (H) Persons with HIV/AIDS and their families;
    (I) Victims of domestic violence, dating violence, sexual assault, 
and stalking;
    (J) Persons with disabilities; and
    (K) Formerly homeless families and individuals who are receiving 
rapid re-housing assistance and are nearing the termination of that 
assistance.
    (ii) 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.'')
* * * * *
    (c) Persons who are homeless or at risk of homelessness. (1) The 
plan must describe, in a form prescribed by HUD, the nature and extent 
of homelessness, including rural homelessness, within the state.
    (i) The description must include, for each category of homeless 
persons specified by HUD (including chronically homeless individuals 
and families, families with children, veterans and their families, and 
unaccompanied youth), the number of persons experiencing homelessness 
on a given night, the number of persons who experience homelessness 
each year, the number of persons who lose their housing and become 
homeless each year, the number of persons who exit homelessness each 
year, and the number of days that persons experience homelessness, and 
any other measures specified by HUD.
    (ii) The plan also must contain a brief narrative description of 
the nature and extent of homelessness by racial and ethnic group, to 
the extent that information is available.
    (2) The plan must include a narrative description of the 
characteristics and needs of low-income individuals and families with 
children (especially extremely low-income) who are currently housed but 
threatened with homelessness. This information may be evidenced by the 
characteristics and needs of individuals and families with children who 
are currently entering the homeless assistance system or appearing for 
the first time on the streets. The description must also include 
specific housing characteristics linked to instability and an increased 
risk of homelessness.
* * * * *

0
16. In Sec.  91.310, paragraph (b) is revised to read as follows:


Sec.  91.310  Housing market analysis.

* * * * *
    (b) Facilities, housing, and services for homeless persons. The 
plan must include a brief inventory of facilities and services that 
meet the needs of homeless persons within the state, particularly 
chronically homeless individuals and families, families with children, 
veterans and their families, and unaccompanied youth.
    (1) The inventory of facilities and housing (e.g., emergency 
shelter, transitional housing, and permanent supportive housing) must 
be presented in a form specified by HUD.
    (2) The inventory of services must include both services targeted 
to homeless persons and mainstream services, such as health, mental 
health, and employment services to the extent those services are used 
to complement services targeted to homeless persons.
* * * * *

0
17. In Sec.  91.315, paragraphs (b), (d), (k), and (l) are revised to 
read as follows:


Sec.  91.315  Strategic plan.

* * * * *
    (b) Affordable housing. With respect to affordable housing, the 
consolidated plan must include the priority housing needs table 
prescribed by HUD and the following:
    (1) The affordable housing section shall describe how the 
characteristics of

[[Page 75972]]

the housing market and the severity of housing problems and needs of 
extremely low-income, low-income, and moderate-income renters and 
owners, persons at risk of homelessness, and homeless persons 
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 rental 
assistance, the State 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 that the jurisdiction 
hopes to achieve and must specify the number of extremely low-income, 
low-income, and moderate-income families, and homeless persons 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.
* * * * *
    (d) Homelessness. The consolidated plan must include the priority 
homeless needs table prescribed by HUD and must describe the State's 
strategy for reducing and ending homelessness through:
    (1) Reaching out to homeless persons (especially unsheltered 
persons) and assessing their individual needs;
    (2) Addressing the emergency shelter and transitional housing needs 
of homeless persons;
    (3) Helping homeless persons (especially chronically homeless 
individuals and families, families with children, veterans and their 
families, and unaccompanied youth) make the transition to permanent 
housing and independent living, including shortening the period of time 
individuals and families experience homelessness, facilitating access 
for homeless individuals and families to affordable housing units, and 
preventing individuals and families who were recently homeless from 
becoming homeless again; and
    (4) Helping low-income individuals and families avoid becoming 
homeless, especially extremely low-income individuals and families who 
are:
    (i) Likely to become homeless after being discharged from publicly 
funded institutions and systems of care (such as health-care 
facilities, mental health facilities, foster care and other youth 
facilities, and corrections programs and institutions); or
    (ii) Receiving assistance from public or private agencies that 
address housing, health, social services, employment, education, or 
youth needs.
* * * * *
    (k) Institutional structure. The consolidated plan must provide a 
concise summary of the institutional structure, including businesses, 
developers, nonprofit organizations, philanthropic organizations, 
community-based and faith-based organizations, the Continuum of Care, 
and public institutions, departments, and agencies through which the 
State will carry out its housing, homeless, and community development 
plan; a brief assessment of the strengths and gaps in that delivery 
system; and 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 jurisdiction's activities to enhance coordination among 
Continuums of Care, public and assisted housing providers, and private 
and governmental health, mental health, and service agencies. The 
summary must include the jurisdiction's efforts to coordinate housing 
assistance and services for homeless persons (especially chronically 
homeless individuals and families, families with children, veterans and 
their families, and unaccompanied youth) and persons who were recently 
homeless but now live in permanent housing. 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.
* * * * *

0
18. In Sec.  91.320, paragraphs (h) and (k)(3) are revised to read as 
follows:


Sec.  91.320  Action plan.

* * * * *
    (h) Homeless and other special needs activities. (1) The State must 
describe its one-year goals and specific actions steps for reducing and 
ending homelessness through:
    (i) Reaching out to homeless persons (especially unsheltered 
persons) and assessing their individual needs;
    (ii) Addressing the emergency shelter and transitional housing 
needs of homeless persons;
    (iii) Helping homeless persons (especially chronically homeless 
individuals and families, families with children, veterans and their 
families, and unaccompanied youth) make the transition to permanent 
housing and independent living, including shortening the period of time 
that individuals and families experience homelessness, facilitating 
access for homeless individuals and families to affordable housing 
units, and preventing individuals and families who were recently 
homeless from becoming homeless again; and
    (iv) Helping low-income individuals and families avoid becoming 
homeless, especially extremely low-income individuals and families who 
are:
    (A) Being discharged from publicly funded institutions and systems 
of care (such as health-care facilities, mental health facilities, 
foster care and other youth facilities, and corrections programs and 
institutions); or
    (B) Receiving assistance from public or private agencies that 
address housing, health, social services, employment, education, or 
youth needs.
    (2) The State must specify the activities that it plans to 
undertake during the next year to address the housing and supportive 
service needs identified in accordance with Sec.  91.315(e) with 
respect to persons who are not homeless but have other special needs.
* * * * *
    (k) * * *
    (3) ESG. (i) The State must either include its written standards 
for providing Emergency Solutions Grant (ESG) assistance or describe 
its requirements for its subrecipients to establish and implement 
written standards for providing ESG assistance. The minimum 
requirements regarding these standards are set forth in 24 CFR 
576.400(e)(2) and (e)(3).
    (ii) For each area of the State in which a Continuum of Care has 
established a centralized or coordinated assessment system that meets 
HUD requirements, the State must describe that centralized or 
coordinated assessment system. The requirements for using a centralized 
or coordinated assessment system, including the exception for victim 
service providers, are set forth under 24 CFR 576.400(d).
    (iii) The State must identify its process for making subawards and 
a

[[Page 75973]]

description of how the State intends to make its allocation available 
to units of general local government and private nonprofit 
organizations, including community and faith-based organizations.
    (iv) The State must describe the performance standards for 
evaluating ESG activities.
    (v) The State must describe its consultation with each Continuum of 
Care in determining how to allocate ESG funds each program year; 
developing the performance standards for, and evaluating the outcomes 
of, projects and activities assisted by ESG funds; and developing 
funding, policies and procedures for the administration and operation 
of the HMIS.
* * * * *

0
19. In Sec.  91.325, paragraph (c) is revised to read as follows:


Sec.  91.325  Certifications.

* * * * *
    (c) ESG. Each State that seeks funding under ESG must provide the 
following certifications:
    (1) The State will obtain any matching amounts required under 24 
CFR 576.201 in a manner so that its subrecipients that are least 
capable of providing matching amounts receive the benefit of the 
exception under 24 CFR 576.201(a)(2);
    (2) The State will establish and implement, to the maximum extent 
practicable and where appropriate, policies, and protocols for the 
discharge of persons from publicly funded institutions or systems of 
care (such as health-care facilities, mental health facilities, foster 
care or other youth facilities, or correction programs and 
institutions) in order to prevent this discharge from immediately 
resulting in homelessness for these persons;
    (3) The State will develop and implement procedures to ensure the 
confidentiality of records pertaining to any individual provided family 
violence prevention or treatment services under any project assisted 
under the ESG program, including protection against the release of the 
address or location of any family violence shelter project, except with 
the written authorization of the person responsible for the operation 
of that shelter; and
    (4) The State will ensure that its subrecipients comply with the 
following criteria:
    (i) If an emergency shelter's rehabilitation costs exceed 75 
percent of the value of the building before rehabilitation, the 
building will be maintained as a shelter for homeless individuals and 
families for a minimum of 10 years after the date the building is first 
occupied by a homeless individual or family after the completed 
rehabilitation;
    (ii) If the cost to convert a building into an emergency shelter 
exceeds 75 percent of the value of the building after conversion, the 
building will be maintained as a shelter for homeless individuals and 
families for a minimum of 10 years after the date the building is first 
occupied by a homeless individual or family after the completed 
conversion;
    (iii) In all other cases where ESG funds are used for renovation, 
the building will be maintained as a shelter for homeless individuals 
and families for a minimum of 3 years after the date the date the 
building is first occupied by a homeless individual or family after the 
completed renovation;
    (iv) If ESG funds are used for shelter operations or essential 
services related to street outreach or emergency shelter, the 
subrecipient will provide services or shelter to homeless individuals 
and families for the period during which the ESG assistance is 
provided, without regard to a particular site or structure, so long as 
the applicant serves the same type of persons (e.g., families with 
children, unaccompanied youth, veterans, disabled individuals, or 
victims of domestic violence) or persons in the same geographic area;
    (v) Any renovation carried out with ESG assistance shall be 
sufficient to ensure that the building involved is safe and sanitary;
    (vi) The subrecipient will assist homeless individuals in obtaining 
permanent housing, appropriate supportive services (including medical 
and mental health treatment, counseling, supervision, and other 
services essential for achieving independent living), and other 
Federal, State, local, and private assistance available for such 
individuals;
    (vii) To the maximum extent practicable, the subrecipient will 
involve, through employment, volunteer services, or otherwise, homeless 
individuals and families in constructing, renovating, maintaining, and 
operating facilities assisted under ESG, in providing services assisted 
under ESG, and in providing services for occupants of facilities 
assisted under ESG; and
    (viii) All activities the subrecipient undertakes with assistance 
under ESG are consistent with the State's current HUD-approved 
consolidated plan.
* * * * *

0
20. In Sec.  91.520, paragraph (b) is revised, paragraphs (c), (d), 
(e), (f), and (g) are redesignated as paragraphs (d), (e), (f), (h), 
and (i), respectively, and new paragraphs (c) and (g) are added to read 
as follows:


Sec.  91.520  Performance reports.

* * * * *
    (b) Affordable housing. The report shall include an evaluation of 
the jurisdiction's progress in meeting its specific objective of 
providing affordable housing, including the number and types of 
families served. This element of the report must include the number of 
extremely low-income, low-income, moderate-income, middle-income, and 
homeless persons served.
    (c) Homelessness. The report must include, in a form prescribed by 
HUD, an evaluation of the jurisdiction's progress in meeting its 
specific objectives for reducing and ending homelessness through:
    (1) Reaching out to homeless persons (especially unsheltered 
persons) and assessing their individual needs;
    (2) Addressing the emergency shelter and transitional housing needs 
of homeless persons;
    (3) Helping homeless persons (especially chronically homeless 
individuals and families, families with children, veterans and their 
families, and unaccompanied youth) make the transition to permanent 
housing and independent living, including shortening the period of time 
that individuals and families experience homelessness, facilitating 
access for homeless individuals and families to affordable housing 
units, and preventing individuals and families who were recently 
homeless from becoming homeless again; and
    (4) Helping low-income individuals and families avoid becoming 
homeless, especially extremely low-income individuals and families and 
those who are
    (i) Likely to become homeless after being discharged from publicly 
funded institutions and systems of care (such as health-care 
facilities, mental health facilities, foster care and other youth 
facilities, and corrections programs and institutions);
    (ii) Receiving assistance from public or private agencies that 
address housing, health, social services, employment, education, or 
youth needs.
* * * * *
    (g) ESG. For jurisdictions receiving funding under the ESG program 
provided in 24 CFR part 576, the report, in a form prescribed by HUD, 
must include the number of persons assisted, the types of assistance 
provided, and the project or program outcomes data measured under the 
performance

[[Page 75974]]

standards developed in consultation with the Continuum(s) of Care.
* * * * *

0
21. Part 576 is revised to read as follows:

PART 576--EMERGENCY SOLUTIONS GRANTS PROGRAM

Subpart A--General Provisions
Sec.
576.1 Applicability and purpose.
576.2 Definitions.
576.3 Allocation of funding.
Subpart B--Program Components and Eligible Activities
576.100 General provisions and expenditure limits.
576.101 Street outreach component.
576.102 Emergency shelter component.
576.103 Homelessness prevention component.
576.104 Rapid re-housing assistance component.
576.105 Housing relocation and stabilization services.
576.106 Short-term and medium-term rental assistance.
576.107 HMIS component.
576.108 Administrative activities.
576.109 Indirect costs.
Subpart C--Award and Use of Funds
576.200 Submission requirements and grant approval.
576.201 Matching requirement.
576.202 Means of carrying out grant activities.
576.203 Obligation, expenditure, and payment requirements.
Subpart D--Reallocations
576.300 In general.
576.301 Metropolitan cities and urban counties.
576.302 States.
576.303 Territories.
576.304 Alternative method.
Subpart E--Program Requirements
576.400 Area-wide systems coordination requirements.
576.401 Evaluation of program participant eligibility and needs.
576.402 Terminating assistance.
576.403 Shelter and housing standards.
576.404 Conflicts of interest.
576.405 Homeless participation.
576.406 Faith-based activities.
576.407 Other Federal requirements.
576.408 Displacement, relocation, and acquisition.
Subpart F--Grant Administration
576.500 Recordkeeping and reporting requirements.
576.501 Enforcement.

    Authority: 42 U.S.C. 11371 et seq., 42 U.S.C. 3535(d).

Subpart A--General Provisions


Sec.  576.1  Applicability and purpose.

    This part implements the Emergency Solutions Grants (ESG) program 
authorized by subtitle B of title IV of the McKinney-Vento Homeless 
Assistance Act (42 U.S.C. 11371-11378). The program authorizes the 
Department of Housing and Urban Development (HUD) to make grants to 
States, units of general purpose local government, and territories for 
the rehabilitation or conversion of buildings for use as emergency 
shelter for the homeless, for the payment of certain expenses related 
to operating emergency shelters, for essential services related to 
emergency shelters and street outreach for the homeless, and for 
homelessness prevention and rapid re-housing assistance.


Sec.  576.2  Definitions.

    At risk of homelessness means: (1) An individual or family who:
    (i) Has an annual income below 30 percent of median family income 
for the area, as determined by HUD;
    (ii) Does not have sufficient resources or support networks, e.g., 
family, friends, faith-based or other social networks, immediately 
available to prevent them from moving to an emergency shelter or 
another place described in paragraph (1) of the ``homeless'' definition 
in this section; and
    (iii) Meets one of the following conditions:
    (A) Has moved because of economic reasons two or more times during 
the 60 days immediately preceding the application for homelessness 
prevention assistance;
    (B) Is living in the home of another because of economic hardship;
    (C) Has been notified in writing that their right to occupy their 
current housing or living situation will be terminated within 21 days 
after the date of application for assistance;
    (D) Lives in a hotel or motel and the cost of the hotel or motel 
stay is not paid by charitable organizations or by Federal, State, or 
local government programs for low-income individuals;
    (E) Lives in a single-room occupancy or efficiency apartment unit 
in which there reside more than two persons or lives in a larger 
housing unit in which there reside more than 1.5 persons reside per 
room, as defined by the U.S. Census Bureau;
    (F) Is exiting a publicly funded institution, or system of care 
(such as a health-care facility, a mental health facility, foster care 
or other youth facility, or correction program or institution); or
    (G) Otherwise lives in housing that has characteristics associated 
with instability and an increased risk of homelessness, as identified 
in the recipient's approved consolidated plan;
    (2) A child or youth who does not qualify as ``homeless'' under 
this section, but qualifies as ``homeless'' under section 387(3) of the 
Runaway and Homeless Youth Act (42 U.S.C. 5732a(3)), section 637(11) of 
the Head Start Act (42 U.S.C. 9832(11)), section 41403(6) of the 
Violence Against Women Act of 1994 (42 U.S.C. 14043e-2(6)), section 
330(h)(5)(A) of the Public Health Service Act (42 U.S.C. 
254b(h)(5)(A)), section 3(m) of the Food and Nutrition Act of 2008 (7 
U.S.C. 2012(m)), or section 17(b)(15) of the Child Nutrition Act of 
1966 (42 U.S.C. 1786(b)(15)); or
    (3) A child or youth who does not qualify as ``homeless'' under 
this section, but qualifies as ``homeless'' under section 725(2) of the 
McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), and the 
parent(s) or guardian(s) of that child or youth if living with her or 
him.
    Consolidated plan means a plan prepared in accordance with 24 CFR 
part 91. An approved consolidated plan means a consolidated plan that 
has been approved by HUD in accordance with 24 CFR part 91.
    Continuum of Care means the group composed of representatives of 
relevant organizations, which generally includes nonprofit homeless 
providers; victim service providers; faith-based organizations; 
governments; businesses; advocates; public housing agencies; school 
districts; social service providers; mental health agencies; hospitals; 
universities; affordable housing developers; law enforcement; 
organizations that serve homeless and formerly homeless veterans, and 
homeless and formerly homeless persons that are organized to plan for 
and provide, as necessary, a system of outreach, engagement, and 
assessment; emergency shelter; rapid re-housing; transitional housing; 
permanent housing; and prevention strategies to address the various 
needs of homeless persons and persons at risk of homelessness for a 
specific geographic area.
    Emergency shelter means any facility, the primary purpose of which 
is to provide a temporary shelter for the homeless in general or for 
specific populations of the homeless and which does not require 
occupants to sign leases or occupancy agreements. Any project funded as 
an emergency shelter

[[Page 75975]]

under a Fiscal Year 2010 Emergency Solutions grant may continue to be 
funded under ESG.
    Homeless means:
    (1) An individual or family who lacks a fixed, regular, and 
adequate nighttime residence, meaning:
    (i) An individual or family with a primary nighttime residence that 
is a public or private place not designed for or ordinarily used as a 
regular sleeping accommodation for human beings, including a car, park, 
abandoned building, bus or train station, airport, or camping ground;
    (ii) An individual or family living in a supervised publicly or 
privately operated shelter designated to provide temporary living 
arrangements (including congregate shelters, transitional housing, and 
hotels and motels paid for by charitable organizations or by federal, 
state, or local government programs for low-income individuals); or
    (iii) An individual who is exiting an institution where he or she 
resided for 90 days or less and who resided in an emergency shelter or 
place not meant for human habitation immediately before entering that 
institution;
    (2) An individual or family who will imminently lose their primary 
nighttime residence, provided that:
    (i) The primary nighttime residence will be lost within 14 days of 
the date of application for homeless assistance;
    (ii) No subsequent residence has been identified; and
    (iii) The individual or family lacks the resources or support 
networks, e.g., family, friends, faith-based or other social networks, 
needed to obtain other permanent housing;
    (3) Unaccompanied youth under 25 years of age, or families with 
children and youth, who do not otherwise qualify as homeless under this 
definition, but who:
    (i) Are defined as homeless under section 387 of the Runaway and 
Homeless Youth Act (42 U.S.C. 5732a), section 637 of the Head Start Act 
(42 U.S.C. 9832), section 41403 of the Violence Against Women Act of 
1994 (42 U.S.C. 14043e-2), section 330(h) of the Public Health Service 
Act (42 U.S.C. 254b(h)), section 3 of the Food and Nutrition Act of 
2008 (7 U.S.C. 2012), section 17(b) of the Child Nutrition Act of 1966 
(42 U.S.C. 1786(b)) or section 725 of the McKinney-Vento Homeless 
Assistance Act (42 U.S.C. 11434a);
    (ii) Have not had a lease, ownership interest, or occupancy 
agreement in permanent housing at any time during the 60 days 
immediately preceding the date of application for homeless assistance;
    (iii) Have experienced persistent instability as measured by two 
moves or more during the 60-day period immediately preceding the date 
of applying for homeless assistance; and
    (iv) Can be expected to continue in such status for an extended 
period of time because of chronic disabilities, chronic physical health 
or mental health conditions, substance addiction, histories of domestic 
violence or childhood abuse (including neglect), the presence of a 
child or youth with a disability, or two or more barriers to 
employment, which include the lack of a high school degree or General 
Education Development (GED), illiteracy, low English proficiency, a 
history of incarceration or detention for criminal activity, and a 
history of unstable employment; or
    (4) Any individual or family who:
    (i) Is fleeing, or is attempting to flee, domestic violence, dating 
violence, sexual assault, stalking, or other dangerous or life-
threatening conditions that relate to violence against the individual 
or a family member, including a child, that has either taken place 
within the individual's or family's primary nighttime residence or has 
made the individual or family afraid to return to their primary 
nighttime residence;
    (ii) Has no other residence; and
    (iii) Lacks the resources or support networks, e.g., family, 
friends, faith-based or other social networks, to obtain other 
permanent housing.
    Homeless Management Information System (HMIS) means the information 
system designated by the Continuum of Care to comply with the HUD's 
data collection, management, and reporting standards and used to 
collect client-level data and data on the provision of housing and 
services to homeless individuals and families and persons at-risk of 
homelessness.
    Metropolitan city means a city that was classified as a 
metropolitan city under 42 U.S.C. 5302(a) for the fiscal year 
immediately preceding the fiscal year for which ESG funds are made 
available. This term includes the District of Columbia.
    Private nonprofit organization means a private nonprofit 
organization that is a secular or religious organization described in 
section 501(c) of the Internal Revenue Code of 1986 and which is exempt 
from taxation under subtitle A of the Code, has an accounting system 
and a voluntary board, and practices nondiscrimination in the provision 
of assistance. A private nonprofit organization does not include a 
governmental organization, such as a public housing agency or housing 
finance agency.
    Program income shall have the meaning provided in 24 CFR 85.25. 
Program income includes any amount of a security or utility deposit 
returned to the recipient or subrecipient.
    Program participant means an individual or family who is assisted 
under ESG program.
    Program year means the consolidated program year established by the 
recipient under 24 CFR part 91.
    Recipient means any State, territory, metropolitan city, or urban 
county, or in the case of reallocation, any unit of general purpose 
local government that is approved by HUD to assume financial 
responsibility and enters into a grant agreement with HUD to administer 
assistance under this part.
    State means each of the several States and the Commonwealth of 
Puerto Rico.
    Subrecipient means a unit of general purpose local government or 
private nonprofit organization to which a recipient makes available ESG 
funds.
    Territory means each of the following: the Virgin Islands, Guam, 
American Samoa, and the Northern Mariana Islands.
    Unit of general purpose local government means any city, county, 
town, township, parish, village, or other general purpose political 
subdivision of a State.
    Urban county means a county that was classified as an urban county 
under 42 U.S.C. 5302(a) for the fiscal year immediately preceding the 
fiscal year for which ESG funds are made available.
    Victim service provider means a private nonprofit organization 
whose primary mission is to provide services to victims of domestic 
violence, dating violence, sexual assault, or stalking. This term 
includes rape crisis centers, battered women's shelters, domestic 
violence transitional housing programs, and other programs.


Sec.  576.3  Allocation of funding.

    (a) Territories. HUD will set aside for allocation to the 
territories up to 0.2 percent, but not less than 0.1 percent, of the 
total amount of each appropriation under this part in any fiscal year. 
HUD will allocate this set-aside amount to each territory based on its 
proportionate share of the total population of all territories and its 
rate of compliance with the most recent expenditure deadline under 
Sec.  576.203.
    (b) States, metropolitan cities, and urban counties. HUD will 
allocate the amounts that remain after the set-aside to territories 
under paragraph (a) of this section to States, metropolitan cities, and 
urban counties, as follows:

[[Page 75976]]

    (1) HUD will provide that the percentage of the total amount 
available for allocation to each State, metropolitan city, or urban 
county is equal to the percentage of the total amount available under 
section 106 of the Housing and Community Development Act of 1974 for 
the prior fiscal year that was allocated to that State, metropolitan 
city, or urban county.
    (2) Except as otherwise provided by law, if the amount a 
metropolitan city or urban county would be allocated under paragraph 
(b)(1) is less than 0.05 percent of the total fiscal year appropriation 
for ESG, that amount will be added to the allocation for the State in 
which the city or county is located.
    (c) Notification of allocation amount. HUD will notify each State, 
metropolitan city, urban county, and territory that is eligible to 
receive an allocation under this section of the amount of its 
allocation.

Subpart B--Program Components and Eligible Activities


Sec.  576.100  General provisions and expenditure limits.

    (a) ESG funds may be used for five program components: street 
outreach, emergency shelter, homelessness prevention, rapid re-housing 
assistance, and HMIS; as well as administrative activities. The five 
program components and the eligible activities that may be funded under 
each are set forth in Sec.  576.101 through Sec.  576.107. Eligible 
administrative activities are set forth in Sec.  576.108.
    (b) The total amount of the recipient's fiscal year grant that may 
be used for street outreach and emergency shelter activities cannot 
exceed the greater of:
    (1) 60 percent of the recipient's fiscal year grant; or
    (2) The amount of Fiscal Year 2010 grant funds committed for 
homeless assistance activities.
    (c) The total amount of ESG funds that may be used for 
administrative activities cannot exceed 7.5 percent of the recipient's 
fiscal year grant.
    (d) Subject to the cost principles in OMB Circulars A-87 (2 CFR 
225) and A-122 (2 CFR 230) and other requirements in this part, 
employee compensation and other overhead costs directly related to 
carrying out street outreach, emergency shelter, homelessness 
prevention, rapid re-housing, and HMIS are eligible costs of those 
program components. These costs are not subject to the expenditure 
limit in paragraph (c) of this section.


Sec.  576.101  Street outreach component.

    (a) Eligible costs. Subject to the expenditure limit in Sec.  
576.100(b), ESG funds may be used for costs of providing essential 
services necessary to reach out to unsheltered homeless people; connect 
them with emergency shelter, housing, or critical services; and provide 
urgent, nonfacility-based care to unsheltered homeless people who are 
unwilling or unable to access emergency shelter, housing, or an 
appropriate health facility. For the purposes of this section, the term 
``unsheltered homeless people'' means individuals and families who 
qualify as homeless under paragraph (1)(i) of the ``homeless'' 
definition under Sec.  576.2. The eligible costs and requirements for 
essential services consist of:
    (1) Engagement. The costs of activities to locate, identify, and 
build relationships with unsheltered homeless people and engage them 
for the purpose of providing immediate support, intervention, and 
connections with homeless assistance programs and/or mainstream social 
services and housing programs. These activities consist of making an 
initial assessment of needs and eligibility; providing crisis 
counseling; addressing urgent physical needs, such as providing meals, 
blankets, clothes, or toiletries; and actively connecting and providing 
information and referrals to programs targeted to homeless people and 
mainstream social services and housing programs, including emergency 
shelter, transitional housing, community-based services, permanent 
supportive housing, and rapid re-housing programs. Eligible costs 
include the cell phone costs of outreach workers during the performance 
of these activities.
    (2) Case management. The cost of assessing housing and service 
needs, arranging, coordinating, and monitoring the delivery of 
individualized services to meet the needs of the program participant. 
Eligible services and activities are as follows: using the centralized 
or coordinated assessment system as required under Sec.  576.400(d); 
conducting the initial evaluation required under Sec.  576.401(a), 
including verifying and documenting eligibility; counseling; 
developing, securing and coordinating services; obtaining Federal, 
State, and local benefits; monitoring and evaluating program 
participant progress; providing information and referrals to other 
providers; and developing an individualized housing and service plan, 
including planning a path to permanent housing stability.
    (3) Emergency health services. (i) Eligible costs are for the 
direct outpatient treatment of medical conditions and are provided by 
licensed medical professionals operating in community-based settings, 
including streets, parks, and other places where unsheltered homeless 
people are living.
    (ii) ESG funds may be used only for these services to the extent 
that other appropriate health services are inaccessible or unavailable 
within the area.
    (iii) Eligible treatment consists of assessing a program 
participant's health problems and developing a treatment plan; 
assisting program participants to understand their health needs; 
providing directly or assisting program participants to obtain 
appropriate emergency medical treatment; and providing medication and 
follow-up services.
    (4) Emergency mental health services. (i) Eligible costs are the 
direct outpatient treatment by licensed professionals of mental health 
conditions operating in community-based settings, including streets, 
parks, and other places where unsheltered people are living.
    (ii) ESG funds may be used only for these services to the extent 
that other appropriate mental health services are inaccessible or 
unavailable within the community.
    (iii) Mental health services are the application of therapeutic 
processes to personal, family, situational, or occupational problems in 
order to bring about positive resolution of the problem or improved 
individual or family functioning or circumstances.
    (iv) Eligible treatment consists of crisis interventions, the 
prescription of psychotropic medications, explanation about the use and 
management of medications, and combinations of therapeutic approaches 
to address multiple problems.
    (5) Transportation. The transportation costs of travel by outreach 
workers, social workers, medical professionals, or other service 
providers are eligible, provided that this travel takes place during 
the provision of services eligible under this section. The costs of 
transporting unsheltered people to emergency shelters or other service 
facilities are also eligible. These costs include the following:
    (i) The cost of a program participant's travel on public 
transportation;
    (ii) If service workers use their own vehicles, mileage allowance 
for service workers to visit program participants;
    (iii) The cost of purchasing or leasing a vehicle for the recipient 
or subrecipient in which staff transports program participants and/or 
staff serving program participants, and the cost of gas, insurance, 
taxes and maintenance for the vehicle; and

[[Page 75977]]

    (iv) The travel costs of recipient or subrecipient staff to 
accompany or assist program participants to use public transportation.
    (6) Services for special populations. ESG funds may be used to 
provide services for homeless youth, victim services, and services for 
people living with HIV/AIDS, so long as the costs of providing these 
services are eligible under paragraphs (a)(1) through (a)(5) of this 
section. The term victim services means services that assist program 
participants who are victims of domestic violence, dating violence, 
sexual assault, or stalking, including services offered by rape crisis 
centers and domestic violence shelters, and other organizations with a 
documented history of effective work concerning domestic violence, 
dating violence, sexual assault, or stalking.
    (b) Minimum period of use. The recipient or subrecipient must 
provide services to homeless individuals and families for at least the 
period during which ESG funds are provided.
    (c) Maintenance of effort. (1) If the recipient or subrecipient is 
a unit of general purpose local government, its ESG funds cannot be 
used to replace funds the local government provided for street outreach 
and emergency shelter services during the immediately preceding 12-
month period, unless HUD determines that the unit of general purpose 
local government is in a severe financial deficit.
    (2) Upon the recipient's request, HUD will determine whether the 
unit of general purpose local government is in a severe financial 
deficit, based on the recipient's demonstration of each of the 
following:
    (i) The average poverty rate in the unit of general purpose local 
government's jurisdiction was equal to or greater than 125 percent of 
the average national poverty rate, during the calendar year for which 
the most recent data are available, as determined according to 
information from the U.S. Census Bureau.
    (ii) The average per-capita income in the unit of general purpose 
local government's jurisdiction was less than 75 percent of the average 
national per-capita income, during the calendar year for which the most 
recent data are available, as determined according to information from 
the Census Bureau.
    (iii) The unit of general purpose local government has a current 
annual budget deficit that requires a reduction in funding for services 
for homeless people.
    (iv) The unit of general purpose local government has taken all 
reasonable steps to prevent a reduction in funding of services for 
homeless people. Reasonable steps may include steps to increase revenue 
generation, steps to maximize cost savings, or steps to reduce 
expenditures in areas other than services for homeless people.


Sec.  576.102  Emergency shelter component.

    (a) General. Subject to the expenditure limit in Sec.  576.100(b), 
ESG funds may be used for costs of providing essential services to 
homeless families and individuals in emergency shelters, renovating 
buildings to be used as emergency shelter for homeless families and 
individuals, and operating emergency shelters.
    (1) Essential services. ESG funds may be used to provide essential 
services to individuals and families who are in an emergency shelter, 
as follows:
    (i) Case management. The cost of assessing, arranging, 
coordinating, and monitoring the delivery of individualized services to 
meet the needs of the program participant is eligible. Component 
services and activities consist of:
    (A) Using the centralized or coordinated assessment system as 
required under Sec.  576.400(d);
    (B) Conducting the initial evaluation required under Sec.  
576.401(a), including verifying and documenting eligibility;
    (C) Counseling;
    (D) Developing, securing, and coordinating services and obtaining 
Federal, State, and local benefits;
    (E) Monitoring and evaluating program participant progress;
    (F) Providing information and referrals to other providers;
    (G) Providing ongoing risk assessment and safety planning with 
victims of domestic violence, dating violence, sexual assault, and 
stalking; and
    (H) Developing an individualized housing and service plan, 
including planning a path to permanent housing stability.
    (ii) Child care. The costs of child care for program participants, 
including providing meals and snacks, and comprehensive and coordinated 
sets of appropriate developmental activities, are eligible. The 
children must be under the age of 13, unless they are disabled. 
Disabled children must be under the age of 18. The child-care center 
must be licensed by the jurisdiction in which it operates in order for 
its costs to be eligible.
    (iii) Education services. When necessary for the program 
participant to obtain and maintain housing, the costs of improving 
knowledge and basic educational skills are eligible. Services include 
instruction or training in consumer education, health education, 
substance abuse prevention, literacy, English as a Second Language, and 
General Educational Development (GED). Component services or activities 
are screening, assessment and testing; individual or group instruction; 
tutoring; provision of books, supplies and instructional material; 
counseling; and referral to community resources.
    (iv) Employment assistance and job training. The costs of 
employment assistance and job training programs are eligible, including 
classroom, online, and/or computer instruction; on-the-job instruction; 
and services that assist individuals in securing employment, acquiring 
learning skills, and/or increasing earning potential. The cost of 
providing reasonable stipends to program participants in employment 
assistance and job training programs is an eligible cost. Learning 
skills include those skills that can be used to secure and retain a 
job, including the acquisition of vocational licenses and/or 
certificates. Services that assist individuals in securing employment 
consist of employment screening, assessment, or testing; structured job 
skills and job-seeking skills; special training and tutoring, including 
literacy training and prevocational training; books and instructional 
material; counseling or job coaching; and referral to community 
resources.
    (v) Outpatient health services. Eligible costs are for the direct 
outpatient treatment of medical conditions and are provided by licensed 
medical professionals. Emergency Solutions Grant (ESG) funds may be 
used only for these services to the extent that other appropriate 
health services are unavailable within the community. Eligible 
treatment consists of assessing a program participant's health problems 
and developing a treatment plan; assisting program participants to 
understand their health needs; providing directly or assisting program 
participants to obtain appropriate medical treatment, preventive 
medical care, and health maintenance services, including emergency 
medical services; providing medication and follow-up services; and 
providing preventive and noncosmetic dental care.
    (vi) Legal services. (A) Eligible costs are the hourly fees for 
legal advice and representation by attorneys licensed and in good 
standing with the bar association of the State in which the services 
are provided, and by person(s) under the supervision of the licensed 
attorney, regarding matters that interfere with the program 
participant's ability to obtain and retain housing.
    (B) Emergency Solutions Grant (ESG) funds may be used only for 
these

[[Page 75978]]

services to the extent that other appropriate legal services are 
unavailable or inaccessible within the community.
    (C) Eligible subject matters are child support, guardianship, 
paternity, emancipation, and legal separation, orders of protection and 
other civil remedies for victims of domestic violence, dating violence, 
sexual assault, and stalking, appeal of veterans and public benefit 
claim denials, and the resolution of outstanding criminal warrants.
    (D) Component services or activities may include client intake, 
preparation of cases for trial, provision of legal advice, 
representation at hearings, and counseling.
    (E) Fees based on the actual service performed (i.e., fee for 
service) are also eligible, but only if the cost would be less than the 
cost of hourly fees. Filing fees and other necessary court costs are 
also eligible. If the subrecipient is a legal services provider and 
performs the services itself, the eligible costs are the subrecipient's 
employees' salaries and other costs necessary to perform the services.
    (F) Legal services for immigration and citizenship matters and 
issues relating to mortgages are ineligible costs. Retainer fee 
arrangements and contingency fee arrangements are ineligible costs.
    (vii) Life skills training. The costs of teaching critical life 
management skills that may never have been learned or have been lost 
during the course of physical or mental illness, domestic violence, 
substance use, and homelessness are eligible costs. These services must 
be necessary to assist the program participant to function 
independently in the community. Component life skills training are 
budgeting resources, managing money, managing a household, resolving 
conflict, shopping for food and needed items, improving nutrition, 
using public transportation, and parenting.
    (viii) Mental health services. (A) Eligible costs are the direct 
outpatient treatment by licensed professionals of mental health 
conditions.
    (B) ESG funds may only be used for these services to the extent 
that other appropriate mental health services are unavailable or 
inaccessible within the community.
    (C) Mental health services are the application of therapeutic 
processes to personal, family, situational, or occupational problems in 
order to bring about positive resolution of the problem or improved 
individual or family functioning or circumstances. Problem areas may 
include family and marital relationships, parent-child problems, or 
symptom management.
    (D) Eligible treatment consists of crisis interventions; 
individual, family, or group therapy sessions; the prescription of 
psychotropic medications or explanations about the use and management 
of medications; and combinations of therapeutic approaches to address 
multiple problems.
    (ix) Substance abuse treatment services. (A) Eligible substance 
abuse treatment services are designed to prevent, reduce, eliminate, or 
deter relapse of substance abuse or addictive behaviors and are 
provided by licensed or certified professionals.
    (B) ESG funds may only be used for these services to the extent 
that other appropriate substance abuse treatment services are 
unavailable or inaccessible within the community.
    (C) Eligible treatment consists of client intake and assessment, 
and outpatient treatment for up to 30 days. Group and individual 
counseling and drug testing are eligible costs. Inpatient 
detoxification and other inpatient drug or alcohol treatment are not 
eligible costs.
    (x) Transportation. Eligible costs consist of the transportation 
costs of a program participant's travel to and from medical care, 
employment, child care, or other eligible essential services 
facilities. These costs include the following:
    (A) The cost of a program participant's travel on public 
transportation;
    (B) If service workers use their own vehicles, mileage allowance 
for service workers to visit program participants;
    (C) The cost of purchasing or leasing a vehicle for the recipient 
or subrecipient in which staff transports program participants and/or 
staff serving program participants, and the cost of gas, insurance, 
taxes, and maintenance for the vehicle; and
    (D) The travel costs of recipient or subrecipient staff to 
accompany or assist program participants to use public transportation.
    (xi) Services for special populations. ESG funds may be used to 
provide services for homeless youth, victim services, and services for 
people living with HIV/AIDS, so long as the costs of providing these 
services are eligible under paragraphs (a)(1)(i) through (a)(1)(x) of 
this section. The term victim services means services that assist 
program participants who are victims of domestic violence, dating 
violence, sexual assault, or stalking, including services offered by 
rape crisis centers and domestic violence shelters, and other 
organizations with a documented history of effective work concerning 
domestic violence, dating violence, sexual assault, or stalking.
    (2) Renovation. Eligible costs include labor, materials, tools, and 
other costs for renovation (including major rehabilitation of an 
emergency shelter or conversion of a building into an emergency 
shelter). The emergency shelter must be owned by a government entity or 
private nonprofit organization.
    (3) Shelter operations. Eligible costs are the costs of maintenance 
(including minor or routine repairs), rent, security, fuel, equipment, 
insurance, utilities, food, furnishings, and supplies necessary for the 
operation of the emergency shelter. Where no appropriate emergency 
shelter is available for a homeless family or individual, eligible 
costs may also include a hotel or motel voucher for that family or 
individual.
    (4) Assistance required under the Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970 (URA). Eligible costs 
are the costs of providing URA assistance under Sec.  576.408, 
including relocation payments and other assistance to persons displaced 
by a project assisted with ESG funds. Persons that receive URA 
assistance are not considered ``program participants'' for the purposes 
of this part, and relocation payments and other URA assistance are not 
considered ``rental assistance'' or ``housing relocation and 
stabilization services'' for the purposes of this part.
    (b) Prohibition against involuntary family separation. The age, of 
a child under age 18 must not be used as a basis for denying any 
family's admission to an emergency shelter that uses Emergency 
Solutions Grant (ESG) funding or services and provides shelter to 
families with children under age 18.
    (c) Minimum period of use. (1) Renovated buildings. Each building 
renovated with ESG funds must be maintained as a shelter for homeless 
individuals and families for not less than a period of 3 or 10 years, 
depending on the type of renovation and the value of the building. The 
``value of the building'' is the reasonable monetary value assigned to 
the building, such as the value assigned by an independent real estate 
appraiser. The minimum use period must begin on the date the building 
is first occupied by a homeless individual or family after the 
completed renovation. A minimum period of use of 10 years, required for 
major rehabilitation and conversion, must be enforced by a recorded 
deed or use restriction.
    (i) Major rehabilitation. If the rehabilitation cost of an 
emergency

[[Page 75979]]

shelter exceeds 75 percent of the value of the building before 
rehabilitation, the minimum period of use is 10 years.
    (ii) Conversion. If the cost to convert a building into an 
emergency shelter exceeds 75 percent of the value of the building after 
conversion, the minimum period of use is 10 years.
    (iii) Renovation other than major rehabilitation or conversion. In 
all other cases where ESG funds are used for renovation, the minimum 
period of use is 3 years.
    (2) Essential services and shelter operations. Where the recipient 
or subrecipient uses ESG funds solely for essential services or shelter 
operations, the recipient or subrecipient must provide services or 
shelter to homeless individuals and families at least for the period 
during which the ESG funds are provided. The recipient or subrecipient 
does not need to limit these services or shelter to a particular site 
or structure, so long as the site or structure serves the same type of 
persons originally served with the assistance (e.g., families with 
children, unaccompanied youth, disabled individuals, or victims of 
domestic violence) or serves homeless persons in the same area where 
the recipient or subrecipient originally provided the services or 
shelter.
    (d) Maintenance of effort. The maintenance of effort requirements 
under Sec.  576.101(c), which apply to the use of ESG funds for 
essential services related to street outreach, also apply for the use 
of such funds for essential services related to emergency shelter.


Sec.  576.103  Homelessness prevention component.

    ESG funds may be used to provide housing relocation and 
stabilization services and short- and/or medium-term rental assistance 
necessary to prevent an individual or family from moving into an 
emergency shelter or another place described in paragraph (1) of the 
``homeless'' definition in Sec.  576.2. This assistance, referred to as 
homelessness prevention, may be provided to individuals and families 
who meet the criteria under the ``at risk of homelessness'' definition, 
or who meet the criteria in paragraph (2), (3), or (4) of the 
``homeless'' definition in Sec.  576.2 and have an annual income below 
30 percent of median family income for the area, as determined by HUD. 
The costs of homelessness prevention are only eligible to the extent 
that the assistance is necessary to help the program participant regain 
stability in the program participant's current permanent housing or 
move into other permanent housing and achieve stability in that 
housing. Homelessness prevention must be provided in accordance with 
the housing relocation and stabilization services requirements in Sec.  
576.105, the short-term and medium-term rental assistance requirements 
in Sec.  576.106, and the written standards and procedures established 
under Sec.  576.400.


Sec.  576.104  Rapid re-housing assistance component.

    ESG funds may be used to provide housing relocation and 
stabilization services and short- and/or medium-term rental assistance 
as necessary to help a homeless individual or family move as quickly as 
possible into permanent housing and achieve stability in that housing. 
This assistance, referred to as rapid re-housing assistance, may be 
provided to program participants who meet the criteria under paragraph 
(1) of the ``homeless'' definition in Sec.  576.2 or who meet the 
criteria under paragraph (4) of the ``homeless'' definition and live in 
an emergency shelter or other place described in paragraph (1) of the 
``homeless'' definition. The rapid re-housing assistance must be 
provided in accordance with the housing relocation and stabilization 
services requirements in Sec.  576.105, the short- and medium-term 
rental assistance requirements in Sec.  576.106, and the written 
standards and procedures established under Sec.  576.400.


Sec.  576.105  Housing relocation and stabilization services.

    (a) Financial assistance costs. Subject to the general conditions 
under Sec.  576.103 and Sec.  576.104, ESG funds may be used to pay 
housing owners, utility companies, and other third parties for the 
following costs:
    (1) Rental application fees. ESG funds may pay for the rental 
housing application fee that is charged by the owner to all applicants.
    (2) Security deposits. ESG funds may pay for a security deposit 
that is equal to no more than 2 months' rent.
    (3) Last month's rent. If necessary to obtain housing for a program 
participant, the last month's rent may be paid from ESG funds to the 
owner of that housing at the time the owner is paid the security 
deposit and the first month's rent. This assistance must not exceed one 
month's rent and must be included in calculating the program 
participant's total rental assistance, which cannot exceed 24 months 
during any 3-year period.
    (4) Utility deposits. ESG funds may pay for a standard utility 
deposit required by the utility company for all customers for the 
utilities listed in paragraph (5) of this section.
    (5) Utility payments. ESG funds may pay for up to 24 months of 
utility payments per program participant, per service, including up to 
6 months of utility payments in arrears, per service. A partial payment 
of a utility bill counts as one month. This assistance may only be 
provided if the program participant or a member of the same household 
has an account in his or her name with a utility company or proof of 
responsibility to make utility payments. Eligible utility services are 
gas, electric, water, and sewage. No program participant shall receive 
more than 24 months of utility assistance within any 3-year period.
    (6) Moving costs. ESG funds may pay for moving costs, such as truck 
rental or hiring a moving company. This assistance may include payment 
of temporary storage fees for up to 3 months, provided that the fees 
are accrued after the date the program participant begins receiving 
assistance under paragraph (b) of this section and before the program 
participant moves into permanent housing. Payment of temporary storage 
fees in arrears is not eligible.
    (b) Services costs. Subject to the general restrictions under Sec.  
576.103 and Sec.  576.104, ESG funds may be used to pay the costs of 
providing the following services:
    (1) Housing search and placement. Services or activities necessary 
to assist program participants in locating, obtaining, and retaining 
suitable permanent housing, include the following:
    (i) Assessment of housing barriers, needs, and preferences;
    (ii) Development of an action plan for locating housing;
    (iii) Housing search;
    (iv) Outreach to and negotiation with owners;
    (v) Assistance with submitting rental applications and 
understanding leases;
    (vi) Assessment of housing for compliance with Emergency Solutions 
Grant (ESG) requirements for habitability, lead-based paint, and rent 
reasonableness;
    (vii) Assistance with obtaining utilities and making moving 
arrangements; and
    (viii) Tenant counseling.
    (2) Housing stability case management. ESG funds may be used to pay 
cost of assessing, arranging, coordinating, and monitoring the delivery 
of individualized services to facilitate housing stability for a 
program participant who resides in permanent housing or to assist a 
program participant in overcoming immediate barriers to obtaining 
housing. This

[[Page 75980]]

assistance cannot exceed 30 days during the period the program 
participant is seeking permanent housing and cannot exceed 24 months 
during the period the program participant is living in permanent 
housing. Component services and activities consist of:
    (A) Using the centralized or coordinated assessment system as 
required under Sec.  576.400(d), to evaluate individuals and families 
applying for or receiving homelessness prevention or rapid re-housing 
assistance;
    (B) Conducting the initial evaluation required under Sec.  
576.401(a), including verifying and documenting eligibility, for 
individuals and families applying for homelessness prevention or rapid 
re-housing assistance;
    (C) Counseling;
    (D) Developing, securing, and coordinating services and obtaining 
Federal, State, and local benefits;
    (E) Monitoring and evaluating program participant progress;
    (F) Providing information and referrals to other providers;
    (G) Developing an individualized housing and service plan, 
including planning a path to permanent housing stability; and
    (H) Conducting re-evaluations required under Sec.  576.401(b).
    (3) Mediation. ESG funds may pay for mediation between the program 
participant and the owner or person(s) with whom the program 
participant is living, provided that the mediation is necessary to 
prevent the program participant from losing permanent housing in which 
the program participant currently resides.
    (4) Legal services. ESG funds may pay for legal services, as set 
forth in Sec.  576.102(a)(1)(vi), except that the eligible subject 
matters also include landlord/tenant matters, and the services must be 
necessary to resolve a legal problem that prohibits the program 
participant from obtaining permanent housing or will likely result in 
the program participant losing the permanent housing in which the 
program participant currently resides.
    (5) Credit repair. ESG funds may pay for credit counseling and 
other services necessary to assist program participants with critical 
skills related to household budgeting, managing money, accessing a free 
personal credit report, and resolving personal credit problems. This 
assistance does not include the payment or modification of a debt.
    (c) Maximum amounts and periods of assistance. The recipient may 
set a maximum dollar amount that a program participant may receive for 
each type of financial assistance under paragraph (a) of this section. 
The recipient may also set a maximum period for which a program 
participant may receive any of the types of assistance or services 
under this section. However, except for housing stability case 
management, the total period for which any program participant may 
receive the services under paragraph (b) of this section must not 
exceed 24 months during any 3-year period. The limits on the assistance 
under this section apply to the total assistance an individual 
receives, either as an individual or as part of a family.
    (d) Use with other subsidies. Financial assistance under paragraph 
(a) of this section cannot be provided to a program participant who is 
receiving the same type of assistance through other public sources or 
to a program participant who has been provided with replacement housing 
payments under the URA, during the period of time covered by the URA 
payments.


Sec.  576.106  Short-term and medium-term rental assistance.

    (a) General provisions. Subject to the general conditions under 
Sec.  576.103 and Sec.  576.104, the recipient or subrecipient may 
provide a program participant with up to 24 months of rental assistance 
during any 3-year period. This assistance may be short-term rental 
assistance, medium-term rental assistance, payment of rental arrears, 
or any combination of this assistance.
    (1) Short-term rental assistance is assistance for up to 3 months 
of rent.
    (2) Medium-term rental assistance is assistance for more than 3 
months but not more than 24 months of rent.
    (3) Payment of rental arrears consists of a one-time payment for up 
to 6 months of rent in arrears, including any late fees on those 
arrears.
    (4) Rental assistance may be tenant-based or project-based, as set 
forth in paragraphs (h) and (i) of this section.
    (b) Discretion to set caps and conditions. Subject to the 
requirements of this section, the recipient may set a maximum amount or 
percentage of rental assistance that a program participant may receive, 
a maximum number of months that a program participant may receive 
rental assistance, or a maximum number of times that a program 
participant may receive rental assistance. The recipient may also 
require program participants to share in the costs of rent.
    (c) Use with other subsidies. Except for a one-time payment of 
rental arrears on the tenant's portion of the rental payment, rental 
assistance cannot be provided to a program participant who is receiving 
tenant-based rental assistance, or living in a housing unit receiving 
project-based rental assistance or operating assistance, through other 
public sources. Rental assistance may not be provided to a program 
participant who has been provided with replacement housing payments 
under the URA during the period of time covered by the URA payments.
    (d) Rent restrictions. (1) Rental assistance cannot be provided 
unless the rent does not exceed the Fair Market Rent established by 
HUD, as provided under 24 CFR part 888, and complies with HUD's 
standard of rent reasonableness, as established under 24 CFR 982.507.
    (2) For purposes of calculating rent under this section, the rent 
shall equal the sum of the total monthly rent for the unit, any fees 
required for occupancy under the lease (other than late fees and pet 
fees) and, if the tenant pays separately for utilities, the monthly 
allowance for utilities (excluding telephone) established by the public 
housing authority for the area in which the housing is located.
    (e) Rental assistance agreement. The recipient or subrecipient may 
make rental assistance payments only to an owner with whom the 
recipient or subrecipient has entered into a rental assistance 
agreement. The rental assistance agreement must set forth the terms 
under which rental assistance will be provided, including the 
requirements that apply under this section. The rental assistance 
agreement must provide that, during the term of the agreement, the 
owner must give the recipient or subrecipient a copy of any notice to 
the program participant to vacate the housing unit, or any complaint 
used under state or local law to commence an eviction action against 
the program participant.
    (f) Late payments. The recipient or subrecipient must make timely 
payments to each owner in accordance with the rental assistance 
agreement. The rental assistance agreement must contain the same 
payment due date, grace period, and late payment penalty requirements 
as the program participant's lease. The recipient or subrecipient is 
solely responsible for paying late payment penalties that it incurs 
with non-ESG funds.
    (g) Lease. Each program participant receiving rental assistance 
must have a legally binding, written lease for the rental unit, unless 
the assistance is solely for rental arrears. The lease must be between 
the owner and the program participant. Where the assistance is solely 
for rental arrears, an oral agreement may be accepted in place of a 
written lease, if the agreement gives the program participant an 
enforceable leasehold interest under state law and

[[Page 75981]]

the agreement and rent owed are sufficiently documented by the owner's 
financial records, rent ledgers, or canceled checks. For program 
participants living in housing with project-based rental assistance 
under paragraph (i) of this section, the lease must have an initial 
term of one year.
    (h) Tenant-based rental assistance. (1) A program participant who 
receives tenant-based rental assistance may select a housing unit in 
which to live and may move to another unit or building and continue to 
receive rental assistance, as long as the program participant continues 
to meet the program requirements.
    (2) The recipient may require that all program participants live 
within a particular area for the period in which the rental assistance 
is provided.
    (3) The rental assistance agreement with the owner must terminate 
and no further rental assistance payments under that agreement may be 
made if:
    (i) The program participant moves out of the housing unit for which 
the program participant has a lease;
    (ii) The lease terminates and is not renewed; or
    (iii) The program participant becomes ineligible to receive ESG 
rental assistance.
    (i) Project-based rental assistance. If the recipient or 
subrecipient identifies a permanent housing unit that meets ESG 
requirements and becomes available before a program participant is 
identified to lease the unit, the recipient or subrecipient may enter 
into a rental assistance agreement with the owner to reserve the unit 
and subsidize its rent in accordance with the following requirements:
    (1) The rental assistance agreement may cover one or more permanent 
housing units in the same building. Each unit covered by the rental 
assistance agreement (``assisted unit'') may only be occupied by 
program participants, except as provided under paragraph (i)(4) of this 
section.
    (2) The recipient or subrecipient may pay up to 100 percent of the 
first month's rent, provided that a program participant signs a lease 
and moves into the unit before the end of the month for which the first 
month's rent is paid. The rent paid before a program participant moves 
into the unit must not exceed the rent to be charged under the program 
participant's lease and must be included when determining that program 
participant's total rental assistance.
    (3) The recipient or subrecipient may make monthly rental 
assistance payments only for each whole or partial month an assisted 
unit is leased to a program participant. When a program participant 
moves out of an assisted unit, the recipient or subrecipient may pay 
the next month's rent, i.e., the first month's rent for a new program 
participant, as provided in paragraph (i)(2) of this section.
    (4) The program participant's lease must not condition the term of 
occupancy to the provision of rental assistance payments. If the 
program participant is determined ineligible or reaches the maximum 
number of months over which rental assistance can be provided, the 
recipient or subrecipient must suspend or terminate the rental 
assistance payments for the unit. If the payments are suspended, the 
individual or family may remain in the assisted unit as permitted under 
the lease, and the recipient or subrecipient may resume payments if the 
individual or family again becomes eligible and needs further rental 
assistance. If the payments are terminated, the rental assistance may 
be transferred to another available unit in the same building, provided 
that the other unit meets all ESG requirements.
    (5) The rental assistance agreement must have an initial term of 
one year. When a new program participant moves into an assisted unit, 
the term of the rental assistance agreement may be extended to cover 
the initial term of the program participant's lease. If the program 
participant's lease is renewed, the rental assistance agreement may be 
renewed or extended, as needed, up to the maximum number of months for 
which the program participant remains eligible. However, under no 
circumstances may the recipient or subrecipient commit ESG funds to be 
expended beyond the expenditure deadline in Sec.  576.203 or commit 
funds for a future ESG grant before the grant is awarded.
    (j) Changes in household composition. The limits on the assistance 
under this section apply to the total assistance an individual 
receives, either as an individual or as part of a family.


Sec.  576.107  HMIS component.

    (a) Eligible costs.
    (1) The recipient or subrecipient may use ESG funds to pay the 
costs of contributing data to the HMIS designated by the Continuum of 
Care for the area, including the costs of:
    (i) Purchasing or leasing computer hardware;
    (ii) Purchasing software or software licenses;
    (iii) Purchasing or leasing equipment, including telephones, fax 
machines, and furniture;
    (iv) Obtaining technical support;
    (v) Leasing office space;
    (vi) Paying charges for electricity, gas, water, phone service, and 
high-speed data transmission necessary to operate or contribute data to 
the HMIS;
    (vii) Paying salaries for operating HMIS, including:
    (A) Completing data entry;
    (B) Monitoring and reviewing data quality;
    (C) Completing data analysis;
    (D) Reporting to the HMIS Lead;
    (F) Training staff on using the HMIS or comparable database; and
    (G) Implementing and complying with HMIS requirements;
    (viii) Paying costs of staff to travel to and attend HUD-sponsored 
and HUD-approved training on HMIS and programs authorized by Title IV 
of the McKinney-Vento Homeless Assistance Act;
    (ix) Paying staff travel costs to conduct intake; and
    (x) Paying participation fees charged by the HMIS Lead, if the 
recipient or subrecipient is not the HMIS Lead. The HMIS Lead is the 
entity designated by the Continuum of Care to operate the area's HMIS.
    (2) If the recipient is the HMIS lead agency, as designated by the 
Continuum of Care in the most recent fiscal year Continuum of Care 
Homeless Assistance Grants Competition, it may also use ESG funds to 
pay the costs of:
    (i) Hosting and maintaining HMIS software or data;
    (ii) Backing up, recovering, or repairing HMIS software or data;
    (iii) Upgrading, customizing, and enhancing the HMIS;
    (iv) Integrating and warehousing data, including development of a 
data warehouse for use in aggregating data from subrecipients using 
multiple software systems;
    (v) Administering the system;
    (vi) Reporting to providers, the Continuum of Care, and HUD; and
    (vii) Conducting training on using the system or a comparable 
database, including traveling to the training.
    (3) If the subrecipient is a victim services provider or a legal 
services provider, it may use ESG funds to establish and operate a 
comparable database that collects client-level data over time (i.e., 
longitudinal data) and generates unduplicated aggregate reports based 
on the data. Information entered into a comparable database must not be 
entered directly into or provided to an HMIS.
    (b) General restrictions. Activities funded under this section must 
comply with HUD's standards on participation, data collection, and 
reporting under a local HMIS.

[[Page 75982]]

Sec.  576.108  Administrative activities.

    (a) Eligible costs. The recipient may use up to 7.5 percent of its 
ESG grant for the payment of administrative costs related to the 
planning and execution of ESG activities. This does not include staff 
and overhead costs directly related to carrying out activities eligible 
under Sec.  576.101 through Sec.  576.107, because those costs are 
eligible as part of those activities. Eligible administrative costs 
include:
    (1) General management, oversight and coordination. Costs of 
overall program management, coordination, monitoring, and evaluation. 
These costs include, but are not limited to, necessary expenditures for 
the following:
    (i) Salaries, wages, and related costs of the recipient's staff, 
the staff of subrecipients, or other staff engaged in program 
administration. In charging costs to this category, the recipient may 
either include the entire salary, wages, and related costs allocable to 
the program of each person whose primary responsibilities with regard 
to the program involve program administration assignments, or the pro 
rata share of the salary, wages, and related costs of each person whose 
job includes any program administration assignments. The recipient may 
use only one of these methods for each fiscal year grant. Program 
administration assignments include the following:
    (A) Preparing program budgets and schedules, and amendments to 
those budgets and schedules;
    (B) Developing systems for assuring compliance with program 
requirements;
    (C) Developing interagency agreements and agreements with 
subrecipients and contractors to carry out program activities;
    (D) Monitoring program activities for progress and compliance with 
program requirements;
    (E) Preparing reports and other documents directly related to the 
program for submission to HUD;
    (F) Coordinating the resolution of audit and monitoring findings;
    (G) Evaluating program results against stated objectives; and
    (H) Managing or supervising persons whose primary responsibilities 
with regard to the program include such assignments as those described 
in paragraph (a)(1)(i)(A) through (G) of this section.
    (ii) Travel costs incurred for monitoring of subrecipients;
    (iii) Administrative services performed under third-party contracts 
or agreements, including general legal services, accounting services, 
and audit services; and
    (iv) Other costs for goods and services required for administration 
of the program, including rental or purchase of equipment, insurance, 
utilities, office supplies, and rental and maintenance (but not 
purchase) of office space.
    (2) Training on ESG requirements. Costs of providing training on 
ESG requirements and attending HUD-sponsored ESG trainings.
    (3) Consolidated plan. Costs of preparing and amending the ESG and 
homelessness-related sections of the consolidated plan in accordance 
with ESG requirements and 24 CFR part 91.
    (4) Environmental review. Costs of carrying out the environmental 
review responsibilities under Sec.  576.407.
    (b) Sharing requirement. (1) States. If the recipient is a State, 
the recipient must share its funds for administrative costs with its 
subrecipients that are units of general purpose local government. The 
amount shared must be reasonable under the circumstances. The recipient 
may share its funds for administrative costs with its subrecipients 
that are private nonprofit organizations.
    (2) Territories, metropolitan cities, and urban counties. If the 
recipient is a territory, metropolitan city, or urban county, the 
recipient may share its funds for administrative costs with its 
subrecipients.


Sec.  576.109  Indirect costs.

    (a) In general. ESG grant funds may be used to pay indirect costs 
in accordance with OMB Circular A-87 (2 CFR part 225), or A-122 (2 CFR 
part 230), as applicable.
    (b) Allocation. Indirect costs may be allocated to each eligible 
activity under Sec.  576.101 through Sec.  576.108, so long as that 
allocation is consistent with an indirect cost rate proposal developed 
in accordance with OMB Circular A-87 (2 CFR part 225), or A-122 (2 CFR 
part 230), as applicable.
    (c) Expenditure limits. The indirect costs charged to an activity 
subject to an expenditure limit under Sec.  576.100 must be added to 
the direct costs charged for that activity when determining the total 
costs subject to the expenditure limit.

Subpart C--Award and Use of Funds


Sec.  576.200  Submission requirements and grant approval.

    (a) Application submission and approval. In addition to meeting the 
application submission requirements in 24 CFR part 5, subpart K, each 
State, urban county, or metropolitan city must submit and obtain HUD 
approval of a consolidated plan in accordance with the requirements in 
24 CFR part 91, and each territory must submit and obtain HUD approval 
of a consolidated plan in accordance with the requirements that apply 
to local governments under 24 CFR part 91. As provided under 24 CFR 
85.12, HUD may impose special conditions or restrictions on a grant, if 
the recipient is determined to be high risk.
    (b) Amendments. The recipient must amend its approved consolidated 
plan in order to make a change in its allocation priorities; make a 
change in its method of distributing funds; carry out an activity not 
previously described in the plan; or change the purpose, scope, 
location, or beneficiaries of an activity. The amendment must be 
completed and submitted to HUD in accordance with the requirements 
under 24 CFR 91.505.


Sec.  576.201  Matching requirement.

    (a) Required amount of matching contributions. (1) Except as 
provided under paragraphs (a)(2) and (a)(3) of this section, the 
recipient must make matching contributions to supplement the 
recipient's ESG program in an amount that equals the amount of ESG 
funds provided by HUD.
    (2) If the recipient is a State, the first $100,000 of the fiscal 
year grant is not required to be matched. However, the recipient must 
transfer the benefit of this exception to its subrecipients that are 
least capable of providing the recipient with matching contributions.
    (3) This matching requirement does not apply if the recipient is a 
territory.
    (b) Eligible sources of matching contributions. (1) Subject to the 
requirement for States under paragraph (a)(2) of this section, the 
recipient may require its subrecipients to make matching contributions 
consistent with this section to help meet the recipient's matching 
requirement.
    (2) Matching contributions may be obtained from any source, 
including any Federal source other than the ESG program, as well as 
state, local, and private sources. However, the following requirements 
apply to matching contributions from a Federal source of funds:
    (i) The recipient must ensure the laws governing any funds to be 
used as matching contributions do not prohibit those funds from being 
used to match Emergency Solutions Grant (ESG) funds.
    (ii) If ESG funds are used to satisfy the matching requirements of 
another Federal program, then funding from that program may not be used 
to satisfy the matching requirements under this section.

[[Page 75983]]

    (c) Recognition of matching contributions. (1) In order to meet the 
matching requirement, the matching contributions must meet all 
requirements that apply to the ESG funds provided by HUD, except for 
the expenditure limits in Sec.  576.100.
    (2) The matching contributions must be provided after the date that 
HUD signs the grant agreement.
    (3) To count toward the required match for the recipient's fiscal 
year grant, cash contributions must be expended within the expenditure 
deadline in Sec.  576.203, and noncash contributions must be made 
within the expenditure deadline in Sec.  576.203.
    (4) Contributions used to match a previous ESG grant may not be 
used to match a subsequent ESG grant.
    (5) Contributions that have been or will be counted as satisfying a 
matching requirement of another Federal grant or award may not count as 
satisfying the matching requirement of this section.
    (d) Eligible types of matching contributions. The matching 
requirement may be met by one or both of the following:
    (1) Cash contributions. Cash expended for allowable costs, as 
defined in OMB Circulars A-87 (2 CFR part 225) and A-122 (2 CFR part 
230), of the recipient or subrecipient.
    (2) Noncash contributions. The value of any real property, 
equipment, goods, or services contributed to the recipient's or 
subrecipient's ESG program, provided that if the recipient or 
subrecipient had to pay for them with grant funds, the costs would have 
been allowable. Noncash contributions may also include the purchase 
value of any donated building.
    (e) Calculating the amount of noncash contributions. (1) To 
determine the value of any donated material or building, or of any 
lease, the recipient must use a method reasonably calculated to 
establish the fair market value.
    (2) Services provided by individuals must be valued at rates 
consistent with those ordinarily paid for similar work in the 
recipient's or subrecipient's organization. If the recipient or 
subrecipient does not have employees performing similar work, the rates 
must be consistent with those ordinarily paid by other employers for 
similar work in the same labor market.
    (3) Some noncash contributions are real property, equipment, goods, 
or services that, if the recipient or subrecipient had to pay for them 
with grant funds, the payments would have been indirect costs. Matching 
credit for these contributions must be given only if the recipient or 
subrecipient has established, along with its regular indirect cost 
rate, a special rate for allocating to individual projects or programs 
the value of those contributions.
    (f) Costs paid by program income. Costs paid by program income 
shall count toward meeting the recipient's matching requirements, 
provided the costs are eligible ESG costs that supplement the 
recipient's ESG program.


Sec.  576.202  Means of carrying out grant activities.

    (a) States. If the recipient is a State, the recipient may use an 
amount consistent with the restrictions in Sec.  576.100 and Sec.  
576.108 to carry out administrative activities through its employees or 
procurement contracts. If the recipient is a State, and has been 
identified as the HMIS lead by the Continuum of Care, the State may use 
funds to carry out HMIS activities set forth in Sec.  576.107(a)(2). 
The recipient must subgrant the remaining funds in its fiscal year 
grant to:
    (1) Units of general purpose local government in the State, which 
may include metropolitan cities and urban counties that receive ESG 
funds directly from HUD; or
    (2) Private nonprofit organizations, provided that for emergency 
shelter activities the recipient obtains a certification of approval 
from the unit of general purpose local government for the geographic 
area in which those activities are to be carried out.
    (b) Recipients other than States; subrecipients. The recipient, if 
it is not a State, and all subrecipients may carry out all eligible 
activities through their employees, procurement contracts, or subgrants 
to private nonprofit organizations. If the recipient is an urban 
county, it may carry out activities through any of its member 
governments, so long as the county applies to its members the same 
requirements that are applicable to local government subrecipients 
under this part.


Sec.  576.203  Obligation, expenditure, and payment requirements.

    (a) Obligation of funds. (1) Funds allocated to States. (i) Within 
60 days from the date that HUD signs the grant agreement with the State 
(or grant amendment for reallocated funds), the recipient must obligate 
the entire grant, except the amount for its administrative costs. This 
requirement is met by a subgrant agreement with, or a letter of award 
requiring payment from the grant to, a subrecipient.
    (ii) Within 120 days after the date that the State obligates its 
funds to a unit of general purpose local government, the subrecipient 
must obligate all of those funds by a subgrant agreement with, or a 
letter of award requiring payment to, a private nonprofit organization; 
a procurement contract; or the written designation of a department 
within the government of the subrecipient to directly carry out an 
eligible activity.
    (2) Funds allocated to metropolitan cities, urban counties, and 
territories. Within 180 days after the date that HUD signs the grant 
agreement (or a grant amendment for reallocation of funds) with the 
metropolitan city, urban county, or territory, the recipient must 
obligate all the grant amount, except the amount for its administrative 
costs. This requirement is met by an agreement with, or a letter of 
award requiring payment to, a subrecipient; a procurement contract; or 
a written designation of a department within the government of the 
recipient to directly carry out an eligible activity. If the recipient 
is an urban county, this requirement may also be met with an agreement 
with, or letter of award requiring payment to, a member government, 
which has designated a department to directly carry out an eligible 
activity.
    (b) Expenditures. The recipient must draw down and expend funds 
from each year's grant not less than once during each quarter of the 
recipient's program year. All of the recipient's grant must be expended 
for eligible activity costs within 24 months after the date HUD signs 
the grant agreement with the recipient. For the purposes of this 
paragraph, expenditure means either an actual cash disbursement for a 
direct charge for a good or service or an indirect cost or the accrual 
of a direct charge for a good or service or an indirect cost.
    (c) Payments to subrecipients. The recipient must pay each 
subrecipient for allowable costs within 30 days after receiving the 
subrecipient's complete payment request. This requirement also applies 
to each subrecipient that is a unit of general purpose local 
government.

Subpart D--Reallocations


Sec.  576.300  In general.

    (1) Funds not awarded by HUD due to failure by the recipient to 
submit and obtain HUD approval of a consolidated plan will be 
reallocated in accordance with Sec. Sec.  576.301 through 576.303.
    (2) Recaptured funds will be awarded by formula. In October and 
April each year, HUD will determine if the amount of recaptured funds 
is at least 30 percent of the most recent fiscal year

[[Page 75984]]

appropriation. If so, HUD will amend all existing grants and reallocate 
the funds. If the amount is less than 30 percent of the most recent 
fiscal year appropriation, the funds will be reallocated in conjunction 
with the next fiscal year's allocation of funding.


Sec.  576.301  Metropolitan cities and urban counties.

    Grant funds returned by a metropolitan city or urban county will be 
reallocated as follows:
    (a) Eligible recipient. HUD will make the funds available to the 
State in which the city or county is located.
    (b) Notification of availability. HUD will promptly notify the 
State of the availability of the amounts to be reallocated.
    (c) Application requirement. Within 45 days after the date of 
notification, the State must submit to HUD a substantial amendment to 
its consolidated plan in accordance with 24 CFR part 91.
    (d) Restrictions that apply to reallocated amounts. The same 
requirements that apply to grant funds allocated under Sec.  576.3 
apply to grant funds reallocated under this section, except that the 
State must distribute the reallocated funds:
    (1) To private nonprofit organizations and units of general purpose 
local government in the geographic area in which the metropolitan city 
or urban county is located;
    (2) If funds remain, to private nonprofit organizations and units 
of general purpose local government located throughout the State.


Sec.  576.302  States.

    Grant funds returned by a State will be reallocated as follows:
    (a) Eligible recipients. HUD will make the funds available:
    (1) To metropolitan cities and urban counties in the State that 
were not allocated funds under Sec.  576.3 because the amount they 
would have been allocated did not meet the minimum requirement under 
Sec.  576.3(b)(2);
    (2) If funds remain, to county governments in the State other than 
urban counties;
    (3) Then, if funds remain, to metropolitan cities and urban 
counties in the State that were allocated funds under Sec.  576.3.
    (b) Notification of availability. HUD will notify eligible 
recipients of the availability of the funds by a notification letter or 
Federal Register notice, which will specify how the awards of funds 
will be made.
    (c) Application requirements. Within 45 days after the date of 
notification, the eligible recipient must submit to HUD:
    (1) A substantial amendment to its approved consolidated plan in 
accordance with 24 CFR part 91; or
    (2) If the eligible recipient does not have an approved 
consolidated plan, an abbreviated consolidated plan that meets the 
requirements in the Federal Register notice or notification letter from 
HUD.
    (d) Restrictions that apply to reallocated amounts. The same 
requirements that apply to grant funds allocated under Sec.  576.3 
apply to grant funds reallocated under this section.


Sec.  576.303  Territories.

    (a) General. Grant funds returned by a territory will be 
reallocated to other territories, then if funds remain, to States.
    (b) Allocation method. The funds will be allocated as follows:
    (1) For territories, the funds will be allocated among the 
territories in direct proportion with each territory's share of the 
total population of all of the eligible territories. If HUD determines 
that a territory failed to spend its funds in accordance with ESG 
requirements, then HUD may exclude the territory from the allocation of 
reallocation amounts under this section.
    (2) For States, the funds will be allocated to each State in direct 
proportion with each State's share of the total amount of funds 
allocated to States under Sec.  576.3.
    (c) Notification of availability. HUD will notify eligible 
recipients of the availability of the fund by a letter or Federal 
Register notice, which will specify how the awards of funds will be 
made.
    (d) Application requirements. Within 45 days after the date of 
notification, the eligible recipient must submit to HUD a substantial 
amendment to its consolidated plan in accordance with 24 CFR part 91.
    (e) Restrictions that apply to reallocated amounts. The same 
requirements that apply to grant funds allocated under Sec.  576.3 
apply to grant funds reallocated under this section.

Subpart E--Program Requirements


Sec.  576.400  Area-wide systems coordination requirements.

    (a) Consultation with Continuums of Care. The recipient must 
consult with each Continuum of Care that serves the recipient's 
jurisdiction in determining how to allocate ESG funds each program 
year; developing the performance standards for, and evaluating the 
outcomes of, projects and activities assisted by ESG funds; and 
developing funding, policies, and procedures for the administration and 
operation of the HMIS.
    (b) Coordination with other targeted homeless services. The 
recipient and its subrecipients must coordinate and integrate, to the 
maximum extent practicable, ESG-funded activities with other programs 
targeted to homeless people in the area covered by the Continuum of 
Care or area over which the services are coordinated to provide a 
strategic, community-wide system to prevent and end homelessness for 
that area. These programs include:
    (1) Shelter Plus Care Program (24 CFR part 582);
    (2) Supportive Housing Program (24 CFR part 583);
    (3) Section 8 Moderate Rehabilitation Program for Single Room 
Occupancy Program for Homeless Individuals (24 CFR part 882);
    (4) HUD--Veterans Affairs Supportive Housing (HUD-VASH) (division 
K, title II, Consolidated Appropriations Act, 2008, Pub. L. 110-161 
(2007), 73 FR 25026 (May 6, 2008));
    (5) Education for Homeless Children and Youth Grants for State and 
Local Activities (title VII-B of the McKinney-Vento Homeless Assistance 
Act (42 U.S.C. 11431 et seq.));
    (6) Grants for the Benefit of Homeless Individuals (section 506 of 
the Public Health Services Act (42 U.S.C. 290aa-5));
    (7) Healthcare for the Homeless (42 CFR part 51c);
    (8) Programs for Runaway and Homeless Youth (Runaway and Homeless 
Youth Act (42 U.S.C. 5701 et seq.));
    (9) Projects for Assistance in Transition from Homelessness (part C 
of title V of the Public Health Service Act (42 U.S.C. 290cc-21 et 
seq.));
    (10) Services in Supportive Housing Grants (section 520A of the 
Public Health Service Act);
    (11) Emergency Food and Shelter Program (title III of the McKinney-
Vento Homeless Assistance Act (42 U.S.C. 11331 et seq.));
    (12) Transitional Housing Assistance Grants for Victims of Sexual 
Assault, Domestic Violence, Dating Violence, and Stalking Program 
(section 40299 of the Violent Crime Control and Law Enforcement Act (42 
U.S.C. 13975));
    (13) Homeless Veterans Reintegration Program (section 5(a)(1)) of 
the Homeless Veterans Comprehensive Assistance Act (38 U.S.C. 2021);
    (14) Domiciliary Care for Homeless Veterans Program (38 U.S.C. 
2043);
    (15) VA Homeless Providers Grant and Per Diem Program (38 CFR part 
61);
    (16) Health Care for Homeless Veterans Program (38 U.S.C. 2031);

[[Page 75985]]

    (17) Homeless Veterans Dental Program (38 U.S.C. 2062);
    (18) Supportive Services for Veteran Families Program (38 CFR part 
62); and
    (19) Veteran Justice Outreach Initiative (38 U.S.C. 2031).
    (c) System and program coordination with mainstream resources. The 
recipient and its subrecipients must coordinate and integrate, to the 
maximum extent practicable, ESG-funded activities with mainstream 
housing, health, social services, employment, education, and youth 
programs for which families and individuals at risk of homelessness and 
homeless individuals and families may be eligible. Examples of these 
programs include:
    (1) Public housing programs assisted under section 9 of the U.S. 
Housing Act of 1937 (42 U.S.C. 1437g) (24 CFR parts 905, 968, and 990);
    (2) Housing programs receiving tenant-based or project-based 
assistance under section 8 of the U.S. Housing Act of 1937 (42 U.S.C. 
1437f) (respectively 24 CFR parts 982 and 983);
    (3) Supportive Housing for Persons with Disabilities (Section 811) 
(24 CFR part 891);
    (4) HOME Investment Partnerships Program (24 CFR part 92);
    (5) Temporary Assistance for Needy Families (TANF) (45 CFR parts 
260-265);
    (6) Health Center Program (42 CFR part 51c);
    (7) State Children's Health Insurance Program (42 CFR part 457):
    (8) Head Start (45 CFR chapter XIII, subchapter B);
    (9) Mental Health and Substance Abuse Block Grants (45 CFR part 
96); and
    (10) Services funded under the Workforce Investment Act (29 U.S.C. 
2801 et seq.).
    (d) Centralized or coordinated assessment. Once the Continuum of 
Care has developed a centralized assessment system or a coordinated 
assessment system in accordance with requirements to be established by 
HUD, each ESG-funded program or project within the Continuum of Care's 
area must use that assessment system. The recipient and subrecipient 
must work with the Continuum of Care to ensure the screening, 
assessment and referral of program participants are consistent with the 
written standards required by paragraph (e) of this section. A victim 
service provider may choose not to use the Continuum of Care's 
centralized or coordinated assessment system.
    (e) Written standards for providing ESG assistance. (1) If the 
recipient is a metropolitan city, urban county, or territory, the 
recipient must have written standards for providing Emergency Solutions 
Grant (ESG) assistance and must consistently apply those standards for 
all program participants. The recipient must describe these standards 
in its consolidated plan.
    (2) If the recipient is a state:
    (i) The recipient must establish and consistently apply, or require 
that its subrecipients establish and consistently apply, written 
standards for providing ESG assistance. If the written standards are 
established by the subrecipients, the recipient may require these 
written standards to be:
    (A) Established for each area covered by a Continuum of Care or 
area over which the services are coordinated and followed by each 
subrecipient providing assistance in that area; or
    (B) Established by each subrecipient and applied consistently 
within the subrecipient's program.
    (ii) Written standards developed by the state must be included in 
the state's Consolidated Plan. If the written standards are developed 
by its subrecipients, the recipient must describe its requirements for 
the establishment and implementation of these standards in the state's 
Consolidated Plan.
    (3) At a minimum these written standards must include:
    (i) Standard policies and procedures for evaluating individuals' 
and families' eligibility for assistance under Emergency Solutions 
Grant (ESG);
    (ii) Standards for targeting and providing essential services 
related to street outreach;
    (iii) Policies and procedures for admission, diversion, referral, 
and discharge by emergency shelters assisted under ESG, including 
standards regarding length of stay, if any, and safeguards to meet the 
safety and shelter needs of special populations, e.g., victims of 
domestic violence, dating violence, sexual assault, and stalking; and 
individuals and families who have the highest barriers to housing and 
are likely to be homeless the longest;
    (iv) Policies and procedures for assessing, prioritizing, and 
reassessing individuals' and families' needs for essential services 
related to emergency shelter;
    (v) Policies and procedures for coordination among emergency 
shelter providers, essential services providers, homelessness 
prevention, and rapid re-housing assistance providers; other homeless 
assistance providers; and mainstream service and housing providers (see 
Sec.  576.400(b) and (c) for a list of programs with which ESG-funded 
activities must be coordinated and integrated to the maximum extent 
practicable);
    (vi) Policies and procedures for determining and prioritizing which 
eligible families and individuals will receive homelessness prevention 
assistance and which eligible families and individuals will receive 
rapid re-housing assistance;
    (vii) Standards for determining what percentage or amount of rent 
and utilities costs each program participant must pay while receiving 
homelessness prevention or rapid re-housing assistance;
    (viii) Standards for determining how long a particular program 
participant will be provided with rental assistance and whether and how 
the amount of that assistance will be adjusted over time; and
    (ix) Standards for determining the type, amount, and duration of 
housing stabilization and/or relocation services to provide to a 
program participant, including the limits, if any, on the homelessness 
prevention or rapid re-housing assistance that each program participant 
may receive, such as the maximum amount of assistance, maximum number 
of months the program participant receive assistance; or the maximum 
number of times the program participant may receive assistance.
    (f) Participation in HMIS. The recipient must ensure that data on 
all persons served and all activities assisted under ESG are entered 
into the applicable community-wide HMIS in the area in which those 
persons and activities are located, or a comparable database, in 
accordance with HUD's standards on participation, data collection, and 
reporting under a local HMIS. If the subrecipient is a victim service 
provider or a legal services provider, it may use a comparable database 
that collects client-level data over time (i.e., longitudinal data) and 
generates unduplicated aggregate reports based on the data. Information 
entered into a comparable database must not be entered directly into or 
provided to an HMIS.


Sec.  576.401  Evaluation of program participant eligibility and needs.

    (a) Evaluations. The recipient or its subrecipient must conduct an 
initial evaluation to determine the eligibility of each individual or 
family's eligibility for ESG assistance and the amount and types of 
assistance the individual or family needs to regain stability in 
permanent housing. These evaluations must be conducted in accordance 
with the centralized or coordinated

[[Page 75986]]

assessment requirements set forth under Sec.  576.400(d) and the 
written standards established under Sec.  576.400(e).
    (b) Re-evaluations for homelessness prevention and rapid re-housing 
assistance. (1) The recipient or subrecipient must re-evaluate the 
program participant's eligibility and the types and amounts of 
assistance the program participant needs not less than once every 3 
months for program participants receiving homelessness prevention 
assistance, and not less than once annually for program participants 
receiving rapid re-housing assistance. At a minimum, each re-evaluation 
of eligibility must establish that:
    (i) The program participant does not have an annual income that 
exceeds 30 percent of median family income for the area, as determined 
by HUD; and
    (ii) The program participant lacks sufficient resources and support 
networks necessary to retain housing without ESG assistance.
    (2) The recipient or subrecipient may require each program 
participant receiving homelessness prevention or rapid re-housing 
assistance to notify the recipient or subrecipient regarding changes in 
the program participant's income or other circumstances (e.g., changes 
in household composition) that affect the program participant's need 
for assistance under ESG. When notified of a relevant change, the 
recipient or subrecipient must re-evaluate the program participant's 
eligibility and the amount and types of assistance the program 
participant needs.
    (c) Annual income. When determining the annual income of an 
individual or family, the recipient or subrecipient must use the 
standard for calculating annual income under 24 CFR 5.609.
    (d) Connecting program participants to mainstream and other 
resources. The recipient and its subrecipients must assist each program 
participant, as needed, to obtain:
    (1) Appropriate supportive services, including assistance in 
obtaining permanent housing, medical health treatment, mental health 
treatment, counseling, supervision, and other services essential for 
achieving independent living; and
    (2) Other Federal, State, local, and private assistance available 
to assist the program participant in obtaining housing stability, 
including:
    (i) Medicaid (42 CFR chapter IV, subchapter C):
    (ii) Supplemental Nutrition Assistance Program (7 CFR parts 271-
283);
    (iii) Women, Infants and Children (WIC) (7 CFR part 246);
    (iv) Federal-State Unemployment Insurance Program (20 CFR parts 
601-603, 606, 609, 614-617, 625, 640, 650);
    (v) Social Security Disability Insurance (SSDI) (20 CFR part 404);
    (vi) Supplemental Security Income (SSI) (20 CFR part 416);
    (vii) Child and Adult Care Food Program (42 U.S.C. 1766(t) (7 CFR 
part 226));
    (viii) Other assistance available under the programs listed in 
Sec.  576.400(c).
    (e) Housing stability case management. (1) While providing 
homelessness prevention or rapid re-housing assistance to a program 
participant, the recipient or subrecipient must:
    (i) Require the program participant to meet with a case manager not 
less than once per month to assist the program participant in ensuring 
long-term housing stability; and
    (ii) Develop a plan to assist the program participant to retain 
permanent housing after the ESG assistance ends, taking into account 
all relevant considerations, such as the program participant's current 
or expected income and expenses; other public or private assistance for 
which the program participant will be eligible and likely to receive; 
and the relative affordability of available housing in the area.
    (2) The recipient or subrecipient is exempt from the requirement 
under paragraph (e)(1)(i) of this section if the Violence Against Women 
Act of 1994 (42 U.S.C. 13701 et seq.) or the Family Violence Prevention 
and Services Act (42 U.S.C. 10401 et seq.) prohibits that recipient or 
subrecipient from making its shelter or housing conditional on the 
participant's acceptance of services.


Sec.  576.402  Terminating assistance.

    (a) In general. If a program participant violates program 
requirements, the recipient or subrecipient may terminate the 
assistance in accordance with a formal process established by the 
recipient or subrecipient that recognizes the rights of individuals 
affected. The recipient or subrecipient must exercise judgment and 
examine all extenuating circumstances in determining when violations 
warrant termination so that a program participant's assistance is 
terminated only in the most severe cases.
    (b) Program participants receiving rental assistance or housing 
relocation and stabilization services. To terminate rental assistance 
or housing relocation and stabilization services to a program 
participant, the required formal process, at a minimum, must consist 
of:
    (1) Written notice to the program participant containing a clear 
statement of the reasons for termination;
    (2) A review of the decision, in which the program participant is 
given the opportunity to present written or oral objections before a 
person other than the person (or a subordinate of that person) who made 
or approved the termination decision; and
    (3) Prompt written notice of the final decision to the program 
participant.
    (c) Ability to provide further assistance. Termination under this 
section does not bar the recipient or subrecipient from providing 
further assistance at a later date to the same family or individual.


Sec.  576.403  Shelter and housing standards.

    (a) Lead-based paint remediation and disclosure. The Lead-Based 
Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential 
Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), 
and implementing regulations in 24 CFR part 35, subparts A, B, H, J, K, 
M, and R apply to all shelters assisted under ESG program and all 
housing occupied by program participants.
    (b) Minimum standards for emergency shelters. Any building for 
which Emergency Solutions Grant (ESG) funds are used for conversion, 
major rehabilitation, or other renovation, must meet state or local 
government safety and sanitation standards, as applicable, and the 
following minimum safety, sanitation, and privacy standards. Any 
emergency shelter that receives assistance for shelter operations must 
also meet the following minimum safety, sanitation, and privacy 
standards. The recipient may also establish standards that exceed or 
add to these minimum standards.
    (1) Structure and materials. The shelter building must be 
structurally sound to protect residents from the elements and not pose 
any threat to health and safety of the residents. Any renovation 
(including major rehabilitation and conversion) carried out with ESG 
assistance must use Energy Star and WaterSense products and appliances.
    (2) Access. The shelter must be accessible in accordance with 
Section 504 of the Rehabilitation Act (29 U.S.C. 794) and implementing 
regulations at 24 CFR part 8; the Fair Housing Act (42 U.S.C. 3601 et 
seq.) and implementing regulations at 24 CFR part 100; and Title II of 
the Americans with Disabilities Act (42 U.S.C. 12131 et seq.) and 28 
CFR part 35; where applicable.
    (3) Space and security. Except where the shelter is intended for 
day use only,

[[Page 75987]]

the shelter must provide each program participant in the shelter with 
an acceptable place to sleep and adequate space and security for 
themselves and their belongings.
    (4) Interior air quality. Each room or space within the shelter 
must have a natural or mechanical means of ventilation. The interior 
air must be free of pollutants at a level that might threaten or harm 
the health of residents.
    (5) Water supply. The shelter's water supply must be free of 
contamination.
    (6) Sanitary facilities. Each program participant in the shelter 
must have access to sanitary facilities that are in proper operating 
condition, are private, and are adequate for personal cleanliness and 
the disposal of human waste.
    (7) Thermal environment. The shelter must have any necessary 
heating/cooling facilities in proper operating condition.
    (8) Illumination and electricity. The shelter must have adequate 
natural or artificial illumination to permit normal indoor activities 
and support health and safety. There must be sufficient electrical 
sources to permit the safe use of electrical appliances in the shelter.
    (9) Food preparation. Food preparation areas, if any, must contain 
suitable space and equipment to store, prepare, and serve food in a 
safe and sanitary manner.
    (10) Sanitary conditions. The shelter must be maintained in a 
sanitary condition.
    (11) Fire safety. There must be at least one working smoke detector 
in each occupied unit of the shelter. Where possible, smoke detectors 
must be located near sleeping areas. The fire alarm system must be 
designed for hearing-impaired residents. All public areas of the 
shelter must have at least one working smoke detector. There must also 
be a second means of exiting the building in the event of fire or other 
emergency.
    (c) Minimum standards for permanent housing. The recipient or 
subrecipient cannot use ESG funds to help a program participant remain 
or move into housing that does not meet the minimum habitability 
standards provided in this paragraph (c). The recipient may also 
establish standards that exceed or add to these minimum standards.
    (1) Structure and materials. The structures must be structurally 
sound to protect residents from the elements and not pose any threat to 
the health and safety of the residents.
    (2) Space and security. Each resident must be provided adequate 
space and security for themselves and their belongings. Each resident 
must be provided an acceptable place to sleep.
    (3) Interior air quality. Each room or space must have a natural or 
mechanical means of ventilation. The interior air must be free of 
pollutants at a level that might threaten or harm the health of 
residents.
    (4) Water supply. The water supply must be free from contamination.
    (5) Sanitary facilities. Residents must have access to sufficient 
sanitary facilities that are in proper operating condition, are 
private, and are adequate for personal cleanliness and the disposal of 
human waste.
    (6) Thermal environment. The housing must have any necessary 
heating/cooling facilities in proper operating condition.
    (7) Illumination and electricity. The structure must have adequate 
natural or artificial illumination to permit normal indoor activities 
and support health and safety. There must be sufficient electrical 
sources to permit the safe use of electrical appliances in the 
structure.
    (8) Food preparation. All food preparation areas must contain 
suitable space and equipment to store, prepare, and serve food in a 
safe and sanitary manner.
    (9) Sanitary conditions. The housing must be maintained in a 
sanitary condition.
    (10) Fire safety. (i) There must be a second means of exiting the 
building in the event of fire or other emergency.
    (ii) Each unit must include at least one battery-operated or hard-
wired smoke detector, in proper working condition, on each occupied 
level of the unit. Smoke detectors must be located, to the extent 
practicable, in a hallway adjacent to a bedroom. If the unit is 
occupied by hearing impaired persons, smoke detectors must have an 
alarm system designed for hearing-impaired persons in each bedroom 
occupied by a hearing-impaired person.
    (iii) The public areas of all housing must be equipped with a 
sufficient number, but not less than one for each area, of battery-
operated or hard-wired smoke detectors. Public areas include, but are 
not limited to, laundry rooms, community rooms, day care centers, 
hallways, stairwells, and other common areas.


Sec.  576.404  Conflicts of interest.

    (a) Organizational conflicts of interest. The provision of any type 
or amount of ESG assistance may not be conditioned on an individual's 
or family's acceptance or occupancy of emergency shelter or housing 
owned by the recipient, the subrecipient, or a parent or subsidiary of 
the subrecipient. No subrecipient may, with respect to individuals or 
families occupying housing owned by the subrecipient, or any parent or 
subsidiary of the subrecipient, carry out the initial evaluation 
required under Sec.  576.401 or administer homelessness prevention 
assistance under Sec.  576.103.
    (b) Individual conflicts of interest. For the procurement of goods 
and services, the recipient and its subrecipients must comply with the 
codes of conduct and conflict of interest requirements under 24 CFR 
85.36 (for governments) and 24 CFR 84.42 (for private nonprofit 
organizations). For all other transactions and activities, the 
following restrictions apply:
    (1) Conflicts prohibited. No person described in paragraph (b)(2) 
of this section who exercises or has exercised any functions or 
responsibilities with respect to activities assisted under the ESG 
program, or who is in a position to participate in a decision-making 
process or gain inside information with regard to activities assisted 
under the program, may obtain a financial interest or benefit from an 
assisted activity; have a financial interest in any contract, 
subcontract, or agreement with respect to an assisted activity; or have 
a financial interest in the proceeds derived from an assisted activity, 
either for him or herself or for those with whom he or she has family 
or business ties, during his or her tenure or during the one-year 
period following his or her tenure.
    (2) Persons covered. The conflict-of- interest provisions of 
paragraph (b)(1) of this section apply to any person who is an 
employee, agent, consultant, officer, or elected or appointed official 
of the recipient or its subrecipients.
    (3) Exceptions. Upon the written request of the recipient, HUD may 
grant an exception to the provisions of this subsection on a case-by-
case basis, taking into account the cumulative effects of the criteria 
in paragraph (b)(3)(ii) of this section, provided that the recipient 
has satisfactorily met the threshold requirements of paragraph 
(b)(3)(i) of this section.
    (i) Threshold requirements. HUD will consider an exception only 
after the recipient has provided the following documentation:
    (A) If the recipient or subrecipient is a government, disclosure of 
the nature of the conflict, accompanied by an assurance that there has 
been public disclosure of the conflict and a description of how the 
public disclosure was made; and
    (B) An opinion of the recipient's attorney that the interest for 
which the

[[Page 75988]]

exception is sought would not violate state or local law.
    (ii) Factors to be considered for exceptions. In determining 
whether to grant a requested exception after the recipient has 
satisfactorily met the threshold requirements under paragraph (b)(3)(i) 
of this section, HUD must conclude that the exception will serve to 
further the purposes of the ESG program and the effective and efficient 
administration of the recipient's or subrecipient's program or project, 
taking into account the cumulative effect of the following factors, as 
applicable:
    (A) Whether the exception would provide a significant cost benefit 
or an essential degree of expertise to the program or project that 
would otherwise not be available;
    (B) Whether an opportunity was provided for open competitive 
bidding or negotiation;
    (C) Whether the affected person has withdrawn from his or her 
functions, responsibilities or the decision-making process with respect 
to the specific activity in question;
    (D) Whether the interest or benefit was present before the affected 
person was in the position described in paragraph (b)(1) of this 
section;
    (E) Whether undue hardship results to the recipient, the 
subrecipient, or the person affected, when weighed against the public 
interest served by avoiding the prohibited conflict; and
    (F) Any other relevant considerations.
    (c) Contractors. All contractors of the recipient or subrecipient 
must comply with the same requirements that apply to subrecipients 
under this section.


Sec.  576.405  Homeless participation.

    (a) Unless the recipient is a State, the recipient must provide for 
the participation of not less than one homeless individual or formerly 
homeless individual on the board of directors or other equivalent 
policy-making entity of the recipient, to the extent that the entity 
considers and makes policies and decisions regarding any facilities, 
services, or other assistance that receive funding under Emergency 
Solutions Grant (ESG).
    (b) If the recipient is unable to meet requirement under paragraph 
(a), it must instead develop and implement a plan to consult with 
homeless or formerly homeless individuals in considering and making 
policies and decisions regarding any facilities, services, or other 
assistance that receive funding under Emergency Solutions Grant (ESG). 
The plan must be included in the annual action plan required under 24 
CFR 91.220.
    (c) To the maximum extent practicable, the recipient or 
subrecipient must involve homeless individuals and families in 
constructing, renovating, maintaining, and operating facilities 
assisted under ESG, in providing services assisted under ESG, and in 
providing services for occupants of facilities assisted under ESG. This 
involvement may include employment or volunteer services.


Sec.  576.406  Faith-based activities.

    (a) Organizations that are religious or faith-based are eligible, 
on the same basis as any other organization, to receive ESG funds. 
Neither the Federal Government nor a State or local government 
receiving funds under ESG shall discriminate against an organization on 
the basis of the organization's religious character or affiliation.
    (b) Organizations that are directly funded under the ESG program 
may not engage in inherently religious activities, such as worship, 
religious instruction, or proselytization as part of the programs or 
services funded under ESG. If an organization conducts these 
activities, the activities must be offered separately, in time or 
location, from the programs or services funded under ESG, and 
participation must be voluntary for program participants.
    (c) Any religious organization that receives ESG funds retains its 
independence from Federal, State, and local governments, and may 
continue to carry out its mission, including the definition, practice, 
and expression of its religious beliefs, provided that the religious 
organization does not use direct ESG funds to support any inherently 
religious activities, such as worship, religious instruction, or 
proselytization. Among other things, faith-based organizations may use 
space in their facilities to provide ESG-funded services, without 
removing religious art, icons, scriptures, or other religious symbols. 
In addition, an ESG-funded religious organization retains its authority 
over its internal governance, and the organization may retain religious 
terms in its organization's name, select its board members on a 
religious basis, and include religious references in its organization's 
mission statements and other governing documents.
    (d) An organization that receives ESG funds shall not, in providing 
ESG assistance, discriminate against a program participant or 
prospective program participant on the basis of religion or religious 
belief.
    (e) ESG funds may not be used for the rehabilitation of structures 
to the extent that those structures are used for inherently religious 
activities. Solutions ESG funds may be used for the rehabilitation of 
structures only to the extent that those structures are used for 
conducting eligible activities under the ESG program. Where a structure 
is used for both eligible and inherently religious activities, ESG 
funds may not exceed the cost of those portions of the rehabilitation 
that are attributable to eligible activities in accordance with the 
cost accounting requirements applicable to ESG funds. Sanctuaries, 
chapels, or other rooms that an ESG-funded religious congregation uses 
as its principal place of worship, however, are ineligible for funded 
improvements under the program. Disposition of real property after the 
term of the grant, or any change in use of the property during the term 
of the grant, is subject to government-wide regulations governing real 
property disposition (see 24 CFR parts 84 and 85).
    (f) If the recipient or a subrecipient that is a local government 
voluntarily contributes its own funds to supplement federally funded 
activities, the recipient or subrecipient has the option to segregate 
the Federal funds or commingle them. However, if the funds are 
commingled, this section applies to all of the commingled funds.


Sec.  576.407  Other Federal requirements.

    (a) General. The requirements in 24 CFR part 5, subpart A are 
applicable, including the nondiscrimination and equal opportunity 
requirements at 24 CFR 5.105(a). Section 3 of the Housing and Urban 
Development Act of 1968, 12 U.S.C. 1701u, and implementing regulations 
at 24 CFR part 135 apply, except that homeless individuals have 
priority over other Section 3 residents in accordance with Sec.  
576.405(c).
    (b) Affirmative outreach. The recipient or subrecipient must make 
known that use of the facilities, assistance, and services are 
available to all on a nondiscriminatory basis. If it is unlikely that 
the procedures that the recipient or subrecipient intends to use to 
make known the availability of the facilities, assistance, and services 
will to reach persons of any particular race, color, religion, sex, 
age, national origin, familial status, or disability who may qualify 
for those facilities and services, the recipient or subrecipient must 
establish additional procedures that ensure that those persons are made 
aware of the facilities, assistance, and services. The recipient and 
its subrecipients must take appropriate steps to ensure effective 
communication with persons with disabilities including, but not limited 
to, adopting procedures

[[Page 75989]]

that will make available to interested persons information concerning 
the location of assistance, services, and facilities that are 
accessible to persons with disabilities. Consistent with Title VI and 
Executive Order 13166, recipients and subrecipients are also required 
to take reasonable steps to ensure meaningful access to programs and 
activities for limited English proficiency (LEP) persons.
    (c) Uniform Administrative Requirements. The requirements of 24 CFR 
part 85 apply to the recipient and subrecipients that are units of 
general purpose local government, except that 24 CFR 85.24 and 85.42 do 
not apply, and program income is to be used as match under 24 CFR 
85.25(g). The requirements of 24 CFR part 84 apply to subrecipients 
that are private nonprofit organizations, except that 24 CFR 84.23 and 
84.53 do not apply, and program income is to be used as the nonfederal 
share under 24 CFR 84.24(b). These regulations include allowable costs 
and non-Federal audit requirements.
    (d) Environmental review responsibilities. (1) Activities under 
this part are subject to environmental review by HUD under 24 CFR part 
50. The recipient shall supply all available, relevant information 
necessary for HUD to perform for each property any environmental review 
required by 24 CFR part 50. The recipient also shall carry out 
mitigating measures required by HUD or select alternate eligible 
property. HUD may eliminate from consideration any application that 
would require an Environmental Impact Statement (EIS).
    (2) The recipient or subrecipient, or any contractor of the 
recipient or subrecipient, may not acquire, rehabilitate, convert, 
lease, repair, dispose of, demolish, or construct property for a 
project under this part, or commit or expend HUD or local funds for 
eligible activities under this part, until HUD has performed an 
environmental review under 24 CFR part 50 and the recipient has 
received HUD approval of the property.
    (e) Davis-Bacon Act. The provisions of the Davis-Bacon Act (40 
U.S.C. 276a to 276a-5) do not apply to the ESG program.
    (f) Procurement of Recovered Materials. The recipient and its 
contractors must comply with Section 6002 of the Solid Waste Disposal 
Act, as amended by the Resource Conservation and Recovery Act. The 
requirements of Section 6002 include procuring only items designated in 
guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 
247 that contain the highest percentage of recovered materials 
practicable, consistent with maintaining a satisfactory level of 
competition, where the purchase price of the item exceeds $10,000 or 
the value of the quantity acquired by the preceding fiscal year 
exceeded $10,000; procuring solid waste management services in a manner 
that maximizes energy and resource recovery; and establishing an 
affirmative procurement program for procurement of recovered materials 
identified in the EPA guidelines.


Sec.  576.408  Displacement, relocation, and acquisition.

    (a) Minimizing displacement. Consistent with the other goals and 
objectives of Emergency Solutions Grant (ESG), the recipient and its 
subrecipients must assure that they have taken all reasonable steps to 
minimize the displacement of persons (families, individuals, 
businesses, nonprofit organizations, and farms) as a result of a 
project assisted under Emergency Solutions Grant (ESG).
    (b) Temporary relocation not permitted. No tenant-occupant of 
housing (a dwelling unit) that is converted into an emergency shelter 
may be required to relocate temporarily for a project assisted with ESG 
funds, or be required to move to another unit in the same building/
complex. When a tenant moves for a project assisted with ESG funds 
under conditions that trigger the Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970 (URA), 42 U.S.C. 4601-
4655, as described in paragraph (c) of this section, the tenant should 
be treated as permanently displaced and offered relocation assistance 
and payments consistent with that paragraph.
    (c) Relocation assistance for displaced persons. (1) In general. A 
displaced person (defined in paragraph (c)(2) of this section) must be 
provided relocation assistance at the levels described in, and in 
accordance with, the URA and 49 CFR part 24. A displaced person must be 
advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601 
et seq.). Whenever possible, minority persons shall be given reasonable 
opportunities to relocate to comparable and suitable decent, safe, and 
sanitary replacement dwellings, not located in an area of minority 
concentration, that are within their financial means. This policy, 
however, does not require providing a person a larger payment than is 
necessary to enable a person to relocate to a comparable replacement 
dwelling. (See 49 CFR 24.205(c)(2)(ii)(D).) As required by Section 504 
of the Rehabilitation Act (29 U.S.C. 794) and 49 CFR part 24, 
replacement dwellings must also contain the accessibility features 
needed by displaced persons with disabilities.
    (2) Displaced Person. (i) For purposes of paragraph (c) of this 
section, the term ``displaced person'' means any person (family, 
individual, business, nonprofit organization, or farm, including any 
corporation, partnership, or association) that moves from real 
property, or moves personal property from real property, permanently, 
as a direct result of acquisition, rehabilitation, or demolition for a 
project assisted under the ESG program. This includes any permanent, 
involuntary move for an assisted project, including any permanent move 
from the real property that is made:
    (A) After the owner (or person in control of the site) issues a 
notice to move permanently from the property or refuses to renew an 
expiring lease, if the move occurs on or after:
    (I) The date of the submission by the recipient (or subrecipient, 
as applicable) of an application for assistance to HUD (or the 
recipient, as applicable) that is later approved and funded if the 
recipient (or subrecipient, as applicable) has site control as 
evidenced by a deed, sales contract, or option contract to acquire the 
property; or
    (II) The date on which the recipient (or subrecipient, as 
applicable) selects the applicable site, if the recipient (or 
subrecipient, as applicable) does not have site control at the time of 
the application, provided that the recipient (or subrecipient, as 
applicable) eventually obtains control over the site;
    (B) Before the date described in paragraph (c)(2)(i)(A) of this 
section, if the recipient or HUD determines that the displacement 
resulted directly from acquisition, rehabilitation, or demolition for 
the project; or
    (C) By a tenant-occupant of a dwelling unit and the tenant moves 
after execution of the agreement covering the acquisition, 
rehabilitation, or demolition of the property for the project.
    (ii) Notwithstanding paragraph (c)(2)(i) of this section, a person 
does not qualify as a displaced person if:
    (A) The person has been evicted for cause based upon a serious or 
repeated violation of the terms and conditions of the lease or 
occupancy agreement; violation of applicable Federal, State or local 
law, or other good cause; and the recipient determines that the 
eviction was not undertaken for the purpose of evading the obligation 
to provide relocation assistance.
    (B) The person moved into the property after the submission of the

[[Page 75990]]

application but, before signing a lease and commencing occupancy, was 
provided written notice of the project, its possible impact on the 
person (e.g., the person may be displaced), and the fact that the 
person would not qualify as a ``displaced person'' (or for any 
assistance under this section) as a result of the project;
    (C) The person is ineligible under 49 CFR 24.2(a)(9)(ii); or
    (D) HUD determines that the person was not displaced as a direct 
result of acquisition, rehabilitation, or demolition for the project.
    (iii) The recipient or subrecipient may, at any time, request that 
HUD to determine whether a displacement is or would be covered by this 
rule.
    (3) Initiation of negotiations. For purposes of determining the 
type of replacement housing payment assistance to be provided to a 
displaced person pursuant to this section:
    (i) If the displacement is the direct result of privately 
undertaken rehabilitation, demolition, or acquisition of the real 
property, ``initiation of negotiations'' means the execution of the 
agreement between the recipient and the subrecipient or the agreement 
between the recipient (or subrecipient, as applicable) and the person 
owning or controlling the property;
    (ii) If site control is only evidenced by an option contract to 
acquire the property, the ``initiation of negotiations'' does not 
become effective until the execution of a written agreement that 
creates a legally enforceable commitment to proceed with the purchase, 
such as a sales contract.
    (d) Real property acquisition requirements. The acquisition of real 
property, whether funded privately or publicly, for a project assisted 
with Emergency Solutions Grant (ESG) funds is subject to the URA and 
Federal governmentwide regulations at 49 CFR part 24, subpart B.
    (e) Appeals. A person who disagrees with the recipient's (or 
subrecipient's, if applicable) determination concerning whether the 
person qualifies as a displaced person, or the amount of relocation 
assistance for which the person may be eligible, may file a written 
appeal of that determination with the recipient under 49 CFR 24.10. A 
low-income person who disagrees with the recipient's determination may 
submit a written request for review of that determination by the 
appropriate HUD field office.

Subpart F--Grant Administration


Sec.  576.500  Recordkeeping and reporting requirements.

    (a) In general. The recipient must have policies and procedures to 
ensure the requirements of this part are met. The policies and 
procedures must be established in writing and implemented by the 
recipient and its subrecipients to ensure that ESG funds are used in 
accordance with the requirements. In addition, sufficient records must 
be established and maintained to enable the recipient and HUD to 
determine whether ESG requirements are being met.
    (b) Homeless status. The recipient must maintain and follow written 
intake procedures to ensure compliance with the homeless definition in 
Sec.  576.2. The procedures must require documentation at intake of the 
evidence relied upon to establish and verify homeless status. The 
procedures must establish the order of priority for obtaining evidence 
as third-party documentation first, intake worker observations second, 
and certification from the person seeking assistance third. However, 
lack of third-party documentation must not prevent an individual or 
family from being immediately admitted to emergency shelter, receiving 
street outreach services, or being immediately admitted to shelter or 
receiving services provided by a victim service provider. Records 
contained in an HMIS or comparable database used by victim service or 
legal service providers are acceptable evidence of third-party 
documentation and intake worker observations if the HMIS retains an 
auditable history of all entries, including the person who entered the 
data, the date of entry, and the change made; and if the HMIS prevents 
overrides or changes of the dates on which entries are made.
    (1) If the individual or family qualifies as homeless under 
paragraph (1)(i) or (ii) of the homeless definition in Sec.  576.2, 
acceptable evidence includes a written observation by an outreach 
worker of the conditions where the individual or family was living, a 
written referral by another housing or service provider, or a 
certification by the individual or head of household seeking 
assistance.
    (2) If the individual qualifies as homeless under paragraph 
(1)(iii) of the homeless definition in Sec.  576.2, because he or she 
resided in an emergency shelter or place not meant for human habitation 
and is exiting an institution where he or she resided for 90 days or 
less, acceptable evidence includes the evidence described in paragraph 
(b)(1) of this section and one of the following:
    (i) Discharge paperwork or a written or oral referral from a social 
worker, case manager, or other appropriate official of the institution, 
stating the beginning and end dates of the time residing in the 
institution. All oral statements must be recorded by the intake worker; 
or
    (ii) Where the evidence in paragraph (b)(2)(i) of this section is 
not obtainable, a written record of the intake worker's due diligence 
in attempting to obtain the evidence described in paragraph (b)(2)(i) 
and a certification by the individual seeking assistance that states he 
or she is exiting or has just exited an institution where he or she 
resided for 90 days or less.
    (3) If the individual or family qualifies as homeless under 
paragraph (2) of the homeless definition in Sec.  576.2, because the 
individual or family will imminently lose their housing, the evidence 
must include:
    (i)(A) A court order resulting from an eviction action that 
requires the individual or family to leave their residence within 14 
days after the date of their application for homeless assistance; or 
the equivalent notice under applicable state law, a Notice to Quit, or 
a Notice to Terminate issued under state law;
    (B) For individuals and families whose primary nighttime residence 
is a hotel or motel room not paid for by charitable organizations or 
federal, state, or local government programs for low-income 
individuals, evidence that the individual or family lacks the resources 
necessary to reside there for more than 14 days after the date of 
application for homeless assistance; or
    (C) An oral statement by the individual or head of household that 
the owner or renter of the housing in which they currently reside will 
not allow them to stay for more than 14 days after the date of 
application for homeless assistance. The intake worker must record the 
statement and certify that it was found credible. To be found credible, 
the oral statement must either: (I) be verified by the owner or renter 
of the housing in which the individual or family resides at the time of 
application for homeless assistance and documented by a written 
certification by the owner or renter or by the intake worker's 
recording of the owner or renter's oral statement; or (II) if the 
intake worker is unable to contact the owner or renter, be documented 
by a written certification by the intake worker of his or her due 
diligence in attempting to obtain the owner or renter's verification 
and the written certification by the individual or head of

[[Page 75991]]

household seeking assistance that his or her statement was true and 
complete;
    (ii) Certification by the individual or head of household that no 
subsequent residence has been identified; and
    (iii) Certification or other written documentation that the 
individual or family lacks the resources and support networks needed to 
obtain other permanent housing.
    (4) If the individual or family qualifies as homeless under 
paragraph (3) of the homeless definition in Sec.  576.2, because the 
individual or family does not otherwise qualify as homeless under the 
homeless definition but is an unaccompanied youth under 25 years of 
age, or homeless family with one or more children or youth, and is 
defined as homeless under another Federal statute or section 725(2) of 
the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), the 
evidence must include:
    (i) For paragraph (3)(i) of the homeless definition in Sec.  576.2, 
certification of homeless status by the local private nonprofit 
organization or state or local governmental entity responsible for 
administering assistance under the Runaway and Homeless Youth Act (42 
U.S.C. 5701 et seq.), the Head Start Act (42 U.S.C. 9831 et seq.), 
subtitle N of the Violence Against Women Act of 1994 (42 U.S.C. 14043e 
et seq.), section 330 of the Public Health Service Act (42 U.S.C. 
254b), the Food and Nutrition Act of 2008 (7 U.S.C. 2011 et seq.), 
section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786), or 
subtitle B of title VII of the McKinney-Vento Homeless Assistance Act 
(42 U.S.C. 11431 et seq.), as applicable;
    (ii) For paragraph (3)(ii) of the homeless definition in Sec.  
576.2, referral by a housing or service provider, written observation 
by an outreach worker, or certification by the homeless individual or 
head of household seeking assistance;
    (iii) For paragraph (3)(iii) of the homeless definition in Sec.  
576.2, certification by the individual or head of household and any 
available supporting documentation that the individual or family moved 
two or more times during the 60-day period immediately preceding the 
date of application for homeless assistance, including: recorded 
statements or records obtained from each owner or renter of housing, 
provider of shelter or housing, or social worker, case worker, or other 
appropriate official of a hospital or institution in which the 
individual or family resided; or, where these statements or records are 
unobtainable, a written record of the intake worker's due diligence in 
attempting to obtain these statements or records. Where a move was due 
to the individual or family fleeing domestic violence, dating violence, 
sexual assault, or stalking, then the intake worker may alternatively 
obtain a written certification from the individual or head of household 
seeking assistance that they were fleeing that situation and that they 
resided at that address; and
    (iv) For paragraph (3)(iv) of the homeless definition in Sec.  
576.2, written diagnosis from a professional who is licensed by the 
state to diagnose and treat that condition (or intake staff-recorded 
observation of disability that within 45 days of date of the 
application for assistance is confirmed by a professional who is 
licensed by the state to diagnose and treat that condition); employment 
records; department of corrections records; literacy, English 
proficiency tests; or other reasonable documentation of the conditions 
required under paragraph (3)(iv) of the homeless definition.
    (5) If the individual or family qualifies under paragraph (4) of 
the homeless definition in Sec.  576.2, because the individual or 
family is fleeing domestic violence, dating violence, sexual assault, 
stalking, or other dangerous or life-threatening conditions related to 
violence, then acceptable evidence includes an oral statement by the 
individual or head of household seeking assistance that they are 
fleeing that situation, that no subsequent residence has been 
identified and that they lack the resources or support networks, e.g., 
family, friends, faith-based or other social networks, needed to obtain 
other housing. If the individual or family is receiving shelter or 
services provided by a victim service provider, the oral statement must 
be documented by either a certification by the individual or head of 
household; or a certification by the intake worker. Otherwise, the oral 
statement that the individual or head of household seeking assistance 
has not identified a subsequent residence and lacks the resources or 
support networks, e.g., family, friends, faith-based or other social 
networks, needed to obtain housing must be documented by a 
certification by the individual or head of household that the oral 
statement is true and complete, and, where the safety of the individual 
or family would not be jeopardized, the domestic violence, dating 
violence, sexual assault, stalking, or other dangerous or life-
threatening condition must be verified by a written observation by the 
intake worker or a written referral by a housing or service provider, 
social worker, legal assistance provider, health-care provider, law 
enforcement agency, legal assistance provider, pastoral counselor, or 
any other organization from whom the individual or head of household 
has sought assistance for domestic violence, dating violence, sexual 
assault, or stalking. The written referral or observation need only 
include the minimum amount of information necessary to document that 
the individual or family is fleeing, or attempting to flee domestic 
violence, dating violence, sexual assault, and stalking.
    (c) At risk of homelessness status. For each individual or family 
who receives Emergency Solutions Grant (ESG) homelessness prevention 
assistance, the records must include the evidence relied upon to 
establish and verify the individual or family's ``at risk of 
homelessness'' status. This evidence must include an intake and 
certification form that meets HUD specifications and is completed by 
the recipient or subrecipient. The evidence must also include:
    (1) If the program participant meets the criteria under paragraph 
(1) of the ``at risk of homelessness'' definition in Sec.  576.2:
    (i) The documentation specified under this section for determining 
annual income;
    (ii) The program participant's certification on a form specified by 
HUD that the program participant has insufficient financial resources 
and support networks; e.g., family, friends, faith-based or other 
social networks, immediately available to attain housing stability and 
meets one or more of the conditions under paragraph (1)(iii) of the 
definition of ``at risk of homelessness'' in Sec.  576.2;
    (iii) The most reliable evidence available to show that the program 
participant does not have sufficient resources or support networks; 
e.g., family, friends, faith-based or other social networks, 
immediately available to prevent them from moving to an emergency 
shelter or another place described in paragraph (1) of the ``homeless'' 
definition. Acceptable evidence includes:
    (A) Source documents (e.g., notice of termination from employment, 
unemployment compensation statement, bank statement, health-care bill 
showing arrears, utility bill showing arrears);
    (B) To the extent that source documents are unobtainable, a written 
statement by the relevant third party (e.g., former employer, public 
administrator, relative) or the written certification by the 
recipient's or subrecipient's intake staff of the oral verification by 
the relevant third party that the applicant meets one or both of

[[Page 75992]]

the criteria under paragraph (1)(ii) of the definition of ``at risk of 
homelessness'' in Sec.  576.2; or
    (C) To the extent that source documents and third-party 
verification are unobtainable, a written statement by the recipient's 
or subrecipient's intake staff describing the efforts taken to obtain 
the required evidence; and
    (iv) The most reliable evidence available to show that the program 
participant meets one or more of the conditions under paragraph 
(1)(iii) of the definition of ``at risk of homelessness'' in Sec.  
576.2. Acceptable evidence includes:
    (A) Source documents that evidence one or more of the conditions 
under paragraph (1)(iii) of the definition (e.g., eviction notice, 
notice of termination from employment, bank statement);
    (B) To the extent that source documents are unobtainable, a written 
statement by the relevant third party (e.g., former employer, owner, 
primary leaseholder, public administrator, hotel or motel manager) or 
the written certification by the recipient's or subrecipient's intake 
staff of the oral verification by the relevant third party that the 
applicant meets one or more of the criteria under paragraph (1)(iii) of 
the definition of ``at risk of homelessness''; or
    (C) To the extent that source documents and third-party 
verification are unobtainable, a written statement by the recipient's 
or subrecipient's intake staff that the staff person has visited the 
applicant's residence and determined that the applicant meets one or 
more of the criteria under paragraph (1)(iii) of the definition or, if 
a visit is not practicable or relevant to the determination, a written 
statement by the recipient's or subrecipient's intake staff describing 
the efforts taken to obtain the required evidence; or
    (2) If the program participant meets the criteria under paragraph 
(2) or (3) of the ``at risk of homelessness'' definition in Sec.  
576.2, certification of the child or youth's homeless status by the 
agency or organization responsible for administering assistance under 
the Runaway and Homeless Youth Act (42 U.S.C. 5701 et seq.), the Head 
Start Act (42 U.S.C. 9831 et seq.), subtitle N of the Violence Against 
Women Act of 1994 (42 U.S.C. 14043e et seq.), section 330 of the Public 
Health Service Act (42 U.S.C. 254b), the Food and Nutrition Act of 2008 
(7 U.S.C. 2011 et seq.), section 17 of the Child Nutrition Act of 1966 
(42 U.S.C. 1786) or subtitle B of title VII of the McKinney-Vento 
Homeless Assistance Act (42 U.S.C. 11431 et seq.), as applicable.
    (d) Determinations of ineligibility. For each individual and family 
determined ineligible to receive Emergency Solutions Grant (ESG) 
assistance, the record must include documentation of the reason for 
that determination.
    (e) Annual income. For each program participant who receives 
homelessness prevention assistance, or who receives rapid re-housing 
assistance longer than one year, the following documentation of annual 
income must be maintained:
    (1) Income evaluation form containing the minimum requirements 
specified by HUD and completed by the recipient or subrecipient; and
    (2) Source documents for the assets held by the program participant 
and income received over the most recent period for which 
representative data is available before the date of the evaluation 
(e.g., wage statement, unemployment compensation statement, public 
benefits statement, bank statement);
    (3) To the extent that source documents are unobtainable, a written 
statement by the relevant third party (e.g., employer, government 
benefits administrator) or the written certification by the recipient's 
or subrecipient's intake staff of the oral verification by the relevant 
third party of the income the program participant received over the 
most recent period for which representative data is available; or
    (4) To the extent that source documents and third party 
verification are unobtainable, the written certification by the program 
participant of the amount of income the program participant received 
for the most recent period representative of the income that the 
program participant is reasonably expected to receive over the 3-month 
period following the evaluation.
    (f) Program participant records. In addition to evidence of 
homeless status or ``at risk of homelessness'' status, as applicable, 
records must be kept for each program participant that document:
    (1) The services and assistance provided to that program 
participant, including, as applicable, the security deposit, rental 
assistance, and utility payments made on behalf of the program 
participant;
    (2) Compliance with the applicable requirements for providing 
services and assistance to that program participant under the program 
components and eligible activities provisions at Sec.  576.101 through 
Sec.  576.106, the provision on determining eligibility and amount and 
type of assistance at Sec.  576.401(a) and (b), and the provision on 
using appropriate assistance and services at Sec.  576.401(d) and (e); 
and
    (3) Where applicable, compliance with the termination of assistance 
requirement in Sec.  576.402.
    (g) Centralized or coordinated assessment systems and procedures. 
The recipient and its subrecipients must keep documentation evidencing 
the use of, and written intake procedures for, the centralized or 
coordinated assessment system(s) developed by the Continuum of Care(s) 
in accordance with the requirements established by HUD.
    (h) Rental assistance agreements and payments. The records must 
include copies of all leases and rental assistance agreements for the 
provision of rental assistance, documentation of payments made to 
owners for the provision of rental assistance, and supporting 
documentation for these payments, including dates of occupancy by 
program participants.
    (i) Utility allowance. The records must document the monthly 
allowance for utilities (excluding telephone) used to determine 
compliance with the rent restriction.
    (j) Shelter and housing standards. The records must include 
documentation of compliance with the shelter and housing standards in 
Sec.  576.403, including inspection reports.
    (k) Emergency shelter facilities. The recipient must keep records 
of the emergency shelters assisted under the ESG program, including the 
amount and type of assistance provided to each emergency shelter. As 
applicable, the recipient's records must also include documentation of 
the value of the building before the rehabilitation of an existing 
emergency shelter or after the conversion of a building into an 
emergency shelter and copies of the recorded deed or use restrictions.
    (l) Services and assistance provided. The recipient must keep 
records of the types of essential services, rental assistance, and 
housing stabilization and relocation services provided under the 
recipient's program and the amounts spent on these services and 
assistance. The recipient and its subrecipients that are units of 
general purpose local government must keep records to demonstrate 
compliance with the maintenance of effort requirement, including 
records of the unit of the general purpose local government's annual 
budgets and sources of funding for street outreach and emergency 
shelter services.
    (m) Coordination with Continuum(s) of Care and other programs. The 
recipient and its subrecipients must document their compliance with the

[[Page 75993]]

requirements of Sec.  576.400 for consulting with the Continuum(s) of 
Care and coordinating and integrating ESG assistance with programs 
targeted toward homeless people and mainstream service and assistance 
programs.
    (n) HMIS. The recipient must keep records of the participation in 
HMIS or a comparable database by all projects of the recipient and its 
subrecipients.
    (o) Matching. The recipient must keep records of the source and use 
of contributions made to satisfy the matching requirement in Sec.  
576.201. The records must indicate the particular fiscal year grant for 
which each matching contribution is counted. The records must show how 
the value placed on third-party, noncash contributions was derived. To 
the extent feasible, volunteer services must be supported by the same 
methods that the organization uses to support the allocation of regular 
personnel costs.
    (p) Conflicts of interest. The recipient and its subrecipients must 
keep records to show compliance with the organizational conflicts-of-
interest requirements in Sec.  576.404(a), a copy of the personal 
conflicts of interest policy or codes of conduct developed and 
implemented to comply with the requirements in Sec.  576.404(b), and 
records supporting exceptions to the personal conflicts of interest 
prohibitions.
    (q) Homeless participation. The recipient must document its 
compliance with the homeless participation requirements under Sec.  
576.405.
    (r) Faith-based activities. The recipient and its subrecipients 
must document their compliance with the faith-based activities 
requirements under Sec.  576.406.
    (s) Other Federal requirements. The recipient and its subrecipients 
must document their compliance with the Federal requirements in Sec.  
576.407, as applicable, including:
    (1) Records demonstrating compliance with the nondiscrimination and 
equal opportunity requirements under Sec.  576.407(a), including data 
concerning race, ethnicity, disability status, sex, and family 
characteristics of persons and households who are applicants for, or 
program participants in, any program or activity funded in whole or in 
part with ESG funds and the affirmative outreach requirements in Sec.  
576.407(b).
    (2) Records demonstrating compliance with the uniform 
administrative requirements in 24 CFR part 85 (for governments) and 24 
CFR part 84 (for nonprofit organizations).
    (3) Records demonstrating compliance with the environmental review 
requirements, including flood insurance requirements.
    (4) Certifications and disclosure forms required under the lobbying 
and disclosure requirements in 24 CFR part 87.
    (t) Relocation. The records must include documentation of 
compliance with the displacement, relocation, and acquisition 
requirements in Sec.  576.408.
    (u) Financial records. (1) The recipient must retain supporting 
documentation for all costs charged to the ESG grant.
    (2) The recipient and its subrecipients must keep documentation 
showing that ESG grant funds were spent on allowable costs in 
accordance with the requirements for eligible activities under Sec.  
576.101-Sec.  576.109 and the cost principles in OMB Circulars A-87 (2 
CFR part 225) and A-122 (2 CFR part 230).
    (3) The recipient and its subrecipients must retain records of the 
receipt and use of program income.
    (4) The recipient must keep documentation of compliance with the 
expenditure limits in Sec.  576.100 and the expenditure deadline in 
Sec.  576.203.
    (v) Subrecipients and contractors. (1) The recipient must retain 
copies of all solicitations of and agreements with subrecipients, 
records of all payment requests by and dates of payments made to 
subrecipients, and documentation of all monitoring and sanctions of 
subrecipients, as applicable. If the recipient is a State, the 
recipient must keep records of each recapture and distribution of 
recaptured funds under Sec.  576.501.
    (2) The recipient and its subrecipients must retain copies of all 
procurement contracts and documentation of compliance with the 
procurement requirements in 24 CFR 85.36 and 24 CFR 84.40-84.48.
    (3) The recipient must ensure that its subrecipients comply with 
the recordkeeping requirements specified by the recipient and HUD 
notice or regulations.
    (w) Other records specified by HUD. The recipient must keep other 
records specified by HUD.
    (x) Confidentiality. (1) The recipient and its subrecipients must 
develop and implement written procedures to ensure:
    (i) All records containing personally identifying information (as 
defined in HUD's standards for participation, data collection, and 
reporting in a local HMIS) of any individual or family who applies for 
and/or receives ESG assistance will be kept secure and confidential;
    (ii) The address or location of any domestic violence, dating 
violence, sexual assault, or stalking shelter project assisted under 
the ESG will not be made public, except with written authorization of 
the person responsible for the operation of the shelter; and
    (iii) The address or location of any housing of a program 
participant will not be made public, except as provided under a 
preexisting privacy policy of the recipient or subrecipient and 
consistent with state and local laws regarding privacy and obligations 
of confidentiality.
    (2) The confidentiality procedures of the recipient and its 
subrecipients must be in writing and must be maintained in accordance 
with this section.
    (y) Period of record retention. All records pertaining to each 
fiscal year of ESG funds must be retained for the greater of 5 years or 
the period specified below. Copies made by microfilming, photocopying, 
or similar methods may be substituted for the original records.
    (1) Documentation of each program participant's qualification as a 
family or individual at risk of homelessness or as a homeless family or 
individual and other program participant records must be retained for 5 
years after the expenditure of all funds from the grant under which the 
program participant was served;
    (2) Where ESG funds are used for the renovation of an emergency 
shelter involves costs charged to the ESG grant that exceed 75 percent 
of the value of the building before renovation, records must be 
retained until 10 years after the date that ESG funds are first 
obligated for the renovation; and
    (3) Where ESG funds are used to convert a building into an 
emergency shelter and the costs charged to the ESG grant for the 
conversion exceed 75 percent of the value of the building after 
conversion, records must be retained until 10 years after the date that 
ESG funds are first obligated for the conversion.
    (z) Access to records. (1) Federal government rights. 
Notwithstanding the confidentiality procedures established under 
paragraph (w) of this section, HUD, the HUD Office of the Inspector 
General, and the Comptroller General of the United States, or any of 
their authorized representatives, must have the right of access to all 
books, documents, papers, or other records of the recipient and its 
subrecipients that are pertinent to the ESG grant, in order to make 
audits, examinations, excerpts, and transcripts. These rights of access 
are not limited to the required retention period but last as long as 
the records are retained.

[[Page 75994]]

    (2) Public rights. The recipient must provide citizens, public 
agencies, and other interested parties with reasonable access 
(consistent with state and local laws regarding privacy and obligations 
of confidentiality and the confidentiality requirements in this part) 
to records regarding any uses of ESG funds the recipient received 
during the preceding 5 years.
    (aa) Reports. The recipient must collect and report data on its use 
of ESG funds in the Integrated Disbursement and Information System 
(IDIS) and other reporting systems, as specified by HUD. The recipient 
must also comply with the reporting requirements in 24 CFR parts 85 and 
91 and the reporting requirements under the Federal Funding 
Accountability and Transparency Act of 2006, (31 U.S.C. 6101 note), 
which are set forth in Appendix A to 2 CFR part 170.


Sec.  576.501  Enforcement.

    (a) Performance reviews.
    (1) HUD will review the performance of each recipient in carrying 
out its responsibilities under this part whenever determined necessary 
by HUD, but at least annually. In conducting performance reviews, HUD 
will rely primarily on information obtained from the records and 
reports from the recipient and, when appropriate, its subrecipients, as 
well as information from onsite monitoring, audit reports, and 
information from IDIS and HMIS. Where applicable, HUD may also consider 
relevant information pertaining to the recipient's performance gained 
from other sources, including citizen comments, complaint 
determinations, and litigation. Reviews to determine compliance with 
specific requirements of this part will be conducted as necessary, with 
or without prior notice to the recipient.
    (2) If HUD determines preliminarily that the recipient or one of 
its subrecipients has not complied with an ESG program requirement, HUD 
will give the recipient notice of this determination and an opportunity 
to demonstrate, within the time prescribed by HUD and on the basis of 
substantial facts and data, that the recipient has complied with 
Emergency Solutions Grant (ESG) requirements. HUD may change the method 
of payment to require the recipient to obtain HUD's prior approval each 
time the recipient draws down Emergency Solutions Grant (ESG) funds. To 
obtain prior approval, the recipient may be required to manually submit 
its payment requests and supporting documentation to HUD in order to 
show that the funds to be drawn down will be expended on eligible 
activities in accordance with all ESG program requirements.
    (3) If the recipient fails to demonstrate to HUD's satisfaction 
that the activities were carried out in compliance with ESG program 
requirements, HUD will take one or more of the remedial actions or 
sanctions specified in paragraph (b) of this section.
    (b) Remedial actions and sanctions. Remedial actions and sanctions 
for a failure to meet an ESG program requirement will be designed to 
prevent a continuation of the deficiency; mitigate, to the extent 
possible, its adverse effects or consequences; and prevent its 
recurrence.
    (1) HUD may instruct the recipient to submit and comply with 
proposals for action to correct, mitigate, and prevent noncompliance 
with ESG requirements, including:
    (i) Preparing and following a schedule of actions for carrying out 
activities affected by the noncompliance, including schedules, 
timetables, and milestones necessary to implement the affected 
activities;
    (ii) Establishing and following a management plan that assigns 
responsibilities for carrying out the remedial actions;
    (iii) Canceling or revising activities likely to be affected by the 
noncompliance, before expending ESG funds for the activities;
    (iv) Reprogramming ESG funds that have not yet been expended from 
affected activities to other eligible activities;
    (v) Suspending disbursement of ESG funds for some or all 
activities;
    (vi) Reducing or terminating the remaining grant of a subrecipient 
and reallocating those funds to other subrecipients; and
    (vii) Making matching contributions before or as draws are made 
from the recipient's ESG grant.
    (2) HUD may change the method of payment to a reimbursement basis.
    (3) HUD may suspend payments to the extent HUD deems it necessary 
to preclude the further expenditure of funds for affected activities.
    (4) HUD may remove the recipient from participation in 
reallocations of funds under subpart D of this part.
    (5) HUD may deny matching credit for all or part of the cost of the 
affected activities and require the recipient to make further matching 
contributions to make up for the contribution determined to be 
ineligible.
    (6) HUD may require the recipient to reimburse its line of credit 
in an amount equal to the funds used for the affected activities.
    (7) HUD may reduce or terminate the remaining grant of a recipient 
and reallocate those funds to other recipients in accordance with 
subpart D of this part.
    (8) HUD may condition a future grant.
    (9) HUD may take other remedies that are legally available.
    (c) Recipient sanctions. If the recipient determines that a 
subrecipient is not complying with an ESG program requirement or its 
subgrant agreement, the recipient must take appropriate actions, as 
prescribed for HUD in paragraphs (a) and (b) of this section. If the 
recipient is a State and funds become available as a result of an 
action under this section, the recipient must reallocate those funds to 
other subrecipients as soon as practicable. If the recipient is a unit 
of general purpose local government of territory, it must either 
reallocate those funds to other subrecipients or reprogram the funds 
for other activities to be carried out by the recipient as soon as 
practicable. The recipient must amend its Consolidated Plan in 
accordance with its citizenship participation plan if funds become 
available and are reallocated or reprogrammed under this section. The 
reallocated or reprogrammed funds must be used by the expenditure 
deadline in Sec.  576.203.

    Dated: November 9, 2011.
Mercedes M[aacute]rquez,
Assistant Secretary for Community Planning and Development.
[FR Doc. 2011-30938 Filed 12-2-11; 8:45 am]
BILLING CODE 4210-67-P