[Federal Register Volume 77, Number 41 (Thursday, March 1, 2012)]
[Proposed Rules]
[Pages 12698-12719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4878]



[[Page 12697]]

Vol. 77

Thursday,

No. 41

March 1, 2012

Part IV





Department of Veterans Affairs





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38 CFR Part 61





VA Homeless Providers Grant and Per Diem Program; Proposed Rule

  Federal Register / Vol. 77 , No. 41 / Thursday, March 1, 2012 / 
Proposed Rules  

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 61

RIN 2900-AN81


VA Homeless Providers Grant and Per Diem Program

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: We propose to revise and reorganize regulations which contain 
the Department of Veterans Affairs' (VA) Homeless Providers Grant and 
Per Diem Program. This rulemaking would update our current regulations, 
implement and authorize new VA policies, and generally improve the 
clarity of part 61.

DATES: Comments must be received by VA on or before April 30, 2012.

ADDRESSES: Written comments may be submitted through 
www.Regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (02REG), Department of Veterans Affairs, 810 Vermont Avenue 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
(This is not a toll free number). Comments should indicate that they 
are submitted in response to ``RIN 2900-AN81 VA Homeless Providers 
Grant and Per Diem Program.'' Copies of comments received will be 
available for public inspection in the Office of Regulation Policy and 
Management, Room 1063B, between the hours of 8 a.m. and 4:30 p.m., 
Monday through Friday (except holidays). Please call (202) 461-4902 for 
an appointment. (This is not a toll free number). In addition, during 
the comment period, comments may be viewed online through the Federal 
Docket Management System (FDMS) at www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Guy Liedke, VA Homeless Providers 
Grant and Per Diem Program Office, Veterans Health Administration, 
Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 
20420, (877) 332-0334. (This is a toll-free number).

SUPPLEMENTARY INFORMATION: Pursuant to 38 U.S.C. 501, 2001, 2011, 2012, 
2061, and 2064, the VA Homeless Providers Grant and Per Diem Program, 
provides capital grants and per diem to public or nonprofit private 
entities who assist homeless veterans by helping to ensure the 
availability of supportive housing and service centers to furnish 
outreach, rehabilitative services, vocational counseling and training, 
and supportive housing. The regulations governing this program are 
located at part 61 of title 38, CFR. We are proposing to rewrite those 
regulations to establish certain new policies and procedures related to 
the administration of this program. In addition, technical and 
clarifying changes are proposed. We discuss the significant and 
substantive changes below in a section-by-section analysis. Changes 
that are not described below were made for technical reasons or to 
improve readability and are not intended to be substantive.
    We propose to revise the statutory authority for part 61 to include 
38 U.S.C. 2001, because that authority establishes that the purpose of 
chapter 20 of title 38, U.S.C., ``is to provide for the special needs 
of homeless veterans.'' We propose to eliminate the reference to 38 
U.S.C. ``7721 note'' because section 7721 was repealed in 2006. See 
Public Law 109-233, title IV, Sec.  402(c) (June 15, 2006).
    We also propose to remove current Sec.  61.20 because the authority 
to award these grants has expired. Public Law 107-95 established 38 
U.S.C. 2012(c)(3) to provide grants to renovate facilities that already 
received a capital grant under Sec.  3 of the Homeless Veterans 
Comprehensive Service Programs Act of 1992 (Pub. L. 102-590; 38 U.S.C. 
7221 note). Such grants were solely for renovations to comply with the 
Life Safety Code of the National Fire Protection Association. This 
authority has expired.

Section 61.0 Purpose

    We propose to make some non-substantive changes to current Sec.  
61.0.

Section 61.1 Definitions

    We are adding or modifying several definitions in order to provide 
conformity and clarity in their use within part 61, and are removing 
others that are no longer relevant to the reorganized and clarified 
part 61. New definitions and significant changes are addressed below.
    We would move the definition of ``capital lease'' to Sec.  61.4, 
and make the substantive changes to that definition as discussed later 
in this document.
    We would add a definition of ``default'' defined as ``a 
determination by VA that an awardee has materially failed to comply 
with the terms and conditions of an award.'' This is a program-specific 
definition that is consistent with the common definition of the term 
``default'' as it relates to contractual compliance.
    We would revise the definition of ``homeless'' to be consistent 
with 38 U.S.C. 2002(1), which defines a ``homeless veteran'' as ``a 
veteran who is homeless (as that term is defined in section 103(a) of 
the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11302(a)).''
    We would add a definition of ``Notice of Fund Availability (NOFA)'' 
that would refer readers to Sec.  61.60, the substantive provision 
governing NOFAs. We believe this may be helpful to users who are 
unfamiliar with the term.
    We would add a definition of ``operational'' and define the term to 
describe a program in which ``all VA inspection requirements under this 
part have been met and an activation document has been issued by the VA 
National GPD Program.'' This clarifies that a program cannot be 
considered operational, i.e., in effect, under part 61 until it has 
complied with all applicable regulations, and VA has recognized it as 
such.
    We would add a definition of ``participant agreement,'' because the 
term would be used in Sec. Sec.  61.13 and 61.82, as revised. The 
definition would state that a participant agreement is ``any written or 
implied agreement between a grant recipient agency and a program 
participant that outlines the requirements for program compliance, 
participant or service delivery.''
    We would add a definition of ``project'' and define as ``all 
activities that define the parameters of the purpose of the grant.'' We 
note that VA provides additional details for specific projects in the 
notices of fund availability that serve as the bases for specific grant 
awards.
    We would add a definition of ``recipient'' as ``the entity whose 
employer or taxpayer identification number is on the Application for 
Federal Assistance (SF 424) and is consequently responsible to comply 
with all terms and conditions of the award.'' We would also state that, 
``For the purpose of this part the terms ``grantee'', ``recipient'', 
and ``awardee'' are synonymous and interchangeable.'' These terms are 
used in this manner throughout part 61, and it is consistent with the 
common definitions of these terms to use them to describe the entity 
that is receiving the grant and therefore should be primarily 
responsible for compliance with part 61.
    We would revise the definition of ``supportive housing.'' The 
current definition requires that supportive housing be ``transitional 
housing'' or part of a project designed to meet the needs of homeless 
veterans. The term ``transitional'' can be misleading, because in some 
cases supportive housing can include a detoxification facility or other 
facility with a medical focus. The revised definition would require 
that ``supportive housing'' provide supportive services for

[[Page 12699]]

homeless veterans ``designed to either (1) facilitate the movement of 
homeless veterans to permanent housing; or (2) provide specific medical 
treatment such as detoxification, respite, or hospice treatments.'' 
Finally, the revised rule would also clarify the current rule that 
supportive housing cannot be emergent or permanent by design, by 
providing examples of types of housing that are not considered 
supportive housing. We note that this clarification will be helpful 
because we have received applications for emergent care facilities and 
permanent housing.
    We would move the definition of ``supportive services'' to its own 
section, Sec.  61.2, for organizational purposes, but would not revise 
the substance of the definition.
    We would add a definition of ``total project cost'' and define as 
``the sum of all costs incurred by a recipient for the acquisition, 
rehabilitation, and new construction of a facility, or van(s), 
identified in a grant application.'' This definition would be 
consistent with the use of this term throughout part 61, as it defines 
the total cost in terms of the costs that would be allowable under this 
part. We would use the term ``total project cost'' in Sec.  61.16(c)(5) 
where we require that the value of matching funds must be for a cost 
that is included in the calculation of the total project cost, thereby 
decreasing the total expenditures of the grantee.
    We would define ``VA National GPD Program'' as ``the VA Homeless 
Providers Grant and Per Diem Program.'' We would use the defined term 
as an abbreviation in our regulations.
    We propose to remove the definition of ``fee'' in the revised rule. 
Currently, we define the term as ``a fixed charge for a service offered 
by a recipient under this part, that is in addition to the services 
that are outlined in the recipient's application; and [is] not paid for 
by VA per diem or provided by VA, (e.g., cable television, recreational 
outings, professional instruction or counseling).'' Rather than define 
the term, we would add detail in Sec.  61.82 concerning participant 
fees and extracurricular fees. Under Sec.  61.82(a), participant fees 
may be required under the specified circumstances, and extracurricular 
fees may be charged only under circumstances that are substantively the 
same as those specified in the current rule. Grant programs vary widely 
across the country, and we believe that it will be clearer to simply 
discuss fees in more detail in Sec.  61.82 than to attempt to provide a 
single definition of the term ``fee.''

Section 61.2 Supportive Services--General

    We would move the definition of ``supportive services'' from 
current Sec.  61.1 into its own section, without substantive revision. 
We have done this because the definition is very detailed and contains 
a substantive rule that recipients must design supportive services, in 
addition to providing extensive criteria for the design of such 
services.

Section 61.3 Notice of Fund Availability

    We would move the current provision regarding the Notice of Fund 
Availability to earlier in part 61. Specifically, we propose to move 
the substance of current Sec.  61.60 to new Sec.  61.3. No substantive 
changes are proposed.

Section 61.4 Definition of Capital Lease

    Under current Sec.  61.1, a capital lease ``means a lease that will 
be in effect for the full period in which VA may recover all or 
portions of the capital grant amount.'' This definition is too narrow 
because this period is, at a minimum, 20 years (under proposed Sec.  
61.67(b)), and many leases will not be able to meet the requirement 
that the lease be in effect for the full period. Therefore, we propose 
to require that a ``capital lease'' be in effect for all of the period 
of recovery listed in Sec.  61.67(b), or satisfy one of three criteria, 
including: (1) The lease transfers ownership to the lessee at the 
expiration of the lease term, (2) The lease contains a bargain purchase 
option, or (3) The present value of lease payments that are applied to 
the purchase are equal to or greater than 90 percent of the fair market 
value of the asset. We had used these same three criteria in a prior 
version of this regulation, and attempted to simplify the definition in 
the current rule; however, this simplification caused unexpected 
problems. Therefore, we are returning to this former definition because 
it is standard for the real estate industry but, again, will make it 
applicable only to leases that will not run for 20 years or more. The 
provisions protect VA in the event that the improved property is used 
for something other than the purpose of the grant. Due to the 
complexity and substantive nature of this proposed definition, we would 
reorganize it into its own section.
    In addition, we would refer to a ``capital lease'' in the 
regulation as a ``conditional sales contract.'' The latter term is 
well-understood in the industry.

Section 61.10 Capital Grants--General

    We propose to make some non-substantive changes to current Sec.  
61.10.

Section 61.11 Capital Grants--Application Packages

    We would generally simplify the language used to describe the 
requirements of an application for a capital grant.
    In paragraph (b)(7)(iii), we propose to require that the applicant 
``will insure the site to the same extent they would insure a site 
bought with their own funds.'' We believe that this requirement will 
help ensure that the applicant takes measures to protect the capital 
securing VA's grant investment. We would remove the reference to 
``vans'' because we address capital grants for vans separately under 
proposed Sec.  61.18, where we maintain the requirement from the 
current rule that vans be insured ``to the same extent they would 
insure a van bought with their own funds.''
    In paragraph (b)(7), we propose to require ``[a] statement from the 
applicant that all of the following are true'', followed by, in 
paragraphs (b)(7)(i) through (vi), the items that appear in current 
Sec.  61.11(b)(12). The current regulation requires ``[r]easonable 
assurances'' that the items are true. We believe that a statement to 
that effect is sufficient for purposes of the application. This 
includes, in paragraph (b)(7)(vi), a statement that no more than 25 
percent of the grant-awarded beds are occupied by non-veterans. This 
accurately reflects the statutory requirement that ``not more than 25 
percent of the services provided under the project will be provided to 
individuals who are not veterans.'' 38 U.S.C. 2011(e)(4). A provision 
to enforce this requirement would be added at Sec.  61.80(r).

Section 61.12 Capital Grant Application Packages--Threshold 
Requirements

    We would revise paragraph (a) to include several specific 
requirements that must be met at the ``threshold'' stage, or else the 
application will not be rated under Sec.  61.13. These threshold 
requirements will help VA eliminate incomplete applications, 
applications by ineligible entities, and the like, prior to rating such 
applications. In particular, we would require that the applicant submit 
a signed Application for Federal Assistance (SF 424) that contains the 
employer or taxpayer identification number (EIN/TIN) that corresponds 
to the applicant's Internal

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Revenue Service 501(c)(3) or (19) determination letter, noting that for 
applicants that apply under a group EIN/TIN, the IRS letter must list 
the applicant as a sub-unit of the parent EIN/TIN. We would require 
that the applicant provide documentation showing that it is under the 
parent EIN/TIN. Such documentation could include a copy of the 
organization directory identifying them as a sub-unit, or other similar 
types of documents. Including this material will improve our ability to 
process the application efficiently, and will help avoid any delays 
related to our need to request this material at a later date.
    We would delete current paragraph (c), which requires that the 
application propose to serve homeless veterans, because it is redundant 
in light of current paragraph (d) (paragraph (c) in proposed Sec.  
61.12), which requires that the activities for which assistance is 
requested must be eligible for funding under part 61.
    We would also redesignate current Sec.  61.12(i) as proposed 
paragraph (h) and add a new paragraph (i) at the end of the regulation. 
Proposed paragraph (h) would require that the applicant not have been 
``notified by VA as being in default'' as opposed to the current rule, 
which requires that the applicant ``is not in default.'' By requiring 
that the applicant not have been notified as being in default, we can 
eliminate applicants who we suspect of being in default, but who are 
still going through the final process of determining actual default. 
Because VA grant funds are limited, permitting applicants suspected of 
being in default to remain in the applicant pool could seriously 
jeopardize the overall success of this grant program. Notification of 
default occurs after a lengthy development process, and we do not 
believe that we would be appropriately safeguarding the proper use of 
limited funds if we were to allow a grant to issue to an applicant who 
was under investigation for default. Proposed paragraph (i)(1) would 
require that the applicant, during the 5 years preceding the date of 
the application, not have had more than two grants in development. This 
will ensure that applicants are not overcommitted to the VA National 
GPD Program. Proposed paragraphs (i)(2) and (3) would eliminate 
applicants who have failed to establish up to two previous awarded 
grant projects or who had a previous grant or per diem project award 
terminated or transferred to another eligible entity for failure to 
comply with the terms and conditions of the award. Requiring adherence 
to these threshold requirements will reduce the risk to the Government 
and the public, as well as help homeless veterans by increasing the 
likelihood that grants will be given only to organizations that 
demonstrate the ability to complete projects and provide quality 
supportive housing and services.

Section 61.13 Capital Grant Application Packages--Rating Criteria

    We propose to revise the rating criteria for capital and non 
capital grant applications by eliminating the rating for leveraging, 
cost effectiveness, and innovation; modifying the requirements for 
need, targeting, ability, and coordination; adding criteria for a 
completion confidence rating; and adjusting the minimum points 
necessary to be fundable from 600 cumulative points to 750 cumulative 
points out of a possible 1000. We note that these rating criteria would 
also be used to rank special-needs grants. This would reduce the 
redundancy of current application requirements, provide an improved 
picture of overall applicant project viability, and emphasize cost 
matching requirements, thereby providing an increased likelihood of 
successful project completion and the delivery of quality services to 
homeless veterans. Rather than offer a score based on leveraged funds, 
we propose to require applicants to include documentation showing 
matching funds as part of the application package, but we would not 
provide any additional score based on that documentation. This would be 
required under Sec.  61.11(b)(2)(ii). Currently, awardees have 30 days 
after conditional selection to submit this match documentation. We do 
not believe that requiring the documentation to be submitted with the 
application will be an undue burden, and we believe that it will 
eliminate duplication of the information at both the conditional and 
final selections.
    The remainder of proposed Sec.  61.13 would contain the rating 
criteria for capital grants, which we would revise to reflect the 
criteria called for under revisions that we are making to the 
application for a capital grant. A discussion of the new criteria 
follows.
    In proposed paragraph (b) we would continue to award 300 points 
based on the project plan; however, we have expanded and revised the 
items that must be demonstrated in order to receive these 300 points. 
According to internal reviewers and grant panels, which consist 
primarily of VA clinicians and VA homeless specialists, the current 
regulation could better describe to applicants the essential elements 
of a capital grantee's program, such as addressing nutritional needs of 
participants, providing a clean and sober environment, etc. We believe 
that these revised criteria would clarify this information for grantees 
and would provide a better quality of service and care for our 
veterans.
    Proposed paragraph (c) would lower from 150 to 100 the number of 
points awarded for outreach, which is called ``targeting'' in the 
current regulation. We have decreased the number of points because VA 
has outreach resources available to assist programs with this function. 
Moreover, programs that have historically been successful are even less 
likely to require outreach, as they are established and have proven 
their ability to reach and serve veterans. Therefore, we would take 50 
points out of outreach and award them under paragraph (f), which 
assesses our overall confidence in the program's likelihood of success. 
Completion confidence, in proposed paragraph (f), would enable us to 
take into account, for example, whether the applicant has previously 
failed to perform (e.g., had grant funds revoked), whether we believe 
that the applicant is overextended or has questionable inspection 
histories, etc. We note that the criteria under proposed paragraph (c) 
are identical to those in the current regulation (38 CFR 61.13(c)).
    Proposed paragraph (d) would continue to award 200 points based on 
the applicant's ability to develop and operate a project; however, 
feedback from our review panels has been that we need more extensive 
information concerning who will be providing the services to veterans, 
their qualifications, and what percentage of their time would be 
dedicated to this activity. The revised criteria are intended to 
demonstrate that the program's staff will be effective and capable, 
operationally, of meeting the program's needs. We note that we would no 
longer require, as required by current Sec.  61.13(d)(9), a showing of 
fiscal solvency because as a practical matter our application reviewers 
who score the applications are for the most part clinicians who do not 
have the expertise to review financial statements. More importantly, we 
do not believe that this is an essential element to scoring the 
application. However, we note that under proposed Sec.  61.16, VA would 
not actually award a grant, irrespective of the score assigned to an 
application, unless the applicant can demonstrate sufficient funding 
for the project.
    Proposed paragraphs (e) and (g) would be identical to the current 
regulation at Sec.  61.13(e) and (i).
    Finally, we would not include in these proposed rules current Sec.  
61.13(f), ``[i]nnovative quality of proposal.'' We think that the 
proposed paragraph (f),

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``[c]ompletion confidence,'' is based on actual performance and the 
overall content of the proposal. In addition, whether or not a project 
is innovative may not indicate whether the program will actually 
succeed. VA is not as concerned with whether a program is similar to 
existing programs (i.e., whether it is innovative) as we are with 
whether the program is likely to provide successful outcomes to our 
veterans.

Section 61.14 Capital Grants--Selection of Grantees

    Proposed paragraph (a) is substantively identical to current 
paragraph (a). We note that the references to conditional selection 
would refer to the selection of applicants who submitted a complete 
application package, which would include information about matching 
funding. The current regulations do not require that such information 
be submitted at the threshold stage. In this regard, the conditional 
application process would be different under these new regulations, 
because this information would already have been submitted during the 
application stage.
    Proposed paragraph (b) would revise the ``tiebreaker'' provisions 
in current paragraph (b). Under the current rule, ties are broken based 
on the ``need'' score, but we propose to use the ``coordination'' score 
as the tiebreaker because our experience in managing this program has 
shown that programs that are able to coordinate with other programs 
such as other supportive housing, health care, and social services 
programs, have more successful outcomes. We would similarly include a 
tiebreaker provision for per diem applications in proposed Sec.  
61.32(b).
    In proposed paragraph (c), we would reserve the right to reduce or 
reject applications that we believe will not be cost effective. It is 
substantively similar to current Sec.  61.13(h), except that under 
these proposed rules it would serve as a basis to deny an application 
rather than as a scoring criterion because although we eliminated this 
criterion as a rating criterion (because cost-effectiveness should not, 
in our view, be a primary consideration in determining the overall 
quality of an application), we continue to believe that cost-
effectiveness is a high priority for managing our program. If the 
program is highly rated but simply cannot be considered economically 
viable, it would be irresponsible for us to grant the application. More 
likely, if we believe that it is not necessary to provide the level of 
grant funds requested in the application, then we believe that we 
should be able to grant the application but decrease the amount of 
funding to what we consider a reasonable amount. Thus, authorizing 
reducing or rejecting the application on this basis will give proper 
weight to cost-effectiveness.
    In proposed paragraph (d), we would describe the mechanisms for the 
transfer of a grant award when a previously awarded recipient can no 
longer provide the services and/or housing. This mechanism, which is 
not present in the current rule, is needed in order to prevent a lapse 
in services to homeless veterans within a particular geographic area 
who were served by the prior grant recipient.

Section 61.15 Capital Grants--Obtaining Additional Information and 
Awarding Capital Grants

    In proposed paragraph (a)(1), we restate the requirement that 
applicants who have been conditionally selected submit ``[a]ny 
additional information necessary to show that the project is feasible, 
including a plan from an architect, contractor, or other building 
professional that provides estimated costs for the proposed design.'' 
The current version requires that match documentation be submitted at 
this time, but under these revised regulations, detailed match 
documentation would be required as part of the initial application 
package. Therefore, we retain the mention of match documentation in 
this section but plan to request additional match documentation only 
when necessary. The rest of Sec.  61.15 would be substantively 
identical to the current rule.

Section 61.16 Matching Funds for Capital Grants

    Proposed paragraph (a) would restate much of current Sec.  61.16. 
We would attempt to clarify, without substantive change, the 
percentages of funding that may be provided by VA and the matching 
funds that must be provided by the grantee.
    In proposed paragraph (b), we would restate the last sentence of 
current Sec.  61.16; however, we would add that ``developer's fees'' 
are not allowable costs because we have found that such fees are 
difficult to justify in the vast majority of cases.
    Proposed paragraph (c) would specify the documentation required to 
demonstrate the match. We believe it will be helpful to include the 
details of what documentation is required to demonstrate compliance 
with the statutory requirement in 38 U.S.C. 2011(c).

Section 61.17 Site Control for Capital Grants

    We would revise paragraph (a) to add that the grantee must 
establish control or ownership through assignment to the entity whose 
employer or taxpayer identification number is on the Application for 
Federal Assistance (SF424). This is necessary to ensure that site 
control rests with the grantee, i.e., the entity whose employer or 
taxpayer identification number is on the SF424. Moreover, under 
paragraph (a)(1) we would allow for alternate assignments, which can be 
used by non-profit organizations to assign site control to different 
divisions within their same organization (e.g., a non-profit 
organization using non-taxable units to hold the property, thereby 
limiting the liability of the greater organization).
    We note that this does not mean that VA will not award grants to 
non-profit organizations who are working with tax-credit entities. We 
would permit tax credit entities to use a capital lease to demonstrate 
site control.
    In proposed paragraph (a)(1), we would set forth criteria to grant 
alternative assignments. The criteria attempt to reduce opportunities 
to profit through alternative assignments, because our grants are not 
designed to benefit for-profit entities.
    We would also reorganize the current provisions for clarity.
    Proposed paragraph (c) would restate the 1-year deadline to 
establish site control, which is contained in current paragraph (a). We 
have added that grantees who do not establish control within 1 year may 
request a reasonable extension, or the grant may be terminated. This 
reflects current VA National GPD Program practice. In addition, we 
would clarify that extensions will be authorized if the grantee was not 
at fault for being unable to exercise site control and the lack of site 
control does not affect the grantee's ability to complete the project. 
These are the only reasons that we would deny an extension.

Section 61.18 Capital Grants for Vans

    Proposed Sec.  61.18 would set forth in a separate section all 
current provisions relating to capital grants for vans. Because we 
would no longer be considering vans as part of the rating criteria for 
capital grants in general, we would add scoring criteria specific to 
vans in paragraph (d).

Section 61.19 Transfer of Capital Grants

    We propose to add Sec.  61.19, which describes the mechanisms for 
the

[[Page 12702]]

transfer of a grant award when a previously awarded recipient can no 
longer provide the services and/or housing. This is needed in order to 
prevent a lapse in services to homeless veterans within a particular 
geographic area who were served by the prior grant recipient.

Section 61.30 Per Diem--General

    We propose to reorganize and clarify the information in the current 
rule. We would also add that VA may terminate per diem only awards if 
the funds are not being used for supportive services within 180 days 
after the date on the notification of award letter.

Section 61.31 Per Diem--Application Packages

    Proposed Sec.  61.31 is substantively identical to the current 
rule, except that we propose not to include current Sec.  61.31(b)(1), 
which requires that the application justify the need for per diem, 
because the requirement is unnecessary and redundant in light of the 
other, more specific application requirements set forth in the rule.

Section 61.32 Per Diem Application Packages--Rating Criteria

    Proposed paragraph (a) is essentially the same as current Sec.  
61.32(a). In paragraph (b), we would add a tiebreaker provision, as 
discussed above in the discussion of proposed Sec.  61.14.

Section 61.33 Payment of Per Diem

    We propose to simplify the language throughout this section, and 
eliminate redundancy within the section. For example, current Sec.  
61.33(c) states that non-capital-grant recipients must enter into an 
agreement with VA; however, that requirement is currently reflected in 
Sec. Sec.  61.61 and 61.32(c). Similarly, the current rule refers 
several times to inspection requirements, but these are already 
established in current Sec.  61.65. We would eliminate these 
duplications because they are unnecessary and because restating them 
here might create confusion as to whether, and the extent to which, the 
other provisions also apply.

Section 61.40 Special Need Grants--General

    In proposed Sec.  61.40, we would clarify existing procedures for 
applying for a special need grant. We would also make the following 
significant change: Currently, we permit grantees to submit an 
application for a special need grant only after they have already been 
granted a capital or non-capital grant. Under the proposed rule, we 
would authorize awarding special need grants to any eligible entity 
that can establish that they would target the special need populations 
identified in this section. We are making this change to increase the 
pool of applicants to include those entities who are not already 
grantees.
    In accordance with the new application process described in Sec.  
61.40 for special need grants, we would cross-reference the rating and 
substantive requirements in the other sections that also would be 
applicable to this new procedure and application package. We would 
eliminate Sec.  61.43, which sets forth rating criteria for special 
need application packages, because these applications would be scored 
as capital or non-capital grant applications.

Section 61.41 Special Need Grants--Application Packages and Threshold 
Requirements

    We would combine the substance of current Sec. Sec.  61.41 and 
61.42 into proposed Sec.  61.41, simplify the language of the current 
rules, and revise the application criteria to conform with proposed 
Sec.  61.12, which sets forth threshold requirements for capital grant 
applications. We note that some requirements of proposed Sec.  61.12 
are not contained in current Sec.  61.42, such as a requirement that 
the application be submitted on the correct form. We believe that the 
threshold requirements in proposed Sec.  61.12 should apply to special 
need grants applications to provide an appropriate basis for the 
elimination of applicants who do not meet certain minimum standards, 
and will contribute to a more efficient application process overall.

Section 61.44 Awarding Special Need Grants and Payment of Special Need 
Per Diem

    Proposed paragraph (a) would simply state the requirement for an 
executed agreement under Sec.  61.61.
    Proposed paragraph (b) would describe the nature of the special 
need grant--such grants differ from capital and non-capital (Per Diem 
Only (PDO)) grants because the per diem payment is slightly higher and 
is based on the program addressing the needs of the targeted 
populations. The authorizing statute, 38 U.S.C. 2061, does not set 
forth either a capital grant amount or per diem rate for the purposes 
of a special need grant. Increased capital grant amounts will be 
provided as a natural result of the increased building and project 
costs related to these targeted populations (such as wheelchair ramps, 
other Americans with Disability Act building requirements, security 
locks and cameras for women and children, etc.). Special needs non-
capital grants may be awarded for up to twice the amount of per diem 
awarded to non-special-needs grants. We also note that the proposed 
rule would not require a match for these grants, but would continue to 
require a match for special needs capital grants.
    The amount of the per diem payment would be the lesser of (1) 100 
percent of the daily cost of care estimated by the special need 
recipient for furnishing services to homeless veterans with special 
need that the special need recipient certifies to be correct, minus any 
other sources of income; or (2) Two times the current VA State Home 
Program per diem rate for domiciliary care. Pursuant to 38 U.S.C. 
2061(a), VA ``shall carry out a program to make grants to * * * grant 
and per diem providers in order to encourage development by those * * * 
providers of programs for homeless veterans with special needs.'' 
Moreover, in order to adequately incentivize grantees to cater to 
veterans with special needs, we believe that the rate of per diem must 
be greater than the rate of per diem paid to a capital grantee who does 
not provide a program for veterans with special needs. Therefore, we 
believe that it is consistent with the statute to set forth special 
rates of per diem for these programs in order to encourage both capital 
and non-capital grantees to serve the targeted populations. The 
specific per diem calculation is based on what we believe reflects the 
amount of increased daily costs related to this specialty care.

Section 61.50 Technical Assistance Grants--General

    We would increase the specificity in this regulation to help ensure 
that we select the most deserving grant recipients, which will further 
the needs of the overall program. The changes are consistent with 
current practice and with the purposes of 38 U.S.C. 2064.
    The last sentence of paragraph (a) would bar current recipients of 
any grant under this part (other than a technical assistance grant), or 
their sub-recipients, from receiving technical assistance grants. 
Technical assistance grantees learn highly technical information and 
get one-on-one assistance from VA National GPD Program officials to 
help them provide accurate information to the potential grant 
applicants that they provide services to. As such, they are, as a 
practical matter, an extension of program office staff. Therefore, we 
believe that it is unfair to allow these grantees to compete against 
other entities for other grants under this part because there may be a 
bias perceived

[[Page 12703]]

by other applicants in favor of these technical assistance grantees, 
who, again, have extensive access to VA National GPD Program officials.

Section 61.51 Technical Assistance Grants--Application Packages

    We do not propose any substantive changes to current Sec.  61.51. 
We would delete current Sec.  61.51(b)(1), which requires that the 
application justify the need for the grant, because the requirement is 
unnecessary and redundant in light of the other, more specific 
application requirements set forth in the rule.

Section 61.52 Technical Assistance Grant Application Packages--
Threshold Requirements

    This section is substantively identical to the current section, 
except that we would make it a threshold requirement that the applicant 
must not have been notified by VA that they were in default, whereas 
the current rule requires only that the applicant not be in default. We 
would also revise this requirement to cover those rare instances where 
VA discovers that an applicant may be in default during the application 
process, but VA has not been able to verify the default, as well as 
those rare instances where an applicant is technically in default but 
is unaware of the default and is able to quickly resolve the issue 
before VA institutes notification procedures. As noted above, VA grant 
funds are limited and permitting applicants suspected of being in 
default to remain in the applicant pool could seriously jeopardize the 
overall success of this grant program. Notification of default occurs 
after a lengthy development process, and we do not believe that we 
would be appropriately safeguarding the proper use of limited funds if 
we were to allow a grant to issue to an applicant who was under 
investigation for default.

Section 61.53 Technical Assistance Grant Application Packages--Rating 
Criteria

    We propose to add paragraph (c)(6), which would allow VA to use 
historical documents of past performance both VA and non-VA, including 
those from other Federal, state and local agencies and audits by 
private or public entities in scoring applications. This will help us 
have a better perspective of the applicant's overall past performance, 
which may serve as an indicator of future performance.

Section 61.54 Awarding Technical Assistance Grants

    Much of proposed Sec.  61.54 remains the same as current Sec.  
61.54, with the exception of a few significant changes. In proposed 
paragraph (d), we would change the time period during which VA may make 
payments for technical assistance from 3 years (with permission to re-
apply in response to a Notice of Fund Availability) to ``the period 
specified in the Notice of Fund Availability.'' We propose this change 
because we want to be able to establish periods (that will generally be 
longer than 3 years), based on fund availability.
    We would remove current paragraph (e), which states that the amount 
of a technical assistance grant under this part may not exceed the cost 
of the estimated cost of the provision of technical assistance. Current 
paragraph (e) was superfluous because under current and proposed 
paragraph (d), the amount of the grant will be the estimated total 
operational cost; therefore, logically, the grant cannot be for more 
than that amount.
    In proposed paragraph (e), which is based on current paragraph (f), 
we would change, ``VA will not pay for sustenance or lodging under a 
technical assistance grant'' to ``VA will not pay for sustenance or 
lodging for the nonprofit community participants or attendees at 
training conferences offered by technical assistance grant recipients; 
however, the grantee may use grant funds to recover such expenses.'' 
The current rule can be read to bar any such payment related to a 
technical assistance grant activity; however, we did not intend to bar 
the grantees themselves from recovering these costs. The proposed 
revision will make this section consistent with our original intent.

Section 61.55 Technical Assistance Reports

    We propose to make some non-substantive changes to current Sec.  
61.55.

Section 61.61 Agreement and Funding Actions

    We would move current Sec.  61.61(c) to paragraph (a), because it 
applies only to our enforcement of executed agreements. We would also 
reorganize provisions that appeared in current Sec.  61.61(f), (g) and 
(i) by moving them to Sec.  61.67(a). They provide that VA may seek 
recovery where a capital grant recipient fails to provide supportive 
services and/or supportive housing for the minimum period of operation; 
VA may obligate any recovered funds without fiscal year limitation; and 
where a recipient has no control over causes for delays in implementing 
a project, VA may extend the 3-year period described in current Sec.  
61.67(a), as appropriate. These provisions relate to recovery, and not 
to funding actions, and therefore it makes more organizational sense to 
locate them in Sec.  61.67, ``Recovery provisions.'' Otherwise, 
proposed paragraphs (a) through (e) contain the substance of current 
Sec.  61.61 with some changes for purposes of readability.

Section 61.62 Program Changes

    In proposed paragraph (b), we propose to eliminate the $100,000 
threshold grant amount for seeking approval of cumulative transfers 
among direct cost categories that exceed, or are expected to exceed, 10 
percent of the approved budget. This is because some of our grantees do 
not even receive a grant of $100,000. In addition, we believe that by 
requiring greater oversight we will be able to ensure that the funds 
awarded are used for the purpose for which the grant was made and that 
we are aware of all changes between direct cost categories.
    We propose to add a new paragraph (f) that would require recipients 
to inform VA ``in writing of any key position and address changes in/of 
their organization within 30 days of the change, i.e., new executive 
director or chief financial officer, permanent change of address for 
corporate communications.'' This requirement will help ensure that we 
are aware of necessary contact information.

Section 61.63 Procedural Error

    We propose to eliminate the requirement that when ``an application 
would have been selected but for a procedural error committed by VA, VA 
will select that application for potential funding when sufficient 
funds become available if there is no material change in the 
information that resulted in its selection.'' Instead, we propose to 
reconsider such an application in the next funding round, if there has 
not been any material change in the information that resulted in its 
selection. Notwithstanding that this provision addresses VA's own 
procedural errors, we do not believe it is appropriate to require VA to 
select the overlooked applicant at the expense of another, better 
qualified applicant who may apply in the next funding round. Such a 
requirement could be to the detriment of the homeless veterans serviced 
by the project.

[[Page 12704]]

Section 61.64 Religious Organizations

    We propose to make some non-substantive changes to current Sec.  
61.64.

Section 61.65 Inspections

    This section is substantively identical to current Sec.  61.65, 
except that we would clarify that inspections necessary to determine 
compliance with this part include compliance with the terms of the 
grant agreement. This clarification reflects our original intent in 
promulgating this proposed rule. It is important to verify compliance 
with the terms of the agreement, which may contain specifics verifiable 
upon inspection.

Section 61.66 Financial Management

    We propose to revise this section to specifically reference the CFR 
provisions which codify the requirement for use of accounting 
procedures set forth by the Office of Management and Budget Given that 
these procedures are codified in regulation VA grantees have already 
been subject to them, but placing them in this Part highlights their 
applicability to GPD grantees.

Section 61.67 Recovery Provisions

    In proposed paragraph (b), we have revised the chart showing the 
grant amount/years in operation calculation necessary to apply the 
formula described in paragraph (b). We would revise the chart by 
extending the period of operation from 7 to 20 to 20 to 40 years, and 
by changing the grant amount relating to periods of years within that 
proposed 20 to 40-year period. We did this to better reflect industry 
standards for both accounting and real estate methodologies for 
calculating depreciation and asset worth.
    Proposed paragraph (c) clarifies that capital grantees are subject 
to real property disposition as required by 38 CFR 49.32 when the 
grantee no longer is providing services through a grant awarded under 
this part. This is a separate legal requirement that has always applied 
to grants under this part; we add it only to provide notice to 
grantees.

Section 61.80 General Operation Requirements for Supportive Housing and 
Service Centers

    In proposed paragraph (a), we would require a sprinkler system 
unless a facility is specifically exempted under the Life Safety Code. 
This provision is to help ensure the safety of our veterans. We also 
removed language that appears in the current rule concerning the timing 
of compliance with the Life Safety Code because the deadline for 
compliance was in 2006. Thus, that language is outdated.
    We have added an explanation of the requirements for a clean and 
sober environment. These requirements are intended to ensure that 
illegal drug use and/or alcohol use do not prevent participants from 
peacefully enjoying the supportive housing or services provided by the 
grantee. These requirements are consistent with the clean and sober 
policies established in the regulations governing Housing and Urban 
Development at 24 CFR 5.855 et seq.
    We propose to revise paragraph (c) to require a quarterly technical 
performance report that must include information that will help VA 
assess whether the recipient is performing adequately. We specify that 
such report ``must be filed once during each quarter and no later than 
January 30, April 30, July 30, and October 30.''
    We would also add provisions reflecting performance measures set 
forth in the grant application. These are found in paragraphs (m) 
through (q).

Section 61.81 Outreach Activities

    We propose to make some non-substantive changes to current Sec.  
61.81.

Section 61.82 Participant Fees for Supportive Housing

    We propose to revise the section header from ``Resident rent for 
supportive housing'' to ``Participant fees for supportive housing.'' We 
also propose to specifically describe the requirements regarding the 
charge and use of such fees. We propose not to discuss rent, as we do 
in the current rule, because of the significant variation in the 
definitions of rents between localities. We believe that the proposed 
language will allow VA to operate the program in a more flexible, 
locally appropriate manner.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action'' requiring review by the Office of 
Management and Budget (OMB) as ``any regulatory action that is likely 
to result in a rule that may: (1) Have an annual effect on the economy 
of $100 million or more, or adversely affect in a material way the 
economy, a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    VA has examined the economic, interagency, budgetary, legal, and 
policy implications of this proposed rule and has determined that it is 
not a significant regulatory action under Executive Order 12866.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in expenditure by 
state, local, or tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any given year. This proposed rule would have no such 
effect on state, local, or tribal governments, or on the private 
sector.

Paperwork Reduction Act

    OMB assigns a control number for each collection of information it 
approves. Except for emergency approvals under 44 U.S.C. 3507(j), VA 
may not conduct or sponsor, and a person is not required to respond to, 
a collection of information unless it displays a currently valid OMB 
control number.
    The proposed rule at Sec. Sec.  61.11, 61.12, 61.15, 61.17, 61.31, 
61.41, 61.51, 61.55, 61.62 and 61.80 contains collections of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521). 
Accordingly, under Sec.  3507(d) of the Act, VA has submitted a copy of 
this rulemaking action to OMB for its review of the collections of 
information.
    Collections at Sec. Sec.  61.11, 61.12, 61.15, 61.17, 61.31, 61.41, 
61.51, and 61.55 have been previously approved under OMB 2900-0554 
(Homeless Providers Grant and Per Diem Program). Collections at 
Sec. Sec.  61.62 and 61.80 are

[[Page 12705]]

new. We are seeking an approval of the information collection on a non-
emergency basis. Accordingly, we are also requesting comments on the 
collection of information provisions contained in Sec. Sec.  61.62 and 
61.80 on a non-emergency basis. Comments must be submitted by April 30, 
2012.
    Comments on the collections of information should be submitted to 
the Office of Management and Budget, Attention: Desk Officer for the 
Department of Veterans Affairs, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies mailed or hand-delivered to: 
Director, Office of Regulations Management (02REG), Department of 
Veterans Affairs, 810 Vermont Ave., NW., Room 1063B, Washington, DC 
20420. Comments should indicate that they are submitted in response to 
``RIN 2900-AN81.''
    Title: VA Homeless Providers Grant and Per Diem Program.
    Summary of collection of information: The proposed rule at 
Sec. Sec.  61.11, 61.12, 61.15, 61.17, 61.31, 61.41, 61.51, 61.55, 
61.62 and 61.80 contains application provisions for capital grants, per 
diem, special need payment, program changes, and program performance. 
Collections at Sec. Sec.  61.11, 61.12, 61.15, 61.31, 61.41, and 61.55 
have been previously approved under OMB 2900-0554. Collections at 
Sec. Sec.  61.62 and 61.80 are new. However, they may be in any 
acceptable business format and should not be a burden upon grant 
recipients as they already collect this information.
    Application provisions for capital grants and per diem and special 
need payment.
    Description of the need for information and proposed use of 
information: This information is needed to determine eligibility for 
capital grants and per diem and special need payment.
    Description of likely respondents: Public or nonprofit private 
entities requesting a capital grant.
    Estimated number of respondents per year: 200.
    Estimated frequency of responses per year: 1.
    Estimated total annual reporting and recordkeeping burden: 7,000 
hours.
    Estimated annual burden per collection: 35 hours.
    Application provisions for per diem for non-capital grant 
recipients.
    Description of the need for information and proposed use of 
information: This information is needed to determine eligibility for 
per diem.
    Description of likely respondents: Public or nonprofit private 
entities requesting per diem.
    Estimated number of respondents per year: 250.
    Estimated frequency of responses per year: 1.
    Estimated total annual reporting and recordkeeping burden: 35 
hours.
    Estimated annual burden per collection: 8,750 hours.
    The Department considers comments by the public on collections of 
information in--
     Evaluating whether the collections of information are 
necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the collections of information, including the validity of 
the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collections of information on 
those who are to respond, including responses through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    OMB is required to make a decision concerning the collections of 
information contained in this rule between 30 and 60 days after 
publication of this document in the Federal Register. Therefore, a 
comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed rule.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule would not 
have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq. This proposed rule would only impact those entities 
that choose to participate in the VA Homeless Providers Grant and Per 
Diem Program. Small entity applicants would not be affected to a 
greater extent than large entity applicants. Small entities must elect 
to participate, and it is considered a benefit to those who choose to 
apply. To the extent this proposed rule would have any impact on small 
entities, it would not have an impact on a substantial number of small 
entities. Therefore, pursuant to 5 U.S.C. 605(b), this proposed rule is 
exempt from the initial and final regulatory flexibility analysis 
requirement of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 64.009, Veterans Medical 
Care Benefits; 64.024, VA Homeless Providers Grant and Per Diem 
Program.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. John R. 
Gingrich approved this document on February 23, 2012, for publication.

List of Subjects in 38 CFR Part 61

    Administrative practice and procedure, Alcohol abuse, Alcoholism, 
Day care, Dental health, Drug abuse, Government contracts, Grant 
programs--health, Grant programs--veterans, Health care, Health 
facilities, Health professions, Health records, Homeless, Mental health 
programs, Reporting and recordkeeping requirements, Travel and 
transportation expenses, Veterans.

    Dated: February 24, 2012.
William F. Russo,
Deputy Director, Office of Regulation Policy and Management, Office of 
the General Counsel, Department of Veterans Affairs.

    For the reasons set forth in the preamble, we propose to amend 38 
CFR part 61 as follows:

PART 61--VA HOMELESS PROVIDERS GRANT AND PER DIEM PROGRAM

    1. The authority citation for part 61 is revised to read as 
follows:

    Authority: 38 U.S.C. 501, 2001, 2002, 2011, 2012, 2061, 2064.

    2. Part 61 is revised to read as follows:

Sec.

General Provisions

61.0 Purpose.
61.1 Definitions.
61.2 Supportive services--general.
61.3 Notice of Fund Availability.
61.4 Definition of capital lease.

Capital Grants

61.10 Capital grants--general.
61.11 Capital grants--application packages.
61.12 Capital grant application packages--threshold requirements.
61.13 Capital grant application packages--rating criteria.
61.14 Capital grants--selection of grantees.
61.15 Capital grants--obtaining additional information and awarding 
capital grants.
61.16 Matching funds for capital grants.
61.17 Site control for capital grants.
61.18 Capital grants for vans.

[[Page 12706]]

61.19 Transfer of capital grants.

Per Diem Payments

61.30 Per diem--general.
61.31 Per diem--application packages.
61.32 Per diem application packages--rating criteria.
61.33 Payment of per diem.

Special Need Grants

61.40 Special need grants--general.
61.41 Special need grants--application packages and threshold 
requirements.
61.44 Awarding special need grants and payment of special need per 
diem.

Technical Assistance Grants

61.50 Technical assistance grants--general.
61.51 Technical assistance grants--application packages.
61.52 Technical assistance grant application packages--threshold 
requirements.
61.53 Technical assistance grant application packages--rating 
criteria.
61.54 Awarding technical assistance grants.
61.55 Technical assistance reports.

Awards, Monitoring, and Enforcement of Agreements

61.61 Agreement and funding actions.
61.62 Program changes.
61.63 Procedural error.
61.64 Religious organizations.
61.65 Inspections.
61.66 Financial management.
61.67 Recovery provisions.
61.80 General operation requirements for supportive housing and 
service centers.
61.81 Outreach activities.
61.82 Participant fees for supportive housing.

General Provisions


Sec.  61.0  Purpose.

    This part implements the VA Homeless Providers Grant and Per Diem 
Program which consists of the following components: capital grants, per 
diem, special need capital and non-capital grants, and technical 
assistance grants.

(Authority: 38 U.S.C. 501, 2001, 2002, 2011, 2012, 2061, 2064)

Sec.  61.1  Definitions.

    For purposes of this part:
    Area or community means a political subdivision or contiguous 
political subdivisions (such as a precinct, ward, borough, city, 
county, State, Congressional district, etc.) with a separately 
identifiable population of homeless veterans.
    Capital grant means a grant for construction, renovation, or 
acquisition of a facility, or a grant for acquisition of a van.
    Capital lease is defined by Sec.  61.4.
    Chronically mentally ill means a condition of schizophrenia or 
major affective disorder (including bipolar disorder) or post-traumatic 
stress disorder (PTSD), based on a diagnosis from a licensed mental 
health professional, with at least one documented hospitalization for 
this condition sometime in the last 2 years or with documentation of a 
formal assessment on a standardized scale of any serious symptomatology 
or serious impairment in the areas of work, family relations, thinking, 
or mood.
    Default means a determination by VA that an awardee has materially 
failed to comply with the terms and conditions of an award.
    Fixed site means a physical structure that under normal conditions 
is not capable of readily being moved from one location to another 
location.
    Frail elderly means 65 years of age or older with one or more 
chronic health problems and limitations in performing one or more 
activities of daily living (such as bathing, toileting, transferring 
from bed to chair, etc.).
    Homeless has the meaning given that term in section 103 of the 
McKinney-Vento Homeless Assistance Act (42 U.S.C. 11302(a)).
    New construction means building a structure where none existed, or 
building an addition to an existing structure that increases the floor 
area by more than 100 percent.
    Nonprofit organization means a private organization, no part of the 
net earnings of which may inure to the benefit of any member, founder, 
contributor, or individual. The organization must be recognized as a 
section 501(c)(3) or 501(c)(19) nonprofit organization by the United 
States Internal Revenue Service, and meet all of the following 
criteria:
    (1) Have a voluntary board;
    (2) Have a functioning accounting system that is operated in 
accordance with generally accepted accounting principles, or designate 
an entity to maintain such a functioning accounting system; and
    (3) Practice nondiscrimination in the provision of supportive 
housing and supportive services assistance.
    Notice of Fund Availability (NOFA) means a notice published in the 
Federal Register in accordance with Sec.  61.60.
    Operating costs means expenses incurred in operating supportive 
housing, supportive services or service centers with respect to:
    (1) Administration (including staff salaries; costs associated with 
accounting for the use of grant funds, preparing reports for submission 
to VA, obtaining program audits, and securing accreditation; and 
similar costs related to administering the grant after the award), 
maintenance, repair and security for the supportive housing;
    (2) Van costs or building rent (except under capital leases), e.g., 
fuel, insurance, utilities, furnishings, and equipment;
    (3) Conducting on-going assessments of supportive services provided 
for and needed by participants and the availability of such services; 
and
    (4) Other costs associated with operating the supportive housing.
    Operational means a program for which all VA inspection 
requirements under this part have been met and an activation document 
has been issued by the VA National GPD Program.
    Outpatient health services means outpatient health care, outpatient 
mental health services, outpatient alcohol and/or substance abuse 
services, and case management.
    Participant means a person receiving services based on a grant or 
per diem provided under this part.
    Participant agreement means any written or implied agreement 
between a grant recipient agency and a program participant that 
outlines the requirements for program compliance, participant or 
service delivery.
    Project means all activities that define the parameters of the 
purpose of the grant.
    Public entity means any of the following:
    (1) A county, municipality, city, town, township, local public 
authority (including any public and Indian housing agency under the 
United States Housing Act of 1937), school district, special district, 
intrastate district, council of governments (whether or not 
incorporated as a nonprofit corporation under state law), any other 
regional or interstate government entity, or any agency or 
instrumentality of a local government; or
    (2) The governing body or a governmental agency of any Indian 
tribe, band, nation, or other organized group or community (including 
any Native village as defined in Sec.  3 of the Alaska Native Claims 
Settlement Act, 85 Stat 688) certified by the Secretary of the Interior 
as eligible for the special programs and services provided by the 
Bureau of Indian Affairs.
    Recipient means the entity whose employer or taxpayer 
identification number is on the Application for Federal Assistance (SF 
424) and is consequently responsible to comply with all terms and 
conditions of the award. For the purpose of this part the terms 
``grantee'', ``recipient'', and ``awardee'' are synonymous and 
interchangeable.
    Rehabilitation means the improvement or repair of an existing

[[Page 12707]]

structure. Rehabilitation does not include minor or routine repairs.
    State means any of the several states of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
state exclusive of local governments. The term does not include any 
public and Indian housing agency under United States Housing Act of 
1937.
    Supportive housing means housing with supportive services provided 
for homeless veterans that:
    (1) Is not shelter care, other emergent housing, or housing 
designed to be permanent or long term (more than 24 months), with no 
requirement to move; and
    (2) Is designed to either:
    (i) Facilitate the movement of homeless veterans to permanent 
housing within a period that is not less than 90 days and does not 
exceed 24 months, subject to Sec.  61.80; or
    (ii) Provide specific medical treatment such as detoxification, 
respite, or hospice treatments that are used as step-up or step-down 
programs within that specific project's continuum.
    Supportive services has the meaning assigned to it under Sec.  
61.2.
    Terminally ill means a prognosis of 9 months or less to live, based 
on a written medical diagnosis from a physician.
    Total project cost means the sum of all costs incurred by a 
recipient for the acquisition, rehabilitation, and new construction of 
a facility, or van(s), identified in a grant application.
    VA means the Department of Veterans Affairs.
    VA National GPD Program refers to the VA Homeless Providers Grant 
and Per Diem Program.
    Veteran means a person who served in the active military, naval, or 
air service, and who was discharged or released there from under 
conditions other than dishonorable.

(Authority: 38 U.S.C. 501, 2002, 2011, 2012, 2061, 2064)

Sec.  61.2  Supportive services--general.

    (a) Recipients must design supportive services. Such services must 
provide appropriate assistance, or aid participants in obtaining 
appropriate assistance, to address the needs of homeless veterans. The 
following are examples of supportive services:
    (1) Outreach activities;
    (2) Providing food, nutritional advice, counseling, health care, 
mental health treatment, alcohol and other substance abuse services, 
case management services;
    (3) Establishing and operating child care services for dependents 
of homeless veterans;
    (4) Providing supervision and security arrangements necessary for 
the protection of residents of supportive housing and for homeless 
veterans using supportive housing or services;
    (5) Assistance in obtaining permanent housing;
    (6) Education, employment counseling and assistance, and job 
training;
    (7) Assistance in obtaining other Federal, State and local 
assistance available for such residents including mental health 
benefits, employment counseling and assistance, veterans' benefits, 
medical assistance, and income support assistance; and
    (8) Providing housing assistance, legal assistance, advocacy, 
transportation, and other services essential for achieving and 
maintaining independent living.
    (b) Supportive services do not include inpatient acute hospital 
care.

(Authority: 38 U.S.C. 501, 2011, 2012, 2061)

Sec.  61.3  Notice of Fund Availability.

    When funds are made available for a grant or per diem award under 
this part, VA will publish a Notice of Fund Availability in the Federal 
Register. The notice will:
    (a) Give the location for obtaining application packages;
    (b) Specify the date, time, and place for submitting completed 
applications;
    (c) State the estimated amount and type of funding available; and
    (d) State any priorities for or exclusions from funding to meet the 
statutory mandate of 38 U.S.C. 2011, to ensure that awards do not 
result in the duplication of ongoing services and to reflect the 
maximum extent practicable appropriate geographic dispersion and an 
appropriate balance between urban and nonurban locations.
    (e) Provide other information necessary for the application 
process, such as the grant period, where applicable.

(Authority: 38 U.S.C. 501, 2011, 2012, 2061, 2064)

Sec.  61.4  Definition of capital lease.

    A capital lease, for purposes of this part, means a conditional 
sales contract that either:
    (a) Will be in effect for all of the period of recovery listed in 
Sec.  61.67(b); or
    (b) That satisfies one of the following criteria:
    (1) The lease transfers ownership to the lessee at the expiration 
of the lease term.
    (2) The lease contains a bargain purchase option.
    (3) The present value of lease payments that are applied to the 
purchase are equal to or greater than 90 percent of the fair market 
value of the asset.

(Authority: 38 U.S.C. 501, 2011, 2012, 2061, 2064)

Capital Grants


Sec.  61.10  Capital grants--general.

    (a) Subject to the availability of appropriations provided for such 
purpose, VA will provide capital grants to public or nonprofit private 
entities so they can assist homeless veterans by helping to ensure the 
availability of supportive housing and service centers to furnish 
outreach, rehabilitative services, and vocational counseling and 
training. Specifically, VA provides capital grants for up to 65 percent 
of the cost to:
    (1) Construct structures and purchase the underlying land to 
establish new supportive housing facilities or service centers, or to 
expand existing supportive housing facilities or service centers;
    (2) Acquire structures to establish new supportive housing 
facilities or service centers, or to expand existing supportive housing 
facilities or service centers; and
    (3) Renovate existing structures to establish new supportive 
housing facilities or service centers, or to expand existing supportive 
housing facilities or service centers.
    (4) Procure a van in accordance with Sec.  61.18 Capital grants for 
vans.
    (b) Capital grants may not be used for acquiring buildings located 
on VA-owned property. However, capital grants may be awarded for 
construction, expansion, or renovation of buildings located on VA-owned 
property.

(Authority: 38 U.S.C. 501, 2011)

Sec.  61.11  Capital grants--application packages.

    (a) General. To apply for a capital grant, an applicant must obtain 
from, complete, and submit to VA a capital grant application package 
within the time period established in the Notice of Fund Availability.
    (b) Content of application. The capital grant application package 
will require the following:
    (1) Site description, site design, and site cost estimates.
    (2) Documentation supporting:
    (i) Eligibility to receive a capital grant under this part;
    (ii) Matching funds committed to the project;
    (iii) A proposed operating budget and cost sharing;

[[Page 12708]]

    (iv) Supportive services committed to the project;
    (v) The applicant's authority to control the site and meet 
appropriate zoning laws; and
    (vi) The boundaries of the area or community that would be served.
    (3) If capital grant funds would be used for acquisition or 
rehabilitation, documentation demonstrating that the costs associated 
with acquisition or rehabilitation are less than the costs associated 
with new construction.
    (4) If capital grant funds would be used for new construction, 
documentation demonstrating that the costs associated with new 
construction are less than the costs associated with rehabilitation of 
an existing building, that there is a lack of available appropriate 
units that could be rehabilitated at a cost less than new construction, 
and that new construction is less costly than acquisition of an 
existing building (for purposes of this cost comparison, costs 
associated with rehabilitation or new construction may include the cost 
of real property acquisition).
    (5) If proposed construction includes demolition:
    (i) A demolition plan that describes the extent and cost of 
existing site features to be removed, stored, or relocated; and
    (ii) Information establishing that the proposed construction is 
either in the same location as the building to be demolished or that 
the demolition is inextricably linked to the design of the construction 
project. Without such information, the cost of demolition cannot be 
included in the cost of construction.
    (6) If the applicant is a state, comments or recommendations by 
appropriate state (and area wide) clearinghouses pursuant to E.O. 12372 
(3 CFR, 1982 Comp., p. 197).
    (7) A statement from the applicant that all of the following are 
true:
    (i) The project will furnish to veterans the level of care for 
which such application is made, and services provided will meet the 
requirements of this part.
    (ii) The applicant will continue to operate the project until the 
expiration of the period during which VA could seek full recovery under 
Sec.  61.67.
    (iii) Title to the site will vest solely in the applicant and the 
applicant will insure the site to the same extent they would insure a 
site bought with their own funds.
    (iv) Adequate financial support will be available for the 
completion of the project.
    (v) The applicant will keep records and submit reports as VA may 
reasonably require, within the time frames required, and, upon demand, 
allow VA access to the records upon which such information is based.
    (vi) The applicant will state that no more than 25 percent of the 
grant-awarded beds are occupied by non- veterans.
    (c) Multiple capital grant applications. Subject to Sec.  61.12(i), 
applicants may apply for more than one capital grant.

(Authority: 38 U.S.C. 501, 2011)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0554)


Sec.  61.12  Capital grant application packages--threshold 
requirements.

    The following threshold requirements for a capital grant 
application must be met, or the application will be rejected before 
being rated under Sec.  61.13:
    (a) The application package must meet all of the following 
criteria:
    (1) Be on the correct application form.
    (2) Be completed in all parts, including all information requested 
in the Notice of Fund Availability and application package.
    (3) Include a signed Application for Federal Assistance (SF 424) 
that contains the Employer Identification Number or Taxpayer 
Identification Number (EIN/TIN) that corresponds to the applicant's 
Internal Revenue Service (IRS) 501(c)(3) or (19) determination letter. 
All applicants must provide such an IRS determination letter, which 
includes their EIN/TIN. Applicants that apply under a group EIN/TIN, 
must be identified by the parent EIN/TIN as a member or sub-unit of the 
parent EIN/TIN, and provide supporting documentation.
    (4) Be submitted before the deadline established in the Notice of 
Fund Availability.
    (b) The applicant must be a public or nonprofit private entity at 
the time of application.
    (c) The activities for which assistance is requested must be 
eligible for funding under this part.
    (d) The applicant must demonstrate that adequate financial support 
will be available to carry out the project for which the capital grant 
is sought, consistent with the plans, specifications, and schedule 
submitted by the applicant.
    (e) The application must demonstrate compliance with the Uniform 
Relocation Assistance and Real Property Acquisition Policies Act of 
1970 (URA) (42 U.S.C. 4601-4655).
    (f) The applicant must agree to comply with the requirements of 
this part and demonstrate the capacity to do so.
    (g) The applicant must not have an outstanding obligation to VA 
that is in arrears, or have an overdue or unsatisfactory response to an 
audit.
    (h) The applicant must not have been notified by VA as being in 
default.
    (i) The applicant, during the 5 years preceding the date of the 
application, must not have done any of the following:
    (1) Had more than two grants awarded under this part that remain in 
development;
    (2) Failed to establish two previous awarded grant projects under 
this part; or
    (3) Had a previous grant or per diem project awarded under this 
part terminated or transferred to another eligible entity for failure 
to comply with the terms and conditions of the award.

(Authority: 38 U.S.C. 501, 2011)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0554)


Sec.  61.13  Capital grant application packages--rating criteria.

    (a) General. Applicants that meet the threshold requirements in 
Sec.  61.12 will be rated using the selection criteria listed in this 
section. To be eligible for a capital grant, an applicant must receive 
at least 750 points (out of a possible 1000) and must receive points 
under each of the following paragraphs (b), (c), (d), (e) (f) and (g) 
of this section.
    (b) Project Plan. VA will award up to 300 points based on the 
demonstration and quality of the following:
    (1) The selection of the proposed housing in light of the 
population to be served.
    (2) The process used for deciding which veterans are appropriate 
for admission.
    (3) How, when, and by whom the progress of participants toward 
meeting their individual goals will be monitored, evaluated, and 
documented.
    (4) The role program participants will have in operating and 
maintaining the housing.
    (5) The responsibilities the applicant, sponsors, or contractors 
will have in operating and maintaining the housing.
    (6) The supportive services that will be provided and by whom to 
help participants achieve residential stability, increase skill level 
and/or income, and become involved in making life decisions that will 
increase self-determination.

[[Page 12709]]

    (7) The measureable objectives that will be used to determine 
success of the supportive services.
    (8) How the success of the program will be evaluated on an ongoing 
basis.
    (9) How the nutritional needs of veterans will be met.
    (10) How the agency will ensure a clean and sober environment.
    (11) How participants will be assisted in assimilating into the 
community through access to neighborhood facilities, activities, and 
services.
    (12) How the proposed project will be implemented in a timely 
fashion.
    (13) How permanent affordable housing will be identified and made 
known to participants upon leaving the supportive housing.
    (14) How participants will be provided necessary follow-up 
services.
    (15) The description of program policies regarding participant 
agreements, rent, and fees.
    (c) Outreach to persons on streets and in shelters. VA will award 
up to 100 points based on:
    (1) The agency's outreach plan to serve homeless veterans living in 
places not ordinarily meant for human habitation (e.g., streets, parks, 
abandoned buildings, automobiles, under bridges, in transportation 
facilities) and those who reside in emergency shelters; and
    (2) The likelihood that proposed plans for outreach and selection 
of participants will result in these populations being served.
    (d) Ability of applicant to develop and operate a project. VA will 
award up to 200 points based on the extent to which the application 
demonstrates the necessary staff and organizational experience to 
complete and operate the proposed project, based on the following:
    (1) Staffing plan for the project that reflects the appropriate 
professional staff, both administrative and clinical;
    (2) Experience of staff, if staff not yet hired, position 
descriptions and expectations of time to hire;
    (3) Amount of time each staff position is dedicated to the project, 
and in what capacity;
    (4) Applicant's previous experience assessing and providing for the 
housing needs of homeless veterans;
    (5) Applicant's previous experience assessing and providing 
supportive services for homeless veterans;
    (6) Applicant's previous experience assessing supportive service 
resources and entitlement benefits;
    (7) Applicant's previous experience with evaluating the progress of 
both individual participants and overall program effectiveness using 
quality and performance data to make changes;
    (8) Applicant's previous experience operating housing for homeless 
individuals;
    (9) Overall agency organizational overview (org. chart); and
    (10) Historical documentation of past performance both with VA and 
non-VA projects, including those from other Federal, state and local 
agencies and audits by private or public entities.
    (e) Need. VA will award up to 150 points based on the extent to 
which the applicant demonstrates:
    (1) Substantial unmet needs, particularly among the target 
population living in places not ordinarily meant for human habitation 
such as the streets, emergency shelters, based on reliable data from 
surveys of homeless populations or other reports or data gathering 
mechanisms that directly support claims made; and
    (2) An understanding of the homeless population to be served and 
its unmet housing and supportive service needs.
    (f) Completion confidence. VA will award up to 50 points based on 
the review panel's confidence that the applicant has effectively 
demonstrated the supportive housing or service center project will be 
completed as described in the application. VA may use historical 
program documents of past performance both VA and non-VA, including 
those from other Federal, state and local agencies as well as audits by 
private or public entities in determining confidence scores.
    (g) Coordination with other programs. VA will award up to 200 
points based on the extent to which applicants demonstrate that they 
have coordinated with Federal, state, local, private and other entities 
serving homeless persons in the planning and operation of the project. 
Such entities may include shelter transitional housing, health care, or 
social service providers; providers funded through Federal initiatives; 
local planning coalitions or provider associations; or other program 
providers relevant to the needs of homeless veterans in the local 
community. Applicants are required to demonstrate that they have 
coordinated with the VA medical care facility of jurisdiction and/or VA 
Regional Office of jurisdiction in their area. VA will award up to 50 
points of the 200 points based on the extent to which commitments to 
provide supportive services are documented at the time of application. 
Up to 150 points of the 200 points will be given to the extent 
applicants demonstrate that:
    (1) They are part of an ongoing community-wide planning process 
within the framework described above which is designed to share 
information on available resources and reduce duplication among 
programs that serve homeless veterans;
    (2) They have consulted directly with the closest VA Medical Center 
and other providers within the framework described above regarding 
coordination of services for project participants; and
    (3) They have coordinated with the closest VA Medical Center their 
plan to assure access to health care, case management, and other care 
services.

(Authority: 38 U.S.C. 501, 2011)

Sec.  61.14  Capital grants--selection of grantees.

    (a) Applicants will first be grouped in categories according to the 
funding priorities set forth in the NOFA, if any. Applicants will then 
be ranked, within their respective funding category if applicable. The 
highest-ranked applications for which funding is available, within 
highest priority funding category if applicable, will be conditionally 
selected to receive a capital grant in accordance with their ranked 
order, as determined under Sec.  61.13. If funding priorities have been 
established and funds are still available after selection of those 
applicants in the highest priority group VA will continue to 
conditionally select applicants in lower priority categories in 
accordance with the selection method set forth in this paragraph 
subject to available funding.
    (b) In the event of a tie between applicants, VA will use the score 
from Sec.  61.13(g) to determine the ranking. If the score from Sec.  
61.13(g) is also tied, VA will use the score from Sec.  61.13(d) to 
determine the ranking.
    (c) VA may reject an application where the project is not cost 
effective based on the cost and number of new supportive housing beds 
made available--or based on the cost, amount, and types of supportive 
services made available--when compared to other supportive housing or 
services projects, and when adjusted for high cost areas. For those 
applications that VA believes not to be cost-effective VA will:
    (1) Reduce the award; or
    (2) Not select the application for funding.
    (d) In the case of a previously awarded project that can no longer 
provide services and or housing and the recipient agency has decided to 
withdraw or the project has been terminated for failure to comply with 
the terms and conditions of the award; VA may transfer a capital grant 
or non-capital grant to another eligible entity in the same 
geographical area without competition, in order to prevent a loss of 
capacity of services and housing to

[[Page 12710]]

homeless veterans. The new entity must meet all of the requirements to 
which the original grantee was subject. In the case of a capital grant 
transfer the new grantee will only be entitled to the funding that 
remains from the original capital obligation and remains responsible 
for all commitments made by the original grantee.

(Authority: 38 U.S.C. 501, 2011)

Sec.  61.15  Capital grants--obtaining additional information and 
awarding capital grants.

    (a) Each applicant who has been conditionally selected for a 
capital grant will be requested by VA to submit additional 
documentation or information as necessary, including:
    (1) Any additional information necessary to show that the project 
is feasible, including a plan from an architect, contractor, or other 
building professional that provides estimated costs for the proposed 
design;
    (2) Documentation showing the sources of funding for the project 
and firm financing commitments for the matching requirements described 
in Sec.  61.16;
    (3) Documentation establishing site control described in Sec.  
61.17;
    (4) Documentation establishing compliance with the National 
Historic Preservation Act (16 U.S.C. 470);
    (5) Information necessary for VA to ensure compliance both with 
Uniform Federal Accessibility Standards (UFAS) and the Americans with 
Disabilities Act Accessibility Guidelines;
    (6) Documentation establishing compliance with local and state 
zoning codes;
    (7) Documentation in the form of one set of design development (35 
percent completion) drawings demonstrating compliance with local codes, 
state codes, and the current Life Safety Code of the National Fire 
Protection Association;
    (8) Information necessary for VA to ensure compliance with the 
provisions of the National Environmental Policy Act (42 U.S.C. 4321 et 
seq.);
    (9) A site survey performed by a licensed land surveyor; and
    (10) Such other documentation as specified by VA in writing or 
verbally to the applicant to confirm or clarify information provided in 
the application.
    (b) Items requested under paragraph (a) of this section must be 
received by VA in acceptable form within the time frame established in 
accordance with the Notice of Fund Availability.
    (c) Following receipt of the additional information in acceptable 
form, VA will execute an agreement and make payments to the grant 
recipient in accordance with Sec.  61.61 and other applicable 
provisions of this part.

(Authority: 38 U.S.C. 501, 2011)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0554)


Sec.  61.16  Matching funds for capital grants.

    (a) VA cannot award a capital grant for more than 65 percent of the 
total allowable costs of the project. The grantee must provide funding 
(``matching funding'') for the remaining 35 percent of the total cost, 
using non-federal funds. VA requires that applicants provide 
documentation of all costs related to the project including those that 
are not allowable under OMB Circular A-122 as codified at 2 CFR part 
230. Allowable costs means those related to the portion (percentage) of 
the property that would be used to provide supportive housing and 
services under this part.
    (b) Capital grants may include application costs, including site 
surveys, architectural, and engineering fees, but may not include 
relocation costs or developer's fees.
    (c) Documentation of matching funds. The matching funds described 
in paragraph (a) of this section must be documented as follows; no 
other format will be accepted as evidence of a firm commitment of 
matching funds:
    (1) Donations must be on the donor's letterhead, signed and dated.
    (2) The applicant's own cash must be committed on the applicant's 
letterhead, signed, and dated.
    (3) No conditions may be placed on the matching funds other than 
the organization's receipt of the capital grant.
    (4) Funds must be committed to the same activity as the capital 
grant application (i.e., acquisition, renovation, new construction, or 
a van), and must not relate to operating costs or services.
    (5) The value of matching funds must be for a cost that is included 
in the calculation of the total project cost, thereby decreasing the 
total expenditures of the grantee.
    (d) Van applications. The requirements of this section also apply 
to applications for a capital grant for a van under Sec.  61.18.

(Authority: 38 U.S.C. 501, 2011)

Sec.  61.17  Site control for capital grants.

    (a) In order to receive a capital grant for supportive housing or a 
fixed site service center, an applicant must demonstrate site control. 
Site control must be demonstrated through a deed or an executed 
contract of sale, or a capital lease, which assigns control or 
ownership to the entity whose Federal employer or taxpayer 
identification number is on the Application for Federal Assistance 
(SF424), unless one of the following apply:
    (1) VA gives written permission for an alternate assignment. VA 
will permit alternate assignments except when:
    (i) The alternate assignment is to a for-profit entity which is 
neither controlled by the applicant or by the applicant's parent 
organization or the entity is controlled by the applicant's parent 
organization which is a for-profit entity; or
    (ii) VA has a reasonable concern that the assignment may provide an 
economic or monetary benefit to the assignee other than the benefit 
that would have inured to the applicant had the applicant not made the 
alternate assignment.
    (2) The site is in a building or on land owned by VA, and the 
applicant has an agreement with VA for site control.
    (b) A capital grant recipient may change the site to a new site 
meeting the requirements of this part subject to VA approval under 
Sec.  61.62. However, the recipient is responsible for and must 
demonstrate ability to provide for any additional costs resulting from 
the change in site.
    (c) If site control is not demonstrated within 1 year after 
execution of an agreement under Sec.  61.61, the grantee may request a 
reasonable extension from the VA national GPD office, or the grant may 
be terminated. VA will authorize an extension request if the grantee 
was not at fault for being unable to exercise site control and the lack 
of site control does not affect the grantee's ability to complete the 
project.

(Authority: 38 U.S.C. 501, 2011)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0554)


Sec.  61.18  Capital grants for vans.

    (a) General. A capital grant may be used to procure one or more 
vans, as stated in a NOFA, to provide transportation or outreach for 
the purpose of providing supportive services. The grant may cover the 
purchase price, sales taxes, and title and licensing fees. Title to the 
van must vest solely in the applicant, and the applicant must insure 
the van to the same extent they would insure a van bought with their 
own funds.
    (b) Who can apply for a van. VA will only award vans to applicants 
who currently have an operational grant under this part, or in 
conjunction with a new application.

[[Page 12711]]

    (c) Application packages for van(s). In order to receive a van, the 
application must demonstrate the following:
    (1) Clear need for the van(s);
    (2) Specific use of the van(s);
    (3) Frequency of use of the van(s);
    (4) Qualifications of the van driver(s);
    (5) Training of the van driver(s);
    (6) Type of van(s) to be obtained; and
    (7) Adequate financial support will be available for the completion 
of the project or for the purchase and maintenance, repair, and 
operation of the van(s).
    (d) Rating criteria. Applications will be scored using the 
selection criteria listed in this section. To be eligible for a van 
grant, an applicant must receive at least 80 points (out of a possible 
100) of this section.
    (1) Need. VA will award up to 60 points based on the extent to 
which the applicant demonstrates a substantial unmet need for 
transportation due to:
    (i) Lack of alternative public transportation,
    (ii) Project location,
    (iii) Expired life use of current van, or
    (iv) Special disabled individual transportation.
    (2) Activity. VA will award up to 20 points based on the extent to 
which the applicant demonstrates:
    (i) Frequency of use,
    (ii) Type of use, and
    (iii) Type of van, e.g., whether there is a justification for a van 
with a wheelchair lift or other modifications.
    (3) Operator Qualification. VA will award up to 20 points based on 
the extent to which the applicant demonstrates a job description for 
the van operator that details:
    (i) Requirements of the position, and
    (ii) Training that will be provided to the driver.

(Authority: 38 U.S.C. 501, 2011)

Sec.  61.19  Transfer of capital grants.

    In the case of a previously awarded project that can no longer 
provide services and or housing and the recipient agency has decided to 
withdraw or the project has been terminated for failure to comply with 
the terms and conditions of the award; VA may transfer a capital grant 
or non-capital grant to another eligible entity in the same 
geographical area without competition, in order to prevent a loss of 
capacity of services and housing to homeless veterans. The new entity 
must meet all of the requirements to which the original grantee was 
subject. In the case of a capital grant transfer the new grantee will 
only be entitled to the funding that remains from the original capital 
obligation and remains responsible for all commitments made by the 
original grantee.

(Authority: 38 U.S.C. 501, 2011)

Per Diem Payments


Sec.  61.30  Per diem--general.

    (a) General. VA may provide per diem funds to offset operating 
costs for a program of supportive housing or services. VA may provide:
    (1) Per diem funds to capital grant recipients; or
    (2) Per diem only (PDO) funds to entities eligible to receive a 
capital grant, if the entity established a program of supportive 
housing or services after November 10, 1992.
    (b) Capital grant recipients. Capital grant recipients may request 
per diem funds after completion of a project funded by a capital grant 
and a site inspection under Sec.  61.80 to ensure that the grantee is 
capable of providing supportive services.
    (c) Per diem only applicants. PDO awards to entities eligible to 
receive a capital grant must provide supportive housing or services to 
the homeless veteran population within 180 days after the date on the 
notification of award letter, or VA will terminate the PDO payments.

(Authority: 38 U.S.C. 501, 2012)

Sec.  61.31  Per diem--application packages.

    (a) Capital grant recipient. To apply for per diem, a capital grant 
recipient need only indicate the intent to receive per diem on the 
capital grant application or may separately request per diem by 
submitting to VA a written statement requesting per diem.
    (b) Non-capital-grant recipient (per diem only). To apply for per 
diem only, a non-capital grant applicant must obtain from VA a non-
capital grant application package and submit to VA the information 
called for in the application package within the time period 
established in the Notice of Fund Availability. The application package 
includes exhibits to be prepared and submitted as part of the 
application process, including:
    (1) Documentation on eligibility to receive per diem under this 
part;
    (2) Documentation on operating budget and cost sharing;
    (3) Documentation on supportive services committed to the project;
    (4) Comments or recommendations by appropriate state (and area 
wide) clearinghouses pursuant to E.O. 12372 (3 CFR, 1982 Comp., p. 
197), if the applicant is a state; and
    (5) Reasonable assurances with respect to receipt of per diem under 
this part that:
    (i) The project will be used principally to furnish to veterans the 
level of care for which such application is made; that not more than 25 
percent of participants at any one time will be non-veterans; and that 
such services will meet the requirements of this part;
    (ii) Adequate financial support will be available for the per diem 
program; and
    (iii) The recipient will keep records and submit reports as VA may 
reasonably require, within the time frames required; and give VA, upon 
demand, access to the records upon which such information is based.

(Authority: 38 U.S.C. 501, 2012)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0554)


Sec.  61.32  Per diem application packages--rating criteria.

    (a) Conditional selection. Application packages for per diem only 
(i.e., from non-capital grant applicants) in response to a Notice of 
Fund Availability (NOFA) will be reviewed and grouped in categories 
according to the funding priorities set forth in the NOFA, if any. Such 
applications will then be ranked within their respective funding 
category according to scores achieved only if the applicant scores at 
least 750 cumulative points out of a possible 1000 from each of the 
following paragraphs: (b), (c), (d), (e), (f), and (g) of Sec.  61.13. 
The highest-ranked applications for which funding is available, within 
highest funding priority category if applicable, will be conditionally 
selected for eligibility to receive per diem payments or special need 
payment in accordance with their ranked order. If funding priorities 
have been established and funds are still available after selection of 
those applicants in the highest priority group VA will continue to 
conditionally select applicants in lower priority categories in 
accordance with the selection method set forth in this paragraph 
subject to available funding. Conditionally selectees will be 
subsequently awarded per diem, if they otherwise meet the requirements 
of this part, including passing the inspection required by Sec.  61.80.
    (b) Ranking applications. In the event of a tie between applicants, 
VA will use the score from Sec.  61.13(g) to determine the ranking. 
Note: Capital grant recipients are not required to be ranked; however, 
continuation of per diem payments to capital grant recipients will be 
subject to limitations set forth in Sec.  61.33.
    (c) Executing per diem agreements. VA will execute per diem 
agreements with an applicant whose per diem application was 
conditionally selected

[[Page 12712]]

under this section using the same procedures applicable to a capital 
grant under Sec.  61.15.

(Authority: 38 U.S.C. 501, 2012)

Sec.  61.33  Payment of per diem.

    (a) General. VA will pay per diem to the recipient for those 
homeless veterans:
    (1) Who VA referred to the recipient; or
    (2) For whom VA authorized the provision of supportive housing or 
supportive service.
    (b) Rate of payments for individual veterans. The rate of per diem 
for each veteran in supportive housing shall be the lesser of:
    (1) The daily cost of care estimated by the per diem recipient 
minus other sources of payments to the per diem recipient for 
furnishing services to homeless veterans that the per diem recipient 
certifies to be correct (other sources include payments and grants from 
other departments and agencies of the United States, from departments 
of local and State governments, from private entities or organizations, 
and from program participants); or
    (2) The current VA state home program per diem rate for domiciliary 
care, as set by the Secretary under title 38 U.S.C. 1741(a)(1).
    (c) Rate of payments for service centers. The per diem amount for 
service centers shall be \1/8\ of the lesser of the amount in paragraph 
(b)(1) or (b)(2) of this section, per hour, not to exceed 8 hours in 
any day.
    (d) Continuing payments. Recipients may continue to receive per 
diem only so long as funding is available, they continue to provide the 
supportive services described in their application, and they continue 
to meet the applicable ongoing requirements of this part. For non-
capital grant recipients of per diem only, funds will be paid to the 
highest-ranked applicants, within the highest-funding priority category 
if applicable, in descending order until funds are expended. Generally, 
payments will continue for the time frame specified in the Notice of 
Fund Availability. When necessary due to funding limitations, VA will 
reduce the rate of per diem.
    (e) Retroactive payments. Per diem may be paid retroactively for 
services provided not more than 3 days before VA approval is given or 
where, through no fault of the recipient, per diem payments should have 
been made but were not made.
    (f) Payments for absent veterans. VA will pay per diem for up to, 
and not more than, 72 consecutive hours (scheduled or unscheduled) of 
absence.
    (g) Supportive housing limitation. VA will not pay per diem for 
supportive housing for any homeless veteran who has had three or more 
episodes (admission and discharge for each episode) of supportive 
housing services paid for under this part. VA may waive this limitation 
if the services offered are different from those previously provided 
and may lead to a successful outcome.
    (h) Veterans receiving supportive housing and services. VA will not 
pay per diem for both supportive housing and supportive services 
provided to the same veteran by the same per diem recipient.
    (i) At the time of receipt, a per diem recipient must report to VA 
all other sources of income for the project for which per diem was 
awarded. The report provides a basis for adjustments to the per diem 
payment under paragraph (b)(1) of this section.

(Authority: 38 U.S.C. 501, 2012)

Special Need Grants


Sec.  61.40  Special need grants--general.

    (a) VA provides special need grants to public or nonprofit private 
entities that will create or provide supportive housing and services, 
which they would not otherwise create or provide, for the following 
special need homeless veteran populations:
    (1) Women, including women who have care of minor dependents;
    (2) Frail elderly;
    (3) Terminally ill; or
    (4) Chronically mentally ill.
    (b) Applicants must submit an application package for a capital or 
non-capital grant, which will be processed by the VA National GPD 
Program in accordance with this part; however, to be eligible for a 
capital special need grant, an applicant must receive at least 800 
points (out of a possible 1000) and must receive points under in each 
of the following paragraphs: (b), (c), (d), (e), (f), and (g) of Sec.  
61.13. Non-capital special need grants are rated in the same manner as 
non-capital grant applications under Sec.  61.32.
    (c) The following sections apply to special need grants: Sec. Sec.  
61.61 through 61.67, Sec.  61.80, and Sec.  61.82.

(Authority: 38 U.S.C. 501, 2061)

Sec.  61.41  Special need grants--application packages and threshold 
requirements.

    (a) Applications. To apply for a special need grant, an applicant 
must obtain, complete, and submit to VA a special need capital grant or 
special need per diem only application package within the time period 
established in the Notice of Fund Availability. A special need grant 
application must meet the same threshold requirements applicable to a 
capital grant under Sec.  61.12.
    (b) In addition to the requirements of Sec.  61.11, applicants must 
describe how they will address the needs of one or more of the homeless 
veteran populations identified in paragraphs (c) through (f) of this 
section.
    (c) Women, including women who have care of minor dependents. 
Applications must show how the program design will:
    (1) Ensure transportation for women and their children, especially 
for health care and educational needs;
    (2) Provide directly or offer referrals for adequate and safe child 
care;
    (3) Ensure children's health care needs are met, especially age-
appropriate wellness visits and immunizations; and
    (4) Address safety and security issues including segregation from 
other program participants if deemed appropriate.
    (d) Frail elderly. Applications must show how the program design 
will:
    (1) Ensure the safety of the residents in the facility to include 
preventing harm and exploitation;
    (2) Ensure opportunities to keep residents mentally and physically 
agile to the fullest extent through the incorporation of structured 
activities, physical activity, and plans for social engagement within 
the program and in the community;
    (3) Provide opportunities for participants to address life 
transitional issues and separation and/or loss issues;
    (4) Provide access to walkers, grippers, or other assistance 
devices necessary for optimal functioning;
    (5) Ensure adequate supervision, including supervision of 
medication and monitoring of medication compliance; and
    (6) Provide opportunities for participants either directly or 
through referral for other services particularly relevant for the frail 
elderly, including services or programs addressing emotional, social, 
spiritual, and generative needs.
    (e) Terminally ill. Applications must show how the program design 
will:
    (1) Help participants address life-transition and life-end issues;
    (2) Ensure that participants are afforded timely access to hospice 
services;
    (3) Provide opportunities for participants to engage in ``tasks of 
dying,'' or activities of ``getting things in order'' or other 
therapeutic actions that help resolve end of life issues and enable 
transition and closure;

[[Page 12713]]

    (4) Ensure adequate supervision including supervision of medication 
and monitoring of medication compliance; and
    (5) Provide opportunities for participants either directly or 
through referral for other services particularly relevant for 
terminally ill such as legal counsel and pain management.
    (f) Chronically mentally ill. Applications must show how the 
program design will:
    (1) Help participants join in and engage with the community;
    (2) Facilitate reintegration with the community and provide 
services that may optimize reintegration such as life-skills education, 
recreational activities, and follow up case management;
    (3) Ensure that participants have opportunities and services for 
re-establishing relationships with family;
    (4) Ensure adequate supervision, including supervision of 
medication and monitoring of medication compliance; and
    (5) Provide opportunities for participants, either directly or 
through referral, to obtain other services particularly relevant for a 
chronically mentally ill population, such as vocational development, 
benefits management, fiduciary or money management services, medication 
compliance, and medication education.

(Authority: 38 U.S.C. 501, 2061)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0554)


Sec.  61.44  Awarding special need grants and payment of special need 
per diem.

    (a) For those applicants selected for a special need grant, VA will 
execute an agreement and make payments to the grantee under Sec.  
61.61.
    (b) Capital grantee selectees who successfully complete the capital 
portion of their grant, or non-capital grantee selectees who 
successfully pass VA inspection, will be eligible for a special need 
per diem payment to defray the operational cost of the project. Special 
need per diem payment will be the lesser of:
    (1) 100 percent of the daily cost of care estimated by the special 
need recipient for furnishing services to homeless veterans with 
special need that the special need recipient certifies to be correct, 
minus any other sources of income; or
    (2) Two times the current VA State Home Program per diem rate for 
domiciliary care.
    (c) Special need awards are subject to funds availability, the 
recipient meeting the performance goals as stated in the grant 
application, statutory and regulatory requirements, and annual 
inspections.
    (d) Special need capital grantees are not eligible for per diem 
payment under Sec.  61.33, as the special need per diem payment covers 
the cost of care.

(Authority: 38 U.S.C. 501, 2061)

Technical Assistance Grants


Sec.  61.50  Technical assistance grants--general.

    (a) General. VA provides technical assistance grants to entities or 
organizations with expertise in preparing grant applications relating 
to the provision of assistance for homeless veterans. The recipients 
must use the grants to provide technical assistance to nonprofit 
organizations with experience in providing assistance to homeless 
veterans in order to help such groups apply for grants under this part, 
or from any other source, for addressing the needs of homeless 
veterans. Current recipients of any grant under this part (other than a 
technical assistance grant), or their sub-recipients, are ineligible 
for technical assistance grants.
    (b) Allowable activities. Technical assistance grant recipients may 
use grant funds for the following activities:
    (1) Group or individual ``how-to'' grant writing seminars, 
providing instructions on applying for a grant. Topics must include:
    (i) Determining eligibility;
    (ii) Matching the awarding agency's grant mission to the applicant 
agency's strengths;
    (iii) Meeting the specific grant outcome requirements;
    (iv) Creating measurable goals and objectives for grants;
    (v) Relating clear and concise grant project planning;
    (vi) Ensuring appropriate grant project staffing; and
    (vii) Demonstrating the applicant's abilities.
    (2) Creation and dissemination of ``how-to'' grant writing 
materials, i.e., compact disks, booklets, web pages or other media 
specifically designed to facilitate and instruct applicants in the 
completion of grant applications.
    (3) Group or individual seminars, providing instructions on the 
legal obligations associated with grant applications. Topics must 
include:
    (i) Office of Management and Budget (OMB) grant management 
circulars and forms, 2 CFR parts 215, 225, 230;
    (ii) Federal funding match and fund separation requirements; and
    (iii) Property and equipment disposition.
    (4) Telephone, video conferencing or email with potential grant 
applicants that specifically address grant application questions.
    (c) Unallowable activities. Technical assistance grant recipients 
may not use grant funds for the following activities:
    (1) Meetings, consortia, or any similar activity that does not 
assist community agencies in seeking grants to aid homeless veterans.
    (2) Referral of individual veterans to agencies for benefits, 
housing, medical assistance, or social services.
    (3) Lobbying.

 (Authority: 38 U.S.C. 501 and 2064)

Sec.  61.51  Technical assistance grants--application packages.

    (a) To apply for a technical assistance grant, an applicant must 
obtain from, complete, and submit to VA a technical assistance grant 
application package within the time period established in the Notice of 
Fund Availability.
    (b) The technical assistance grant application package will require 
the following:
    (1) Documentation on eligibility to receive a technical assistance 
grant under this part;
    (2) A description of technical assistance that would be provided 
(see Sec.  61.50);
    (3) Documentation concerning the estimated operating costs and 
operating budget for the technical assistance program for which the 
grant is sought;
    (4) Documentation concerning expertise in preparing grant 
applications;
    (5) Documentation of resources committed to the provision of 
technical expertise;
    (6) Comments or recommendations by appropriate state (and area 
wide) clearinghouses pursuant to E.O. 12372 (3 CFR, 1982 Comp., p. 
197), if the applicant is a state; and
    (7) Reasonable assurances that:
    (i) The recipient will provide adequate financial and 
administrative support for providing the services set forth in the 
technical assistance grant application, and will actually provide such 
services; and
    (ii) The recipient will keep records and timely submit reports as 
required by VA, and will give VA, on demand, access to the records upon 
which such reports are based.

(Authority: 38 U.S.C. 501, 2064)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0554)


Sec.  61.52  Technical assistance grant application packages--threshold 
requirements.

    The following threshold requirements for a technical assistance 
grant must be

[[Page 12714]]

met, or the application will be rejected before being rated under Sec.  
61.53:
    (a) The application must be complete and submitted on the correct 
form and in the time period established in the Notice of Fund 
Availability;
    (b) The applicant must establish expertise in preparing grant 
applications;
    (c) The activities for which assistance is requested must be 
eligible for funding under this part;
    (d) The applicant must demonstrate that adequate financial support 
will be available to carry out the project for which the grant is 
sought, consistent with the plans, specifications and schedule 
submitted by the applicant;
    (e) The applicant must not have an outstanding obligation to VA 
that is in arrears, or have an overdue or unsatisfactory response to an 
audit; and
    (f) The applicant must not have been notified by VA as being in 
default.

(Authority: 38 U.S.C. 501, 2064)

Sec.  61.53  Technical assistance grant application packages--rating 
criteria.

    (a) General. Applicants that meet the threshold requirements in 
Sec.  61.52 will then be rated using the selection criteria listed in 
paragraphs (b) and (c) of this section. To be eligible for a technical 
assistance grant, an applicant must receive at least 600 points (out of 
a possible 800).
    (b) Quality of the technical assistance. VA will award up to 400 
points based on the following:
    (1) How the recipients of technical training will increase their 
skill level regarding the completion of applications;
    (2) How the recipients of technical training will learn to find 
grant opportunities in a timely manner;
    (3) How the technical assistance provided will be monitored and 
evaluated and changes made, if needed; and
    (4) How the proposed technical assistance programs will be 
implemented in a timely fashion.
    (c) Ability of applicant to demonstrate expertise in preparing 
grant applications develop and operate a technical assistance program. 
VA will award up to 400 points based on the extent to which the 
application demonstrates all of the following:
    (1) Ability to find grants available for addressing the needs of 
homeless veterans.
    (2) Ability to find and offer technical assistance to entities 
eligible for such assistance.
    (3) Ability to administer a technical assistance program.
    (4) Ability to provide grant technical assistance.
    (5) Ability to evaluate the overall effectiveness of the technical 
assistance program and to make adjustments, if necessary, based on 
those evaluations.
    (6) Past performance. VA may use historical documents of past 
performance both VA and non-VA, including those from other Federal, 
state and local agencies and audits by private or public entities in 
scoring technical assistance applications.

(Authority: 38 U.S.C. 501, 2064)

Sec.  61.54  Awarding technical assistance grants.

    (a) Applicants will first be grouped in categories according to the 
funding priorities set forth in the NOFA, if any. Applicants will then 
be ranked within their respective funding category, if applicable. The 
highest-ranked applications for which funding is available, within 
highest priority funding category if applicable, will be selected to 
receive a technical assistance grant in accordance with their ranked 
order, as determined under Sec.  61.53. If funding priorities have been 
established and funds are still available after selection of those 
applicants in the highest priority group VA will continue to 
conditionally select applicants in lower priority categories in 
accordance with the selection method set forth in this paragraph 
subject to available funding.
    (b) In the event of a tie between applicants, VA will use the score 
from Sec.  61.53(c) to determine the ranking.
    (c) For those applicants selected to receive a technical assistance 
grant, VA will execute an agreement and make payments to the grant 
recipient in accordance with Sec.  61.61.
    (d) The amount of the technical assistance grant will be the 
estimated total operational cost of the technical assistance over the 
life of the technical assistance grant award as specified in the 
technical assistance grant agreement. Payments may be made for no more 
than the period specified in the Notice of Fund Availability.
    (e) VA will not pay for sustenance or lodging for the nonprofit 
community participants or attendees at training conferences offered by 
technical assistance grant recipients; however, the grantee may use 
grant funds to recover such expenses.

(Authority: 38 U.S.C. 501, 2064)

Sec.  61.55  Technical assistance reports.

    Each technical assistance grantee must submit to VA a quarterly 
report describing the activities for which the technical assistance 
grant funds were used, including the type and amount of technical 
assistance provided and the number of nonprofit community-based groups 
served.

(Authority: 38 U.S.C. 501, 2064)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0554)

Awards, Monitoring, and Enforcement of Agreements


Sec.  61.61  Agreement and funding actions.

    (a) Agreement. When VA selects an applicant for grant or per diem 
award under this part, VA will incorporate the requirements of this 
part into an agreement to be executed by VA and the applicant. VA will 
enforce the agreement through such action as may be appropriate, 
including temporarily withholding cash payments pending correction of a 
deficiency. Appropriate actions include actions in accordance with the 
VA common grant rules at 38 CFR parts 43 and 49 and the OMB Circulars, 
including those cited in Sec.  61.66.
    (b) Obligating funds. Upon execution of the agreement, VA will 
obligate funds to cover the amount of the approved grant/per diem, 
subject to the availability of funding. Payments will be for services 
rendered, contingent on submission of documentation in the form of 
invoices or purchase agreements and inspections, as VA deems necessary. 
VA will make payments on its own schedule to reimburse for amounts 
expended. Except for increases in the rate of per diem, VA will not 
increase the amount obligated for assistance under this part after the 
initial obligation of funds.
    (c) Deobligating funds. VA may deobligate all or parts of funds 
obligated under this part:
    (1) If the actual total cost for assistance is less than the total 
cost stated in the application; or
    (2) If the recipient fails to comply with the requirements of this 
part.
    (d) Deobligation procedure. Before deobligating funds under this 
section, VA will issue a notice of intent to terminate payments. The 
recipient will have 30 days to submit documentation demonstrating why 
payments should not be terminated. After review of any such 
documentation, VA will issue a final decision concerning termination of 
payment.
    (e) Other government funds. No funds provided under this part may 
be used to replace Federal, state or local funds previously used, or 
designated for use, to assist homeless veterans.

(Authority: 38 U.S.C. 501, 2011, 2012, 2061, 2064)


[[Page 12715]]




Sec.  61.62  Program changes.

    (a) Except as provided in paragraphs (b) through (d) of this 
section, a recipient may not make any significant changes to a project 
for which a grant has been awarded without prior written approval from 
the VA National Grant and Per Diem Program Office. Significant changes 
include, but are not limited to, a change in the recipient, a change in 
the project site (including relocating, adding an annex, a branch, or 
other expansion), additions or deletions of activities, shifts of funds 
from one approved type of activity to another, and a change in the 
category of participants to be served.
    (b) Recipients of grants involving both construction and non-
construction projects must receive prior written approval from the VA 
National Grant and Per Diem Program Office for cumulative transfers 
among direct cost categories which exceed or are expected to exceed 10 
percent of the current total approved budget.
    (c) Recipients of grants for projects involving both construction 
and non-construction who are state or local governments must receive 
prior written approval from the VA National Grant and Per Diem Program 
Office for any budget revision which would transfer funds between non-
construction and construction categories.
    (d) Approval for changes is contingent upon the application ranking 
remaining high enough after the approved change to have been 
competitively selected for funding in the year the application was 
selected.
    (e) Any changes to an approved program must be fully documented in 
the recipient's records.
    (f) Recipients must inform the VA National Grant and Per Diem 
Program Office in writing of any key position and address changes in/of 
their organization within 30 days of the change, i.e., new executive 
director or chief financial officer, permanent change of address for 
corporate communications.

(Authority: 38 U.S.C. 501, 2011, 2012, 2061, 2064)

Sec.  61.63  Procedural error.

    If an application would have been selected but for a procedural 
error committed by VA, VA may reconsider that application in the next 
funding round. A new application will not be required for this purpose 
so long as there is no material change in the information.

(Authority: 38 U.S.C. 501)

Sec.  61.64  Religious organizations.

    (a) Organizations that are religious or faith-based are eligible, 
on the same basis as any other organization, to participate in VA 
programs under this part. In the selection of service providers, 
neither the Federal Government nor a state or local government 
receiving funds under this part shall discriminate for or against an 
organization on the basis of the organization's religious character or 
affiliation.
    (b)(1) No organization may use direct financial assistance from VA 
under this part to pay for any of the following:
    (i) Inherently religious activities such as, religious worship, 
instruction, or proselytization; or
    (ii) Equipment or supplies to be used for any of those activities.
    (2) For purposes of this section, ``indirect financial assistance'' 
means Federal assistance in which a service provider receives program 
funds through a voucher, certificate, agreement or other form of 
disbursement, as a result of the independent and private choices of 
individual beneficiaries. ``Direct financial assistance,'' means 
Federal aid in the form of a grant, contract, or cooperative agreement 
where the independent choices of individual beneficiaries do not 
determine which organizations receive program funds.
    (c) Organizations that engage in inherently religious activities, 
such as worship, religious instruction, or proselytization, must offer 
those services separately in time or location from any programs or 
services funded with direct financial assistance from VA, and 
participation in any of the organization's inherently religious 
activities must be voluntary for the beneficiaries of a program or 
service funded by direct financial assistance from VA.
    (d) A religious organization that participates in VA programs under 
this part will retain its independence from Federal, state, or local 
governments and may continue to carry out its mission, including the 
definition, practice and expression of its religious beliefs, provided 
that it does not use direct financial assistance from VA under this 
part 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 VA-
funded services under this part, without removing religious art, icons, 
scripture, or other religious symbols. In addition, a VA-funded 
religious organization retains its authority over its internal 
governance, and it may retain religious terms in its organization's 
name, select its board members and otherwise govern itself on a 
religious basis, and include religious reference in its organization's 
mission statements and other governing documents.
    (e) An organization that participates in a VA program under this 
part shall not, in providing direct program assistance, discriminate 
against a program beneficiary or prospective program beneficiary 
regarding housing, supportive services, or technical assistance, on the 
basis of religion or religious belief.
    (f) If a state or local government voluntarily contributes its own 
funds to supplement Federally funded activities, the state or local 
government has the option to segregate the Federal funds or commingle 
them. However, if the funds are commingled, this provision applies to 
all of the commingled funds.
    (g) To the extent otherwise permitted by Federal law, the 
restrictions on inherently religious activities set forth in this 
section do not apply where VA funds are provided to religious 
organizations through indirect assistance as a result of a genuine and 
independent private choice of a beneficiary, provided the religious 
organizations otherwise satisfy the requirements of this part. A 
religious organization may receive such funds as the result of a 
beneficiary's genuine and independent choice if, for example, a 
beneficiary redeems a voucher, coupon, or certificate, allowing the 
beneficiary to direct where funds are to be paid, or a similar funding 
mechanism provided to that beneficiary and designed to give that 
beneficiary a choice among providers.

(Authority: 38 U.S.C. 501)

Sec.  61.65  Inspections.

    VA may inspect the facility and records of any applicant or 
recipient when necessary to determine compliance with this part or an 
agreement under Sec.  61.61. The authority to inspect does not 
authorize VA to manage or control the applicant or recipient.

(Authority: 38 U.S.C. 501, 2011, 2012, 2061, 2064)

Sec.  61.66  Financial management.

    (a) All recipients must comply with applicable requirements of the 
Single Audit Act Amendments of 1996, as implemented by OMB Circular A-
133 and codified at 38 CFR part 41.
    (b) All entities receiving assistance under this part must use a 
financial management system that follows generally accepted accounting 
principals and meets the requirements set forth under OMB Circular A-
102, Subpart C. Sec.  20, codified at 38 CFR

[[Page 12716]]

43.20, for state and local government recipients, or under OMB Circular 
A-110, Subpart C-Sec.  21, codified at 38 CFR 49.21 for nonprofit 
recipients. All recipients must implement the requirements of the 
appropriate OMB Circular for Cost-Principles (A-87 or A-122 codified at 
2 CFR parts 225 and part 230, respectively) for determining costs 
reimbursable under all awards issued under these regulations.

(Authority: 38 U.S.C. 501)

Sec.  61.67  Recovery provisions.

    (a) Full recovery of capital grants. VA may recover from the grant 
recipient all of the grant amounts provided for the project if, after 3 
years after the date of an award of a capital grant, the grant 
recipient has withdrawn from the VA Homeless Providers Grant and Per 
Diem Program (Program), does not establish the project for which the 
grant was made, or has established the project for which the grant was 
made but has not passed final inspection. Where a recipient has no 
control over causes for delays in implementing a project, VA may extend 
the three-year period, as appropriate. VA may obligate any recovered 
funds without fiscal year limitation.
    (b) Prorated (partial) recovery of capital grants. If a capital 
grant recipient is not subject to recovery under paragraph (a) of this 
section, VA will seek recovery of the grant amount on a prorated basis 
where the grant recipient ceases to provide services for which the 
grant was made or withdraws from the Program prior to the expiration of 
the applicable period of operation, which period shall begin on the 
date shown on the activation document produced by the VA National GPD 
Program. In cases where capital grant recipients have chosen not to 
receive per diem payments, the applicable period of operation shall 
begin on the date the VA Medical Center Director approved placement at 
the project site as shown on the inspection documents. The amount to be 
recaptured equals the total amount of the grant, multiplied by the 
fraction resulting from using the number of years the recipient was not 
operational as the numerator, and using the number of years of 
operation required under the following chart as the denominator.

------------------------------------------------------------------------
                                                             Years of
          Grant amount  (dollars in thousands)               operation
------------------------------------------------------------------------
0-1,000.................................................              20
1,001-2,000.............................................              25
2,001-3,000.............................................              30
Over 3,000..............................................              40
------------------------------------------------------------------------

     (c) Disposition of real property for capital grantees. In addition 
to being subject to recovery under paragraphs (a) and (b) of this 
section, capital grantees are subject to real property disposition as 
required by 38 CFR 49.32 when the grantee no longer is providing 
services through a grant awarded under this part.
    (d) Recovery of per diem and non-capital grants. VA will seek to 
recover from the recipient of per diem, a special need non-capital 
grant, or a technical assistance grant any funds that are not used in 
accordance with the requirements of this part.
    (e) Notice. Before VA takes action to recover funds, VA will issue 
to the recipient a notice of intent to recover funds. The recipient 
will then have 30 days to submit documentation demonstrating why funds 
should not be recovered. After review of any such documentation, VA 
will issue a decision regarding whether action will be taken to recover 
funds.
    (f) Vans. All recovery provisions will apply to vans with the 
exception of the period of time for recovery. The period of time for 
recovery will be 7 years. Disposition provisions of 38 CFR 49.34 apply 
to vans. Grantees are required to notify the VA National Grant and Per 
Diem Program Office for disposition of any van funded under this part.

(Authority: 38 U.S.C. 501, 2011, 2012, 2061, 2064)

Sec.  61.80  General operation requirements for supportive housing and 
service centers.

    (a) Supportive housing and service centers for which assistance is 
provided under this part must comply with the requirements of the 
current edition of the Life Safety Code of the National Fire Protection 
Association and all applicable state and local housing codes, licensing 
requirements, fire and safety requirements, and any other requirements 
in the jurisdiction in which the project is located regarding the 
condition of the structure and the operation of the supportive housing 
or service centers. Note: All facilities are to be protected throughout 
by an approved automatic sprinkler system unless a facility is 
specifically exempted under the Life Safety Code.
    (b) Except for such variations as are proposed by the recipient 
that would not affect compliance with paragraph (a) of this section and 
are approved by VA, supportive housing must meet the following 
requirements:
    (1) The structures must be structurally sound so as not to pose any 
threat to the health and safety of the occupants and so as to protect 
the residents from the elements;
    (2) Entry and exit locations to the structure must be capable of 
being utilized without unauthorized use of other private properties, 
and must provide alternate means of egress in case of fire;
    (3) Buildings constructed or altered with Federal assistance must 
also be accessible to the disabled, as required by Sec.  502 of the 
Americans with Disabilities Act, referred to as the Architectural 
Barriers Act;
    (4) Each resident must be afforded appropriate space and security 
for themselves and their belongings, including an acceptable place to 
sleep that is in compliance with all applicable local, state, and 
federal requirements;
    (5) Every room or space must be provided with natural or mechanical 
ventilation and the structures must be free of pollutants in the air at 
levels that threaten the health of residents;
    (6) The water supply must be free from contamination;
    (7) Residents must have access to sufficient sanitary facilities 
that are in proper operating condition, that may be used in privacy, 
and that are adequate for personal cleanliness and the disposal of 
human waste;
    (8) The housing must have adequate heating and/or cooling 
facilities in proper operating condition;
    (9) The housing must have adequate natural or artificial 
illumination to permit normal indoor activities and to support the 
health and safety of residents and sufficient electrical sources must 
be provided to permit use of essential electrical appliances while 
assuring safety from fire;
    (10) All food preparation areas must contain suitable space and 
equipment to store, prepare, and serve food in a sanitary manner;
    (11) The housing and any equipment must be maintained in a sanitary 
manner;
    (12) The residents with disabilities must be provided meals or meal 
preparation facilities must be available;
    (13) Residential supervision from a paid staff member, volunteer, 
or senior resident participant must be provided 24 hours per day, 7 
days per week and for those times that a volunteer or senior resident 
participant is providing residential supervision a paid staff member 
must be on call for emergencies 24 hours a day 7 days a week (all 
supervision must be provided by individuals with sufficient knowledge 
for the position); and
    (14) Residents must be provided a clean and sober environment that 
is free from illicit drug use or from alcohol use that: could threaten 
the health and/or safety of the residents or staff; hinders

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the peaceful enjoyment of the premises; or jeopardizes completion of 
the grantee's project goals and objectives. Those supportive housing or 
service centers that provide medical or social detox at the same site 
as the supportive housing or service must ensure that those residents 
in detox are clearly separated from the general residential population.
    (c) Each recipient of assistance under this part must conduct an 
ongoing assessment of the supportive services needed by the residents 
of the project and the availability of such services, and make 
adjustments as appropriate. The recipient will provide evidence of this 
ongoing assessment to VA regarding the plan described in their grant 
application to include meeting their performance goals. This 
information will be incorporated into the annual inspection. Grantees 
must submit during the grant agreement period to VA, a quarterly 
technical performance report. A quarterly report must be filed once 
during each quarter and no later than January 30, April 30, July 30, 
and October 30. The report may be in any acceptable business format and 
must include the following information:
    (1) A comparison of actual accomplishments to established goals for 
the reporting period and response to any findings related to monitoring 
efforts. This comparison will be on the same level of detail as 
specified in the program approved in the grant document. It will 
address quantifiable as well as non-quantifiable goals.
    (2) If established goals have not been met, provide a detailed 
narrative explanation and an explanation of the corrective action(s) 
which will be taken, as well as a timetable for accomplishment of the 
corrective action(s).
    (3) Other pertinent information, including a description of grant-
related activities occurring during the report period. This may include 
personnel activity (hiring-training), community orientation/awareness 
activity, programmatic activity (job development). Also identify 
administrative and programmatic problems, which may affect performance 
and proposed solutions.
    (4) The quarterly technical performance report will be submitted to 
the VA National GPD Program Liaison assigned to the project, with each 
quarterly report being a cumulative report for the entire calendar 
year. All pages of the reporting documents should have the appropriate 
grant number and signature, where appropriate. VA National GPD Program 
Liaisons will file the report and corrective actions in the 
administrative file for the grant.
    (5) Between scheduled reporting dates, the recipient will also 
immediately inform the VA National GPD Program Liaison of any 
significant developments affecting the recipient's ability to 
accomplish the work. VA National GPD Program Liaisons will provide 
grantees with necessary technical assistance, when and where 
appropriate as problems arise.
    (6) For each goal or objective listed in the grant application 
grantees will be allowed a 15 percent deviation of each goal or 
objective. If the deviation is greater than 15 percent in any one goal 
or objective a corrective action plan must be submitted to the VA 
National GPD Program Liaison. Failure to meet goals and objectives may 
result in withholding of placement, withholding of payment, suspension 
of payment and termination as outlined in this part or other applicable 
Federal statutes if the goal or objective would impact the program's 
ability to provide a successful outcome for veterans.
    (7) Corrective Action(s): When necessary, the grantee will 
automatically initiate a Corrective Action Plan (CAP). A CAP will be 
required if, on a quarterly basis, actual grant accomplishments vary by 
a margin of +/-15 percent or more from the planned goals and 
objectives. Please note that this is a general rule of thumb, in some 
cases +/-15 percent deviations are beneficial to the program such as 
more placements into employment or training than planned, less cost per 
placement than planned, higher average wage at placement than planned, 
etc.
    (8) All +/-15 percent deviations from the planned goals that have a 
negative impact on the grantee's ability to accomplish planned goals, 
must be fully explained in the grantee's quarterly technical report and 
a CAP is to be initiated, developed, and submitted by the grantee to 
the VA Liaison for approval.
    (9) The CAP must identify the activity or expenditure source which 
has the +/-15 percent deviation, describe the reason(s) for the 
variance, provide specific proposed corrective action(s), and a 
timetable for accomplishment of the corrective action. The plan may 
include an intent to modify the grant when appropriate.
    (10) The CAP will be submitted as an addendum to the quarterly 
technical report. After receipt of the CAP, the VA National GPD Program 
Liaison will send a letter to the grantee indicating that the CAP is 
approved or disapproved. If disapproved, VA Liaison will make 
beneficial suggestions to improve the proposed CAP and request 
resubmission until CAP is satisfactory to both parties.
    (d) A homeless veteran may remain in supportive housing for which 
assistance is provided under this part for a period no longer than 24 
months, except that a veteran may stay longer, if permanent housing for 
the veteran has not been located or if the veteran requires additional 
time to prepare for independent living. However, at any given time, no 
more than one-half of the veterans at such supportive housing facility 
may have resided at the facility for periods longer than 24 months.
    (e) Each recipient of assistance under this part must provide for 
the consultation and participation of not less than one homeless 
veteran or formerly homeless veteran on the board of directors or an 
equivalent policymaking entity of the recipient, to the extent that 
such entity considers and makes policies and decisions regarding any 
project provided under this part. This requirement may be waived if an 
applicant, despite a good faith effort to comply, is unable to meet it 
and presents a plan, subject to VA approval, to otherwise consult with 
homeless or formerly homeless veterans in considering and making such 
policies and decisions.
    (f) Each recipient of assistance under this part must, to the 
maximum extent practicable, involve homeless veterans and families, 
through employment, volunteer services, or otherwise, in constructing, 
rehabilitating, maintaining, and operating the project and in providing 
supportive services for the project.
    (g) Each recipient of assistance under this part shall establish 
procedures for fiscal control and fund accounting to ensure proper 
disbursement and accounting of assistance received under this part.
    (h) The recipient of assistance under this part that provides 
family violence prevention or treatment services must establish and 
implement procedures to ensure:
    (1) The confidentiality of records pertaining to any individual 
provided services, and
    (2) The confidentially of the address or location where the 
services are provided.
    (i) Each recipient of assistance under this part must maintain the 
confidentiality of records kept on homeless veterans receiving 
services.
    (j) VA may disapprove use of outpatient health services provided 
through the recipient if VA determines that such services are of 
unacceptable quality. Further, VA will not pay per diem where the 
Department concludes

[[Page 12718]]

that services furnished by the recipient are unacceptable.
    (k) A service center for homeless veterans shall provide services 
to homeless veterans for a minimum of 40 hours per week over a minimum 
of 5 days per week, as well as provide services on an as-needed, 
unscheduled basis. The calculation of average hours shall include 
travel time for mobile service centers. In addition:
    (1) Space in a service center shall be made available as mutually 
agreeable for use by VA staff and other appropriate agencies and 
organizations to assist homeless veterans;
    (2) A service center shall be equipped to provide, or assist in 
providing, health care, mental health services, hygiene facilities, 
benefits and employment counseling, meals, and transportation 
assistance;
    (3) A service center shall provide other services as VA determines 
necessary based on the need for services otherwise not available in the 
geographic area; and
    (4) A service center may be equipped and staffed to provide, or to 
assist in providing, job training and job placement services (including 
job readiness, job counseling, and literacy and skills training), as 
well as any outreach and case management services that may be necessary 
to meet the requirements of this paragraph.
    (l) Fixed site service centers will prominently post at or near the 
entrance to the service center their hours of operation and contacts in 
case of emergencies. Mobile service centers must take some action 
reasonably calculated to provide in advance a tentative schedule of 
visits, (e.g., newspapers, fliers, public service announcements on 
television or radio). The schedule should include but is not limited 
to:
    (1) The region of operation;
    (2) Times of operation;
    (3) Expected services to be provided; and
    (4) Contacts for specific information and changes.
    (m) Each recipient that provides housing and services must have a 
written disaster plan that has been coordinated with the emergency 
management entity responsible for the locality in which the project 
exists. The plan must encompass natural and man-made disasters.
    (n) The recipient will inform within 24 hours, its VA liaison of 
any sentinel events occurring within the program (i.e., drug overdose, 
death, injury).
    (o) The grantee, or sub-grantee, will provide appropriate 
orientation and training to staff to enable them to provide quality 
services that are appropriate to homeless veteran or homeless special 
need veteran population.
    (p) The grantee will maintain systematic participant enrollment 
information and participant tracking records designed to facilitate the 
uniform compilation and analysis of programmatic data necessary for 
verification of veteran status and case management, reporting, 
monitoring, and evaluation purposes.
    (q) The grantee will also document in each participant record at a 
minimum:
    (1) Family status.
    (2) Verification of veteran status (DD214, Department of Veterans 
Affairs confirmation report and/or identification card).
    (3) Education, employment history, and marketable skills/licenses/
credentials.
    (4) An Individual Service Plan (ISP) for each individual 
participant will be maintained in the participant case management 
record which contains the following:
    (i) An assessment of barriers, service needs, as well as strengths; 
and
    (ii) Specific services and referrals planned and benefits to be 
achieved as a result of program participation.
    (5) Duration and outcome of supportive service.
    (6) The grantee must verify service outcomes each calendar year 
quarter through the participant and provide documentation of this 
verification in the participant case management files.
    (r) The grantee will ensure that no more than 25 percent of the 
grant awarded beds are occupied by non-veterans, or VA may take actions 
as appropriate to decrease the beds, grant amounts, or terminate the 
grant and seek recapture in the case of capital funding. To calculate 
the occupancy rate, divide the actual number of bed days of care for 
veterans eligible to reside in the project, by the total number of 
possible bed days of care (the previous 180 days from the most current 
6 month period).

(Authority: 38 U.S.C. 501, 2011, 2012, 2061)

Sec.  61.81  Outreach activities.

    Recipients of capital grants and per diem relating to supportive 
housing or service centers must use their best efforts to ensure that 
eligible hard-to-reach veterans are found, engaged, and provided 
assistance. To achieve this goal, recipients may search for homeless 
veterans at places such as shelters, soup kitchens, parks, bus or train 
stations, and the streets. Outreach particularly should be directed 
toward veterans who have a nighttime residence that is an emergency 
shelter or a public or private place not ordinarily used as a regular 
sleeping accommodation for human beings (e.g., cars, streets, or 
parks).

(Authority: 38 U.S.C. 501, 2011, 2012, 2061)

Sec.  61.82  Participant fees for supportive housing.

    (a) Each participant of supportive housing may be required to pay a 
participant fee in an amount determined by the recipient, except that 
such participant fee may not exceed 30 percent of the participant's 
monthly income after deducting medical expenses, child care expenses, 
court ordered child support payments, or other court ordered payments; 
nor may it exceed the program's set maximum rate or the HUD Fair Market 
Rent for that type of housing and its location, whichever is less. The 
participant fee determination and collection process/procedures should 
be documented in the grant recipient's operating procedures to ensure 
consistency, fairness, and accuracy of fees collected. The 
participant's monthly income includes all income earned by or paid to 
the participant.
    (b) Retroactive benefit payments from any source to program 
participants, for the purpose of this part, may be considered income in 
the month received and therefore may be used in calculating the 
participant fee for that month.
    (c) Participant fees may be used for costs of operating the 
supportive housing or to assist supportive housing residents move to 
permanent housing, and must have a therapeutic benefit.
    (d) In addition to a participant fee, recipients may charge 
residents reasonable fees for extracurricular services and activities 
(extracurricular fee) that participants are not required to receive 
under the terms of the grant award, are not paid for by VA per diem, or 
provided by VA. Extracurricular fees must be voluntary on the part of 
the participant.
    (e) In projects funded under this part where participants sign 
agreements, VA treat the costs associated with participant eviction to 
be as unallowable.
    (f) Use of participant agreements.
    (1) Participant agreements must be between the grant recipient of 
record and the program participant.
    (2) Participant agreements must be part of a therapeutic plan to 
increase self-determination and responsibility.
    (3) Participant agreements must include a clause that allows 
program participants the ability to break the lease or program 
agreement without penalty for medical or clinical necessity.

[[Page 12719]]

    (4) Participant agreements may not be used to exclude homeless 
veterans with little or no income from the program.
    (5) Participant agreements and conditions must be fully disclosed 
to potential participants and acknowledged in writing by both parties.

(Authority: 38 U.S.C. 501, 2011, 2012, 2061)


[FR Doc. 2012-4878 Filed 2-29-12; 8:45 am]
BILLING CODE 8320-01-P