[Federal Register Volume 81, Number 225 (Tuesday, November 22, 2016)]
[Rules and Regulations]
[Pages 83674-83687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27208]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 1000

[Docket No. FR-5650-F-14]
RIN 2577-AC90


Native American Housing Assistance and Self-Determination Act; 
Revisions to the Indian Housing Block Grant Program Formula

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Final rule.

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SUMMARY: This final rule revises the Indian Housing Block Grant (IHBG) 
Program allocation formula authorized by section 302 of the Native 
American Housing Assistance and Self-Determination Act of 1996, as 
amended (NAHASDA). Through the IHBG Program, HUD provides federal 
housing assistance for Indian tribes in a manner that recognizes the 
right of Indian self-determination and tribal self-government. HUD 
negotiated this final rule with active tribal participation and using 
the procedures of the Negotiated Rulemaking Act of 1990. The regulatory 
changes reflect the consensus decisions reached by HUD and the tribal 
representatives on ways to improve and clarify the current regulations 
governing the IHBG Program formula.

DATES: Effective Date: December 22, 2016.

FOR FURTHER INFORMATION CONTACT: Heidi J. Frechette, Deputy Assistant 
Secretary for Native American Programs, Office of Public and Indian 
Housing, Department of Housing and Urban Development, 451 Seventh 
Street SW., Room 4126, Washington, DC 20410, telephone number 202-401-
7914 (this is not a toll-free number). Hearing- or speech-impaired 
individuals may access this number via TTY by calling the toll-free 
Federal Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Native American Housing Assistance and Self-Determination Act 
of 1996 (25 U.S.C. 4101 et seq.) (NAHASDA) changed the way that housing 
assistance is provided to Native Americans. NAHASDA eliminated several 
separate assistance programs and replaced them with a single block 
grant program, known as the Indian Housing Block Grant (IHBG) Program. 
NAHASDA and its implementing regulations, codified at 24 CFR part 1000, 
recognize tribal self-determination and self-governance while 
establishing reasonable standards of accountability. Reflective of 
this, section 106 of NAHASDA provides that HUD shall develop 
implementing regulations with active tribal participation and using the 
procedures of the Negotiated Rulemaking Act of 1990 (5 U.S.C. 561-570).
    Under the IHBG program, HUD makes assistance available to eligible 
Indian tribes for affordable housing activities. The amount of 
assistance made available to each Indian tribe is determined using a 
formula developed as part of the NAHASDA negotiated process. Based on 
the amount of funding appropriated for the IHBG program, HUD calculates 
the annual grant for each Indian tribe and provides this information to 
the Indian tribes. Indian tribes are required to submit to HUD an 
Indian Housing plan that includes, among other things, a description of 
planned activities and statement of needs. If the Indian Housing Plan 
complies with statutory and regulatory requirements, the grant is 
awarded.

[[Page 83675]]

    Following the enactment of the Native American Housing Assistance 
and Self-Determination Reauthorization Act of 2008 (Pub. L. 110-411, 
approved October 14, 2008) (NAHASDA Reauthorization Act) HUD 
established a negotiated rulemaking committee \1\ that focused on 
implementing the NAHASDA Reauthorization Act and prior amendments to 
NAHASDA, except those provisions which govern the NAHASDA allocation 
formula. As a result of that negotiated rulemaking, HUD published a 
final rule on December 3, 2012 (77 FR 71513).
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    \1\ 75 FR 423 (January 5, 2010).
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    On July 3, 2012 (77 FR 39452) and September 18, 2012 (77 FR 57544), 
HUD announced its intent to establish a negotiated rulemaking committee 
for the purpose of reviewing the NAHASDA allocation formula regulations 
at 24 CFR part 1000, subpart D, and negotiating recommendations for a 
possible proposed rule modifying the IHBG formula. On July 30, 2013 (78 
FR 45903), after considering public comment on the proposed membership, 
HUD published a Federal Register document announcing the final list of 
members of the IHBG Formula Negotiated Rulemaking Committee (Committee) 
and announcing the date of the first meeting of the Committee. The 
Committee consists of 24 designated representatives of tribal 
governments (or authorized designees of those tribal governments) 
which, as required by NAHASDA, reflects a balanced representation of 
Indian tribes geographically and based on size, and two HUD 
representatives.
    In developing this final rule, the Committee met nine times. 
Committee meetings took place on August 27-28, 2013, September 17-19, 
2013, April 23-24, 2014, June 11-13, 2014, July 29-31, 2014, August 26-
28, 2014, August 11-13, 2015, January 26-27, 2016, and September 20-21, 
2016. The Committee agreed to operate based on consensus rulemaking and 
its approved charter and protocols. All of the Committee meetings were 
announced in the Federal Register and were open to the public.\2\
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    \2\ See, 78 FR 45903 (July 30, 2013); 78 FR 54416 (September 4, 
2013); 79 FR 14204 (March 13, 2014); 79 FR 28700 (May 23, 2014); 80 
FR 30004 (May 26, 2015); 80 FR 33157 (June 11, 2015); 81 FR 881 
(January 8, 2016); 81 FR 57506 (August 23, 2016).
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    During this negotiated rulemaking, the Committee undertook a 
comprehensive review of the IHBG formula and statutory changes that 
needed to be addressed in the regulations. With the full and active 
participation of the tribes, HUD and the Committee identified certain 
areas of the IHBG formula that required clarification, were outdated, 
or could be improved and, on May 31, 2016, published a proposed rule 
(81 FR 34290). With the exception of changes to Sec.  1000.330(b)(ii), 
the proposed rule reflected the consensus decisions reached by the 
Committee during the negotiated rulemaking process on the best way to 
address these issues.
    The Committee convened for a 2-day meeting in Oklahoma City, OK, on 
September 20-21, 2016, to review and consider public comments received 
on the proposed rule. This final rule takes into consideration the 
public comments on the proposed rule, and makes some changes, based on 
the public comments, to the May 31, 2016, proposed rule. It also 
reflects the consensus decisions reached by HUD and the Committee.

II. Changes and Clarifications Made in This Final Rule

    This final rule follows publication of the May 31, 2016, proposed 
rule and takes into consideration the public comments received on the 
proposed rule. In response to the public comments, a discussion of 
which is presented in the following section of this preamble, and in 
further consideration of issues addressed at the proposed rule stage, 
HUD and the Committee are making the following regulatory changes at 
this final rule stage:
     HUD has decided not to move forward with the single non-
consensus provision in the proposed rule; the adjustment to the 
American Community Survey (ACS) proposed in Sec.  1000.330(b). HUD 
meaningfully considered the public comments and engaged in extensive 
additional analysis. HUD has decided that the adjustment does not do 
enough to address volatility associated with small areas to warrant its 
introduction as a non-consensus adjustment.
     The Committee agreed by consensus to add a new Sec.  
1000.318(d) to establish the eligibility criteria for Formula Current 
Assisted Stock (FCAS) units that are demolished and rebuilt. The 
provision provides that a unit demolished pursuant to a planned 
demolition may be considered eligible as a FCAS unit if, after 
demolition is completed, the unit is rebuilt within one year. The 
provision provides that demolition is completed when the site of the 
demolished unit is ready for rebuilding and allows IHBG recipients to 
request approval for a one-time, one-year extension based on the 
formula factors in section 302(c)(1) of NAHASDA.
     The Committee agreed to revise Sec.  1000.329(c) which 
requires that a tribe receiving Minimum Total Grant Allocation of 
Carryover Funds, certify the presence of households at or below 80 
percent of median income, to more closely parallel a similar provision 
codified at Sec.  1000.328(b)(2).
     The Committee agreed to clarify the undercount adjustment 
to the U.S. Decennial Census for Reservation and Trust Lands in Sec.  
1000.330(b). Specifically, the Committee agreed to change ``Indian 
Lands in Remote Alaska'' to ``For Remote Alaska as designated by the 
U.S. Census Bureau, Alaska Formula Areas in Remote Alaska shall be 
treated as Reservation and Trust Lands for purposes of this 
paragraph''.

III. The Public Comments

    The public comment period for this rule closed on August 1, 2016, 
and HUD received 22 comments. Included in these 22 comments were 2 sets 
of identical comments; one set that contained 7 identical comments and 
a second set that contained 2 identical comments. Comments were 
submitted by federally recognized Indian tribes, tribal and regional 
housing authorities, TDHEs, associations comprised of tribes, tribal 
housing authorities, a law office, a nonprofit devoted to issues of 
race and ethnicity, and members of the public.
    As discussed in this preamble, the Committee met on September 20 
and 21, 2016, to review and consider responses to the public comments. 
This section of the preamble addresses the significant issues raised in 
the public comments and organizes the comments by subject category, 
with a brief description of the issue, followed by the Committee's 
response.

A. Comments Regarding Non-Consensus Provision To Control Total Weights 
Within ACS (Sec.  1000.330(b))

    Comment: Control weights within the ACS not a valid measure of 
other variables. Several commenters expressed concern with the 
adjustment of Sec.  1000.330(b) and stated it is not reasonable to 
assume that an undercount of one variable, American Indian and Alaska 
Native (AIAN) persons, should be applied to the other variables.
    Response: The Committee acknowledges this was a non-consensus 
decision taken by HUD. HUD appreciates the comment. HUD proposed the 
adjustment to reduce some of the likely error in the ACS for small 
areas caused by county based sampling in the ACS and to address the 
undercount in the base Decennial

[[Page 83676]]

Census that is used as a core component of the weighting of ACS data. 
After careful consideration, however, HUD has decided not to move 
forward with the adjustment. HUD has determined that it does not do 
enough to address volatility associated with small areas to warrant its 
introduction as a non-consensus adjustment.
    Comment: Opposition to implementing a non-consensus adjustment to 
the ACS data. Several commenters expressed disappointment with HUD in 
proposing to implement the reweighting adjustment that is part of Sec.  
1000.330(b) despite broad opposition from tribal Committee members. The 
commenters urged HUD to respect the perspective of the majority of the 
Committee tribal members and not implement the reweighting proposal. 
Other commenters stated that HUD should not unilaterally move forward 
with its own proposals if no consensus is found but rather should rely 
on the existing language of the regulations since that approach was the 
result of a prior consensus between HUD and the tribes.
    Several commenters also stated that they do not support the 
implementation of any non-consensus items, and referred to the adoption 
of the ACS adjustment. Several of these commenters also concluded that 
implementing a non-consensus item severely dilutes the significance of 
this process, is not a sign of negotiating in good faith, and is 
inconsistent with what constitutes Government-to-Government 
consultation. One of the commenters also stated that the summary 
section of the proposed rule was inaccurate by stating that the 
proposed regulatory changes reflect the consensus decision of the 
Committee since the adoption of the data source itself was not made by 
consensus, and recommended that HUD revise the sentence to reflect that 
the proposal included regulatory changes that did not achieve 
consensus.
    Response: HUD appreciates the concerns of the commenters but 
disagrees with the suggestion that moving forward unilaterally with 
this non-consensus item reflects a lack of good faith or detracts from 
the Government-to-Government relationship that HUD has with the tribes. 
HUD has agreed, however, to remove the ACS adjustment (control total 
weights within the ACS).

B. Comments Regarding Minimum Total Grant Allocation of Carryover Funds 
(Sec.  1000.329).

    Comment: The Minimum Total Grant Allocation of Carryover Funds is 
inconsistent with NAHASDA. One commenter expressed opposition to the 
Minimum Total Grant Allocation of Carryover Funds stating that it is an 
arbitrary allocation rather than a need-based allocation, as required 
by NAHASDA. The commenter stated that adjusting the formula simply 
because carryover funds are added is a departure from the need-based 
model and will mean funding is withheld from tribes with more 
demonstrable need. The commenter suggested that if carryover funds 
cannot be added to the total allocation, then the funds should be used 
for drug clean-up grants.
    Response: The Committee considered this comment and disagrees that 
Sec.  1000.329 is arbitrary and not based on need. In considering the 
provision, the Committee sought to augment the minimum allocation 
amount already provided under the need component in Sec.  1000.328 in 
the event there are funds voluntarily returned or not accepted by other 
tribes in the prior year (``carryover''). Just as Sec.  1000.328 
recognized that allocations in minimum amounts are needed if there 
exist eligible households below 80 percent of median income in the 
tribe's formula area, proposed Sec.  1000.329 simply recalibrates the 
minimum if there are carryover funds. The Committee also notes that HUD 
does not have the statutory authority to award funds specifically to 
fund drug control/elimination grants, however, grantees may choose to 
spend their IHBG funds to remediate units as doing so is an eligible 
activity in the IHBG program.
    Comment: Minimum Total Grant Allocation of Carryover Funds should 
be clarified. Another commenter recommended that Sec.  1000.329(c) be 
clarified to read, ``To be eligible, a tribe must certify in its Indian 
Housing Plan the presence of any eligible households at or below 80 
percent of median income.''
    Response: The Committee considered this comment and agrees that 
Sec.  1000.329(c) be clarified to parallel Sec.  1000.328.

C. Comments Regarding the Data Sources for the Need Variables (Sec.  
1000.330).

    Comment: Counting and averaging of the U.S. Decennial Census data. 
Several commenters recommended the U.S. Decennial Census data be 
adjusted for both over and undercounts for accuracy. The commenters 
also requested clarification on who determines what is ``significant'' 
since it is not defined in the regulations. Other commenters 
recommended that HUD must determine the actual undercounts on a 
reservation-by-reservation basis instead of utilizing an average 
undercount for its adjustment.
    Response: The Committee considered these comments and agreed that 
the regulation should not make adjustments to add for any statistically 
significant overcount. The Committee during its eighth session 
considered how to address undercounts and overcounts reported by the 
U.S. Census Bureau. The Committee, by consensus, determined that 
adjustments to data should be made for statistically significant 
undercounts. The Committee did not reach consensus on any adjustments 
to data based upon overcounts. The Census reports reviewed during the 
convening of the Committee did not indicate any statistically 
significant overcounts. The U.S. Census Bureau determines whether 
overcounts or undercounts are statistically significant. Currently 
there is no way to determine actual undercounts or overcounts on a 
reservation-by-reservation basis.
    Comment: The term ``Indian Lands'' is ambiguous and needs to be 
clarified in the undercount adjustment to the U.S. Decennial Census. 
Several commenters stated that the term ``Indian Lands'' in Sec.  
1000.330(b) needs to be clarified as it pertains to Alaska Native 
villages in remote Alaska. One commenter stated that the term was not 
meant to mean ``Indian Country'' but was meant to refer to the lands 
within the formula area of the villages (Alaska Native Village 
Statistical Areas). The commenter recommended that the Committee not 
change this section if this is the understanding of how this term would 
be interpreted. The commenter requested, however, that the term be 
clarified as including those lands comprising the formula areas of the 
Alaska Native Villages if there is confusion regarding this 
interpretation.
    Another commenter stated that aggravating the ambiguity is the 
absence of any definition of the term ``Indian Lands'' in NAHASDA or 
the NAHASDA regulations, and the various uses of the term by other 
Federal agencies (e.g., the Department of Energy under the Alaska 
Native Claims Settlement Act, 25 U.S.C. 3501). This commenter stated 
that there are no reservation or trust lands in Remote Alaska other 
than the Metlakatla Reservation, and concluded that confining the term 
to reservations and trust lands in this unique context would render the 
provision meaningless. The commenters asserted that the Committee 
adopted the term ``Indian Lands'' in the committee briefings to also 
include Alaskan Native Village areas in remote Alaska and proposed a 
documented definition or a technical amendment

[[Page 83677]]

specifically stating that Alaskan Native Villages or Indian Lands in 
remote Alaska shall be treated as reservation and trust lands.
    Response: The Committee agreed with the commenters on the ambiguity 
of the term ``Indian Lands,'' and clarified the regulation at Sec.  
1000.330 by changing ``Indian Lands in Remote Alaska'' to ``For Remote 
Alaska as designated by the U.S. Census Bureau, Alaska Formula Areas in 
Remote Alaska shall be treated as Reservation and Trust Lands'' for 
purposes of this paragraph.
    Comment: Require HUD to issue a report on data source and update 
data source if necessary (Proposed Sec.  1000.330(d)). A commenter 
recommended that the volatility control provision, in Sec.  1000.331, 
be retained if HUD proceeds with using the ACS, as adjusted, to 
determine the variables described in Sec.  1000.324. The commenter also 
recommended that the rule require HUD to renegotiate this provision if 
it determines that the use of ACS data or U.S. Census Bureau county 
level population estimates for Native Americans results in inaccurate 
figures. Specifically, the commenter recommended the addition of the 
following provision:

Sec.  1000.330(d). After fiscal year 2018 but before fiscal year 2023, 
HUD shall prepare a report on the use of the data sources in this 
Section, including whether the data sources provide reliable 
information on the funding variables described on Sec.  1000.324, and 
provide tribes an opportunity to comment on the report. If the report 
determines that the data sources used in this section result in 
unreliable data, HUD shall propose a more reliable data source.

    Response: The Committee considered this comment and agreed not to 
add the language proposed by the commenter. In reaching this decision, 
the Committee notes that the language recommended is ambiguous. 
Additionally, the IHBG Negotiated Rulemaking Data Study Group 
extensively evaluated all data sources used in the formula during 
negotiated rulemaking. The resulting report outlining the Committee's 
Data Study Group's process and final recommendations to the Committee 
was published with the proposed rule.
    Comment: The American Community Survey (ACS) data is unreliable. 
One commenter stated that they did not support Sec.  1000.330(b)(ii) 
because the ACS is neither reflective nor representative of the 
commenter's tribal community. The commenter also stated that the flaws 
in the ACS data cannot be fixed by a weighting that uses the ACS count 
of American Indian and Native persons. Another commenter questioned the 
accuracy of ACS data given the sampling, response and inclusion rates, 
as well as its failure to capture tribal enrollment information. The 
commenter concluded that reliance on these data would harm poorer 
tribes with the worst housing, and thus disproportionately affect the 
funding accessible to them via the need component of the IHBG funding 
formula.
    Response: The Committee's Data Study Group did a thorough review of 
the ACS as a data source. Although consensus was not achieved on using 
the ACS as a data source, HUD has determined that the ACS is the most 
current and accurate data available for measuring the need for funding 
under the IHBG. The ACS data are more current than the data currently 
being used in the formula and are available for all eligible tribes, as 
discussed in the final Data Study Group Report. HUD recognizes that the 
ACS data does have some limitations. In addition, the 4.88 percent 
undercount of the 2010 Decennial Census for Reservation and Trust Lands 
is potentially present in the ACS because the ACS uses the Decennial 
Census, adjusted for post Census population growth, as its base data 
for weighting the ACS.
    HUD is committed to work with the Census Bureau to improve the 
accuracy of the counts. Tribes may still challenge the ACS data.

D. Comments Regarding Volatility Control (Sec.  1000.331).

    Comment: The Committee should clarify the volatility control 
provision. Several commenters stated that a strict construction of 
Sec.  1000.331(a) would defeat the intent of the Committee in agreeing 
to the provision. According to these commenters, the intent of Sec.  
1000.331(a) was to limit the impact of adopting a new data source (ACS) 
on those tribes that will be significantly and adversely affected by 
that conversion. The commenters wrote that as written, however, the 
relief would only be available if the tribe can show that the greater 
than 10 percent needs grant decline occurred ``solely as a direct 
result of the introduction'' of the ACS. The commenters stated that the 
record of the Committee proceedings indicates that was not the 
Committee's intent. One commenter presented several examples, including 
one which provided that if a tribe suffered a 65 percent reduction and 
can trace only 64.9 percent of its reduction to adoption of the ACS it 
would be disqualified from receiving any volatility control assistance, 
because its decline would not have been ``solely as a direct result of 
the introduction'' of ACS. The commenters recommended that Sec.  
1000.331(a) be revised by substituting ``primarily as a result'' for 
``solely as a direct result.'' These same commenters also recommended 
that the intent of Sec.  1000.331(a) be clarified by adding a 
definition for ``primarily as a result'' to read, ``As used in this 
section, `primarily as a result' means that the introduction of a new 
data source, in-and-of-itself, would result in greater than a 10 
percent decline in the tribe's need component allocation, irrespective 
of any declines attributable to causes other than introduction of that 
data source.''
    Response: Ensuring that grantees have stable allocations is a 
priority for the Committee. The original intent of Sec.  1000.331 was 
to protect tribes against significant fluctuations with the 
introduction of the Decennial Census and ACS data. When HUD introduces 
a new data set, HUD will not apply volatility control. When HUD 
introduces a new data source, HUD will apply volatility control. When 
HUD first introduces ACS data into the IHBG formula in Fiscal Year 
2018, HUD will apply volatility control. When a new ACS data set is 
available from year to year, HUD will not apply volatility control. 
When new Decennial Census data is available and is introduced into the 
formula, HUD will apply volatility control (e.g., 2020 Decennial 
Census).
    HUD understands, however, the concern expressed by the commenters. 
HUD is able to isolate the impact on tribes' funding allocations that 
is due to the introduction of the ACS as a new data source. This 
ability to isolate the impact, and apply the control on the basis of 
that impact alone alleviates the concern of the commenters. HUD will 
continue to apply the same methodology to calculate the impacts of 
introduction of a new data source to avoid the concerns raised by the 
commenters with the agreed upon language.

E. Comments Regarding Demolition and Rebuilding of Formula Current 
Assisted Stock (FCAS) Units (Sec.  1000.318(d))

    Comment: Recommended language for demolition and rebuilding should 
provide maximum flexibility to tribes. One commenter supported the 
preamble definition of demolition ``as occurring only when a recipient 
voluntarily demolishes units in order to clear a site for a new 
replacement unit.'' The commenter also recommended that the Committee 
define ``demolition'' in a way as to provide maximum flexibility to 
tribes. Flexibility is important,

[[Page 83678]]

according to the commenter, because a significant problem that many 
tribes face are housing units that are irreparably contaminated by 
methamphetamine production and tribes must engage in time-consuming 
testing of a substance that cannot be seen or smelled.
    The second problem, according to the commenter, is the potentially 
limited time for rebuilding the home where the weather conditions can 
delay or completely halt construction from October through May. Tribes 
should not lose their FCAS funds if these homes are not rebuilt within 
the one-year time frame. The commenter recommended, therefore, a 
definition for demolition that takes these concerns into account and 
allows tribes and TDHEs maximum flexibility in rehabilitation and 
reconstruction of FCAS units that are destroyed or demolished due to 
events beyond the control of the tribe/TDHE.
    Response: The Committee appreciates the commenter's recommendation 
to define demolition in a way that maximizes flexibility for tribes. As 
stated, the intent of Sec.  1000.318(d) is to incentivize tribes to 
rebuild expeditiously within a reasonable time period. The Committee 
understands the unique construction constraints faced by some IHBG 
recipients due to short building seasons, units contaminated by 
methamphetamine or other contaminants, remote locations and high 
construction costs and has considered these factors in the structuring 
of the demolition provision.
    Comment: Recommended language for demolition and rebuilding. 
Another commenter stated that section 302(b)(1)(C) of NAHASDA triggers 
a one-year time period at the time of demolition, regardless of how 
demolition occurs. The commenter stated that section 302(b)(1)(C) does 
not require completion of the unit within the one-year period, but 
requires that the construction process begin within one year of the 
demolition. Based on this interpretation of the statute, the commenter 
recommended that the Committee adopt the following language:
     If a FCAS unit is demolished, it will continue to be 
eligible as a FCAS unit if the following conditions are met:
    [cir] Construction of a replacement unit begins within one year of 
the time the original unit is demolished. If the unit is demolished by 
the occurrence of a natural disaster or fire, demolition shall be 
defined to occur on the date of the event. If the unit is demolished by 
the voluntary act of the recipient, demolition shall be defined to 
occur on the date that the replacement unit is demolished to a point 
where construction can commence;
    [cir] The replacement unit is complete within 24 months from the 
commencement of construction, except that if more than 5 units are 
being replaced, the time for completion of the units shall be 36 
months.
    Response: The Committee appreciates the recommendation submitted by 
the commenter on the demolition provision pursuant to Sec.  
1000.318(d). The Committee considered the proposed language but 
ultimately concluded that the statute requires that rebuilding be 
completed within one year of the demolition. The Committee agreed by 
consensus, however, to a revised Sec.  1000.318(d) that provides that 
the one-year clock does not begin until demolition is complete.
    Comment: Recommended language for demolition and rebuilding based 
on defining the terms ``demolish'' and ``rebuilds''. Another commenter 
wrote that the purposes of the statute is to create an incentive for 
tribes to expeditiously rebuild housing units that are so badly 
damaged, as to require demolition and to give tribes a reasonable 
period of time to rebuild. The commenter wrote that Congressional 
intent was to incentivize rebuilding in a reasonable time but balance 
that goal with the realities that Indian country suffers not only from 
remoteness but short construction seasons. The commenter recommended 
that the Committee define the terms ``demolish'' and ``rebuilds'' using 
a standard dictionary definition and consistent with Congressional 
intent. With regard to the term ``demolish'' the commenter stated that 
standard dictionary definitions convey a sense of completeness and 
define this term as requiring a deliberate, human, caused process. In 
defining ``rebuilds'' the commenter notes that the statute uses the 
present active tense. With these foundations, the commenter recommends 
that the Committee adopt the following provision:
     If an affordable housing unit is demolished and rebuilding 
occurs within 1 year of demolition of the unit, the unit may continue 
to be considered Formula Current Assisted Stock.
     As used in this subsection:
    [cir] Demolition'' means the intentional act or process of the 
tribe, and demolition occurs when the structure is completely destroyed 
and its component parts, including demolition debris, are removed from 
the site; and
    [cir] Rebuilding occurs when the tribe has made substantial, 
initial, on-going site improvements to the site of the replacement 
housing unit, including laying or altering the foundation.
    Response: The Committee appreciates the commenter's thoughtful 
responses on the demolition issue posed in the proposed rule. 
Specifically, the comments regarding the past and present tense of the 
terms ``demolish'' and ``rebuilds'' respectively, as used in the 
statute, offered the Committee a useful starting point for developing a 
revised section addressing demolition. The Committee also agrees that 
the purpose of the statute is to create an incentive for tribes to 
expeditiously rebuild housing units. The revised demolition regulation 
agreed to by consensus at Sec.  1000.318(d) incorporates and builds on 
the comments provided.

F. Other Issues and Comments.

    Comment: There is a need for a federally conducted National Tribal 
Survey. Several commenters recommended that tribes continue to find 
common ground on changes to the IHBG funding formula and push for the 
self-determined goal of building tribally driven data sources. These 
commenters also stated that it is the duty of HUD and the Federal 
government to assist tribes in seeking data sources that most 
appropriately reflect and represent the conditions and characteristics 
of their tribal communities and that this includes providing tribes the 
training and technical assistance to develop their own tribal data 
sources for housing and community development purposes.
    Other commenters recommended that HUD should consider developing or 
using a federally conducted national tribal survey to collect 
demographic and enrollment information for NAHASDA-eligible tribes. 
According to the commenters, a National Tribal Survey, jointly designed 
by HUD and tribes, would collect demographic data directly related to 
the IHBG formula. The commenters wrote that the survey could be 
administered by the Census Bureau under contract from HUD, much the 
same way the American Housing Survey is now done for special data 
related to public housing information. The commenters concluded that 
there would be many advantages to such a survey, including a focus on 
information essential for IHBG fund allocation, providing flexibility 
in survey design to accommodate future changes to the IHBG formula, and 
using said survey to inform a more accurate allocation of funds in 
other Indian programs like education and health care.
    Response: The Committee emphasizes that the IHBG Negotiated 
Rulemaking Data Study Group examined the development of a National 
Tribal

[[Page 83679]]

Survey that would rely on tribally driven data sources. The pros and 
cons of the Committee's analysis are presented in the Final Data Study 
Group Report and, more particularly, the individual data source 
evaluations in the appendices. No consensus could be reached on using 
any alternative to ACS data, including a National Tribal Survey. HUD 
has stated that it does not have the resources to design or administer 
a National Tribal Survey, or to audit data collection efforts to ensure 
that data from tribal sources is being collected in a fair and 
equitable manner, and thus unusable in the IHBG formula.
    Comment: Impact on other organizations that use the IHBG factors or 
data. One commenter responded to HUD's request for public comment 
regarding how the proposed changes to the IHBG formula would 
potentially impact nonprofits, state and local governments, and other 
organizations that are not IHBG recipients. The commenter stated that 
the effect of the IHBG formula on outside stakeholders should have no 
bearing on the implementation of changes to the IHBG formula. The 
commenter also stated that the purpose of the IHBG formula is to 
allocate federal Indian Housing resources to eligible recipients to 
address the housing needs of Alaska Native and American Indian families 
and that impact on other entities is not within the scope of factors 
that HUD may consider in the course of negotiating the IHBG formula.
    Response: The Committee is aware that some organizations, such as 
the U.S. Department of Transportation, use the IHBG formula for various 
reasons. Nevertheless, the Committee agrees with the commenter that the 
effect of the IHBG formula on these outside stakeholders should have no 
bearing on whether such changes are implemented. As stated by the 
commenter, section 302 of NAHASDA delineates the factors that the 
Committee must consider in determining the formula. HUD is not 
authorized to consider in the course of negotiating the IHBG formula 
how elements of the formula might impact entities that are not IHBG 
recipients.
    Comment: The negotiated rulemaking was successful. One commenter 
thanked everyone who was involved in the negotiated rulemaking process 
and described the process as thoughtful and deliberate, and the final 
product the best that could be expected given the limitations on 
current funding for the program. The commenter expressed support for 
all of the final proposed changes, and described the rule as necessary, 
fair and consistent with the mission of the Committee and the IHBG 
Program overall, and developed in the spirit of compromise. The 
commenter concluded that moving to an updated data source is the single 
greatest achievement of this Committee and urged HUD to adopt this 
final language and begin implementation as provided in the proposed 
rule. Another commenter wrote to recognize the many significant, 
positive outcomes of this negotiated rulemaking. This commenter stated 
that despite the somewhat distributive nature of this process, HUD and 
tribes were able to reach consensus on numerous important issues, 
including the minimum allocations of carryover funds, the undisbursed 
funds factor, the volatility control and establishing adjustments for 
undercounts. Both commenters agreed that the negotiated rulemaking 
process was successful.
    Response: The Committee appreciates these comments and agrees that 
this Negotiated Rulemaking was educational, productive and successful. 
The Committee also extends its appreciation to each tribal 
representative and to HUD leadership and staff for their hard work and 
dedication to the Negotiated Rulemaking process, and believes that this 
final rule reflects the thoughtful and deliberate work of everyone 
involved in this rulemaking, The Committee believes that the success of 
the Negotiated Rulemaking rests on the spirit of cooperation and hard 
work that tribal representatives and HUD leadership and staff brought 
to the negotiations.

IV. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and, therefore, subject to review by the Office of Management and 
Budget (OMB) in accordance with the requirements of the order. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned.'' Executive Order 13563 also directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. This final rule was determined not to be a 
``significant regulatory action'' as defined in section 3(f) of 
Executive Order 12866, and therefore was not reviewed by OMB.

Paperwork Reduction Act

    The information collection requirements contained in this rule have 
been approved by OMB in accordance with the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501-3520) and assigned OMB Control Number 2577-0218. 
In accordance with the Paperwork Reduction Act, an agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information, unless the collection displays a currently 
valid OMB control number.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis for any rule that is subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
The requirements of this rule apply to Indian tribal governments and 
their tribal housing authorities. Tribal governments and their tribal 
housing authorities are not covered by the definition of ``small 
entities'' under the RFA. Accordingly, the undersigned certifies that 
this rule will not have a significant impact on a substantial number of 
small entities.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on state and local governments and 
is not required by statute, or preempts state law, unless the relevant 
requirements of section 6 of the Executive Order are met. This rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on state and local governments or preempt state 
law within the meaning of the Executive Order.

Unfunded Mandates Reform Act

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

[[Page 83680]]

state, local, or tribal government, or on the private sector, within 
the meaning of UMRA.

Environmental Review

    This rule is a statutorily required establishment of a rate 
determination that does not constitute a development decision that 
affects the physical condition of specific project areas or buildings 
sites. Accordingly, under 24 CFR 50.19(c)(6), this rule is 
categorically excluded from environmental review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance Number (CFDA) for Indian 
Housing Block Grants is 14.867, and the CFDA for Title VI Federal 
Guarantees for Financing Tribal Housing Activities is 14.869.

List of Subjects in 24 CFR Part 1000

    Aged, Community development block grants, Grant programs--housing 
and community development, Grant programs--Indians, Indians, 
Individuals with disabilities, Public housing, Reporting and 
recordkeeping requirements.

    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR part 1000 as follows:

PART 1000--NATIVE AMERICAN HOUSING ACTIVITIES

0
1. The authority citation for 24 CFR part 1000 continues to read as 
follows:

    Authority:  25 U.S.C. 4101 et seq.; 42 U.S.C. 3535(d).


0
2. In Sec.  1000.302, revise paragraph (2)(i) of the definition of 
``Formula area'' to read as follows:


Sec.  1000.302   What are the definitions applicable for the IHBG 
formula?

* * * * *
    Formula area. * * *
    (2) * * *
    (i) For a geographic area not identified in paragraph (1) of this 
definition, and for expansion or re-definition of a geographic area 
from the prior year, including those identified in paragraph (1) of 
this definition, the Indian tribe must submit, on a form agreed to by 
HUD, information about the geographic area it wishes to include in its 
Formula Area, including proof that the Indian tribe, where applicable, 
has agreed to provide housing services pursuant to a Memorandum of 
Agreement (MOA) with the tribal and public governing entity or entities 
of the area, or has attempted to establish such an MOA, and is 
providing substantial housing services and will continue to expend or 
obligate funds for substantial housing services, as reflected in its 
Indian Housing Plan and Annual Performance Report for this purpose.
* * * * *


Sec.  1000.306   [Amended]

0
3. In Sec.  1000.306, remove paragraph (c).

0
4. Revise Sec.  1000.310 to read as follows:


Sec.  1000.310   What are the components of the IHBG formula?

    The IHBG formula consists of four components:
    (a) Formula Current Assisted Stock (FCAS) (Sec.  1000.316);
    (b) Need (Sec.  1000.324);
    (c) 1996 Minimum (Sec.  1000.340); and
    (d) Undisbursed IHBG funds factor (Sec.  1000.342).

0
5. In Sec.  1000.316, add paragraph (c) to read as follows:


Sec.  1000.316   How is the Formula Current Assisted Stock (FCAS) 
Component developed?

* * * * *
    (c) Conversion. Conversion of FCAS units from homeownership (Mutual 
Help or Turnkey III) to low-rent or from low-rent to a home ownership 
program.
    (1) If units were converted before October 1, 1997, as evidenced by 
an amended ACC, then those units will be counted for formula funding 
and eligibility purposes as the type of unit to which they were 
converted.
    (2) If units were converted on or after October 1, 1997, the 
following applies:
    (i) Funding type. Units that converted after October 1, 1997 will 
be funded as the type of unit specified on the original ACC in effect 
on September 30, 1997.
    (ii) Continued FCAS eligibility. Whether or not it is the first 
conversion, a unit converted after October 1, 1997, will be considered 
as the type converted to when determining continuing FCAS eligibility. 
A unit that is converted to low-rent will be treated as a low-rent unit 
for purposes of determining continuing FCAS eligibility. A unit that is 
converted to homeownership will be treated as a homeownership unit for 
purposes of determining continuing FCAS eligibility.
    (3) The Indian tribe, TDHE, or IHA shall report conversions on the 
Formula Response Form.

0
6. Amend Sec.  1000.318 by redesignating paragraphs (b) and (c) as 
paragraphs (c) and (d), respectively, and adding paragraphs (b) and (e) 
to read as follows:


Sec.  1000.318   When do units under Formula Current Assisted Stock 
cease to be counted or expire from the inventory use for the formula?

* * * * *
    (b)(1) A Mutual Help or Turnkey III unit not conveyed after the 
unit becomes eligible for conveyance by the terms of the MHOA may 
continue to be considered Formula Current Assisted Stock only if a 
legal impediment prevented conveyance; the legal impediment continues 
to exist; the tribe, TDHE, or IHA has taken all other steps necessary 
for conveyance and all that remains for conveyance is a resolution of 
the legal impediment; and the tribe, TDHE, or IHA made the following 
reasonable efforts to overcome the impediments:
    (i) No later than four months after the unit becomes eligible for 
conveyance, the tribe, TDHE, or IHA creates a written plan of action, 
which includes a description of specific legal impediments as well as 
specific, ongoing, and appropriate actions for each applicable unit 
that have been taken and will be taken to resolve the legal impediments 
within a 24-month period; and
    (ii) The tribe, TDHE, or IHA has carried out or is carrying out the 
written plan of action; and
    (iii) The tribe, TDHE, or IHA has documented undertaking the plan 
of action.
    (2) No Mutual Help or Turnkey III unit will be considered FCAS 24 
months after the date the unit became eligible for conveyance, unless 
the tribe, TDHE, or IHA provides evidence from a third party, such as a 
court or state or federal government agency, documenting that a legal 
impediment continues to prevent conveyance. FCAS units that have not 
been conveyed due to legal impediments on December 22, 2016 shall be 
treated as having become eligible for conveyance on December 22, 2016.
* * * * *
    (e) A unit that is demolished pursuant to a planned demolition may 
be considered eligible as a FCAS unit if, after demolition is 
completed, the unit is rebuilt within one year. Demolition is completed 
when the site of the demolished unit is ready for rebuilding. If the 
unit cannot be rebuilt within one year because of relative 
administrative capacities and other challenges faced by the recipient, 
including, but not limited to geographic distribution within the Indian 
area and technical capacity, the Indian tribe, TDHE or IHA may request 
approval for a one-time, one-year extension. Requests must be submitted

[[Page 83681]]

in writing and include a justification for the request.

0
7. In Sec.  1000.326, revise paragraph (a)(3), redesignate paragraph 
(c) as paragraph (d), and add a new paragraph (c) to read as follows:


Sec.  1000.326   What if a formula area is served by more than one 
Indian tribe?

    (a) * * *
    (3) In cases where a State recognized tribe's formula area overlaps 
with the formula area of a Federally recognized Indian tribe, the 
Federally recognized Indian tribe receives the allocation for the 
formula area up to its population cap, and the State recognized tribe 
receives the balance of the overlapping area (if any) up to its 
population cap.
* * * * *
    (c) Upon receiving a request for expansion or redefinition of a 
tribe's formula area, if approving the request would create an overlap, 
HUD shall follow the notice and comment procedures set forth in 
paragraph (2)(ii) of the definition of ``Formula area'' in Sec.  
1000.302.
* * * * *

0
8. Add Sec.  1000.329 to read as follows:


Sec.  1000.329   What is the minimum total grant allocated to a tribe 
if there is carryover funds available?

    (a) If in any given year there are carryover funds, then HUD will 
hold the lesser amount of $3 million or available carryover funds for 
additional allocations to tribes with grant allocations of less than 
0.011547 percent of that year's appropriations. All tribes eligible 
under this section shall receive a grant allocation equal to 0.011547 
percent of that year's appropriations.
    (b)(1) If the set-aside carryover funds are insufficient to fund 
all eligible tribes at 0.011547 percent of that year's appropriations, 
the minimum total grant shall be reduced to an amount which can be 
fully funded with the available set-aside carryover funds.
    (2) If less than $3 million is necessary to fully fund tribes under 
paragraph (a) of this section, any remaining carryover amounts of the 
set aside shall be carried forward to the next year's formula.
    (c) To be eligible, an Indian tribe must certify in its Indian 
Housing Plan the presence of any households at or below 80 percent of 
median income.
    (d) For purposes of this section, carryover funds means grant funds 
voluntarily returned to the formula or not accepted by tribes in a 
fiscal year.

0
9. Revise Sec.  1000.330 to read as follows:


Sec.  1000.330   What are the data sources for the need variables?

    (a) The sources of data for the need variables shall be data that 
are available and collected in a uniform manner that can be confirmed 
and verified for all AIAN households and persons living in an 
identified area. Until fiscal year 2018, the data used are 2000 U.S. 
Decennial Census data and any HUD-accepted Census challenges. The 2000 
U.S. Decennial Census data shall be adjusted annually using IHS 
projections based upon birth and death rate data provided by the 
National Center for Health Statistics.
    (b)(1) Beginning fiscal year 2018, the data source used to 
determine the AIAN persons variable described in Sec.  1000.324(g) 
shall be the most recent U.S. Decennial Census data adjusted for any 
statistically significant undercount for AIAN population confirmed by 
the U.S. Census Bureau and updated annually using the U.S. Census 
Bureau county level Population Estimates for Native Americans. For 
Remote Alaska as designated by the U.S. Census Bureau, Alaska Formula 
Areas in Remote Alaska shall be treated as Reservation and Trust Lands, 
unless the U.S. Census Bureau includes Remote Alaska in their Census 
Coverage Measurement or comparable study. The data under this paragraph 
(b) shall be updated annually using the U.S. Census Bureau county level 
Population Estimates for Native Americans.
    (2) Beginning fiscal year 2018, the data source used to determine 
the variables described in paragraphs (a) through (f) of Sec.  1000.324 
shall initially be the American Community Survey (ACS) 5-year 
Estimates.
    (c) Indian tribes may challenge the data described in this section 
pursuant to Sec.  1000.336.

0
10. Add Sec.  1000.331 to read as follows:


Sec.  1000.331   How will the impacts from adoption of a new data 
source be minimized as the new data source is implemented?

    (a) To minimize the impact of funding changes based on the 
introduction of a new data source under Sec.  1000.330, in fiscal year 
2018 and each year thereafter, if, solely as a direct result of the 
introduction of a new data source, an Indian tribe's allocation under 
the need component of the formula is less than 90 percent of the amount 
it received under the need component in the immediate previous fiscal 
year, the Indian tribe's need allocation shall be adjusted up to an 
amount equal to 90 percent of the previous year's need allocation.
    (b) Nothing in this section shall impact other adjustments under 
this part, including minimum funding, census challenges, formula area 
changes, or an increase in the total amount of funds available under 
the need component.
    (c) In the event of a decrease in the total amount of funds 
available under the need component, an Indian tribe's adjusted 
allocation under paragraph (a) of this section shall be reduced by an 
amount proportionate to the reduced amount available for distribution 
under the need component of the formula.
    (d) Adjustments under paragraph (b) or (c) of this section shall be 
made to a tribe's need allocation after adjusting that allocation under 
paragraph (a) of this section.

0
11. Revise Sec.  1000.336 as follows:
0
a. In paragraph (a)(6), remove ``and'';
0
b. In paragraph (a)(7), remove the period and add in its place ``; 
and'';
0
c. Add paragraph (a)(8); and
0
d. Revise paragraphs (d), (e), and (f).
    The addition and revisions read as follows:


Sec.  1000.336   How may an Indian tribe, TDHE, or HUD challenge data 
or appeal HUD formula determinations?

    (a) * * *
    (8) The undisbursed funds factor.
* * * * *
    (d) An Indian tribe or TDHE that seeks to appeal data or a HUD 
formula determination, and has data in its possession that are 
acceptable to HUD, shall submit the challenge or appeal in writing with 
data and proper documentation to HUD. An Indian tribe or TDHE may 
appeal the undisbursed funds factor no later than 30 days after the 
receipt of the formula determination. Data used to challenge data 
contained in the U.S. Census must meet the requirements described in 
Sec.  1000.330(a). Further, in order for a census challenge to be 
considered for the upcoming fiscal year allocation, documentation must 
be submitted by March 30th.
    (e) HUD shall respond to all challenges or appeals no later than 45 
days after receipt and either approve or deny the appeal in writing, 
setting forth the reasons for its decision.
    (1) If HUD challenges the validity of the submitted data HUD and 
the Indian tribe or TDHE shall attempt in good faith to resolve any 
discrepancies so that such data may be included in the formula 
allocation.
    (2) If HUD denies a challenge or appeal, the Indian tribe or TDHE 
may request reconsideration of HUD's denial within 30 calendar days of 
receipt of HUD's denial. The request shall be in writing and set forth 
justification for reconsideration.

[[Page 83682]]

    (3) HUD shall in writing affirm or deny the Indian tribe's or 
TDHE's request for reconsideration, setting forth HUD's reasons for the 
decision, within 20 calendar days of receiving the request. HUD's 
denial of a request for reconsideration shall constitute final agency 
action.
    (4) If HUD approves the Indian tribe or TDHE's appeal, HUD will 
adjust to the Indian tribe's or TDHE's subsequent fiscal year 
allocation to include only the disputed fiscal year(s).
    (f) In the event HUD questions whether the data contained in the 
formula accurately represents the Indian tribe's need, HUD shall 
request the Indian tribe to submit supporting documentation to justify 
the data and, if applicable, to provide a commitment to serve the 
population indicated in the geographic area.

0
12. Add Sec.  1000.342 to subpart D to read as follows:


Sec.  1000.342   Are undisbursed IHBG funds a factor in the grant 
formula?

    Yes, beginning fiscal year 2018. After calculating the initial 
allocation calculation for the current fiscal year by calculating FCAS, 
need, the 1996 Minimum, and repayments or additions for past over- or 
under-funding for each Indian tribe, the undisbursed funds factor shall 
be applied as follows:
    (a) The undisbursed funds factor applies if an Indian tribe's 
initial allocation calculation is $5 million or more and the Indian 
tribe has undisbursed IHBG funds in an amount that is greater than the 
sum of the prior 3 years' initial allocation calculations.
    (b) If subject to paragraph (a) of this section, the Indian tribe's 
grant allocation shall be the greater of the initial allocation 
calculation minus the amount of undisbursed IHBG funds that exceed the 
sum of the prior 3 years' initial allocation calculations, or its 1996 
Minimum.
    (c) For purposes of this section, ``undisbursed IHBG funds'' means 
the amount of IHBG funds allocated to an Indian tribe in HUD's line of 
credit control system on October 1 of the fiscal year for which the 
allocation is made. For Indian tribes under an umbrella TDHE (a 
recipient that has been designated to receive grant amounts by more 
than one Indian tribe), if the Indian tribe's initial allocation 
calculation is $5 million or more, its undisbursed IHBG funds is the 
amount calculated by multiplying the umbrella TDHE's total balance in 
HUD's line of credit control system on October 1 of the fiscal year for 
which the allocation is made by a percentage based on the Indian 
tribe's proportional share of the initial allocation calculation of all 
tribes under the umbrella.
    (d) Amounts subtracted from an initial allocation calculation under 
this section shall be redistributed under the need component among all 
Indian tribes not subject to paragraph (a) of this section (while also 
retaining the 1996 Minimum).

0
13. Revise appendices A and B of part 1000 to read as follows:

Appendix A to Part 1000--Indian Housing Block Grant Formula Mechanics

    This appendix shows the different components of the Indian 
Housing Block Grant (IHBG) formula. The following text explains how 
each component of the IHBG formula is calculated.
    1. The first step in running the IHBG formula is to determine 
the amount available for allocation in the Fiscal Year (FY). It is 
the sum of:
    (a) The FY appropriation for the IHBG program less amounts in 
the Appropriations Act mandated for purposes other than the formula 
allocation.
    (b) The net amount, if any, made available as a result of 
corrections for over- or under-allocations in prior FYs.
    (c) The amount, if any, made available pursuant to Sec.  
1000.536.
    (d) The amounts, if any, made available because tribes 
voluntarily returned, or did not accept, the amounts allocated to 
them in prior FYs, defined as ``carryover'' (see Sec.  1000.329).
    2. If there is carryover as defined in Sec.  1000.329, the 
amount of carryover up to $3 million, is then held aside for 
allocation under the minimum total grant provisions of the formula 
(see 11 below).
    3. The IHBG formula first calculates the amount each tribe is 
allocated under the Formula Current Assisted Stock (FCAS) component 
(See Sec. Sec.  1000.310 through 1000.322). The FCAS component is 
comprised of two parts, Operating Subsidy (Sec.  1000.316(a)) and 
Modernization (Sec.  1000.316(b)).
    (a) The Operating Subsidy component is calculated in two steps, 
as follows:
    (i) Each tribe's counts of Low Rent, Homeownership (Mutual Help 
and Turnkey III), and Section 8 units are multiplied by the National 
Per Unit Subsidy for operations for that category of unit, which is 
a 1996 index for the type of unit that is adjusted for inflation 
(see Sec.  1000.302 defining National Per Unit Subsidy). The amounts 
are summed to create an initial calculation of the operating subsidy 
component.
    (ii) The initial operating subsidy component amount is then 
adjusted for local area costs, using an adjustment factor called the 
AELFMR. The AELFMR factor is calculated for each tribe in three 
steps. First, an Allowable Expense Level (AEL) factor is calculated 
by dividing the tribe's AEL, a historic per-unit measure of 
operating cost, by the national weighted average AEL (see Sec.  
1000.302 defining Allowable Expense Level). Second, a Fair Market 
Rent (FMR) factor is calculated by dividing the tribe's FMR amount, 
an area-specific index published annually by HUD (see Sec.  1000.302 
Fair Market Rent factor), by the national weighted average FMR. 
Third, an AELFMR factor is created by assigning each tribe the 
greater of its AEL or FMR factor, and dividing that figure by the 
national weighted average AELFMR. In all cases, when the national 
average figure is calculated, tribes are weighted by the amount of 
their initial operating subsidy as calculated in 3(a)(i).
    (See Sec.  1000.320).
    (b) The Modernization component is determined using two methods 
depending on the number of public housing units that a tribe's 
housing authority operated prior to the Native American Housing and 
Self-Determination Act.
    (i) For all tribes, the number of Low Rent, Mutual Help, and 
Turnkey III units are multiplied by the National Per Unit Subsidy 
for modernization from 1996 adjusted for inflation (see Sec.  
1000.302 defining National Per Unit Subsidy).
    (ii) For Indian tribes with an Indian Housing Authority (IHA) 
that owned or operated fewer than 250 units on October 1, 1997, an 
alternative modernization component is calculated from the amount of 
funds the IHA received under the assistance program authorized by 
Section 14 of the 1937 Act (not including funds provided as 
emergency assistance) for FYs 1992 through 1997 (see Sec.  
1000.316(b)(2)). If this alternative calculation is greater than the 
amount calculated in paragraph (a) above, it is used to calculate 
the tribe's modernization component.
    (iii) The Modernization component is then multiplied by a local 
area cost adjustment factor based on the Total Development Cost 
(TDC) for the tribe (see Sec.  1000.302) divided by the national 
weighted average of all TDCs weighted by each tribe's pre-adjustment 
Modernization calculation in paragraph (b)(i) or (ii) above as 
applicable.
    4. The total amounts calculated under the FCAS component for 
each tribe are then added together to determine the national total 
amount allocated under the FCAS component. That total is subtracted 
from the funds available for allocation less the carryover amount 
held aside for allocation under the minimum total grant provision in 
Sec.  1000.329. The remainder is the total amount available for 
allocation under the need component of the IHBG formula.
    5. The first step in calculating need component is identifying 
weighted needs variables and adjusting for local area cost 
differences.
    (a) Need is first calculated using seven factors, where each 
factor is a tribe's share of the national totals for each of seven 
variables. The data used for the seven variables is described in 
Sec.  1000.330. The person count variable is adjusted for 
statistically significant undercounts for reservations, trust lands 
and remote Alaska and for growth in population since the latest 
Decennial Census. The Population Cap provision in Sec.  1000.302 
Formula Area (5) is then applied. Needs data are capped if the 
American Indian and Alaska Native (AIAN) population counts exceed 
twice tribal enrollment unless a tribe

[[Page 83683]]

can demonstrate that it serves more than twice as many non-tribal 
members as tribal members, in which case the cap is adjusted upward.
    The factors are weighted as set forth in Sec.  1000.324, as 
follows:
    (i) 22 percent of the amount available for allocation under the 
needs component are allocated by the share of the total AIAN 
households paying more than 50 percent of their income for housing 
and living in each tribe's Formula Area (see Sec.  1000.302);
    (ii) 25 percent are allocated by the share of the total AIAN 
households living in overcrowded housing and/or without kitchen or 
plumbing in each tribe's Formula Area;
    (iii) 15 percent are allocated by the share of the total AIAN 
households with an annual income less than or equal to 80 percent of 
Formula Median Income (see Sec.  1000.302) living in each tribe's 
Formula Area less the tribe's number of FCAS.
    (iv) 13 percent are allocated by the share of AIAN households 
with annual income less than or equal to 30 percent of Formula 
Median Income living in each tribe's Formula Area;
    (v) 7 percent are allocated by the share of AIAN households with 
annual income between 30 percent and 50 percent of Formula Median 
Income living in each tribe's Formula Area;
    (vi) 7 percent are allocated by the share of AIAN households 
with annual income between 50 percent and 80 percent of Formula 
Median Income living in each tribe's Formula Area;
    (vii) 11 percent are allocated by the share of AIAN persons 
living in each tribe's Formula Area.
    (b) The result of these calculations for each tribe is then 
multiplied by a local area cost adjustment based on the Total 
Development Cost for the tribe (see Sec.  1000.302) divided by the 
national weighted average of TDCs weighted by each tribe's pre-
adjustment need calculation. (See Sec.  1000.325).
    6. Each tribe's initial need allocation amount is then adjusted 
under the minimum need allocation provision of Sec.  1000.328. 
Tribes that are allocated less than $200,000 under the FCAS 
component of the IHBG formula and that certify the presence of any 
households at or below 80 percent of median income in their Indian 
Housing Plans will be allocated no less than a specified minimum 
under the needs component of the formula. The specified minimum 
amount shall equal 0.007826 percent of the appropriation for that FY 
after set-asides. The increase in funding for the tribes allocated 
the minimum need amount is funded by a reallocation from other 
tribes whose needs allocation exceeds the minimum need amount. This 
is necessary in order to keep the total allocation within the 
appropriation level (See Sec.  1000.328).
    7. Whenever a new Data Source is first introduced, provision is 
made to moderate extreme impacts through phase down adjustments. For 
purposes of these adjustments, new data sources (see Sec.  1000.331) 
include the initial introduction of the American Community Survey 
and 2010 Decennial Census in 2018, and the initial introduction of 
the 2020 Decennial Census when it becomes available. Tribes whose 
allocation under the need component decrease by more than ten 
percent in the first year of introduction will have that decrease 
moderated by subsequent adjustments, as required to prevent a drop 
of more than ten percent per year in the tribes' needs allocation 
attributable solely to the introduction of the New Data Source. 
After allocation adjustments are made under Sec.  1000.331 for a FY, 
the needs allocation of an Indian tribe whose needs allocation 
increased as a result of the introduction of a New Data Source under 
Sec.  1000.331 shall be adjusted downward proportionate to its share 
of the total increase in funding resulting from the introduction of 
a New Data Source to keep the overall needs allocation within 
available appropriations.
    8. A tribe's preliminary total allocation for a grant is 
calculated by summing the amounts calculated under the FCAS and need 
components. This amount is compared to how much a tribe received in 
FY 1996 for operating subsidy and modernization under the 1937 
Housing Act. If a tribe received more in FY 1996 for operating 
subsidy and modernization than it does under the IHBG formula 
allocation, its preliminary total allocation is adjusted up to the 
FY 1996 amount (See Sec.  1000.340(b)). Indian tribes receiving more 
under the IHBG formula than in FY 1996 have their grant allocations 
adjusted downward to offset the upward adjustments for the other 
tribes.
    9. The initial allocation amount for the current FY is 
calculated by adding any adjustments for over- or under-funding 
occurring in prior FYs to the allocation calculated in the previous 
step. These adjustments typically result from late reporting of FCAS 
changes, or conveyances which occur in a timely manner following the 
removal of units from eligibility due to conveyance eligibility.
    10. The Undisbursed Funds Factor component is calculated based 
on the initial allocation amounts calculated above. Tribes with an 
initial allocation of $5 million or more and undisbursed IHBG grant 
amounts (the amount available to the tribe in HUD's line of credit 
control on October 1 of the FY for which the allocation is being 
made) in an amount greater than the sum of the prior 3 years' 
initial allocation calculations will have their initial allocation 
amount adjusted down by the difference between the tribe's 
undisbursed grant amounts and the sum of its prior 3 years' initial 
allocation calculations. If this adjustment would bring the tribe 
below its FY 1996 minimum (see Sec.  1000.340(b)), then the tribe 
will be allocated its FY 1996 minimum. The sum of the adjustments 
will be reallocated among the other tribes proportionally under the 
need component.
    11. A final adjustment is made under Sec.  1000.329 which 
allocates available carryover amounts up to $3 million to achieve 
minimum total allocations. Tribes that certify in their Indian 
Housing Plans the presence of any eligible households at or below 80 
percent of median income and whose current FY formula allocation 
after the Undisbursed Funds Factor adjustment determined in the 
preceding step is less than 0.011547 percent of the FY appropriation 
after set-asides, will have their allocation adjusted upwards to 
0.011547 percent of the FY appropriation after set-asides, or to a 
lesser percentage which can be achieved for all eligible tribes with 
available carryover held for this adjustment (see 2 above).

Appendix B to Part 1000--IHBG Block Grant Formula Mechanisms

    1. The first step in running the Indian Housing Block Grant 
(IHBG) formula is to determine the total amount available for 
allocation in the current Fiscal Year (FY).

ALLOCAMT = APPROP + ADJ1 + ADJ2 + CARRYOVER.

Where:

ALLOCAMT = amount available for allocation under the formula.
APPROP = current FY appropriation for the IHBG program less amounts 
in the Appropriations Act mandated for purposes other than the 
formula allocation.
ADJ1= net amount, if any, made available as a result of corrections 
for over-or under allocations in prior FYs.
ADJ2 = amount, if any, made available under Sec.  1000.536.
CARRYOVER = amounts, if any, made available because tribes 
voluntarily returned, or did not accept, the amounts allocated to 
them in prior FYs.

    2. If there is carryover as defined in Sec.  1000.329, the 
amount of carryover up to $3 million, is then held aside for 
allocation under the minimum total grant provisions of the formula 
(see Step 10), then:

MGHOLD = amount set-aside for allocation under minimum total grant 
provision.

If CARRYOVER = 0, MGHOLD = 0.
If CARRYOVER > 0 and CARRYOVER < = $3 million, MGHOLD = CARRYOVER.
If CARRYOVER > $3 million, MGHOLD = $3 million.

    3. The FCAS component is calculated first. FCAS consists of two 
parts, Operating Subsidy (OPSUB) and Modernization (MOD), such that:

FCAS = OPSUB + MOD.

    a. OPSUB is calculated in two steps, as follows:
    (i) First, the number of Low-Rent, Section 8 and homeownership 
units are multiplied by the applicable national per unit subsidy 
(Sec.  1000.302 National Per Unit Subsidy). The amounts are summed 
to create an initial calculation of the Operating Subsidy component.

OPSUB1 = [LR * LRSUB] + [(MH + TK) * HOSUB] + [S8 * S8SUB].

Where:

OPSUB1 = initial calculation of Operating Subsidy component.
LR = number of Low-Rent units.
LRSUB = national per unit subsidy for Low-Rent units ($2,440 * INF).
INF = adjustment for inflation since 1995, as determined by the 
Consumer Price Index for housing.
MH + TK = number of Mutual Help and Turnkey III units.
HOSUB = national per unit subsidy for Homeownership units ($528 * 
INF).

[[Page 83684]]

S8 = number of Section 8 units.
S8SUB = national per unit subsidy for Section 8 units = ($3,625 * 
INF).

    (ii) The initial Operating Subsidy component amount is then 
adjusted for local area costs, using an adjustment factor called the 
AELFMR. The AELFMR factor is calculated for each tribe in three 
steps. First, an AEL factor is calculated by dividing the tribe's 
Allowable Expense Level (AEL), a historic per-unit measure of 
operating cost, by the national weighted average AEL (see Sec.  
1000.302 defining Allowable Expense Level)

AEL FACTOR = AEL/NAEL.

Where:

AEL = local Allowable Expense Level.
NAEL = national weighted average for AEL, where the weight is a 
tribe's initial calculation of operating subsidy.

    Second, an FMR factor is calculated by dividing the tribe's Fair 
Market Rent amount (FMR), an area-specific index published annually 
by HUD (see Sec.  1000.302 Fair Market Rent factor), by the national 
weighted average FMR.

FMR FACTOR = FMR/NFMR.

Where:

FMR= local Fair Market Rent.
NFMR = national weighted average for FMR, where the weight is a 
tribe's initial calculation of operating subsidy.

    Third, an AELFMR factor is created by assigning each tribe the 
greater of its AEL or FMR factor, and dividing that figure by the 
national weighted average AELFMR. In all cases, when the national 
average figure is calculated, tribes are weighted by the amount of 
their initial operating subsidy as calculated in 3(a)(i) above. (See 
Sec.  1000.320).

AELFMRFACTOR = final local area cost adjustment factor (AELFACTOR or 
FMRFACTOR)/NAELFMR.

Where:

NAELFMR = national weighted average for greater of AEL Factor or FMR 
factor, where weight is a tribe's initial calculation of operating 
subsidy

    Finally, the AELFMR factor is used to adjust the initial 
operating subsidy calculation for differences in local area costs.

OPSUB = OPSUB1 * AELFMRFACTOR.

Where:

OPSUB = Operating Subsidy component after adjustment for local cost 
differences.

    b. The modernization component, MOD, is calculated by two 
different methods, depending on whether the tribe had an Indian 
housing authority (IHA) that owned or operated more than 250 public 
housing units on October 1, 1997.
    (i) MOD1 is calculated for all tribes and considers the number 
of Low-Rent, and Mutual Help and Turnkey III FCAS units. Each of 
these is adjusted by the national per-unit modernization subsidy

MOD1 = [LR + MH + TK] * MODPU.

Where:

LR = number of Low-Rent units.
MH = number of Mutual Help units.
TK = number of Turnkey III units.
MODPU = national per-unit amount for modernization in 1996 adjusted 
for inflation ($1,974 * INF).
INF = adjustment for inflation since 1995, as determined by the 
Consumer Price Index for housing.

    (ii) MODAVG is calculated only for tribes that had an IHA that 
owned or operated fewer than 250 public housing units on October 1, 
1997, as the annual average amount they received for FYs 1992 
through 1997 under the assistance program authorized by section 14 
of the 1937 Act (not including emergency assistance). If this 
alternative calculation is greater than the amount calculated in 
(i), it is used to calculate the tribe's modernization component.

MODAVG = Average (FY 1992 to FY 1997) amount received by Section 14 
of the 1937 Act.

If MODAVG > MOD1, MOD1 = MODAVG.

    c. The modernization calculation is adjusted for local area 
costs:

MOD = MOD1 * (TDC/NTDC).

Where:

TDC = Local Total Development Costs defined in Sec.  1000.302.
NTDC = weighted national average for TDC, where the weight is the 
initial calculation of modernization amount of tribe with CAS.

    4. Now that calculation for FCAS is complete, the amount 
allocated using the need component of the formula can be determined:

NEEDALLOCAMT = ALLOCAMT - MGHOLD - NATCAS.

Where:

NEEDALLOCAMT = amount allocated using the need component of the 
formula.
ALLOCAMT = amount available for allocation under the formula.
MGHOLD = amount held for allocation under minimum total grant 
provision.
NATCAS = national summation of FCAS allocation for all tribes.

    5. The first step in calculating needs is identifying weighted 
needs variables and adjusting for local area cost differences.
    a. The basic needs calculation uses seven weighted criteria 
based on population and housing data in a tribe's Formula Area or 
share of Formula Area if Formula Areas overlap (see Sec.  1000.302 
Formula Area and Sec.  1000.326) to allocate the funds available for 
the needs component. The person count variable is adjusted for 
statistically significant undercounts for reservations, trust lands 
and remote Alaska and for changes in population since the latest 
Decennial Census.

PERADJ = PER * UCFACTOR * POPCHGFACTOR.

Where:

PER = American Indian and Alaskan Native (AIAN) persons as reported 
in the most recent Decennial Census.
UCFACTOR= 1+ the percentage undercount identified by the Census by 
type of land (in 2010 1.0488 for reservation and trust lands only 
and assumed also to apply to remote Alaska).
POPCHGFACTOR = the ratio of the most recent AIAN Census population 
estimate for county to the AIAN count for county from the Decennial 
Census.
    The Population Cap provision in Sec.  1000.302 Formula Area (5) 
is then applied. Needs data are capped if AIAN population counts 
exceed twice tribal enrollment unless a tribe can demonstrate that 
it serves more than twice as many non-tribal members as tribal 
members, in which case the cap is adjusted upward.

POPCAPTEST=1 if PERADJ > TEmultiplier * TE

    If POPCAPTEST=1, (tribes subject to Population Cap) then:

PER = TEmultiplier * TE
POPCAPADJF = PER/PERADJ
    For tribes NOT subject to Population Cap,
PER = PERADJ and POPCAPADJF = 1.

    Where:

POPCAPTEST = an indicator showing whether a tribe's needs data must 
be adjusted downward because its Formula Area population is 
disproportionally large relative to tribe's enrollment,
TEmultiplier = 2, or a larger factor if justified by tribe on annual 
basis.
TE = Tribal enrollment.
POPCAPADJF = factor used to adjust household needs variables.

    An initial calculation of the needs component is then calculated 
by determining each tribe's share of national totals on each 
variable, and applying weights to the variables as specified in 
regulation.

BASENEED = [(0.11 * (PER)/NPER) + (0.13 * HHLE30/NHHLE30) + (0.07 * 
HH30T50/NHH30T50) + (0.07 * HH50T80/NHH50T80) + (0.25 * OCRPR/
NOCRPR) + (0.22 * SCBTOT/NSCBTOT) + (0.15 * HOUSHOR/NHOUSHOR)] * 
NEEDALLOCAMT.

Where:

PER = count of AIAN persons after adjustments.
NPER = national total of PER.
HHLE30 = count of AIAN households less than 30% of formula median 
income multiplied by POPCAPADJF.
NHHLE30 = national total of HHLE30.
HH30T50 = count of AIAN households 30% to 50% of formula median 
income multiplied by POPCAPADJF.
NHH30T50 = national total of HH30T50.
HH50T80 = count of AIAN households 50% to 80% of formula median 
income multiplied by POPCAPADJF.
NHH50T80 = national total of HH50T80.
OCRPR = count of AIAN households crowded or without complete kitchen 
or plumbing multiplied by POPCAPADJF.
NOCRPR = national total of OCRPR.
SCBTOT = count of AIAN households paying more than 50% of their 
income for housing multiplied by POPCAPADJF.
NSCBTOT = national total SCBTOT.
HOUSHOR = a measure of housing shortage calculated as (HHLE30 + 
HH30T50 + HH50T80)--(LR + MH + TKIII)
NHOUSHOR = national total of HOUSHOR.
NEEDALLOCAMT = amount allocated using the need component of the 
formula.

    b. The basic needs calculation is adjusted to reflect 
differences in local area costs.

NEED = BASENEED * (TDC/NATDC).


[[Page 83685]]


Where:

TDC = Local Total Development Costs defined in Sec.  1000.302.
NATDC = average for TDC for all tribes weighted using BASENEED.

    6. The need allocation computed above is adjusted to take into 
account the minimum needs provision. Tribes allocated less than 
$200,000 under the FCAS component of the IHBG formula and that 
certify the presence of any households at or below 80 percent of 
median income in their Indian Housing Plan are allocated an 
additional amount so their needs allocation equals 0.007826 percent 
of the available appropriations for that FY after set-asides.

MINNEED = APPROP * 0.00007826.

Where:

APPROP = current FY appropriation for the IHBG program less amounts 
in the Appropriations Act mandated for purposes other than the 
formula allocation.
    If in the first need computation, a qualified tribe is allocated 
less than the minimum needs funding level, its need allocation will 
go up. Other tribes whose needs allocations are greater than the 
minimum needs amount will have their allocations adjusted downward 
to keep the total allocation within available funds:

If NEED < MINNEED and FCAS < $200,000 and income-based need has been 
identified in a tribe's IHP, then NEED1 = MINNEED.
If NEED > = MINNEED, then NEED1 = NEED1 - {UNDERMIN$ * [(NEED1 - 
MINNEED)/OVERMIN$]{time} .

Where:

MINNEED = minimum needs amount.
UNDERMIN$ = for all tribes qualifying for an increase under the 
minimum needs provision, sum of the differences between MINNEED and 
NEED1.
OVERMIN$ = for all tribes with needs allocations larger than the 
minimum needs amount, the sum of the difference between NEED1 and 
MINNEED.
7. Whenever a new data source (see Sec.  1000.331) is first 
introduced, provision is made to moderate extreme impacts through 
phase down adjustments. Tribes whose allocation under the need 
component decrease by more than ten percent in the first year of 
introduction will have that decrease moderated by subsequent 
adjustments, as required to prevent a drop of more than ten percent 
per year in the tribes' needs allocation attributable solely to the 
introduction of the new data source. A phase down adjustment 
schedule is calculated, containing adjustment amounts 
(PDADJn) for the first and all subsequent FYs, based on 
the amount allocated to a tribe under the need component in the FY 
prior to the introduction of the new data source using the old data 
source. That is,

If NEED1NewDS < 0.9 * NEED1OldDS, then a tribe qualifies for a phase 
down adjustment (PDADJ) (see Sec.  1000.331(c)).
PDADJn = (((0.9\n\) * NEED1OldDS)--NEED1NewDS), where n = 
1 to [infin] provided PDADJn > 0 for at least one tribe.

Where:

NEED1NewDS = the amount the tribe would have received in the FY 
prior to the introduction of the new data source had the new data 
source been used to determine their need component in that FY.
NEED1OldDS = the amount a tribe actually received in the FY prior to 
the introduction of the new data source based on the old data 
source.
PDADJn = the size of the adjustment that qualifying 
tribes will receive in each year n, where the n represents the 
number of years elapsed since the introduction of the new data 
source and is equal to one in the first year.

    After allocation adjustments are made under Sec.  1000.331 for a 
FY, the needs allocation of an Indian tribe whose needs allocation 
increased as a result of the introduction of a new data source shall 
be adjusted downward proportionate to its share of the total 
increase in funding resulting from the introduction of a new data 
source to keep the overall need component within available 
appropriations. For each tribe which benefitted from the 
introduction of the new data source, their share of the total gain 
is calculated and that share is used to determine the amount of 
contribution they will make in each year following the introduction 
of the new data source to allow the phase down adjustments to be 
made without exceeding the amount available for allocation.

If NEED1NewDS > NEED1OldDS, then tribe gained from the introduction 
of the new data source and contributes a portion of their gain to 
offset the phase down adjustments.
GAINSHR = (NEED1NewDS -NEED1OldDS)/TOTGAINYR1.
CONTRIBn = GAINSHR * TOTPDADJn,

Where:

NEEDd1NewDS = the amount the tribe would have received in the FY 
prior to the of introduction of the new data source had the new data 
source been used to determine their needs funding in that FY.
NEED1OldDS = the amount a tribe actually received in the FY prior to 
the introduction the new data source based on the old data source.
GAINSHR = a tribe's share of the total gains realized by all tribes 
that benefitted from the introduction of the new data source.
TOTGAINYR1 = the sum of the amounts that tribes gain from the 
introduction of the new data source in year one.
CONTRIBn = the size of the contribution that non-
qualifying tribes give in each year n, where the n represents the 
number of years elapsed since the introduction of the new data 
source and equal to one in the first year.
TOTPDADJn = the total amount in each year n required to 
cover the cost of phase down adjustments in that year, i.e. S 
PDADJn.

    The initial needs allocation for each tribe is adjusted based on 
the phase down adjustments and contribution amounts in the phase 
down schedule.

NEED1PD = NEED1 +_PDADJn - CONTRIBn.

Where:

NEED1PD = a tribe's allocation under the need component after 
applying the phase down adjustment schedule.
NEED1= the initial calculation of need in the current FY from step 6 
above.
PDADJn = the size of the adjustment that qualifying 
tribes will receive in each year n, where the n represents the 
number of years elapsed since the introduction of the new data 
source and is equal to one in the first year.
CONTRIBn = the size of the contribution that non-
qualifying tribes give in each year n, where the n represents the 
number of years elapsed since the introduction of the new data 
source and equal to one in the first year.

    PDADJn and CONTRIBn as calculated in the 
initial phase down adjustment schedule may have to be adjusted 
downward in subsequent FYs if the total amount available for 
allocation under the needs Component (i.e. NEEDALLOCAMT in Step 4) 
is lower than the amount available for that purpose in the FY prior 
to the introduction of the new data source. If so, both 
PDADJn and CONTRIBn will be reduced by a 
factor which is the ratio of NEEDALLOCAMT in current FY to 
NEEDALLOCAMT in the year prior to the introduction of the new data 
source.
    Furthermore, when the 2020 Decennial Census or other new data 
source is introduced, a new phase down adjustment schedule will be 
calculated in a similar manner as that was calculated for FY 2018.
    8. A tribe's preliminary total allocation is calculated by 
summing the amounts calculated under the FCAS and need components 
that will serve as the basis for further adjustments in accordance 
with Sec.  1000.340.

GRANT1 = FCAS + NEED1PD.

Where:

GRANT1 = preliminary total allocation before applying 1996 Operating 
Subsidy and Modernization minimum funding (see Step 8), Undisbursed 
Funds Factor (see Step 9) and Minimum Grant provision (see Step 10).
FCAS = Formula Current Assisted Stock component equal to OPSUB + 
MOD.
NEED1PD = the Tribe's needs allocation after applying the phase down 
adjustment schedule.

    GRANT1 is compared to how much a tribe received in FY 1996 for 
operating subsidy and modernization under the 1937 Housing Act. If a 
tribe received more in FY 1996 for operating subsidy and 
modernization than its IHBG formula allocation, its preliminary 
total allocation is adjusted up to the FY 1996 amount (See Sec.  
1000.340(b)). Indian tribes receiving more under the IHBG formula 
than in FY 1996 have their grant allocations adjusted downward to 
offset the upward adjustment for the other tribes.

TEST = GRANT1 - OPMOD96.
If TEST is < = than 0, then GRANT2 = OPMOD96.
If TEST is greater than 0 and GRANT1 > MINNEED, then:
GRANT2 = GRANT1 - [UNDER1996 * (TEST/OVER1996)].


[[Page 83686]]


Where:

TEST = variable to decide whether tribes qualify for adjustments 
under 1996 minimum funding.
GRANT1 = preliminary total allocation before applying 1996 Operating 
Subsidy and Modernization minimum funding (see Step 8), Undisbursed 
Funds Factor (see Step 9) and Minimum Grant provision (see Step 10).
OPMOD96 = funding received by tribe in FY 1996 for Operating Subsidy 
and Modernization.
MINNEED = minimum needs amount.
UNDER1996 = for all tribes with TEST less than 0, sum of the 
absolute value of TEST.
OVER1996 = for all tribes with TEST greater than 0, sum of TEST.
GRANT2 = preliminary total allocation after applying 1996 Operating 
Subsidy and Modernization minimum funding (see Step 8) but before 
applying the Undisbursed Funds Factor (see Step 9) and Minimum Grant 
provision (see Step 10).

    9. The initial allocation amount for the current FY is 
calculated by adding any adjustments for over- or under-funding 
occurring in prior FYs to the allocation calculated in the previous 
step. These adjustments typically result from late reporting of FCAS 
changes, or conveyances.

REPGRANT = GRANT2 + ADJUST1.

Where:

REPGRANT = Initial Allocation Amount in current FY (see Sec.  
1000.342).
GRANT2 = preliminary total allocation after applying 1996 Operating 
Subsidy and Modernization minimum funding (see Step 8) but before 
applying the Undisbursed Funds Factor (see Step 9) and Minimum Grant 
provision (see Step 10).
ADJUST1 = adjustments for over- or under-funding occurring in prior 
FYs.

10. The Undisbursed Funds Factor is determined by subtracting the 
sum of each tribe's Initial Allocation Amount for the prior three 
FYs from the IHBG amounts in HUD's Line of Credit Control System 
(LOCCS) on October 1 of the FY for which the new allocation is being 
determined. If the undisbursed funds factor is > $0 and the tribe's 
initial allocation for the FY exceeds $5 million, its final 
allocation will be the initial allocation minus the Undisbursed 
Funds Factor or its 1996 minimum, whichever is greater. Reductions 
to the initial allocation amounts due to the Undisbursed Funds 
Factor are summed and redistributed to other tribes in proportion to 
their initial needs allocation, NEED1PD, calculated above.

If REPGRANT > = $5 MILLION and UNDISB$ > (REPGRANTYR1 + REPGRANTYR2 
+ REPGRANTYR3), then UDFFtest = 1.

Where:

REPGRANT = Initial Allocation Amount in current FY.
REPGRANTYR1 = Initial Allocation Amount in one year prior to current 
FY.
REPGRANTYR2 = Initial Allocation Amount in two years prior to 
current FY.
REPGRANTYR3 = Initial Allocation Amount in three years prior to 
current FY.
UDFFTest = is an indicator as to whether the tribe will give up a 
portion of its needs allocation due to an excessive amount of 
undisbursed funds.

For tribes whose UDFFtest = 1, a reduction will occur as follows:

REPGRANTaftUDFF = (GRANT2 - (UNDISB$ - (REPGRANTYR1 + REPGRANTYR2 + 
REPGRANTYR3))
Except if, OPMOD96 > (GRANT2 - (UNDISB$ - (REPGRANTYR + REPGRANTYR2 
+ REPGRANTYR3)) then, REPGRANTaftUDFF = OPMOD96.

Where:

REPGRANTaftUDFF = Initial Allocation Amount in current FY adjusted 
for the Undisbursed Funds Factor.
GRANT2 = preliminary total allocation after applying 1996 Operating 
Subsidy and Modernization minimum funding (see Step 8) but before 
applying the Undisbursed Funds Factor (see Step 9) and Minimum Grant 
provision (see Step 10).
UNDISB$ = amount in HUD's LOCCS on October 1 of the FY.
REPGRANTYR1 = Initial Allocation Amount in one year prior to current 
FY.
REPGRANTYR2 = Initial Allocation Amount in two years prior to 
current FY.
REPGRANTYR3 = Initial Allocation Amount in three years prior to 
current FY.
OPMOD96 = funding received by tribe in FY 1996 for Operating Subsidy 
and Modernization.

    So the UDFFadj = REPGRANTaftUDFF - GRANT2 and UDFFadjTOT= 
Absolute value of the sum of UDFF adjustments for tribes subject to 
reduction.
    If UDFFtest is not equal to 1, tribes receive a portion of the 
funds recovered under the UDFF provision based on their share of 
total needs excluding any tribes with UDFFtest = 1. For these 
tribes, then:

UDFFadj = (NEED1PD/S Need1PD) * UDFFadjTOT).
REPGRANTaftUDFF = REPGRANT + UDFFadj.

Where:

UDFFadj = amount of the Undisbursed Fund Factor adjustments. 
Negative amount represents excess undisbursed funds. Positive 
represents amounts being transferred to other tribes without excess 
undisbursed funds.
NEED1PD = the Tribe's needs allocation after applying the phase down 
adjustment schedule.
UDFFadjTOT = absolute value of the sum of Undisbursed Fund Factor 
adjustments for tribes that meet the criteria for reduction and is 
equal to the sum available for redistribution among other tribes 
based on their initial needs allocation.
REPGRANTaftUDFF = Initial Allocation Amount in current FY adjusted 
for the Undisbursed Funds Factor.
REPGRANT = Initial Allocation Amount in current FY.

    11. A final adjustment is made under Sec.  1000.329 which 
allocates available carryover amounts up to $3 million to achieve 
minimum total allocations. Tribes that certify in their Indian 
Housing Plans the presence of any eligible households at or below 80 
percent of median income and whose total allocation determined in 
the preceding step is less than 0.011547 percent of the FY 
appropriation after set-asides, will have their allocation adjusted 
upwards to 0.011547 percent of the FY appropriation after set-
asides, or to a lesser percentage which can be achieved for all 
eligible tribes with available carryover funds set-aside for this 
purpose.

MINGRANT = APPROP * 0.0001547.

Where:

APPROP = current FY appropriation for the IHBG program less amounts 
in the Appropriations Act mandated for purposes other than the 
formula allocation.
    If (GRANT2 + UDFFADJ) < MINGRANT and income-based need has been 
identified in a tribe's IHP, then tribe qualifies for MINGRANTADJ. 
For Tribes that qualify, calculate:

MINGRTADJTEST = MINGRANT--(GRANT2 + UDFFADJ).

If the Sum for all tribes of MINGRTADJTEST < MGHOLD, then:

MINGRANTADJ = MINGRTADJTEST.

    If the Sum for all tribes of MINGRANTADJTEST > MGHOLD, then:

MINGRANTADJ = MINGRANTADJTEST * (MGHOLD/S MINGRANTADJ)

Where:

GRANT2 is the approximate grant allocation in any given year for any 
given tribe.
UDFFADJ = amount of UDFF adjustment.
MINGRANT = Minimum total allocation established in Sec.  1000.329.
MINGRANTADJTEST = amount required to bring all qualifying tribes' 
allocations up to the minimum total allocation amount. This amount 
can then be compared.
MGHOLD = amount set-aside for allocation under minimum total grant 
provision (see Step 2).
MINGRANTADJ = actual amount of the minimum grant adjustment that can 
be accommodated with the amount set aside from carryover for this 
purpose.
    12. A tribe's final allocation consists of the initial current 
FY formula allocation with three adjustments.

FINALALLOCATION = GRANT2 + ADJUST1 + UDFFadj + MINGRANTADJ

Where:

FINALALLOCATION = total amount a tribe is eligible to receive as a 
grant in the current FY.
GRANT2 = preliminary total allocation after applying 1996 Operating 
Subsidy and Modernization minimum funding (see Step 8) but before 
applying the Undisbursed Funds Factor (see Step 9) and Minimum Grant 
provision (see Step 10).
ADJUST1 = adjustments for over- or under-funding occurring in prior 
FYs.
UDFFadj = amount of the Undisbursed Fund Factor adjustments. 
Negative amount represents excess undisbursed funds.

[[Page 83687]]

Positive represents amounts being transferred to other tribes 
without excess undisbursed funds.
MINGRANTADJ = actual amount of the minimum grant adjustment that can 
be accommodated with the amount set aside from carryover for this 
purpose.

    Dated: November 4, 2016.
Lourdes Castro Ramirez,
Principal Deputy Assistant, Secretary for Public and Indian Housing.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2016-27208 Filed 11-21-16; 8:45 am]
 BILLING CODE 4210-67-P