[Federal Register Volume 81, Number 232 (Friday, December 2, 2016)]
[Rules and Regulations]
[Pages 86947-86953]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28591]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 91 and 92

[Docket No. FR 5792-I-01]
RIN 2501-AD69


Changes to HOME Investment Partnerships (HOME) Program Commitment 
Requirement

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

ACTION: Interim final rule.

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SUMMARY: This rule changes the method by which HUD will determine 
participating jurisdictions' compliance with the statutory 24-month 
commitment requirement. Beginning with Fiscal Year (FY) 2015 grants, 
HUD will implement a grant-specific method for determining compliance 
with these requirements. This rule also establishes a method of 
administering program income that will prevent participating 
jurisdictions from losing appropriated funds when they expend program 
income.

DATES: Effective Date: January 31, 2017.
    Comment Due Date: January 3, 2017.

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim final rule. All communications must refer to the above 
docket number and title. To receive consideration as public comments, 
comments must be submitted through one of the two methods specified 
below:
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available to 
the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.
    No Facsimiled Comments. Facsimiled (faxed) comments are not 
acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at 202-708-3055 (this is 
not a toll-free number). Individuals with speech or hearing impairments 
may access this number via TTY by calling the Federal Relay Service at 
800-877-8339 (this is a toll-free number). Copies of all comments 
submitted are available for inspection and downloading at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Virginia Sardone, Director, Office of 
Affordable Housing Programs, Department of Housing and Urban 
Development, Office of Community Planning and Development, 451 7th 
Street SW., Suite 7286, Washington, DC 20410; or at 202-708-2684 (this 
is not a toll-free number). Individuals with speech or hearing 
impairments may access this number via TTY by calling the Federal Relay 
Service at 800-877-8339 (this is a toll-free number).

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 218(g) of the National Affordable Housing Act of 1990 
(NAHA), as amended, requires that participating jurisdictions place 
Home Investment Partnerships Program (HOME) funds under binding 
commitment within 24 months after the last day of the month in which 
HUD made the funds available (i.e., obligated the grant by executing 
the HOME grant agreement). This section of NAHA further states that a 
participating jurisdiction loses the right to draw any funds that are 
not placed under binding commitment by that date and that HUD shall 
reduce the participating jurisdiction's line of credit by the expiring 
amount.
    To date, HUD has measured compliance with the HOME program 24-month 
requirement for committing funds using a cumulative methodology. 
Because HUD's Integrated Disbursement and Information System (IDIS) 
committed and disbursed funds on a first-in, first-out basis through 
participating jurisdictions' FY 2014 HOME grants, participating 
jurisdictions did not have the ability to designate funds from a 
specific allocation when committing HOME funds to a project. 
Consequently, HUD implemented the commitment requirement through a 
cumulative methodology under which HUD determined a participating 
jurisdiction's compliance with the 24-month deadline by determining 
whether the total amount committed by the participating jurisdiction 
from all HOME grants it had received was equal to or greater than the 
participating jurisdiction's cumulative commitment requirement for all 
grants that had been obligated for 24 months or longer. This 
methodology has been described in the HOME program regulations since 
1997.
    HUD will begin using a grant-specific method of determining 
compliance with the 24-month commitment deadline, beginning with FY 
2015 HOME grants. HUD has made changes to IDIS so that, beginning with 
FY 2015 grants, the participating jurisdiction will select the grant 
year's funds that will be committed to a specific project or activity. 
When the participating jurisdiction requests a draw of grant funds for 
that project or activity, HUD, through IDIS, will disburse the funds 
committed to that project or activity, rather than the oldest funds 
available.
    As mentioned above, prior to this change, IDIS did not permit 
participating jurisdictions to specify which grant years' funds they 
were committing to a specific project. This system change makes it 
possible for participating jurisdictions to commit funds and for HUD to 
assess commitment deadline compliance on a grant-specific basis, 
beginning with FY 2015 HOME grants.

[[Page 86948]]

    HOME program regulatory changes are also needed to address the 
timely commitment and expenditure of program income, repaid funds, 
recaptured funds, and funds committed for programs to be administered 
by State recipients and subrecipients. Conforming changes to the 
consolidated plan regulations with respect to program income, repaid 
funds, and recaptured funds are also made.
    The following section of this preamble provides a section-by-
section overview of the interim regulatory changes.

II. This Interim Rule--Section-by-Section

Consolidated Planning (Sec. Sec.  91.220 and 91.320)

    HUD has revised the regulations governing the HOME program 
components of the action plans for local governments (Sec.  91.220) and 
States (Sec.  91.320). Specifically, this rule revises sections Sec.  
91.220(l)(2)(i) and Sec.  91.320(k)(2)(i) to require the participating 
jurisdiction to include uncommitted program income, repayments, and 
recaptured funds that it has received during the previous year in the 
resources it describes in its annual action plan. The rule gives 
participating jurisdictions the option to include program income, 
repayments, or recaptures expected to be received during the program 
year in the summary of anticipated Federal resources described in their 
annual action plan. Participating jurisdictions are not required to 
include these anticipated funds in their action plan, because doing so 
would result in them having a period of less than 24 months to commit 
these funds. However, if a participating jurisdiction did not include 
anticipated program income, repayments, or recaptured funds in the 
annual action plan and later wished to commit such funds to a HOME 
project or activity, it would be required to amend its annual action 
plan, in accordance with the provisions of Sec.  91.505.

Definitions (Sec.  92.2)

    This rule eliminates reference to an agreement with a contractor 
from the definition of ``commitment'' in Sec.  92.2. Unlike State 
recipients and subrecipients, which design programs and develop 
policies and procedures to administer those programs, contractors that 
administer HOME-funded programs carry out the participating 
jurisdiction's policies and procedures. When a participating 
jurisdiction carries out HOME activities using its own employees, HOME 
funds are committed when the participating jurisdiction executes an 
agreement with a project owner to assist a specific project. When a 
participating jurisdiction uses contractors in place of its own 
employees to carry out activities, the agreement with those contractors 
should not constitute a commitment.
    HUD has added language to the definition clarifying that community 
housing development organization (CHDO) operating expense funds, CHDO 
capacity building funds, and CHDO project-specific technical assistance 
and site control loans are considered committed when the participating 
jurisdiction executes a legally binding agreement for the use of the 
funds. Similarly, the rule includes language clarifying that 
administrative and planning cost funds are considered committed based 
on the amount set aside for such purposes in IDIS. These revisions 
reflect HUD's longstanding practice of considering these three types of 
CHDO funds, each of which is designated as a unique fund type in IDIS, 
as committed based upon legally binding written agreements for the 
activities and make the regulatory definition of ``commitment'' 
comprehensive.

HOME Investment Trust Fund (Sec.  92.500)

Commitment Deadline
    This rule revises Sec.  92.500(d). Currently, 24 CFR 92.500(d)(1) 
describes the requirements for reducing a participating jurisdiction's 
grant for failure to meet the 24-month commitment deadline, the 24-
month deadline for committing 15 percent of a HOME allocation for CHDO 
set-aside projects, and the 5-year deadline for expending HOME funds. 
Section 92.500(d)(2) then describes the cumulative method for 
determining compliance with the deadlines outlined in paragraph (d)(1) 
of Sec.  92.500. This rule reorganizes these paragraphs so that Sec.  
92.500(d)(1) addresses commitment, CHDO set-aside commitment, and 
expenditure requirements for FY 2015 and subsequent-year HOME 
allocations and Sec.  92.500(d)(2) addresses these requirements for FY 
2014 and prior-year HOME allocations.
    At Sec.  92.500(d)(1)(i), this rule requires that HUD recapture any 
funds (including funds for CHDOs under Sec.  92.300) from a specific 
grant allocation that are in the participating jurisdiction's United 
States Treasury Account and are not committed within 24 months of the 
last day of the month in which HUD notifies the participating 
jurisdiction of HUD's execution of the HOME Investment Partnership 
Agreement for the specific fiscal year allocation. Participating 
jurisdictions will no longer have flexibility to meet the requirement 
that 15 percent of its HOME allocation be used for housing owned, 
developed, or sponsored by CHDOs on a cumulative basis (e.g., 
committing less than 15 percent to CHDOs in some years and more than 15 
percent to CHDOs in others, but maintaining compliance by ensuring that 
15 percent of cumulative HOME allocations are used for CHDO projects). 
Each participating jurisdiction is now required to commit a minimum of 
15 percent of each year's allocation or HUD will recapture the funds.
    The rule at Sec.  92.500(d)(1)(ii) establishes a new deadline to 
ensure that funds that have been committed to State recipients or 
subrecipients are subsequently committed timely to a specific local 
project. HOME funds that a participating jurisdiction committed to a 
State recipient or subrecipient must be committed to a specific local 
project within 36 months after the last day of the month in which HUD 
notified the participating jurisdiction of HUD's execution of its HOME 
Investment Partnership Agreement for the specific fiscal year 
allocation. HUD has established this deadline because, with the 
elimination of the 5-year expenditure deadline described below, HOME 
funds committed to a State recipient or subrecipient could remain 
uncommitted to a project until the expiration of the funds at the end 
of 9 years, at which point they would be recaptured. The additional 
deadline is necessary to ensure that HOME funds that have been 
committed to State recipients or subrecipients are committed to 
projects within a reasonable period of time.
    For FY 2014 and previous grants, HUD will continue using the 
cumulative method for determining compliance with the commitment 
deadline. Participating jurisdictions have relied on the existing HOME 
regulations at Sec.  92.500(d)(2) and the HOME Deadline Compliance 
reports that HUD has posted monthly on its HOME program Web site \1\ 
since 2005, which describe and implement the cumulative method of 
determining compliance with the HOME commitment, CHDO commitment, and 
expenditure deadlines. However, HUD has eliminated the existing Sec.  
92.500(d)(2) and added new text to fully explain the cumulative 
methodology that will

[[Page 86949]]

continue to apply to FY 2014 and previous grants. A new paragraph 
(d)(2)(i)(A) in Sec.  92.500 establishes the 24-month commitment 
requirement for FY 2014 and previous HOME allocations, including the 15 
percent CHDO reservation requirement. New paragraph (d)(2)(i)(B) 
describes the cumulative method that HUD will continue to use to 
measure compliance with the 24-month commitment deadlines for these 
grants. New paragraph (d)(2)(i)(C) retains existing regulatory language 
stating that HUD may recapture HOME funds for any penalties assessed by 
HUD under Sec.  92.552 (Sanctions).
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    \1\ HUD's HOME program Web site is located at http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/affordablehousing/programs/home.
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    New paragraph Sec.  92.500(d)(2)(iii) requires FY 2014 and previous 
allocations to be committed by the participating jurisdiction's 
deadline for FY 2015 allocations. For deadlines occurring in 2016 for 
FY 2014 HOME allocations, HUD is following the existing regulation and 
using the cumulative method for determining compliance with the 24-
month commitment requirement. As a result, it was necessary to include 
commitments from FY 2015 allocations in the cumulative calculation of 
commitments, creating a situation in which FY 2014 and earlier funds 
would not be separately subject to any commitment requirement.
Expenditure Deadline
    In this rule, HUD has eliminated the 5-year deadline for 
expenditure of HOME funds appropriated for FY 2015 and subsequent 
years. This regulatory deadline was established in the December 16, 
1991, interim rule (56 FR 65313) issued to implement the HOME statute. 
At that time, funds appropriated for the HOME program were available 
until expended and HUD determined that it was necessary to establish a 
deadline to ensure that HOME funds were expended expeditiously to 
develop affordable housing. Beginning with the FY 2002 HOME 
appropriation, and for all subsequent appropriations, funds 
appropriated for the HOME program are available for obligation to 
participating jurisdictions for 3 years after the first day of the 
fiscal year for which they were appropriated and expire 5 years after 
the period of obligation (i.e., at the end of the eighth year). Expired 
funds are recaptured by the United States Treasury. HUD's FY 2015 and 
FY 2016 appropriations laws have extended the period of obligation of 
HOME funds to 4 years; the funds expire 5 years after the period of 
obligation (i.e., at the end of the ninth year). In addition, in 2013, 
HUD established a 4-year deadline for completing projects assisted with 
HOME funds in Sec.  92.205(e)(2). Because of these new deadlines for 
expiration of appropriated funds and completion of projects, HUD 
believes that the 5-year expenditure deadline is duplicative and 
creates an unnecessary burden on participating jurisdictions. Thus, the 
deadline is eliminated.
    This rule also eliminates the separate 5-year deadline for 
expenditure of CHDO set-aside funds appropriated for FY 2015 and 
subsequent years. In its 2013 HOME rulemaking, HUD determined that a 
separate examination of CHDO expenditures was necessary because, under 
the cumulative method of determining compliance with the 5-year 
expenditure requirement, rapid expenditure of other HOME funds 
frequently shielded older, unexpended CHDO funds from deobligation. 
This separate deadline is no longer necessary and this rule eliminates 
both the overall and the CHDO-specific 5-year deadlines for expending 
HOME funds.
Expiration of Funds
    For clarity, HUD has included the 9-year deadline for the 
expiration of HOME funds in Sec.  92.500(d)(2)(iii)(C). The new 
provision states that HUD will recapture funds from a specific fiscal 
year allocation that are in the United States Treasury account and are 
not expended by the end of the fifth year after the period of 
availability for obligation by HUD. These funds will be deobligated 
from the participating jurisdiction and returned to the United States 
Treasury.

Program Disbursement and Information System (Sec.  92.502)

    This rule eliminates Sec.  92.502(b)(2), which contained two 
provisions related to HUD cancellation of projects. The first provision 
stated that HUD's information system could cancel a project for which 
project set-up information was not completed within 20 days. This 
provision is not necessary, because IDIS does not permit project set up 
to occur until all required information has been entered. The second 
provision permitted HUD to automatically cancel projects that had been 
committed in IDIS for 12 months without an initial disbursement of 
funds. HUD will continue to monitor projects for timely initial 
disbursement of funds. However, the automatic cancellation of projects 
by IDIS is no longer appropriate because it may result in the loss of 
funds that become uncommitted after the 24-month commitment deadline 
irrespective of the nature and extent of any project delay.
    The rule revises Sec.  92.502(c)(3) to add language stating that, 
beginning with FY 2015 allocations, the specific funds that are 
committed to a project will be disbursed for that project. This 
provision is necessary because, beginning with FY 2015 HOME grants, 
IDIS no longer disburses funds on a first-in, first-out basis. HUD also 
adds language to this paragraph stating that if funds in both the HOME 
local account and in the United States Treasury account are committed 
to a HOME project, the funds in the local account must be disbursed 
before the participating jurisdiction requests that HOME funds be 
disbursed from the United States Treasury account. This provision 
ensures that program income and other HOME funds in the local account 
are disbursed before HOME funds are drawn from the Treasury.

Program Income, Repayments, and Recaptured Funds (Sec.  92.503)

    HUD has revised paragraphs Sec.  92.503(b)(2) and (3) so that 
participating jurisdictions that must repay HOME funds for any reason 
must seek HUD's instructions with respect to the account to which the 
HOME funds must be repaid. By providing specific instructions on a 
case-by-case basis, HUD can avoid situations in which a participating 
jurisdiction repays funds to a Federal HOME account after the 24-month 
deadline and loses access to the funds as a result.
    Under the first-in, first-out method of disbursing funds, it was 
generally not necessary for participating jurisdictions to commit 
program income and other funds in the local HOME account through IDIS 
prior to expending the funds. When a participating jurisdiction had 
program income on hand, it, generally, disbursed program income for the 
next HOME cost. Since 2007, HUD has excluded expended HOME program 
income from the calculation of total commitments or expenditures for 
determining compliance with the 24-month commitment and the 5-year 
expenditure deadlines.
    This rule changes the manner in which program income and other 
funds in the local HOME account are treated. Otherwise, a participating 
jurisdiction would be required to uncommit appropriated HOME funds from 
a specific project each time it disbursed program income for that 
project. This would then subject the newly uncommitted HOME funds to 
recapture by HUD if the 24-month commitment deadline for those funds 
had passed. To avoid unnecessary loss of funds, HUD has determined that 
participating jurisdictions should be permitted to accumulate program 
income, repayments, and recaptured funds

[[Page 86950]]

during a program year and that a deadline for committing HOME funds 
should be applied to those funds in the local account. Although 
participating jurisdictions are required to include program income 
expected to be received in their consolidated plan or annual action 
plans, HUD recognizes that participating jurisdictions cannot always 
accurately estimate the amount and timing of program income, 
recaptures, or repaid funds that they may receive. Consequently, to 
accommodate the unpredictability associated with the receipt of program 
income, HUD has established special provisions with respect to program 
income.
    The rule adds a new Sec.  92.503(d) to establish a deadline for 
committing funds deposited in a participating jurisdiction's local HOME 
account. These funds include program income as defined at Sec.  92.2, 
repayments of HOME funds pursuant to Sec.  92.503(b), and recaptured 
funds as described in Sec.  92.503(c). HUD has determined it is 
necessary to establish this deadline because, under the new 
requirements for committing funds from specific allocations, funds in 
the local account will have to be committed to specific projects before 
they can be expended. The deadline for committing program income, 
repayments, and recaptured funds received during a program year is the 
same as the commitment deadline for the HOME grant allocation for the 
subsequent program year. HUD has determined that this approach is 
appropriate because: (1) The deadline for committing program income 
should not be shorter than for appropriated funds, and, unlike 
appropriated funds, program income, repayments, and recaptured funds 
are received sporadically throughout the year; and (2) it would be 
administratively burdensome for participating jurisdictions to track 
and comply with two separate deadlines each year for committing their 
HOME allocation and funds in their local account. Further, while the 
amount and approximate date of receipt for program income can often be 
estimated by a participating jurisdiction, repaid funds and recaptured 
funds generally cannot be anticipated in advance.

Participating Jurisdiction Responsibilities; Written Agreements; On-
Site Inspections (Sec.  92.504)

    This rule adds new paragraphs at Sec.  92.504(c)(7) and (8) to 
establish the requirements for written agreements for CHDO project-
specific technical assistance, site control loans, project-specific 
seed money loans, and community development capacity building 
activities. These provisions are added to correspond to the addition of 
these agreements to the definition of ``commitment'' at Sec.  92.2.

III. Justification for Interim Rule

    HUD generally publishes rules for advance public comment in 
accordance with its rule on rulemaking at 24 CFR part 10. However, 
under 24 CFR 10.1, HUD may omit prior public notice and comment if it 
is ``impracticable, unnecessary, or contrary to the public interest.'' 
In this instance, HUD has determined that it is unnecessary to delay 
the effectiveness of this rule for advance public comment.
    The HOME statute requires that HOME funds be placed under legally 
binding agreement within 24 months of HUD's obligation of the HOME 
grant to the participating jurisdiction. As described in the HOME 
regulations at 24 CFR 92.500(d)(2), since 1997 HUD has determined 
compliance with the commitment requirement by comparing cumulative 
commitments through the deadline date to the cumulative amount of HOME 
funds required to have been committed as of that date.
    Beginning in 2013, HUD has frequently discussed with HOME 
participating jurisdictions the planned change from the cumulative 
method of measuring commitment compliance to a grant-specific method as 
part of HUD's transition to grant-based accounting for its formula 
grant programs. HUD notified all HOME participating jurisdictions of 
the planned IDIS programming changes to implement grant-specific 
commitment deadline compliance for FY 2015 HOME grants.\2\
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    \2\ HUD memorandum, ``System and Regulatory Changes to Eliminate 
First-In-First-Out Accounting in the Integrated Disbursement and 
Information System,'' May 9, 2014, https://www.hudexchange.info/resources/documents/CPD-Memo-System-and-Regulatory-Changes-to-Eliminate-First-In-First-Out-Accounting-in-IDIS.pdf; HUD fact sheet, 
``Transition to Grant Based Accounting,'' June 2015, https://www.hudexchange.info/resources/documents/Transition-to-Grant-Based-Accounting.pdf; and HOME FACTS--Vol. 6 No. 2, June 2015, https://www.hudexchange.info/resources/documents/HOME-FACTS-Vo6-No2-HOME-IDIS-Grant-Based-Accounting.pdf.
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    HUD has also conducted webinars to explain the pending changes in 
the method for determining compliance with the commitment deadline 
beginning with FY 2015 HOME grants.\3\ During 2015 and 2016, HUD 
provided HOME grant-based accounting training at numerous HOME 
conferences sponsored by membership associations for HOME participating 
jurisdictions and at meetings hosted by HUD field offices across the 
country.
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    \3\ ``HOME IDIS Webinar: Grant Based Accounting Changes for FY 
2015 and Onward,'' August 12, 2015, https://www.hudexchange.info/training-events/courses/home-idis-grant-based-accounting-changes-for-fy-2015-and-onward-webinar/.
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    The scope of the rule amendments is limited to this change and to 
other changes that: (1) Conform the regulations to the new method or 
make minor corrections and clarifications of provisions relating to 
commitments and the written agreements through which HOME funds are 
committed; (2) eliminate the expenditure deadline and automatic project 
cancellation provisions that are no longer required under the grant-
specific method of committing and expending funds, or which may 
otherwise help to minimize undue risk of HOME funding deobligations; 
and (3) establish a project commitment deadline for funds provided to 
State recipients and subrecipients to ensure timely deployment of funds 
for affordable housing projects.
    With the exception of the new requirements related to program 
income, this rule does not establish new and unfamiliar requirements 
for HOME participating jurisdictions. Moreover, if HUD were to issue 
this rule without adjusting the program income requirements, HOME 
participating jurisdictions could potentially lose millions of dollars 
of appropriated HOME funds each time they expended program income while 
HUD conducted proposed and final rulemaking processes. Consequently, 
the program income changes are included in the rule because they help 
to avert the loss of large amounts of HOME funds by the communities and 
beneficiaries for which they were appropriated.
    Although HUD has determined that good cause exists to publish this 
rule for effect without prior solicitation of public comment, HUD 
recognizes the value and importance of public input in the rulemaking 
process. Accordingly, HUD is issuing these regulatory amendments on an 
interim basis and providing a 60-day public comment period. HUD is 
specifically soliciting comment on the best way to treat program income 
to avoid loss of appropriated HOME funds. All comments will be 
considered in the development of the final rule.

IV. Findings and Certifications

Information Collection Requirements

    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 Office of

[[Page 86951]]

Management and Budget (OMB) control number. The information collection 
requirements contained in this rule have been submitted to OMB under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned 
OMB control number 2506-0171.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and 
the private sector. This rule will not impose any Federal mandates on 
any State, local, or tribal governments or the private sector within 
the meaning of UMRA.

Environmental Review

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

Impact on Small Entities

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
As discussed, this regulation changes the manner in which HUD measures 
compliance with the statutory 24-month commitment deadline in the HOME 
program and does not alter the manner in which participating 
jurisdictions administer their HOME programs. Given this fact, HUD 
anticipates the regulatory changes will have minimal, or no, economic 
impacts.
    Therefore, the undersigned certifies that this rule will not have a 
significant impact on a substantial number of small entities.
    Notwithstanding HUD's belief that this rule will not have a 
significant effect on a substantial number of small entities, HUD 
specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Executive Order 13132, Federalism

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

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number applicable to the 
program that would be affected by this rule is 14.239.

List of Subjects

24 CFR Part 91

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

24 CFR Part 92

    Administrative practice and procedure, Grant programs-housing and 
community development, Low and moderate income housing, Manufactured 
homes, Rent subsidies, Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated in the preamble, HUD amends 24 
CFR parts 91 and 92 as follows:

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

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

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


0
2. In Sec.  91.220, redesignate paragraphs (l)(2)(i) through (vii) as 
(l)(2)(ii) through (viii), and add new paragraph (l)(2)(i) to read as 
follows:


Sec.  91.220  Action plan.

* * * * *
    (l) * * *
    (2) * * *
    (i) The HOME program resources that the participating jurisdiction 
must describe in the action plan are the fiscal year HOME allocation 
plus the amount of program income, repayments, and recaptured funds in 
the participating jurisdiction's HOME Investment Trust Fund local 
account (see 24 CFR 92.500(c)(1)) at the beginning of the participating 
jurisdiction's program year. The jurisdiction may choose to include 
program income, repayments, and recaptured funds that are expected to 
be received during the program year if the jurisdiction plans to commit 
these funds during the program year.
* * * * *

0
3. In Sec.  91.320, redesignate paragraphs (k)(2)(i) through (vii) as 
paragraphs (k)(2)(ii) through (viii), and add new paragraph (k)(2)(i) 
to read as follows.


Sec.  91.320  Action plan.

* * * * *
    (k) * * *
    (2) * * *
    (i) The HOME program resources that the State must describe in the 
action plan are the fiscal year HOME allocation plus the amount of 
program income, repayments, and recaptured funds in the State's HOME 
Investment Trust Fund local account (see 24 CFR 92.500(c)(1)) at the 
beginning of the State's program year. The State may choose to include 
program income, repayments, and recaptured funds that are expected to 
be received during the program year if the State plans to commit these 
funds during the program year.
* * * * *

0
4. Revise Sec.  91.505(a)(2) to read as follows:


Sec.  91.505  Amendments to the consolidated plan.

    (a) * * *
    (2) To carry out an activity, using funds from any program covered 
by the consolidated plan (including program income, reimbursements, 
repayment, recaptures, or reallocations from HUD), not previously 
described in the action plan; or
* * * * *

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

0
5. The authority citation for part 92 continues to read as follows:


[[Page 86952]]


    Authority: 42 U.S.C. 3535(d) and 12701-12839.


0
6. In Sec.  92.2, revise paragraph (1) of the definition of 
``Commitment'' to read as follows:


Sec.  92.2  Definitions.

* * * * *
    Commitment means:
    (1) The participating jurisdiction has executed a legally binding 
written agreement (that includes the date of the signature of each 
person signing the agreement) that meets the minimum requirements for a 
written agreement in Sec.  92.504(c). An agreement between the 
participating jurisdiction and a subrecipient that is controlled by the 
participating jurisdiction (e.g., an agency whose officials or 
employees are official or employees of the participating jurisdiction) 
does not constitute a commitment. An agreement between the 
representative unit and a member unit of general local government of a 
consortium does not constitute a commitment. Funds for administrative 
and planning costs of the HOME program are committed based on the 
amount in the program disbursement and information system for 
administration and planning. The written agreement must be:
    (i) With a State recipient or a subrecipient to use a specific 
amount of HOME funds to produce affordable housing, provide downpayment 
assistance, or provide tenant-based rental assistance;
    (ii) With a community housing development organization to provide 
operating expenses;
    (iii) With a community housing development organization to provide 
project-specific technical assistance and site control loans or 
project-specific seed money loans, in accordance with Sec.  92.301;
    (iv) To develop the capacity of community housing development 
organizations in the jurisdiction, in accordance with Sec.  92.300(b); 
or
    (v) To commit to a specific local project, as defined in paragraph 
(2) of this definition.
* * * * *

0
7. Revise Sec.  92.500(d) to read as follows:


Sec.  92.500   The HOME Investment Trust Fund.

* * * * *
    (d)(1) Reductions of Fiscal Year 2015 and subsequent fiscal year 
allocations. HUD will reduce or recapture HOME funds in the HOME 
Investment Trust Fund, as follows:
    (i) Any funds from a specific fiscal year allocation that are in 
the United States Treasury account that are not committed (including 
funds for community housing development organizations under Sec.  
92.300) within 24 months after the last day of the month in which HUD 
notifies the participating jurisdiction of HUD's execution of the HOME 
Investment Partnership Agreement for the specific fiscal year 
allocation;
    (ii) Any funds from a specific fiscal year allocation that were 
committed to a State recipient or subrecipient that are not committed 
to a specific local project within 36 months after the last day of the 
month in which HUD notifies the participating jurisdiction of HUD's 
execution of the HOME Investment Partnership Agreement for the specific 
fiscal year allocation;
    (iii) Any funds from a specific fiscal year allocation that are in 
the United States Treasury account that are not expended (drawn down) 
by September 30 of the fifth year after the end of the period of 
availability of the fiscal year allocation for obligation by HUD. Due 
to end-of-year financial system closeouts that begin before this date 
and prevent electronic access to the payment system, requests to draw 
down the funds must be made at least 7 full business days before this 
date to ensure that the funds still can be drawn from the United States 
Treasury account through the computerized disbursement and information 
system; and
    (iv) Any penalties assessed by HUD under Sec.  92.552.
    (2)(i) Reductions of Fiscal Year 2014 and prior fiscal year 
allocations. HUD will reduce or recapture HOME funds in the HOME 
Investment Trust Fund by the amount of:
    (A) Any funds from Fiscal Year 2014 and prior fiscal year 
allocations in the United States Treasury account that are required to 
be reserved (i.e., 15 percent of the funds) by a participating 
jurisdiction, under Sec.  92.300, and which are not committed to a 
community housing development organization project within 24 months 
after the last day of the month in which HUD notifies the participating 
jurisdiction of HUD's execution of the HOME Investment Partnership 
Agreement;
    (B) Any funds from Fiscal Year 2014 and prior fiscal year 
allocations in the United States Treasury account that are not 
committed within 24 months after the last day of the month in which HUD 
notifies the participating jurisdiction of HUD's execution of the HOME 
Investment Partnership Agreement;
    (C) Any funds from Fiscal Year 2014 and prior fiscal year 
allocations in the United States Treasury account that are not expended 
within 5 years after the last day of the month in which HUD notifies 
the participating jurisdiction of HUD's execution of the HOME 
Investment Partnership Agreement; and
    (D) Any penalties assessed by HUD under Sec.  92.552.
    (ii) For purposes of determining the amount by which the HOME 
Investment Trust Fund will be reduced or recaptured under paragraphs 
(d)(2)(i)(A), (B), and (C) of this section, HUD will consider the sum 
of commitments to CHDOs, commitments, or expenditures, as applicable, 
from all fiscal year allocations through the Fiscal Year 2014 
allocation. This sum must be equal to or greater than the sum of all 
fiscal year allocations through the fiscal year allocation being 
examined (minus previous reductions to the HOME Investment Trust Fund), 
or in the case of commitments to CHDOs, 15 percent of those fiscal year 
allocations.
    (iii) HUD will reduce or recapture HOME funds in the HOME 
Investment Trust Fund by the amount of all fiscal year allocations 
through the Fiscal Year 2014 allocation that are uncommitted by the 
commitment deadline for the Fiscal Year 2015 allocation.

0
8. In Sec.  92.502, remove paragraph (b)(2), redesignate paragraph 
(b)(1) as (b), and revise paragraph (c)(3) to read as follows:


Sec.  92.502  Program disbursement and information system.

* * * * *
    (c) * * *
    (3) HOME funds in the local account of the HOME Investment Trust 
Fund must be disbursed before requests are made for HOME funds in the 
United States Treasury account. Beginning with the Fiscal Year 2015 
allocation, the specific funds that are committed to a project will be 
disbursed for that project. If both funds in the local account and 
funds in the United States Treasury account are committed to a project, 
the funds in the local account must be disbursed before requests are 
made for HOME funds in the United States Treasury account for the 
project.
* * * * *

0
9. In Sec.  92.503, revise paragraphs (b)(2) and (3) and add paragraph 
(d) to read as follows:


Sec.  92.503  Program income, repayments, and recaptured funds.

* * * * *
    (b) * * *
    (2) Any HOME funds invested in a project that is terminated before 
completion, either voluntarily or otherwise, must be repaid by the 
participating jurisdiction, in accordance with paragraph (b)(3) of this 
section,

[[Page 86953]]

except for repayments of project-specific community housing development 
organization loans that are waived, in accordance with Sec. Sec.  
92.301(a)(3) and (b)(3). In addition, any HOME funds used for costs 
that are not eligible under this part must be repaid by the 
participating jurisdiction, in accordance with paragraph (b)(3) of this 
section.
    (3) HUD will instruct the participating jurisdiction to either 
repay the funds to the HOME Investment Trust Fund Treasury account or 
the local account. If the jurisdiction is not a participating 
jurisdiction at the time the repayment is made, the funds must be 
remitted to HUD and reallocated, in accordance with Sec.  92.454.
* * * * *
    (d) Commitment of funds in the local account. Beginning with the 
Fiscal Year 2017 action plan, as provided in 24 CFR 91.220(l)(2) and 
91.320(k)(2), program income, repayments, and recaptured funds in the 
participating jurisdiction's HOME Investment Trust Fund local account 
must be used in accordance with the requirements of this part, and the 
amount of program income, repayments, and recaptured funds in the 
participating jurisdiction's HOME Investment Trust Fund local account 
at the beginning of the program year must be committed before HOME 
funds in the HOME Investment Trust Fund United States Treasury account, 
except for the HOME funds in the United States Treasury account that 
are required to be reserved (i.e., 15 percent of the funds), under 
Sec.  92.300(a), for investment only in housing to be owned, developed, 
or sponsored by community housing development organizations. The 
deadline for committing program income, repayments, and recaptured 
funds received during a program year is the date of the participating 
jurisdiction's commitment deadline for the subsequent year's grant 
allocation.

0
10. Add Sec.  92.504(c)(7) and (8) to read as follows:


Sec.  92.504  Participating jurisdiction responsibilities; written 
agreements; on-site inspection.

* * * * *
    (c) * * *
    (7) Community housing development organization receiving assistance 
for project-specific technical assistance and site control loans or 
project-specific seed money loans. The agreement must identify the 
specific site or sites and describe the amount and use of the HOME 
funds (in accordance with Sec.  92.301), including a budget for work, a 
period of performance, and a schedule for completion. The agreement 
must also set forth the basis upon which the participating jurisdiction 
may waive repayment of the loans, consistent with Sec.  92.301, if 
applicable.
    (8) Technical assistance provider to develop the capacity of 
community housing development organizations in the jurisdiction. The 
agreement must identify the specific nonprofit organization(s) to 
receive capacity building assistance. The agreement must describe the 
amount and use (scope of work) of the HOME funds, including a budget, a 
period of performance, and a schedule for completion.
* * * * *

    Dated: November 22, 2016.
Harriet Tregoning,
Principal Deputy Assistant, Secretary for Community Planning and 
Development.

    Approved on November 2, 2016.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2016-28591 Filed 12-1-16; 8:45 am]
 BILLING CODE 4210-67-P