[Federal Register Volume 87, Number 183 (Thursday, September 22, 2022)]
[Rules and Regulations]
[Pages 57821-57824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20425]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 91 and 92

[Docket No. FR 5792-F-03]
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: Final rule.

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[[Page 57822]]

SUMMARY: This final rule follows HUD's interim final rule published on 
December 2, 2016. The interim rule changed the method by which HUD 
determines participating jurisdictions' compliance with the statutory 
24-month commitment requirements on the use of HOME Investment 
Partnerships program (HOME) funds, including the set-aside for 
community housing development organizations, under the Cranston-
Gonzalez National Affordable Housing Act of 1990 (NAHA). Specifically, 
it implemented a grant-specific method for determining compliance with 
such requirements. In addition, the interim rule revised the method of 
administering program income to prevent participating jurisdictions 
from losing allocated HOME funds when they expend program income. This 
rule finalizes the December 2, 2016, interim rule without change.

DATES: Effective: October 24, 2022.

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

    Under section 218(g) of the Cranston-Gonzalez National Affordable 
Housing Act of 1990 \1\ (42 U.S.C. 12701 et seq.) (NAHA), participating 
jurisdictions are required to place their 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., 
deposited the funds into the participating jurisdiction's HOME 
Investment Trust Fund (``HOME account'')). Under section 218(g) of 
NAHA,\2\ a participating jurisdiction's right to draw HOME funds from 
its HOME account expires if the funds are not placed under binding 
commitment by the 24-month deadline. In addition, pursuant to section 
231 of NAHA,\3\ a participating jurisdiction must reserve not less than 
15 percent of its HOME funds for investment only in housing to be 
developed, sponsored, or owned by community housing development 
organizations (CHDOs). If any funds reserved under section 231 of NAHA 
remain uninvested for a period of 24 months, then HUD must deduct the 
uninvested funds from the line of credit in the participating 
jurisdiction's HOME account.
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    \1\ 42 U.S.C. 12748(g).
    \2\ Id.
    \3\ 42 U.S.C. 12771.
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    Prior to Fiscal Year (FY) 2015, HUD measured compliance with the 
24-month requirement for committing funds, including CHDO set-aside 
funds, using a cumulative methodology. HUD also had a 5-year 
expenditure requirement for all participating jurisdictions that was 
measured using the cumulative methodology. Under HUD's cumulative 
methodology, HUD's Integrated Disbursement and Information System 
(IDIS) committed and disbursed funds on a first-in, first-out basis and 
participating jurisdictions were not required to designate funds from a 
specific FY allocation when committing HOME funds to a project. 
Consequently, HUD did not require participating jurisdictions to 
specify which grant year's funds they were committing to a specific 
project in IDIS.
    On December 2, 2016 (81 FR 86947), HUD published an interim rule in 
the Federal Register to implement a grant-specific method for 
determining compliance with both the 24-month commitment and 24-month 
CHDO set-aside commitment deadlines, and to establish a method of 
administering program income that would prevent participating 
jurisdictions from losing appropriated funds when they expend program 
income. The interim rule also eliminated the 5-year expenditure 
requirement for participating jurisdictions (other than insular areas) 
for FY 2015 and later grant years and changed the manner in which 
program income and other funds in the local HOME account were treated.
    The 24-month commitment requirement in section 218(g) of NAHA, 
however, was later suspended for HOME funds with 24-month deadlines 
occurring in 2016 through 2023 under section 242 of Title I of Division 
K of the Consolidated Appropriations Act, 2017.\4\ Specifically, the 
2017 Appropriations Act stated: ``Section 218(g) of the Cranston-
Gonzalez National Affordable Housing Act (42 U.S.C. 12748(g)) shall not 
apply with respect to the right of a jurisdiction to draw funds from 
its HOME Investment Trust Fund that otherwise expired or would expire 
in 2016, 2017, 2018, or 2019 under this section.'' The Consolidated 
Appropriations Act of 2019 \5\ and subsequent appropriations acts,\6\ 
also included a provision suspending the 24-month requirement for CHDO 
set-aside funds in section 231(b) of NAHA for ``any uninvested funds 
that otherwise were deducted or would be deducted from the line of 
credit in the participating jurisdiction's HOME Investment Trust Fund'' 
in 2018 through 2024. Consequently, HUD is currently not enforcing the 
24-month commitment requirements for those grants covered by the 
suspensions. Despite the suspensions of sections 218(g) and 231(b) in 
recent appropriations acts, HUD is finalizing the interim rule as these 
suspensions may lapse in the future.
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    \4\ Public Law 115-31, 131 Stat. 135, 789.
    \5\ Public Law 116-6, 133 Stat. 13. 464.
    \6\ Public Law 115-141, 132 Stat. 348; Public Law 116-94, 133 
Stat. 2534. Public Law 117-03, 136 Stat. 742.
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    After considering the public comments submitted in response to 
HUD's interim rule, HUD is finalizing its December 2, 2016, interim 
rule without change. This final rule implements a grant-specific method 
of determining compliance with the HOME commitment deadlines. As 
discussed in HUD's interim rule, beginning with FY 2015 grants, a 
participating jurisdiction is required to 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, now disburses the specific 
grant year's funds committed to that project or activity, rather than 
the oldest funds available. This change requires participating 
jurisdictions to commit specific FY grant funds and for HUD to assess 
commitment deadline compliance on a grant-specific basis. This 
methodology change addresses 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 are also made to the consolidated plan regulations 
with respect to program income, repaid funds, and recaptured funds.

II. Discussion of Public Comments and HUD's Responses

    The public comment period for the interim rule closed on January 
31, 2017, and HUD received seven public comments. Comments were largely 
submitted by development agencies. The following presents the 
significant issues and questions related to the interim rule raised by 
the commenters and HUD's responses to these issues and questions.

[[Page 57823]]

A. Comments of Support

    The comments were generally supportive. One commenter stated that 
requiring additional project-specific information is a positive change. 
Other commenters praised the change eliminating the requirement to 
expend program income prior to drawing grant funds, stated that HUD has 
developed a reasonable approach to accounting for the commitment of 
program income and supported the elimination of the automatic 
cancellation of projects.

B. Cancellation of Funds

    Issue: De-obligation of previously committed funds. Commenters 
stated that de-obligating funds when a project is cancelled or 
completed for less than the committed amount only penalizes 
participating jurisdictions for being responsible stewards of funds. 
The commenters encouraged HUD to allow the funds to be recommitted 
immediately and used within the expenditure deadline without being 
recaptured by HUD. Another commenter stated that grantees should have a 
grace period to recommit those funds, such as the commitment deadline 
for the next year's allocation.
    HUD Response: HOME funds that become uncommitted for any reason 
after the funds have met their 24-month commitment deadline can be 
committed by the participating jurisdiction to another eligible HOME 
project or activity, provided the participating jurisdiction met the 
requirements for a commitment, including the definition of commitment 
at 24 CFR 92.2, at the time of the funds' 24-month commitment deadline.

C. Community Housing Development Organization (CHDO) Commitments

    Issue: Elimination of cumulative method. A commenter stated that 
eliminating the cumulative method for determining compliance with the 
CHDO set-aside is impractical and will result in a significant loss of 
funds. The commenter stated that funding has declined recently and 
using the small amount of funds is very difficult, so jurisdictions 
wait and pool CHDO set-aside funds across multiple years. Eliminating 
the use of the cumulative method would essentially require at least 
some participating jurisdictions to work solely with CHDOs to have 
sufficient project dollars for the projects funded by CHDO set-aside 
funds.
    HUD Response: The Department is aware of the challenges that the 
elimination of the cumulative method of measuring compliance with the 
15 percent CHDO set-aside requirement may cause. Rather than committing 
less than 15 percent in some years and more than 15 percent in other 
years so 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 grant year's allocation or HUD 
will recapture the funds. While the Department lacks statutory 
authority to use the cumulative method in determining compliance with 
the 15 percent CHDO set-aside requirement, Congress recognized these 
challenges and responded by suspending the application of section 
231(b) of NAHA to CHDO set-aside funds that were or would be deducted 
in 2018 through 2024 and section 218(g) of NAHA to remove the 
expiration of funds with 24-month commitment deadlines in 2016 through 
2024. Since the suspension of sections 218(g) and 231(b) of NAHA 
relieves participating jurisdictions of the obligation of committing 
funds to projects within 24 months, the combined effect of the 
suspensions allows participating jurisdictions to have a longer period 
of time to accumulate enough CHDO set-aside funds to commit to a CHDO 
project. The suspension of section 231(b) of NAHA also removes the 
requirement that participating jurisdictions reserve CHDO set-aside 
funds to be used for projects owned, developed, or sponsored by CHDOs 
for more than 24-months from the date the funds are made available. 
This allows participating jurisdictions to use CHDO set-aside funds for 
non-CHDO HOME projects after the end of the 24-month CHDO set-aside 
time period defined in section 231 of NAHA.
    Issue: Elimination of CHDO set-aside. A commenter also supported 
eliminating the CHDO set-aside.
    HUD Response: Elimination of the CHDO set-aside would require an 
amendment to NAHA.

D. Commitment Deadline

    Issue: Difficult to meet. A commenter stated that the 24-month 
commitment deadline is very difficult to meet, and the new rule does 
nothing to change it. Another commenter supported the elimination of 
the 24-month commitment deadline.
    HUD Response: The 24-month deadline for committing HOME funds is a 
statutory requirement in section 218(g) of NAHA. Eliminating the 
requirement therefore requires a statutory amendment. In recent 
appropriations acts, Congress recognized the issues with the 24-month 
commitment deadline in section 218(g) by suspending the commitment 
requirement for HOME funds with deadlines occurring in 2016 through 
2024. Congress also suspended section 231(b) of NAHA to permit 
participating jurisdictions to retain CHDO set-aside funds that were or 
would otherwise be deducted from a participating jurisdiction's HOME 
account in 2018, 2019, 2020, 2021, 2022, 2023, or 2024.
    Issue: Notification. A commenter stated that HUD should notify all 
grantees as soon as possible of the amounts of prior year funds that 
must be committed, what the deadline is, and what the penalty for 
failure to meet the deadline is.
    HUD Response: Participating jurisdictions have real time access to 
this information in IDIS. Under 24 CFR 92.504(a), participating 
jurisdictions are responsible for monitoring their progress toward 
meeting this and other HOME program deadlines.

E. Expenditure Deadline

    Issue: Simplification and elimination. A commenter supported the 
simplification of expenditure deadlines and supported the elimination 
of the 5-year expenditure deadline.
    HUD Response: Under the terms of the interim rule and this final 
rule, there is no 5-year expenditure deadline for participating 
jurisdictions (other than insular areas) for FY 2015 and subsequent 
allocations. The last application of the expenditure deadline for most 
participating jurisdictions occurred in 2019.

F. Expiration of Funds

    Issue: Expiration of funds. A commenter asked HUD for confirmation 
that the period of performance is retroactive so that the period of 
performance for FY 2015 grants ends on September 1, 2024, and the 
period of performance for FY 2016 grants ends on September 1, 2025.
    HUD Response: The period of performance for HOME grants is 
specified on the Funding Approval and HOME Investment Partnerships 
Agreement (HUD-40093) between HUD and the participating jurisdiction. 
The period of performance for FY 2015 grants ends on September 1, 2023, 
and the period of performance for FY 2016 grants ends on September 1, 
2024. These dates provide participating jurisdictions with time prior 
to the cancellation of the grants on September 30, 2023, and September 
30, 2024, respectively, to draw down funds for costs incurred during 
the period of performance before the funds will be returned to the U.S. 
Treasury.

[[Page 57824]]

G. Program Income

    Issue: Timing for entering program income into the IDIS. Commenter 
asked whether program income is to be entered into the IDIS at the time 
of receipt or when it is reported in the annual action plan.
    HUD Response: A participating jurisdiction's program income must be 
deposited in the participating jurisdiction's HOME Investment Trust 
Fund local account pursuant to 24 CFR 92.503(a) and reported in IDIS at 
the time it is received. If a participating jurisdiction's written 
agreement permits the state recipient or subrecipient to retain program 
income, then the program income must be reported in IDIS at the time it 
is received by the state recipient or subrecipient. If a participating 
jurisdiction permits a state recipient or subrecipient to retain 
program income, then the participating jurisdiction is still 
responsible for requiring that this information be entered into IDIS. 
The use of State recipients, subrecipients, or contractors does not 
relieve the participating jurisdiction of this responsibility, but a 
State participating jurisdiction may rely upon a state recipient for 
compliance with recordkeeping requirements under 24 CFR 
92.508(a)(5)(iii) and (b) and need not duplicate such efforts.
    Issue: Conflict with Department of Treasury. A commenter asked 
whether there is a conflict with the Department of Treasury in allowing 
a participating jurisdiction to accumulate expenditure of program 
income, as Treasury requires program income to be expended first.
    HUD Response: Due to HOME funds' statutory 24-month commitment 
deadline, HUD established requirements for HOME program income that 
differ from those applicable to other Federal grant programs. Requiring 
participating jurisdictions to expend program income first places an 
additional barrier to committing allocated HOME funds by the 24-month 
commitment deadline. Therefore, HUD determined that the revised 
provisions for program income in the interim rule and finalized in this 
final rule are necessary so that participating jurisdictions can avoid 
losing allocated HOME funds that are subject to the 24-month commitment 
deadline.
    Issue: Loss of appropriated funds. A commenter stated that HUD must 
prevent participating jurisdictions from losing appropriated HOME funds 
when they expend program income.
    HUD Response: HUD agrees and established provisions in the interim 
rule and final rule to ensure that participating jurisdictions do not 
lose allocated HOME funds subject to the 24-month commitment deadline 
because they have expended program income.

III. 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 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

    When the interim rule was published, 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)). Because this rule finalizes the interim rule 
without change, the previous FONSI remains applicable.

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.

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, Low and moderate income 
housing, Manufactured homes, Rent subsidies, Reporting and 
recordkeeping requirements.


0
Accordingly, for the reasons stated in the preamble, the interim rule 
amending 24 CFR parts 91 and 92 that was published at 81 FR 86947 
(December 2, 2016) is adopted as final without change.

Marion M. McFadden,
Principal Deputy Assistant Secretary for Community Planning and 
Development.
[FR Doc. 2022-20425 Filed 9-21-22; 8:45 am]
BILLING CODE 4210-67-P