[Federal Register Volume 69, Number 112 (Thursday, June 10, 2004)]
[Rules and Regulations]
[Pages 32774-32782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12954]
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Part IV
Department of Housing and Urban Development
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24 CFR Part 570
Community Development Block Grant Program; Small Cities and Insular
Areas Programs; Interim Rule
Federal Register / Vol. 69 , No. 112 / Thursday, June 10, 2004 /
Rules and Regulations
[[Page 32774]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 570
[Docket No. FR-4919-I-01]
RIN 2506-AC17
Community Development Block Grant Program; Small Cities and
Insular Areas Programs
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Interim rule.
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SUMMARY: This interim rule establishes regulations to implement a
statutory change moving Community Development Block Grant (CDBG)
program assistance for insular areas from section 107 (Special Purpose
Grants) to section 106 (Allocation and Distribution of Funds) of the
Housing and Community Development Act of 1974. As in the past under the
Special Purpose Grant program, HUD will continue to make grants to
insular area jurisdictions under the Insular Areas CDBG program for
activities which principally benefit low- and moderate-income persons,
aid in the elimination of slums or blighting conditions, or meet other
community development needs having a particular urgency. This interim
rule codifies the amended statutory funding mechanism for allocation of
CDBG funds to insular areas, includes the Insular Areas CDBG program in
subpart F and streamlines that subpart by removing sections no longer
necessary for the Small Cities CDBG program, identifies the process by
which insular areas will receive and report on grant funds under
section 106, enables insular areas to apply for the Section 108 Loan
Guarantee program, and makes other conforming and technical amendments.
DATES: Effective Date: July 12, 2004.
Comment Due Date: August 9, 2004.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Regulations Division, Office of General Counsel, Room
10276, Department of Housing and Urban Development, 451 Seventh Street,
SW., Washington, DC 20410-0500. Electronic comments may be submitted
through Regulations.gov (http://www.regulations.gov). Communications
should refer to the above docket number and title. Facsimile (FAX)
comments are not acceptable. A copy of each communication submitted
will be available for public inspection and copying between 8 a.m. and
5 p.m. weekdays at the above address.
FOR FURTHER INFORMATION CONTACT: Jamie Spakow, Community Planning and
Development Specialist, State and Small Cities Division, Office of
Block Grant Assistance, Office of Community Planning and Development,
Room 7184, Department of Housing and Urban Development, 451 Seventh
Street, SW., Washington, DC 20410-7000, telephone (202) 708-1322 (this
is not a toll-free number). Individuals with speech or hearing
impairments may access this number through TTY by calling the toll-free
Federal Information Relay Service at 800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
The CDBG program, authorized under the Housing and Community
Development Act of 1974 (HCD Act) (42 U.S.C. 5301 et seq.), has
provided discretionary assistance as special purpose grants to
qualifying insular area jurisdictions since Fiscal Year (FY) 1982.
Through the CDBG program, HUD allocates funds by formula among eligible
state and local governments, and also makes funds available to insular
areas, for activities which principally benefit low- and moderate-
income persons, aid in the elimination of slums or blighting
conditions, or meet other community development needs having a
particular urgency. HUD's regulations for the portions of the CDBG
program administered by HUD's Office of Community Planning and
Development are located in 24 CFR part 570.
Title V of Public Law 108-186 (117 Stat. 2685, approved December
16, 2003) (title V) amended title I of the HCD Act, moving the insular
areas funding authorization from section 107(a) (42 U.S.C. 5307(a)) to
section 106(a) (42 U.S.C. 5306(a)). This revision identified a specific
portion of the CDBG allocation for insular areas that is separate from
the distribution for special purpose grants as well as from the
entitlement and state formula distribution. The change provides the
insular areas of Guam, the Northern Mariana Islands, the Virgin
Islands, and American Samoa with greater assurance of annual CDBG
program funding.
With respect to the allocation of funds, title V establishes total
ongoing annual insular areas funding at a level of $7,000,000,
consistent with the level of funding received by insular areas while
under the special purpose grant section of the HCD Act. Title V
provides for the distribution of amounts to insular areas on the basis
of the ratio of the population of each insular area to the population
of all insular areas, which is also consistent with the past basis for
distribution under the special purpose grant section. Title V also
provides HUD with the authority to include other statistical criteria
in the distribution formula as additional data become available from
the Bureau of the Census, if such distribution criteria are contained
in a regulation promulgated by HUD after notice and public comment.
Finally, the greater assurance of continued funding provided by
inclusion under section 106 of the HCD Act and the placement of the
Insular Areas CDBG regulations in subpart F provide insular areas with
the opportunity to apply for loan guarantees as described in section
108 of the HCD Act and subpart M of 24 CFR 570.
Because the Consolidated Appropriations Act, 2004 (Public Law 108-
199, approved January 23, 2004) made funds available to insular areas
under section 107 rather than section 106, the regulations at 24 CFR
570.405 applicable to insular areas grants under section 107 will
govern FY2004 insular areas funding. The regulations added by this rule
to govern insular areas funding under section 106 will apply to funds
made available under section 106.
II. This Interim Rule
This interim rule amends HUD's part 570 regulations for the CDBG
program to establish the policies and procedures governing the Insular
Areas CDBG program consistent with section 106 of the HCD Act. The
Insular Areas CDBG regulations that will govern funding under section
106 are added to subpart F (renamed ``Small Cities and Insular Areas
Programs'' by this rule) of 24 CFR part 570. This interim rule codifies
in HUD's regulations the statutory basis for allocation of CDBG funding
to insular area jurisdictions under section 106, identifies eligible
activities and costs, and makes other conforming and technical
amendments.
To the greatest extent possible, this interim rule applies existing
CDBG program regulatory requirements to Insular Areas CDBG awards under
section 106. This interim rule enables insular areas to apply for the
Section 108 Loan Guarantee program. This rule also streamlines subpart
F by removing sections no longer necessary for the Small Cities CDBG
program and identifies the process by which insular areas will receive
and report on grant funds under section 106.
The following discussion provides an overview of the specific
regulatory amendments made by this interim rule:
A. Purpose and Primary Objective
This interim rule expands the scope of subpart F, which formerly
contained
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only regulations applicable to the HUD-administered Small Cities CDBG
program. Subpart F now contains regulations applicable to two types of
nonentitlement area CDBG funds: (1) The HUD-administered Small Cities
program, and (2) the Insular Areas program. Conforming amendments are
made to Sec. 570.1 in subpart A and Sec. 570.420 in subpart F to
reflect this change. Regulations pertaining to the third type of
nonentitlement CDBG program, the state-administered nonentitlement
program, remain separate under Subpart I without revision.
B. Definitions
This interim rule codifies the definitions that apply to the
Insular Areas CDBG program in Sec. 570.3, which contains the
definitions that also apply to other components of the CDBG program.
The interim rule also makes technical corrections to Sec. 570.3 to
remove terms related to the Indian CDBG program, as this program is now
administered by HUD's Office of Public and Indian Housing and is
codified separately at 24 CFR part 1003. The specific changes to Sec.
570.3 are as follows:
1. Insular area. Given enactment of title V and authorization of
Insular Area CDBG funding under section 106 of the HCD Act, HUD is
codifying the statutory definition of ``insular area'' in Sec. 570.3.
Accordingly, this interim rule provides that the term ``insular area''
has the same meaning as provided in section 102(a)(24) of the Act. The
term ``insular area'' means each of Guam, the Northern Mariana Islands,
the Virgin Islands, and American Samoa.
2. Applicant. This interim rule makes a technical correction by
removing the reference to Indian tribes as eligible applicants for the
CDBG program administered through HUD's Office of Community Planning
and Development and codified at 24 CFR part 570. The Indian CDBG
program is separately codified at 24 CFR part 1003 and administered by
HUD's Office of Public and Indian Housing. Indian tribes are no longer
eligible applicants under the part CDBG program codified at 24 CFR part
570. Eligible applicants for CDBG under part 570 now include only
states or units of general local government (including insular areas)
making applications pursuant to the provisions of subparts D, E, F, G,
I, or M of 24 CFR part 570.
3. Indian tribe. The part 570 definition of Indian tribe is
removed, as this definition is no longer relevant to the CDBG program
administered by the Office of Community Planning and Development.
C. Allocation of Funds
This interim rule makes a conforming change to Sec. 570.4(a) to
include a reference to the allocation of appropriated funds to insular
areas as being governed by the policies and procedures described in
sections 106 and 107 of the HCD Act, as appropriate.
D. General Policies
Section 570.200 of subpart C (applicable to all categories of the
part 570 CDBG program, except the state-administered program under
subpart I) has been revised to conform the applicability and
implementation of the national and primary objectives under section 106
of the HCD Act for the Insular Areas program. Conforming changes are
made to Sec. 570.200(a)(2) and (a)(3) to specifically include insular
area CDBG recipients. The change to Sec. 570.200(a)(3) allows these
recipients to determine compliance with the 70 percent low- and
moderate-income requirement over a period of up to three years for
grants funded under section 106 of the HCD Act. The option of choosing
a one- to three-year compliance measurement period in recipient
certifications is already available to other recipients under section
106. Because Sec. 570.200(a)(3) specifies that this flexibility
applies to grants under section 106, insular area grantees must
continue to determine compliance for funds received under section 107
of the HCD Act on an annual basis.
E. Special Purpose Grants
Until funds made available under section 107 are fully expended and
these grants are closed out, insular area jurisdictions must continue
to comply with the special purpose grant requirements of Sec. 570.400,
Sec. 570.405, and other sections of part 570 applicable to the program
at time of funding, as well as the terms of the grant agreements for
those grants, and to implement their activities as outlined in each
insular application and approved by HUD. A conforming change is made to
Sec. 570.420(a) to state that fund reservations for insular areas
under section 107 shall remain governed by the policies and procedures
described in section 107(a)(1)(A) of the Act and Sec. Sec. 570.400 and
570.405.
F. Subpart F--General Section
Subpart F formerly referred only to the Small Cities program. This
interim rule revises the General section of subpart F at Sec. 570.420
to include the Insular Areas program and to clarify the applicability
of the remaining subpart F sections to the Small Cities and Insular
Areas CDBG programs.
1. Administration of nonentitlement CDBG funds. Introductory
language at Sec. 570.420(a) has been revised to indicate that two
categories of nonentitlement CDBG programs are now covered in this
subpart, the Small Cities and Insular Areas programs. The description
of the Small Cities program that originally composed the entire text of
paragraph (a) has been redesignated as Sec. 570.420(a)(1), and Sec.
570.420(a)(2) has been added to describe the Insular Areas program in
accordance with the statutory change.
2. Scope and applicability. This interim rule simplifies and
clarifies the applicability of the remaining sections of subpart F,
while also incorporating regulations to administer the Insular Areas
program. References to regulatory sections applicable to the Small
Cities program are further delineated as applicable only to New York,
Hawaii, or small city grant recipients from either state. A new Sec.
570.420(b)(2) has been added to refer to sections applicable to the
Insular Areas program, including the treatment of grants under section
107. The previous Sec. 570.420(b)(2) (except for the first sentence,
which has been redesignated as Sec. 570.420(f)(1), as described below)
has been redesignated as Sec. 570.420(b)(3), and outlines the
applicability of the other subparts of part 570 to the Small Cities and
Insular Areas programs. A new reference about the applicability of
subpart M, loan guarantees, has been added. This reference supports the
continued ability to apply for section 108 loan guarantees under the
Small Cities program, and provides this option for insular area
grantees for the first time.
3. Public notification requirements. Section 570.420(c)(3) has been
added to indicate that Section 102 of the HUD Reform Act of 1989 (42
U.S.C. 3545) is not applicable to the Insular Areas CDBG program under
section 106, since these funds are not distributed by HUD on a
competitive basis.
4. Abbreviated consolidated plan. A conforming revision to Sec.
570.420(d) includes the Insular Areas program under section 106 in the
requirement to include a certification of consistency of proposed
housing activities with an applicant's consolidated plan.
5. National and primary objectives. Consistent with the conforming
change made in Sec. 570.200(a)(3), discussed above, Sec.
570.420(e)(3) has been added to provide the options that Insular Areas
grantees under section 106 will have for measuring compliance with the
primary
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objective of 70 percent benefit to low- and moderate-income persons.
Under the Special Purpose Grant program pursuant to section 107,
insular area recipients were required to measure compliance based on
each individual funding award. For funds made available under section
106, insular area jurisdictions will have the same flexibility afforded
to entitlement and state grantees of measuring compliance on a one- to
three-year basis. In the certifications to their consolidated plan,
insular area jurisdictions must specify the measurement period to be
used.
6. Allocation of Funds. This rule redesignates the first sentence
of Sec. 570.420(b)(2), which describes the Small Cities allocation
method, as Sec. 570.420(f)(1) and adds the allocation method for the
Insular Areas program under section 106 as Sec. 570.420(f)(2).
G. Obsolete Small Cities Regulations
Under the Small Cities CDBG program, HUD directly administers
allocations for nonentitlement areas in states that have not elected to
administer their own nonentitlement programs. In recent years, HUD has
administered the Small Cities program in only two states--New York and
Hawaii. The State of New York currently administers its own
nonentitlement funding under the State CDBG program, beginning with
FY2000 funding. The Consolidated Appropriations Act, 2004 contained
provisions to fund directly the three county recipients of the Hawaii
Small Cities program as urban counties under the Entitlement CDBG
program, starting in FY2005, if the State of Hawaii does not elect to
administer the State CDBG program. HUD intends to separately issue
revised regulations to implement the Hawaii program's change in status.
In order to simplify subpart F, along with the incorporation of new
Insular Areas program regulations, this interim rule removes the
following regulatory sections of the Small Cities Program that are no
longer required (because the State of New York now administers its own
program): Sec. 570.422--Applications from joint applicants; Sec.
570.423--Application for the HUD-administered New York Small Cities
Grants; Sec. 570.424--Grants for imminent threats to public health and
safety (under the New York Small Cities program), Sec. 570.425--HUD
review and actions on applications for New York State applicants, and
Sec. 570.428--Reallocated (Small Cities) funds.
This rule also makes a conforming change to remove from 24 CFR
570.206(f) the reference to Sec. 570.433, a section that was
previously removed from the subpart F CDBG program regulations.
H. Application Requirements for Insular Area Grants Funded Under
Section 106
Subpart F of this interim rule establishes CDBG grant application
requirements under section 106 for use by insular areas.
1. Consolidated plan. In Sec. 570.440, this rule provides the
options for insular area jurisdictions to prepare either an abbreviated
consolidated plan following the requirements of 24 CFR 91.235, or a
full consolidated plan under part 91 following the requirements of
subparts A--General, B--Citizen Participation and Consultation, C--
Local Governments: Contents of Consolidated Plan, and F--Other General
Requirements. Most insular areas have submitted information in the past
under section 107 that is similar to an abbreviated consolidated plan
under section 106 as part of the annual application for funding under
the Special Purpose Grant program. Section 570.440 also uses the
section 106 terminology of proposed and final ``statements'' rather
than ``applications'' to recognize the recent change in Insular Areas
CDBG program status under title V. HUD specifically invites comments on
the issue of whether future regulatory revisions should require insular
areas funded under section 106 to complete a full consolidated plan.
2. Certifications. This interim rule specifies the required Insular
Areas CDBG certifications at Sec. 570.440(e), consistent with those
already required in a consolidated plan.
3. Submission requirement. Consistent with the existing
consolidated plan requirements, Sec. 570.440(d) of this interim rule
provides insular area jurisdictions with additional flexibility in
determining their program year under section 106 and requires
submission of final statements at least 45 days before the start of the
program year. Under the Special Purpose Grant program pursuant to
section 107, all insular areas use October 1 as their program year
start date. October 1 is the start of the federal fiscal year. October
1, 2004, will continue to be the program year start date for FY2004
funds, which are being made available under section 107. This rule
allows insular area jurisdictions to change their program year start
dates in future years under section 106. HUD does not recommend
choosing a program year start date during the six months following the
beginning of a federal fiscal year, as there may be delay in a
jurisdiction's ability to access funds. For example, choosing a FY2005
program year start date of January 1, 2005 might result in the
jurisdiction's inability to access federal fiscal year 2005 funds until
several months into that program year because of the time required to
make the funds available to the jurisdiction. Similarly, a jurisdiction
should also consider the impact of program year timing issues relative
to 24 CFR 91.10 and 91.15 on its operations under full consolidated
plan requirements.
4. HUD actions. This interim rule specifies that HUD will notify
insular area jurisdictions promptly of actions taken with regard to a
final statement submitted for funding under section 106, and describes
the conditions necessary for approval at Sec. 570.440(f). This section
is consistent with existing requirements applicable to nonentitlement
grantees in subpart F and in subpart O of part 570.
5. Program amendments. Section 570.440(j) of this rule outlines an
insular area jurisdiction's responsibility for including policies and
procedures for program amendments in its citizen participation plan and
HUD's minimum requirements in this area, including a public comment
period for substantial amendments, consistent with the consolidated
plan requirements at Sec. 91.105. Citizen participation requirements
are further described in this interim rule at Sec. 570.441.
6. Other flexibilities and requirements. At Sec. 570.440, this
interim rule changes, for purposes of funding under section 106, the
process for an insular area jurisdiction to be reimbursed for preaward
costs. Insular areas will be subject to the requirements of Sec.
570.200(h) for costs incurred prior to its program year start date.
That section prescribes a limit of the greater of 25 percent of that
year's grant or $300,000 for preaward costs that meet the other
requirements of this section, including consolidated plan,
environmental, and citizen participation requirements. Under the
Special Purpose Grant program pursuant to section 107 at Sec. 570.405,
preaward costs require specific HUD approval at the application level
before they can be incurred. At Sec. 570.440(i), an insular area under
section 106 has the additional flexibility to incorporate float funding
in its program, the same option available to entitlements. This option
is possible as a result of the greater assurance of funding provided by
inclusion under section 106 of the HCD Act. These changes are
applicable only to awards under section 106.
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I. Citizen Participation
At Sec. 570.441, the interim rule requires, for funding under
section 106, insular area jurisdictions to develop and follow detailed
citizen participation plans. There are two primary options available to
insular area jurisdictions. Jurisdictions preparing abbreviated
consolidated plans in accordance with Sec. 91.235 must follow the
citizen participation requirements outlined in Sec. 570.441, which are
consistent with the nonentitlement area citizen participation
requirements at Sec. 570.431. Jurisdictions preparing full
consolidated plans must follow the citizen participation requirements
detailed in the consolidated plan regulations at 24 CFR 91.100 and
91.105. There is one notable exception based in statute to the latter
requirement--an insular area jurisdiction does not have to comply with
the Sec. 91.100(a)(4) requirement for consultation with adjacent units
of general local government. Adjacent units of general local government
outside of the insular area itself are not relevant because such other
jurisdictions are not contiguous with the insular areas.
HUD notes that insular areas intending to make applications for the
Section 108 Loan Guarantee program must ensure that they follow the
presubmission and citizen participation requirements outlined in the
loan guarantee regulations at Sec. 570.704.
J. Subpart M Loan Guarantees
Some minor revisions to the Section 108 Loan Guarantee program
regulations at Sec. Sec. 570.704(a)(1)(v) and 570.705(a)(2)(iii) are
necessary to clarify the ability of insular areas jurisdictions to
apply for loan guarantees. Section 570.704(a)(1)(v) is amended to
permit a ``nonentitlement public entity,'' a term that includes insular
areas, to submit loan guarantee and grant applications simultaneously.
In Sec. 570.705(a)(2)(iii), the words ``in an insular area'' and
reference to the new insular area regulations at Sec. 570.440 are
added to allow each insular area jurisdiction to have an unpaid balance
of loan guarantees up to five times the amount of its most recent
grant. HUD notes that while insular area jurisdictions may now apply
for the Section 108 Loan Guarantee program, the approval of insular
area applications (as with any other type of application) will be
subject to all of the program's underwriting and other criteria.
K. Timeliness
HUD will establish timeliness standards for the Insular Areas
program under section 106 by regulation at a later date. Until then,
insular area jurisdictions that will be funded under section 106 are
encouraged to adopt and achieve the timeliness standards for section
570.902(a) currently applicable to entitlement jurisdictions. In the
meantime, HUD specifically invites comments on the idea of adopting the
Sec. 570.902(a) standards as the Insular Areas program timeliness
standards under section 106.
III. Justification for Interim Rulemaking
HUD generally publishes a rule for public comment before issuing a
rule for effect, in accordance with its own regulations on rulemaking
in 24 CFR part 10. However, part 10 provides for exceptions to the
general rule if the agency finds good cause to omit advance notice and
public participation. The good cause requirement is satisfied when
prior public procedure is ``impractical, unnecessary, or contrary to
the public interest'' (24 CFR 10.1). For the following reasons, HUD has
determined that it would be unnecessary to delay the effectiveness of
this rule in order to solicit prior public comments.
This interim rule merely codifies in HUD's regulations the
statutory policies and procedures mandated by title V, which transfer
the Insular Areas program from eligibility under section 107 of the HCD
Act to eligibility under section 106 of the HCD Act, and makes existing
sections of 24 CFR parts 91 and 570 that apply to section 106
nonentitlement grants also applicable to the Insular Areas program.
Accordingly, the interim rule only changes the administration of the
Insular Areas program from being subject to regulatory requirements
relevant to section 107 to being subject to existing regulatory
requirements relevant to section 106, consistent with the title V
statutory amendments. In addition, section 501(g) of title V requires
HUD to issue regulations carrying out the amendments made by title V to
take effect not later than the expiration of the 90-day period
beginning on the date of the enactment of Public Law 108-186.
Although HUD believes that good cause exists to publish this rule
for effect without prior public comment, HUD recognizes the value of
public comment in the development of its regulations. HUD has,
therefore, issued these regulations on an interim basis and has
provided the public with a 60-day comment period. HUD welcomes comments
on the regulatory amendments made by this interim rule, as well as
advance comments on the adoption of full consolidated planning and
reporting requirements and timeliness standards for insular area CDBG
grantees as discussed in more detail under the applicable sections of
this preamble. The public comments will be addressed in the final rule
or, if necessary, in a new proposed rule.
IV. Findings and Certifications
Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this rule under
Executive Order 12866 (entitled ``Regulatory Planning and Review'').
OMB determined that this rule is a ``significant regulatory action'' as
defined in section 3(f) of the order (although not an economically
significant regulatory action, as provided under section 3(f)(1) of the
order). Any changes made to the rule subsequent to its submission to
OMB are identified in the docket file, which is available for public
inspection in the Regulations Division, Room 10276, Office of General
Counsel, Department of Housing and Urban Development, 451 Seventh
Street, SW., Washington, DC 20410-0500.
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 the private sector. This interim rule does not
impose any federal mandates on any state, local, or tribal government
or the private sector within the meaning of UMRA.
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.
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this interim rule and in so
doing certifies that this rule will not have a significant
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economic impact on a substantial number of small entities for the
following reasons. This rule only codifies in HUD's regulations
statutory policies and procedures that transfer the Insular Areas
program from eligibility under section 107 of the HCD Act to
eligibility under section 106 of the HCD Act and makes existing
sections of 24 CFR parts 91 and 570 that apply to section 106
nonentitlement grants also applicable to the Insular Areas program. As
such, the rule does not significantly differ from the current status in
terms of the impact on the number of entities, the amount of funding,
or the governing requirements applicable.
Notwithstanding HUD's determination that this rule will not have a
significant economic impact 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.
Environmental Impact
A Finding of No Significant Impact with respect to the environment
has been made in accordance with HUD regulations at 24 CFR part 50,
which implement section 102(2)(C) of the National Environmental Policy
Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding of No Significant
Impact is available for public inspection between the hours of 8 a.m.
and 5 p.m. weekdays in the Regulations Division, Office of General
Counsel, Room 10276, Department of Housing and Urban Development, 451
Seventh Street, SW., Washington, DC 20410-0500.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance number for the CDBG
Small Cities Program is 14.219.
List of Subjects in 24 CFR Part 570
Administrative practice and procedure, American Samoa, Community
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Lead poisoning, Loan
programs--housing and community development, Low and moderate income
housing, New communities, Northern Mariana Islands, Pacific Islands
Trust Territory, Pockets of poverty, Puerto Rico, Reporting and
recordkeeping requirements, Small cities, Student aid, Virgin Islands.
0
Accordingly, HUD amends 24 CFR parts 570 as follows:
PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS
0
1. The authority citation for 24 CFR part 570 continues to read as
follows:
Authority: 42 U.S.C. 3535(d) and 5301--5320.
0
2. In Sec. 570.1, revise paragraph (a)(2) to read as follows:
Sec. 570.1 Purpose and primary objective.
(a) * * *
(2) Nonentitlement Funds: HUD-administered Small Cities and Insular
Area programs (subpart F);
* * * * *
0
3. In Sec. 570.3, revise the definition of applicant, remove the
definition of Indian tribe, and add, in alphabetical order, the
definition of insular area, to read as follows:
Sec. 570.3 Definitions.
* * * * *
Applicant means a State or unit of general local government that
makes application pursuant to the provisions of subpart E, F, G or M.
* * * * *
Insular area shall have the meaning provided in section 102(a)(24)
of the Act.
* * * * *
0
4. In Sec. 570.4, revise paragraph (a) to read as follows:
Sec. 570.4 Allocation of funds.
(a) The determination of eligibility of units of general local
government to receive entitlement grants, the entitlement amounts, the
allocation of appropriated funds to States for use in nonentitlement
areas, the reallocation of funds, the allocation of appropriated funds
to insular areas, and the allocation of appropriated funds for
discretionary grants under the Secretary's Fund shall be governed by
the policies and procedures described in sections 106 and 107 of the
Act, as appropriate.
* * * * *
0
5. In Sec. 570.200, revise paragraph (a)(2) and the introductory
paragraph of (a)(3) to read as follows:
Sec. 570.200 General policies.
(a) * * *
(2) Compliance with national objectives. Grant recipients under the
Entitlement and HUD-administered Small Cities programs and recipients
of insular area funds under section 106 of the Act must certify that
their projected use of funds has been developed so as to give maximum
feasible priority to activities which will carry out one of the
national objectives of benefit to low- and moderate-income families or
aid in the prevention or elimination of slums or blight. The projected
use of funds may also include activities that the recipient certifies
are designed to meet other community development needs having a
particular urgency because existing conditions pose a serious and
immediate threat to the health or welfare of the community where other
financial resources are not available to meet such needs. Consistent
with the foregoing, each recipient under the Entitlement or HUD-
administered Small Cities programs, and each recipient of insular area
funds under section 106 of the Act must ensure and maintain evidence
that each of its activities assisted with CDBG funds meets one of the
three national objectives as contained in its certification. Criteria
for determining whether an activity addresses one or more of these
objectives are found in Sec. 570.208.
(3) Compliance with the primary objective. The primary objective of
the Act is described in section 101(c) of the Act. Consistent with this
objective, Entitlement recipients, recipients of the HUD-administered
Small Cities program in Hawaii, and recipients of insular area funds
under section 106 of the Act must ensure that over a period of time
specified in their certification not to exceed three years, not less
than 70 percent of the aggregate of CDBG fund expenditures shall be for
activities meeting the criteria under Sec. 570.208(a) or under Sec.
570.208(d)(5) or (6) for benefiting low- and moderate-income persons.
For grants under section 107 of the Act, insular area recipients must
meet this requirement for each separate grant. See Sec. 570.420(e)(3)
for additional discussion of the primary objective requirement for
insular areas funded under section 106 of the Act. The requirements for
the HUD-administered Small Cities program in New York are at Sec.
570.420(e)(2). Additional requirements for the HUD-administered Small
Cities program in Hawaii are at Sec. 570.430(e). In determining the
percentage of funds expended for such activities:
* * * * *
0
6. In Sec. 570.206, revise the first sentence of paragraph (f) to read
as follows:
Sec. 570.206 Program administrative costs.
* * * * *
(f) Submission of applications for federal programs. Preparation of
documents required for submission to HUD to receive funds under the
CDBG and UDAG programs. * * *
* * * * *
[[Page 32779]]
0
7. Revise the heading of subpart F in part 570 to read as follows:
Subpart F--Small Cities and Insular Areas Programs
0
8. Revise Sec. 570.420 to read as follows:
Sec. 570.420 General.
(a) Administration of nonentitlement CDBG funds by HUD or Insular
Areas--(1) Small cities. The Act permits each State to elect to
administer all aspects of the CDBG program annual fund allocation for
the nonentitlement areas within its jurisdiction. This subpart sets
forth policies and procedures applicable to grants for nonentitlement
areas in States that have not elected, in a manner and time prescribed
by the Secretary, to administer the CDBG program. States that elected
to administer the program after the close of fiscal year 1984 cannot
return administration of the program to HUD. A decision by a State to
discontinue administration of the program would result in the loss of
CDBG funds for nonentitlement areas in that State and the reallocation
of those funds to all States in the succeeding fiscal year.
(2) Insular areas. Title V of Public Law 108-186 amended the Act to
move the insular areas funding authorization from sections 107(a) and
(b) to section 106(a). This revision identified a specific portion of
the CDBG allocation for insular areas that is separate from the
distribution for special purpose grants, as well as from the
Entitlement and State formula distribution. The insular areas of Guam,
the Northern Mariana Islands, the Virgin Islands, and American Samoa
are permitted to administer all aspects of their Community Development
Block Grant (CDBG) program under section 106 of the Act in accordance
with their final statement as further described at Sec. 570.440.
(b) Scope and applicability. (1) This subpart describes the
policies and procedures of the Small Cities Program that apply to
nonentitlement areas in States where HUD administers the CDBG program.
HUD currently administers the Small Cities program in only two States--
New York (for grants prior to FY2000) and Hawaii. The small cities
portion of this subpart principally addresses the requirements for New
York in Sec. Sec. 570.421, 570.426, 570.427, and 570.431. Sections
570.429 and 570.430 identify special procedures applicable to Hawaii.
Section 570.432 is applicable to both New York and Hawaii.
(2) This subpart also describes the policies and procedures
governing community development block grants to insular areas under
section 106 of the Act. Sections 570.440 and 570.441 identify
procedures applicable to the Insular Areas program under section 106 of
the Act. Fund reservations for insular areas under section 107 of the
Act shall remain governed by the policies and procedures described in
section 107(a)(1)(A) of the Act and Sec. Sec. 570.400 and 570.405 of
this part.
(3) The policies and procedures set forth in the following
identified subparts of this part apply to the HUD-administered Small
Cities and Insular Areas programs, except as modified or limited under
the provisions thereof or this subpart:
(i) Subpart A--General Provisions;
(ii) Subpart C--Eligible Activities;
(iii) Subpart J--Grant Administration;
(iv) Subpart K--Other Program Requirements;
(v) Subpart M--Loan Guarantees; and
(vi) Subpart O--Performance Reviews.
(c) Public notification requirements. (1) Section 102 of the
Department of Housing and Urban Development Reform Act of 1989 (42
U.S.C. 3545) contains a number of provisions that are designed to
ensure greater accountability and integrity in the provision of certain
types of assistance administered by HUD. All competitive grants in the
HUD-administered Small Cities program in New York are affected by this
statute, and the requirements identified at 24 CFR part 4 apply to
them. Imminent threat grants under Sec. 570.424 and section 108
repayment grants under Sec. 570.432 are not affected by section 102
because they are not competitive grants.
(2) The Hawaii HUD-administered Small Cities program is not subject
to section 102 because the funds are not distributed by HUD on a
competitive basis.
(3) The Insular Areas program under section 106 of the Act is not
subject to section 102 because the funds are not distributed by HUD on
a competitive basis.
(d) Abbreviated consolidated plan. Applications for the HUD-
administered Small Cities Program and the Insular Areas program under
section 106 of the Act that contain housing activities must include a
certification that the proposed housing activities are consistent with
the applicant's consolidated plan as described at 24 CFR part 91.
(e) National and primary objectives. (1) Each activity funded
through the Small Cities program and the Insular Areas program under
section 106 of the Act must meet one of the following national
objectives as defined under the criteria in Sec. 570.208:
(i) Benefit low- and moderate-income families;
(ii) Aid in the prevention or elimination of slums or blight; or
(iii) Be an activity that the grantee certifies is designed to meet
other community development needs having a particular urgency because
existing conditions pose a serious and immediate threat to the health
or welfare of the community and other financial resources are not
available to meet such needs.
(2) In addition to the objectives described in paragraph (e)(1) of
this section, with respect to grants made through the Small Cities
program, not less than 70 percent of the total of grant funds from each
grant and Section 108 loan guarantee funds received under subpart M of
this part within a fiscal year must be expended for activities which
benefit low- and moderate-income persons under the criteria of Sec.
570.208(a) or of Sec. 570.208(d)(5) or (6). In the case of multiyear
plans in New York State approved in response to NOFAs published prior
to calendar year 1997, not less than 70 percent of the total funding
for grants approved pursuant to a multiyear plan for a time period of
up to three years must be expended for activities which benefit low-
and moderate-income persons. Thus, 70 percent of the grant for year 1
of a multiyear plan approved in response to NOFAs published prior to
calendar year 1997 must meet the 70 percent requirement, 70 percent of
the combined grants from years 1 and 2 must meet the requirement, and
70 percent of the combined grants from years 1, 2, and 3 must meet the
requirement. In determining the percentage of funds expended for such
activity, the provisions of Sec. 570.200(a)(3)(i), (iii), (iv), and
(v) shall apply.
(3) In addition to the objectives described in paragraph (e)(1) of
this section, grants made through the Insular Areas program shall also
comply with the primary objective of 70 percent benefit to low- and
moderate-income persons. Insular area recipients must meet this
requirement for each separate grant under section 107 of the Act. For
grants made under section 106 of the Act, insular area recipients must
ensure that over a period of time specified in their certifications not
to exceed three years, not less than 70 percent of the aggregate of
CDBG fund expenditures shall be for low- and moderate-income activities
meeting the criteria under Sec. 570.208(a) or under Sec.
570.208(d)(5) or (6). See also Sec. 570.200(a)(3) for further
discussion of the primary objective.
[[Page 32780]]
(f) Allocation of funds--(1) Small cities. The allocation of
formula CDBG funds for use in nonentitlement areas of Hawaii is as
provided in subpart A of this part.
(2) Insular areas. The allocation of appropriated funds for insular
areas under section 106 of the Act shall be governed by the policies
and procedures described in section 106(a)(2) of the Act and Sec. Sec.
570.440 and 570.441 of this subpart. The annual appropriations
described in this section shall be distributed to insular areas on the
basis of the ratio of the population of each insular area to the
population of all insular areas.
Sec. 570.422 [Removed]
0
9. Remove Sec. 570.422.
Sec. 570.423 [Removed]
0
10. Remove Sec. 570.423.
Sec. 570.424 [Removed]
0
11. Remove Sec. 570.424.
Sec. 570.425 [Removed]
0
12. Remove Sec. 570.425.
Sec. 570.428 [Removed]
0
13. Remove Sec. 570.428.
0
14. Add a new Sec. 570.440 in subpart F to read as follows:
Sec. 570.440 Application requirements for insular area grants funded
under section 106.
(a) Applicability. The requirements of this section apply to
insular grants funded under section 106 of the Act. An insular area
jurisdiction may choose to prepare program statements following either:
(1) The abbreviated consolidated plan procedures described in this
subpart and in 24 CFR 91.235; or
(2) The complete consolidated plan procedures applicable to local
governments, discussed at 24 CFR 91.200 through 91.230.
(b) Proposed statement. An insular area jurisdiction shall prepare
and publish a proposed statement and comply with the citizen
participation requirements described in Sec. 570.441, if it submits an
abbreviated consolidated plan under 24 CFR 91.235. The jurisdiction
shall follow the citizen participation requirements of 24 CFR 91.105
and 91.100 (with the exception of Sec. 91.100(a)(4)), if it submits a
complete consolidated plan.
(c) Final statement. The insular area jurisdiction shall submit to
HUD a final statement describing its community development objectives
and activities. The statement also must include a priority nonhousing
community development plan in accordance with 24 CFR 91.235. This final
statement shall be submitted, together with the required
certifications, to the appropriate field office in a form prescribed by
HUD.
(d) Submission requirement. Each insular area jurisdiction shall
submit its final statement to HUD no later than 45 days before the
start of its program year. Each jurisdiction may choose the start date
for the annual period of its program year that most closely fits its
own needs. HUD may grant an extension of the submission deadline for
good cause.
(e) Certifications. The insular area jurisdiction's final statement
must be accompanied by appropriate certifications as further described
under 24 CFR 91.225. The jurisdiction should submit all general
certifications, as well as all program certifications for each program
from which it receives funding, if it submits a complete consolidated
plan. For insular area jurisdictions receiving CDBG funds under an
abbreviated consolidated plan, these certifications shall include at a
minimum:
(1) The following general certifications described at Sec.
91.225(a) of this title: Affirmatively furthering fair housing; anti-
displacement and relocation plan; drug-free workplace; anti-lobbying;
authority of jurisdiction; consistency with plan; acquisition and
relocation; and Section 3.
(2) The following CDBG certifications described at Sec. 91.225(b)
of this title: Citizen participation; community development plan;
following a plan; use of funds; excessive force; compliance with anti-
discrimination laws; compliance with lead-based paint procedures; and
compliance with laws.
(f) HUD action on final statement. Following the review of the
statement, HUD will promptly notify each jurisdiction of the action
taken with regard to its statement. HUD will approve a grant if the
jurisdiction's submissions have been made and approved in accordance
with 24 CFR part 91, and if the certifications required in such
submissions are satisfactory to HUD. The certifications will be
satisfactory to HUD for this purpose, unless HUD determines pursuant to
subpart O of this part that the jurisdiction has not complied with the
requirements of this part, has failed to carry out its consolidated
plan (or abbreviated consolidated plan) as provided under Sec.
570.903, or has determined that there is evidence, not directly
involving the jurisdiction's past performance under this program, that
tends to challenge in a substantial manner the jurisdiction's
certification of future performance. If HUD makes any such
determination, however, further assurances may be required to be
submitted by the jurisdiction as HUD may deem warranted or necessary to
find the jurisdiction's certification satisfactory.
(g) Reimbursement for pre-award costs. Insular area jurisdictions
may request reimbursement for pre-award costs in accordance with Sec.
570.200(h).
(h) Float funding. An insular area jurisdiction may use undisbursed
funds in the line of credit and its CDBG program account that are
budgeted in final statements or action plans for one or more activities
that do not need the funds immediately, subject to the limitations
described in Sec. 570.301(b).
(i) Program amendments. (1) The insular area jurisdiction's citizen
participation plan (see Sec. 570.441) must specify the criteria the
jurisdiction will use for determining what changes in the
jurisdiction's planned or actual activities will constitute a
substantial amendment to its final statement. It must include changes
in the use of CDBG funds from one eligible activity to another among
the changes that qualify as a substantial amendment.
(2) The citizen participation plan must provide citizens with
reasonable notice and an opportunity to comment on substantial
amendments. The citizen participation plan must state how reasonable
notice and an opportunity to comment will be given, as well as provide
a period of not less than 30 days to receive comments on the
substantial amendment before the amendment is implemented.
(3) The citizen participation plan shall require the jurisdiction
to consider comments or views of citizens received in writing, or
orally at public hearings, if any, in preparing the substantial
amendment of its statement. A summary of comments or views not accepted
and the reasons for non-acceptance shall be attached to the substantial
amendment.
(4) Any program amendment, regardless of whether it is considered
to be substantial, must be fully documented in the jurisdiction's
records.
(j) Performance reports. Each insular area jurisdiction must submit
annual performance reports in accordance with 24 CFR 91.520.
0
15. Add a new Sec. 570.441 in subpart F to read as follows:
Sec. 570.441 Citizen participation--insular areas.
(a) General. An insular area jurisdiction submitting an abbreviated
consolidated plan under 24 CFR 91.235 shall comply with the citizen
[[Page 32781]]
participation requirements described in this section. An insular area
jurisdiction submitting a complete consolidated plan in accordance with
24 CFR 91.200 through 91.230 shall follow the citizen participation
requirements of Sec. 91.100 and Sec. 91.105, except for Sec.
91.100(a)(4). For funding under section 106 of the Act, these
requirements are applicable to all aspects of the Insular Areas
program, including the preparation of the proposed statement and final
statements as described in Sec. 570.440. The requirements for citizen
participation do not restrict the responsibility or authority of the
jurisdiction for the development and execution of its community
development program.
(b) Citizen participation plan. The insular area jurisdiction must
develop and follow a detailed citizen participation plan and must make
the plan public. The plan must be completed and available before the
statement for assistance is submitted to HUD, and the jurisdiction must
certify that it is following the plan. The plan must set forth the
jurisdiction's policies and procedures for:
(1) Giving citizens timely notice of local meetings and reasonable
and timely access to local meetings, information, and records relating
to the grantee's proposed and actual use of CDBG funds including, but
not limited to:
(i) The amount of CDBG funds expected to be made available for the
coming year, including the grant and anticipated program income;
(ii) The range of activities that may be undertaken with those
funds;
(iii) The estimated amount of those funds proposed to be used for
activities that will benefit low- and moderate-income persons;
(iv) The proposed CDBG activities likely to result in displacement
and the jurisdiction's plans, consistent with the policies developed
under Sec. 570.606(b), for minimizing displacement of persons as a
result of its proposed activities; and
(v) The types and levels of assistance the jurisdiction plans to
make available (or to require others to make available) to persons
displaced by CDBG-funded activities, even if the jurisdiction expects
no displacement to occur;
(2) Providing technical assistance to groups representative of
persons of low- and moderate-income that request assistance in
developing proposals. The level and type of assistance to be provided
is at the discretion of the jurisdiction. The assistance need not
include the provision of funds to the groups;
(3) Holding a minimum of two public hearings for the purpose of
obtaining citizens' views and formulating or responding to proposals
and questions. Each public hearing must be conducted at a different
stage of the CDBG program. Together, the hearings must address
community development and housing needs, development of proposed
activities, and review of program performance. There must be reasonable
notice of the hearings, and the hearings must be held at times and
accessible locations convenient to potential or actual beneficiaries,
with reasonable accommodations including material in accessible formats
for persons with disabilities. The jurisdiction must specify in its
plan how it will meet the requirement for hearings at times and
locations convenient to potential or actual beneficiaries;
(4) Meeting the needs of non-English speaking residents in the case
of public hearings where a significant number of non-English speaking
residents can reasonably be expected to participate;
(5) Responding to citizen complaints and grievances, including the
procedures that citizens must follow when submitting complaints and
grievances. The jurisdiction's policies and procedures must provide for
timely written answers to written complaints and grievances within 15
working days after the receipt of the complaint, where practicable; and
(6) Encouraging citizen participation, particularly by low- and
moderate-income persons who reside in areas in which CDBG funds are
proposed to be used.
(c) Publication of proposed statement. (1) The insular area
jurisdiction shall publish a proposed statement consisting of the
proposed community development activities and community development
objectives in order to afford affected citizens an opportunity to:
(i) Examine the statement's contents to determine the degree to
which they may be affected;
(ii) Submit comments on the proposed statement; and
(iii) Submit comments on the performance of the jurisdiction.
(2) The requirement for publishing in paragraph (c)(1) of this
section may be met by publishing a summary of the proposed statement in
one or more newspapers of general circulation and by making copies of
the proposed statement available at libraries, government offices, and
public places. The summary must describe the contents and purpose of
the proposed statement and must include a list of the locations where
copies of the entire proposed statement may be examined.
(d) Preparation of a final statement. An insular area jurisdiction
must prepare a final statement. In the preparation of the final
statement, the jurisdiction shall consider comments and views received
relating to the proposed statement and may, if appropriate, modify the
final statement. The final statement shall be made available to the
public and shall include the community development objectives,
projected use of funds, and the community development activities.
(e) Program amendments. To assure citizen participation on program
amendments to final statements, the insular area grantee shall:
(1) Furnish citizens information concerning the amendment;
(2) Hold one or more public hearings to obtain the views of
citizens on the proposed amendment;
(3) Develop and publish the proposed amendment in such a manner as
to afford affected citizens an opportunity to examine the contents, and
to submit comments on the proposed amendment;
(4) Consider any comments and views expressed by citizens on the
proposed amendment and, if the grantee finds it appropriate, modify the
final amendment accordingly; and
(5) Make the final amendment to the community development program
available to the public before its submission to HUD.
(f) Performance reports. (1) The citizen participation plan must
provide citizens with reasonable notice and an opportunity to comment
on performance reports. The citizen participation plan must state how
reasonable notice and an opportunity to comment will be given. The
citizen participation plan must provide a period of not less than 15
days to receive comments on the performance report before it is to be
submitted to HUD.
(2) The citizen participation plan shall require the jurisdiction
to consider comments or views of citizens received in writing or orally
at public hearings in preparing the performance report. A summary of
these comments or views shall be attached to the performance report.
(g) Application for loan guarantees. Insular area jurisdictions
intending to apply for the Section 108 Loan Guarantee program must
ensure that they follow the applicable presubmission and citizen
participation requirements of Sec. 570.704.
0
16. In Sec. 570.704, revise paragraph (a)(1)(v) to read as follows:
[[Page 32782]]
Sec. 570.704 Application requirements.
(a) * * *
(1) * * *
(v) If an application for loan guarantee assistance is to be
submitted by an entitlement or nonentitlement public entity
simultaneously with the public entity's submission for its grant, the
public entity shall include and identify in its proposed and final
consolidated plan the activities to be undertaken with the guaranteed
loan funds, the national objective to be met by each of these
activities, the amount of any program income expected to be received
during the program year, and the amount of guaranteed loan funds to be
used. The public entity shall also include in the consolidated plan a
description of the pledge of grants, as required under Sec.
570.705(b)(2). In such cases the proposed and final application
requirements of paragraphs (a)(1)(i), (iii), and (iv) of this section
will be deemed to have been met.
* * * * *
0
17. Revise the introductory paragraph of Sec. 570.705(a)(2)(iii) to
read as follows:
Sec. 570.705 Loan requirements.
(a) * * *
(2) * * *
(iii) Nonentitlement public entities eligible under subpart F of
this part. No commitment to guarantee shall be made with respect to a
nonentitlement public entity in an insular area or the State of Hawaii
if the total unpaid balance of debt obligations guaranteed under this
subpart (excluding any amount defeased under the contract entered into
under Sec. 570.705(b)(1)) on behalf of the public entity would thereby
exceed an amount equal to five times the amount of the most recent
grant made pursuant to Sec. 570.429 or Sec. 570.440 (as applicable)
to the public entity.
* * * * *
Dated: May 11, 2004.
Roy A. Bernardi,
Assistant Secretary for Community Planning and Development.
[FR Doc. 04-12954 Filed 6-9-04; 8:45 am]
BILLING CODE 4210-32-P