Federal Register, Volume 73 Issue 194 (Monday, October 6, 2008)

[Federal Register Volume 73, Number 194 (Monday, October 6, 2008)]
[Notices]
[Pages 58330-58349]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23476]

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Part III

Department of Housing and Urban Development

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Notice of Allocations, Application Procedures, Regulatory Waivers
Granted to and Alternative Requirements for Emergency Assistance for
Redevelopment of Abandoned and Foreclosed Homes Grantees Under the
Housing and Economic Recovery Act, 2008; Notice

Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 /
Notices

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5255-N-01]

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of allocation method, waivers granted, alternative
requirements applied, and statutory program requirements.

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SUMMARY: This notice advises the public of the allocation formula and
allocation amounts, the list of grantees, alternative requirements, and
the waivers of regulations granted to grantees under Title III of
Division B of the Housing and Economic Recovery Act of 2008, for the
purpose of assisting in the redevelopment of abandoned and foreclosed
homes under the Emergency Assistance for Redevelopment of Abandoned and
Foreclosed Homes heading, referred to throughout this notice as the
Neighborhood Stabilization Program (NSP). As described in the
Supplementary Information section of this notice, HUD is authorized by
statute to specify alternative requirements and make regulatory waivers
for this purpose. This notice also notes statutory issues affecting
program design and implementation.

DATES: Effective Date: September 29, 2008.

FOR FURTHER INFORMATION CONTACT: Stanley Gimont, Director, Office of
Block Grant Assistance, Department of Housing and Urban Development,
451 Seventh Street, SW., Room 7286, Washington, DC 20410, telephone
number 202-708-3587. Persons with hearing or speech impairments may
access this number via TTY by calling the Federal Information Relay
Service at 800-877-8339. FAX inquiries may be sent to Mr. Gimont at
202-401-2044. (Except for the ``800'' number, these telephone numbers
are not toll-free.)

SUPPLEMENTARY INFORMATION:

Authority To Provide Alternative Requirements and Grant Regulatory
Waivers

Title III of Division B of the Housing and Economic Recovery Act,
2008 (HERA) (Pub. L. 110-289, approved July 30, 2008) appropriates
$3.92 billion for emergency assistance for redevelopment of abandoned
and foreclosed homes and residential properties, and provides under a
rule of construction that, unless HERA states otherwise, the grants are
to be considered Community Development Block Grant (CDBG) funds. The
grant program under Title III is commonly referred to as the
Neighborhood Stabilization Program (NSP). When referring to a provision
of the appropriations statute itself, this notice will refer to HERA;
when referring to the grants, grantees, assisted activities, and
implementation rules, this notice will use the term NSP.
HERA authorizes the Secretary to specify alternative requirements
to any provision under Title I of the Housing and Community Development
Act of 1974, as amended, (the HCD Act) except for requirements related
to fair housing, nondiscrimination, labor standards, and the
environment (including lead-based paint), in accordance with the terms
of section 2301 of HERA and for the sole purpose of expediting the use
of grant funds. (Current and former disaster recovery CDBG grantees
should note that this authority is substantially and significantly more
limited from that generally provided with disaster recovery CDBG
supplemental appropriations; therefore, waivers under the NSP are much
more limited. For example, HUD does not have authority to provide
alternative requirements for the National Affordable Housing Act (NAHA)
or for the Uniform Relocation Assistance Real Property Acquisition
Policies Act of 1970 (URA). Unless this notice describes how HERA has
superseded one of their provisions, these statutes will apply as in the
CDBG program. Such regulatory relief as HUD deemed necessary and was
authorized to provide under 24 CFR 5.110 and 91.600 to permit
implementation of the NSP is provided in this notice.)
The Secretary finds that the following alternative requirements are
necessary to expedite the use of these funds for their required
purposes.
Under the requirements of HERA, the Secretary must provide Congress
written notice of its intent to exercise the authority to specify
alternative requirements not less than 10 business days before such
exercise of authority is to occur. Under the HUD Reform Act, regulatory
waivers must be justified and published in the Federal Register. The
Department is also using this notice to provide grantees information
about other ways in which the requirements for this grant vary from
regular CDBG program rules. Compiling this information in a single
notice creates a helpful resource for grant administrators and HUD
field staff.
Except as described in this notice, statutory and regulatory
provisions governing the CDBG program, including those at 24 CFR part
570 subpart I for states or, for CDBG entitlement communities,
including those at 24 CFR part 570 subparts A, C, D, J, K, and O, as
appropriate, shall apply to the use of these funds. (The State of
Hawaii will be allocated funds and will be subject to part 570, subpart
I, as modified by this notice.) Other sections of the notice will
provide further details of the changes, the majority of which deal with
adjustments necessitated by HERA provisions, simplifying program rules
to expedite administration, or relate to the ability of state grantees
to act directly instead of solely through distribution to local
governments. In a separate guidance issuance, HUD also will provide a
simplified ``crosswalk'' of NSP and State CDBG requirements for state
grantee administrators.

Table of Contents

I. Allocations
A. Formula: Allocation
B. Formula: Reallocation
II. Alternative Requirements and Regulatory Waivers
A. Definitions for purposes of the CDBG Neighborhood
Stabilization Program
B. Pre-Grant Process
1. General
2. Contents of an NSP Action Plan Substantial Amendment
3. Continued Affordability
4. Citizen Participation Alternative Requirement
5. Joint Requests
6. Effect of Existing Cooperation Agreements Governing Joint
Programs and Urban Counties
C. Reimbursement for Pre-Award Costs
D. Grant Conditions
E. Income Eligibility Requirement Changes
F. State Distribution to Entitlement Communities and Indian
Tribes
G. State's Direct Action
H. Eligibility and Allowable Costs
I. Rehabilitation Standards
J. Sale of Homes
K. Acquisition and Relocation
L. Note on Eminent Domain
M. Timeliness of Use and Expenditure of NSP Funds
N. Alternative Requirement for Program Income (Revenue)
Generated by Activities Assisted With Grant Funds
O. Reporting
P. Note That FHA Properties Are Eligible for NSP Acquisition and
Redevelopment
Q. Purchase Discount
R. Removal of Annual Requirements
S. Affirmatively Furthering Fair Housing
T. Certifications
U. Note on Statutory Limitation on Distribution of Funds
V. Information Collection Approval Note
W. Duration of Funding

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I. Allocations

A. Formula: Allocation

HERA provides $3.92 billion of funds that are generally to be
construed as CDBG program funds for the communities and in the amounts
listed in Attachment A to this notice. Attachment A also includes a
description of the allocation formula used to determine the grant
amounts, as required by HERA.

B. Formula: Reallocation

1.a. To expedite the use of NSP funds, the Department is specifying
alternative requirements to 42 U.S.C. 5306(c). If a unit of general
local government receiving an allocation of NSP funds under this notice
(as designated in Attachment A) fails to submit a substantially
complete application for its grant allocation by December 1, 2008, or
submits an application for less than the total allocation amount, HUD
will simultaneously notify the jurisdiction of the cancellation of all
or part of its allocation amount and proceed to reallocate the funds to
the state in which the jurisdiction is located.
b. If a state or insular area receiving an allocation of funds
under this notice fails to submit a substantially complete application
for its allocation by December 1, 2008, or submits an application for
less than the total allocation amount, HUD will simultaneously notify
the state or insular area of the reduction in its allocation amount and
proceed to reallocate the funds to the 10 highest-need states based on
original rankings of need.
2. If any jurisdiction, state, insular, or local area fails to meet
the requirement to use its grant within 18 months of receipt of the
amounts, as required, HUD, on the first business day after that
deadline, will simultaneously notify the grantee and restrict the
amount of unused funds in the grantee's line of credit. HUD will allow
the grantee 30 days to submit information to HUD regarding any
additional ``use'' of funds not already recorded in the Disaster
Recovery Grant Reporting system (DRGR). Then HUD will proceed to
recapture the unused funds. HUD will reallocate these unused funds in
accordance with 42 U.S.C. 5306(c)(4).

II. Alternative Requirements and Regulatory Waivers

This section of the notice briefly provides a justification for
alternative requirements, where additional explanation is necessary,
and describes the necessary basis for each regulatory waiver. This
section also highlights some of the statutory items applicable to the
grants. This background narrative is followed by the NSP
requirement(s).
HUD's resources for implementing HERA are limited and have other
calls upon them (for managing the regular CDBG and HOME Investment
Partnership programs (HOME) and the New York, Gulf Coast, and Midwest
disaster recovery grants), and the Department wants to target the use
of its resources toward achieving NSP program performance, and
preventing and eliminating fraud, waste, and misuse of program funds.
Because no funds were available specifically for tracking the use of
NSP grants, HUD is applying an existing system, unmodified. This all
militates toward keeping standards simple or familiar, wherever
possible. Therefore, throughout this notice, where HUD had any choice
of a standard to use to measure compliance, HUD selected the simplest
one to administer, giving a preference to a standard already in common
use.
Each grantee eligible for an NSP grant already receives annual CDBG
allocations, has carried out needs hearings, has a consolidated plan,
an annual action plan, a citizen participation plan, a monitoring plan,
an analysis of impediments to fair housing choice, and has made CDBG
certifications. The consolidated plan already discusses housing needs
related to up to four major grant programs: CDBG, HOME, Emergency
Shelter Grants (ESG), and Housing Opportunities for Persons With AIDS
(HOPWA). A grantee's annual action plan describes the activities
budgeted under each of those annual programs.
HUD is treating a grantee's use of its NSP grant to be a
substantial amendment to its current approved consolidated plan and
annual action plan. The NSP grant is a special CDBG allocation to
address the problem of abandoned and foreclosed homes. HERA establishes
the need, targets the geographic areas, and limits the eligible uses of
NSP funds. Treating the NSP as a substantial amendment will expedite
the distribution of NSP funds, while ensuring citizen participation on
the specific use of the funds. HUD is waiving the consolidated plan
regulations on the certification of consistency with the consolidated
plan to mean the NSP funds will be used to meet the congressionally
identified needs of abandoned and foreclosed homes in the targeted
areas set forth in the grantee's substantial amendment. In addition,
HUD is waiving the consolidated plan regulations to the extent
necessary to adjust reporting to fit the requirements of HERA and the
use of the DRGR.
The waivers, alternative requirements, and statutory changes apply
only to the grant funds appropriated under HERA and not to the use of
regular formula allocations of CDBG funds, even if they are used in
conjunction with NSP funds for a project. They provide expedited
program implementation and implement statutory requirements unique to
this appropriation.

A. Definitions for Purposes of the CDBG Neighborhood Stabilization
Program

Background
Certain terms are used in HERA that are not used in the regular
CDBG program, or the terms are used differently in HERA and the HCD
Act. In the interest of speed and clarity of administration, HUD is
defining these terms in this notice for all grantees, including states.
For the same reason, HUD is also defining eligible fund uses for all
grantees, including states. States may define other program terms under
the authority of 24 CFR 570.481(a), and will be given maximum feasible
deference in accordance with 24 CFR 570.480(c) in matters related to
the administration of their NSP programs.
Requirement
Abandoned. A home is abandoned when mortgage or tax foreclosure
proceedings have been initiated for that property, no mortgage or tax
payments have been made by the property owner for at least 90 days, AND
the property has been vacant for at least 90 days.
Blighted structure. A structure is blighted when it exhibits
objectively determinable signs of deterioration sufficient to
constitute a threat to human health, safety, and public welfare.
CDBG funds. CDBG funds means, in addition to the definition at 24
CFR 570.3, grant funds distributed under this notice.
Current market appraised value. The current market appraised value
means the value of a foreclosed upon home or residential property that
is established through an appraisal made in conformity with the
appraisal requirements of the URA at 49 CFR 24.103 and completed within
60 days prior to an offer made for the property by a grantee,
subrecipient, developer, or individual homebuyer.
Foreclosed. A property ``has been foreclosed upon'' at the point
that, under state or local law, the mortgage or tax foreclosure is
complete. HUD generally will not consider a foreclosure to be complete
until after the title for the

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property has been transferred from the former homeowner under some type
of foreclosure proceeding or transfer in lieu of foreclosure, in
accordance with state or local law.
Land bank. A land bank is a governmental or nongovernmental
nonprofit entity established, at least in part, to assemble,
temporarily manage, and dispose of vacant land for the purpose of
stabilizing neighborhoods and encouraging re-use or redevelopment of
urban property. For the purposes of the NSP program, a land bank will
operate in a specific, defined geographic area. It will purchase
properties that have been abandoned or foreclosed upon and maintain,
assemble, facilitate redevelopment of, market, and dispose of the land-
banked properties. If the land bank is a governmental entity, it may
also maintain abandoned or foreclosed property that it does not own,
provided it charges the owner of the property the full cost of the
service or places a lien on the property for the full cost of the
service.
Revenue for the purposes of section 2301(d)(4). Revenue has the
same meaning as program income, as defined at 24 CFR 570.500(a) with
the modifications in this notice.
Subrecipient. Subrecipient shall have the same meaning as at the
first sentence of 24 CFR 570.500(c). This includes any nonprofit
organization (including a unit of general local government) that a
state awards funds to.
Use for the purposes of section 2301(c)(1). Funds are used when
they are obligated by a state, unit of general local government, or any
subrecipient thereof, for a specific NSP activity; for example, for
acquisition of a specific property. Funds are obligated for an activity
when orders are placed, contracts are awarded, services are received,
and similar transactions have occurred that require payment by the
state, unit of general local government, or subrecipient during the
same or a future period. Note that funds are not obligated for an
activity when subawards (e.g., grants to subrecipients or to units of
local government) are made.

B. Pre-Grant Process

Background
With this notice, HUD is establishing the NSP allocation formula,
including reallocation provisions, and announcing the distribution of
funds. CDBG grantees receiving NSP allocations may immediately begin to
prepare and submit action plan substantial amendments for NSP funds, in
accordance with this notice. (Insular areas should follow the
requirements for entitlement communities.)
To receive NSP funding, each CDBG grantee listed in Attachment A
must submit an action plan substantial amendment to HUD in accordance
with this notice by December 1, 2008.
HUD encourages each grantee to carry out its NSP activities in the
context of a comprehensive plan for the community's vision of how it
can make its neighborhoods not only more stable, but also more
sustainable, competitive, and integrated into the overall metropolitan
fabric, including access to transit, affordable housing, employers, and
services.
HUD encourages each local jurisdiction receiving an allocation to
carefully consider its administrative capacity to use the funds within
the statutory deadline versus the capacity of the state administrator.
HUD expects that after such consideration, some jurisdictions may
choose to apply for less than the full amount, which will allow the
balance of their grants to pass to the NSP administrator at the state
level.
Another way jurisdictions may cooperate to carry out their grant
programs is through a joint request to HUD. HUD is providing regulatory
waivers and alternative requirements to allow joint requests among
entitlement communities and to allow joint requests between an
entitlement community and a state. Any two or more contiguous
entitlement communities (metropolitan cities or urban counties) that
are in the same metropolitan area and that are eligible to receive an
NSP grant may instead make a joint request to HUD to implement a joint
NSP program. A jurisdiction need not have a joint agreement with an
urban county under the regular CDBG entitlement program to request a
joint program for NSP funding. Similarly, any entitlement community
eligible to receive an NSP grant may instead make a request for a joint
NSP program with its state. An NSP joint request under a cooperation
agreement results in a single combined grant and a single action plan
substantial amendment. Potential requestors should contact HUD as soon
as possible (as far as possible in advance of publishing a proposed NSP
substantial amendment) for technical guidance. The requestors will
specify which jurisdiction will receive the funds and administer the
combined grant on behalf of the requestors; in the case of a joint
request between a local government jurisdiction and a state, the state
will administer the combined grant. (Grantees choosing this option
should consider the Consolidated Plan and citizen participation
implications of this approach. The lead entity's substantial amendment
will cover any participating members. The citizen participation process
must include citizens of all jurisdictions participating in the joint
NSP program, not just those of the lead entity.)
Given the rule of construction in HERA that NSP funds generally are
construed as CDBG program funds, subject to CDBG program requirements,
HUD generally is treating NSP funds as a special allocation of Fiscal
Year (FY) 2008 CDBG funding. This has important consequences for local
governments presently participating in an existing urban county
program, and for metropolitan cities that have joint agreements with
urban counties. HUD will consider any existing cooperation agreements
between a local government and an urban county governing FY2008 CDBG
funding (for purposes of either an urban county or a joint program) to
automatically cover NSP funding as well. These cooperation agreements
will continue to apply to the use of NSP funds for the duration of the
NSP grant, just as cooperation agreements covering regular CDBG
Entitlement program funds continue to apply to any use of the funds
appropriated during the 3-year period covered by the agreements. For
example, a local government presently has a cooperation agreement
covering a joint program or participation in an urban county for
federal FYs 2007, 2008 and 2009. The local government may choose to
discontinue its participation with the county at the end of the
applicable qualification period for purposes of regular CDBG
entitlement funding. However, the county will still be responsible for
any NSP projects funded in that community, and for any NSP funding the
local government receives from the county, until those funds are
expended and the funded activities are completed.
A third method of cooperating is also available. A jurisdiction may
choose to apply for its entire grant, and then enter into a
subrecipient agreement with another jurisdiction or nonprofit entity to
administer the grant. In this manner, for example, all of the grantees
operating in a single metropolitan area could designate the same land-
bank entity (or the state housing finance agency) as a subrecipient for
some or all of their NSP activities.
Each grantee will have until December 1, 2008, to complete and
submit a substantial amendment to its annual action plan. A grantee
that wishes to initially submit its action plan

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amendment to HUD electronically in the DRGR system rather than via
paper may do so by contacting its local field office for the DRGR
submission directions. Paper submissions to HUD also will be allowed,
although each grantee must set up its action plan in DRGR prior to the
deadline for the first required performance report after receiving a
grant.
HUD is using DRGR for the NSP because no other application and
reporting system was sufficiently flexible to deal with the alternative
requirements. The emergency nature of this legislation and
corresponding statutory time frames do not give HUD sufficient time to
develop a new system or modify an existing system to perfectly fit NSP.
HUD encourages grantees, during development of their action plan
amendments, to contact HUD field offices for guidance in complying with
these requirements, or if they have any questions regarding meeting
grant requirements.
Normally, in the CDBG program, a grantee takes at least 30 days
soliciting comment from its citizens before it submits an annual action
plan to HUD, which then has 45 days to accept or reject the plan. To
expedite the process and to ensure that the NSP grants are awarded in a
timely manner, while preserving reasonable citizen participation, HUD
is waiving the requirement that the grantee follow its citizen
participation plan for this substantial amendment. HUD is shortening
the minimum time for citizen comments and requiring the substantial
amendment materials to be posted on the grantee's official website as
the materials are developed, published, and submitted to HUD.
Each grantee must use its NSP funds within 18 months of receipt. A
grantee will be deemed by HUD to have received its NSP grant at the
time HUD signs its NSP grant agreement (or amendment thereof, in the
case of a state that later receives reallocated grant funds).
Grantees are cautioned that, despite the expedited application and
plan process, they are still responsible for ensuring that all citizens
have equal access to information about the programs. Among other
things, this means that each grantee must ensure that program
information is available in the appropriate languages for the
geographic area served by the jurisdiction. This will be a particular
issue for those states that this notice is allowing to make grants
throughout the state, including into regular CDBG entitlement areas.
Because regular State CDBG funds are not used in entitlement areas,
State CDBG staffs may not be aware of limited English proficient (LEP)
speaking populations in those metropolitan jurisdictions.
HUD will review each grantee submission for completeness and
consistency with the requirements of this notice and will disapprove
incomplete and inconsistent action plan amendments. HUD will allow
revision and resubmission of a disapproved action plan in accordance
with 24 CFR 91.500 so long as any such resubmission is received by HUD
45 days or less following the date of first disapproval and in no case
later than the close of business February 13, 2009.
In combination, the notice alternative requirements provide the
following expedited steps for NSP grants:
Proposed action plan amendment published via the usual
methods and on the Internet for no less than 15 calendar days of public
comment;
Final action plan amendment posted on the Internet and
submitted to HUD by December 1, 2008 (grant application includes
Standard Form 424 (SF-424) and certifications);
HUD expedites review,
HUD accepts the plan and prepares a cover letter, grant
agreement, and grant conditions;
Grant agreement signed by HUD and immediately transmitted
to the grantee;
Grantee signs and returns the grant agreements;
HUD establishes the line of credit and the grantee
requests and receives voice response system (VRS) access;
After completing the environmental review(s) pursuant to
24 CFR part 58 and, as applicable, receiving from HUD or the state an
approved Request for Release of Funds and certification, the grantee
may draw-down funds from the line of credit.
The action plan substantial amendment and citizen participation
alternative requirement will permit an expedited grant-making process,
but one that still provides for public notice, appraisal, examination,
and comment on the activities proposed for the use of NSP grant funds.
Requirement
1. General note. Except as described in this notice, statutory and
regulatory provisions governing the CDBG program for states and
entitlement communities, as applicable, shall apply to the use of these
funds.
2. Contents of an NSP Action Plan substantial amendment. The
elements in the NSP substantial amendment to the Annual Action Plan
required for the CDBG program under part 91 are:
a. General information about needs, distribution, use of funds, and
definitions:
i. Summary needs data identifying the geographic areas of greatest
need in the grantee's jurisdiction. (A state must include the needs of
the entire state and not just the areas not receiving an NSP
allocation. To include the needs of an entitlement community, the state
may either incorporate an entitlement jurisdiction's consolidated plan
and NSP needs by reference and hyperlink on the Internet, or state the
needs for that jurisdiction in the state's own plan);
ii. A narrative describing how the distribution and uses of the
grantee's NSP funds will meet the requirements of Section 2301(c)(2) of
HERA that funds be distributed to the areas of greatest need, including
those with the greatest percentage of home foreclosures, with the
highest percentage of homes financed by a subprime mortgage related
loan, and identified by the grantee as likely to face a significant
rise in the rate of home foreclosures. The grantee's narrative must
address the three need categories in the NSP statute, but the grantee
may also consider other need categories;
iii. For the purposes of the NSP, the narratives will include:
(A) A definition of ``blighted structure'' in the context of state
or local law;
(B) A definition of ``affordable rents;''
(C) A description of how the grantee will ensure continued
affordability for NSP-assisted housing; and
(D) A description of housing rehabilitation standards that will
apply to NSP-assisted activities.
b. Information by activity describing how the grantee will use the
funds, identifying:
i. The eligible use of funds under NSP;
ii. The eligible CDBG activity or activities;
iii. The areas of greatest need addressed by the activity or
activities;
iv. The expected benefit to income-qualified persons or households
or areas;
v. Appropriate performance measures for the activity (e.g., units
of housing to be acquired, rehabilitated, or demolished for the income
levels represented in DRGR, which are currently 50 percent of area
median income and below, 51 to 80 percent, and 81 to 120 percent);
vi. Amount of funds budgeted for the activity;
vii. The name and location of the entity that will carry out the
activity; and

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viii. The expected start and end dates of the activity.
c. A Description of the general terms under which assistance will
be provided, including:
i. If the activity includes acquisition of real property, the
discount required for acquisition of foreclosed-upon properties;
ii. Range of interest rates (if any);
iii. Duration or term of assistance;
iv. Tenure of beneficiaries (e.g., rental or homeownership); and
v. If the activity produces housing, how the design of the activity
will ensure continued affordability; and
vi. If the funds used for the activity are to count toward the
requirement at section 2301(f)(3)(A)(ii) to provide benefit to low-
income persons (earning 50 percent or less of area median income).
d. Information on how to contact grantee program administrators, so
that citizens and other interested parties know who to contact for
additional information.
3. Continued affordability. Grantees shall ensure, to the maximum
extent practicable and for the longest feasible term, that the sale,
rental, or redevelopment of abandoned and foreclosed-upon homes and
residential properties under this section remain affordable to
individuals or families whose incomes do not exceed 120 percent of area
median income or, for units originally assisted with funds under the
requirements of section 2301(f)(3)(A)(ii), remain affordable to
individuals and families whose incomes do not exceed 50 percent of area
median income.
a. In its NSP action plan substantial amendment, a grantee will
define ``affordable rents'' and the continued affordability standards
and enforcement mechanisms that it will apply for each (or all) of its
NSP activities. HUD will consider any grantee adopting the HOME program
standards at 24 CFR 92.252(a), (c), (e), and (f), and 92.254 to be in
minimal compliance with this standard and expects any other standards
proposed and applied by a grantee to be enforceable and longer in
duration. (Note that HERA's continued affordability standard is longer
than that required of subrecipients and participating units of general
local government under 24 CFR 570.503 and 570.501(b).)
b. The grantee must require each NSP-assisted homebuyer to receive
and complete at least 8 hours of homebuyer counseling from a HUD-
approved housing counseling agency before obtaining a mortgage loan.
The grantee must ensure that the homebuyer obtains a mortgage loan from
a lender who agrees to comply with the bank regulators' guidance for
non-traditional mortgages (see, Statement on Subprime Mortgage Lending
issued by the Office of the Comptroller of the Currency, Board of
Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Department of the Treasury, and National Credit Union
Administration, available at http://www.fdic.gov/regulations/laws/rules/5000-5160.html). Grantees must design NSP programs to comply with
this requirement and must document compliance in the records, for each
homebuyer. Grantees are cautioned against providing or permitting
homebuyers to obtain subprime mortgages for whom such mortgages are
inappropriate, including homebuyers who qualify for traditional
mortgage loans.
c. If NSP funds assist a property that was previously assisted with
HOME funds, but on which the affordability restrictions were terminated
through foreclosure or transfer in lieu of foreclosure pursuant to 24
CFR part 92, the grantee must revive the HOME affordability
restrictions for the greater of the remaining period of HOME
affordability or the continuing affordability requirements of this
notice.
4. Citizen participation alternative requirement. HUD is providing
an alternative requirement to 42 U.S.C. 5304(a)(2) and (3), to expedite
distribution of grant funds and to provide for expedited citizen
participation for the NSP substantial amendment. Provisions of 24 CFR
570.302 and 570.486 and those of 24 CFR 91.105(k) and 91.115(i), with
respect to following the citizen participation plan, are waived to the
extent necessary to allow implementation of the requirements below.
a. To receive its grant allocation, a grantee must submit to HUD
for approval an NSP application by December 1, 2008. This submission
will include a signed standard federal form SF-424, signed
certifications, and a substantial action plan amendment meeting the
requirements of paragraph b below. (24 CFR 91.505 is waived to the
extent necessary to require submission of the substantial amendment to
HUD for approval in accordance with this notice.)
b. Each grantee must prepare and submit its annual Action Plan
amendment to HUD in accordance with the consolidated plan procedures
for a substantial amendment under the annual CDBG program as modified
by this notice or HUD will reallocate the funds allocated for that
grantee. HUD is providing alternative requirements to 42 U.S.C.
5304(a)(2) and waiving 91.105(k) and 91.115(i) to the extent necessary
to allow the grantee to provide no fewer than 15 calendar days for
citizen comment (rather than 30 days) for its initial NSP submission,
and to require that, at the time of submission to HUD, each grantee
post its approved action plan amendment and any subsequent NSP
amendments on its official website along with a summary of citizen
comments received within the 15-day comment period. After HUD processes
and approves the plan amendment and both HUD and the grantee have
signed the grant agreement, HUD will establish the grantee's line of
credit in the amount of funds included in the Action Plan amendment, up
to the allocation amount.
5. Joint requests. To expedite the use of funds, HUD is providing
an alternative requirement to 42 U.S.C. 5304(i) and is waiving 24 CFR
570.308 to the extent necessary to allow for additional joint programs
described below.
a. Entitlement Community Joint Agreements. Two or more contiguous
entitlement communities (metropolitan cities or urban counties) that
are eligible to receive a NSP allocation and are located in the same
metropolitan area may enter into joint agreements. All members to the
joint agreement must be eligible to receive NSP funds, and one unit of
general local government must be designated as the lead entity. The
lead entity must execute the NSP grant agreement with HUD. Consistent
with 24 CFR 570.308, the lead entity must assume responsibility for
administering the NSP grant on behalf of all members, in compliance
with applicable program requirements. The substantial amendment to the
lead entity's action plan will include all participating entitlement
communities.
b. Joint agreements with a state. Any entitlement community that is
eligible to receive an NSP allocation may enter into a joint agreement
with its state. The state shall be the lead entity and must assume
responsibility for administering the NSP grant on behalf of the
entitlement community, in compliance with applicable program
requirements. The substantial amendment to the state's action plan will
include any participating entitlement community.
6. Effect of existing cooperation agreements governing joint
programs and urban counties. Any cooperation agreement between a unit
of general local government and a county, concerning either a joint
program or participation in an urban county under

[[Page 58335]]

24 CFR 570.307 or 570.308, and governing CDBG funds appropriated for
federal FY 2008, will be considered to incorporate and apply to NSP
funding. Any such cooperation agreements will continue to apply to the
use of NSP funds until the NSP funds are expended and the NSP grant is
closed out. Grantees should note that certain provisions in existing
cooperation agreements that govern FY2008 CDBG funding may be
inconsistent with parts of HERA and this notice. For instance, set
minimum and/or maximum allocation amounts may conflict with priority
distributions to areas of greatest need identified in the grantee's
action plan substantial amendment. Conforming amendments should be made
to existing cooperation agreements, as necessary, to comply with HERA
and this notice.

C. Reimbursement for Pre-Award Costs

Background
NSP allocatees will need to move forward rapidly to prepare the NSP
substantial amendment and to undertake other administrative actions,
including environmental reviews, as soon as allocations are known.
Therefore, HUD is granting permission to states and entitlement
jurisdictions receiving a direct allocation of NSP funds (see
Attachment A) to incur pre-award costs as if each was a new grantee
preparing to receive its first allocation of CDBG funds.
Requirement
24 CFR 570.200(h) is waived to the extent necessary to grant
permission to entitlement jurisdictions receiving a direct NSP
allocation under this notice to incur pre-award costs as if each was a
new grantee preparing to receive its first allocation of CDBG funds.
Similarly, in accordance with OMB Circular A-87, Attachment B,
paragraph 31, HUD is allowing states to incur pre-award costs as if
each was a new grantee preparing to receive its first allocation of
CDBG funds. As a new grantee, an NSP allocatee will be allowed to incur
costs necessary to develop the NSP substantial action plan amendment
and undertake other administrative actions necessary to receive its
first grant, prior to the costs being included in the final plan,
provided that the other conditions of 24 CFR 570.200(h) are met. (For
units of general local government (including entitlements not receiving
a direct NSP allocation under this notice) applying to the state, 24
CFR 570.489(b) applies unmodified.)

D. Grant Conditions

For NSP grantees that HUD determines are high risk in accordance
with 24 CFR 85.12(a), HUD will apply additional grant conditions in
accordance with 24 CFR 85.12(b).

E. Income Eligibility Requirement Changes

Background
The NSP program includes two low- and moderate-income requirements
at section 2301(f)(3)(A) that supersede existing CDBG income
qualification requirements. Under the heading ``Low and Moderate Income
Requirement,'' HERA states that: ``All of the funds appropriated or
otherwise made available under this section shall be used with respect
to individuals and families whose income does not exceed 120 percent of
area median income.''
This provision does two main things. First, for the purposes of the
NSP, it effectively supersedes the overall benefit provisions of the
HCD Act and the CDBG regulations, which allow up to 30 percent of a
grant to be used for activities that meet a national objective other
than the low- and moderate-income one. Thus, NSP allows the use of only
the low- and moderate-income national objective. Activities may not
qualify under NSP using the ``prevent or eliminate slums and blight''
or ``address urgent community development needs'' objectives.
Second, this provision also redefines and supersedes the definition
of ``low- and moderate-income,'' effectively allowing households whose
incomes exceed 80 percent of area median income but do not exceed 120
percent of area median income to qualify as if their incomes did not
exceed the published low- and moderate-income levels of the regular
CDBG program. To prevent confusion, HUD will refer to this new income
group as ``middle income,'' and keep the regular CDBG definitions of
``low-income'' and ``moderate income'' in use. Further, HUD will
characterize aggregated households whose incomes do not exceed 120
percent of median income as ``low-, moderate-, and middle-income
households,'' abbreviated as LMMH. For the purposes of NSP CDBG only,
an activity may meet the HERA low- and moderate-income national
objective if the assisted activity:
Provides or improves permanent residential structures that
will be occupied by a household whose income is at or below 120 percent
of area median income (abbreviated as LMMH);
Serves an area in which at least 51 percent of the
residents have incomes at or below 120 percent of area median income
(LMMA);
Creates or retains jobs for persons whose household
incomes are at or below 120 percent of median income (LMMJ); or
Serves a limited clientele whose incomes are at or below
120 percent of area median income (LMMC).
HUD will use the parenthetical terms above to refer to NSP national
objectives in program implementation, to avoid confusion with the
regular HCD Act definitions.
Land banks are not allowed in the regular CDBG program because of
the very high risk that the delay between acquiring property and
meeting a national objective can be excessively long, attenuating the
intended CDBG program benefits by delaying benefit far beyond the
annual or even the 5-year consolidated plan cycles. In the regular CDBG
program (and in the NSP other than in an eligible land-bank use), a
property acquisition activity is dependent on the national objective
met by the subsequent reuse of the property in order to demonstrate
program compliance. Given this, the HERA direction that assistance to
land banks is an eligible use of NSP funds requires an alternative
requirement and policy clarification.
For grantees choosing to assist land banks or demolition of
structures with NSP funds, the change to the income qualification level
for low-, moderate-, and middle-income areas will likely include most
of the neighborhoods where property stabilization is required. If an
assisted land bank is not merely acquiring properties, but is also
carrying out other activities intended to arrest neighborhood decline,
such as maintenance, demolition, and facilitating redevelopment of the
properties, HUD will, for NSP-assisted activities only, accept that the
acquisition and management activities of the land bank may provide
sufficient benefit to an area generally (as described in 24 CFR
570.208(a)(1) and 570.483(b)(1)) to meet a national objective (LMMA)
prior to final disposition of the banked property. HUD notes that the
grantee must determine the actual service area benefiting from a land
bank's activities, in accordance with the regulations.
However, HUD does not believe the benefits of just holding property
are sufficient to stabilize most neighborhoods or that this is the best
use of limited NSP funds absent a re-use plan. Therefore, HUD is
requiring that a land bank may not hold a property for more than 10
years without obligating the property for a specific, eligible

[[Page 58336]]

redevelopment of that property in accordance with NSP requirements.
Note that if a state provides funds to an entitlement community,
the entitlement community must apply the area median income levels
applicable to its regular CDBG program geography and not the ``balance
of state'' levels.
Other than the change in the applicable low- and moderate-income
qualification level from 80 percent to 120 percent, the area benefit,
housing, jobs, and limited clientele benefit requirements at 570.208(a)
and 570.483(b) remain unchanged, as does the required documentation.
The other NSP low- and moderate-income related provision states
that: ``not less than 25 percent of the funds appropriated or otherwise
made available under this section shall be used for the purchase and
redevelopment of abandoned or foreclosed homes or residential
properties that will be used to house individuals or families whose
incomes do not exceed 50 percent of area median income.''
HUD advises grantees to take note of this new threshold as they
design NSP activities. This provision does not have a parallel in the
regular CDBG program. Grantees must document that an amount equal to at
least 25 percent of a grantee's NSP grant (initial allocation plus any
reallocations) has been budgeted in the initial approved action plan
substantial amendment for activities that will provide housing for
income-qualified individuals or families. Prior to and at grant
closeout, HUD will review grantees for compliance with this provision
by determining whether at least 25 percent of grant funds have been
expended for housing for individual households whose incomes do not
exceed 50 percent of area median income.
Requirements
1. Overall benefit supersession and alternative requirement. The
requirements at 42 U.S.C. 5301(c), 42 U.S.C. 5304(b)(3)(A), 24 CFR
570.484 (for states), and 24 CFR 570.200(a)(3) that 70 percent of funds
are for activities that benefit low- and moderate-income persons are
superseded and replaced by section 2301(f)(3)(A) of HERA. One hundred
percent of NSP funds must be used to benefit individuals and households
whose income does not exceed 120 percent of area median income. NSP
shall refer to such households as ``low-, moderate-, and middle-
income.''
2. National objectives supersession and alternative requirements.
The requirements at 42 U.S.C 5301(c) are superseded and 24 CFR
570.208(a) and 570.483 are waived to the extent necessary to allow the
following alternative requirements:
a. For purposes of NSP only, the term ``low- and moderate-income
person'' as it appears throughout the CDBG regulations at 24 CFR part
570 shall be defined as a member of a low-, moderate-, and middle-
income household, and the term ``low- and moderate-income household''
as it appears throughout the CDBG regulations shall be defined as a
household having an income equal to or less than 120 percent of area
median income, measured as 2.4 times the current Section 8 income limit
for households below 50 percent of median income, adjusted for family
size. A state choosing to carry out an activity directly must apply the
requirements of 24 CFR 570.208(a) to determine whether the activity has
met the low-, moderate-, and middle-income (LMMI) national objective
and must maintain the documentation required at 24 CFR 570.506 to
demonstrate compliance to HUD.
b. The national objectives related to prevention and elimination of
slums and blight and addressing urgent community development needs (24
CFR 570.208(b) and (c) and 570.483(c) and (d)) are not applicable to
NSP-assisted activities.
c. Each grantee whose plan includes assisting rental housing shall
develop and make public its definition of affordable rents for NSP-
assisted rental projects.
d. An NSP-assisted property may not be held in a land bank for more
than 10 years without obligating the property for a specific, eligible
redevelopment of that property in accordance with NSP requirements.

F. State Distribution to Entitlement Communities and Indian Tribes

Background
This notice includes an alternative requirement to the HCD Act and
a regulatory waiver allowing distribution of funds by a state to CDBG
regular entitlement communities and Tribes. This is consistent with the
provision of HERA that specifically sets distribution priorities for
areas with the greatest need, including ``metropolitan areas,
metropolitan cities, urban areas, rural areas, low- and moderate-income
areas * * *'' Therefore, states receiving allocations under this notice
may distribute funds to or within any jurisdiction within the state
that is among those with the greatest need, even if the jurisdiction is
among those receiving a direct formula allocation of funds from HUD
under the regular CDBG program or this notice.
Requirement
Alternative requirement for distribution to CDBG metropolitan
cities, urban counties, and Tribes. In accordance with the direction of
HERA that grantees distribute funds to the areas of greatest need, HUD
is providing an alternative requirement to 42 U.S.C. 5302(a)(7)
(definition of ``nonentitlement area'') and waiving provisions of 24
CFR part 570, including 24 CFR 570.480(a), that would prohibit states
electing to receive CDBG funds from distributing such funds to units of
general local government in entitlement communities or to Tribes. The
appropriations law supersedes the statutory distribution prohibition at
42 U.S.C. 5306(d)(1) and (2)(A). Alternatively, the state is required
to distribute funds without regard to a local government status under
any other CDBG program and must use funds in entitlement jurisdictions
if they are identified as areas of greatest need, regardless of whether
the entitlement receives its own NSP allocation.

G. State's Direct Action

Background
In the State CDBG program, states receiving CDBG funds may not
directly use the funds for activities, but must distribute them to
units of general local government, which then use the funds for program
activities. States may still use this ``method of distribution''
program model under NSP, but HUD reminds the states of the 18-month
``use'' requirement. HUD also notes the language of section 2301(c)
that says, in part, that:

Any State * * * that receives amounts pursuant to this section
shall * * * use such amounts to purchase and redevelop * * *.

This clearly speaks to the states using funds directly for projects and
supersedes the HCD Act direction for states to only distribute funds to
nonentitlement areas. Direct use of funds by a state may also result in
more expeditious use of NSP funds. Therefore, a state receiving NSP
funds may carry out NSP activities directly for some or all of its
assisted grant activities, just as CDBG entitlement communities do
under 24 CFR 570.200(f), including, but not limited to, carrying out
activities using its own employees, procuring contractors, private
developers, and providing loans and grants through nonprofit
subrecipients (including local governments and other public

[[Page 58337]]

nonprofits such as regional or local planning or development
authorities and public housing authorities).
For those activities a state chooses to carry out directly, HUD
strongly advises the state to adopt the recordkeeping required for an
entitlement community at 570.506 and the subrecipient agreement
provisions at 570.503. Also, in such cases, as an alternative
requirement to 42 U.S.C. 5304(i), the state may retain and re-use
program income as if it were an entitlement community.
HUD is granting regulatory waivers of State CDBG regulations to
conform the applicable management, real property change of use, and
recordkeeping rules when a state chooses to carry out activities as if
it were an entitlement community.
Requirements
1. Responsibility for state review and handling of noncompliance.
This change conforms NSP requirements with the waiver allowing the
state to carry out activities directly. 24 CFR 570.492 is waived and
the following alternative requirement applies: The state shall make
reviews and audits, including on-site reviews of any subrecipients,
designated public agencies, and units of general local government as
may be necessary or appropriate to meet the requirements of 42 U.S.C.
5304(e)(2), as amended, as modified by this notice. In the case of
noncompliance with these requirements, the state shall take such
actions as may be appropriate to prevent a continuance of the
deficiency, mitigate any adverse effects or consequences, and prevent a
recurrence. The state shall establish remedies for noncompliance by any
designated public agencies or units of general local governments and
for its subrecipients.
2. Change of use of real property for state grantees acting
directly. This waiver conforms the change of use of real property rule
to the waiver allowing a state to carry out activities directly. For
purposes of this program, in 24 CFR 570.489(j), (j)(1), and the last
sentence of (j)(2), ``unit of general local government'' shall be read
as ``unit of general local government or state.''
3. Recordkeeping for a state grantee acting directly. Recognizing
that the state may carry out activities directly, 24 CFR 570.490(b) is
waived in such a case and the following alternative provision shall
apply: State records. The state shall establish and maintain such
records as may be necessary to facilitate review and audit by HUD of
the state's administration of NSP funds under 24 CFR 570.493.
Consistent with applicable statutes, regulations, waivers and
alternative requirements, and other federal requirements, the content
of records maintained by the state shall be sufficient to: (1) Enable
HUD to make the applicable determinations described at 24 CFR 570.493;
(2) make compliance determinations for activities carried out directly
by the state; and (3) show how activities funded are consistent with
the descriptions of activities proposed for funding in the action plan.
For fair housing and equal opportunity purposes, and as applicable,
such records shall include data on the racial, ethnic, and gender
characteristics of persons who are applicants for, participants in, or
beneficiaries of the program.
4. State compliance with certifications for state grantees acting
directly. This is a conforming change related to the waiver to allow a
state to act directly. Because a state grantee under this appropriation
may carry out activities directly, HUD is applying the regulations at
24 CFR 570.480(c) with respect to the basis for HUD determining whether
the state has failed to carry out its certifications, so that such
basis shall be that the state has failed to carry out its
certifications in compliance with applicable program requirements.
5. Clarifying note on the process for environmental release of
funds when a State carries out activities directly. Usually, a state
distributes CDBG funds to units of local government and takes on HUD's
role in receiving environmental certifications from the grant
recipients and approving releases of funds. For this grant, HUD will
allow a state grantee to also carry out activities directly instead of
distributing them to other governments. According to the environmental
regulations at 24 CFR 58.4, when a state carries out activities
directly, the state must submit the certification and request for
release of funds to HUD for approval.

H. Eligibility and Allowable Costs

Background
Most of the activities eligible under NSP represent a subset of the
eligible activities under 42 U.S.C. 5305(a). Due to limitations in the
reporting system, DRGR, the NSP-eligible uses must be correlated with
CDBG-eligible activities. The alternative to this approach, using a
paper-based action plan and reporting process using NSP-eligible uses
only would be much slower to implement. This correlation also reduces
implementation risks, because it will ensure that the NSP grants are
administered largely in accordance with long-established CDBG rules and
controls. The table in the requirements paragraph below shows the
eligible uses under NSP and the corresponding eligible activities from
the regulations for the regular CDBG entitlement program that HUD has
determined best correspond to those uses. If a grantee creates a
program design that includes a CDBG-eligible activity that is not shown
in the table to support an NSP-eligible use, the Department is
providing an alternative requirement to 42 U.S.C. 5305(a) that HUD may
allow a grantee an additional eligible-activity category if HUD finds
the activity to be in compliance with the NSP statute. As under the
regular CDBG program, grantees may fund costs, such as reasonable
developer's fees, related to NSP-assisted housing rehabilitation or
construction activities. NSP funds may be used to redevelop acquired
property for nonresidential uses, such as a public park, commercial
use, or mixed residential and commercial use.
The annual entitlement CDBG program allows up to 20 percent of any
grant amount plus program income may be used for general administration
and planning costs. The State CDBG program is also subject to the 20
percent limitation, but within that cap up to 3 percent may be used by
the state for state administrative cost and technical assistance to
potential local government program grant recipients, with the remainder
available to be granted to local government recipients for their
administrative costs. Because some of the costs usually allocated under
these caps are not applicable to NSP grants (for example, the costs of
completing the entire consolidated plan process), these amounts seem
excessive to HUD in the context of the NSP program. On the other hand,
HUD wants to encourage and support expeditious, appropriate, and
compliant use of grant funds, and to prevent fraud, waste, and abuse of
funds. Therefore, HUD is providing an alternative requirement that an
amount of up to 10 percent of an NSP grant provided to a jurisdiction
and of up to 10 percent of program income earned may be used for
general administration and planning activities as those are defined at
24 CFR 570.205 and 206. For all grantees, including states, the 10
percent limitation applies to the grant as a whole.
The regulatory and statutory requirements for state match for
program administration at 24 CFR 570.489 (a)(i) are superseded by the
statutory direction at section 2301(e)(2) that no matching funds shall
be required for a state or unit of general local government to receive
a grant.

[[Page 58338]]

Requirements
1. Use of grant funds must constitute an eligible use under HERA.
2. In addition to being an eligible NSP use of funds, each activity
funded under this notice must also be CDBG-eligible under 42 U.S.C.
5305(a) and meet a CDBG national objective.
3.a. Certain CDBG-eligible activities correlate to specific NSP-
eligible uses and vice versa. 42 U.S.C. 5305(a) and 24 CFR 570.201-207
and 482(a) through (d) are superseded to the extent necessary to allow
the eligible uses described under section 2301(c)(3) of HERA in
accordance with this paragraph (including the table and subparagraphs
below) or with permission granted, in writing, by HUD upon a written
request by the grantee that demonstrates that the proposed activity
constitutes an eligible use under NSP. All NSP grantees, including
states, will use the NSP categories and CDBG entitlement regulations
listed below.

------------------------------------------------------------------------
Correlated eligible activities
NSP-eligible uses from the CDBG entitlement
regulations
------------------------------------------------------------------------
(A) Establish financing mechanisms for As part of an activity
purchase and redevelopment of delivery cost for an eligible
foreclosed upon homes and residential activity as defined in 24 CFR
properties, including such mechanisms 570.206.
as soft-seconds, loan loss reserves, Also, the eligible
and shared-equity loans for low- and activities listed below to the
moderate-income homebuyers. extent financing mechanisms
are used to carry them out.
(B) Purchase and rehabilitate homes and 24 CFR 570.201(a)
residential properties that have been Acquisition
abandoned or foreclosed upon, in order (b) Disposition,
to sell, rent, or redevelop such homes (i) Relocation, and
and properties. (n) Direct homeownership
assistance (as modified
below);
570.202 eligible
rehabilitation and
preservation activities for
homes and other residential
properties (HUD notes that
rehabilitation may include
counseling for those seeking
to take part in the activity).
(C) Establish land banks for homes that 24 CFR 570.201(a) Acquisition
have been foreclosed upon. and (b) Disposition.
(D) Demolish blighted structures....... 24 CFR 570.201(d)
Clearance for blighted
structures only.
(E) Redevelop demolished or vacant 24 CFR 570.201(a)
properties. Acquisition,
(b) Disposition,
(c) Public facilities and
improvements,
(e) Public services for housing
counseling, but only to the
extent that counseling
beneficiaries are limited to
prospective purchasers or
tenants of the redeveloped
properties,
(i) Relocation, and
(n) Direct homeownership
assistance (as modified
below).
204 Community based
development organizations.
------------------------------------------------------------------------

b. HUD will not consider requests to allow foreclosure prevention
activities, or to allow demolition of structures that are not blighted,
or to allow purchase of residential properties and homes that have not
been abandoned or foreclosed upon as provided in HERA and defined in
this notice. HUD does not have the authority to permit uses or
activities not authorized by HERA.
c. New construction of housing is eligible as part of eligible-use
(E) to redevelop demolished or vacant properties.
d. 24 CFR 570.201(n) is waived and an alternative requirement
provided for 42 U.S.C. 5305(a) to the extent necessary to allow
provision of NSP-assisted homeownership assistance to persons whose
income does not exceed 120 percent of median income.
4. Alternative requirement for the limitation on planning and
administrative costs. 24 CFR 570.200(g) and 570.489(a)(3) are waived to
the extent necessary to allow each grantee under this notice to expend
no more than 10 percent of its grant amount, plus 10 percent of the
amount of program income received by the grantee, for activities
eligible under 24 CFR 570.205 or 206. The requirements at 24 CFR
570.489 are waived to the extent that they require a state match for
general administrative costs. (States may use NSP funds under this 10
percent limitation to provide technical assistance to local governments
and nonprofit program participants.)

I. Rehabilitation Standards

Background
HERA provides that any NSP-assisted rehabilitation of a foreclosed-
upon home or residential property shall be to the extent necessary to
comply with applicable laws, codes, and other requirements relating to
housing safety, quality, and habitability, in order to sell, rent, or
redevelop such homes and properties. This imposes a requirement that
does not exist in the CDBG program. This means that each grantee must
describe or reference in its NSP action plan amendment what
rehabilitation standards it will apply for NSP-assisted rehabilitation.
HUD will monitor to ensure the standards are implemented.
HERA defines rehabilitation to include improvements to increase the
energy efficiency or conservation of such homes and properties or to
provide a renewable energy source or sources for such homes and
properties. Such improvements are also eligible under the regular CDBG
program. HUD strongly encourages grantees to use NSP funds not only to
stabilize neighborhoods in the short-term, but to strategically
incorporate modern, green building and energy-efficiency improvements
in all NSP activities to provide for long-term affordability and
increased sustainability and attractiveness of housing and
neighborhoods.

J. Sale of Homes

Background
Section 2301(d)(2) of HERA directs that, if an abandoned or
foreclosed-upon home or residential property is purchased, redeveloped,
or otherwise sold to an individual as a primary residence, then such
sale shall be in an amount equal to or less than the cost to acquire
and redevelop or rehabilitate such home or property up to a decent,
safe, and habitable condition. (Sales and closing costs are eligible
NSP redevelopment or rehabilitation costs.) Note that the maximum sales
price for a property is determined by aggregating all costs of
acquisition, rehabilitation, and redevelopment (including related
activity delivery costs, which generally may include, among other
items, costs related to the sale of the property).
Requirements
1. In its records, each grantee must maintain sufficient
documentation

[[Page 58339]]

about the purchase and sale amounts of each property and the sources
and uses of funds for each activity so that HUD can determine whether
the grantee is in compliance with this requirement. A grantee will be
expected to provide this documentation individually for each activity.
2. In determining the sales price limitation, HUD will not consider
the costs of boarding up, lawn mowing, simply maintaining the property
in a static condition, or, in the absence of NSP-assisted
rehabilitation or redevelopment of the property, the costs of
completing a sales transaction or other disposition to be redevelopment
or rehabilitation costs. These costs may not be included by the grantee
in the determination of the sales price for an NSP-assisted property.
3. For reporting purposes only, for a housing program involving
multiple single-family structures under the management of a single
entity, HUD will permit reporting the aggregation of activity delivery
costs across the total portfolio of projects until completion of the
program or closeout of the grant with HUD, whichever comes earlier.

K. Acquisition and Relocation

Background
Acquisition of Foreclosed-Upon Properties. HUD notes that section
2301(d)(1) of HERA conflicts with section 301(3) of the URA (42 U.S.C.
4651) and related regulatory requirements at 49 CFR 24.102(d). As
discussed further, section 2301(d)(1) of HERA requires that any
acquisition of a foreclosed-upon home or residential property under NSP
be at a discount from the current market-appraised value of the home or
property and that such discount shall ensure that purchasers are paying
below-market value for the home or property. Section 301(3) of the URA,
as implemented at 49 CFR 24.102(d), provides that an offer of just
compensation shall not be less than the agency's approved appraisal of
the fair market value of such property. These URA acquisition policies
apply to any acquisition of real property for a federally funded
project, except for acquisitions described in 49 CFR 24.101(b)(1)
through (5) (commonly referred to as ``voluntary acquisitions''). As
the more recent and specific statutory provision, section 2301(d)(1) of
HERA prevails over section 301 of the URA for purposes of NSP-assisted
acquisitions of foreclosed-upon homes or residential properties.
NSP Appraisal Requirements. As noted above, section 301 of the URA
does not apply to voluntary acquisitions. While the URA and its
regulations do not require appraisals for such acquisitions, the URA
acquisition policies do not prohibit acquiring agencies from obtaining
appraisals. Appendix A, 49 CFR 24.101(b)(2) acknowledges that acquiring
agencies may still obtain an appraisal to support their determination
of fair market value. Section 2301(d)(1) of HERA requires an appraisal
for purposes of determining the statutory purchase discount. This
appraisal requirement applies to any NSP-assisted acquisition of a
foreclosed-upon home or residential property (including voluntary
acquisitions).
One-for-One Replacement. HUD is providing an alternative
requirement to the one-for-one replacement requirements set forth in 42
U.S.C. 5304(d)(2), as implemented at 24 CFR 42.375. The Department
anticipates a large number of requests from grantees for whom the
requirements will be onerous given the pressing rush to implement NSP,
and several of the major housing markets affected by the foreclosure
crisis have a surplus of abandoned and foreclosed-upon residential
properties. The additional workload of reviewing requests under 42
U.S.C. 5304(d)(3) and 24 CFR 42.375(d) could cause a substantial
backlog at HUD and delay NSP program operations. Therefore, the
alternative requirement is that an NSP grantee will not be required to
meet the requirements of 42 U.S.C. 5304(d), as implemented at 24 CFR
42.375, to provide one-for-one replacement of low- and moderate-income
dwelling units demolished or converted in connection with activities
assisted with NSP funds. Alternatively, each grantee must submit the
information described below relating to its demolition and conversion
activities in its action plan substantial amendment. The grantee will
report to HUD and citizens (via prominent posting of the DRGR reports
on the grantee's official Internet site) on progress related to these
measures until the closeout of its grant with HUD.
As noted earlier, HUD does not have the authority to waive or
specify alternative requirements to the URA's acquisition policies or
relocation provisions. Those requirements that do not conflict with
HERA continue to apply. HUD is not specifying alternative requirements
to the relocation assistance provisions at 42 U.S.C. 5304(d). Guidance
on meeting these requirements is available on the HUD Web site and
through local HUD field offices. HUD urges grantees to consider URA
requirements in designing their programs and to remember that there are
URA obligations related to voluntary and involuntary property
acquisition activities, even for vacant and abandoned property. HUD
reminds grantees to be aware of the requirement to have and follow a
residential antidisplacement and relocation plan for the CDBG and HOME
programs. This requirement is not waived for those programs and
continues to apply to activities assisted with regular CDBG and HOME
funds.
Requirements
1. The one-for-one replacement requirements at 24 CFR 570.488,
570.606(c), and 42.375 are waived for low- and moderate-income dwelling
units demolished or converted in connection with an activity assisted
with NSP funds. As an alternative requirement to 42 U.S.C.
5304(d)(2)(A)(i) and (ii), each grantee planning to demolish or convert
any low- and moderate-income dwelling units as a result of NSP-assisted
activities must identify all of the following information in its NSP
substantial amendment:

(a) The number of low- and moderate-income dwelling units
reasonably expected to be demolished or converted as a direct result
of NSP-assisted activities;
(b) The number of NSP affordable housing units (made available
to low-, moderate-, and middle-income households) reasonably
expected to be produced, by activity and income level as provided
for in DRGR, by each NSP activity providing such housing (including
a proposed time schedule for commencement and completion); and
(c) The number of dwelling units reasonably expected to be made
available for households whose income does not exceed 50 percent of
area median income.

The grantee must also report on actual performance for demolitions and
production, as required elsewhere in this notice.

L. Note on Eminent Domain

Although section 2303 of HERA appears to allow some use of eminent
domain for public purposes, HUD cautions grantees that section
2301(d)(1) may effectively ensure that all NSP-assisted property
acquisitions must be voluntary acquisitions as the term is defined by
the URA and its implementing regulations. Section 2301(d)(1) directs
that any purchase of a foreclosed-upon home or residential property
under NSP be at a discount from the current market appraised value of
the home or property and that such discount shall ensure that
purchasers are paying below-market value for the home or property.
However, the Fifth Amendment to the U.S. Constitution provides that
private property shall not be taken for public use without just

[[Page 58340]]

compensation. The Supreme Court has ruled that a jurisdiction must pay
fair market value for the purchase of property through eminent domain.
A grantee contemplating using NSP funds to assist an acquisition
involving an eminent domain action is advised to consult appropriate
legal counsel before taking action.

M. Timeliness of Use and Expenditure of NSP Funds

Background
One of the most critical NSP provisions is the HERA requirement at
section 2301(c)(1) that any grantee receiving a grant:

* * * shall, not later than 18 months after the receipt of such
amounts, use such amounts to purchase and redevelop abandoned and
foreclosed homes and residential properties.

HUD has defined the term ``use'' in this notice to include
obligation of funds.
A further complication is that HERA clearly expects grantees to
earn program income under this grant program. As provided under 24 CFR
85.21 for entitlements, grantees and subrecipients shall disburse
program income before requesting additional cash withdrawals from the
U.S. Treasury. States are governed similarly by 24 CFR 489(e)(3) and 31
CFR part 205. This requirement is reflected in the regulations
governing use of program income by States and units of general local
government under the CDBG program. This means that a grantee that
successfully and quickly deploys its program and generates program
income may obligate, draw down, and expend an amount equal to its NSP
allocation amount, and still have funds remaining in its line of
credit, possibly subject to recapture at the 18-month deadline.
On consideration, the Department chose to implement the use test
based on whether the state or unit of general local government has
expended or obligated the NSP grant funds and program income in an
aggregate amount at least equal to the NSP allocation.
HUD is also imposing a deadline for expending NSP grant funds
because the intent of these grants clearly is to quickly address an
emergency situation in areas of the greatest need.
Requirements
1. Timely use of NSP funds. At the end of the statutory 18-month
use period, which begins when the NSP grantee receives its funds from
HUD, the state or unit of general local government NSP grantee's
accounting records and DRGR information must reflect outlays
(expenditures) and unliquidated obligations for approved activities
that, in the aggregate, are at least equal to the NSP allocation. (The
DRGR system collects information on expenditures and obligations.)
2. Timely expenditure of NSP funds. The timely distribution or
expenditure requirements of sections 24 CFR 570.494 and 570.902 are
waived to the extent necessary to allow the following alternative
requirement: All NSP grantees must expend on eligible NSP activities an
amount equal to or greater than the initial allocation of NSP funds
within 4 years of receipt of those funds or HUD will recapture and
reallocate the amount of funds not expended.

N. Alternative Requirement for Program Income (Revenue) Generated by
Activities Assisted With Grant Funds

Requirement
Revenue received by a state, unit of general local government, or
subrecipient (as defined at 24 CFR 570.500(c)) that is directly
generated from the use of CDBG funds (which term includes NSP grant
funds) constitutes CDBG program income. To ensure consistency of
treatment of such revenue, the definition of program income at 24 CFR
570.500(a) shall be applied to amounts received by states, units of
general local government, and subrecipients. However, Section
2301(d)(4) imposes certain limitations and requirements that
necessitate an alternative requirement to govern the use of program
income generated by activities carried out pursuant to Section 2301(c).
The limitations and requirements are based on the NSP activity that
generated the program income and on the date the income is received. In
addition, Section 2301(d)(4) requires any revenue from the sale,
rental, redevelopment, rehabilitation or any other eligible use of NSP
funds to be provided to and used by the state or unit of local general
government. This includes revenue received by a private individual or
other entity that is not a subrecipient.
1. Program income generated by activities carried out pursuant to
Section 2301(c)(3)(B) and (E).
a. Program income received before July 30, 2013, may be retained by
the state or unit of general local government if it is treated as
additional CDBG funds and used in accordance with the requirements of
Section 2301.
b. Program income received on or after July 30, 2013--Return to the
Treasury.
Any program income received by a state, unit of general local
government, or subrecipient on or after July 30, 2013, that is
generated by activities carried out pursuant to Section 2301(c)(3)(B)
and (E) (e.g., proceeds from the sale of rental housing by a state,
unit of general local government, or subrecipient) and is not
authorized to be retained as described below must be remitted to HUD
for deposit in the Treasury. Any program income received by a state,
unit of general local government, or subrecipient on or after July 30,
2013, that is generated by activities carried out pursuant to Section
2301(c)(3)(B) and (E) and that is in excess of the cost to acquire and
redevelop or rehabilitate an abandoned or foreclosed-upon home or
residential property may be retained if HUD approves a request to use
the funds for other NSP purposes. Note that no profit can be earned on
the sale of an abandoned or foreclosed-upon home or residential
property to an individual as a primary residence; as provided under
Section 2301(c)(3), the sale must be in an amount equal to or less than
the cost to acquire and redevelop or rehabilitate the home or property
up to a decent, safe, and habitable condition.

Example: A unit of general local government acquires a
foreclosed-upon multi-family residential property for $100,000,
spends $100,000 to redevelop the property, and sells the property
for $225,000. If the sale occurs on or after July 30, 2013, the
amount to be remitted to HUD by the state or unit of general
government is $200,000 if HUD authorizes the profit of $25,000 to be
used for other NSP purposes, or $225,000 if HUD does not authorize
such use.

c. Revenue received by a private individual or other entity that is
not a subrecipient.
i. Any revenue generated by activities carried out pursuant to
Section 2301(c)(3)(B) and (E) that is in excess of the cost to acquire
and redevelop (including reasonable development fees) or rehabilitate
an abandoned or foreclosed-upon home or residential property must be
provided to the state or unit of general local government and treated
as program income. The disposition of the program income by the state
or unit of general local government is governed by a. and b. above.
ii. Any revenue that is generated by activities carried out
pursuant to Section 2301(c)(3)(B) and (E) and is received on or after
July 30, 2013, shall be provided to the State or unit of general local
government and treated as program income. The disposition of the
program income by the state or unit of general local government is
governed by b. above.

[[Page 58341]]

Example: A unit of general local government uses NSP funds to
make a loan (or grant) to a developer to finance the acquisition and
rehabilitation of a foreclosed-upon multi-family residential
property. The developer uses $200,000 in NSP funds (loan or grant)
from the unit of general local government to pay the total costs of
acquisition and rehabilitation (including reasonable development
fees) and subsequently sells the property for $225,000. The
developer is required to provide $225,000 to the unit of general
local government. (If the NSP funding was a loan, the sale proceeds
would be used to repay the NSP loan.) If the sale occurs on or after
July 30, 2013, the unit of general local government must remit
$225,000 to HUD for deposit in the United States Treasury, unless
HUD approves a request to use $25,000 of that amount for other NSP
purposes. If in this same example, the developer received $100,000
of NSP funding and used $100,000 of its own funds for eligible
costs, the revenue to be provided to the local government would be
$125,000.

2. Program income generated by activities carried out pursuant to
Section 2301(c)(3)(A), (C) and (E). Program income received may be
retained by the State or unit of general local government if it is
treated as additional CDBG funds and used in accordance with the
requirements of Section 2301. Revenue received by a private individual
or other entity that is not a subrecipient must be returned to the
State or unit of general local government.
3. Cash management. Substantially all program income must be
disbursed for eligible NSP activities before additional cash
withdrawals are made from the U.S. Treasury.
4. Agreements with subrecipients and other entities. States and
units of general local governments must incorporate in subrecipient
agreements such provisions as are necessary to ensure compliance with
the requirements of this paragraph, including the requirement that
program income described in N.1.(b) be remitted to HUD for deposit in
the Treasury. States, units of general local government, and
subrecipients must incorporate in agreements with private individuals
and other entities that are not subrecipients such provisions as are
necessary to ensure compliance with the requirements governing
disposition of revenue generated by activities carried out pursuant to
Section 2301(c).

O. Reporting

Background
HUD is requiring regular reporting on each NSP grant in the DRGR
system to ensure the Department gets sufficient management information
to follow-up promptly if a grantee lags in implementation and risks
recapture of its grant funds. For NSP only, HUD is waiving the annual
reporting requirements of the consolidated plan to allow HUD to collect
more regular information on various aspects of the uses of funds and of
the activities funded with these grants. HUD will use the reports to
exercise oversight for compliance with the requirements of this notice
and for prevention of fraud, waste, and abuse of funds.
The regular CDBG performance measurement requirements will not
apply to the NSP funds. To the extent feasible, HUD will configure DRGR
performance measures to fit the NSP activities and will provide
additional guidance on NSP performance measures.
To collect these data elements and to meet its reporting
requirements, HUD is requiring each grantee to report on its NSP funds
to HUD using the online DRGR system, which uses a streamlined,
Internet-based format. HUD will use grantee reports to monitor for
anomalies or performance problems that suggest fraud, waste, and abuse
of funds; to reconcile budgets, obligations, fund draws, and
expenditures; to calculate applicable administrative and public service
limitations and the overall percent of benefit to LMMI persons; and as
a basis for risk analysis in determining a monitoring plan.
The grantee must post the NSP report on a Web site for its citizens
when it submits the report to HUD (DRGR generates a version of the
report that the grantee can download, save, and post).
Requirements
1. Performance report alternative requirement. The Secretary may
specify the form and timing of reports provided by the grantee under
both 42 U.S.C. 5304(e) (the HCD Act) and 42 U.S.C. 12708 (NAHA).
Therefore, the consolidated plan regulation at 24 CFR 91.520 is waived
and the alternative reporting form and timing for the NSP funds is
that:
a. Each grantee must enter its NSP Action Plan amendment into HUD's
web-based DRGR system in sufficient detail to meet the NSP action plan
content requirements of this notice and to serve as the basis for
acceptable performance reports. (Because DRGR was not specifically
redesigned for the NSP, HUD field staff will provide grantees with
specific technical assistance on where in DRGR the required NSP
narrative and data elements must be placed.)
b.i. Each grantee must submit a quarterly performance report, as
HUD prescribes, no later than 30 days following the end of each
quarter, beginning 30 days after the completion of the first full
calendar quarter after grant award and continuing until the end of the
15th month after initial receipt of grant funds. In addition to this
quarterly performance reporting, each grantee will report monthly on
its NSP obligations and expenditures beginning 30 days after the end of
the 15th month following receipt of funds, and continuing until
reported total obligations are equal to or greater than the total NSP
grant. After HUD has accepted a report from a grantee showing such
obligation of funds, the monthly reporting requirement will end and
quarterly reports will continue until all NSP funds (including program
income) have been expended and those expenditures are included in a
report to HUD, or until HUD issues other instructions pursuant to
paragraph b.ii. below. Each report will include information about the
uses of funds, including, but not limited to, the project name,
activity, location, national objective, funds budgeted and expended,
the funding source and total amount of any non-NSP funds, numbers of
properties and housing units, beginning and ending dates of activities,
and numbers of low- and moderate-income persons or households
benefiting. Reports must be submitted using HUD's web-based DRGR system
and, at the time of submission, be posted prominently on the grantee's
official Web site.
ii. During the winter of 2008-2009, HUD is undertaking a major
enhancement of DRGR, initiated as part of a series of improvements
designed to prevent fraud, waste, and abuse of funds in the Gulf Coast
CDBG disaster recovery programs, whose grantees are reporting on the
uses of more than $19 billion of CDBG disaster recovery funds through
DRGR. Prior to roll-out of the enhancement, NSP grantees will use the
Voice Response System (VRS) to access the line of credit and will
prepare and submit action plans and performance reports through DRGR.
After this enhancement is complete, grantees also will be able to
access their lines of credit through DRGR. At that time, HUD will issue
updated guidance on all DRGR reporting and require most activity data
to be updated on a transactional basis.

P. Note That FHA Properties Are Eligible for NSP Acquisition and
Redevelopment

The Department notes that it is an eligible use of CDBG grant funds
to acquire and redevelop FHA foreclosed

[[Page 58342]]

properties. The Department strongly urges every community to consider
and include such properties under their NSP programs because the nature
and location of many of these homes will make them very compatible with
the eligible uses of grant funds, the areas of greatest need, and the
income eligibility thresholds and limits. Furthermore, in many areas,
FHA foreclosed properties will be available for purchase at below-
market value to meet HERA requirements. FHA provides quick access to
location, condition, and sales price information; FHA may also offer
expedited closing time frames. These factors may help expedite NSP fund
use.
HUD will provide technical assistance on its Web site regarding how
these programs can effectively interact. Grantees may also contact
their local HUD FHA field office for further information.

Q. Purchase Discount

Background
Section 2301(d)(1) limits the purchase price of a foreclosed home,
as follows:

Any purchase of a foreclosed upon home or residential property
under this section shall be at a discount from the current market
appraised value of the home or property, taking into account its
current condition, and such discount shall ensure that purchasers
are paying below-market value for the home or property.

To ensure that uncertainty over the meaning of this section does not
delay program implementation, HUD is defining ``current market
appraised value'' in this notice. For mortgagee foreclosed properties,
HUD is requiring that grantees seek to obtain the ``maximum reasonable
discount'' from the mortgagee, taking into consideration likely
``carrying costs'' of the mortgagee if it were to not sell the property
to the grantee or subrecipient. These likely carrying costs are
different from market to market, and the ``maximum reasonable
discount'' is likely to be higher in markets where homes are taking
many months to more than a year to sell as compared to markets with
shorter average time to sell a property. In recognition of the need for
flexibility in administering the purchase discount requirement, HUD has
adopted an approach that requires a minimum discount of 5 percent for
each residential property purchased with NSP funds and a minimum
average discount for all properties acquired with NSP funds over the
18-month HERA use period. The minimum average discount for the
``portfolio'' of properties acquired with NSP funds depends upon how
the purchase discount for an individual property is determined. If the
state, unit of general local government, or subrecipient determines the
discount through use of a methodology that incorporates the factors
discussed above (keeping in mind that the discount must be at least 5
percent), then the minimum average discount for the NSP portfolio is 10
percent. If not, the minimum average discount is 15 percent. Recipients
and subrecipients are cautioned that a purchase discount negotiated
with the seller on an individual property that is below the minimum
average discount requirement must be offset by a purchase discount that
is above the minimum average discount.
Requirements
1.a. Individual purchase transaction. Each foreclosed-upon home or
residential property shall be purchased at a discount of at least 5
percent from the current market-appraised value of the home or
property.
b. Purchase transactions in the aggregate. Except as set forth
below, the average purchase discount for all properties purchased with
NSP funds during the 18-month use period shall be at least 15 percent.
The average purchase discount shall be at least 10 percent if the
state, unit of general local government, or subrecipient determines the
maximum reasonable discount for each purchase transaction through use
of a methodology that results in a discount equivalent to the total
carrying costs that would be incurred by the seller if the property
were not purchased with NSP funds (provided the discount is at least 5
percent). Such methodology shall provide for an analysis of the
estimated holding period for the property and the nature and amount of
the carrying costs of holding the property for this period. Such
carrying costs shall include, but not be limited to: Taxes, insurance,
maintenance, marketing, overhead, and interest. The procedures to
implement such methodology shall be in writing and applied consistently
to all purchases. The analysis for each purchase transaction shall be
documented in the grantee's program records.
2. An NSP recipient may not provide NSP funds to another party to
finance an acquisition of tax foreclosed (or any other) properties from
itself, other than to pay necessary and reasonable costs related to the
appraisal and transfer of title. A property conveyed in this manner to
a subrecipient, homebuyer, developer, or jurisdiction will be NSP-
assisted and subject to all program requirements, such as requirements
for NSP-eligible use and benefit to income-qualified persons.
3. The address, appraised value, purchase offer amount, and
discount amount of each property purchase must be documented in the
grantee's program records.

R. Removal of Annual Requirements

Requirement
Throughout 24 CFR parts 91 and 570, all references to ``annual''
requirements such as submission of plans and reports are waived to the
extent necessary to allow the provisions of this notice to apply to NSP
funds, with no recurring annual requirements other than those related
to civil rights and fair housing certifications and requirements.

S. Affirmatively Furthering Fair Housing

Nothing in this notice may be construed as affecting each grantee's
responsibility to carry out its certification to affirmatively further
fair housing. HUD encourages each grantee to review its analysis of
impediments to fair housing choice to determine whether an update is
necessary because of current market conditions or other factors.

T. Certifications

Background
HUD is substituting alternative certifications. The alternative
certifications are tailored to NSP grants and remove certifications and
references that are appropriate only to the annual CDBG formula
program.
Requirements
Certifications for states and for entitlement communities,
alternative requirement. Although the NSP is being implemented as a
substantial amendment to the current annual action plan, HUD is
requiring submission of this alternative set of certifications as a
conforming change, reflecting alternative requirements and waivers
under this notice. Each jurisdiction will submit the following
certifications:
1. Affirmatively furthering fair housing. The jurisdiction
certifies that it will affirmatively further fair housing, which means
that it will conduct an analysis to identify impediments to fair
housing choice within the jurisdiction, take appropriate actions to
overcome the effects of any impediments identified through that
analysis, and maintain records reflecting the analysis and actions in
this regard.
2. Anti-lobbying. The jurisdiction must submit a certification with
regard to compliance with restrictions on lobbying required by 24 CFR
part 87,

[[Page 58343]]

together with disclosure forms, if required by that part.
3. Authority of jurisdiction. The jurisdiction certifies that the
consolidated plan is authorized under state and local law (as
applicable) and that the jurisdiction possesses the legal authority to
carry out the programs for which it is seeking funding, in accordance
with applicable HUD regulations and other program requirements.
4. Consistency with plan. The jurisdiction certifies that the
housing activities to be undertaken with NSP funds are consistent with
its consolidated plan.
5. Acquisition and relocation. The jurisdiction certifies that it
will comply with the acquisition and relocation requirements of the
Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970, as amended (42 U.S.C. 4601), and implementing regulations
at 49 CFR part 24, except as those provisions are modified by the
notice for the NSP program published by HUD.
6. Section 3. The jurisdiction certifies that it will comply with
section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C.
1701u), and implementing regulations at 24 CFR part 135.
7. Citizen participation. The jurisdiction certifies that it is in
full compliance and following a detailed citizen participation plan
that satisfies the requirements of Sections 24 CFR 91.105 or 91.115, as
modified by NSP requirements.
8. Following a plan. The jurisdiction certifies it is following a
current consolidated plan (or Comprehensive Housing Affordability
Strategy) that has been approved by HUD.
9. Use of funds. The jurisdiction certifies that it will comply
with Title III of Division B of the Housing and Economic Recovery Act
of 2008 by using all of its grant funds within 18 months of receipt of
the grant.
10. The jurisdiction certifies:
a. that all of the NSP funds made available to it will be used with
respect to individuals and families whose incomes do not exceed 120
percent of area median income; and
b. The jurisdiction will not attempt to recover any capital costs
of public improvements assisted with CDBG funds, including Section 108
loan guaranteed funds, by assessing any amount against properties owned
and occupied by persons of low- and moderate-income, including any fee
charged or assessment made as a condition of obtaining access to such
public improvements. However, if NSP funds are used to pay the
proportion of a fee or assessment attributable to the capital costs of
public improvements (assisted in part with NSP funds) financed from
other revenue sources, an assessment or charge may be made against the
property with respect to the public improvements financed by a source
other than CDBG funds. In addition, with respect to properties owned
and occupied by moderate-income (but not low-income) families, an
assessment or charge may be made against the property with respect to
the public improvements financed by a source other than NSP funds if
the jurisdiction certifies that it lacks NSP or CDBG funds to cover the
assessment.
11. Excessive force. The jurisdiction certifies that it has adopted
and is enforcing:
a. A policy prohibiting the use of excessive force by law
enforcement agencies within its jurisdiction against any individuals
engaged in nonviolent civil rights demonstrations; and
b. A policy of enforcing applicable state and local laws against
physically barring entrance to, or exit from, a facility or location
that is the subject of such nonviolent civil rights demonstrations
within its jurisdiction.
12. Compliance with anti-discrimination laws. The jurisdiction
certifies that the NSP grant will be conducted and administered in
conformity with Title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and implementing
regulations.
13. Compliance with lead-based paint procedures. The jurisdiction
certifies that its activities concerning lead-based paint will comply
with the requirements of part 35, subparts A, B, J, K, and R of this
title.
14. Compliance with laws. The jurisdiction certifies that it will
comply with applicable laws.

U. Note on Statutory Limitation on Distribution of Funds

Section 2304 of HERA states that none of the funds made available
under this Title or title IV shall be distributed to an organization
that has been indicted for a violation under federal law relating to an
election for federal office; or an organization that employs applicable
individuals. Section 2304 defines applicable individuals.

V. Information Collection Approval Note

HUD has approval from the Office of Management and Budget (OMB) for
information collection requirements in accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501-3520). OMB approval is under OMB
control number 2506-0165. In accordance with the Paperwork Reduction
Act, HUD may not conduct or sponsor and a person is not required to
respond to, a collection of information, unless the collection displays
a valid control number.

W. Duration of Funding

The appropriation accounting provisions in 31 U.S.C. 1551-1557,
added by section 1405 of the National Defense Authorization Act for
Fiscal Year 1991 (Pub. L. 101-510), limit the availability of certain
appropriations for expenditure. Such a limitation may not be waived.
The appropriations acts for NSP grants direct that these funds be
available until expended. However, the Department is imposing a shorter
deadline on the expenditure of NSP funds in this notice.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance numbers for grants made
under NSP are as follows: 14.218; 14.225; and 14.228.

Finding of No Significant 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(C)(2)). The Finding of No Significant
Impact is available for public inspection between 8 a.m. and 5 p.m.
weekdays in the Office of the Rules Docket Clerk, Office of General
Counsel, Department of Housing and Urban Development, 451 Seventh
Street, SW., Room 10276, Washington, DC 20410-0500.

Establishment of Formula

I hereby establish the funding formula set out in Attachment A to
this notice.

Dated: September 29, 2008.
Steven C. Preston,
Secretary.

Attachment A

HERA calls for allocating funds ``to States and units of general
local government with the greatest need, as such need is determined in
the discretion of the Secretary based on--
(A) The number and percentage of home foreclosures in each State or
unit of general local government;
(B) The number and percentage of homes financed by a subprime
mortgage related loan in each State or unit of general local
government; and
(C) The number and percentage of homes in default or delinquency in
each

[[Page 58344]]

State or unit of general local government.''
It further directs that ``each State shall receive not less than
0.5 percent of funds''. The allocation formula operates as follows. In
this formula, the primary data on foreclosure rates, subprime loan
rates, and rates of loans delinquent or in default come from the
Mortgage Bankers Association National Delinquency Survey (MBA-NDS).
Because the MBA-NDS may have uneven coverage from state-to-state in
respect to the total number of mortgages reported, the total count of
mortgages is calculated as the number of owner-occupied mortgages from
the 2006 American Community Survey increased with data from the Home
Mortgage Disclosure Act to capture the proportion of total mortgages
made within a state made to investors between 2004 and 2006. The first
step of the allocation is to make a ``statewide'' allocation using the
following formula:
[GRAPHIC] [TIFF OMITTED] TN06OC08.024

This formula allocates 70 percent of the funds based on the number
and percent of foreclosures, 15 percent for subprime loans, 10 percent
for loans in default (delinquent 90 days or longer), and 5 percent for
loans delinquent 60 to 90 days. The higher weight on foreclosures is
based on the emphasis the statute places on targeting foreclosed homes.
The percentage adjustments, the rate of a problem in a state relative
to the national rate of a problem, are restricted such that a state's
allocation based on its proportional share of a problem cannot be
increased or decreased by more than 30 percent.
Because HERA specifically indicates that the funds are needed for
the ``redevelopment of abandoned and foreclosed upon homes and
residential properties'', HUD has included a variable to proxy where
abandonment of homes due to foreclosure is more likely, specifically
each state's rate of vacant residential addresses in neighborhoods with
a high proportion (more than 40 percent) of loans in 2004 to 2006 that
were high cost. Information on vacant addresses is based on United
States Postal Service data as of June 30, 2008 aggregated by HUD to the
Census Tract level. The residential vacancy adjustment factor reflects
a state's vacancy rate relative to the national average and cannot
increase or decrease a state's proportional share of the allocation
based on foreclosures, subprime loans, and delinquencies and defaults
by more than 10 percent.
Finally, if a statewide allocation is less than $19.6 million, the
statewide grant is increased to $19.6 million. Because this approach
will result in a total allocation in excess of appropriation, all grant
amounts above $19.6 million are reduced pro-rata to make the total
allocation equal to the total appropriation.
From each statewide allocation, a substate allocation is made as
follows:
Each state government is allocated $19.6 million.
If the statewide allocation is more than $19.6 million,
the remaining funds are allocated to FY 2008 CDBG entitlement cities,
urban counties, and non-entitlement balance of state proportional to
relative need.
If a local government receives less than $2 million under
this sub-allocation, their grant is rolled up into the state government
grant.
Note that HUD has determined that HERA's direction that a minimum
of $19.6 million be allocated to the state means that a minimum grant
must be provided to each state government of $19.6 million. As a
result, this approach provides state governments with proportionally
more funding than their estimated need. As such, state governments
should use their best judgment to serve both those areas not receiving
a direct grant and those areas that do receive a direct grant, making
sure that the total of all funds in the state are going proportionally
more to those places (as prescribed by HERA):
``With the greatest percentage of home foreclosures;
With the highest percentage of homes financed by a
subprime mortgage related loan; and
Identified by the State or unit of general local
government as likely to face a significant rise in the rate of home
foreclosures.''
For the amount of funds above each state's $19.6 million, the
remaining funds are allocated among the entitlement communities and
non-

[[Page 58345]]

entitlement balances using the following formula:
[GRAPHIC] [TIFF OMITTED] TN06OC08.025

Where the residential vacancy rate adjustment cannot increase or
reduced a local jurisdiction's allocation by more than 30 percent and
the estimated number of foreclosures is calculated based on a predicted
foreclosure rate times the estimated number of mortgages in a
community. HUD analysis shows that 75 percent of the variance between
states on foreclosure rates can be explained by three variables
available from public data:
Office of Federal Housing Enterprise Oversight (OFHEO)
data on change in home values as of June 2008 compared to peak home
value since 2000.
Percent of all loans made between 2004 and 2006 that are
high cost as reported in the Home Mortgage Disclosure Act (HMDA).
Unemployment rate as of June 2008 (from Bureau of Labor
Statistics).
Because these three variables are publicly available for all CDBG
eligible communities and they are good predictors of foreclosure risk,
they are used in a model to calculate the estimated number of
foreclosures in each jurisdiction within a state. The formula used is
as follows:

Predicted Foreclosure Rate = -2.211
-(0.131* Percent change in MSA OFHEO current price relative to the
maximum in past 8 years)
+(0.152* Percent of total loans made between 2004 and 2006 that are
high cost)
+(0.392*Percent unemployed in the place our county in June 2008).

This predicted foreclosure rate is then multiplied times the
estimated number of mortgages within a jurisdiction (number of HMDA
loans made between 2004 and 2006 times the ratio of ACS 2006 data on
total mortgages in state / HMDA loans in state). This ``estimated
number of mortgages in the jurisdiction'' is further adjusted such that
the estimated number of foreclosures from the model will equal the
total foreclosure starts in the state from the Mortgage Bankers
Association National Delinquency Survey.
As noted above, for entitlement cities and urban counties that
would receive an NSP allocation of less than $2 million, the funds are
allocated to the state grantee. The District of Columbia and the four
Insular Areas receive direct allocations and are not subject to the
minimum grant threshold.
Because this funding is one-time funding and the eligible
activities under the program are different enough from the regular
program, HUD believes that a grantee must receive a minimum amount of
$2 million to have adequate staffing to properly administer the program
effectively. In addition, fewer grants will allow HUD staff to more
effectively monitor grantees to ensure proper implementation of the
program and reduce the risk for fraud, waste, and abuse.

----------------------------------------------------------------------------------------------------------------
State Grantee name NSP grant amount
----------------------------------------------------------------------------------------------------------------
AK............................... ALASKA STATE PROGRAM....................................... $19,600,000
AL............................... ALABAMA STATE PROGRAM...................................... 37,033,031
AL............................... BIRMINGHAM................................................. 2,580,214
AL............................... JEFFERSON COUNTY........................................... 2,237,876
AR............................... ARKANSAS STATE PROGRAM..................................... 19,600,000
AZ............................... PHOENIX.................................................... 39,478,096
AZ............................... ARIZONA STATE PROGRAM...................................... 38,370,206
AZ............................... MARICOPA COUNTY............................................ 9,974,267
AZ............................... MESA....................................................... 9,659,665
AZ............................... TUCSON..................................................... 7,286,911
AZ............................... GLENDALE................................................... 6,184,112
AZ............................... PIMA COUNTY................................................ 3,086,867
AZ............................... AVONDALE CITY.............................................. 2,466,039
AZ............................... CHANDLER................................................... 2,415,100
AZ............................... SURPRISE TOWN.............................................. 2,197,786
CA............................... CALIFORNIA STATE PROGRAM................................... 145,071,506
CA............................... RIVERSIDE COUNTY........................................... 48,567,786
CA............................... LOS ANGELES................................................ 32,860,870
CA............................... SAN BERNARDINO COUNTY...................................... 22,758,188
CA............................... SACRAMENTO COUNTY.......................................... 18,605,460
CA............................... LOS ANGELES COUNTY......................................... 16,847,672
CA............................... SACRAMENTO................................................. 13,264,829
CA............................... STOCKTON................................................... 12,146,038
CA............................... MORENO VALLEY.............................................. 11,390,116
CA............................... KERN COUNTY................................................ 11,211,385
CA............................... FRESNO..................................................... 10,969,169

[[Page 58346]]

CA............................... STANISLAUS COUNTY.......................................... 9,744,482
CA............................... SAN DIEGO.................................................. 9,442,370
CA............................... SAN JOAQUIN COUNTY......................................... 9,030,385
CA............................... BAKERSFIELD................................................ 8,982,836
CA............................... SAN BERNARDINO............................................. 8,408,558
CA............................... OAKLAND.................................................... 8,250,668
CA............................... MODESTO.................................................... 8,109,274
CA............................... PALMDALE................................................... 7,434,301
CA............................... FRESNO COUNTY.............................................. 7,037,465
CA............................... LANCASTER.................................................. 6,983,533
CA............................... RIVERSIDE.................................................. 6,581,916
CA............................... CONTRA COSTA COUNTY........................................ 6,019,051
CA............................... FONTANA.................................................... 5,953,309
CA............................... SANTA ANA.................................................. 5,795,151
CA............................... SAN JOSE................................................... 5,628,283
CA............................... RIALTO..................................................... 5,461,574
CA............................... VICTORVILLE................................................ 5,311,363
CA............................... SAN DIEGO COUNTY........................................... 5,144,152
CA............................... LONG BEACH................................................. 5,070,310
CA............................... HESPERIA................................................... 4,590,719
CA............................... ANTIOCH.................................................... 4,049,228
CA............................... CORONA..................................................... 3,602,842
CA............................... POMONA..................................................... 3,530,825
CA............................... RICHMOND................................................... 3,346,105
CA............................... ORANGE COUNTY.............................................. 3,285,926
CA............................... COMPTON.................................................... 3,242,817
CA............................... APPLE VALLEY............................................... 3,064,836
CA............................... HEMET...................................................... 2,888,473
CA............................... CHULA VISTA................................................ 2,830,072
CA............................... ONTARIO.................................................... 2,738,309
CA............................... VALLEJO.................................................... 2,657,861
CA............................... ANAHEIM.................................................... 2,653,455
CA............................... ELK GROVE.................................................. 2,389,651
CA............................... VISALIA.................................................... 2,388,331
CA............................... RANCHO CUCAMONGA........................................... 2,133,397
CA............................... ALAMEDA COUNTY............................................. 2,126,927
CO............................... COLORADO STATE PROGRAM..................................... 34,013,566
CO............................... DENVER..................................................... 6,060,170
CO............................... ADAMS COUNTY............................................... 4,600,211
CO............................... AURORA..................................................... 4,474,097
CO............................... COLORADO SPRINGS........................................... 3,904,989
CT............................... CONNECTICUT STATE PROG..................................... 25,043,385
DC............................... WASHINGTON................................................. 2,836,384
DE............................... DELAWARE STATE PROGRAM..................................... 19,600,000
FL............................... FLORIDA STATE PROGRAM...................................... 91,141,478
FL............................... MIAMI-DADE COUNTY.......................................... 62,207,200
FL............................... ORANGE COUNTY.............................................. 27,901,773
FL............................... PALM BEACH COUNTY.......................................... 27,700,340
FL............................... JACKSONVILLE-DUVAL......................................... 26,175,317
FL............................... PASCO COUNTY............................................... 19,495,805
FL............................... HILLSBOROUGH COUNTY........................................ 19,132,978
FL............................... LEE COUNTY................................................. 18,243,867
FL............................... BROWARD COUNTY............................................. 17,767,589
FL............................... POLK COUNTY................................................ 14,586,258
FL............................... TAMPA...................................................... 13,600,915
FL............................... PORT ST LUCIE.............................................. 13,523,132
FL............................... MIAMI...................................................... 12,063,702
FL............................... ST PETERSBURG.............................................. 9,498,962
FL............................... MIRAMAR.................................................... 9,312,658
FL............................... PINELLAS COUNTY............................................ 8,063,759
FL............................... HOLLYWOOD.................................................. 7,534,603
FL............................... COLLIER COUNTY............................................. 7,306,755
FL............................... SARASOTA COUNTY............................................ 7,140,861
FL............................... CAPE CORAL................................................. 7,065,484
FL............................... SEMINOLE COUNTY............................................ 7,019,514
FL............................... MIAMI GARDENS CITY......................................... 6,866,119
FL............................... ORLANDO.................................................... 6,730,263
FL............................... DELTONA.................................................... 6,635,909
FL............................... MARION COUNTY.............................................. 6,324,055
FL............................... HIALEAH.................................................... 5,385,046
FL............................... MANATEE COUNTY............................................. 5,283,122
FL............................... BREVARD COUNTY............................................. 5,269,667
FL............................... VOLUSIA COUNTY............................................. 5,222,831

[[Page 58347]]

FL............................... PALM BAY................................................... 5,208,104
FL............................... TAMARAC.................................................... 4,772,218
FL............................... ESCAMBIA COUNTY............................................ 4,565,918
FL............................... PEMBROKE PINES............................................. 4,398,575
FL............................... POMPANO BEACH.............................................. 4,366,157
FL............................... WEST PALM BEACH............................................ 4,349,546
FL............................... LAUDERHILL................................................. 4,293,288
FL............................... FT LAUDERDALE.............................................. 3,700,096
FL............................... SUNRISE.................................................... 3,494,986
FL............................... CORAL SPRINGS.............................................. 3,378,142
FL............................... LAKE COUNTY................................................ 3,136,967
FL............................... BOYNTON BEACH.............................................. 2,963,311
FL............................... HOMESTEAD CITY............................................. 2,887,010
FL............................... NORTH MIAMI................................................ 2,847,089
FL............................... KISSIMMEE.................................................. 2,371,749
FL............................... FT MYERS................................................... 2,297,318
FL............................... MARGATE.................................................... 2,106,555
FL............................... PLANTATION................................................. 2,016,309
FL............................... LAKELAND................................................... 2,005,781
FL............................... DEERFIELD BEACH............................................ 2,005,699
GA............................... GEORGIA STATE PROGRAM...................................... 77,085,125
GA............................... DE KALB COUNTY............................................. 18,545,013
GA............................... ATLANTA.................................................... 12,316,082
GA............................... GWINNETT COUNTY............................................ 10,507,827
GA............................... FULTON COUNTY.............................................. 10,333,410
GA............................... CLAYTON COUNTY............................................. 9,732,126
GA............................... COBB COUNTY................................................ 6,889,134
GA............................... COLUMBUS-MUSCOGEE.......................................... 3,117,039
GA............................... AUGUSTA.................................................... 2,473,064
GA............................... SAVANNAH................................................... 2,038,631
HI............................... HAWAII STATE PROGRAM....................................... 19,600,000
IA............................... IOWA STATE PROGRAM......................................... 21,607,197
ID............................... IDAHO STATE PROGRAM........................................ 19,600,000
IL............................... CHICAGO.................................................... 55,238,017
IL............................... ILLINOIS STATE PROGRAM..................................... 53,113,044
IL............................... COOK COUNTY................................................ 28,156,321
IL............................... DU PAGE COUNTY............................................. 5,176,438
IL............................... WILL COUNTY................................................ 5,160,424
IL............................... LAKE COUNTY................................................ 4,600,800
IL............................... JOLIET..................................................... 3,531,810
IL............................... MCCHENRY COUNTY............................................ 3,085,695
IL............................... AURORA..................................................... 3,083,568
IL............................... KANE COUNTY................................................ 2,576,369
IL............................... ROCKFORD................................................... 2,287,004
IL............................... ST CLAIR COUNTY............................................ 2,262,015
IL............................... ELGIN...................................................... 2,159,623
IL............................... CICERO..................................................... 2,078,351
IN............................... INDIANA STATE PROGRAM...................................... 83,757,048
IN............................... INDIANAPOLIS............................................... 29,051,059
IN............................... FORT WAYNE................................................. 7,063,956
IN............................... LAKE COUNTY................................................ 5,738,024
IN............................... SOUTH BEND................................................. 4,098,521
IN............................... HAMMOND.................................................... 3,860,473
IN............................... GARY....................................................... 3,836,758
IN............................... EVANSVILLE................................................. 3,605,204
IN............................... HAMILTON COUNTY............................................ 2,343,868
IN............................... ELKHART.................................................... 2,251,346
IN............................... KOKOMO..................................................... 2,181,088
IN............................... ANDERSON................................................... 2,141,795
IN............................... MUNCIE..................................................... 2,007,356
KS............................... KANSAS STATE PROGRAM....................................... 20,970,242
KY............................... KENTUCKY STATE PROGRAM..................................... 37,408,788
KY............................... LOUISVILLE................................................. 6,973,721
LA............................... LOUISIANA STATE PROGRAM.................................... 34,183,994
LA............................... BATON ROUGE................................................ 2,308,848
LA............................... NEW ORLEANS................................................ 2,302,208
MA............................... MASSACHUSETTS STATE PROG................................... 43,466,030
MA............................... BOSTON..................................................... 4,230,191
MA............................... SPRINGFIELD................................................ 2,566,272
MA............................... WORCESTER.................................................. 2,390,858
MA............................... BROCKTON................................................... 2,152,979
MD............................... MARYLAND STATE PROGRAM..................................... 28,778,469
MD............................... PRINCE GEORGES COUNTY...................................... 10,883,234

[[Page 58348]]

MD............................... BALTIMORE.................................................. 4,112,239
MD............................... BALTIMORE COUNTY........................................... 2,596,880
ME............................... MAINE STATE PROGRAM........................................ 19,600,000
MI............................... MICHIGAN STATE PROGRAM..................................... 98,653,915
MI............................... DETROIT.................................................... 47,137,690
MI............................... WAYNE COUNTY............................................... 25,909,153
MI............................... OAKLAND COUNTY............................................. 17,383,776
MI............................... MACOMB COUNTY.............................................. 9,765,375
MI............................... GENESEE COUNTY............................................. 7,506,343
MI............................... GRAND RAPIDS............................................... 6,187,686
MI............................... LANSING.................................................... 5,992,160
MI............................... WARREN..................................................... 5,829,447
MI............................... FLINT...................................................... 4,224,621
MI............................... KENT COUNTY................................................ 3,912,796
MI............................... PONTIAC.................................................... 3,542,002
MI............................... SOUTHFIELD................................................. 3,241,457
MI............................... REDFORD.................................................... 3,041,364
MI............................... WASHTENAW COUNTY........................................... 3,024,719
MI............................... TAYLOR..................................................... 2,495,056
MI............................... STERLING HEIGHTS........................................... 2,454,961
MI............................... DEARBORN................................................... 2,436,246
MI............................... LINCOLN PARK............................................... 2,417,688
MI............................... CANTON TWP................................................. 2,182,988
MI............................... CLINTON TWP................................................ 2,147,608
MI............................... WESTLAND................................................... 2,061,722
MI............................... WATERFORD TOWNSHIP......................................... 2,014,489
MN............................... MINNESOTA STATE PROGRAM.................................... 38,849,929
MN............................... MINNEAPOLIS................................................ 5,601,967
MN............................... ST PAUL.................................................... 4,302,249
MN............................... HENNEPIN COUNTY............................................ 3,885,729
MN............................... DAKOTA COUNTY.............................................. 2,765,991
MN............................... ANOKA COUNTY............................................... 2,377,310
MO............................... MISSOURI STATE PROGRAM..................................... 42,664,187
MO............................... ST LOUIS COUNTY............................................ 9,338,562
MO............................... KANSAS CITY................................................ 7,323,734
MO............................... ST LOUIS................................................... 5,532,792
MS............................... MISSISSIPPI STATE PROG..................................... 43,151,914
MS............................... JACKSON.................................................... 3,116,049
MT............................... MONTANA STATE PROGRAM...................................... 19,600,000
NC............................... NORTH CAROLINA STA PROG.................................... 52,303,004
NC............................... CHARLOTTE.................................................. 5,431,777
ND............................... NORTH DAKOTA STATE PROG.................................... 19,600,000
NE............................... NEBRASKA STATE PROGRAM.................................... 19,600,000
NH............................... NEW HAMPSHIRE STATE PROG................................... 19,600,000
NJ............................... NEW JERSEY STATE PROGRAM................................... 51,470,620
NJ............................... NEWARK..................................................... 3,406,849
NJ............................... UNION COUNTY............................................... 2,601,755
NJ............................... PATERSON................................................... 2,266,641
NJ............................... JERSEY CITY................................................ 2,153,431
NJ............................... BERGEN COUNTY.............................................. 2,096,194
NM............................... NEW MEXICO STATE PROGRAM................................... 19,600,000
NV............................... NEVADA STATE PROGRAM....................................... 24,287,240
NV............................... CLARK COUNTY............................................... 22,829,062
NV............................... LAS VEGAS.................................................. 14,775,270
NV............................... NORTH LAS VEGAS............................................ 6,837,736
NV............................... HENDERSON.................................................. 3,205,044
NY............................... NEW YORK STATE PROGRAM..................................... 54,556,464
NY............................... NEW YORK CITY.............................................. 24,257,740
NY............................... NASSAU COUNTY.............................................. 7,767,916
NY............................... SUFFOLK COUNTY............................................. 5,681,443
NY............................... ISLIP TOWN................................................. 3,720,392
NY............................... BABYLON TOWN............................................... 2,170,909
NY............................... ORANGE COUNTY.............................................. 2,163,744
OH............................... OHIO STATE PROGRAM......................................... 116,859,223
OH............................... COLUMBUS................................................... 22,845,495
OH............................... CLEVELAND.................................................. 16,143,120
OH............................... TOLEDO..................................................... 12,270,706
OH............................... CUYAHOGA COUNTY............................................ 11,212,447
OH............................... AKRON...................................................... 8,583,492
OH............................... CINCINNATI................................................. 8,361,592
OH............................... HAMILTON COUNTY............................................ 7,970,490
OH............................... MONTGOMERY COUNTY.......................................... 5,988,000
OH............................... DAYTON..................................................... 5,582,902

[[Page 58349]]

OH............................... FRANKLIN COUNTY............................................ 5,439,664
OH............................... BUTLER COUNTY.............................................. 4,213,742
OH............................... STARK COUNTY............................................... 4,181,673
OH............................... SUMMIT COUNTY.............................................. 3,767,144
OH............................... CANTON..................................................... 3,678,562
OH............................... LAKE COUNTY................................................ 3,402,859
OH............................... LORAIN..................................................... 3,031,480
OH............................... YOUNGSTOWN................................................. 2,708,206
OH............................... EUCLID..................................................... 2,580,464
OH............................... ELYRIA..................................................... 2,468,215
OH............................... HAMILTON CITY.............................................. 2,385,315
OH............................... SPRINGFIELD................................................ 2,270,009
OH............................... MIDDLETOWN................................................. 2,144,379
OK............................... OKLAHOMA STATE PROGRAM..................................... 29,969,459
OK............................... OKLAHOMA CITY.............................................. 2,882,282
OR............................... OREGON STATE PROGRAM....................................... 19,600,000
PA............................... PENNSYLVANIA STATE PROG.................................... 59,631,318
PA............................... PHILADELPHIA............................................... 16,832,873
PA............................... ALLEGHENY COUNTY........................................... 5,524,950
PA............................... ALLENTOWN.................................................. 2,113,456
PA............................... YORK COUNTY................................................ 2,017,253
PA............................... PITTSBURGH................................................. 2,002,958
PR............................... PUERTO RICO STATE PROG..................................... 19,600,000
RI............................... RHODE ISLAND STATE PROG.................................... 19,600,000
SC............................... SOUTH CAROLINA STA PROG.................................... 44,673,692
SC............................... GREENVILLE COUNTY.......................................... 2,262,856
SC............................... RICHLAND COUNTY............................................ 2,221,859
SD............................... SOUTH DAKOTA STATE PROG.................................... 19,600,000
TN............................... TENNESSEE STATE PROGRAM.................................... 49,360,421
TN............................... MEMPHIS.................................................... 11,506,415
TN............................... NASHVILLE-DAVIDSON......................................... 4,051,398
TN............................... SHELBY COUNTY.............................................. 2,752,708
TN............................... KNOXVILLE.................................................. 2,735,980
TN............................... CHATTANOOGA................................................ 2,113,727
TX............................... TEXAS STATE PROGRAM........................................ 101,996,848
TX............................... HARRIS COUNTY.............................................. 14,898,027
TX............................... HOUSTON.................................................... 13,542,193
TX............................... SAN ANTONIO................................................ 8,635,899
TX............................... DALLAS..................................................... 7,932,555
TX............................... FORT WORTH................................................. 6,307,433
TX............................... DALLAS COUNTY.............................................. 4,405,482
TX............................... TARRANT COUNTY............................................. 3,293,388
TX............................... EL PASO.................................................... 3,032,465
TX............................... HIDALGO COUNTY............................................. 2,867,057
TX............................... FORT BEND COUNTY........................................... 2,796,177
TX............................... GRAND PRAIRIE.............................................. 2,267,290
TX............................... MESQUITE................................................... 2,083,933
TX............................... ARLINGTON.................................................. 2,044,254
TX............................... GARLAND.................................................... 2,040,196
UT............................... UTAH STATE PROGRAM......................................... 19,600,000
VA............................... VIRGINIA STATE PROGRAM..................................... 38,749,931
VA............................... PRINCE WILLIAM COUNTY...................................... 4,134,612
VA............................... FAIRFAX COUNTY............................................. 2,807,300
VT............................... VERMONT STATE PROGRAM...................................... 19,600,000
WA............................... WASHINGTON STATE PROGRAM................................... 28,159,293
WI............................... WISCONSIN STATE PROGRAM.................................... 38,779,123
WI............................... MILWAUKEE.................................................. 9,197,465
WV............................... WEST VIRGINIA STATE PROG................................... 19,600,000
WY............................... WYOMING STATE PROGRAM...................................... 19,600,000
XX............................... INSULAR AREAS.............................................. 1,144,289
----------------------------------------------------------------------------------------------------------------

[FR Doc. E8-23476 Filed 10-3-08; 8:45 am]
BILLING CODE 4210-67-P