[Code of Federal Regulations]
[Title 24, Volume 3]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR572.220]

[Page 184-186]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER V--OFFICE OF ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND 
        DEVELOPMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 572_HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES PROGRAM (HOPE 3)--Table of Contents
 
                            Subpart C_Grants
 
Sec. 572.220  Implementation grants--matching requirements.

    (a) General requirements. (1) Except as provided in paragraph (a)(3) 
of this section, each recipient must assure that matching contributions 
equal to not less than 33 percent (or 25 percent for grants awarded 
after April 11, 1994) of the amount of the implementation grant shall be 
provided from non-Federal sources to carry out the homeownership 
program. Amounts contributed to the match must be used for eligible 
activities or in accordance with the requirements of this section.
    (2) All contributions toward eligible activities to be counted 
toward the match must be provided no later than the deadline for 
completion of program activities established in accordance with Sec. 
572.210(f), except as permitted under paragraphs (b)(1)(iv) and (b)(3) 
of this section.
    (3) When the recipient is an IHA, and the IHA (acting in that 
capacity) has not received, and will not receive, amounts under title I 
of the Housing and Community Development Act of 1974 for the fiscal year 
in which HUD obligates HOPE grant funds, the match requirements under 
this section will not apply.
    (b) Form. Contributions may only be in the form of:
    (1) Cash contributions. (i) Cash contributions from non-Federal 
resources contributed permanently for uses under the HOPE 3 program by 
the applicant, non-Federal public entities, private entities, or 
individuals, except that a cash contribution in the form of a down 
payment made by an eligible family may not count as a matching 
contribution. Funds will be considered permanently contributed if all 
principal, interest, and any other return on the contribution are used 
for eligible activities in accordance with program requirements.
    (ii) Non-Federal resources may include:
    (A) Contribution of trust funds held by Federal agencies for Indian 
tribes;
    (B) PHA section 8 operating reserve funds, where approved by HUD;
    (C) Income from a Federal grant earned after the end of the award 
period, if no Federal programmatic requirements govern the disposition 
of the program income.
    (D) Amounts, determined in accordance with paragraph (b)(1)(iv)(B) 
of this section, that have been requested by the applicant in an 
application submitted to the Federal Housing Finance Board for 
assistance under its affordable housing program, so long as the 
application is approved within 30 days of HUD's conditional approval of 
the HOPE 3 application.
    (iii) Non-Federal resources may not include:
    (A) Funds from a Community Development Block Grant under section 
106(b) or section 106(d), respectively, of the Housing and Community 
Development Act of 1974, except to the extent

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permitted for administrative expenses under paragraph (b)(2) of this 
section;
    (B) Federal tax expenditures, including low-income housing tax 
credits.
    (iv) The grant equivalent of a below-market interest rate loan to 
the homebuyer from non-Federal resources, where all repayments, 
interest, and other return will not be permanently contributed to the 
HOPE 3 program, may be counted as a cash contribution. The grant 
equivalent of a below market interest rate loan must be calculated in 
accordance with paragraphs (b)(1)(iv) (A) and (B) of this section--
    (A) If the loan is made from proceeds of obligations issued by or on 
behalf of a public body that are exempt from taxation by the United 
States, the contribution is the present discounted cash value of the 
difference between payments to be made on the borrowed funds and 
payments to be received on the loan to the homebuyer, based on a 
discount rate equal to the interest rate on the borrowed funds;
    (B) If the loan is made from funds other than under paragraph 
(b)(1)(iv)(A) of this section, the contribution is the present 
discounted cash value of the yield forgone, calculated based on a 
discount rate approved or prescribed by HUD. In determining the yield 
forgone, the recipient must use as a measure of a market yield one of 
the following, as appropriate:
    (1) With respect to housing financed with a fixed interest rate 
mortgage, a rate equal to the 10-year Treasury note rate plus 200 basis 
points; or
    (2) With respect to housing financed with an adjustable interest 
rate mortgage, a rate equal to the one-year Treasury bill rate plus 250 
basis points.
    (v) Cash contributions may also be made from sales proceeds from the 
Turnkey III Homeownership and Mutual Help programs, as approved by HUD, 
or an approved homeownership program under section 5(h) of the 1937 Act.
    (2) Administrative costs. (i) Contributions of eligible 
administrative services up to a value equal to 7 percent of the amount 
of the implementation grant. This limitation is in addition to the 15 
percent limitation on administrative costs (see Sec. 572.215(o)).
    (ii) If an applicant proposes to contribute administrative services, 
HUD will automatically approve an applicant's assurances for matching 
purposes that it will pay eligible administrative costs from non-Federal 
sources in an amount up to 7 percent of the implementation grant, and 
will not require further documentation of those expenditures for 
purposes of the HOPE 3 program. If a recipient uses more than 8 percent 
of its implementation grant to pay administrative costs, the amount 
credited toward the match will be reduced to less than 7 percent to stay 
within the 15 percent limitation.
    (iii) Non-Federal resources, for the purposes of counting 
contributions for administrative costs, may include funds from a 
Community Development Block Grant under section 106(b) or section 106(d) 
of the Housing and Community Development Act of 1974 and are subject to 
the recordkeeping and documentation requirements of that program.
    (3) Taxes, fees, and other charges. (i) The present value of taxes, 
fees, or other charges that are normally and customarily imposed but are 
waived, forgone, or deferred in a manner that facilitates the 
implementation of a homeownership program assisted under this part. Only 
amounts that would have been imposed after the date a property is 
acquired by a recipient or other entity for transfer to eligible 
families, the effective date of the implementation grant agreement if 
the recipient already owns the property, or the date after an eligible 
property is acquired directly from an eligible source by an eligible 
family, as applicable, may be counted towards the match.
    (ii) Amounts that would be waived, forgone, or deferred for longer 
than 20 years from the date a family acquires homeownership interests in 
the unit may not be counted towards the match.
    (iii) The present value of taxes, fees, or other charges waived, 
forgone, or deferred must be computed by discounting the estimated 
amount that would be otherwise payable over the time period (up to 20 
years) based on a discount rate approved or prescribed by HUD.

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    (iv) Where the match includes amounts under paragraph (b)(3) of this 
section, the documents transferring the homeownership interest to the 
family must evidence the contribution, to the extent the contribution 
has not already been received.
    (4) Real property. Real property contributed for use under an 
approved homeownership program. To the extent properties were acquired 
with Federal resources or are donated directly to the program from 
Federal sources, their value is not an eligible match contribution.
    (i) The as-is fair market value of eligible property may be counted 
as a contribution toward the match, determined in accordance with a 
recent appraisal conducted under procedures established or approved by 
HUD. The maximum value contributed will be limited as provided in Sec. 
572.100.
    (ii) When eligible real property is sold to the recipient or its 
designee from non-Federal sources at a price below fair market value, 
the differential between the fair market value and the discounted sales 
price may be counted toward the match.
    (iii) Vacant land from any non-Federal source located on existing 
streets with available utilities (which need not include laterals) may 
be contributed for use under the program, but only if a structure 
acquired or donated from an eligible HOPE 3 source will be moved onto 
it. The total amount of the contribution and any amount paid from HOPE 3 
funds for acquisition of the structure, moving, and rehabilitation costs 
must be within the limits provided in Sec. 572.100.
    (5) Infrastructure. The fair market value of investment (as approved 
by HUD), not made with Federal resources, in on-site and off-site 
infrastructure that directly contributes to a homeownership program. The 
infrastructure investment may be counted toward the match only if it was 
completed no earlier than 12 months before the deadline date set by HUD 
in the NOFA for receipt of implementation grant applications. Investment 
in infrastructure may include such activities as new or repaired utility 
laterals connecting eligible property to the main line and new or 
rebuilt walkways, sidewalks, or curbs on or contiguous to the eligible 
property. If the investment in infrastructure also benefits other 
properties, only the share of the costs directly benefiting the eligible 
property under the homeownership program may be counted toward the 
match.
    (6) Donated labor. All donated labor, including sweat equity 
provided by a homebuyer or homeowner, to be valued at $10 an hour or at 
a rate promulgated by HUD in the NOFA, except for donated professional 
labor, as approved by HUD, including professional labor by homebuyers 
and homeowners. The donated professional labor will be valued at the 
fair market value of the work completed. Professional labor is work 
ordinarily performed by the donor for payment, such as work by 
attorneys, electricians, carpenters, and architects that is equivalent 
to work they do in their occupations. Sweat equity may be counted 
towards the match only if it is not also counted toward a family's 
equity.
    (7) Donated materials and supplies. Donated materials and supplies 
may be counted toward the match contribution at their fair market value. 
The recipient must maintain a written enumeration of what donated 
materials and supplies are being used in the program, as well as 
documentation of their cost or value.
    (8) Other in-kind contributions. The reasonable value of in-kind 
contributions proposed by the applicant in the application and approved 
by HUD. In reviewing proposed in-kind contributions, HUD will review to 
ensure:
    (i) The proposed contribution is to be used for an eligible activity 
under the proposed homeownership program;
    (ii) The application demonstrates that the proposed in-kind 
contribution will actually be provided; and
    (iii) The proposed value of the contribution is reasonable. In 
determining whether the value is reasonable, HUD will generally consider 
the amount such contribution would otherwise cost the program.

[58 FR 36526, July 7, 1993, as amended at 60 FR 36018, July 12, 1995; 61 
FR 48798, Sept. 16, 1996]

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