Community Development Block Grant Program: Streamlining Final Rule

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Part II

Department ofHousing and UrbanDevelopment24 CFR Part 570Office of the Assistant Secretary forCommunity Planning and Development;Community Development Block GrantProgram; Streamlining; Final Rule

11474 Federal Register / Vol. 61, No. 55 / Wednesday, March 20, 1996 / Rules and Regulations

DEPARTMENT OF HOUSING ANDURBAN DEVELOPMENT

24 CFR Part 570

[Docket No. FR–3978–F–01]

RIN 2506–AB77

Office of the Assistant Secretary forCommunity Planning andDevelopment; CommunityDevelopment Block Grant Program;Streamlining Final Rule

AGENCY: Office of the AssistantSecretary for Community Planning andDevelopment, HUD.ACTION: Final rule.

SUMMARY: This final rule amends HUD’sregulations for the CommunityDevelopment Block Grant (CDBG)Program. In an effort to comply with thePresident’s regulatory reform initiatives,this rule will streamline the CDBGregulations by eliminating provisionsthat are redundant of statutes or areotherwise unnecessary. This final rulewill make the CDBG regulations clearerand more concise.EFFECTIVE DATE: April 19, 1996.FOR FURTHER INFORMATION CONTACT:Deirdre Maguire-Zinni, Director,Entitlement Communities Division,Room 7282, Department of Housing andUrban Development, 451 Seventh Street,SW., Washington, DC 20410, telephonenumber (202) 708–1577. (This telephonenumber is not toll-free). Hearing- orspeech-impaired persons may accessthis number via TDD by calling theFederal Information Relay Service at(800) 877–8339.SUPPLEMENTARY INFORMATION: On March4, 1995, President Clinton issued amemorandum to all Federaldepartments and agencies regardingregulatory reinvention. In response tothis memorandum, the Department ofHousing and Urban Developmentconducted a page-by-page review of itsregulations to determine which can beeliminated, consolidated, or otherwiseimproved. While the CommunityDevelopment Block Grant regulationsserve as important program guidance,HUD has determined that theregulations can be improved andstreamlined by eliminating unnecessaryprovisions.

Several provisions in the CDBGregulations repeat statutory languagefrom the Housing and CommunityDevelopment Act of 1974, as amended(42 U.S.C. 5301 et seq.) (the Act), andother statutes. It is unnecessary tomaintain statutory requirements in theCode of Federal Regulations (CFR),

since those requirements are otherwisefully accessible and binding.Furthermore, if regulations containstatutory language, HUD must amendthe regulations whenever Congressamends the statute. Therefore, this finalrule will remove repetitious statutorylanguage and replace it with a citationto the specific statutory section for easyreference.

Other provisions in the CDBGregulations apply to more than oneprogram, and therefore HUD repeatedthese provisions in different subpartswithin part 570. This repetition isunnecessary, and updating thesescattered provisions is cumbersome andoften creates confusion. Therefore, thisfinal rule will consolidate theseduplicative provisions.

Some provisions in the CDBGregulations are obsolete. For instance,Congress has not appropriated funds forthe Urban Development Action Grant(UDAG) program since Fiscal Year 1988.While several approved grants have notyet reached the final close-out stage, itis unnecessary for HUD to maintain allof the regulations for these grants.Therefore, this rule removes many of theUDAG provisions from subpart G of part570, such as those related to thesubmission and approval of applicationsfor new grants. This rule also removesobsolete regulations regarding UrbanRenewal projects in subpart N. Loansand grants are no longer authorizedunder the Urban Renewal program. Allof the existing projects are the subject ofclose-out agreements that contain all theregulatory provisions. Therefore, HUDcan remove the obsolete regulations insubpart N.

This final rule makes the followingspecific amendments:

1. Amends § 570.1 by updatingparagraphs (a)(4) and (b) to refer toSpecial Purpose Grants, rather than theSecretary’s Fund program;

2. Moves the essential language of§ 570.2 into a new paragraph (c) in§ 570.1, and removes the unnecessaryremainder of § 570.2;

3. Amends § 570.3 by removing thestatutory language from severaldefinitions, by updating the definitionof ‘‘CDBG funds’’ to include fundsreceived under § 570.405 or undersection 108(q) of the Housing andCommunity Development Act of 1974,and by updating the definition of‘‘Discretionary grant’’ to refer to SpecialPurpose Grants, rather than to theSecretary’s Fund;

4. Adds a streamlined § 570.5, whichcontains a reference to HUD’s waiverauthority in the CDBG program. Thissection was inadvertently removed inthe General HUD Program Requirements

final rule, published in the FederalRegister on February 9, 1996 (61 FR5198);

5. Amends § 570.200(a)(3) byremoving the statutory language andclarifying the requirements for the HUD-administered Small Cities Program. Thisrule also corrects § 570.200(a)(3), whichwas recently amended in a final rulepublished on November 9, 1995 (60 FR56892), to clarify that Insular areas mustuse 70 percent of their CDBG funds foractivities that benefit low- to moderate-income persons each year;

6. Removes obsolete provisionsregarding the New Communitiesprogram, maintaining a savings clausein § 570.403;

7. Corrects § 570.420(e)(2) to refer to§ 570.208(d)(5) or (6), in addition to§ 570.208(a);

8. Removes obsolete provisionsregarding the UDAG program fromsubpart G;

9. Consolidates, to the extent possible,the provisions in §§ 570.488 and570.606, which are essentially the same.In effect, this rule removes most of theinformation in § 570.488, maintaining across-reference to § 570.606, and makesminor conforming changes to § 570.606so that it applies both to grantees andStates/state recipients. This rule makesno substantive changes to therequirements in § 570.606;

10. Removes the statutory and otherrepetitive language in §§ 570.600,570.601, 570.603, 570.604, 570.605,570.608, 570.701, and 570.706,maintaining statutory citations for easyreference;

11. Makes conforming changes to§§ 570.703(d) and 570.704 to reflect theconsolidation of §§ 570.488 and570.606;

12. Removes obsolete provisionsregarding Urban Renewal projects fromsubpart N, maintaining a savings clausein § 570.800; and

13. Makes conforming changes to§ 570.904 to reflect this rule’samendment to § 570.601.This final rule will eliminateapproximately 34 pages of unnecessaryregulations from the CFR.

Justification for Final RulemakingHUD generally publishes a rule for

public comment before issuing a rule foreffect, in accordance with its ownregulations on rulemaking in 24 CFRpart 10. However, part 10 provides forexceptions to the general rule if theagency finds good cause to omitadvance notice and public participation.The good cause requirement is satisfiedwhen prior public procedure is‘‘impracticable, unnecessary, or contraryto the public interest’’ (24 CFR 10.1).

11475Federal Register / Vol. 61, No. 55 / Wednesday, March 20, 1996 / Rules and Regulations

HUD finds that good cause exists topublish this rule for effect without firstsoliciting public comment. This rulemerely removes unnecessary regulatoryprovisions and does not establish oraffect substantive policy. Therefore,prior public comment is unnecessary.

Other Matters

Regulatory Flexibility ActThe Secretary, in accordance with the

Regulatory Flexibility Act (5 U.S.C.605(b)), has reviewed and approved thisfinal rule, and in so doing certifies thatthis rule will not have a significanteconomic impact on a substantialnumber of small entities. This rulestreamlines the CommunityDevelopment Block Grant regulations byremoving unnecessary provisions. Therule will have no adverse ordisproportionate economic impact onsmall businesses.

Environmental ImpactThis rule does not have an

environmental impact. This rule simplyamends existing regulations byconsolidating and streamliningprovisions; it does not alter theenvironmental effect of the regulationsbeing amended. At the time ofdevelopment of regulations in part 570,a Finding of No Significant Impact withrespect to the environment was made inaccordance with HUD regulations in 24CFR part 50 that implement section102(2)(C) of the National EnvironmentalPolicy Act of 1969 (42 U.S.C. 4332).That finding remains applicable to thisrule, and is available for publicinspection between 7:30 a.m. and 5:30p.m. weekdays in the Office of the RulesDocket Clerk, Office of General Counsel,Room 10276, Department of Housingand Urban Development, 451 SeventhStreet, SW, Washington, DC.

Executive Order 12612, FederalismThe General Counsel, as the

Designated Official under section 6(a) ofExecutive Order 12612, Federalism, hasdetermined that this rule will not havesubstantial direct effects on States ortheir political subdivisions, or therelationship between the FederalGovernment and the States, or on thedistribution of power andresponsibilities among the variouslevels of Government. No programmaticor policy changes will result from thisrule that would affect the relationshipbetween the Federal Government andState and local governments.

Executive Order 12606, The FamilyThe General Counsel, as the

Designated Official under ExecutiveOrder 12606, The Family, has

determined that this rule will not havethe potential for significant impact onfamily formation, maintenance, orgeneral well-being, and thus is notsubject to review under the Order. Nosignificant change in existing HUDpolicies or programs will result frompromulgation of this rule.

List of Subjects in 24 CFR Part 570Administrative practice and

procedure, American Samoa,Community development block grants,Grant programs—education, Grantprograms—housing and communitydevelopment, Guam, Indians, Leadpoisoning, Loan programs—housing andcommunity development, Low andmoderate income housing, Newcommunities, Northern Mariana Islands,Pacific Islands Trust Territory, Pocketsof poverty, Puerto Rico, Reporting andrecordkeeping requirements, Smallcities, Student aid, Virgin Islands.

Accordingly, 24 CFR part 570 isamended as follows:

PART 570—COMMUNITYDEVELOPMENT BLOCK GRANTS

1. The authority citation for part 570continues to read as follows:

Authority: 42 U.S.C. 3535(d) and 5300–5320.

Subpart A—General Provisions

2. Section 570.1 is amended byrevising the section heading, paragraph(a)(4), and the second sentence ofparagraph (b); and by adding a newparagraph (c), to read as follows:

§ 570.1 Purpose and primary objective.(a) * * *(4) Special Purpose Grants (subpart

E);* * * * *

(b) * * * In the application of thesubparts to Special Purpose Grants orthe Urban Development Action Grantprogram, the reference to funds in theform of grants in the term ‘‘CDBGfunds’’, as defined in § 570.3, shallmean the grant funds under thoseprograms. * * *

(c) The primary objective of theprograms authorized under title I of theHousing and Community DevelopmentAct of 1974, as amended, is described insection 101(c) of the Act (42 U.S.C.5301(c)).

§ 570.2 [Removed]3. Section 570.2 is removed.4. Section 570.3 is amended by

adding introductory text; and byrevising the definitions of ‘‘Age ofhousing’’, ‘‘Buildings for the generalconduct of government’’, ‘‘CDBG

funds’’, ‘‘Discretionary grant’’, ‘‘Extentof growth lag’’, ‘‘Extent of housingovercrowding’’, ‘‘Indian tribe’’,‘‘Metropolitan area’’, ‘‘Metropolitancity’’, ‘‘Microenterprise’’,‘‘Nonentitlement area’’, ‘‘State’’, ‘‘Unitof general local government’’, and‘‘Urban county’’; to read as follows:

§ 570.3 Definitions.The terms HUD and Secretary are

defined in 24 CFR part 5. All of thefollowing definitions in this section thatrely on data from the United StatesBureau of the Census shall rely upon thedata available from the latest decennialcensus.* * * * *

Age of housing means the number ofyear-round housing units, as furtherdefined in section 102(a)(11) of the Act.* * * * *

Buildings for the general conduct ofgovernment shall have the meaningprovided in section 102(a)(21) of theAct.

CDBG funds means CommunityDevelopment Block Grant funds,including funds received in the form ofgrants under subpart D, F, or § 570.405of this part, funds awarded undersection 108(q) of the Housing andCommunity Development Act of 1974,loans guaranteed under subpart M ofthis part, urban renewal surplus grantfunds, and program income as definedin § 570.500(a).* * * * *

Discretionary grant means a grantmade from the various Special PurposeGrants in accordance with subpart E ofthis part.* * * * *

Extent of growth lag shall have themeaning provided in section 102(a)(12)of the Act.

Extent of housing overcrowding shallhave the meaning provided in section102(a)(10) of the Act.* * * * *

Indian tribe shall have the meaningprovided in section 102(a)(17) of theAct.* * * * *

Metropolitan area shall have themeaning provided in section 102(a)(3) ofthe Act.

Metropolitan city shall have themeaning provided in section 102(a)(4) ofthe Act.

Microenterprise shall have themeaning provided in section 102(a)(22)of the Act.* * * * *

Nonentitlement area shall have themeaning provided in section 102(a)(7) ofthe Act.* * * * *


State shall have the meaning providedin section 102(a)(2) of the Act.

Unit of general local government shallhave the meaning provided in section102(a)(1) of the Act.

Urban county shall have the meaningprovided in section 102(a)(6) of the Act.For the purposes of this definition, HUDwill determine whether the county’scombined population contains therequired percentage of low- andmoderate-income persons by identifyingthe number of persons that resided inapplicable areas and units of generallocal government based on data from themost recent decennial census, and usingincome limits that would have appliedfor the year in which that census wastaken.* * * * *

5. Section 570.5 is revised to read asfollows:

§ 570.5 Wavers.HUD’s authority for the waiver of

regulations and for the suspension ofrequirements to address damage in aPresidentially declared disaster area isdescribed in 24 CFR part 5 and insection 122 of the Act, respectively.

Subpart C—Eligible Activities

6. Section 570.200 is amended byrevising the introductory text ofparagraph (a)(3) to read as follows:

§ 570.200 General policies.(a) * * *(3) Compliance with the primary

objective. The primary objective of theAct is described in section 101(c) of theAct. Consistent with this objective,Entitlement recipients and recipients ofthe HUD-administered Small Citiesprogram in Hawaii must ensure thatover a period of time specified in theircertification not to exceed three years,not less than 70 percent of the aggregateof CDBG fund expenditures shall be foractivities meeting the criteria under§ 570.208(a) or § 570.208(d)(5) or (6) forbenefitting low- and moderate-incomepersons; Insular area recipients mustmeet this requirement for each separategrant. The requirements for the HUD-administered Small Cities program inNew York are in § 570.420(e)(2).Additional requirements for the HUD-administered Small Cities program inHawaii are in § 570.430(e). Indetermining the percentage of fundsexpended for such activities:* * * * *

7. Section 570.403 is revised to readas follows:

§ 570.403 New Communities.The regulations for New Communities

grants in this section, that were effective

immediately before April 19, 1996, willcontinue to govern the rights andobligations of recipients and HUD withrespect to grants under the NewCommunities program.

Subpart F—Small Cities

8. Section 570.420 is amended byrevising the first sentence of paragraph(e)(2) to read as follows:

§ 570.420 General.

* * * * *(e) * * *(2) In addition to the objectives

described in paragraph (e)(1) of thissection, with respect to grants madethrough the Small Cities Program, notless than 70 percent of the total of grantfunds from each grant and Section 108loan guarantee funds received undersubpart M of this part within a fiscalyear must be expended for activitieswhich benefit low- and moderate-income persons under the criteria of§ 570.208(a) or § 570.208(d)(5) or (6).* * ** * * * *

Subpart G—Urban Development ActionGrants


§ 570.450 Purpose.The purpose of urban development

action grants is to assist cities and urbancounties that are experiencing severeeconomic distress to help stimulateeconomic development activity neededto aid in economic recovery. Thissubpart G contains those regulationsthat are essential for the continuedoperation of this grant program.

§§ 570.451, 570.452, 570.453, 570.454,570.455, 570.458, 570.459, and 570.460[Removed]

10. Sections 570.451, 570.452,570.453, 570.454, 570.455, 570.458,570.459, and 570.460 are removed.


§ 570.461 Post-preliminary approvalrequirements; Lead-based paint.

The recipient may receive preliminaryapproval prior to the accomplishment ofnotification, inspection, testing, andabatement as described in § 570.608, butno funds will be released until suchactions are complete and evidence ofcompliance is submitted to HUD.

§ 570.462 [Removed]12. Section 570.462 is removed.13. Section 570.463 is amended by

revising the undesignated sentence ofparagraph (a) to read as follows:

§ 570.463 Project amendments andrevisions.

(a) * * * The applicant must hold atleast one public hearing prior to makinga significant revision to the application.* * * * *


§ 570.466 Additional applicationsubmission requirements for Pockets ofPoverty—employment opportunities.

Applicants for Action Grants underthe Pockets of Poverty provision mustdescribe the number and, to the extentpossible, the types of new jobs(construction and permanent) that willbe provided to the low- and moderate-income residents of the Pocket ofPoverty as a direct result of theproposed project. If the application callsfor job training programs (such as thoserelated to the CETA program) or jobrecruiting services for the pocket’sresidents, then such proposed activitiesmust be clearly and fully explained.HUD requires applicants to ensure thatat least 75 percent of whateverpermanent jobs initially result from theproject are provided to low- andmoderate-income persons and that atleast 51 percent of whatever permanentjobs initially result from the project areprovided to low- and moderate-incomeresidents from the pocket. HUDencourages applicants to ensure that atleast 20 percent of all permanent jobsare filled by persons from the pocketqualified to participate in the CETAprogram on a continuous basis. HUDrequires all applicants to continuouslyuse best efforts to ensure that at least 75percent of all permanent jobs resultingfrom any Action Grant-assisted projectare provided to low- and moderate-income persons and that at least 51percent of all permanent jobs resultingfrom any Action Grant-assisted projectare provided to low- and moderate-income residents from the pocket. Theapplication should clearly describe howthe applicant intends to meet initial andcontinuous job requirements. Privateparticipating parties must meet theseemployment requirements in theaggregate. To enable the privateparticipants to do so, lease agreementsexecuted by a private participating partyshall include:

(a) Provisions requiring lessees tofollow hiring practices that the privateparticipating party has determined willenable it to meet these requirements inthe aggregate; and

(b) Provisions that will enable theprivate participating party to declare adefault under the lease agreement if thelessees do not follow such practices.


§ 570.467 [Removed]

15. Section 570.467 is removed.Subpart I—State CommunityDevelopment Block Grant Program

16. Section 570.480 is amended byrevising the last sentence of paragraph(a) to read as follows:

§ 570.480 General.

(a) * * * Other subparts of part 570 arenot applicable to the State CDBGProgram, except as expressly providedotherwise.* * * * *


§ 570.488 Displacement, relocation,acquisition, and replacement of housing.

The requirements for States and staterecipients with regard to thedisplacement, relocation, acquisition,and replacement of housing are in§ 570.606 and 24 CFR part 42.

Subpart K—Other ProgramRequirements

18. Section 570.600 is amended byrevising paragraph (a) to read as follows:

§ 570.600 General.

(a) This subpart K enumerates lawsthat the Secretary will treat asapplicable to grants made under section106 of the Act, other than grants toStates made pursuant to section 106(d)of the Act, for purposes of theSecretary’s determinations undersection 104(e)(1) of the Act, includingstatutes expressly made applicable bythe Act and certain other statutes andExecutive Orders for which theSecretary has enforcementresponsibility. This subpart K applies togrants made under the Insular areasprogram in § 570.405, with theexception of § 570.612. The absence ofmention herein of any other statute forwhich the Secretary does not havedirect enforcement responsibility is notintended to be taken as an indicationthat, in the Secretary’s opinion, suchstatute or Executive Order is notapplicable to activities assisted underthe Act. For laws that the Secretary willtreat as applicable to grants made toStates under section 106(d) of the Actfor purposes of the determinationrequired to be made by the Secretarypursuant to section 104(e)(2) of the Act,see § 570.487.* * * * *


§ 570.601 Public Law 88–352 and PublicLaw 90–284; affirmatively furthering fairhousing; Executive Order 11063.

(a) The following requirements applyaccording to sections 104(b) and 107 ofthe Act:

(1) Public Law 88–352, which is titleVI of the Civil Rights Act of 1964 (42U.S.C. 2000d et seq.), and implementingregulations in 24 CFR part 1.

(2) Public Law 90–284, which is theFair Housing Act (42 U.S.C. 3601–3620).In accordance with the Fair HousingAct, the Secretary requires that granteesadminister all programs and activitiesrelated to housing and communitydevelopment in a manner toaffirmatively further the policies of theFair Housing Act. Furthermore, inaccordance with section 104(b)(2) of theAct, for each community receiving agrant under subpart D of this part, thecertification that the grantee willaffirmatively further fair housing shallspecifically require the grantee toassume the responsibility of fair housingplanning by conducting an analysis toidentify impediments to fair housingchoice within its jurisdiction, takingappropriate actions to overcome theeffects of any impediments identifiedthrough that analysis, and maintainingrecords reflecting the analysis andactions in this regard.

(b) Executive Order 11063, asamended by Executive Order 12259 (3CFR, 1959–1963 Comp., p. 652; 3 CFR,1980 Comp., p. 307) (Equal Opportunityin Housing), and implementingregulations in 24 CFR part 107, alsoapply.


§ 570.603 Labor standards.(a) Section 110(a) of the Act contains

labor standards that apply tononvolunteer labor financed in whole orin part with assistance received underthe Act. In accordance with section110(a) of the Act, the Contract WorkHours and Safety Standards Act (40U.S.C. 327 et seq.) also applies.However, these requirements apply tothe rehabilitation of residential propertyonly if such property contains not lessthan 8 units.

(b) The regulations in 24 CFR part 70apply to the use of volunteers.


§ 570.604 Environmental standards.For purposes of section 104(g) of the

Act, the regulations in 24 CFR part 58specify the other provisions of lawwhich further the purposes of theNational Environmental Policy Act of1969, and the procedures by which

grantees must fulfill their environmentalresponsibilities. In certain cases,grantees assume these environmentalreview, decisionmaking, and actionresponsibilities by execution of grantagreements with the Secretary.


§ 570.605 National Flood InsuranceProgram.

Notwithstanding the date of HUDapproval of the recipient’s application(or, in the case of grants made undersubpart D of this part or HUD-administered small cities recipients inHawaii, the date of submission of thegrantee’s consolidated plan, inaccordance with 24 CFR part 91),section 202(a) of the Flood DisasterProtection Act of 1973 (42 U.S.C. 4106)and the regulations in 44 CFR parts 59through 79 apply to funds providedunder this part 570.


§ 570.606 Displacement, relocation,acquisition, and replacement of housing.

(a) General policy for minimizingdisplacement. Consistent with the othergoals and objectives of this part,grantees (or States or state recipients, asapplicable) shall assure that they havetaken all reasonable steps to minimizethe displacement of persons (families,individuals, businesses, nonprofitorganizations, and farms) as a result ofactivities assisted under this part.

(b) Relocation assistance for displacedpersons at URA levels. (1) A displacedperson shall be provided with relocationassistance at the levels described in, andin accordance with the requirements of49 CFR part 24, which contains thegovernment-wide regulationsimplementing the Uniform RelocationAssistance and Real PropertyAcquisition Policies Act of 1970 (URA)(42 U.S.C. 4601–4655).

(2) Displaced person. (i) For purposesof paragraph (b) of this section, the term‘‘displaced person’’ means any person(family, individual, business, nonprofitorganization, or farm) that moves fromreal property, or moves his or herpersonal property from real property,permanently and involuntarily, as adirect result of rehabilitation,demolition, or acquisition for an activityassisted under this part. A permanent,involuntary move for an assistedactivity includes a permanent movefrom real property that is made:

(A) After notice by the grantee (or thestate recipient, if applicable) to movepermanently from the property, if themove occurs after the initial officialsubmission to HUD (or the State, as


applicable) for grant, loan, or loanguarantee funds under this part that arelater provided or granted.

(B) After notice by the property ownerto move permanently from the property,if the move occurs after the date of thesubmission of a request for financialassistance by the property owner (orperson in control of the site) that is laterapproved for the requested activity.

(C) Before the date described inparagraph (b)(2)(i)(A) or (B) of thissection, if either HUD or the grantee (orState, as applicable) determines that thedisplacement directly resulted fromacquisition, rehabilitation, ordemolition for the requested activity.

(D) After the ‘‘initiation ofnegotiations’’ if the person is the tenant-occupant of a dwelling unit and any oneof the following three situations occurs:

(1) The tenant has not been providedwith a reasonable opportunity to leaseand occupy a suitable decent, safe, andsanitary dwelling in the same building/complex upon the completion of theproject, including a monthly rent thatdoes not exceed the greater of thetenant’s monthly rent and estimatedaverage utility costs before the initiationof negotiations or 30 percent of thehousehold’s average monthly grossincome; or

(2) The tenant is required to relocatetemporarily for the activity but thetenant is not offered payment for allreasonable out-of-pocket expensesincurred in connection with thetemporary relocation, including the costof moving to and from the temporarylocation and any increased housingcosts, or other conditions of thetemporary relocation are not reasonable;and the tenant does not return to thebuilding/complex; or

(3) The tenant is required to move toanother unit in the building/complex,but is not offered reimbursement for allreasonable out-of-pocket expensesincurred in connection with the move.

(ii) Notwithstanding the provisions ofparagraph (b)(2)(i) of this section, theterm ‘‘displaced person-’’ does notinclude:

(A) A person who is evicted for causebased upon serious or repeatedviolations of material terms of the leaseor occupancy agreement. To exclude aperson on this basis, the grantee (orState or state recipient, as applicable)must determine that the eviction wasnot undertaken for the purpose ofevading the obligation to providerelocation assistance under this section;

(B) A person who moves into theproperty after the date of the noticedescribed in paragraph (b)(2)(i)(A) or (B)of this section, but who received a

written notice of the expecteddisplacement before occupancy.

(C) A person who is not displaced asdescribed in 49 CFR 24.2(g)(2).

(D) A person who the grantee (orState, as applicable) determines is notdisplaced as a direct result of theacquisition, rehabilitation, ordemolition for an assisted activity. Toexclude a person on this basis, HUDmust concur in that determination.

(iii) A grantee (or State or staterecipient, as applicable) may, at anytime, request HUD to determine whethera person is a displaced person underthis section.

(3) Initiation of negotiations. Forpurposes of determining the type ofreplacement housing assistance to beprovided under paragraph (b) of thissection, if the displacement is the directresult of privately undertakenrehabilitation, demolition, oracquisition of real property, the term‘‘initiation of negotiations’’ means theexecution of the grant or loan agreementbetween the grantee (or State or staterecipient, as applicable) and the personowning or controlling the real property.

(c) Residential antidisplacement andrelocation assistance plan. Inaccordance with section 104(d) of theAct, each grantee must adopt, makepublic, and certify (or, as applicable,each State must ensure that each staterecipient adopts, makes public, andcertifies to the State) that it is followinga residential antidisplacement andrelocation assistance plan providingone-for-one replacement units(paragraph (c)(1) of this section), andrelocation assistance (paragraph (c)(2) ofthis section). As applicable, section106(d)(5)(A) of the Act requires the staterecipient also to certify to the State thatit will minimize displacement ofpersons as a result of assisted activities.Except with regard to the State CDBGProgram, the plan shall also indicate thesteps that will be taken consistent withother goals and objectives of this part tominimize the displacement of familiesand individuals from their homes andneighborhoods as a result of anyactivities assisted under this part.

(1) One-for-one replacement of low/moderate-income dwelling units. (i) Alloccupied and vacant occupiable low/moderate-income dwelling units that aredemolished or converted to a use otherthan as low/moderate-income dwellingunits in connection with an activityassisted under this part must bereplaced with low/moderate-incomedwelling units.

(ii) Replacement low/moderate-income dwelling units may be providedby any government agency or private

developer, and must meet the followingrequirements:

(A) The units must be located withinthe jurisdiction of the grantee (or thestate recipient, as applicable). To theextent feasible and consistent with otherstatutory priorities, the units shall belocated within the same neighborhoodas the units replaced.

(B) The units must be sufficient innumber and size to house no fewer thanthe number of occupants who couldhave been housed in the units that aredemolished or converted. The numberof occupants who could have beenhoused in units shall be determined inaccordance with applicable localhousing occupancy codes. The grantee(or state recipient, as applicable) maynot replace those units with smallerunits (e.g., a 2-bedroom unit with two 1-bedroom units), unless the grantee (orstate recipient, as applicable) hasprovided the information requiredunder paragraph (c)(1)(iii)(G) of thissection.

(C) The units must be provided instandard condition. Replacement low/moderate-income dwelling units mayinclude units that have been raised tostandard from substandard condition if:

(1) No person was displaced from theunit as a direct result of an assistedactivity (see definition of ‘‘displacedperson’’ in paragraph (c)(3)(ii) of thissection; and

(2) The unit was vacant for at leastthree months before execution of theagreement between the grantee and theproperty owner.

(D) The units must initially be madeavailable for occupancy at any timeduring the period beginning one yearbefore the grantee’s (or state recipient’s,as applicable) submission of theinformation required under paragraph(c)(1)(iii) of this section and endingthree years after the commencement ofthe demolition or rehabilitation relatedto the conversion.

(E) The units must be designed toremain low/moderate-income dwellingunits for at least 10 years from the dateof initial occupancy. Replacement low/moderate-income dwelling units mayinclude, but are not limited to, publichousing, or existing housing receivingSection 8 project-based assistance underthe United States Housing Act of 1937.

(iii) Before the grantee (or staterecipient, as applicable) enters into acontract committing it to provide fundsunder this part for any activity that willdirectly result in the demolition of low/moderate-income dwelling units or theconversion of low/moderate-incomedwelling units to another use, thegrantee (or state recipient, as applicable)must make public, and submit the


following information in writing to theHUD Field Office (or State, asapplicable) for monitoring purposes:

(A) A description of the proposedassisted activity;

(B) The location on a map andnumber of dwelling units by size(number of bedrooms) that will bedemolished or converted to a use otherthan for low/moderate-income dwellingunits as a direct result of the assistedactivity;

(C) A time schedule for thecommencement and completion of thedemolition or conversion;

(D) The location on a map and thenumber of dwelling units by size(number of bedrooms) that will beprovided as replacement dwelling units.If such data are not available at the timeof the general submission, thesubmission shall identify the generallocation on an area map and theapproximate number of dwelling unitsby size, and information identifying thespecific location and number ofdwelling units by size shall besubmitted and disclosed to the public assoon as it is available;

(E) The source of funding and a timeschedule for the provision ofreplacement dwelling units;

(F) The basis for concluding that eachreplacement dwelling unit will remain alow/moderate-income dwelling unit forat least 10 years from the date of initialoccupancy; and

(G) Information demonstrating thatany proposed replacement of dwellingunits with smaller dwelling units (e.g.,a 2-bedroom unit with two 1-bedroomunits) is consistent with the needsanalysis contained in the HUD-approved consolidated plan; or, forpurposes of the State CDBG program,consistent with the housing needs oflow- and moderate-income householdsin the jurisdiction. A grantee that is notrequired to submit a consolidated planto HUD must submit informationdemonstrating that the proposedreplacement is consistent with thehousing needs of low- and moderate-income households in the jurisdiction.

(iv)(A) The one-for-one replacementrequirement of paragraph (c)(1) of thissection does not apply to the extent theField Office determines, based uponobjective data, that there is an adequatesupply of vacant low/moderate-incomedwelling units in standard conditionavailable on a nondiscriminatory basiswithin the jurisdiction of the grantee (orstate recipient, as applicable). Indetermining the adequacy of supply,HUD will consider whether thedemolition or conversion of the low/moderate-income dwelling units willhave a material impact on the ability of

low- and moderate-income householdsto find suitable housing. HUD willconsider relevant evidence of housingsupply and demand including, but notlimited to, the following factors: thehousing vacancy rate in the jurisdiction;the number of vacant low/moderate-income dwelling units in thejurisdiction (excluding units that will bedemolished or converted); the numberof eligible families on waiting lists forhousing assisted under the UnitedStates Housing Act of 1937 in thejurisdiction; the needs analysiscontained in any applicable HUD-approved consolidated plan; andrelevant past or predicted demographicchanges.

(B) HUD may consider the supply ofvacant low/moderate-income dwellingunits in a standard condition availableon a nondiscriminatory basis in an areathat is larger than the jurisdiction of thegrantee (or state recipient, asapplicable). Such additional dwellingunits shall be considered if the FieldOffice determines that the units wouldbe suitable to serve the needs of the low-and moderate-income households thatcould be served by the low/moderate-income dwelling units that are to bedemolished or converted to another use.HUD will base this determination ongeographic and demographic factors,such as location and access to places ofemployment and to other facilities.

(C) The grantee (or state recipient, asapplicable) must submit the request fordetermination under paragraph (c)(1)(iv)of this section directly to the FieldOffice (or State, as applicable).Simultaneously with the submission ofthe request, the grantee (or staterecipient, as applicable) must make thesubmission public and inform interestedpersons that they have 30 days from thedate of submission to provide to HUD(or to the State, as applicable) additionalinformation supporting or opposing therequest. For purposes of the State CDBGprogram, if the State, after consideringthe submission and the additional data,agrees with the request, the State mustprovide its recommendation withsupporting information to HUD.

(2) Relocation assistance undersection 104(d) of the Act. Under section104(d), each ‘‘displaced person’’(defined in paragraph (c)(3)(ii) of thissection) is entitled to choose to receiveeither assistance at URA levels (seeparagraph (b) of this section) or thefollowing relocation assistance:

(i) Advisory services at the levelsdescribed in 49 CFR part 24, subpart C(General Relocation Requirements).Tenants shall be advised of their rightsunder the Fair Housing Act (42 U.S.C.3601–19) and of replacement housing

opportunities in such a manner that, tothe extent feasible, will provide a choicebetween relocating within theirneighborhoods and other neighborhoodsconsistent with the responsibility of thegrantee (or the state recipient, asapplicable) to affirmatively further fairhousing;

(ii) Payment for moving expenses atthe levels described in 49 CFR part 24,subpart D.

(iii) The reasonable and necessarycost of any security deposit required torent the replacement dwelling unit, andfor credit checks required to rent orpurchase the replacement dwelling unit.

(iv) Interim living costs. The grantee(or state recipient, as applicable) shallreimburse a person for actual reasonableout-of-pocket costs incurred inconnection with temporary relocation,including moving expenses andincreased housing costs, if:

(A) The person must relocatetemporarily because continuedoccupancy of the dwelling unitconstitutes a substantial danger to thehealth or safety of the person or thepublic; or

(B) The person is displaced from a‘‘low/moderate-income dwelling unit,’’none of the comparable replacementdwelling units to which the person hasbeen referred qualifies as a low/moderate-income dwelling unit (definedin paragraph (c)(3)(iii) of this section),and a suitable low/moderate-incomedwelling unit is scheduled to becomeavailable in accordance with paragraph(c)(1) of this section. (Because a‘‘comparable replacement dwellingunit’’ may be made affordable to aperson through a rental assistancepayment and its market rent may exceedthe Fair Market Rent (FMR) under theSection 8 Existing Housing Program, itmay not meet the definition of a ‘‘low/moderate-income dwelling unit’’.)

(v) Replacement housing assistance.Persons are eligible to receive one of thefollowing two forms of replacementhousing assistance:

(A) Each person must be offered rentalassistance equal to 60 times the amountnecessary to reduce the monthly rentand estimated average monthly cost ofutilities for a replacement dwelling(comparable replacement dwelling ordecent, safe, and sanitary replacementdwelling to which the person relocates,whichever costs less) to the ‘‘TotalTenant Payment,’’ as determined under§ 813.107 of this title. All or a portionof this assistance may be offeredthrough a certificate or housing voucherfor rental assistance (if available)provided through the Local PublicAgency under Section 8 of the UnitedStates Housing Act of 1937. If a Section


8 certificate or housing voucher isprovided to a person, the grantee (orstate recipient, as applicable) mustprovide referrals to comparablereplacement dwelling units for whichthe owner is willing to participate in theSection 8 Existing Housing Program. Tothe extent that cash assistance isprovided, it will be provided ininstallments.

(B) If the person purchases an interestin a housing cooperative or mutualhousing association and occupies adecent, safe, and sanitary dwelling inthe cooperative or association, theperson may elect to receive a lump sumpayment. This lump sum payment shallbe equal to the capitalized value of 60monthly installments of the amount thatis obtained by subtracting the ‘‘TotalTenant Payment,’’ as determined under§ 813.107 of this title, from the monthlyrent and estimated average monthly costof utilities at a comparable replacementdwelling unit. To compute thecapitalized value, the installments shallbe discounted at the rate of interest paidon passbook savings deposits by aFederally insured bank or savings andloan institution conducting businesswithin the jurisdiction of the grantee (orstate recipient, as applicable). To theextent necessary to minimize hardshipto the household, the grantee (or staterecipient, as applicable) shall, subject toappropriate safeguards, issue a paymentin advance of the purchase of theinterest in the housing cooperative ormutual housing association.

(C) Displaced low/moderate incometenants shall be advised of their right toelect relocation assistance pursuant tothe Uniform Relocation Assistance andReal Property Acquisition Policies Actof 1970 and the regulations appearing at49 CFR part 24 as an alternative to therelocation assistance available underparagraph (c)(2) of this section.

(3) Definitions. For purposes ofproviding section 104(d) assistanceunder paragraph (c) of this section:

(i) Comparable replacement dwellingunit. The term ‘‘comparablereplacement dwelling unit’’ means adwelling unit that:

(A) Meets the criteria of 49 CFR24.2(d) (1) through (6); and

(B) Is available at a monthly cost forrent plus estimated average monthlyutility costs that does not exceed the‘‘Total Tenant Payment’’ determinedunder § 813.107 of this title, after takinginto account any rental assistance thehousehold would receive.

(ii) Displaced person. (A) The term‘‘displaced person’’ means any low/moderate-income family or individualthat moves from real property, or moveshis or her personal property from real

property, permanently andinvoluntarily, as a direct result of theconversion of a low/moderate-incomedwelling unit (defined in paragraph(c)(3)(iv) of this section) or demolitionin connection with an activity assistedunder this part. A permanentinvoluntary move for an assistedactivity includes a permanent movefrom real property that is made:

(1) After notice by the grantee (or staterecipient, as applicable) to movepermanently from the property, if themove occurs after the initial officialsubmission to HUD for grant, loan, orloan guarantee funds under this partthat are later granted; or, for purposes ofthe State CDBG Program, if the moveoccurs after the initial submission of anapplication to the State by the recipientrequesting assistance under this subpartthat is later granted for the requestedactivity.

(2) After notice by the propertyowner, to move permanently from theproperty, if the move occurs after thedate of submission of a request forfinancial assistance by the propertyowner (or person in control of the site)that is later approved for the requestedactivity.

(3) Before the date described inparagraph (c)(3)(ii)(A) (1) or (2) of thissection, if either HUD or the grantee (orState or state recipient, as applicable)determines that the displacementdirectly resulted from the conversion ofa low/moderate-income dwelling unit ordemolition in connection with therequested activity.

(4) After the execution of theagreement by the grantee (or staterecipient, as applicable) covering therehabilitation or demolition, if theperson is the tenant-occupant of adwelling unit and any one of thefollowing three situations occurs:

(i) The tenant has not been providedwith a reasonable opportunity to leaseand occupy a suitable decent, safe, andsanitary dwelling in the same building/complex upon completion of theproject, including a monthly rent thatdoes not exceed the greater of thetenant’s monthly rent and estimatedaverage utility costs before theexecution of such agreement (or, forpurposes of the State CDBG Program,before the ‘‘initiation of negotiations’’),or the ‘‘Total Tenant Payment’’ for theperson as determined under § 813.107 ofthis title; or

(ii) The tenant, required to relocatetemporarily for the activity, does notreturn to the building/complex; andeither the tenant is not offered paymentfor all reasonable out-of-pocketexpenses incurred in connection withthe temporary location (including the

cost of moving to and from thetemporary location and any increasedhousing costs), or other conditions ofthe temporary relocation are notreasonable; or

(iii) The tenant is required to move toanother unit in the building/complex,but is not offered reimbursement for allreasonable out-of-pocket expensesincurred in connection with the move.

(B) Notwithstanding the provisions ofparagraph (c)(3)(ii)(A) of this section,the term ‘‘displaced person’’ does notinclude:

(1) A person who is evicted for causebased upon serious or repeatedviolations of material terms of the leaseor occupancy agreement. To exclude aperson on this basis, the grantee (or staterecipient, as applicable) must determinethat the eviction was not undertaken forthe purpose of evading the obligation toprovide relocation assistance under thissection;

(2) A person who moves into theproperty after the date of the noticedescribed in paragraph (c)(3)(ii)(A) (1)or (2) of this section, but received awritten notice of the expecteddisplacement before commencingoccupancy.

(3) A person who is not displaced asdefined under 49 CFR 24.2(g)(2).

(4) A person who the grantee (or State,as applicable) determines is notdisplaced as a direct result of theconversion of a low/moderate-incomedwelling or demolition in connectionwith an assisted activity. For a granteeor State to exclude a person on thisbasis, HUD must concur in thatdetermination.

(C) A grantee may, at any time,request HUD to determine whether aperson is a displaced person underparagraph (c) of this section.

(iii) Low/moderate-income dwellingunit. The term ‘‘low/moderate-incomedwelling unit’’ means a dwelling unitwith a market rent (including utilitycosts) that does not exceed theapplicable Fair Market Rent (FMR) forexisting housing established under 24CFR part 888, except that the term doesnot include a unit that is owned andoccupied by the same person before andafter the assisted rehabilitation.

(iv) Standard condition andsubstandard condition suitable forrehabilitation. (A) If the grantee has aHUD-approved consolidated plan, thedefinitions of ‘‘standard condition’’ and‘‘substandard condition suitable forrehabilitation’’ established in the planwill apply.

(B) For purposes of the State CDBGprogram, a State may define the terms‘‘standard condition’’ and ‘‘substandardcondition suitable for rehabilitation’’, or


it may allow the state recipient toestablish and make public its definitionof these terms. If a State permits therecipient to establish its definition ofthese terms, the State must determine ifthe state recipient’s definition isacceptable.

(v) Vacant occupiable dwelling unit.The term ‘‘vacant occupiable dwellingunit’’ means a vacant dwelling unit thatis in a standard condition; a vacantdwelling unit that is in a substandardcondition, but is suitable forrehabilitation; or a dwelling unit in anycondition that has been occupied(except by a squatter) at any time withinthe period beginning one year before thedate of execution of the agreement bythe grantee (or state recipient, asapplicable) covering the rehabilitationor demolition.

(d) Optional relocation assistance.Under section 105(a)(11) of the Act, thegrantee may provide (or the State maypermit the state recipient to provide, asapplicable) relocation payments andother relocation assistance to personsdisplaced by activities that are notsubject to paragraphs (b) or (c) of thissection. The grantee may also provide(or the State may also permit the staterecipient to provide, as applicable)relocation assistance to personsreceiving assistance under paragraphs(b) or (c) of this section at levels inexcess of those required by theseparagraphs. Unless such assistance isprovided under State or local law, thegrantee (or state recipient, as applicable)shall provide such assistance only uponthe basis of a written determination thatthe assistance is appropriate (see, e.g.,24 CFR 570.201(i), as applicable). Thegrantee (or state recipient, as applicable)must adopt a written policy available tothe public that describes the relocationassistance that the grantee (or staterecipient, as applicable) has elected toprovide and that provides for equalrelocation assistance within each classof displaced persons.

(e) Acquisition of real property. Theacquisition of real property for anassisted activity is subject to 49 CFRpart 24, subpart B.

(f) Appeals. If a person disagrees withthe determination of the grantee (or thestate recipient, as applicable)concerning the person’s eligibility for,or the amount of, a relocation paymentunder this section, the person may filea written appeal of that determinationwith the grantee (or state recipient, asapplicable). The appeal procedures to befollowed are described in 49 CFR 24.10.In addition, a low- or moderate-incomehousehold that has been displaced froma dwelling may file a written request forreview of the grantee’s decision to the

HUD Field Office. For purposes of theState CDBG program, a low- ormoderate-income household may file awritten request for review of the staterecipient’s decision with the State.

(g) Responsibility of grantee or State.(1) The grantee (or State, if applicable)is responsible for ensuring compliancewith the requirements of this section,notwithstanding any third party’scontractual obligation to the grantee tocomply with the provisions of thissection. For purposes of the State CDBGprogram, the State shall require staterecipients to certify that they willcomply with the requirements of thissection.

(2) The cost of assistance requiredunder this section may be paid fromlocal public funds, funds providedunder this part, or funds available fromother sources.

(3) The grantee (or State and staterecipient, as applicable) must maintainrecords in sufficient detail todemonstrate compliance with theprovisions of this section.(Approved by the Office of Management andBudget under OMB control number 2506–0102.)

24. Section 570.608 is amended byrevising paragraph (a) to read as follows:

§ 570.608 Lead-based paint.(a) Prohibition against the use of lead-

based paint. Section 401(b) of the Lead-Based Paint Poisoning Prevention Act(42 U.S.C. 4831(b)) and regulations in 24CFR part 35, subpart B apply toresidential structures constructed orrehabilitated with assistance providedunder this part 570.* * * * *

Subpart M—Loan Guarantees

25. Section 570.701 is amended byrevising the definition of ‘‘Publicentity’’, to read as follows:

§ 570.701 Definitions.

* * * * *Public entity shall have the meaning

provided for the term ‘‘Eligible publicentity’’ in section 108(o) of the Act.* * * * *

26. Section 570.703 is amended byrevising paragraphs (d)(1) and (d)(2), toread as follows:

§ 570.703 Eligible activities.

* * * * *(d) * * *(1) Required under the provisions of

§ 570.606(b) or (c); or(2) Determined by the public entity to

be appropriate under the provisions of§ 570.606(d).* * * * *

27. Section 570.704 is amended byrevising paragraphs (a)(2)(i)(D),(b)(8)(vii), and (e); to read as follows:

§ 570.704 Application requirements.

(a) * * *(2) * * *(i) * * *(D) The proposed activities likely to

result in displacement and the publicentity’s plans, consistent with thepolicies developed under § 570.606 forminimizing displacement of persons asa result of its proposed activities.* * * * *

(b) * * *(8) * * *(vii) It will comply with the

requirements governing displacement,relocation, real property acquisition,and the replacement of low andmoderate income housing described in§ 570.606.* * * * *

(e) Displacement, relocation,acquisition, and replacement ofhousing. The public entity (or thedesignated public agency) shall complywith the displacement, relocation,acquisition, and replacement of low/moderate-income housing requirementsin § 570.606 in connection with anyactivity financed in whole or in partwith guaranteed loan funds.


§ 570.706 Federal guarantee; subrogation.

Section 108(f) of the Act provides forthe incontestability of guarantees byHUD under subpart M of this part in thehands of a holder of such guaranteedobligations. If HUD pays a claim undera guarantee made under section 108 ofthe Act, HUD shall be fully subrogatedfor all the rights of the holder of theguaranteed debt obligation with respectto such obligation.

Subpart N—Urban Renewal Provisions


§ 570.800 Urban Renewal regulations.

The regulations governing urbanrenewal projects and neighborhooddevelopment programs in subpart N ofthis part, that were effectiveimmediately before April 19, 1996, willcontinue to govern the rights andobligations of recipients and HUD withrespect to such projects and programs.

§§ 570.801, 570.802, 570.803, and 570.804[Removed]

30. Sections 570.801, 570.802,570.803, and 570.804 are removed.


Subpart O—Performance Reviews

31. Section 570.904 is amended byrevising the introductory text ofparagraph (b), and by revising paragraph(c), to read as follows:

§ 570.904 Equal Opportunity and FairHousing Review Criteria.

* * * * *(b) Review for equal opportunity. Title

VI of the Civil Rights Act of 1964 (42U.S.C. 2000d et seq.), and implementingregulations in 24 CFR part 1, togetherwith section 109 of the Act (see§ 570.602), prohibit discrimination inany program or activity funded in wholeor in part with funds made availableunder this part.* * * * *

(c) Fair housing review criteria. Seethe requirements in the Fair HousingAct (42 U.S.C. 3601–20), as well as§ 570.601(a), which sets forth thegrantee’s responsibility to certify that itwill affirmatively further fair housing.* * * * *

Dated: March 7, 1996.Mark C. Gordon,General Deputy Assistant Secretary forCommunity Planning and Development.[FR Doc. 96–6418 Filed 3–19–96; 8:45 am]BILLING CODE 4210–29-P

Documents

Community Development Block Grant Program: Streamlining Final Rule