[Federal Register Volume 61, Number 205 (Tuesday, October 22, 1996)]
[Rules and Regulations]
[Pages 54914-54922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26957]
[[Page 54913]]
_______________________________________________________________________
Part IV
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Parts 91 and 570
Community Development Block Grant Program for States; Community
Revitalization Strategy Requirements and Miscellaneous Technical
Amendments; Interim Rule
Federal Register / Vol. 61, No. 205 / Tuesday, October 22, 1996 /
Rules and Regulations
[[Page 54914]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 91 and 570
[Docket No. FR-4081-I-01]
RIN 2502-AB83
Community Development Block Grant Program for States; Community
Revitalization Strategy Requirements and Miscellaneous Technical
Amendments; Interim Rule
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Interim rule.
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SUMMARY: This interim rule contains changes to the regulations for the
State Community Development Block Grant (CDBG) program and the
Consolidated Plan. These revisions fall into three categories:
implementation of the community revitalization strategies concept into
the State program; technical amendments to correct inaccurate or
obsolete regulatory citations and to reinstate language that was
inadvertently deleted by the publication of the Consolidated Plan
regulations on January 5, 1995; and technical amendments to implement
statutory changes or clarify existing regulatory language affecting
eligibility and compliance with national objectives for certain
activities.
DATES: Effective date: November 21, 1996. The information collection
requirements in Sec. 91.315(e)(2) of this interim rule, however, will
not be effective until the Office of Management and Budget (OMB) has
approved them under the Paperwork Reduction Act of 1995 and assigned
them a control number. Publication of the control numbers notifies the
public that OMB has approved these information collection requirements.
A document announcing the effective date of Sec. 91.315(e)(2) will be
published in the Federal Register at a later date.
Deadline for comments on the interim rule: February 16, 1997.
Deadline for comments on the proposed information collection
requirements: December 23, 1996.
ADDRESSES: HUD invites interested persons to submit comments regarding
this interim rule to the Rules Docket Clerk, Office of General Counsel,
Room 10276, Department of Housing and Urban Development, 451 Seventh
Street, SW., Washington, DC 20410. Communications should refer to the
above docket number and title. Facsimile (FAX) comments are not
acceptable. A copy of each communication submitted will be available
for public inspection and copying between 7:30 a.m. and 5:30 p.m.
weekdays at the above address.
HUD also invites interested persons to submit comments on the
proposed information collection requirements in this interim rule.
Comments should refer to the above docket number and title, and should
be sent to the Office of Information and Regulatory Affairs, Office of
Management and Budget, Attention: Desk Officer for HUD, Washington, DC
20503.
FOR FURTHER INFORMATION CONTACT: Steve Johnson, Assistant Director,
State & Small Cities Division, Room 7184, Department of Housing and
Urban Development, 451 Seventh Street, SW., Washington, DC 20410;
telephone number (202) 708-1322. FAX inquiries (but not comments on the
interim rule) may be sent to Mr. Johnson at (202) 708-2575. (These
numbers are not toll-free.) Hearing- or speech-impaired persons may
access that number via TTY by calling the Federal Information Relay
Service toll free at (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
This interim rule revises the regulations for the State Community
Development Block Grant (CDBG) program (24 CFR part 570) and for the
Consolidated Submissions for Community Planning and Development
Programs (24 CFR part 91) to provide additional flexibility to States
in implementing their programs, to correct several inaccurate
regulatory citations, and to correct several other errors that resulted
from previous regulation changes. Specifically, this interim rule
contains: (1) Changes to the consolidated plan action plan regarding
the standard of review; (2) Changes to the consolidated plan action
plan to allow for community revitalization strategies; (3) Changes to
the low and moderate income benefit national objective criteria and
public benefit standards regarding community revitalization strategies;
(4) Additional changes to the low and moderate income benefit national
objective criteria regarding limited clientele activities, removal of
architectural barriers, and housing services; (5) A change regarding
HUD approval of States' grants; and (6) Various technical and
conforming changes to the State CDBG regulations, in association with
the above changes or to correct inaccurate regulatory citations. The
preamble of this interim rule describes each of these changes.
II. Community Revitalization Strategies
In the final rule for the Consolidated Submission for Community
Planning and Development Programs, published in the Federal Register on
January 5, 1995 (60 FR 1878), HUD gave Entitlement communities the
option of developing a strategy for revitalizing particular
neighborhoods. A community that elected to follow this approach, and
whose strategy was approved, would be allowed greater flexibility in
meeting certain national objectives and public benefit requirements.
HUD noted in the preamble to the concurrent CDBG Program Economic
Development Guidelines final rule (January 5, 1995; 60 FR 1922) that
HUD was not incorporating the concept into the State CDBG program at
that time because significant issues remained unresolved regarding how
to apply the concept in non-Entitlement communities (60 FR 1929).
Following additional study of the concept and consultation with
States, this interim rule introduces the community revitalization
strategy concept into the State CDBG program. In the CDBG Entitlement
program, revitalization strategies are called ``neighborhood
revitalization strategies.'' The State CDBG program uses the more
generic term ``community revitalization strategies.'' The essential
concept is very similar for both programs, but the nature of the area
covered may be quite different. HUD has consciously avoided referring
to ``neighborhood'' strategies in the State CDBG program; the concept
of a ``neighborhood'' is not meaningful or definable in many small
communities and rural areas.
This interim rule amends Sec. 91.315 of the Consolidated Plan
regulations by adding a new paragraph (e)(2), which provides that
States may (at their option) allow units of general local government to
develop and implement community revitalization strategies. The State
CDBG regulations allow such communities additional flexibility in
meeting certain national objectives and public benefit requirements.
Responsibility for approving individual revitalization strategies from
units of local government lies with the State. States wishing to take
advantage of this approach will need to ensure that the Method of
Distribution in their consolidated plan action plans reflect the
States' processes and criteria for approving local revitalization
strategies. The normal CDBG requirement that States consult with units
of local government in developing their method of distribution also
applies to States'
[[Page 54915]]
development of their community revitalization strategy implementation
approaches.
HUD has crafted this approach to give States maximum flexibility in
implementing the revitalization strategy concept (including the choice
of whether or not to implement it). Before implementing its approach to
revitalization strategies, a State must submit for HUD approval a
description of its implementation approach; approval of a consolidated
plan action plan will not constitute automatic approval of the State's
approach to revitalization strategies. HUD intends that approval of
States' submissions will occur at the field office level. HUD will
establish the parameters within which States may design approaches that
best meet their communities' needs. HUD will not establish the overall
design parameters and strategy approval process by regulation; instead
HUD will distribute this guidance to both States and HUD field office
staff in the form of a notice.
The extent to which a State will need to alter its method of
distribution depends on how the State intends to implement the
revitalization strategy concept and on the nature of its present method
of distribution. A State may choose to establish a separate funding
category for revitalization strategy projects; alternatively, a State
might retain its existing funding categories and award bonus points to
an applicant whose application was developed pursuant to a strategy. In
such cases, a State would need to describe explicitly in the method of
distribution its criteria and process for approving local strategies.
In contrast, a State may decide that its existing funding process can
incorporate the revitalization strategy concept without altering the
method of distribution.
HUD believes that an essential component of the revitalization
strategy concept is the provision of economic opportunities to
residents of revitalization strategy areas. Revitalization strategies
are a means for holistically addressing the identified needs of a
targeted area. A number of States presently have funding categories
such that localities may apply for a combination of activities to be
carried out in a defined target area. States' methods of distribution
often refer to these as ``comprehensive'' applications. HUD cautions
States, however, that the community revitalization strategy concept, as
HUD envisions it, may be more geographically focused and encompass a
wider variety of activities (particularly concerning economic
empowerment) than is presently provided for in typical
``comprehensive'' funding categories.
Several corresponding changes to the CDBG eligibility and national
objectives requirements (discussed below) further implement the
revitalization concept.
A. Public Services
This interim rule expands the list of activities that may be
excluded from the limitations on public services. Section 570.482(d)
currently excludes those public service activities specifically
designed to increase economic opportunities by supporting the
development of permanent jobs. This interim rule amends Sec. 570.482 by
adding a new paragraph (d)(3), which excludes services of any type
carried out pursuant to a community revitalization strategy approved by
a State.
B. Public Benefit Standards
This interim rule amends Sec. 570.482(f)(3)(v) by adding two
additional types of activities to the list of ``important national
interest'' activities for which the public benefit standards allow
extra flexibility. Certain economic development activities that provide
services to residents of a revitalization strategy area, or that create
or retain jobs in such an area, may now be excluded from the aggregate
public benefit standards for economic development activities in
Sec. 570.482(f)(2).
C. Low and Moderate Income Benefit National Objective
The State CDBG regulations prior to this interim rule provided
additional flexibility to certain job creation/retention and housing
activities undertaken by Community Development Financial Institutions.
In certain circumstances, jobs created or retained and housing units
assisted may be aggregated to demonstrate compliance with the national
objectives, as required under 104(b)(3) of the Housing and Community
Development Act of 1974, as amended (the Act), and as provided in
Sec. 570.483 of the regulations. This interim rule provides similar
flexibility to activities carried out pursuant to an approved
revitalization strategy. Job creation or retention activities
undertaken in an area pursuant to an approved revitalization strategy
may be treated as meeting the national objective of benefiting a low
and moderate income area. Provision or improvement of multiple housing
units pursuant to an approved revitalization strategy may be treated as
one structure in demonstrating low and moderate income benefit.
To ensure targeting of CDBG resources through community
revitalization strategy areas to the most needy areas, the area benefit
presumption is limited to areas that meet certain need indicators.
Therefore, this interim rule provides in Sec. 570.483(b)(1)(v) that
strategy areas must be in one of the following areas:
(1) A Federally-designated Empowerment Zone or Enterprise
Community; or
(2) A primarily residential area that contains at least 70 percent
low and moderate income residents; or
(3) A primarily residential area where all the census tracts (or
block numbering areas) have poverty rates of at least 20 percent and at
least 90 percent of all the census tracts/block numbering areas have
poverty rates of at least 25 percent.
The 70 percent low and moderate income threshold applies to the
entire area. The 20 and 25 percent poverty rates thresholds are adopted
from the Empowerment Zone/Enterprise Community legislation (section
13301 of the Omnibus Budget Reconciliation Act of 1993, 26 U.S.C.
1392(a)(4)). Consistent with that program, the poverty criteria are
applied on a census-tract-by-census-tract basis. This does not mean
that the boundaries of the community revitalization strategy areas must
coincide with census tract/block numbering area boundaries. If only
part of a census tract/block numbering area will be included in a
strategy area, the poverty rate for those block groups within the
strategy area should be calculated and used instead of the poverty rate
for the entire census tract/block numbering area.
For individual strategy areas, a State may request an exception to
either the 70 percent low and moderate income threshold or the 25
percent poverty threshold. In no case, however, will HUD approve a
revitalization strategy for an area that has neither a 20 percent
poverty rate for all census tracts nor 51 percent of its residents
qualifying as low and moderate income. HUD field offices will review
and approve exceptions on a case-by-case basis only. HUD envisions that
it will grant exceptions only for unusual circumstances, in which
strong targeting of benefits to low and moderate income purposes can
still be shown. HUD will not entertain requests for ``blanket''
exceptions covering all proposed strategy areas in a State.
[[Page 54916]]
III. Technical Amendments to State CDBG and Consolidated Plan
Regulations
A. State CDBG Waiver Provisions
On February 9, 1996 (61 FR 5198), HUD published a final rule
entitled ``General HUD Program Requirements; Cross-Cutting
Requirements,'' which created a new 24 CFR part 5. This final rule
consolidates in part 5 various definitions and cross-cutting
requirements that are common to many HUD programs. Consolidating these
requirements eliminated the redundancy of repeating requirements or
definitions that apply to more than one program. Section 5.110 contains
HUD's provision for granting waivers of regulations. The February 9,
1996 final rule, however, inadvertently failed to revise the existing
State CDBG Program waiver provision at Sec. 570.480(b). This interim
rule revises Sec. 570.480(b) to refer to HUD's waiver authority in part
5 and HUD's statutory authority (under section 122 of the Act) to
suspend requirements in Presidentially-declared disaster areas.
B. Low and Moderate Income National Objective Criteria
This interim rule changes several of the criteria for demonstrating
compliance with the national objective of benefitting low and moderate
income persons. HUD made similar changes to the CDBG Entitlement
regulations in a final rule published on November 9, 1995 (60 FR
56892). Making similar changes to the State CDBG regulations will
provide States the same flexibility and maintain consistency between
the requirements of the State program and the Entitlement program.
1. Limited clientele activities. This interim rule changes the list
of clientele groups in Sec. 570.483(b)(2)(ii)(A) that HUD presumes to
be principally of low and moderate income. This interim rule adds the
term ``persons living with AIDS'' to the list of ``presumed'' low/
moderate income groups. Reliable national data from the Center for
Disease Control in Atlanta, Georgia supports a reasonable presumption
that at least 51 percent of such persons in a given geographic area are
low and moderate income.
This interim rule also replaces the term ``handicapped'' with terms
compatible with available income data on persons with a disability
provided by the Bureau of the Census' Current Population Reports. The
data, issued in 1993 from the Survey of Income and Program
Participation, justify a national presumption that adults meeting the
Census criteria for ``severe disability'' meet the low and moderate
income national objective under the CDBG program. The Census definition
of ``severe disability'' only applies in the CDBG program for purposes
of making presumptions about income levels for groups of disabled
persons; it does not apply for purposes of meeting responsibilities
under section 504 of the Rehabilitation Act of 1973, the Americans With
Disabilities Act, or the Architectural Barriers Act. Therefore, HUD is
changing the terminology in this interim rule to clarify the
distinction between the income presumption provision and the civil
rights requirements.
2. Architectural Barriers Removal. This change clarifies provisions
under which the use of CDBG funds is authorized for the removal of
barriers to accessibility for elderly and disabled persons. Section
105(a)(5) of the Act (42 U.S.C. 5305(a)(5)) makes eligible the use of
program funds for special projects directed to the removal of material
and architectural barriers that restrict the mobility and accessibility
of elderly and handicapped persons. Under current law and regulation,
this provision has very limited usefulness and has caused confusion. It
is important that the regulations clearly state how CDBG funds may be
used for barrier removal. The real questions arise with respect to
compliance with the national objectives. Virtually all public
facilities and improvements serve an area generally and are thus
subject to the limitations imposed by section 105(c)(2) of the Act.
Section 105(c)(2) states that activities that serve an area generally
may be considered to address the national objective of benefit to low
and moderate income persons only if the percentage of residents in the
service area who are of such income meets certain minimum levels. The
present regulations implement this limitation in Sec. 570.483(b)(1).
Where accessibility barriers exist in a facility or improvement that
serves an area that does not meet this requirement, the use of CDBG
funds to remove such barriers can be problematic. This interim rule
revises Sec. 570.483(b)(2)(iii) to clarify the circumstances in which
the limited clientele presumption may be applied to such activities.
3. Housing activities. This interim rule makes two amendments to
Sec. 570.483(b)(3). First, this interim rule amendment clarifies the
housing activities that may qualify as benefitting low and moderate
income persons. The present regulations include ``the acquisition or
rehabilitation of property.'' This interim rule expands the list to
indicate that such acquisition or rehabilitation may be undertaken by
units of general local government, subrecipients, developers,
homeowners or homebuyers, and nonprofit entities qualifying under
section 105(a)(15) of the Act.
Second, this interim rule reflects two statutory changes to
eligible activities, and it further clarifies HUD's policy regarding
these changes. Section 105(a)(25) of the Act makes downpayment
assistance to homebuyers an eligible activity. Section 105(a)(15) of
the Act makes nonprofit organizations serving the community development
needs of non-Entitlement communities eligible to receive assistance to
carry out neighborhood revitalization, community economic development
and energy conservation projects.
This interim rule also responds to another statutory change.
Section 207 of the Multifamily Housing Property Disposition Reform Act
of 1994 (Pub. L. 103-233; approved April 11, 1994) amended section
105(a)(21) of the Housing and Community Development Act of 1974.
Section 105(a)(21) now authorizes housing services, such as housing
counseling in connection with tenant-based rental assistance and
affordable housing projects assisted under the HOME Program (title II
of the Cranston-Gonzalez National Affordable Housing Act (Pub. L. 101-
625, approved November 28, 1990) (NAHA)), energy auditing, preparation
of work specifications, loan processing, inspections, tenant selection,
management of tenant-based rental assistance, and other services
related to assisting owners, tenants, contractors, and other entities
participating or seeking to participate in housing activities assisted
under title II of the NAHA. Any costs of delivering the housing
services made eligible under the amended section 105(a)(21) are also
eligible.
HUD reminds States and localities using HOME and CDBG funds
together that the eligibility and benefit requirements of the two
programs differ; the HOME term ``project'' and the CDBG term
``activity'' are not synonymous, and States and localities should
exercise care in managing and documenting jointly-funded activities. To
simplify this process, this interim rule creates a new
Sec. 570.483(b)(3)(iii), stating that when CDBG funds are used for
housing services eligible under section 105(a)(21) of the Act, such
funds shall be considered to benefit low and moderate income persons
when the housing for which the services are provided is to be occupied
by low and moderate income households. Documentation demonstrating that
the
[[Page 54917]]
HOME project (or projects) supported by the CDBG housing services
activity meets the HOME income targeting criteria at 24 CFR 92.252 and
92.254 are sufficient to demonstrate compliance with this provision.
C. Program Income Requirements
This interim rule corrects the program income requirements
contained in Sec. 570.489. The final rule for CDBG Program Economic
Development Guidelines (January 5, 1995; 60 FR 1922) renumbered
paragraph (e)(2) of this section as paragraph (e)(3). Within that
section, however, the final rule did not similarly renumber a reference
to paragraph (e)(2)(ii) as paragraph (e)(3)(ii). This interim rule
makes the correction. HUD will soon issue a proposed rule that would
substantially revise all of paragraph (e). HUD will finalize the
technical change described above when it finalizes those new program
income requirements.
D. HUD Actions in Approving Plans and Making Grants
The CDBG Entitlement program final rule that HUD published on
November 9, 1995 (60 FR 56892) restored language in the Entitlement
program regulations that was inadvertently deleted by the Consolidated
Plan final rule (January 5, 1995; 60 FR 1878). That final rule
clarified that HUD retains the authority to require additional
assurances from grantees when substantial evidence exists that a
certification of future performance is not valid. This authority is in
addition to the current Consolidated Plan regulations (based on the
Comprehensive Housing Affordability Strategy statutory language), which
simply provide for certifications to be wholly accepted or wholly
rejected. Requiring additional assurances and potentially delaying or
limiting the grantee's access to funds may trigger CDBG due process
hearing requirements. Therefore, HUD will coordinate such actions
between HUD field offices and Headquarters.
The Consolidated Plan final rule inadvertently deleted a similar
provision in Sec. 570.485(c) of the State CDBG regulations. This
interim rule restores this language, which is similar to that found in
Sec. 570.485(b), except that Sec. 570.485(c) includes references to the
Consolidated Plan regulations in part 91. This interim rule also makes
a conforming change to Sec. 91.500(b) of the Consolidated Plan
regulations by adding a cross-reference to the restored
Sec. 570.485(c).
This interim rule makes another technical correction also resulting
from the Consolidated Plan final rule. Section 570.486(a) requires
units of general local government to follow the citizen participation
requirements imposed by the State. The associated requirement for State
citizen participation processes originally appeared at
Sec. 570.485(c)(1)(i). The Consolidated Plan final rule moved those
requirements to Sec. 91.115(e). This interim rule replaces the old
regulatory citation with the correct one.
E. Other Applicable Laws
This interim rule applies the requirements of the Architectural
Barriers Act of 1968 (42 U.S.C. 4151-4157) (the ABA) to the State CDBG
program. The ABA requires certain Federal and Federally-funded
buildings and other facilities to be designed, constructed, or altered
in accordance with standards that ensure accessibility to, and use by,
persons with physical disabilities. HUD's original CDBG regulations
required compliance with accessibility standards issued pursuant to the
ABA (see former 24 CFR 570.606, as issued on November 13, 1974 (39 FR
40148); and amended on June 28, 1977 (42 FR 33020)). In 1983, HUD
eliminated the requirement that the Entitlement and HUD-Administered
Small Cities programs comply with the ABA accessibility standards. HUD
did not apply the ABA to the State CDBG program when it became
operational in 1982 (47 FR 15290; April 8, 1982). HUD stated that the
CDBG program was not statutorily subject to the accessibility standards
of the ABA, because the CDBG statute does not provide authority for
imposing design, construction, or alteration standards on CDBG-funded
facilities, as required by section 4151(3) of the ABA. HUD further
stated that it had imposed the ABA standards on the CDBG Entitlement
and Small Cities programs as a regulatory requirement (47 FR 43909).
HUD noted, however, that some facilities constructed or altered with
CDBG assistance would remain subject to accessibility standards through
section 504 of the Rehabilitation Act of 1973.
Since HUD's decision in 1983 not to require compliance with the ABA
in the CDBG program, two significant events have caused HUD to
reconsider this decision. The first event was the passage of the Fair
Housing Amendments Act of 1988 (Pub. L. 100-430; approved September 13,
1988) (the Amendments Act), which amended title VIII of the Civil
Rights Act of 1968 to prohibit discrimination in housing on the basis
of handicap and familial status. The Amendments Act also makes it
unlawful to design and construct certain multifamily dwellings for
first occupancy after March 13, 1991 in a manner that makes them
inaccessible to persons with disabilities. Further, the Amendments Act
makes it unlawful to refuse to permit, at the expense of the person
with a disability, reasonable modifications to existing premises
occupied or to be occupied by such person if such modifications are
necessary to afford such person full enjoyment of the premises.
The second event was the passage of the Americans with Disabilities
Act (Pub. L. 101-336; approved July 26, 1990) (the ADA), which provides
comprehensive civil rights to individuals with disabilities in the
areas of employment, public accommodations, State and local government
services, and telecommunications. The ADA provides that discrimination
includes a failure to design and construct facilities for first
occupancy no later than January 26, 1993 that are readily accessible to
and usable by individuals with disabilities. Further, the ADA requires
the removal of architectural barriers and communication barriers that
are structural in nature from existing facilities, where such removal
is readily achievable--that is, easily accomplishable and able to be
carried out without much difficulty or expense. (See the final rule
implementing the ADA published by the Department of Justice on July 26,
1991 (56 FR 35544, 35568).)
The Amendments Act and the ADA indicate a clear policy that
housing, commercial facilities, and public accommodations should be
``readily accessible and usable by'' individuals with disabilities. In
light of these developments and to foster consistency in the
administration of HUD's programs, this interim rule requires compliance
with the ABA in the State CDBG program. (HUD has already required such
compliance in the Entitlement program in the November 9, 1995 final
rule (60 FR 56892).) Assisted facilities would have to meet the
requirements of the Uniform Federal Accessibility Standards for
alterations if the alterations are financed in whole or in part by CDBG
funds made available after the effective date of a final rule. Although
alterations made without the use of Federal funds would not have to
comply with the accessibility requirements of the ABA, alterations made
to these facilities, in most instances, would have to comply with the
accessibility requirements of the public accommodations provisions of
the ADA. This interim rule establishes this requirement in a new
Sec. 570.487(e).
[[Page 54918]]
F. HUD's Reviews and Audits
To clarify the relationship between HUD's review procedures and
HUD's expectations for States regarding recordkeeping, this interim
rule amends Sec. 570.493(b) by adding an additional sentence. The
additional sentence provides that a State's failure to maintain records
may result in a finding of noncompliance with the requirement to which
the record pertains. This provision does not represent a change in
HUD's overall policy (a comparable provision already exists in the
Entitlement program); it is just a clearer expression of this
relationship. This interim rule also updates Sec. 570.493(a) by
replacing the reference to a ``final statement'' with a reference to
the consolidated plan action plan.
Justification for Interim Rulemaking
HUD generally publishes a rule for public comment before issuing a
rule for effect, in accordance with it's regulations on rulemaking in
24 CFR part 10. Part 10 provides exceptions, however, if HUD finds good
cause to omit advance notice and public participation. The good cause
requirement is satisfied when prior public procedure is
``impracticable, unnecessary, or contrary to the public interest'' (24
CFR 10.1). HUD finds that good cause exists to publish this interim
rule for effect without first soliciting public comment, since prior
public procedure would be unnecessary.
HUD has already implemented the community revitalization strategy
approach in the Entitlement CDBG program through the Consolidated Plan
final rule published on January 5, 1995 (60 FR 1878). HUD has decided
that it is unnecessary to solicit comments prior to implementing this
flexible initiative in the State CDBG program for the following
reasons: (1) States have been generally aware of the community
revitalization strategy concept since the publication of the CDBG
Economic Development Guidelines final rule for the Entitlement program
on January 5, 1995 (60 FR 1922, 1929), in which HUD solicited comments
on the development of the concept for States; (2) HUD has consulted
with a representational cross section of States on the specific content
of this interim rule; (3) A number of States have asked HUD to
institute the revitalization strategy concept in the State program as
quickly as possible, so that they may take advantage of this flexible
new approach; and (4) Adoption of the concept is optional for States,
and so imposes no involuntary burden on them.
This interim rule allows States to implement the revitalization
concept promptly, while still providing for public comment on the
regulations before they are finalized. HUD is providing an extended
comment period (120 days rather than 60 days) so that respondents may
base their comments on their actual experience in implementing the
revitalization strategy concept. During the extended comment period,
HUD also plans to publish a notice in the Federal Register describing
the parameters within which States may design their approach and
explaining HUD's process for approval of States' process descriptions.
HUD has also determined that it is unnecessary to solicit prior
comment before implementing the other changes in this interim rule. The
changes to the national objectives criteria concerning architectural
barriers removal, housing activities, and ``presumed benefit'' groups
provide increased flexibility to States and State grantees. HUD has
previously adopted the changes in the Entitlement program after
soliciting and considering comments. The changes regarding housing
activities merely provide clarification in light of statutory changes.
HUD has also solicited and considered public comments before clarifying
HUD's policy regarding reviews and audits in the Entitlement program.
It is also unnecessary to solicit prior public comment regarding
the application of the Architectural Barriers Act (ABA) to the State
CDBG program, because this application is necessitated by other
statutory changes. In adding this requirement to Sec. 570.487, HUD does
not provide further regulatory interpretation of the ABA, but refers to
other applicable Federal regulations. HUD issued those regulations
through previous rulemaking actions. HUD also recently solicited and
considered public comments before applying the ABA to the Entitlement
CDBG program.
This interim rule also corrects regulatory citations and reinstates
unintentionally-deleted language. It is unnecessary to solicit prior
public comment on these minor technical corrections and clarifications,
because they do not represent substantive changes to the regulations.
The interim rulemaking process allows interested parties an
opportunity to comment on all of the changes included in this interim
rule. HUD will consider all comments received in developing a final
rule concerning these changes.
Findings and Certifications
Paperwork Reduction Act of 1995
The information collection requirements contained in
Sec. 91.315(e)(2) of this interim rule have been submitted to the
Office of Management and Budget (OMB) for review in accordance with the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). An agency may
not conduct or sponsor, and a person is not required to respond to, a
collection of information unless the collection displays a valid
control number. The OMB control number, when assigned, will be
announced by separate notice in the Federal Register.
As required under 5 CFR 1320.8(d)(1), HUD and OMB are seeking
comments from members of the public and affected agencies concerning
the proposed collection of information to:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond; including through the use of appropriate automated
collection techniques or other forms of information technology, e.g.,
permitting electronic submission of responses. Interested persons are
invited to submit comments according to the instructions in the
``Dates'' and ``Addresses'' sections in the preamble of this interim
rule.
This document also provides the following information:
Title of Proposal: Community Revitalization Strategies: submission
of implementation process description statement by States; submission
of Community Revitalization Strategy by units of general local
government to States.
OMB Control Number: OMB has previously approved the information
collection requirements for the State CDBG Program under control number
2506-0117. This proposed information collection would be in addition to
the information collection requirements presently covered under control
number 2506-0117.
Description of the Need for the Information and Proposed Use: This
interim rule will, among other changes, allow States the option of
implementing a community revitalization strategy approach to community
development.
[[Page 54919]]
States that wish to adopt this approach will develop a process for
implementing community revitalization strategies in their State CDBG
program, including the specific process and criteria to be used in
approving local strategies. This process description, which will be
part of the State's consolidated plan action plan, must be submitted to
and approved by HUD. Units of local government applying for or
receiving State CDBG funds may then prepare a community revitalization
strategy and submit it to the State for approval. If the strategy is
approved, the locality will be allowed greater flexibility in meeting
certain national objectives and public benefit criteria.
Form Numbers: Not applicable. Process descriptions will be
submitted by States to HUD in narrative format; no forms will be
required. States will determine the format for submission of community
revitalization strategies by units of general local government.
Members of Affected Public: States, units of general local
government. Units of local government will be expected to consult with
citizens and involve citizens in the development of community
revitalization strategies.
Estimation of the Total Number of Hours Needed to Prepare the
Information Collection including Number of Respondents, Frequency of
Response, and Hours of Response: Both State and local governments, as
well as HUD staff, will expend time in implementing the community
revitalization strategy approach. States' time will be spent in
designing their process and in reviewing and approving local
governments' strategies; local governments' time will be spent in
developing strategies and in reporting to states on the progress and
outcomes of strategy implementation. HUD's time will be spent in
reviewing States' implementation process descriptions.
The exact number of hours needed to prepare the information
collection cannot be estimated with great certainty. The actual time
spent may vary greatly, depending on a number of variable factors:
Whether or not a particular State chooses to adopt the
community revitalization strategy approach in its program;
The number of communities in which a particular State
chooses to authorize the community revitalization strategy approach;
The scope and nature of States' existing application and
funding distribution processes for units of local government;
The design of a particular State's approach to implement
community revitalization strategies;
The process a State uses to develop its implementation
approach;
The process a unit of local government uses to develop its
revitalization strategy.
The Department anticipates that under some States' processes, the
preparation of a community revitalization strategy will entail
additional work by a local government beyond that normally required to
prepare an application for funding. Some States may only slightly alter
their existing application requirements to incorporate the
revitalization strategy concept; under those programs, the
incorporation of a community revitalization strategy may involve little
or no additional preparation time. Some communities may have, for their
own purposes, previously prepared a document that meets their State's
requirements for a community revitalization strategy; no additional
work may be necessary in those cases.
The burden of any additional work entailed in development of a
strategy will be offset by a reduced documentation burden for certain
activities undertaken pursuant to an approved strategy. For example,
certain economic development activities may be shown to meet the low-
and moderate-income benefit national objective on the basis of serving
a principally low- and moderate-income area rather than on the basis of
creating (or retaining) jobs for persons of low and moderate incomes.
In such cases, communities would not need to collect information on the
household income of each employee hired or retained; this would
substantially reduce the amount of time spent by communities in
demonstrating compliance with program requirements.
The following figures represent estimates of the additional
information collection burden resulting from implementation of
community revitalization strategies. These figures represent additional
increments of time beyond those normally involved in the State CDBG
program. In developing these estimates of time and cost, the Department
has melded its own estimations with averaged figures provided by
several States that have expressed interest in implementing community
revitalization strategies. To the extent that States minimize or
streamline the process for submission of strategies, the actual burden
per unit of local government may be less than these estimates. The
amount of time for States to review communities' strategies is
anticipated to be minimal; it is anticipated that, in many States, the
format for submitting a strategy will subsume much of the documentation
that States presently request in applications.
----------------------------------------------------------------------------------------------------------------
Total
Burden of collection Frequency Number of hours per Total
respondents response hours
----------------------------------------------------------------------------------------------------------------
State process description:
State......................................................... 1 25 120 3,000
Federal....................................................... 1 25 2 50
Community revitalization strategy:
Local......................................................... 1 300 120 36,000
State......................................................... 1 300 1 300
Federal....................................................... 0 0 0 0
Local recordkeeping on approved strategies:
Local......................................................... Ongoing 300 -80 -24,000
State......................................................... 0 0 0 0
Federal....................................................... 0 0 0 0
Local reporting to State on approved strategies:
Local......................................................... Ongoing 300 8 2,400
State......................................................... 0 0 0 0
Federal....................................................... 0 0 0 0
---------------------------------------------
[[Page 54920]]
Total....................................................... 325 17,750
----------------------------------------------------------------------------------------------------------------
Status of the Proposed Information Collection: New collection.
Authority: Section 3506 of the Paperwork Reduction Act of 1995,
44 U.S.C. Chapter 35, as amended.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this interim rule before publication and
by approving it certifies that this interim rule does not have a
significant economic impact on a substantial number of small entities.
Specifically, this interim rule makes technical amendments and provides
States and communities the same flexibility of the community
revitalization strategies concept that HUD previously provided for
recipients in the Entitlement program.
Environmental Impact
At the time of the development of the regulations in part 570, and
when the regulations were substantively amended by the rules described
in this preamble, HUD made Findings of No Significant Impact with
respect to the environment in accordance with the regulations in 24 CFR
part 50 that implement section 102(2)(C) of the National Environmental
Policy Act of 1969 (42 U.S.C. 4332). This interim rule does not make
significant changes to those regulations in terms of environmental
impact. Accordingly, those findings remain applicable to this interim
rule, and are available for public inspection between 7:30 a.m. and
5:30 p.m. weekdays in the Office of the Rules Docket Clerk, Office of
General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street, SW., Washington, DC.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this interim rule will not have substantial direct effects
on States or their political subdivisions, on the relationship between
the Federal Government and the States, or on the distribution of power
and responsibilities among the various levels of government. This
interim rule will benefit States and communities by providing them with
additional flexibility in meeting certain national objectives and
public benefit requirements of the CDBG program. As a result, the
interim rule is not subject to review under the order.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this interim rule does not
have potential for significant impact on family formation, maintenance,
and general well-being, and thus is not subject to review under the
order. No significant change in existing HUD policies or programs will
result from promulgation of this interim rule, as those policies and
programs relate to family concerns.
List of Subjects
24 CFR Part 91
Aged, Grant programs--housing and community development, Homeless,
Individuals with disabilities, Low and moderate income housing,
Reporting and recordkeeping requirements.
24 CFR Part 570
Administrative practice and procedure, American Samoa, Community
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Lead poisoning, Loan
programs--housing and community development, Low and moderate income
housing, New communities, Northern Mariana Islands, Pacific Islands
Trust Territory, Pockets of poverty, Puerto Rico, Reporting and
recordkeeping requirements, Small cities, Student aid, Virgin Islands.
Accordingly, for the reasons described in this preamble, 24 CFR
parts 91 and 570 are amended, as follows:
PART 91--CONSOLIDATED SUBMISSIONS FOR COMMUNITY PLANNING AND
DEVELOPMENT PROGRAMS
1. The authority citation for part 91 continues to read as follows:
Authority: 42 U.S.C. 3535(d), 3601-3619, 5301-5315, 11331-11388,
12701-12711, 12741-12756, and 12901-12912.
2. Section 91.315 is amended by redesignating the text of paragraph
(e) as paragraph (e)(1), and by adding a new paragraph (e)(2), to read
as follows:
Sec. 91.315 Strategic plan.
* * * * *
(e) * * *
(2) A State may elect to allow units of general local government to
carry out a community revitalization strategy that includes the
economic empowerment of low income residents, in order to obtain the
additional flexibility available as provided in 24 CFR part 570,
subpart I. A State must approve a local government's revitalization
strategy before it may be implemented. If a State elects to allow
revitalization strategies in its program, the method of distribution
contained in a State's action plan pursuant to Sec. 91.320(g)(1) must
reflect the State's process and criteria for approving local
governments' revitalization strategies. The State's process and
criteria are subject to HUD approval.
* * * * *
3. In Sec. 91.320, paragraph (g)(1) is amended by adding a new
sentence after the third sentence and before the parenthetical sentence
at the end of the paragraph, to read as follows:
Sec. 91.320 Action plan.
* * * * *
(g) * * *
(1) * * * If a State elects to allow units of general local
government to carry out community revitalization strategies, the method
of distribution shall reflect the State's process and criteria for
approving local governments' revitalization strategies. * * *
* * * * *
4. Section 91.500 is amended by revising the introductory text of
paragraph (b) to read as follows:
Sec. 91.500 HUD approval action.
* * * * *
(b) Standard of review. HUD may disapprove a plan or a portion of a
plan if it is inconsistent with the purposes of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12703), if it is
substantially incomplete, or, in the case of certifications applicable
to the CDBG program under Secs. 91.225 (a) and (b) or 91.325 (a) and
(b), if it is not satisfactory to the Secretary in accordance with
[[Page 54921]]
Sec. Sec. 570.304, 570.429(g), or 570.485(c) of this title, as
applicable. The following are examples of consolidated plans that are
substantially incomplete:
* * * * *
PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS
5. The authority citation for part 570 continues to read as
follows:
Authority: 42 U.S.C. 3535(d) and 5300-5320.
6. Section 570.480 is amended by revising paragraph (b) to read as
follows:
Sec. 570.480 General.
* * * * *
(b) HUD's authority for the waiver of regulations and for the
suspension of requirements to address damage in a Presidentially-
declared disaster area is described in 24 CFR part 5 and in section 122
of the Act, respectively.
* * * * *
7. Section 570.482 is amended by:
a. Amending paragraph (d)(1) by removing the word ``and'' at the
end of the paragraph;
b. Amending paragraph (d)(2) by removing the period at the end of
the paragraph and adding in it's place the phrase ``; and'';
c. Adding a new paragraph (d)(3); and
d. Amending paragraph (f)(3)(v) by adding new paragraphs
(f)(3)(v)(L) and (f)(3)(v)(M), to read as follows:
Sec. 570.482 Eligible activities.
* * * * *
(d) * * *
(3) Services of any type carried out under the provisions of
section 105(a)(15) of the Act, pursuant to a strategy approved by a
State under the provisions of Sec. 91.315(e)(2) of this title.
* * * * *
(f) * * *
(3) * * *
(v) * * *
(L) Provides services to the residents of an area pursuant to a
strategy approved by the State under the provisions of
Sec. 91.315(e)(2) of this title;
(M) Creates or retains jobs through businesses assisted in an area
pursuant to a strategy approved by the State under the provisions of
Sec. 91.315(e)(2) of this title.
* * * * *
8. Section 570.483 is amended by:
a. Revising paragraph (b)(1)(iv);
b. Adding a new paragraph (b)(1)(v);
c. Revising the second sentence of paragraph (b)(2)(ii)(A);
d. Revising paragraph (b)(2)(iii);
e. Revising the introductory text of paragraph (b)(3);
f. Adding a new paragraph (b)(3)(iii);
g. Amending the last sentence of paragraph (b)(4)(vi)(D) by
removing the reference to ``paragraph (e)(5)'' and by adding in its
place a reference to ``paragraph (e)(6)'';
h. Amending the last sentence of paragraph (b)(4)(vi)(E) by
removing the reference to ``paragraph (e)(5)'' and by adding in its
place a reference to ``paragraph (e)(6)'';
i. Amending paragraph (b)(4)(vi)(F)(2) by removing the citation
``Sec. 570.482(e)'' and by adding in its place the citation
``Sec. 570.482(f)'';
j. Redesignating paragraph (e)(5) as (e)(6), and by revising the
first sentence of newly redesignated paragraph (e)(6); and
k. Adding a new paragraph (e)(5); to read as follows:
Sec. 570.483 Criteria for national objectives.
* * * * *
(b) * * *
(1) * * *
(iv) Activities meeting the requirements of paragraph (e)(4)(i) of
this section may be considered to qualify under paragraph (b)(1) of
this section.
(v) HUD will consider activities meeting the requirements of
paragraph (e)(5)(i) of this section to qualify under paragraph (b)(1)
of this section, provided that the area covered by the strategy meets
one of the following criteria:
(A) The area is in a Federally-designated Empowerment Zone or
Enterprise Community;
(B) The area is primarily residential and contains a percentage of
low and moderate income residents that is no less than 70 percent;
(C) All of the census tracts (or block numbering areas) in the area
have poverty rates of at least 20 percent, at least 90 percent of the
census tracts (or block numbering areas) in the area have poverty rates
of at least 25 percent, and the area is primarily residential. (If only
part of a census tract or block numbering area is included in a
strategy area, the poverty rate shall be computed for those block
groups (or any part thereof) which are included in the strategy area.)
(D) Upon request by the State, HUD may grant exceptions to the 70
percent low and moderate income or 25 percent poverty minimum
thresholds on a case-by-case basis. In no case, however, may a strategy
area have both a percentage of low and moderate income residents less
than 51 percent and a poverty rate less than 20 percent.
(2) * * *
(ii) * * *
(A) * * * Activities that exclusively serve a group of persons in
any one or a combination of the following categories may be presumed to
benefit persons, 51 percent of whom are low and moderate income: abused
children, battered spouses, elderly persons, adults meeting the Bureau
of the Census' Current Population Reports definition of ``severely
disabled,'' homeless persons, illiterate adults, persons living with
AIDS, and migrant farm workers; or
* * * * *
(iii) An activity that serves to remove material or architectural
barriers to the mobility or accessibility of elderly persons or of
adults meeting the Bureau of the Census' Current Population Reports
definition of ``severely disabled'' will be presumed to qualify under
this criterion if it is restricted, to the extent practicable, to the
removal of such barriers by assisting:
(A) The reconstruction of a public facility or improvement, or
portion thereof, that does not qualify under Sec. 570.483(b)(1);
(B) The rehabilitation of a privately owned nonresidential building
or improvement that does not qualify under Sec. 570.483(b) (1) or (4);
or
(C) The rehabilitation of the common areas of a residential
structure that contains more than one dwelling unit and that does not
qualify under Sec. 570.483(b)(3).
* * * * *
(3) Housing activities. An eligible activity carried out for the
purpose of providing or improving permanent residential structures
that, upon completion, will be occupied by low and moderate income
households. This would include, but not necessarily be limited to, the
acquisition or rehabilitation of property by the unit of general local
government, a subrecipient, an entity eligible to receive assistance
under section 105(a)(15) of the Act, a developer, an individual
homebuyer, or an individual homeowner; conversion of nonresidential
structures; and new housing construction. If the structure contains two
dwelling units, at least one must be so occupied, and if the structure
contains more than two dwelling units, at least 51 percent of the units
must be so occupied. If two or more rental buildings being assisted are
or will be located on the same or contiguous properties, and the
buildings will be under common ownership and management, the grouped
buildings may be considered for this purpose as a single structure. If
housing activities being assisted meet the requirements of paragraph
(e)(4)(ii) or (e)(5)(ii) of this
[[Page 54922]]
section, all such housing may also be considered for this purpose as a
single structure. For rental housing, occupancy by low and moderate
income households must be at affordable rents to qualify under this
criterion. The unit of general local government shall adopt and make
public its standards for determining ``affordable rents'' for this
purpose. The following shall also qualify under this criterion:
* * * * *
(iii) When CDBG funds are used for housing services eligible under
section 105(a)(21) of the Act, such funds shall be considered to
benefit low and moderate income persons if the housing units for which
the services are provided are HOME-assisted and the requirements of
Sec. 92.252 or Sec. 92.254 of this title are met.
* * * * *
(e) * * *
(5) If the unit of general local government has elected to prepare
a community revitalization strategy pursuant to the authority of
Sec. 91.315(e)(2) of this title, and the State has approved the
strategy, the unit of general local government may also elect the
following options:
(i) Activities undertaken pursuant to the strategy for the purpose
of creating or retaining jobs may, at the option of the grantee, be
considered to meet the requirements of paragraph (b) of this section
under the criteria at Sec. 570.483(b)(1)(v) instead of the criteria at
Sec. 570.483(b)(4); and
(ii) All housing activities in the area undertaken pursuant to the
strategy may be considered to be a single structure for purposes of
applying the criteria at paragraph (b)(3) of this section.
(6) If an activity meeting the criteria in Sec. 570.482(f)(3)(v)
also meets the requirements of either paragraph (e)(4)(i) or (e)(5)(i)
of this section, the unit of general local government may elect to
qualify the activity either under the area benefit criteria at
paragraph (b)(1) (iv) or (v) of this section or under the job
aggregation criteria at paragraph (b)(4)(vi)(D) of this section, but
not under both. * * *
* * * * *
9. Section 570.485 is amended by revising the section heading, and
by adding a new paragraph (c), to read as follows:
Sec. 570.485 Making of grants.
* * * * *
(c) Approval of grant. HUD will approve a grant if the State's
submissions have been made and approved in accordance with 24 CFR part
91, and the certifications required therein are satisfactory to the
Secretary. The certifications will be satisfactory to the Secretary for
this purpose unless the Secretary has determined pursuant to
Sec. 570.493 that the State has not complied with the requirements of
this subpart, or has determined that there is evidence, not directly
involving the State's past performance under this program, that tends
to challenge in a substantial manner the State's certification of
future performance. If the Secretary makes any such determination,
however, the State may be required to submit further assurances as the
Secretary may deem warranted or necessary to find the grantee's
certification satisfactory.
Sec. 570.486 [Amended]
10. In Sec. 570.486, paragraph (a) introductory text is amended by
removing the reference to ``Sec. 570.485(c)(1)(i)'', and by adding in
its place a reference to ``Sec. 91.115(e) of this title''.
11. Section 570.487 is amended by adding a new paragraph (e) to
read as follows:
Sec. 570.487 Other applicable laws and related program requirements.
* * * * *
(e) Architectural Barriers Act and the Americans with Disabilities
Act. The Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157)
requires certain Federal and Federally-funded buildings and other
facilities to be designed, constructed, or altered in accordance with
standards that ensure accessibility to, and use by, physically
handicapped people. A building or facility designed, constructed, or
altered with funds allocated or reallocated under this subpart after
November 21, 1996 and that meets the definition of residential
structure as defined in 24 CFR 40.2, or the definition of building as
defined in 41 CFR 101-19.602(a), is subject to the requirements of the
Architectural Barriers Act of 1968 and shall comply with the Uniform
Federal Accessibility Standards. For general type buildings, these
standards are in Appendix A to 41 CFR part 101-19.6. For residential
structures, these standards are available from the Department of
Housing and Urban Development, Office of Fair Housing and Equal
Opportunity, Disability Rights Division, Room 5240, 451 Seventh Street,
SW, Washington, DC 20410; telephone (202) 708-2333 (voice) or (203)
708-1734 (TTY) (these are not toll-free numbers).
Sec. 570.489 [Amended]
12. Section 570.489 is amended by:
a. Amending the first sentence of the introductory text of
paragraph (e)(3) by removing the phrase ``paragraph (e)(2)(ii)'', and
by adding in its place the phrase ``paragraph (e)(3)(ii)'';
b. Removing paragraph (k)(2); and
c. Redesignating paragraph (k)(1) as paragraph (l).
13. Section 570.493 is amended by:
a. Amending paragraph (a)(1) by removing the phrase ``final
Statement'', and by adding in its place the phrase ``action plan under
part 91 of this title''; and
b. Amending paragraph (b) by adding a sentence at the end to read
as follows:
Sec. 570.493 HUD's reviews and audits.
* * * * *
(b) * * * A State's failure to maintain records in accordance with
Sec. 570.490 may result in a finding that the State has failed to meet
the applicable requirement to which the record pertains.
Dated: August 28, 1996.
Andrew M. Cuomo,
Assistant Secretary for Community Planning and Development.
[FR Doc. 96-26957 Filed 10-21-96; 8:45 am]
BILLING CODE 4210-29-P