SEC-216 -- PARTICIPATION BY STATES AND LOCAL GOVERNMENTS.


 The Secretary shall designate a State or unit of general local
government to be a participating jurisdiction when it complies with
procedures that the Secretary shall establish by regulation, which
procedures shall only provide for the following:

 (1) Allocation.-Not later than 20 days after funds to carry out this
subtitle become available (or, during the first year after enactment of
this Act, not later than 20 days after (A) funds to carry out this
subtitle are provided in an appropriations Act, or (B) regulations to
implement this subtitle are promulgated, whichever is later), the
Secretary shall allocate funds in accordance with section 217 and
promptly notify each jurisdiction receiving a formula allocation of its
allocation amount. If a jurisdiction is not already a participating
jurisdiction, the Secretary shall inform the jurisdiction in writing how
the jurisdiction may become a participating jurisdiction.

 (2) Consortia.-A consortium of geographically contiguous units of
general local government shall be deemed to be a unit of general local
government for purposes of this title if the Secretary determines that
the consortium-

 (A) has sufficient authority and administrative capability to carry out
the purposes of this title on behalf of its member jurisdictions, and

 (B) will, according to a written certification by the State (or States,
if the consortium includes jurisdictions in more than one State), direct
its activities to alleviation of housing problems within the State or
States.

 (3) Eligibility.-(A) A jurisdiction receiving a formula allocation
under section 217 shall be eligible to become a participating
jurisdiction if its formula allocation is $750,000 or greater, or if the
Secretary finds that-

 (i) the jurisdiction has a local housing authority and has demonstrated
a capacity to carry out provisions of this subtitle, and

 (ii) the State has authorized the Secretary to transfer to the
jurisdiction a portion of the State's allocation that is equal to or
greater than the difference between the jurisdiction's formula
allocation and $750,000, or the State or jurisdiction has made available
from the State's or jurisdiction's own sources an equal amount for use
by the jurisdiction in conformance with the provisions of this subtitle.

 (B) If a jurisdiction has met the requirements of subparagraph (A), the
jurisdiction's formula allocation for a fiscal year shall subsequently
be deemed to equal the sum of the jurisdiction's allocation under
section 217(a)(1) and the amount made available to the jurisdiction
under subparagraph (A)(ii).

 (4) Notification.-If an eligible jurisdiction notifies the Secretary
in writing, not later than 30 days after receiving notification under
paragraph (1), of its intention to become a participating jurisdiction,
the Secretary shall reserve an amount equal to the jurisdiction's
allocation (plus any reallocations for which the jurisdiction is
eligible under section 217(d)(1)) pending the jurisdiction's designation
as a participating jurisdiction. The Secretary shall reallocate, in
accordance with paragraph (6) of this section, any funds reserved under
the previous sentence if the Secretary determines that the jurisdiction
will not meet the requirements for designation as a participating
jurisdiction within a reasonable period of time.

 (5) Submission of strategy.-Not later than 90 days after providing
notification under paragraph (4), an eligible jurisdiction shall submit
to the Secretary a comprehensive housing affordability strategy in
accordance with section 105.

 (6) Reallocation.-If the Secretary determines that a jurisdiction has
failed to meet the requirements of the previous 3 paragraphs or if the
Secretary, after providing for amendments and resubmissions in
accordance with section 105(c)(3), disapproves the jurisdiction's
comprehensive housing affordability strategy, the Secretary shall
reallocate any funds reserved for the jurisdiction as follows:

 (A) State.-If a State has failed to meet the requirements, the
Secretary shall-

 (i) make any funds reserved for the State available by direct
reallocation among applications submitted by units of general local
government within the State or consortia that include units of general
local government within the State, insofar as approvable applications
meeting the selection criteria under section 217(c) are received within
12 months after the funds become available for the direct reallocation,
and

 (ii) reallocate the remainder by formula in accordance with section
217(b).

 (B) Local.-If a unit of general local government has failed to meet the
requirements and is located in a State that is a participating
jurisdiction, the Secretary shall reallocate to the State any funds
reserved for the locality, with preference going to the provision of
affordable housing within the locality.

 (C) Direct reallocation.-If a unit of general local government has
failed to meet the requirements and is located in a State that is not
a participating jurisdiction, the Secretary shall-

 (i) make any funds reserved for the locality available for use within
the State by direct reallocation among units of general local government
and community housing development organizations, insofar as approvable
applications meeting the selection criteria under section 217(c) are
received within 12 months after the funds become available for the
direct reallocation with priority going to applications for affordable
housing within the locality, and

 (ii) reallocate the remainder in accordance with section 217(b).

 (D) Certain jurisdictions deemed to be participating jurisdictions.-If
a State or unit of general local government is meeting the requirements
of paragraphs (3), (4), and (5), it shall be deemed to be a
participating jurisdiction for purposes of reallocation under this
paragraph.

 (7) Designation.-The Secretary shall designate an eligible jurisdiction
to be a participating jurisdiction as soon as its comprehensive housing
affordability strategy is approved in accordance with section 105.

 (8) Continuous designation.-Once a State or unit of general local
government is designated a participating jurisdiction, it shall remain
a participating jurisdiction for subsequent fiscal years, except as
provided in paragraph (9). The provisions of paragraphs (3) through (6)
shall not apply to participating jurisdictions.

 (9) Revocation.-The Secretary may revoke a jurisdiction's designation
as a participating jurisdiction if-

 (A) the Secretary finds, after reasonable notice and opportunity for
hearing, that the jurisdiction is unwilling or unable to carry out the
provisions of this title, or

 (B) the jurisdiction's allocation falls below $750,000 for 3
consecutive years, below $625,000 for 2 consecutive years, or the
jurisdiction does not receive a formula allocation of $500,000 or more
in any 1 year.
If a jurisdiction's designation as a participating jurisdiction is
revoked, any remaining line of credit in the jurisdiction's HOME
Investment Trust Fund established under section 218 shall be reallocated
in accordance with paragraph (6) of this section.