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###### Department of Agriculture

###### Rural Housing Service

          - 7 CFR Part 1944
          - [Docket No. RHS-24-SFH-0037]
          - RIN 0575-AD37

# AGENCY:

Rural Housing Service, USDA.

# ACTION:

Proposed rule.

# SUMMARY:

The Rural Housing Service (RHS or the Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), proposes to update and streamline the Single-Family Housing (SFH) Self-Help Technical Assistance Grant Program. The Self-Help Program has evolved, and the current regulations as codified restrict the Agency's ability to be flexible with market changes. The intent of this proposed rule is to reduce the regulatory burdens in the current regulation, to assist the Agency to better achieve the program objectives, streamline administrative regulatory requirements and make the program more effective in serving rural Americans by increasing decent, safe, and sanitary housing stock across the Nation.

# DATES:

Comments on the proposed rule must be received on or before February 3, 2025.

The comment period for the information collection under the Paperwork Act of 1995 must be received on or before February 3, 2025.

# ADDRESSES:

                        Comments may be submitted electronically by the Federal eRulemaking Portal: Go to                         *http://www.regulations.gov*                         and, in the “Search Field” box, labeled “Search for dockets and documents on agency actions,” enter the following docket number: (RHS-24-SFH-0037) or Regulation Identifier Number (RIN): (0575-AD37). To submit or view public comments, click the “Search” button, select the “Documents” tab, then select the following document title: “Self-Help Technical Assistance Grants: Technical Corrections and Program Updates” from the “Search Results,” and select the “Comment” button. Before inputting your comments, you may also review the “Commenter's Checklist” (optional). Insert your comments under the “Comment” title, click “Browse” to attach files (if available). Input your email address and select “Submit Comment.” Information on using                         *Regulations.gov*, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “FAQ” link.                    

                        All comments will be available for public inspection online at the Federal eRulemaking Portal (                        *http://www.regulations.gov*).                    

*Other Information:*                         Additional information about Rural Development and its programs is available on the internet at                         *http://www.rurdev.usda.gov/​index.html.*

                        In accordance with 5 U.S.C. 553(b)(4), a summary of this proposed rule may be found by going to                         *http://www.regulations.gov*                         and in the “Search for dockets and documents on agency actions” box, enter the following docket number RHS-24-SFH-0037.                    

# FOR FURTHER INFORMATION CONTACT:

                        Sunceri Dade, Finance & Loan Analyst, SFH Direct Division, Rural Housing Service, Rural Development, United States Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 20250, Phone: 202-720-1485, Email:                         *Sunceri.Dade@usda.gov.*

# SUPPLEMENTARY INFORMATION:

## Statutory Authority

Section 510(k) of Title V the Housing Act of 1949 [42 U.S.C. 1480(k)], as amended, authorizes the Secretary of the Department of Agriculture to promulgate rules and regulations as deemed necessary to carry out the purpose of that title. The Self-Help program is authorized under Section 523 of Title V the Housing Act of 1949 (42 U.S.C. 1490(c)), as amended, authorizes the Secretary of the Department of Agriculture to promulgate rules and regulations as deemed necessary to carry out the purpose of that title. The program is implemented under 7 CFR part 1944, subpart I.

## I. Background

The RHS offers a variety of programs to build or improve housing and essential community facilities in rural areas. RHS offers loans, grants, and loan guarantees for single- and multifamily housing, childcare centers, fire and police stations, hospitals, libraries, nursing homes, schools, first responder vehicles and equipment, housing for farm laborers. RHS also provides technical assistance loans and grants in partnership with non-profit organizations, Indian Tribes, state and federal government agencies, and local communities.

Well built, affordable housing is essential to the vitality of communities in rural America. RD SFH Programs give families and individuals the opportunity to buy, build, or repair affordable homes located in rural America. Eligibility for these loans, loan guarantees, and grants is based on income and varies according to the average median income for each area.

                    Section 510(k) of Title V the Housing Act of 1949 [42 U.S.C. 1480(k)], as amended, authorizes the Secretary of the Department of Agriculture to promulgate rules and regulations as deemed necessary to carry out the purpose of that title. The Self-Help program is authorized under Section 523 of Title V the Housing Act of 1949 (42 U.S.C. 1490(c)), as amended, authorizes the Secretary of the Department of Agriculture to promulgate rules and regulations as deemed necessary to carry out the purpose of that title. The RHS administers the Section 523 Self-Help Housing Technical Assistance Grant Program which is implemented under 7 CFR 1944, Subpart I and authorized by the Housing Act of 1949, as amended (42 U.S.C. 1490c). The purpose of the program is to provide grants to qualified organizations to help them carry out local self-help housing construction projects. Grant recipients supervise groups of very low- and low-income individuals and families as they construct or rehabilitate their homes in rural areas. The group members provide most of the construction labor on each other's homes, and rehabilitation project participants contribute construction hours based on the amount of work                           ( print page 96131)                        being completed, all with technical assistance from the organization overseeing the project. Eligible applicants include government nonprofit organizations, federally recognized Tribes, and private nonprofit organizations.                

The SFH program undertook a systematic review of its current regulation at 7 CFR 1944 Subpart I and the procedures to administer its programs. It was determined that several technical corrections and program updates are needed.  

## II. Discussion of the Proposed Rule

The SFH program routinely meets with staff and partners to provide them with the opportunity to discuss suggestions for process improvement(s) to reduce the burden on grantees and borrowers, increase the flexibility of the program and improve overall customer satisfaction. As a result of these consultations, SFH has identified several processes and regulatory improvements which are described in the next section. Continued stakeholder input is vital to ensure the proposed changes would support the Self-Help Program's mission, while ensuring that regulation changes are reasonable and do not overly burden the Agency's staff and their customers.

## III. Summary of Proposed Changes

The following information details the changes in the proposed rule:

*(1) Make general revisions to streamline and update 7 CFR part 1944, subpart I:*

*a. Remove/replace outdated references (e.g., County Office, County Supervisor, and District Director).*

State personnel and office locations have changed over the years, and the terms “County Office”, “County Supervisor”, and “District Director” are no longer used by the Agency. The Agency personnel assigned to review Self-help Program applications, and the person assigned to service the grant, could be different people in different parts of the State. The term “Authorized Agency Official” will be used to generalize assignments and allow states the flexibility to assign work for the program as needed.

*b. Replace references to “FmHA or its successor agency under Public law 103-354” with “Rural Housing Service” or “Agency.”*

In 2006, the FmHA was fully terminated, and its housing and community programs were transferred to the newly formed USDA Rural Development. The proposed rule intends to replace the term “Farmers Home Administration” with the terms “Agency” and “Rural Housing Service.”

*c. Replace references to “SF-269A” with “SF-425.”*

The Standard Form (SF 269A) was obsoleted several years ago. It will be replaced with the Federal Financial Report, Standard Form (SF)-425.

*d. Remove paragraph (d) from 7 CFR 1944.406 “Prohibited use of grant funds.”*

Removing 7 CFR 1944.406(d) will align the regulation with 2 CFR part 200 language which allows grant funds to be used for employee training.

*e. Remove requirements to submit a preapplication or application in an original and one copy.*

The Agency has moved to Electronic Customer Files (ECF) and no longer requires hard copy paper preapplication or applications. This update will streamline and modernize the program while also reducing environmental impact.

*f. Revise 7 CFR 1944.424 “Dwelling construction standards.”*

The Agency intends to update the paragraph to replace “local codes” with “State, Tribal, or local requirements.”

*g. Remove requirement to submit an Affirmative Fair Housing Marketing Plan (AFHMP).*

The Agency has determined that the AFHMP is unnecessary considering marketing materials are collected and reviewed along with a very-low outreach plan. The Agency does not have its own AFHMP form, and the Housing and Urban Development form being used by Single-Family Housing has not been kept updated. This action will cause the removal of 1944.410(a)(10) and 1944.410(b)(1)(iv). Self-help organizations are must still comply with all civil right laws as directed in the grant agreement.

*(2) Revise 7 CFR 1944.401 “Objectives” to remove outdated and incorrect statements.*

The Agency intends to update the introductory paragraph to reflect the program's current objectives and represent the population it is designed to serve.

*(3) Revise 7 CFR 1944.403 “Definitions.”*

Definitions will be added which are intended to provide additional clarity to stakeholders about the program.

*(4) Revise 7 CFR 1944.404(d) to allow `Board of Directors' to be defined at 7 CFR 1944.403 “Definitions.”*

SFH has determined that the language in this part of the regulation is out of place and should be moved to the definitions section. In addition, the requirement for all organizations to have a specific number of board members has been overly restrictive in some extremely rural areas. The Agency proposes to provide organizations with more flexibility related to the required number of board members in the regulatory definitions section.

*(5) Revise 7 CFR 1944.407 “Limitations.”*

This section of the regulation limits the amount of technical assistance (TA) an organization may apply for. The Agency proposes that the limitations in paragraphs (a), (b), (c), and (d) should be as follows:

Remove the following sentence in paragraph (a), “Upon request, the County Supervisor will provide the grantee the average cost of modest homes for the area.” The equivalent value of a modest home will be established by the Agency on an annual basis as described in the definition at 7 CFR 1944.403. The National Office will use a percentage of the area loan limit to establish the equivalent value of a modest home annually.

Revise paragraph (b) “An average TA cost per equivalent unit that does not exceed the difference between the equivalent value of modest homes in the area and the average mortgage of the participating families minus $1,000” to increase to `. . . minus $10,000' which will reduce the historically higher than necessary amount that can be charged to the grant.

Revise paragraph (c) and move to paragraph (d) to remove the State Director's approval of a technical assistance cost above the limits set in paragraphs (a) and (b) in favor of this approval being at the National Office level. Add other limitations may apply which will be released in an annual funding policy. As program funding remains unchanged or decreases annually, funding limitations may be necessary to manage program funds.

The revised paragraph (c) will add a maximum TA cost per equivalent unit for rehabilitation-type programs. The maximum TA cost per equivalent unit will be no more than a percentage of the cost of the equivalent value of modest homes built in the area. The levels will be set in the regulation as not to exceed 12 percent for acquisition rehab, and 9 percent for owner-occupied.

*(6) Revise 7 CFR 1944.409 “Intergovernmental Consultation, Executive Order 12372.”*

The Agency intends to update the title and paragraph language of this section.

*(7) Revise 7 CFR 1944.410 “Processing preapplications, applications, and completing grant dockets.”*

                    As a consequence of historically limited funding for the Self-help Program, funds have not been available                           ( print page 96132)                        for predevelopment grant awards. Proposed changes to the regulation will include items typically collected during the preapplication phase being incorporated into a part of the application docket.                

Other proposed changes/clarifications to § 1944.410 include:

Add the requirement to submit the organization's previous years financial audit in paragraph (a)(3).

Remove the current requirement in paragraph (a)(5) “. . . living in houses that are deteriorated, dilapidated, overcrowded, and/or lacking plumbing facilities.”

Specify in paragraph (b) that a preapplication review will only be completed when preapplications are accepted by the Agency. Typically, the full application docket will be reviewed.

Remove references to Form AD 622, “Notice of Preapplication Review Action” in paragraphs (b)(4)(i), (ii), and (e) in favor of issuing a letter of conditions for eligible preapplications/applications or denial letter with appeal rights for those found to be ineligible.

Remove the $10,000 limit in paragraph (d), and the up to six-month period of performance stipulation for predevelopment grants. Should funding allow for predevelopment grants these limitations will be set in an annual funding policy or other public release announcing the acceptance of preapplications.

In paragraph (e)(2) at the time of application, specify that the first group can be determined eligible by the Agency or the organization; and in paragraph (3) lots do not need to be optioned; however, both will be a condition of closing. The Agency does not have funding for predevelopment grants to aid organizations in meeting these requirements, and in many cases, it is unreasonable to have a group ready to begin construction prior to the approval of the application.

In paragraph (e)(7) clarify that a detailed budget is required in addition to SF 424A.

Remove paragraph (c) and renumber paragraphs (d) and (e) accordingly.  

*(8) Update 7 CFR 1944.411 paragraphs (e) and (g) requirements for fidelity bonding and to establish an interest-bearing checking account.*

The regulation currently prohibits Grantees from drawing funding beyond a 30-day advancement, thus fidelity bonding is not needed. The Agency proposes to revise this section to read “The grantee has established an interest-bearing checking account in accordance with 2 CFR 200.305(b)(8).”

*(9) Remove 7 CFR 1944.412 “Docket preparation” chart in favor of an application checklist to be provided by the program office.*

Remove the chart currently in this section and include a complete application checklist provided by the program office. Electronic applications will be accepted.

*(10) Revise 7 CFR 1944.413 “Grant approval” to reflect the current practices.*

The National Office reviews, approves, and obligates all funding for the Self-help Program. The current process for application review is the docket will first be reviewed by the Technical and Management Assistance (T&MA) Contractor before submission to the RD Office designated by the State. After the field review and recommendation, the docket is submitted to the National Office for final review, approval, and funding. In addition to outlining this process, paragraph (a)(2) will be edited to remove reference to the Finance Office, as the Finance Office no longer processes obligations or fund disbursements as described. Reference to and use of Form RD 440-57 will be removed.

*(11) Revise 7 CFR 1944.415 “Grant approval and other approving authorities.”*

Funding for the Self-help Program remains limited, and the National Office must retain grant approval authority to manage the allocation of funds. SFH proposes to remove the State Director grant approval limits in paragraphs (a) and (b), and to combine the new paragraphs into one paragraph (a).

Renumber paragraph (d) to be paragraph(c), and update the former paragraph (d), (1), (2) and (3) regarding the Agency official authorized to approve monthly expenditures when a grantee serves more than one county or state. The monthly expenditures should normally be approved by the Housing Program Director or designee and update the options for grantees working in multiple states. Should an organization propose to operate in more than one state the National Office will determine the appropriate approval official.

*(12) Update 7 CFR 1944.416 “Grant closing.”*

Revise the paragraph to replace `Agreement' with `Grant Agreement' and remove the reference to 7 CFR 1944.403(a);

Add that cost may not be allocated to the Grant Agreement prior to execution; and Authorize the State Director or designee to execute the Grant Agreement on behalf of the Agency.

*(13) Update 7 CFR 1944.417 “Servicing actions after grant closing.”*

Revise paragraph (a) to state that draws may be requested as needed but no more than monthly, and that funding requests must be accompanied by an actual or projected budget.

Update paragraph (a)(1) to remove references to Form RD 440-57, “Acknowledgment of Obligated Funds/Check Request” which is no longer in use. Form RD 440-57 “Acknowledgment of Obligated Funds/Check Request” will also be removed from paragraph (a) (2)(i) and (ii).

Revise paragraph (b) to specify quarterly reports are based on the grant start date instead of listing the 15th day of January, April, July, and October; change reference to Exhibit B to Subpart I of Part 1944 “Evaluation Report of Self-Help Technical Assistance (TA) Grants” to state that generally a `progress report' and/or `quarterly report' will be submitted to allow for automated reporting systems to be used instead of Exhibit B to Subpart I of Part 1944 “Evaluation Report of Self-Help Technical Assistance (TA) Grants” which will remain in the instruction as a guide where it can be easily updated as needed; replace `should' with `will' in reference to grant oversight quarterly meetings; and add language to allow the option to require more frequent reporting if problems are identified.

In paragraph (b)(1)(iv), remove specific reference to Exhibit B-2 to Subpart I of Part 1944 “Breakdown of Construction Development for Determining Percentage Construction Completed” in favor of the general term `construction development breakdown'.

Add paragraph (b)(1)(v) to reference the new grant goal proposed in 7 CFR 1944.419(a)(5).

Add paragraph (b)(1)(vi) to reference grant goal at 7 CFR 1944.419(a)(6).

*(14) Update 7 CFR 1944.419 “Final grantee evaluation.”*

The requirements for obtaining a grant rating of `successful' are minimal and do not accurately reflect rating a rehabilitation program. Update the grant goals to establish a minimum sweat equity/cost savings goal as part of the application process.

*(15) Update 7 CFR 1944.420 “Extension or revisions of the grant agreement.”*

                    This change updates the grant extension period from a ceiling of no more than one year to less restrictive language of a period that is “reasonable”. Reasonability will be determined based on consideration of grant goals completed, and the timeline to complete the remaining goals. Typically, this will be from one to two years.                          ( print page 96133)    

*(16) Update 7 CFR 1944.421 “Refunding of an existing grantee” to establish a process for `Carry-over' equivalent units.*

High producing grantees often start homes in one grant cycle but finish them in another. Language is purposed to allow this practice with parameters.

*(17) Revise and update 7 CFR 1944.422 “Audit and other reporting requirements.”*

Remove special provisions for nonprofits, State and local governments, and Indian Tribes found at 7 CFR 1944.422 (a) and (b). 2 CFR part 200 does not have these exemptions listed which were previously authorized. All grantees will have the same reporting requirements as defined in 2 CFR part 200.

Add language regarding auditing requirements for 502/504 borrowers supervised or custodial accounts. Direction regarding the audit requirements for 502/504 borrowers supervised or custodial accounts when managed by the grantee is needed. While a separate audit is not necessary, these accounts should be reviewed under an agreed-upon procedures format, not a single audit, as the grantee only manages these funds in trust.

*(18) Revise 7 CFR 1944.423 “Loan/grant packaging and application submittal.”*

This change updates the title of the section and adds reference to Section 504.

*(19) Revise 7 CFR 1944.424 “Dwelling construction standards”*

This change adds State and Tribal requirements to the dwelling construction standards versus just local codes.

*(20) Update 7 CFR 1944.425 “Handling and accounting for borrower loan funds.”*

This section's updates include stating that the Agency is responsible for the administration of borrower loan funds. Grantee involvement such as holding a custodial or supervised account to manage these funds will be approved at the State level with minimum approval guidelines for staff to be defined in the program Instruction.

*(21) Revise 7 CFR 1944.426 “Grant closeout.”*

This change modifies the number of days, from 7 to 30, that the agency has to respond to the grantee regarding notification of termination and updates information on grant suspension appeal guidance.

*(22) Remove Subpart I of Part 1944 Exhibits A, B, B-1, B-2, B-3, C, D, and E. Subpart I of Part 1944 Exhibits A, C, D, and E will be published as Forms.*

References to Exhibits B, B-1, B-2, and B-3 will be eliminated from the CFR in favor of publishing them in the program Instruction with updates. These Exhibits will be provided to organizations by the program offices.

Exhibit A to Subpart I of Part 1944 “Self-Help Technical Assistance Grant Agreement” will be published as a Form and revised to include the new goals established with this proposed rule and add language to reference any closing conditions letter attached.

Exhibit C to Subpart I of Part 1944 “Amendment to Self-Help Technical Assistance Grant Agreement” and Exhibit D to Subpart I of Part 1944 “Self-Help Technical Assistance Grant Predevelopment Agreement” will be published as Forms and revised to update the year from `19_ to `20_.

Exhibit E to Subpart I of Part 1944 “Guidance for Recipients of Self-Help Technical Assistance Grants (Section 523 of Housing Act of 1949)” will be published as a Form and updated to remove outdated questions such as B.5. related to long distance phone call logs, B.8. regarding families being charged for the use of tools which is confusing given some grantees do rent tools to families when they are able to offer the best value, amongst other revisions.

*(23) Revise instruction in Exhibit F to Subpart I of Part 1944 “Site Option Loan to Technical Assistance Grantees” and add it as a new section in 7 CFR 1944.428.*

                    The limitations provided for in this exhibit are a barrier to applicants in the current market in which larger loan amounts and longer repayment terms are necessary. There has not been a Section 523 Site Loan awarded in many years because the program parameters are not feasible (                    *e.g.*                     low loan limit, revolving loan fund requirements, interest rate disparity, and short repayment terms).                

Revise Section IV. `Limitations' to remove the $10,000 loan limit in item (A) in favor of publishing limits as necessary (based on funding availability) in an annual funding policy and removing the loan limitation of fifteen percent of the purchase price in item (B); section V Rates and Terms to change item (A) so that the interest rate will be the lower of 3 percent or the current RHS monthly published rate, item (B) to revise the repayment period to allow for multiple payments.

The revision would align the program with current market trends and reference the Section 524 program requirements to ease the application process and promote the utilization of program funds. Program information will also be moved to the body of the regulation under 1944.428 as a new section.

### Request for Comment

                    Stakeholder input is vital to ensure the proposed changes in the proposed rule would support the Agency's mission, while ensuring that new regulations and policies are reasonable and do not overly burden the Agency's staff and their customers. Comments must be submitted on or before February 3, 2025 and may be submitted electronically by going to the Federal eRulemaking Portal:                     *http://www.regulations.gov.*                     Details on how to submit comments to the Federal eRulemaking Portal are in the                     **ADDRESSES**                     section of this proposed rule.                

## IV. Regulatory Information

### Executive Order 12372, Intergovernmental Review of Federal Programs

                    Intergovernmental Review of Federal Programs,” applies to this program. This E.O. requires that Federal agencies provide opportunities for consultation on proposed assistance with State and local governments. Many states have established a Single Point of Contact (SPOC) to facilitate this consultation. For a list of States that maintain a SPOC, please see the White House website:                     *https://www.whitehouse.gov/​omb/​management/​office-federal-financial-management/​.*                     If your State has a SPOC, you may submit a copy of the application directly for review. Any comments obtained through the SPOC must be provided to your State Office for consideration as part of your application. If your state has not established a SPOC, you may submit your application directly to the Agency. Applications from Federally recognized Indian Tribes are not subject to this requirement. RHS conducts intergovernmental consultations for each loan in accordance with 2 CFR part 415, subpart C.                

### Executive Order 12866, Regulatory Planning and Review

This proposed rule has been determined to be not significant for purposes of Executive Order 12866 and, therefore, was not reviewed by the Office of Management and Budget (OMB).

### Executive Order 12988, Civil Justice Reform

                    This proposed rule has been reviewed under Executive Order 12988. In accordance with this rule: (1) Unless otherwise specifically provided, all State and local laws that conflict with this rule will be preempted; (2) no                           ( print page 96134)                        retroactive effect will be given to this rule except as specifically prescribed in the rule; and (3) administrative proceedings of the National Appeals Division of the Department of Agriculture (7 CFR part 11) must be exhausted before suing in court that challenges action taken under this proposed rule.                

### Executive Order 13132, Federalism

The policies contained in this proposed rule do not have any substantial direct effect on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of Government. This proposed rule does not impose substantial direct compliance costs on State and local Governments; therefore, consultation with States is not required.

### Executive Order 13175, Consultation and Coordination With Indian Tribal Governments

This proposed rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. Consultation is also required for any regulation that preempts Tribal law or that imposes substantial direct compliance costs on Indian Tribal governments and that is not required by statute.

The Agency has determined that this proposed rule does not, to our knowledge, have Tribal implications that require formal Tribal consultation under Executive Order 13175. If a Tribe requests consultation, the Rural Housing Service will work with the Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions and modifications identified herein are not expressly mandated by Congress.

### National Environmental Policy Act

In accordance with the National Environmental Policy Act of 1969, Public Law 91-190, this proposed rule has been reviewed in accordance with 7 CFR part 1970 (“Environmental Policies and Procedures”). The Agency has determined that i) this action meets the criteria established in 7 CFR 1970.53(f); ii) no extraordinary circumstances exist; and iii) the action is not “connected” to other actions with potentially significant impacts, is not considered a “cumulative action” and is not precluded by 40 CFR 1506.1. Therefore, the Agency has determined that the action does not have a significant effect on the human environment, and therefore neither an Environmental Assessment nor an Environmental Impact Statement is required.

### Regulatory Flexibility Act

This proposed rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The undersigned has determined and certified by signature on this document that this rule will not have a significant economic impact on a substantial number of small entities since this rulemaking action does not involve a new or expanded program nor does it require any more action on the part of a small business than required of a large entity.

### Unfunded Mandate Reform Act (UMRA)

Title II of the UMRA, Public Law 104-4, establishes requirements for Federal Agencies to assess the effects of their regulatory actions on State, local, and Tribal Governments and on the private sector. Under section 202 of the UMRA, Federal Agencies generally must prepare a written statement, including cost-benefit analysis, for proposed and Final Rules with “Federal mandates” that may result in expenditures to State, local, or Tribal Governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires a Federal Agency to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective, or least burdensome alternative that achieves the objectives of the rule.

This proposed rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and Tribal Governments or for the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

### Paperwork Reduction Act

The information collection requirements contained in this regulation have been approved by OMB and have been assigned OMB control number 0575-0043. This proposed rulemaking contains new reporting requirements that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).

In accordance with the Paperwork Reduction Act of 1995, the Agency announces its intention to request a revision to a currently approved information collection for the Self-Help Technical Assistance Grant program and hereby open a 60-day public commenting period.

*Title:*7 CFR 1944-I, Self-Help Technical Assistance Grants.                

*OMB Docket Number:*                     0575-0043.                

*Expiration Date of Approval:*                     May 31, 2027.                

*Type of Request:*                     Revision of currently approved information collection.                

*Abstract:*                     This subpart set forth the policies and procedures and delegates authority for providing technical assistance funds to eligible applicants to finance programs of technical and supervisory assistance for self-help housing loan program, as authorized under section 523 of the Housing Act of 1949 under 42 U.S.C. 1472. This financial assistance may pay part or all of the cost of developing, administering, or coordinating a program of technical and supervisory assistance to aid very low- and low-income families in carrying out self-help housing efforts in rural areas. The primary purpose is to locate and work with low-income families to secure decent, safe, and sanitary housing. RHS will be collecting information from non-profit organizations to enter into grant agreements. These non-profit organizations will give technical and supervisory assistance, and in doing so, they must develop a final application for section 523 grant funds. This application includes Agency forms that contain essential information for deciding eligibility.                

*Estimate of Burden:*                     Public reporting burden for this collection of information is estimated to average .99 hours per response.                

*Respondents:*                     Public or private nonprofit organizations, State, Local or Tribal Governments.                

*Estimated Number of Respondents:*                     70.                

*Estimated Number of Responses per Respondent:*                     29.                

*Estimated Number of Responses:*                     2,046.                  

*Estimated Reporting Burden Hours on Respondents:*                     1,865.                

*Estimated Recordkeeping Burden Hours on Respondents:*                     170.                

*Estimated Total Annual Burden on Respondents:*                     2,035.                          ( print page 96135)    

                    Copies of this information collection can be obtained from Kimble Brown, Innovation Center—Regulations Management Division, at                     *Kimble.Brown@usda.gov.*

*Comments:*                     Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the RHS, including whether the information will have practical utility; (b) the accuracy of RHS's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. All responses to this notice will be summarized and included in the request for OMB approval. All comments will become a matter of public record.                

### E-Government Act Compliance

RHS is committed to complying with the E-Government Act by promoting the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information, services, and other purposes.

### Civil Rights Impact Analysis

Rural Development has reviewed this rule in accordance with USDA Regulation 4300-4, Civil Rights Impact Analysis,” to identify any major civil rights impacts the rule might have on program participants on the basis of age, race, color, national origin, sex, or disability. After review and analysis of the rule and available data, it has been determined that implementation of the rule will not adversely or disproportionately impact very low, low- and moderate-income populations, minority populations, women, Indian Tribes, or persons with disability by virtue of their race, color, national origin, sex, age, disability, or marital or familiar status. No major civil rights impact is likely to result from this rule.

### Assistance Listing

The program affected by this regulation is listed in the Assistance Listing Catalog (formerly Catalog of Federal Domestic Assistance) under number 10.420, Rural Self-Help Housing Technical Assistance.

### Non-Discrimination Statement

In accordance with Federal civil rights laws and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.

                    Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (                    *e.g.,*                     Braille, large print, audiotape, American Sign Language) should contact the responsible Mission Area, agency, staff office; or the 711 Federal Relay Service.                

                    To file a program discrimination complaint, a complainant should complete a Form AD-3027,                     *USDA Program Discrimination Complaint Form,*                     which can be obtained online at                     *https://www.usda.gov/​sites/​default/​files/​document/​ad-3027.pdf,*                     from any USDA office, by calling (866) 632-9992, or by writing a letter addressed to USDA. The letter must contain the complainant's name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and date of an alleged civil rights violation. The completed AD-3027 form or letter must be submitted to USDA by:                

                    (1)                     *Mail:*                     U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250-9410; or                

                    (2)                     *Fax:*                     (833) 256-1665 or (202) 690-7442; or                

                    (3)                     *Email: Program.Intake@usda.gov*

USDA is an equal opportunity provider, employer, and lender.

# List of Subjects in 7 CFR 1944

      - Administrative practice and procedure
      - Aged
      - Cooperatives
      - Fair housing
      - Grant programs—housing and community development
      - Home improvement
      - Individuals with disabilities
      - Loan programs—housing and community development
      - Low and moderate income housing
      - Manufactured homes
      - Migrant labor
      - Rent subsidies
      - Reporting and recordkeeping requirements
      - Rural areas

For the reasons set forth in the preamble, the Rural Housing Service proposes to amend 7 CFR part 1944 as set forth below:

# PART 1944—HOUSING

1. The authority citation for part 1944 continues to read as follows: 

Authority: 5 U.S.C. 301; 42 U.S.C. 1480.

# Subpart I—Self-Help Technical Assistance Grants

2. Revise § 1944.401 to read as follows: 

§ 1944.401

                        This subpart sets forth the policies and procedures and delegates authority for providing Technical Assistance (TA) funds to eligible applicants to finance programs of technical and supervisory assistance for self-help housing, as authorized under section 523 of the Housing Act of 1949. Any processing or servicing activity conducted pursuant to this subpart involving authorized assistance to Rural Development employees, members of their families, known close relatives, or business or close personal associates, is subject to the provisions of subpart D of part 1900 of this chapter. Applicants for this assistance are required to identify any known relationship or association with a Rural Development employee. This financial assistance may pay part or all of the cost of developing, administering, or coordinating programs of technical and supervisory assistance to aid very low- and low-income families in carrying out self-help housing efforts in rural areas. Very low-income families must receive a priority for recruitment and participation and may not comprise less than the percentage stated in Section 502 of the Housing Act of 1949, as amended, of those assisted in any grant. The primary purpose is to fund organizations that are willing to locate and work with low-income families to secure decent, safe, and sanitary housing. Grantees will comply with the nondiscrimination regulation subpart E of part 1901 of this chapter which states that no person in the United States shall, on the grounds of race, color, national origin, sex, religion, marital status, mental or physical handicap, or age, be excluded from participating in, be denied the benefits of, or be subject to discrimination in connection with the                               ( print page 96136)                            use of grant funds and all provisions of the Fair Housing Act of 1988, as amended.                    

3. Revise and republish § 1944.403 to read as follows: 

§ 1944.403

                        (a)                        *Agency.*                         The Rural Housing Service within the Rural Development mission area of the U.S. Department of Agriculture (or its successor agency) which administers Section 523 grants.                    

                        (b)                         *Administrator.*                         The official of the Rural Housing Service within the Rural Development mission area (or official of its successor agency) delegated authority by the Secretary of the U.S. Department of Agriculture to administer the Agency and its programs.                    

                        (c)                         *Applicant.*                         An organization that submits an application for a Section 523 technical assistance or predevelopment grant.                    

                        (d)                         *Acquisition Rehabilitation.*                         The method of self-help housing rehabilitation that assists a participant in acquiring and rehabilitating a home through the program.                    

                        (e)                         *Authorized Agency Official.*                         An individual within a Rural Development Office designated with responsibility for a Self-Help Program function (                        *e.g.*                         application reviewer, approval official, grant servicer, etc.).                    

                        (f)                         *Board of Directors.*                         The governing body of an organization and its members. Typically, a board of directors will consist of no less than five members. For smaller organizations (                        *i.e.,*                         less than 5 staff members) a board of 3 or 4 is authorized.                    

                        (g)                         *Borrower.*                         An applicant who has received a Section 502 Home Purchase Loan or Section 504 Home Repair Loan or Grant.                    

                        (h)                         *Closeout.*                         The process of taking final action connected with a completed or terminated grant, including closing of grantee accounts, auditing grantee expenditures, and completing final reports. See also “Final Grantee Evaluation”.                    

                        (i)                         *Cost savings.*                         The value gained by the program participant through the contribution of their own labor to the project. This value is calculated as follows:                    

                        (1)                         *Acquisition Rehab.*                         The cost savings is the difference between the appraised values before and after project completion.                    

                        (2)                         *Owner-Occupied Rehab.*                         The cost savings is difference between the cost to have a contractor make the repair(s) and the self-help cost to the participant.                    

*(j) Custodial account.*                         An account with the project funding for the participating families that is managed by the Self-Help Grantee.                    

                        (k)                         *Date of completion.*                         The date when all work under a grant is completed or the expiration date in the TA grant agreement, or any supplement or amendment to it, when Federal assistance ends.                    

                        (l)                         *Debarment.*                         A determination that a party is ineligible to participate in, or receive assistance under, Federal programs made in accordance with 2 CFR parts 180 and 417.                    

                        (m)                         *Direct costs.*                         Those costs that are specifically identified with a particular project or activity. Grantees receiving funds from a single grant source would typically consider all costs as direct costs.                    

                        (n)                         *Disallowed costs.*                         Those charges to a grant which Rural Development determines cannot be authorized (see also 7 CFR 1944.406 Prohibited use of grant funds).                    

                        (o)                         *Environmental review.*                         An analysis of the impacts that an activity funded with Agency funds may have on the natural or manmade environment. See 7 CFR part 1970.                    

                        (p)                         *Equivalent units.*                         Equivalent units represent the “theoretical number of units” arrived at by adding the equivalent percentage of completion figure for each family in the self-help program (pre-construction and actual construction) together at any given date during program operations. The sum of the percentage of completion figures for all participant families represent the total number of “theoretical units” completed at any point in time. Equivalent units are useful in measuring progress during the period of the grant and are not a measurement of actual accomplishments. The number of equivalent units for any group can never exceed the number of planned or completed houses for that group.                    

                        (q)                         *Equivalent value of a modest house.*                         The typical cost of a recent contractor-built modest home in the area financed by the Agency plus the actual or projected costs of an acceptable site and site development. If the Agency has not financed a contractor-built house during the last twelve months, the value is established by use of online home sales sites; or as a percentage of the Area Loan Limits as published on the Agency website. The Equivalent value of a modest house is established by the Agency.                    

                        (r)                         *Existing grantee.*                         A grantee that is currently operating a grant from the Agency or that has operated a grant within the past two years.                    

                        (s)                         *Family Labor Contribution.*                         The value of labor contributed by a participating family to the process of constructing or rehabilitating their home. For new construction, each family in the group must contribute labor on each other's homes to accomplish the 65 percent of the total 100 percent of tasks defined to complete the dwelling. A participating family may use a substitute to perform the labor with prior approval of the Grantee and Rural Development. For rehabilitation type grants, participating families must complete a proportional amount of labor to the amount of rehabilitation tasks being completed but not less than 10 hours for owner occupied rehab, and 50 hours for acquisition rehab. Volunteer labor may be used in rehabilitation type projects.                    

                        (t)                         *Final grantee evaluation.*                         An Agency evaluation performed in accordance with 7 CFR 1944.419 at the end of the grant period to determine if the grantee met its projected performance goals and complied with program requirements.                    

                        (u)                         *Grant Agreement.*                         The legal document signed by the Self-Help grantee and the Agency that sets forth the terms and conditions under which technical assistance funds will be made available. The grant agreement will typically be for a period of 24 months but may be authorized for longer or shorter periods to accommodate the production of grantees (                        *i.e.,*                         larger grantees may require longer grant period and vice versa).                    

                        (v)                         *Grantee.*                         An organization for which the Agency has closed a Section 523 technical assistance or predevelopment grant.                    

                        (w)                         *Group.*                         Newly constructed homes under the Self-Help program are typically built by families working together in groups of five or more. State Director approval of groups less than five is required and may be granted only when it is determined the requirements of the Self-Help Program can be met (                        *e.g.*                         group labor, reduced building costs from bulk ordering, etc.).                    

                        (x)                        *Household.*                         One or more persons who maintain residency together in a home.                    

                        (y)                         *High Risk.*                         The designation given to a grantee by the State Office when a grantee is at risk of or currently is not meeting the self-help program's requirements.                    

                        (z)                         *Indirect costs.*                         Those costs that are incurred for common or joint objectives and therefore, cannot be readily and specifically identified with a particular project or activity, (                        *e.g.,*                         self-help).                    

                        (aa)                         *Low-income.*                         An adjusted income standard developed in accordance with the requirements of Section 501(b)(4) of the Housing Act of 1949.                    

                        (bb)                         *Membership Agreement.*                         The document signed by a grantee and a participating family that establishes                               ( print page 96137)                            each party's responsibilities and obligations.                    

                        (cc)                         *Modest.*                         A property that is considered modest for the area, with a market value that does not exceed the applicable area loan limit as established by Rural Housing Service in accordance with 7 CFR 3550.63.                    

                        (dd)                         *Mutual Self-Help Method.*                         Refers to the contributory nature of homebuilding in the Self-Help Program. Each family contributes to the building of each home such that the total amount of labor contributed by each family is approximately equal. (See also family labor contribution.)                    

                        (ee)                         *Organization.*

(1) A State, political subdivision, or public nonprofit corporation (including Indian Tribes or Tribal corporations); or

(2) A private nonprofit corporation that is owned and controlled by private persons or interests and is organized and operated for purposes other than making gains or profits for the corporation and is legally precluded from distributing any gains or profits to its members.

                        (ff)                         *Owner-Occupied Rehabilitation.*                         The method of self-help housing rehabilitation that serves a participant that owns and occupies the home in need of repair at the time of application. Owners need not occupy the homes while repairs are being made, provided there is a plan for them to return to the home once the project is complete.                    

                        (gg)                         *Participating family.*                         Individuals and/or their families who agree to build homes by the mutual self-help method and rehabilitate homes by the self-help method. Participants are families with very low- or low-incomes who have the ability to furnish their share of the required labor input regardless of the handicap, age, race, color, national origin, religion, family status, or sex of the head of household.                    

                        (hh)                         *Program requirements.*                         Requirements set forth in any grant document, agreement, statute, or regulation applicable to Section 523 grants.                    

                        (ii)                         *Quarterly review.*                         A formal assessment conducted quarterly by those parties involved in the grant program (                        *e.g.,*                         Grantee staff, Agency staff including grant oversight official, field staff processing the grantees packages, etc., and Technical and Management Assistance contractor of a grantee's progress in meeting its Grant Agreement goals and program requirements).                    

                        (jj)                         *Reasonable costs.*                         A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. To be considered reasonable, costs must meet the following conditions:                    

(1) The cost is of a type generally recognized as ordinary and necessary for the operation of the organization or the performance of the Federal award.

(2) The cost meets the restraints or requirements imposed by such factors as sound business practices; arms-length bargaining; Federal, state, Tribal, and other laws and regulations; and terms and conditions of the award.

(3) Market prices for similar goods or services are comparable.

(4) The individuals concerned acted with prudence in the circumstances considering their responsibilities to the organization, its members, employees, clients, the public at large, and the Federal Government.

(5) In incurring the cost, the organization did not deviate significantly from its established practices and, thereby, unjustifiably increase the award's cost.

                        (kk)                         *Rural Housing Service.*                         The Agency within the Rural Development mission area of the U.S. Department of Agriculture which administers the Section 523 Mutual Self-Help grant program.                    

                        (ll)                         *Self-help Method.*                         The construction method by which an individual family utilizes their labor to reduce the construction cost of their home without an exchange of labor between participating families. Unless otherwise authorized by the National Office, this method is only funded for repair and rehabilitation type construction (owner occupied or acquisition rehabilitation).                    

                        (mm)                         *SHARES (Self-Help Automated Reporting and Evaluation System).*                         The primary monitoring tool used by the Agency. The information accessible on SHARES includes data on construction, recruiting, and budgetary data for each grantee, their participating families, and the homes they are building.                    

                        (nn)                         *Site inspections.*                         Construction site inspections may be conducted by the mortgage lender, or a qualified third party to ensure the construction/repair work is being completed adequately, and according to approved plans and specifications. At a minimum, inspection must be conducted three times during the construction of a house-after the footers are in place, once the framing is complete and mechanical, electrical, and plumbing are roughed in, and when the local authority has certified the house for occupancy.                    

                        (oo)                         *Specialty tools.*                         Specialty tools are those tools needed to complete the construction of a home, not including hand tools that are commonly needed to maintain a home, such as hammers, screwdrivers, tape measures, pliers, and wrenches. Specialty tools include, but are not limited to, power saws, electric drills, saber saws, ladders, and scaffolds.                    

                        (pp)                         *Sponsor.*                         An existing entity that is willing and able to assist an applicant, with or without charge, in applying for a grant and in carrying out responsibilities under the agreement. Examples of sponsors are local rural electric cooperatives, institutions of higher education, community action agencies and other self-help grantees. Also, when available, regional technical and management assistance contractors may qualify to serve as a sponsor at no charge.                    

                        (qq)                         *Supervised bank account.*                         An account with a financial institution established through a deposit agreement entered into between the borrower, the Agency or Grantee, and the financial institution.                    

                        (rr)                         *Sweat equity.*                         The benefit earned by the Mutual Self-Help program participant for the contribution of their own labor to the project construction. This value is calculated by subtracting the self-help construction cost of the homes from the appraised value of the homes.                    

                        (ss)                         *Technical assistance.*                         The organizing and supervising of groups of families in the construction of their own homes including but not limited to:                    

(1) Recruiting families who are interested in contributing labor in the construction or rehabilitation of their homes and assisting such families in obtaining housing loans.

(2) Conducting meetings with the participants to explain the self-help program and subjects related to home ownership, such as loan payments, taxes, insurance, maintenance, and upkeep of the property.

(3) Helping families in planning and developing activities that lead to the acquisition and development of suitable building sites or existing homes in the case of acquisition rehabilitation.

(4) Assisting families in selecting or developing house plans for homes which will meet their needs and which they can afford. For rehabilitation type projects, assisting families in assessing need repairs.

(5) Assisting families in obtaining cost estimates for construction materials and any contracting that may be required.

(6) Providing assistance in the preparation of loan and/or grant applications.

                        (7) Providing construction supervision and training for families while they construct or rehabilitate their homes.                              ( print page 96138)    

(8) Providing financial supervision to individual families with loans and/or grants which will minimize the time and effort required by Rural Development in processing borrower expenditures for materials and contract services.

                        (tt)                         *Technical and Management Assistance (T&MA) contractor.*                         An organization which receives Agency funding to provide services to the Agency and training and management assistance to grantees and prospective grantees.                    

                        (uu)                         *Termination.*                         The Agency may terminate grantees when the grantee fails to meet certain requirements or when the grantee requests termination. A terminated grantee is ineligible for another Self-Help program TA grant for at least two years.                    

                        (vv)                         *Very low-income.*                         An adjusted income standard developed in accordance with the requirements of Section 501(b)(4) of the Housing Act of 1949.                    

4. Amend § 1944.404 by revising paragraph (d)(4) to read as follows: 

§ 1944.404

* * * * *

(d) * * *

(4) Has a board of directors as defined in § 1944.403 of this subpart.

§ 1944.406

5. Amend § 1944.406 by removing paragraph (d) and redesignating paragraph (e) as new paragraph (d). 

6. Amend § 1944.407 by revising paragraphs (a), (b), (c), and (d) to read as follows: 

§ 1944.407

* * * * *

(a) An average TA cost per equivalent unit of no more than 15 percent of the cost of equivalent value of modest homes built in the area; or

(b) An average TA cost per equivalent unit that does not exceed the difference between the equivalent value of modest homes in the area and the average mortgage of the participating families minus $10,000; or

(c) For rehabilitation type programs, the maximum TA cost per equivalent unit will be no more than the provided percentage of the cost of equivalent value of modest homes built in the area:

(i) For acquisition rehabilitation, 12 percent;

(ii) For owner-occupied rehabilitation, 9 percent; or

                        (d) A TA per equivalent unit cost that does not exceed an amount established by the National Office. The National Office may establish other limitations as necessary that will be released in a notice published in the                         **Federal Register**                        .                    

7. Revising § 1944.409 to read as follows: 

§ 1944.409

Executive Order 12372

The self-help program is subject to the provision of Executive Order 12372 which requires consultation with State and local officials to foster an intergovernmental partnership and strengthened federalism by relying on State and local processes for the State and local government coordination and review of proposed Federal financial assistance and direct Federal development.

Applicants for the self-help program are required to contact their state's Single Point of Contact (SPOC) to submit their Statement of Activities and find out more information on how to comply with the state's process under Executive Order 12372. To locate a SPOC for your state, the Office of Management and Budget (OMB) has an official SPOC list on their website. For those States that have a home page for their designated SPCO, a direct link has been provided by clicking on the State name.

States that are not listed on the OMB website page have chosen not to participate in the intergovernmental review process, and therefore do not have a SPOC. If you are located within a State that does not have a SPOC, you may send application materials directly to the awarding agency.

8. Revise and republish § 1944.410 to read as follows: 

§ 1944.410

(a) Form SF-424, “Application for Federal Assistance.” Form SF-424 “Application for Federal Assistance” must be submitted by the applicant to the Agency. It will be used to establish communication between the applicant and RHS, determine the applicant's eligibility, determine how well the project can compete with similar applications from other organizations and eliminate any proposals which have little or no chance for Federal funding before applicants incur significant expenditures for preparing an application. In addition, the following information will be attached to and become a part of the preapplication or application:

(1) Complete information about the applicant's previous experience and capacity to carry out the objective of the agreement.

(2) If the applicant organization is already formed, a copy of or an accurate reference to the specific provisions of State or Tribal law under which the applicant is organized; a certified copy of the applicant's Articles of Incorporation and Bylaws or other evidence of corporate existence; certificate of incorporation for other than public bodies; evidence of good standing from the State or Tribe when the corporation has been in existence 1 year or more; the names and addresses of the applicant's members, directors, and officers; and, if another organization is a member of the applicant-organization, its name, address, and principal business. If the applicant is not already formed, attach copies of the proposed organizational documents demonstrating compliance with § 1944.404(d) of this subpart.

(3) The organization's previous year's financial audit, and a current (no more than 12 months old), dated and signed financial statement showing the amounts and specific nature of assets and liabilities together with information on the repayment schedule and status of any debt owed by the applicant. If the applicant is being sponsored by another organization, the same type of financial statement also must be provided by the applicant's sponsor. Newly formed organizations must have a sponsor.

(4) A narrative statement which includes information about the amount of the grant funds being requested, area(s) to be served, need for self-help housing in the area(s), the number of self-help units proposed to be built, rehabilitated or repaired during the agreement period, housing conditions of low-income families in the area and reasons why families need self-help assistance. Evidence should be provided that the communities support the activity and that there are low- income families willing to contribute their labor in order to obtain adequate housing. Evidence of community support may be letters of support from local officials, individuals and community organizations. The pre-application or application may contain information such as census materials, local planning studies, surveys, or other readily available information which indicates a need in the area for housing of the type and cost to be provided by the proposed self-help TA program.

(5) A plan of how the organization proposes to reach very low-income families.

                        (6) A proposed budget which will be prepared on Form SF-424A, “Budget Information (Non-Construction Programs)” and accompanied by the detailed budget being used by the organization will be completed to address applicable assurances as                               ( print page 96139)                            outlined in 2 CFR part 200 as adopted by USDA through 2 CFR part 400. State and local Government will include an assurance that the grantee shall comply with all applicable Federal statutes and regulations in effect with respect to the periods for which it receives grant funding. The State and local governments shall also comply with 2 CFR part 200 as adopted by USDA through 2 CFR part 400.                    

(7) A preliminary survey as to the availability of lots and projected cost of the sites.

(8) A list of other activities the applicant is engaged in and expects to continue, and a statement as to other sources of funding and whether it will have sufficient funds to assure continued operation of the other activities for at least the period of the agreement. If multi-funded, its cost allocation plan or indirect cost rate must be part of the pre-application or application.

(9) Whether assistance under paragraph (d) of this section is requested and a brief narrative identifying the need, amount of funds needed, and projected time period.  

                        (b)                         *Pre-application or application review.*                         When program funding does not allow the Agency to consider pre-application requests the following steps will apply to the full application:                    

(1) Rural Development, within 30 days of receipt of the application, Form SF-424 “Application for Federal Assistance”, and all other required information and material will complete a thorough review for completeness, accuracy, and conformance to program policy and regulations. Incomplete applications will be returned to the applicant for completion. The Authorized Agency Official in the prospective county will be contacted as to the need for the program in the proposed area and if the necessary resources are available to the grantee. This will include a discussion of the number of 502 and 504 units that will need to be committed to the grantee and the potential work impact on the office during the grant period. If it is determined that the Office lacks the resources (either personnel or funds) to process all loan/grant requests in a timely manner, the local office will communicate this need to the State Office along with a recommended solution. (Lack of resources at the local level are not grounds to deny a request). After the Agency has determined that the application is complete and accurate, the materials in an applicant case file will be assembled and forward it to the State Director. The case file, as a minimum, must contain the following:

(i) Form SF-424 “Application for Federal Assistance”,

(ii) Documentation required in accordance with 7 CFR part 1970, and

(iii) Eligibility recommendations.

(2) The State Director may, if needed, submit the organizational documents with any comments or questions to the Office of General Counsel (OGC) for a preliminary opinion as to whether the applicant is or will be a legal organization of the type required by these regulations and for advice on any other aspects of the preapplication or application.

(3) The State Director, if unable to determine eligibility or qualifications with the advice of the OGC, may submit the preapplication to the National Office for review. The preapplication or application will contain all memoranda from OGC giving the results of its review. The State Director will identify in the transmittal memorandum to the National Office the specific problem and will recommend possible solutions and any information about the applicant which would be helpful to the National Office in reaching a decision.

(4) After an eligibility determination has been made, which should be completed within 30 days unless OGC is involved, the State Director will:

(i) If the applicant is eligible, contact the National Office as to the availability of funds or submit the proposal to the National Office for authorization. If funds are available, the Deputy Administrator or designee for Single Family Housing will issue a letter of conditions that the applicant must meet.

(ii) If the applicant is determined ineligible, the Agency will issue a denial letter that will inform the applicant that an appeal of the decision may be made to the National Appeals Division under 7 CFR part 11.

                        (c)                         *Self-help technical assistance grant predevelopment agreement.*                         If funding is available, the applicant requested predevelopment assistance, and the Agency determines that the applicant lacks the financial resources to meet the conditions of grant approval, a grant can be made for the applicant to provide what is required by paragraph (d) of this section. Existing grantees proposing to operate in an area different from the area that they are currently funded to operate are eligible for this grant. However, this grant is available only once for a defined area. This grant is available only after the letter of conditions has been issued. Denial of this assistance is an appealable decision under 7 CFR part 11.                    

                        (d)                         *Form SF-424, “Application for Federal Assistance.”*                         The applicant will submit Form SF-424 “Application for Federal Assistance” to the Agency. The application should provide a detailed proposal of its goals including:                    

(1) Names, addresses, number in household, and total annual household income of families who have been contacted by the applicant and are interested in participating in a self-help housing project. Community organizations including minority organizations may be used as a source of names of people interested in self-help housing.

(2) Proof that the first group of prospective participating self-help families have qualified for financial assistance by the organization or Rural Development.

(3) Evidence that lots are available for the groups.

(4) Detailed cost estimates of houses to be built by the mutual self-help method. Plans and specifications should be submitted with the cost estimates.

(5) Proposed staffing need, including qualifications, experience, proposed hiring schedule, and availability of any prospective employees.

(6) Name, address, and official position of the applicant's representative or representatives authorized to act for the applicant and work with Rural Development.

(7) Budget information including a detailed budget for the Grant Agreement period based upon the needs outlined in the proposal. The detailed budget will be attached to a completed Form SF 424A “Application for Federal Assistance.”

* * * * *

9. Amend § 1944.411 by revising paragraphs (b), (d), (e), (g), and (h) to read as follows: 

§ 1944.411

* * * * *

(b) The applicant has met all of the conditions listed in § 1944.410(d) of this subpart.

* * * * *

(d) A resolution has been adopted by the board of directors which authorizes the appropriate officer to execute the required Grant Agreement and Form RD 400-4, “Assurance Agreement.”

(e) The grantee has insurance against employee dishonesty and theft.

* * * * *

(g) The grantee has established an interest-bearing checking account in accordance with 2 CFR part 200.

                        (h) The grantee has developed a membership agreement to be executed by the grantee and the self-help participants which clearly sets forth what is expected of each and has                               ( print page 96140)                            incorporated a construction development breakdown negotiated with the program office that clearly shows what work is expected of the participating family.                    

10. Revise § 1944.412 to read as follows: 

§ 1944.412

When the application and all items required for the complete docket have been received, the Agency will conduct a thorough review to ensure the application has been properly and accurately prepared and that it includes the required dates and signatures. The docket items will be assembled in the order identified by the checklist provided to the applicant by the program office.

11. Revise and republish § 1944.413 to read as follows: 

§ 1944.413

                        (a)                         *Approval of grant.*                         Within 30 days of receiving a complete application including recommendation from the T&MA Contractor and State Authorized Official, the National Office will:                    

(1) Execute and distribute Form RD 1940-1 “Request for Obligation of Funds.”

(2) Process the obligation of funds and issue an approval letter of conditions to the state.

                        (b)                         *Cancellation of an approved grant.*                         An approved grant may be canceled before closing if the applicant is no longer eligible, the proposal is no longer feasible, or the applicant requests cancellation. Cancellation will be accomplished as follows:                    

(1) The State Authorized Agency Official will prepare Form RD 1940-10, “Cancellation of U.S. Treasury Check and/or Obligation,” and send it to the State Director with the reasons for cancellation. If the State Director approves the request, Form RD 1940-10 “Cancellation of U.S. Treasury Check and/or Obligation” will be returned to the National Office for processing.

(2) The Agency will notify the applicant of the cancellation and the right to appeal under 7 CFR part 11. If the applicant requested the cancellation, no appeal rights are provided, but the applicant will still be notified of the cancellation.

                        (c)                         *Disapproval of grant.*                         If a grant is disapproved after the docket has been developed, the Agency will state the reason on the original Form RD 1940-1 “Request for Obligation of Funds”, or in a letter to the applicant with appeal rights under 7 CFR part 11.                    

12. Revise and republish § 1944.415 to read as follows: 

§ 1944.415

(a) All application dockets, along with the T&MA Contractor and State Authorized Agency Official's recommendations must be submitted to the National Office for approval.

(b) The authority to contract for services is limited to the Administrator of Rural Housing Service (RHS).

(c) Monthly expenditures of the grantee will normally be approved by the Housing Program Director unless:

(1) The grantee operates in only one county; in which case the authority may be delegated by the Housing Program Director.

(2) The grantee operates in more than one county; in which case the State Director will designate the approving official.

(3) The grantee operates in more than one State, in which case the National Office will designate the approving official.

(4) The expenditure is under contract authority, in which case the Contracting Official Representative will approve the monthly expenditure.

13. Revise and republish § 1944.416 to read as follows: 

§ 1944.416

The grant is closed on the date the Grant Agreement is executed by the applicant and the Agency. Cost may not be allocated to, nor may funds be advanced prior to the signing of the Agreement. The State Director or designee is authorized to execute the agreement on behalf of the Agency. Person(s) authorized by resolution may sign for the applicant.

14. Revise and republish § 1944.417 to read as follows: 

§ 1944.417

The Agency has a responsibility to help the grantee be successful and avoid cases of fraud and abuse. Servicing actions also include correlating activities between the grantee and Agency to the benefit of the participating families. The amount of servicing actions needed will vary in accordance with the experience of the grantee, but as minimum the following actions are required:

(a) As needed, but no more than Monthly, the grantee will provide the Agency with a request for additional funds on Form SF-270, “Request for Advance or Reimbursement,” and must be accompanied by a working budget. This request need only show the amount of funds used during the previous month, amount of unspent funds, projected need for the next 30 days, and written justification if the request exceeds the projected need for the next 30 days. Upon receipt of the grantee's request, the Agency will:

(1) If the request appears to be in order, process the request and make the payment by automatic transfer.

(2) If the request does not appear to be in order, immediately contact the grantee to resolve the problem. After the contact:

(i) If the grantee's explanation is acceptable, process the request, or

(ii) If the grantee's explanation is not acceptable, immediately notify the grantee and order the amount of funds that appear reasonable for the next 30 days. Unapproved funds that are later approved will be added to the next month's request.

(b) Quarterly, after the grant start date, the grantee will submit a progress report to the Authorized Agency Official which will verify its progress toward meeting the objectives stated in the Agreement and the application. A quarterly meeting will be scheduled between the grantee, T&MA Contractor, and Agency and will be used as an opportunity to review progress to date and make necessary adjustments for the future. More frequent meetings may be required if the grantee was previously identified as a High Risk grantee or will be identified as a High Risk grantee at this time. As part of the quarterly meeting the following will be done:

(1) The quarterly report and other information will be evaluated to determine progress made to date. The Agency will comment on the quarterly report as to whether the grantee is ahead or behind schedule in each of the following areas:

                        (i)                         *Assisting the projected number of families.*

                        (ii)                         *Serving very low-income applicants.*                         Is the grantee reaching a minimum of very low-income families as required in 42 U.S.C. 1472?                    

                        (iii)                         *Equivalent units (EUs).*                         Is the number of EUs completed representative of lapse of time of the grant? For example, if 25 percent of the grant period has elapsed, are 25 percent of the number of EUs completed?                    

                        (iv)                         *Labor contributions by the family.*                         Are the families working together and are they completing the labor tasks as established on the construction or rehabilitation development breakdown?                    

                        (v)                         *Meeting the approved sweat equity (new construction), or family cost savings goal.*                         Are the families receiving the amount of sweat equity or costing savings as described in the application?                    

                        (vi)                         *Meeting other objectives in the Agreement.*                         Is the grantee submitting timely quarterly reports, audits, or other                               ( print page 96141)                            required information. Are their issues with the construction/rehabilitation projects or loan/grant packaging?                      

(2) The Agency will determine if the grantee is progressing satisfactorily. However, if the Agency determines the grantee is not performing satisfactorily, the Agency will notify the grantee that it has been classified a “High Risk” grantee. The notice will specify the deficiencies and inform the grantee of proposed remedies for noncompliance. The notice will advise the grantee that the Agency is available to assist and provide the name and address of an organization that is under contract with the Agency to assist them. The State Office will forward a copy of the report with comments, and the reasons for classifying them as “High Risk” to the National Office. When the period of time provided for corrective action has expired, an assessment will be made of the progress by the grantee toward correcting the situation. If the Agency determines:

(i) The situation has been corrected or reasonable progress has been made toward correcting the situation, then the “High Risk” status will be lifted, and the grantee so notified.

(ii) The situation has not been corrected, but it is correctable if additional time is granted, then an extension will be issued.

(iii) The situation has not been corrected and it is unlikely to be corrected if given additional time, then the grant will be terminated under § 1944.426(b)(1) of this subpart.

15. Revise and republish § 1944.419 to read as follows: 

§ 1944.419

At the end of the grant period, an evaluation of the grantee will be conducted by the Agency. The Agency may use employees or an organization under contract to provide the evaluation. The evaluation is to determine how successful the grantee was in meeting goals and objectives as defined in the agreement, application, this regulation, and any amendments.

(a) This is a quantitative evaluation of the grantee to determine if it met its goals in:

(1) Assisting the projected number of families in obtaining adequate housing as proposed by the organization in the approved application.

(2) Meeting the goal of assisting very low-income families stated in section 502 of the Housing Act of 1949, and in § 1944.401 of this subpart.

(3) Meeting the Family Labor Contribution requirement specified in under § 1944.403(s) of this subpart, as applicable.

(4) Keeping costs within the approved budget in the application.

(5) Meeting the approved sweat equity (new construction), or family cost savings goal (rehabilitation) stated in section § 1944.403 of this subpart.

(6) Meeting other objectives in the Grant Agreement including, but not limited to timely reporting, construction standards, loan packaging standards, etc.

(b) The evaluation is a narrative addressed to the grantee and written in 3 parts, namely, findings, recommendations, and an overall rating. The rating will be either unacceptable, acceptable, or outstanding, as follows:

(1) Outstanding if the grantee met or exceeded all of the goals in paragraph (a) of this section.

(2) Acceptable if the grantee met or exceeded three of the grant goals.

(3) Unacceptable if the grantee failed to obtain an acceptable rating. An unacceptable rating may cause the organization to be ineligible for grant assistance should this say the following the proceeding 2 years.

(c) After the State Director has reviewed the evaluation, a copy will be mailed to the grantee. The grantee may request a review of the evaluation with the Agency. This review is for clarification of the material and to dispute the findings if they are known to be wrong. The rating is not open for discussion except to the extent it can be proven that the findings do not support the rating. If this is the case, the Agency may amend the rating.

16. Revise and republish § 1944.420 to read as follows: 

§ 1944.420

The State Director or designee may execute an extension or revision, at any time during the grant period, provided:

(a) The extension period is reasonable. The extension period is reasonable if the goals can be completed within the timeline without additional cost being incurred. Typically, an reasonable extension will not exceed two years.

(b) The need for the extension is clearly justified.

(c) If additional funds are needed, a revised budget is submitted with complete justification, and

(d) The grantee is within the guidelines in § 1944.407 of this subpart or the Agency determines that the best interest of the Government will be served by the extension.

17. Revise and republish § 1944.421 to read as follows: 

§ 1944.421

Grantees wishing to continue with self-help efforts after the end of the current grant plus any extensions should file Form SF-424 “Application for Federal Assistance,” in accordance with § 1944.410. It is recommended that it be filed at least 6 months before the end of the current grant period. Funds from the existing grant may be used to meet the conditions of a new grant and equivalent units may be split between two grant cycles. In addition to meeting the conditions of an applicant as defined in § 1944.411 of this subpart, the grantee must also have received or will receive an acceptable rating on its current grant unless an exception is granted by the Agency. The Agency may grant an exception to the rating if it is determined that the reasons causing the previous unacceptable rating have been removed or will be removed with the approval of this grant.

18. Revise and republish § 1944.422 to read as follows: 

§ 1944.422

The grantee must submit an audit to the Agency annually (or biennially if a State or local government with authority to do a less frequent audit requests it) and the earlier of 30 calendar days after receipt of the auditor's report or nine months after the end of the grantee's audit period. The audit, conducted by the grantee's auditors, is to be performed in accordance with Generally Accepted Government Auditing Standards (GAGAS), using the publication “Standards for Audit of Governmental Organizations, Programs, Activities and Functions” developed by the Comptroller General of the United States in 1981, and any subsequent revisions. In addition, the audits are also to be performed in accordance with 2 CFR part 200, as adopted by USDA through 2 CFR part 400, and Agency requirements as specified in this subpart.

                        Audits of borrower loan funds will be required when the grantee manages these funds during construction in a supervised or custodial bank account. These funds are not awarded to the grantee; therefore, they should not be shown on a Schedule of Federal Awards nor have the same auditing requirements. Instead, an agreed upon procedures audit that, at a minimum, includes a review of the draw down request to ensure charges listed can be traced back to source documents, and reconciliation of the bank account record. The number of borrower accounts audited will be determined by                               ( print page 96142)                            the auditor. In incidences where it is difficult to determine the appropriate number of accounts to be audited, auditors should be authorized by the State Director to audit the lesser of 10 loans or 10 percent of total loans.                    

19. Revise and republish § 1944.423 to read as follows: 

§ 1944.423

A grantee is required to assist 502/504 program applicants in submitting their application for a loan and/or grant. Loan/grant packaging will be performed in accordance with 7 CFR part 3550; therefore, it is important that the grantee be trained at an early date. Typically, this training should take place before the first applications are submitted to the Agency Office and before the grant is closed. A grantee should become very knowledgeable of the Agency's eligibility requirements but must understand that only the Agency can approve or deny an applicant assistance. The Grantee must work cooperatively with the Agency in the loan approval process and must work within the regulations for the program and recognize the Agency's ultimate decision-making authority to approve or deny loans.

However, the grantee may ask for clarification that may be helpful in working with future applicants. Grant funds may not be used to pay any expense in connection with an appeal that the applicant may file or pursue.  

20. Revise and republish § 1944.424 to read as follows: 

§ 1944.424

All construction will be performed in accordance with subpart A of part 1924 of this chapter. The planned work must meet the building requirements of 7 CFR part 3550 and meet the Development Standards as defined in subpart A of part 1924 of this chapter and State, Tribal, or local requirements. Sites and site developments must conform to the requirements of subpart C of part 1924 of this chapter.

21. Revise and republish § 1944.425 to read as follows: 

§ 1944.425

The Agency is responsible for administering borrower loan funds during the construction phases. The extent of grantee involvement will depend on the experience of the grantee and the amount of authority delegated to them by the Authorized Agency Official in accordance with Agency guidelines available in any Rural Development Office.

22. Revise and republish § 1944.426 to read as follows: 

§ 1944.426

                        (a)                         *Grant purposes completed.*                         Promptly after the date of completion, grant closeout actions will be taken to allow the orderly discontinuance of grantee activity.                    

(1) The grantee will immediately refund to the Agency any balance of grant funds that are not committed for the payment of authorized expenses.

(2) The grantee will furnish Form SF-425, “Financial Status Report” and detailed final budget to the Agency within 90 days after the date of completion of the grant. All other financial, performance, and other reports required as a condition of the grant also will be completed.

(3) After the grant closeout, the Agency retains the right to recover any disallowed costs. 7 CFR part 3550 will be used by the Agency to recover any unauthorized expenditures.

(4) The grantee will provide the Agency an audit conforming to those requirements established in this part, including audits of self-help borrower accounts.

(5) Upon request from the recipient, any allowable reimbursable cost not covered by previous payments shall be promptly paid by the Agency.

                        (b)                         *Grant purposes not completed.*

                        (1)                         *Notification of termination.*                         The State Director will promptly notify the grantee and the National Office in writing of the termination action including the specific reasons for the decision and the effective date of the termination. The notification to the grantee will specify that if the grantee believes the reason for the proposed termination can be resolved, the grantee should, within 15 calendar days of the date of this notification, contact the Agency in writing requesting a meeting for further consideration. The meeting will be an informal proceeding at which the grantee will be given the opportunity to provide whatever additional information it believes should be considered in reaching a decision concerning the case. The grantee may have an attorney, or any other person present at the meeting if desired. Within 30 calendar days of the meeting, the Agency will determine what action to take.                    

(i) If the Agency determines that termination is not necessary, the grantee will be informed in writing.

(ii) If the Agency determines that termination of the grant is appropriate, the grantee will be notified in accordance with 7 CFR part 11.

                        (2)                         *National Office review.*

(i) Upon receipt of a request from a grantee that the decision of the State Director be reconsidered, the National Office will make a preliminary decision concerning the continued funding of the grantee during the appeal period. Written notification of the decision will be given to the State Director and grantee.

(ii) The National Office will then obtain a comprehensive report on the matter from the State Office. This information will be considered together with any additional information that may be provided by the grantee.

                        (c)                         *Grant suspension.*                         When the grantee has failed to comply with the terms of the agreement, the Agency will consider termination or suspension of the grant usually only after a Grantee has been classified as “high risk” in accordance with 7 CFR 1944.417(b)(2). When the Agency determines that the grantee has a reasonable potential to correct deficiencies the grant may be suspended. The suspension will adhere to 2 CFR part 200 as adopted by USDA through 2 CFR part 400. The grantee will be notified of the grant suspension in writing by the Agency. The Agency will promptly inform the grantee of its rights to appeal the decision in accordance with 7 CFR part 11.                    

                        (d)                         *Grant termination.*                         The State Director may terminate the grant agreement whenever Rural Development determines that the grantee has failed to comply with terms of the Agreement. The reasons for termination may include, but are not limited to, such problems as listed in paragraph (e)(3)(i) of the Grant Agreement. The State Director may also withhold further disbursement of grant funds and prohibit the grantee from incurring additional obligations of grant funds with written approval of the National Office. Rural Development will allow all necessary and proper costs which grantee could not reasonably avoid.                    

                        (1)                         *Termination for cause.*                         The grant agreement may be terminated in whole, or in part, at any time before date of completion, whenever Rural Development determines that the grantee has failed to comply with terms of the Agreement. The State Director will notify the grantee in writing giving the reasons for the action and inform the grantee of its rights of appeal by use of Exhibit B-3 to Subpart B of part 1900 “Letter for Notifying Applicants, Lender, Holders and Borrowers of Adverse Decisions Where the Decision Involves an Appraisal (Not To Be Used in Cases Involving Farmer Program Primary Loan Servicing Actions.)”                    

                        (2)                         *Termination for convenience.*                         RHS, or its successor agency, or the grantee                               ( print page 96143)                            may terminate the grant in whole, or in part, when both parties agree that the continuation of the grant would not produce beneficial results. The two parties will agree in writing to the termination conditions including the effective date. No notice of rights of appeal will be issued by Rural Development.                    

23. Add § 1944.428 to read as follows: 

§ 1944.428

The objective of a Site Option (SO) loan under Section 523(b)(1)(B) of Title V of the Housing Act of 1949 is to enable technical assistance (TA) grantees or contractors to establish revolving fund accounts to obtain options on land needed to make sites available to families that will build their own homes by the self-help method. Loans may be made only as necessary to enable eligible applicants to establish revolving accounts with which to obtain options on land that will be needed as building sites by self-help families participating in the TA self-help housing program.

To be eligible for an SO loan, the applicant must be a TA grantee that is currently operating in a satisfactory manner under a TA grant agreement. If the SO loan applicant has applied for TA funds but is not already a TA grantee and it appears that the TA grant will be made, the SO loan may be approved but not closed until the TA grant is closed. Applications will be processed, approved or disapproved, and closed in accordance with 7 CFR 1822, subpart G, 1822.271 through 1822.275 and adhere to the special requirements for RHS section 523 loans at 7 CFR 1822.278.

24. Revise and republish § 1944.450 to read as follows: 

§ 1944.450

The information collection requirements contained in this regulation has been approved by OMB and have been assigned OMB control number 0575-0043. This proposed rulemaking contains new reporting requirements that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).

# Subpart I [Amended]

25. Amend Subpart I by removing Exhibits A through F. 

Joaquin Altoro,

Administrator, Rural Housing Service.

[FR Doc. 2024-28032 Filed 12-3-24; 8:45 am]

BILLING CODE 3410-XV-P