16358 Federal Register / Vol. 60, No. 60 / Wednesday, March 29, 1995 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Office of the Assistant Secretary for

Community Planning and

Development

24 CFR Parts 594 and 595

[Docket No. R–95–1665; FR–3389–F–02]

RIN 2506–AB48

John Heinz Neighborhood

Development Program

AGENCY: Office of the Assistant

Secretary for Community Planning and

Development, HUD.

ACTION: Final rule.

SUMMARY: The John Heinz

Neighborhood Development Program

was established as a permanent program

in the Housing and Community

Development Act of 1992. Previously,

the program had been administered by

the Department as a demonstration

program. Pending this final rule, the

permanent program has been

implemented through Notices of

Funding Availability (NOFAs)

published in the Federal Register. The

most recent NOFA was published on

February 24, 1995.

This final rule establishes the

requirements applicable to the

permanent program and contains HUD’s

responses to comments received on the

proposed rule. The rule, which takes

effect before the deadline for

applications under the February 24

NOFA, will govern that NOFA and

future funding competitions that may be

announced from time to time.

EFFECTIVE DATE: April 28, 1995.

FOR FURTHER INFORMATION CONTACT:

Gene Hix, Grant Officer, Office of

Community Planning and Development,

Department of Housing and Urban

Development, Room 7218, 451 Seventh

Street SW., Washington, D.C. 20410;

telephone number (202) 708–2186. The

TDD number is (202) 708–1455. (These

are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The information collection

requirements contained in this rule have

been approved by the Office of

Management and Budget (OMB) under

the Paperwork Reduction Act of 1980.

The control number for information

collections described in this document

is 2535–0084.

Background

Section 832 of the Housing and

Community Development Act of 1992

(42 U.S.C. 5318a) established the John

Heinz Neighborhood Development

Program as a permanent program of the

Department. Previously, the program

had been authorized and operated as a

demonstration program, pursuant to

section 123 of the Housing and UrbanRural Recovery Act of 1983 (42 U.S.C.

5318 note). On June 8, 1993 (58 FR

32210), HUD published a proposed rule

addressing requirements of the

permanent program. This proposed rule

referenced a notice of funding

availability (NOFA) that was published

on the same day as the proposed rule

(58 FR 32215) and invited public

comment on the announced

requirements.

Discussion of Public Comments

The Department received only one

comment in response to the proposed

rule. The comment, from the National

Neighborhood Coalition, incorporated

four separate points that are addressed

in this section of the preamble.

(1) Neighborhood resident

participation. The commenter stated

that two conditions are critical to the

success and sustainability of the

organization and projects that it

undertakes. The comment emphasized

the importance of both participation by

residents of the neighborhood and a

governing body whose composition

reflects the demographic characteristics

of the neighborhood. HUD agrees with

this observation, and the final rule

indicates that NOFAs developed for this

program will give appropriate weight to

this factor.

(2) Neighborhood Development

Funding Organizations (NDFO).

Another comment questioned the

requirement that an applicant obtain the

participation of an NDFO (bank) located

within the neighborhood, noting that a

number of organizations do not have

bank branches located within their

neighborhoods. The final rule clarifies

this requirement by omitting any

requirement that the NDFO be located

within the neighborhood.

(3) Record of past performance of an

applicant. Another comment suggested

that the record of past performance of an

applicant is a critical factor. HUD took

this comment into consideration, but

believes that the record of past

performance is adequately reflected in

other factors. The final rule is

unchanged on this point.

(4) Smaller Grants to Fledgling

Organizations. The commenter also

suggested that HUD make smaller grants

in the $5,000 to $20,000 range to

fledgling organizations to help them get

started. HUD already has the authority

to make smaller grants to these

organizations; therefore, the final rule is

unchanged on this point.

Removal of Part 595

Currently 24 CFR part 595 contains

regulations for the Neighborhood SelfHelp Development Program. Although

this program was conceptually similar

to the John Heinz Neighborhood

Development Program, the authorizing

legislation for the Neighborhood SelfHelp Development Program was

repealed in 1981 (42 U.S.C. 8121 note,

95 Stat. 398). Therefore, the Department

is removing part 595 from the Code of

Federal Regulations, in order to avoid

confusion about the status of that

program.

Other Matters

Executive Order 12612, Federalism

The General Counsel, as the

Designated Official under section 6(a) of

Executive Order 12612, Federalism, has

determined that the policies contained

in this rule do not have substantial

direct effects on States or their political

subdivisions, or the relationship

between the Federal government and

the States, or on the distribution of

power and responsibilities among the

various levels of government. As a

result, the rule is not subject to review

under the Order. The program

implemented by this rule will provide

incentive funds to encourage

neighborhood organizations to become

more self-sufficient in their

development activities.

Executive Order 12606, the Family

The General Counsel, as the

Designated Official under Executive

Order 12606, The Family, has

determined that this rule has potential

for a significant impact on family

formation, maintenance, and general

well-being. The purpose of the program

implemented by this rule is to improve

neighborhood opportunities relating to

employment, business, housing, and the

provision of essential services, all of

which could benefit families

significantly. However, because the

impact on families is indirect and

beneficial, no further review is

considered necessary.

Environmental Review

At the time of publication of the

proposed rule, a finding of no

significant impact with respect to the

environment was made in accordance

with HUD regulations in 24 CFR part 50

that implement section 102(2)(C) of the

National Environmental Policy Act of

1969 (42 U.S.C. 4332). The proposed

rule is adopted by this final rule without

significant change. Accordingly, the
Federal Register / Vol. 60, No. 60 / Wednesday, March 29, 1995 / Rules and Regulations 16359

initial finding of no significant impact

remains applicable, and is available for

public inspection between 7:30 a.m. and

5:30 p.m. weekdays in the office of the

Rules Docket Clerk at the above address.

Regulatory Flexibility Act

The Secretary, in accordance with the

Regulatory Flexibility Act (5 U.S.C.

605(b)), has reviewed this rule before

publication and by approving it certifies

that this rule does not have a significant

economic impact on a substantial

number of small entities. The rule

establishes program regulations for the

award of grants to neighborhood

development organizations for the

purpose of supporting local efforts to

improve opportunities relating to

employment, business, housing, and

services within the participating

neighborhoods.

Semiannual Agenda of Regulations

This rule was listed as Item No. 1842

in the Department’s Semiannual Agenda

of Regulations published on November

14, 1994 (59 FR 57632, 57663), in

accordance with Executive Order 12866

and the Regulatory Flexibility Act.

The Federal Domestic Assistance Catalog

number for this program is 14.242.

List of Subjects

24 CFR Part 594

Community development, Grant

programs—housing and community

development, Reporting and

recordkeeping requirements, Urban

renewal.

24 CFR Part 595

Community development, Grant

programs—housing and community

development, Urban renewal.

Accordingly, and under the authority

of 42 U.S.C. 3535(d), 24 CFR chapter V

is amended as follows:

1. Part 594 is added to read as follows:

PART 594—JOHN HEINZ

NEIGHBORHOOD DEVELOPMENT

PROGRAM

Subpart A—General

Sec.

594.1 Applicability and purpose.

594.3 Definitions.

Subpart B—Eligibility

594.5 Eligible applicants.

594.7 Other threshold requirements.

594.10 Eligible activities.

Subpart C—Funding Allocation and Criteria

594.15 Allocation amounts.

594.17 General criteria for competitive

selection.

Subpart D—Award and Use of Grant

Amounts

594.20 Submission procedures.

594.23 Approval and certification

procedures.

594.25 Project administration.

594.28 Environmental reviews.

594.30 Equal opportunity and other Federal

requirements.

Authority: 42 U.S.C. 3535(d) and 5318a.

Subpart A—General

§ 594.1 Applicability and purpose.

(a) General. This part establishes as a

permanent program the John Heinz

Neighborhood Development Program, as

authorized by section 832 of the

Housing and Community Development

Act of 1992. Previously, the program

had been administered by the

Department as a demonstration program

under Section 123 of the Housing and

Urban-Rural Recovery Act of 1983 (42

U.S.C. 5318 note).

(b) Purpose. The program is intended

to assist communities to become more

viable, by providing incentive funds to

carry out neighborhood development

activities that benefit low- and

moderate-income families. The program

objectives are to increase the capacity of

neighborhood organizations, promote

long-term financial support for their

neighborhood projects, and encourage

greater participation of neighborhood

organizations with private and public

institutions.

§ 594.3 Definitions.

Empowerment zone means an area

designated by HUD as an Empowerment

Zone under 26 U.S.C. 1391–1393.

Enterprise community means an area

designated by HUD as an Enterprise

Community under 26 U.S.C. 1391–1393.

Grantee means an eligible

neighborhood organization that executes

a grant agreement with HUD under this

part.

HUD means the Department of

Housing and Urban Development.

Low- and moderate-income persons

means families and individuals whose

incomes do not exceed 80 percent of the

median income for the area, as

determined by the Secretary of HUD in

accordance with 42 U.S.C. 5302(a)(20).

Neighborhood development funding

organization means:

(1) A depository institution, the

accounts of which are insured pursuant

to the Federal Deposit Insurance Act, 12

U.S.C. 1811 et seq., or the Federal Credit

Union Act, 12 U.S.C. 1751 et seq., and

any subsidiary (as such term is defined

in 12 U.S.C. 1813(w)) thereof;

(2) A depository institution holding

company and any subsidiary (as such

term is defined in 12 U.S.C. 1813(w))

thereof; or

(3) A company at least 75 percent of

the common stock of which is owned by

one or more insured depository

institutions or depository institution

holding companies.

Neighborhood development

organization means the same as the term

is defined in § 594.5.

Rural neighborhoods. In small cities

with under 10,000 in population and in

rural areas, a neighborhood area can be

the same unit as the unit of general local

government.

Unit of general local government

means a city, town, township, county,

parish, village, or other general purpose

political subdivision of a State; an urban

county; the Federated States of

Micronesia; the Marshall Islands; or a

general purpose political subdivision

thereof.

Subpart B—Eligibility

§ 594.5 Eligible applicants.

(a) General requirements. To be

eligible under this program, a

neighborhood development organization

must be located within the

neighborhood for which assistance is to

be provided. It cannot be a city-wide

consortium, or, in general, an

organization serving a large area of the

city. The applicant must meet all of the

following requirements:

(1) The organization must be

incorporated as a private, voluntary,

nonprofit corporation under the laws of

the State in which it operates;

(2) The organization must be

responsible through a governing body to

the residents of the neighborhood it

serves, and not less than 51 percent of

the members of the governing body

must be residents of the neighborhood;

(3) The organization must have

conducted business for at least one year;

(4) The organization must operate

within an area that meets at least one of

the following criteria:

(i) The area meets the requirements

for Federal assistance under section 119

of the Housing and Community

Development Act of 1974, 42 U.S.C.

5318;

(ii) The area is designated as an

Enterprise Community or Empowerment

Zone under Federal law as enacted;

(iii) The area is designated as an

enterprise zone under State law and is

recognized by the Secretary as a State

enterprise zone for purposes of this part;

or
16360 Federal Register / Vol. 60, No. 60 / Wednesday, March 29, 1995 / Rules and Regulations

(iv) The area is a qualified distressed

community within the meaning of

section 233(b)(1) of the Bank Enterprise

Act of 1991, 12 U.S.C. 1834a(b)(1); and

(5) The organization must have

conducted one or more eligible

neighborhood development activities

that primarily benefit low- and

moderate-income persons.

(b) Special eligibility. Any facility that

provides small entrepreneurial business

with affordable shared support services

and business development services and

that meets the requirements of

paragraph (a) of this section may also be

eligible to participate in this program.

§ 594.7 Other threshold requirements.

In addition, an applicant must meet

the following threshold requirements:

(a) Specify a management business

plan for accomplishing one or more of

the eligible activities specified in

§ 594.10;

(b) Specify a strategy for achieving

greater long-term private sector support,

especially in cooperation with a

neighborhood development funding

organization; and

(c) Specify a strategy for increasing

the capacity of the applicant.

§ 594.10 Eligible activities.

Eligible activities include, but are not

limited to, the following:

(a) Developing economic development

activities that include:

(1) Creating permanent jobs in the

neighborhood; or

(2) Establishing or expanding

businesses within the neighborhood;

(b) Developing new housing,

rehabilitating existing housing, or

managing housing stock within the

neighborhood;

(c) Developing delivery mechanisms

for essential services that have lasting

benefits to the neighborhood; and

(d) Planning, promoting, or financing

voluntary neighborhood improvement

efforts.

Subpart C—Funding Allocation and

Criteria

§ 594.15 Allocation amounts.

(a) Amounts and match requirement.

HUD will make grants, in the form of

matching funds, to eligible

neighborhood development

organizations. HUD reserves the right to

make grants for less than the maximum

amount established by statute, and to

limit the number of times a previous

grantee can receive funding. A Federal

matching ratio will be established for

each grantee in accordance with the

statutory requirement that the highest

ratios be established for neighborhoods

having the greatest degree of economic

distress or the smallest number of

households.

(b) Administrative costs. The

Secretary may use no more than 5

percent of the funds appropriated for

the program for administrative or other

expenses in connection with the

program.

§ 594.17 General criteria for competitive

selection.

(a) Criteria. HUD will use the

following general criteria for selecting

and ranking applications for all

competitions for John Heinz

Neighborhood Development Program

funds. The relative values for the

criteria will be indicated in each NOFA:

(1) The degree of economic distress

and the benefit to low- and moderateincome residents of the neighborhood;

(2) The past performance in carrying

out eligible activities, and staff

capability;

(3) The quality of the Management/

Business Plan;

(4) The evidence of coordination and

resident participation; and

(5) The quality of the strategy to

increase the capacity of the organization

and the strategy developed for meeting

long-term financial needs.

(b) Geographic diversity. The

Department also reserves the right to

fund applicants in other than rank

order, for the purpose of achieving

geographic balance.

Subpart D—Award and Use of Grant

Amounts

§ 594.20 Submission procedures.

(a) Use of NOFAs. The Department

will publish a Notice of Funding

Availability (NOFA) in the Federal

Register for each funding competition

under this program, indicating the

objective of the competition; the amount

of funding available; the application

procedures, including the eligible

applicants and activities to be funded;

and any special conditions applicable to

the competition, including the

requirements for the match. The NOFA

also will describe the maximum points

to be awarded under each evaluation

criterion, for the purpose of ranking

applications, and any special factors to

be considered in assigning the points to

each criterion.

(b) Applications shall be submitted in

accordance with the time, place, and

content described in the NOFA.

(Approved by the Office of Management and

Budget under control number 2535–0084)

§ 594.23 Approval and certification

procedures.

(a) Approval of application. HUD’s

acceptance of an application for review

does not imply a commitment to

provide funding. HUD will provide

notification of whether a project will be

funded in accordance with the criteria

and procedures set out in the applicable

NOFA.

(b) Certifications. In the absence of

independent evidence that tends to

challenge in a substantial manner the

certifications made by the applicant

pursuant to § 594.30, the required

certifications will be accepted by HUD.

However, if independent evidence is

available that tends to challenge in a

substantial manner an applicant’s

certification, HUD may require further

information or assurances to be

submitted in order to determine

whether the applicant’s certification is

satisfactory.

§ 594.25 Project administration.

Project administration will be

governed by the terms of the grant

agreement.

§ 594.28 Environmental reviews.

(a) For all proposed actions or

activities that are not considered

categorically excluded under 24 CFR

50.20, HUD will perform the

appropriate environmental reviews

under the National Environmental

Policy Act (NEPA).

(b) Whether the action or activity is

categorically excluded from NEPA

review or not, HUD will comply also

with other applicable requirements of

environmental statutes, Executive

Orders, and HUD standards listed in 24

CFR 50.4. The environmental reviews

will be performed before award of a

grant. Grantees shall adhere to all

assurances applicable to environmental

concerns as contained in the RFGA and

grant agreements.

§ 594.30 Equal opportunity and other

Federal requirements.

Each participating neighborhood

development organization must certify

that it will carry out activities assisted

under the program in compliance with:

(a) The requirements of the Fair

Housing Act (42 U.S.C. 3601–3619) and

implementing regulations at 24 CFR

parts 100, 108, 109, 110, and 115; part

200, subpart M; and Executive Order

11063 (Equal Opportunity in Housing)

(3 CFR, 1958–1963 Comp., p. 652) and

implementing regulations at 24 CFR Part

107; and applicable provisions of the

Civil Rights Act of 1964, 42 U.S.C.

2000a et seq., including Title VI (42

U.S.C. 2000d) (Nondiscrimination in
Federal Register / Vol. 60, No. 60 / Wednesday, March 29, 1995 / Rules and Regulations 16361

Federally Assisted Programs) and its

implementing regulations at 24 CFR part

1;

(b) The prohibitions against

discrimination on the basis of age under

the Age Discrimination Act of 1975 (42

U.S.C. 6101–07) and implementing

regulations at 24 CFR part 146; the

prohibition against discrimination

against individuals with a disability

under section 504 of the Rehabilitation

Act of 1973 (29 U.S.C. 794) and

implementing regulations at 24 CFR part

8; and the requirements of Executive

Order 11246 (Equal Employment

Opportunity) (3 CFR, 1964–1965 Comp.,

p. 339) and the implementing

regulations issued at 41 CFR chapter 60;

(c) The requirements of section 3 of

the Housing and Urban Development

Act of 1968, 12 U.S.C. 1701u, and

implementing regulations at 24 CFR part

135;

(d) The requirements of Executive

Order 11625 (3 CFR, 1971–1975 Comp.,

p. 616), Executive Order 12138 (3 CFR,

1979 Comp., p. 393), and Executive

Order 12432 (3 CFR, 1983 Comp., p.

198). Consistent with HUD’s

responsibilities under these Orders, the

grantee must make efforts to encourage

the use of minority and women’s

business enterprises in connection with

activities funded;

(e) The prohibitions against

discrimination and related requirements

of section 109 of the Housing and

Community Development Act of 1974

(42 U.S.C. 5309);

(f) The requirements of the Americans

with Disabilities Act (42 U.S.C. 12181–

12189) and implementing regulations at

28 CFR part 36, as applicable;

(g) The Consolidated Plan of the

appropriate unit of general local

government; and

(h) Other Federal requirements as

specified in the applicable NOFA and

application kit.

PART 595—[REMOVED AND

RESERVED]

2. Part 595 is removed and reserved.

Dated: March 16, 1995.

Andrew Cuomo,

Assistant Secretary for Community Planning

and Development.

[FR Doc. 95–7402 Filed 3–28–95; 8:45 am]

BILLING CODE 4210–29–P