Source: https://www.federalregister.gov/articles/2007/08/17/E7-16197/community-development-block-grant-program-small-cities-program
Timestamp: 2015-06-30 10:02:12
Document Index: 550034301

Matched Legal Cases: ['art 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', 'art 570', 'art 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', 'art 91', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570', '§ 570']

Federal Register | Community Development Block Grant Program; Small Cities Program
72 FR 46368
-46371 (4 pages)
Shorter URL: https://federalregister.gov/a/E7-16197 Related Topics
In 1981, Section 106 of Title I of the HCD Act (Section 106) was amended (97, approved August 13, 1981) to permit states to elect to assume administrative responsibility for the CDBG program for non-entitlement areas within their jurisdiction. In the event that a state government does not elect to do so, section 106 provides that HUD will administer the CDBG program for non-entitlement areas within the state. For those states that have not elected to assume this administrative responsibility, HUD administers the program under regulations in 24 CFR part 570, subpart F, entitled the “Small Cities Program.” HUD currently administers grants to non-entitlement areas in Hawaii. The Department also administers uncompleted Small Cities grants in New York that were contracted before the New York State government took over the program in FY 2000. The active New York Small Cities grants are being funded with program income.
II. The January 3, 2007, Proposed Rule Back to Top
HUD also proposed to update and streamline the subpart F regulations for the HUD-administered Small Cities program in New York, which HUD operated prior to the state's takeover of the program in FY 2000. The final competitive grants made under this program by HUD were awarded in FY 1999, and almost all New York Small Cities projects expended their funds by the close of FY 2006. The subpart F regulations contain certain outdated provisions regarding the New York Small Cities program that are no longer necessary and, therefore, would be removed by the proposed rule. For example, § 570.420(c) currently references statutory public notification requirements that HUD must follow when it makes competitive awards of grants. HUD is removing paragraph (c) because HUD no longer awards the New York Small Cities funds. Other provisions that continue to apply to ongoing grants are retained in subpart F.
The regulatory changes are described in greater detail in the preamble to the January 3, 2007, proposed rule. III. This Final Rule Back to Top
The public comment period on the proposed rule closed March 5, 2007. HUD received two comments, which were submitted by the Hawaii County and Kauai County governments. Both comments supported the proposed rule. One of the comments recommended that HUD eliminate the second, program income-based test at 24 CFR 570.902(a)(2) for determining whether a grantee is carrying out its CDBG activities in a timely manner. Under the test, which HUD proposed to apply to non-entitlement CDBG grantees in Hawaii, HUD may determine that a grantee is not carrying out its activities in a timely manner if, 60 days prior to the end of a program year, the sum of program income the grantee has on hand and the funds remaining in its CDBG line of credit exceeds 1.5 times the grant amount for its current program year. The commenter argued that, especially for grantees receiving relatively small annual program grants, it is important to be able to generate and maintain revolving loan funds to support homebuyer loan and other lending programs. HUD has decided not to revise the proposed rule in response to the comment. The entitlement rule currently considers program income, including income from revolving loan funds, in determining whether a grantee is implementing its activities in a timely manner. There is a provision at § 570.902(a)(2)(ii) that allows HUD to determine a grantee to be timely if the lack of timely expenditure is due to factors beyond the grantee's reasonable control. This provision would accommodate a situation in which a small grantee received a large amount of unexpected program income. It is worth noting that HUD expects grantees to properly plan for receipt of program income. Implementing § 570.902(a)(2)(ii) for non-entitlement counties in Hawaii will also meet the statutory intent of Section 218 of the Consolidated Appropriations Act, 2004, which aims to treat the non-entitlement counties in Hawaii in the manner of entitlement grantees, as much as possible.
A technical amendment has been made to § 570.420(e) to reference § 570.442 in the section. This section refers to reallocation of Insular area funds and was added to the regulations by a final rule that was published on March 15, 2007.
List of Subjects in 24 CFR Part 570 Back to Top
1.The authority citation for part 570 continues to read as follows: Authority:
2.Revise § 570.200(a)(3) introductory text to read as follows: § 570.200 General policies.
(3) Compliance with the primary objective. The primary objective of the Act is described in section 101(c) of the Act. Consistent with this objective, entitlement recipients, non-entitlement CDBG grantees in Hawaii, and recipients of insular area funds under section 106 of the Act must ensure that, over a period of time specified in their certification not to exceed three years, not less than 70 percent of the aggregate of CDBG fund expenditures shall be for activities meeting the criteria under § 570.208(a) or under § 570.208(d)(5) or (6) for benefiting low- and moderate-income persons. For grants under section 107 of the Act, insular area recipients must meet this requirement for each separate grant. See § 570.420(d)(3) for additional discussion of the primary objective requirement for insular areas funded under section 106 of the Act. The requirements for the HUD-administered Small Cities program in New York are at § 570.420(d)(2). In determining the percentage of funds expended for such activities:
3.Revise § 570.208(a)(1)(ii) introductory text to read as follows: § 570.208 Criteria for national objectives.
(ii) For metropolitan cities and urban counties, an activity that would otherwise qualify under § 570.208(a)(1)(i), except that the area served contains less than 51 percent low- and moderate-income residents, will also be considered to meet the objective of benefiting low- and moderate-income persons where the proportion of such persons in the area is within the highest quartile of all areas in the recipient's jurisdiction in terms of the degree of concentration of such persons. This exception is inapplicable to non-entitlement CDBG grants in Hawaii. In applying this exception, HUD will determine the lowest proportion a recipient may use to qualify an area for this purpose, as follows:
4.§ 570.209(b)(2)(i) is revised to read as follows: § 570.209 Guidelines for evaluating and selecting economic development projects.
5.Revise § 570.300 to read as follows: § 570.300 General.
6.Revise the heading of Subpart F to read as follows: Subpart F—Small Cities, Non-Entitlement CDBG Grants in Hawaii and Insular Areas Programs Back to Top
7.In § 570.420: a. Revise paragraphs (a)(1) and (b)(1);
b. Remove § 570.420(c);
c. Redesignate paragraphs (d), (e), and (f) as paragraphs §§ 570.420 (c), (d), and (e), respectively; and
d. Revise the newly designated paragraph (e) to read as follows:
§ 570.420 General.
(a) Administration of Non-entitlement CDBG funds in New York by HUD or Insular Areas—(1) Small cities. The Act permits each state to elect to administer all aspects of the CDBG program annual fund allocation for the non-entitlement areas within its jurisdiction. All states except Hawaii have elected to administer the CDBG program for non-entitlement areas within their jurisdiction. This section is applicable only to active HUD-administered small cities grants in New York. The requirements for the non-entitlement CDBG grants in Hawaii are set forth in § 570.429 of this subpart. States that elected to administer the program after the close of Fiscal Year 1984 cannot return administration of the program to HUD. A decision by a state to discontinue administration of the program would result in the loss of CDBG funds for non-entitlement areas in that state and the reallocation of those funds to all states in the succeeding fiscal year.
(b) Scope and applicability. (1) This subpart describes the policies and procedures of the Small Cities program that apply to non-entitlement areas in states where HUD administers the CDBG program. HUD currently administers the Small Cities program in only two states—New York (for grants prior to FY 2000) and Hawaii (for non-entitlement CDBG grants in Hawaii). The Small Cities portion of this subpart addresses the requirements for New York Small Cities grants in §§ 570.421, 570.426, 570.427, and 570.431. Section 570.429 identifies special procedures applicable to Hawaii.
(e) Allocation of funds—The allocation of appropriated funds for insular areas under section 106 of the Act shall be governed by the policies and procedures described in section 106(a)(2) of the Act and §§ 570.440, 570.441, and 570.442 of this subpart. The annual appropriations described in this section shall be distributed to insular areas on the basis of the ratio of the population of each insular area to the population of all insular areas.
8.Revise § 570.427(a) to read as follows: § 570.427 Program amendments.
(a) HUD approval of certain program amendments. Grantees shall request prior HUD approval for all program amendments involving new activities or alteration of existing activities that will significantly change the scope, location, or objectives of the approved activities or beneficiaries. Approval is subject to the amended activities meeting the requirements of this part and being able to be completed promptly.
9.In § 570.429: a. Revise paragraphs (a) and (b);
b. Remove paragraphs (d), (f), (g), (h), and (i);
c. Redesignate paragraph (e) as a new paragraph (d); and
d. Revise newly designated paragraph (d) to read as follows:
§ 570.429 Hawaii general and grant requirements.
10.Remove §§ 570.430 and 570.432. 11.In § 570.901, revise paragraphs (d) and (e) to read as follows: § 570.901 Review for compliance with the primary and national objectives and other program requirements.
(d) For entitlement grants and non-entitlement CDBG grants in Hawaii, the submission requirements of 24 CFR part 91 and the displacement policy requirements at § 570.606;
(e) For HUD-administered Small Cities grants in New York, the citizen participation requirements at § 570.431, the amendment requirements at § 570.427, and the displacement policy requirements of § 570.606;
12.In § 570.902: a. Revise the heading of paragraph (a);
b. Revise the introductory paragraph of paragraph (a)(1); and
13.Revise § 570.911(b) to read as follows: § 570.911 Reduction, withdrawal, or adjustment of a grant or other appropriate action.
(b) Entitlement grants, Non-entitlement CDBG grants in Hawaii, and Insular Areas grants. Consistent with the procedures described in § 570.900(b), the Secretary may make a reduction in the entitlement, non-entitlement CDBG grants in Hawaii, or Insular Areas grant amount either for the succeeding program year or, if the grant had been conditioned, up to the amount that had been conditioned. The amount of the reduction shall be based on the severity of the deficiency and may be for the entire grant amount.