Rule2022-20425
Changes to HOME Investment Partnerships (HOME) Program Commitment Requirement
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 22, 2022
Effective
October 24, 2022
Issuing agencies
Housing and Urban Development Department
Abstract
This final rule follows HUD's interim final rule published on December 2, 2016. The interim rule changed the method by which HUD determines participating jurisdictions' compliance with the statutory 24-month commitment requirements on the use of HOME Investment Partnerships program (HOME) funds, including the set-aside for community housing development organizations, under the Cranston- Gonzalez National Affordable Housing Act of 1990 (NAHA). Specifically, it implemented a grant-specific method for determining compliance with such requirements. In addition, the interim rule revised the method of administering program income to prevent participating jurisdictions from losing allocated HOME funds when they expend program income. This rule finalizes the December 2, 2016, interim rule without change.
Full Text
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<title>Federal Register, Volume 87 Issue 183 (Thursday, September 22, 2022)</title>
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[Federal Register Volume 87, Number 183 (Thursday, September 22, 2022)]
[Rules and Regulations]
[Pages 57821-57824]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20425]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 91 and 92
[Docket No. FR 5792-F-03]
RIN 2501-AD69
Changes to HOME Investment Partnerships (HOME) Program Commitment
Requirement
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Final rule.
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[[Page 57822]]
SUMMARY: This final rule follows HUD's interim final rule published on
December 2, 2016. The interim rule changed the method by which HUD
determines participating jurisdictions' compliance with the statutory
24-month commitment requirements on the use of HOME Investment
Partnerships program (HOME) funds, including the set-aside for
community housing development organizations, under the Cranston-
Gonzalez National Affordable Housing Act of 1990 (NAHA). Specifically,
it implemented a grant-specific method for determining compliance with
such requirements. In addition, the interim rule revised the method of
administering program income to prevent participating jurisdictions
from losing allocated HOME funds when they expend program income. This
rule finalizes the December 2, 2016, interim rule without change.
DATES: Effective: October 24, 2022.
FOR FURTHER INFORMATION CONTACT: Virginia Sardone, Director, Office of
Affordable Housing Programs, Department of Housing and Urban
Development, Office of Community Planning and Development, 451 7th
Street SW, Suite 7286, Washington, DC 20410; or at 202-708-2684 (this
is not a toll-free number). Individuals with speech or hearing
impairments may access this number via TTY by calling the Federal Relay
Service at 800-877-8339 (this is a toll-free number).
SUPPLEMENTARY INFORMATION
I. Background
Under section 218(g) of the Cranston-Gonzalez National Affordable
Housing Act of 1990 \1\ (42 U.S.C. 12701 et seq.) (NAHA), participating
jurisdictions are required to place their HOME Investment Partnerships
Program (HOME) funds under binding commitment within 24 months after
the last day of the month in which HUD made the funds available (i.e.,
deposited the funds into the participating jurisdiction's HOME
Investment Trust Fund (``HOME account'')). Under section 218(g) of
NAHA,\2\ a participating jurisdiction's right to draw HOME funds from
its HOME account expires if the funds are not placed under binding
commitment by the 24-month deadline. In addition, pursuant to section
231 of NAHA,\3\ a participating jurisdiction must reserve not less than
15 percent of its HOME funds for investment only in housing to be
developed, sponsored, or owned by community housing development
organizations (CHDOs). If any funds reserved under section 231 of NAHA
remain uninvested for a period of 24 months, then HUD must deduct the
uninvested funds from the line of credit in the participating
jurisdiction's HOME account.
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\1\ 42 U.S.C. 12748(g).
\2\ Id.
\3\ 42 U.S.C. 12771.
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Prior to Fiscal Year (FY) 2015, HUD measured compliance with the
24-month requirement for committing funds, including CHDO set-aside
funds, using a cumulative methodology. HUD also had a 5-year
expenditure requirement for all participating jurisdictions that was
measured using the cumulative methodology. Under HUD's cumulative
methodology, HUD's Integrated Disbursement and Information System
(IDIS) committed and disbursed funds on a first-in, first-out basis and
participating jurisdictions were not required to designate funds from a
specific FY allocation when committing HOME funds to a project.
Consequently, HUD did not require participating jurisdictions to
specify which grant year's funds they were committing to a specific
project in IDIS.
On December 2, 2016 (81 FR 86947), HUD published an interim rule in
the Federal Register to implement a grant-specific method for
determining compliance with both the 24-month commitment and 24-month
CHDO set-aside commitment deadlines, and to establish a method of
administering program income that would prevent participating
jurisdictions from losing appropriated funds when they expend program
income. The interim rule also eliminated the 5-year expenditure
requirement for participating jurisdictions (other than insular areas)
for FY 2015 and later grant years and changed the manner in which
program income and other funds in the local HOME account were treated.
The 24-month commitment requirement in section 218(g) of NAHA,
however, was later suspended for HOME funds with 24-month deadlines
occurring in 2016 through 2023 under section 242 of Title I of Division
K of the Consolidated Appropriations Act, 2017.\4\ Specifically, the
2017 Appropriations Act stated: ``Section 218(g) of the Cranston-
Gonzalez National Affordable Housing Act (42 U.S.C. 12748(g)) shall not
apply with respect to the right of a jurisdiction to draw funds from
its HOME Investment Trust Fund that otherwise expired or would expire
in 2016, 2017, 2018, or 2019 under this section.'' The Consolidated
Appropriations Act of 2019 \5\ and subsequent appropriations acts,\6\
also included a provision suspending the 24-month requirement for CHDO
set-aside funds in section 231(b) of NAHA for ``any uninvested funds
that otherwise were deducted or would be deducted from the line of
credit in the participating jurisdiction's HOME Investment Trust Fund''
in 2018 through 2024. Consequently, HUD is currently not enforcing the
24-month commitment requirements for those grants covered by the
suspensions. Despite the suspensions of sections 218(g) and 231(b) in
recent appropriations acts, HUD is finalizing the interim rule as these
suspensions may lapse in the future.
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\4\ Public Law 115-31, 131 Stat. 135, 789.
\5\ Public Law 116-6, 133 Stat. 13. 464.
\6\ Public Law 115-141, 132 Stat. 348; Public Law 116-94, 133
Stat. 2534. Public Law 117-03, 136 Stat. 742.
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After considering the public comments submitted in response to
HUD's interim rule, HUD is finalizing its December 2, 2016, interim
rule without change. This final rule implements a grant-specific method
of determining compliance with the HOME commitment deadlines. As
discussed in HUD's interim rule, beginning with FY 2015 grants, a
participating jurisdiction is required to select the grant year's funds
that will be committed to a specific project or activity. When the
participating jurisdiction requests a draw of grant funds for that
project or activity, HUD, through IDIS, now disburses the specific
grant year's funds committed to that project or activity, rather than
the oldest funds available. This change requires participating
jurisdictions to commit specific FY grant funds and for HUD to assess
commitment deadline compliance on a grant-specific basis. This
methodology change addresses the timely commitment and expenditure of
program income, repaid funds, recaptured funds, and funds committed for
programs to be administered by State recipients and subrecipients.
Conforming changes are also made to the consolidated plan regulations
with respect to program income, repaid funds, and recaptured funds.
II. Discussion of Public Comments and HUD's Responses
The public comment period for the interim rule closed on January
31, 2017, and HUD received seven public comments. Comments were largely
submitted by development agencies. The following presents the
significant issues and questions related to the interim rule raised by
the commenters and HUD's responses to these issues and questions.
[[Page 57823]]
A. Comments of Support
The comments were generally supportive. One commenter stated that
requiring additional project-specific information is a positive change.
Other commenters praised the change eliminating the requirement to
expend program income prior to drawing grant funds, stated that HUD has
developed a reasonable approach to accounting for the commitment of
program income and supported the elimination of the automatic
cancellation of projects.
B. Cancellation of Funds
Issue: De-obligation of previously committed funds. Commenters
stated that de-obligating funds when a project is cancelled or
completed for less than the committed amount only penalizes
participating jurisdictions for being responsible stewards of funds.
The commenters encouraged HUD to allow the funds to be recommitted
immediately and used within the expenditure deadline without being
recaptured by HUD. Another commenter stated that grantees should have a
grace period to recommit those funds, such as the commitment deadline
for the next year's allocation.
HUD Response: HOME funds that become uncommitted for any reason
after the funds have met their 24-month commitment deadline can be
committed by the participating jurisdiction to another eligible HOME
project or activity, provided the participating jurisdiction met the
requirements for a commitment, including the definition of commitment
at 24 CFR 92.2, at the time of the funds' 24-month commitment deadline.
C. Community Housing Development Organization (CHDO) Commitments
Issue: Elimination of cumulative method. A commenter stated that
eliminating the cumulative method for determining compliance with the
CHDO set-aside is impractical and will result in a significant loss of
funds. The commenter stated that funding has declined recently and
using the small amount of funds is very difficult, so jurisdictions
wait and pool CHDO set-aside funds across multiple years. Eliminating
the use of the cumulative method would essentially require at least
some participating jurisdictions to work solely with CHDOs to have
sufficient project dollars for the projects funded by CHDO set-aside
funds.
HUD Response: The Department is aware of the challenges that the
elimination of the cumulative method of measuring compliance with the
15 percent CHDO set-aside requirement may cause. Rather than committing
less than 15 percent in some years and more than 15 percent in other
years so that 15 percent of cumulative HOME allocations are used for
CHDO projects, each participating jurisdiction is now required to
commit a minimum of 15 percent of each grant year's allocation or HUD
will recapture the funds. While the Department lacks statutory
authority to use the cumulative method in determining compliance with
the 15 percent CHDO set-aside requirement, Congress recognized these
challenges and responded by suspending the application of section
231(b) of NAHA to CHDO set-aside funds that were or would be deducted
in 2018 through 2024 and section 218(g) of NAHA to remove the
expiration of funds with 24-month commitment deadlines in 2016 through
2024. Since the suspension of sections 218(g) and 231(b) of NAHA
relieves participating jurisdictions of the obligation of committing
funds to projects within 24 months, the combined effect of the
suspensions allows participating jurisdictions to have a longer period
of time to accumulate enough CHDO set-aside funds to commit to a CHDO
project. The suspension of section 231(b) of NAHA also removes the
requirement that participating jurisdictions reserve CHDO set-aside
funds to be used for projects owned, developed, or sponsored by CHDOs
for more than 24-months from the date the funds are made available.
This allows participating jurisdictions to use CHDO set-aside funds for
non-CHDO HOME projects after the end of the 24-month CHDO set-aside
time period defined in section 231 of NAHA.
Issue: Elimination of CHDO set-aside. A commenter also supported
eliminating the CHDO set-aside.
HUD Response: Elimination of the CHDO set-aside would require an
amendment to NAHA.
D. Commitment Deadline
Issue: Difficult to meet. A commenter stated that the 24-month
commitment deadline is very difficult to meet, and the new rule does
nothing to change it. Another commenter supported the elimination of
the 24-month commitment deadline.
HUD Response: The 24-month deadline for committing HOME funds is a
statutory requirement in section 218(g) of NAHA. Eliminating the
requirement therefore requires a statutory amendment. In recent
appropriations acts, Congress recognized the issues with the 24-month
commitment deadline in section 218(g) by suspending the commitment
requirement for HOME funds with deadlines occurring in 2016 through
2024. Congress also suspended section 231(b) of NAHA to permit
participating jurisdictions to retain CHDO set-aside funds that were or
would otherwise be deducted from a participating jurisdiction's HOME
account in 2018, 2019, 2020, 2021, 2022, 2023, or 2024.
Issue: Notification. A commenter stated that HUD should notify all
grantees as soon as possible of the amounts of prior year funds that
must be committed, what the deadline is, and what the penalty for
failure to meet the deadline is.
HUD Response: Participating jurisdictions have real time access to
this information in IDIS. Under 24 CFR 92.504(a), participating
jurisdictions are responsible for monitoring their progress toward
meeting this and other HOME program deadlines.
E. Expenditure Deadline
Issue: Simplification and elimination. A commenter supported the
simplification of expenditure deadlines and supported the elimination
of the 5-year expenditure deadline.
HUD Response: Under the terms of the interim rule and this final
rule, there is no 5-year expenditure deadline for participating
jurisdictions (other than insular areas) for FY 2015 and subsequent
allocations. The last application of the expenditure deadline for most
participating jurisdictions occurred in 2019.
F. Expiration of Funds
Issue: Expiration of funds. A commenter asked HUD for confirmation
that the period of performance is retroactive so that the period of
performance for FY 2015 grants ends on September 1, 2024, and the
period of performance for FY 2016 grants ends on September 1, 2025.
HUD Response: The period of performance for HOME grants is
specified on the Funding Approval and HOME Investment Partnerships
Agreement (HUD-40093) between HUD and the participating jurisdiction.
The period of performance for FY 2015 grants ends on September 1, 2023,
and the period of performance for FY 2016 grants ends on September 1,
2024. These dates provide participating jurisdictions with time prior
to the cancellation of the grants on September 30, 2023, and September
30, 2024, respectively, to draw down funds for costs incurred during
the period of performance before the funds will be returned to the U.S.
Treasury.
[[Page 57824]]
G. Program Income
Issue: Timing for entering program income into the IDIS. Commenter
asked whether program income is to be entered into the IDIS at the time
of receipt or when it is reported in the annual action plan.
HUD Response: A participating jurisdiction's program income must be
deposited in the participating jurisdiction's HOME Investment Trust
Fund local account pursuant to 24 CFR 92.503(a) and reported in IDIS at
the time it is received. If a participating jurisdiction's written
agreement permits the state recipient or subrecipient to retain program
income, then the program income must be reported in IDIS at the time it
is received by the state recipient or subrecipient. If a participating
jurisdiction permits a state recipient or subrecipient to retain
program income, then the participating jurisdiction is still
responsible for requiring that this information be entered into IDIS.
The use of State recipients, subrecipients, or contractors does not
relieve the participating jurisdiction of this responsibility, but a
State participating jurisdiction may rely upon a state recipient for
compliance with recordkeeping requirements under 24 CFR
92.508(a)(5)(iii) and (b) and need not duplicate such efforts.
Issue: Conflict with Department of Treasury. A commenter asked
whether there is a conflict with the Department of Treasury in allowing
a participating jurisdiction to accumulate expenditure of program
income, as Treasury requires program income to be expended first.
HUD Response: Due to HOME funds' statutory 24-month commitment
deadline, HUD established requirements for HOME program income that
differ from those applicable to other Federal grant programs. Requiring
participating jurisdictions to expend program income first places an
additional barrier to committing allocated HOME funds by the 24-month
commitment deadline. Therefore, HUD determined that the revised
provisions for program income in the interim rule and finalized in this
final rule are necessary so that participating jurisdictions can avoid
losing allocated HOME funds that are subject to the 24-month commitment
deadline.
Issue: Loss of appropriated funds. A commenter stated that HUD must
prevent participating jurisdictions from losing appropriated HOME funds
when they expend program income.
HUD Response: HUD agrees and established provisions in the interim
rule and final rule to ensure that participating jurisdictions do not
lose allocated HOME funds subject to the 24-month commitment deadline
because they have expended program income.
III. Findings and Certifications
Information Collection Requirements
In accordance with the Paperwork Reduction Act, an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless the collection displays a currently
valid Office of Management and Budget (OMB) control number. The
information collection requirements contained in this rule have been
submitted to OMB under the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520) and assigned OMB control number 2506-0171.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments, and
the private sector. This rule will not impose any Federal mandates on
any State, local, or tribal governments or the private sector within
the meaning of UMRA.
Environmental Review
When the interim rule was published, a Finding of No Significant
Impact (FONSI) with respect to the environment has been 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(2)(C)). Because this rule finalizes the interim rule
without change, the previous FONSI remains applicable.
Impact on Small Entities
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
As discussed, this regulation changes the manner in which HUD measures
compliance with the statutory 24-month commitment deadline in the HOME
program and does not alter the manner in which participating
jurisdictions administer their HOME programs. Given this fact, HUD
anticipates the regulatory changes will have minimal, or no, economic
impacts.
Therefore, the undersigned certifies that this rule will not have a
significant impact on a substantial number of small entities.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on State and local
governments and is not required by statute or the rule preempts State
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive order. This rule does not have federalism
implications and does not impose substantial direct compliance costs on
State and local governments nor preempt State law within the meaning of
the Executive order.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance number applicable to the
program that would be affected by this rule is 14.239.
List of Subjects
24 CFR Part 91
Aged, Grant programs-housing and community development, Homeless,
Individuals with disabilities, Low and moderate income housing,
Reporting and recordkeeping requirements.
24 CFR Part 92
Administrative practice and procedure, Low and moderate income
housing, Manufactured homes, Rent subsidies, Reporting and
recordkeeping requirements.
0
Accordingly, for the reasons stated in the preamble, the interim rule
amending 24 CFR parts 91 and 92 that was published at 81 FR 86947
(December 2, 2016) is adopted as final without change.
Marion M. McFadden,
Principal Deputy Assistant Secretary for Community Planning and
Development.
[FR Doc. 2022-20425 Filed 9-21-22; 8:45 am]
BILLING CODE 4210-67-P
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</html>Indexed from Federal Register on September 22, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.