[Federal Register Volume 77, Number 147 (Tuesday, July 31, 2012)]
[Rules and Regulations]
[Pages 45422-45467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17546]
[[Page 45421]]
Vol. 77
Tuesday,
No. 147
July 31, 2012
Part II
Department of Housing and Urban Development
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24 CFR Part 578
Homeless Emergency Assistance and Rapid Transition to Housing:
Continuum of Care Program; Interim Final Rule
Federal Register / Vol. 77 , No. 147 / Tuesday, July 31, 2012 / Rules
and Regulations
[[Page 45422]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 578
[Docket No. FR-5476-I-01]
RIN 2506-AC29
Homeless Emergency Assistance and Rapid Transition to Housing:
Continuum of Care Program
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Interim rule.
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SUMMARY: The Homeless Emergency Assistance and Rapid Transition to
Housing Act of 2009 (HEARTH Act), enacted into law on May 20, 2009,
consolidates three of the separate homeless assistance programs
administered by HUD under the McKinney-Vento Homeless Assistance Act
into a single grant program, and revises the Emergency Shelter Grants
program and renames it the Emergency Solutions Grants program. The
HEARTH Act also codifies in law the Continuum of Care planning process,
a longstanding part of HUD's application process to assist homeless
persons by providing greater coordination in responding to their needs.
The HEARTH Act also directs HUD to promulgate regulations for these new
programs and processes.
This interim rule focuses on regulatory implementation of the
Continuum of Care program, including the Continuum of Care planning
process. The existing homeless assistance programs that comprise the
Continuum of Care program are the following: the Supportive Housing
program, the Shelter Plus Care program, and the Moderate
Rehabilitation/Single Room Occupancy (SRO) program. This rule
establishes the regulations for the Continuum of Care program, and,
through the establishment of such regulations, the funding made
available for the Continuum of Care program in the statute
appropriating Fiscal Year (FY) 2012 funding for HUD can more quickly be
disbursed, consistent with the HEARTH Act requirements, and avoid any
disruption in current Continuum of Care activities.
DATES: Effective Date: August 30, 2012.
Comment Due Date. October 1, 2012.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Regulations Division, Office of General Counsel, 451
7th Street SW., Room 10276, Department of Housing and Urban
Development, Washington, DC 20410-0500. Communications must refer to
the above docket number and title. There are two methods for submitting
public comments. All submissions must refer to the above docket number
and title.
1. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Counsel, Department
of Housing and Urban Development, 451 7th Street SW., Room 10276,
Washington, DC 20410-0500.
2. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
www.regulations.gov. HUD strongly encourages commenters to submit
comments electronically. Electronic submission of comments allows the
commenter maximum time to prepare and submit a comment, ensures timely
receipt by HUD, and enables HUD to make them immediately available to
the public. Comments submitted electronically through the
www.regulations.gov Web site can be viewed by other commenters and
interested members of the public. Commenters should follow the
instructions provided on that site to submit comments electronically.
Note: To receive consideration as public comments, comments must
be submitted through one of the two methods specified above. Again,
all submissions must refer to the docket number and title of the
rule.
No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
Public Inspection of Public Comments. All properly submitted
comments and communications submitted to HUD will be available for
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the
above address. Due to security measures at the HUD Headquarters
building, an advance appointment to review the public comments must be
scheduled by calling the Regulations Division at 202-708-3055 (this is
not a toll-free number). Individuals with speech or hearing impairments
may access this number through TTY by calling the Federal Relay Service
at 800-877-8339. Copies of all comments submitted are available for
inspection and downloading at www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Ann Marie Oliva, Director, Office of
Special Needs Assistance Programs, Office of Community Planning and
Development, Department of Housing and Urban Development, 451 7th
Street SW., Washington, DC 20410-7000; telephone number 202-708-4300
(this is not a toll-free number). Hearing- and speech-impaired persons
may access this number through TTY by calling the Federal Relay Service
at 800-877-8339 (this is a toll-free number).
SUPPLEMENTARY INFORMATION:
Executive Summary
Purpose of and Legal Authority for This Interim Rule
This interim rule implements the Continuum of Care program
authorized by the Homeless Emergency Assistance and Rapid Transition to
Housing Act of 2009 (HEARTH Act). Section 1504 of the HEARTH Act
directs HUD to establish regulations for this program. (See 42 U.S.C.
11301.) The purpose of the Continuum of Care program is to promote
communitywide commitment to the goal of ending homelessness; provide
funding for efforts by nonprofit providers, and State and local
governments to quickly rehouse homeless individuals and families while
minimizing the trauma and dislocation caused to homeless individuals,
families, and communities by homelessness; promote access to and
effective utilization of mainstream programs by homeless individuals
and families; and optimize self-sufficiency among individuals and
families experiencing homelessness.
The HEARTH Act streamlines HUD's homeless grant programs by
consolidating the Supportive Housing, Shelter Plus Care, and Single
Room Occupancy grant programs into one grant program: The Continuum of
Care program. Local continuums of care, which are community-based
homeless assistance program planning networks, will apply for Continuum
of Care grants. By consolidating homeless assistance grant programs and
creating the Continuum of Care planning process, the HEARTH Act
intended to increase the efficiency and effectiveness of coordinated,
community-based systems that provide housing and services to the
homeless. Through this interim final rule, HUD will implement the
Continuum of Care program by establishing the framework for
establishing a local continuum of care and the process for applying for
Continuum of Care grants.
Summary of Major Provisions
The major provisions of this rulemaking relate to how to establish
and operate a Continuum of Care, how to apply for funds under the
program, and how to use the funds for projects approved by HUD. These
provisions are summarized below.
1. General Provisions (Subpart A): The Continuum of Care program
includes transitional housing, permanent supportive housing for
[[Page 45423]]
disabled persons, permanent housing, supportive services, and Homeless
Management Information Systems (HMIS). To implement the program, HUD
had to define several key terms. In particular, HUD distinguishes
between ``Continuum of Care,'' ``applicant,'' and ``collaborative
applicant.'' A ``Continuum of Care'' is a geographically based group of
representatives that carries out the planning responsibilities of the
Continuum of Care program, as set out in this regulation. These
representatives come from organizations that provide services to the
homeless, or represent the interests of the homeless or formerly
homeless. A Continuum of Care then designates certain ``applicants'' as
the entities responsible for carrying out the projects that the
Continuum has identified through its planning responsibilities. A
``Continuum of Care'' also designates one particular applicant to be a
``collaborative applicant.'' The collaborative applicant is the only
entity that can apply for a grant from HUD on behalf of the Continuum
that the collaborative applicant represents.
2. Establishing and Operating a Continuum of Care (Subpart B): In
order to be eligible for funds under the Continuum of Care program,
representatives from relevant organizations within a geographic area
must establish a Continuum of Care. The three major duties of a
Continuum of Care are to: (1) Operate the Continuum of Care, (2)
designate an HMIS for the Continuum of Care, and (3) plan for the
Continuum of Care. HUD has delineated certain operational requirements
of each Continuum to help measure a Continuum's overall performance at
reducing homelessness, in addition to tracking of performance on a
project-by-project basis. In addition, each Continuum is responsible
for establishing and operating a centralized or coordinated assessment
system that will provide a comprehensive assessment of the needs of
individuals and families for housing and services. HUD has also defined
the minimum planning requirements for a Continuum so that it
coordinates and implements a system that meets the needs of the
homeless population within its geographic area. Continuums are also
responsible for preparing and overseeing an application for funds.
Continuums will have to establish the funding priorities for its
geographic area when submitting an application.
3. Application and Grant Award Process (Subpart C): The Continuum
of Care grant award process begins with a determination of a
Continuum's maximum award amount. As directed by statute, HUD has
developed a formula for determining award amounts that includes the
following factors: A Continuum's Preliminary Pro Rata Need (PPRN)
amount; renewal demand; any additional increases in amounts for
leasing, rental assistance, and operating costs based on Fair Market
Rents, planning and Unified Funding Agency cost funds, and amounts
available for bonus dollars. HUD has established selection criteria for
determining which applications will receive funding under the Continuum
of Care program. Recipients awarded Continuum of Care funds must
satisfy several conditions prior to executing their grant agreements.
All grants submitted for renewal must also submit an annual performance
report. For those applicants not awarded funding, the process also
provides an appeals process.
4. Program Components and Eligible Costs (Subpart D): Continuum of
Care funds may be used for projects under five program components:
Permanent housing, transitional housing, supportive services only,
HMIS, and, in some limited cases, homelessness prevention. The rule
further clarifies how the following activities are considered eligible
costs under the Continuum of Care program: Continuum of Care planning
activities, Unified Funding Agency costs, acquisition, rehabilitation,
new construction, leasing, rental assistance, supportive services,
operating costs, HMIS, project administrative costs, relocation costs,
and indirect costs.
5. High-Performing Communities (Subpart E): HUD will annually,
subject to the availability of appropriate data, select those
Continuums of Care that best meet application requirements to be
designated a high-performing community (HPC). An HPC may use grant
funds to provide housing relocation and stabilization services, and
short- and/or medium-term rental assistance to individuals and families
at risk of homelessness. This is the only time that Continuum of Care
funds may be used to serve individuals and families at risk of
homelessness.
6. Program Requirements (Subpart F): All recipients of Continuum of
Care funding must comply with the program regulations and the
requirements of the Notice of Funding Availability that HUD will issue
each year. Notably, the HEARTH Act requires that all eligible funding
costs, except leasing, must be matched with no less than 25 percent
cash or in-kind match by the Continuum. Other program requirements of
recipients include: Abiding by housing quality standards and suitable
dwelling size, assessing supportive services on an ongoing basis,
initiating and completing approved activities and projects within
certain timelines, and providing a formal process for termination of
assistance to participants who violate program requirements or
conditions of occupancy.
7. Grant Administration (Subpart G): To effectively administer the
grants, HUD will provide technical assistance to those who apply for
Continuum of Care funds, as well as those who are selected for
Continuum of Care funds. After having been selected for funding, grant
recipients must satisfy certain recordkeeping requirements so that HUD
can assess compliance with the program requirements. For any amendments
to grants after the funds have been awarded, HUD has established a
separate amendment procedure. As appropriate, HUD has also established
sanctions to strengthen its enforcement procedures.
Benefits and Costs
This interim rule is intended to help respond to and work toward
the goal of eliminating homelessness. This interim rule provides
greater clarity and guidance about planning and performance review to
the more than 430 existing Continuums of Care that span all 50 states
and 6 United States territories. As reported in HUD's Annual
Homelessness Assessment Report to Congress, there were approximately
1.59 million homeless persons who entered emergency shelters or
transitional housing in FY 2010. HUD serves roughly half that many
persons, nearly 800,000 annually, through its three programs that will
be consolidated into the Continuum of Care program under the McKinney-
Vento Act as amended by the HEARTH Act (i.e., Shelter Plus Care,
Supportive Housing Program, Single Room Occupancy). The changes
initiated by this interim rule will encourage Continuums of Care to
establish formal policies and review procedures, including evaluation
of the effectiveness of their projects, by emphasizing performance
measurement and developing performance targets for homeless
populations. HUD is confident that this systematic review by Continuums
of Care will lead to better use of limited resources and more efficient
service models, with the end result of preventing and ending
homelessness.
The Consolidated and Further Continuing Appropriations Act, 2012
(Pub. L. 112-55) appropriated $1,593,000,000 for the Continuum of Care
and Rural Housing Stability
[[Page 45424]]
Assistance programs. Upon publication of this rule, those FY 2012 funds
will be available for distribution, as governed by these Continuum of
Care regulations.
I. Background--HEARTH Act
On May 20, 2009, the President signed into law ``An Act to Prevent
Mortgage Foreclosures and Enhance Mortgage Credit Availability,'' which
became Public Law 111-22. This law implements a variety of measures
directed toward keeping individuals and families from losing their
homes. Division B of this law is the HEARTH Act, which consolidates and
amends three separate homeless assistance programs carried out under
title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11371
et seq.) (McKinney-Vento Act) into a single grant program that is
designed to improve administrative efficiency and enhance response
coordination and effectiveness in addressing the needs of homeless
persons. The HEARTH Act codifies in law and enhances the Continuum of
Care planning process, the coordinated response to addressing the needs
of the homeless, which was established administratively by HUD in 1995.
The single Continuum of Care program established by the HEARTH Act
consolidates the following programs: The Supportive Housing program,
the Shelter Plus Care program, and the Moderate Rehabilitation/Single
Room Occupancy program. The Emergency Shelter Grants program is renamed
the Emergency Solutions Grants program and is revised to broaden
existing emergency shelter and homelessness prevention activities and
to add short- and medium-term rental assistance and services to rapidly
rehouse homeless people. The HEARTH Act also creates the Rural Housing
Stability program to replace the Rural Homelessness Grant program.
HUD commenced the process to implement the HEARTH Act with
rulemaking that focused on the definition of ``homeless.'' HUD
published a proposed rule, entitled ``Defining Homeless'' on April 20,
2010 (75 FR 20541), which was followed by a final rule that was
published on December 5, 2011 (76 FR 75994). The Defining Homeless rule
clarified and elaborated upon the new McKinney-Vento Act definitions
for ``homeless'' and ``homeless individual with a disability.'' In
addition, the Defining Homeless rule included recordkeeping
requirements related to the ``homeless'' definition. On December 5,
2011, HUD also published an interim rule for the Emergency Solutions
Grants program (76 FR 75954). This interim rule established the program
requirements for the Emergency Solutions Grants program and contained
corresponding amendments to the Consolidated Plan regulations. On
December 9, 2011, HUD continued the process to implement the HEARTH
Act, with the publication of the proposed rule titled ``Homeless
Management Information Systems Requirements'' (76 FR 76917), which
provides for uniform technical requirements for Homeless Management
Information Systems (HMIS), for proper data collection and maintenance
of the database, and ensures the confidentiality of the information in
the database. Today's publication of the interim rule for the Continuum
of Care program continues HUD's implementation of the HEARTH Act.
This rule establishes the regulatory framework for the Continuum of
Care program and the Continuum of Care planning process, including
requirements applicable to the establishment of a Continuum of Care.
Prior to the amendment of the McKinney-Vento Act by the HEARTH Act,
HUD's competitively awarded homeless assistance grant funds were
awarded to organizations that participate in local homeless assistance
program planning networks referred to as a Continuum of Care, a system
administratively established by HUD in 1995. A Continuum of Care is
designed to address the critical problem of homelessness through a
coordinated community-based process of identifying needs and building a
system of housing and services to address those needs. The approach is
predicated on the understanding that homelessness is not caused merely
by a lack of shelter, but involves a variety of underlying, unmet
needs--physical, economic, and social.
The HEARTH Act not only codified in law the planning system known
as Continuum of Care, but consolidated the three existing competitive
homeless assistance grant programs (Supportive Housing, Shelter Plus
Care, and Single Room Occupancy) into the single grant program known as
the Continuum of Care program. The consolidation of the three existing
homeless assistance programs into the Continuum of Care grant program
and the codification in law of the Continuum of Care planning process
are intended to increase the efficiency and effectiveness of the
coordination of the provision of housing and services to address the
needs of the homeless. The regulations established by this rule are
directed to carrying out this congressional intent.
II. Overview of Interim Rule
As amended by the HEARTH Act, Subpart C of the McKinney-Vento
Homeless Assistance Act establishes the Continuum of Care program. The
purpose of the program is to promote communitywide commitment to the
goal of ending homelessness; provide funding for efforts by nonprofit
providers, and State and local governments to quickly rehouse homeless
individuals and families while minimizing the trauma and dislocation
caused to homeless individuals, families, and communities by
homelessness; promote access to and effective utilization of mainstream
programs by homeless individuals and families; and optimize self-
sufficiency among individuals and families experiencing homelessness.
This interim rule establishes the Continuum of Care as the planning
body responsible for meeting the goals of the Continuum of Care
program. Additionally, in order to meet the purpose of the HEARTH Act,
established in section 1002(b), and the goals of ``Opening Doors:
Federal Strategic Plan to Prevent and End Homelessness,'' the Continuum
of Care must be involved in the coordination of other funding streams
and resources--federal, local, or private--of targeted homeless
programs and other mainstream resources. In many communities, the
Continuum of Care is the coordinating body, while in other communities
it is a local Interagency Council on Homelessness (both would be
acceptable forms of coordination under this interim rule). As noted
earlier, HUD published on December 9, 2011, a proposed rule to
establish HMIS regulations in accordance with the HEARTH Act. However,
while the HEARTH Act directed that regulations be established for HMIS,
HMIS is not new to many HUD grantees. Until regulations for HMIS are
promulgated in final, grantees should continue to follow HUD's existing
HMIS instructions and guidance.
The following provides an overview of the proposed rule.
General Provisions (Subpart A)
Purpose and scope. The Continuum of Care program is designed to
promote community-wide goals to end homelessness; provide funding to
quickly rehouse homeless individuals (including unaccompanied youth)
and families while minimizing trauma and dislocation to those persons;
promote access to, and effective utilization of, mainstream programs;
and optimize self-sufficiency among individuals and
[[Page 45425]]
families experiencing homelessness. The program is composed of
transitional housing, permanent supportive housing for disabled
persons, permanent housing, supportive services, and HMIS.
Definitions. The interim rule adopts the definitions of
``developmental disability,'' ``homeless,'' ``homeless individual,''
and ``homeless person'' established by the December 5, 2011 Defining
Homeless final rule. Public comments have already been solicited and
additional public comment is not solicited through this rule. The
December 5, 2011, final rule was preceded by an April 20, 2010,
proposed rule, which sought public comment on these definitions. The
final definitions of these terms took into consideration the public
comments received on the proposed definitions as set out in the April
20, 2010, proposed rule. This interim rule adopts the definition of
``at risk of homelessness'' established by the December 5, 2011, the
Emergency Solutions Grants program interim rule. The interim rule
sought public comment on this definition, and additional public comment
is not being sought through this rule.
HUD received valuable public comment on the definition of
``chronically homeless,'' through the public comment process on the
Emergency Solutions Grants program interim rule. Based on public
comment, this rule for the Continuum of Care program is not adopting
the full definition of ``chronically homeless'' that was included in
the conforming amendments to the Consolidated Plan that were published
as a part of the Emergency Solutions Grants program rule. Commenters
raised concerns with the meaning of the phrase ``where each homeless
occasion was at least 15 days.'' The concerns raised about this phrase,
used for the first time in a definition of ``chronically homeless,''
has caused HUD to reconsider proceeding to apply a definition that
includes this phrase, without further consideration and opportunity for
comment. In this rule, HUD therefore amends the definition of
``chronically homeless'' in the Consolidated Plan regulations to strike
this phrase. The removal of this phrase returns the definition to one
with which service providers are familiar. The following highlights key
definitions used in the Continuum of Care program regulations, and HUD
solicits comment on these definitions.
Applicant is defined to mean an entity that has been designated by
the Continuum of Care as eligible to apply for assistance on behalf of
that Continuum. HUD highlights that the Act does not contain different
definitions for ``applicant'' and ``collaborative applicant.'' HUD
distinguishes between the applicant(s) designated to apply for and
carry out projects (the ``applicant'') and the collaborative applicant
designated to apply for a grant on behalf of the Continuum of Care (the
``collaborative applicant''). Please see below for more information on
the definition of a collaborative applicant, which is the only entity
that may apply for and receive Continuum of Care planning funds.
Centralized or coordinated assessment system is defined to mean a
centralized or coordinated process designed to coordinate program
participant intake, assessment, and provision of referrals. A
centralized or coordinated assessment system covers the geographic
area, is easily accessed by individuals and families seeking housing or
services, is well advertised, and includes a comprehensive and
standardized assessment tool. This definition establishes basic minimum
requirements for the Continuum's centralized or coordinated assessment
system.
Collaborative applicant is defined to mean an eligible applicant
that has been designated by the Continuum of Care to apply for a grant
for Continuum of Care planning funds on behalf of the Continuum. As
discussed above, the ``applicant'' is the entity(ies) designated to
apply for and carry out projects on behalf of the Continuum. In
contrast to the definition of ``applicant'' above, the collaborative
applicant applies for a grant to carry out the planning activities on
behalf of the Continuum of Care. The interim rule simplifies the
statutory language in order to make the Continuum of Care planning
process clear.
HUD highlights that its definition of collaborative applicant does
not track the statutory definition, which is found in section 401 of
the McKinney-Vento Act. As will be discussed in further detail later in
this preamble, the concept of collaborative applicant, its duties and
functions, as provided in the statute, is provided for in this rule.
However, HUD uses the term Continuum of Care to refer to the
organizations that carry out the duties and responsibilities assigned
to the collaborative applicant, with the exception of applying to HUD
for grant funds. The clarification is necessary in this rule because
Continuums of Care are not required to be legal entities, but HUD can
enter into contractual agreements with legal entities only.
Continuum of Care and Continuum are defined to mean the group that
is organized to carry out the responsibilities required under this part
and that is composed of representatives of organizations including
nonprofit homeless providers, victim service providers, faith-based
organizations, governments, businesses, advocates, public housing
agencies, school districts, social service providers, mental health
agencies, hospitals, universities, affordable housing developers, law
enforcement, organizations that serve homeless and formerly homeless
veterans, and homeless and formerly homeless persons. These
organizations consist of the relevant parties in the geographic area.
Continuums are expected to include representation to the extent that
the type of organization exists within the geographic area that the
Continuum represents and is available to participate in the Continuum.
For example, if a Continuum of Care did not have a university within
its geographic boundaries, then HUD would not expect the Continuum to
have representation from a university within the Continuum.
These organizations carry out the responsibilities and duties
established under Subpart B of this interim rule. The Continuum of
Care, as noted above, carries out the statutory duties and
responsibilities of a collaborative applicant. HUD established the
Continuum of Care in 1995. Local grantees and stakeholders are familiar
with the Continuum of Care as the coordinating body for homeless
services and homelessness prevention activities across the geographic
area. Consequently, HUD is maintaining the Continuum of Care
terminology, and the rule provides for the duties and responsibilities
of a collaborative applicant to be carried out under the name Continuum
of Care.
High-performing community is defined to mean the geographic area
under the jurisdiction of a Continuum of Care that has been designated
as a high-performing community by HUD. Section 424 of the McKinney-
Vento Act provides that HUD shall designate, on an annual basis, which
collaborative applicants represent high-performing communities.
Consistent with HUD's substitution of the term ``Continuum of Care''
for ``collaborative applicant,'' the definition of ``high-performing
community'' in this interim rule provides for designation of Continuums
of Care that represent geographic areas designated as high-performing
communities. The standards for becoming a high-performing community can
be found in Sec. 578.65 of this interim
[[Page 45426]]
rule and will be discussed later in this preamble.
Private nonprofit organization is based on the statutory definition
for ``private nonprofit organization.'' The term ``private nonprofit
organization'' is defined in section 424 of the McKinney-Vento Act as
follows: ``The term `private nonprofit organization' means an
organization: `(A) No part of the net earnings of which inures to the
benefit of any member, founder, contributor, or individual; (B) that
has a voluntary board; (C) that has an accounting system, or has
designated a fiscal agent in accordance with requirements established
by the Secretary; and (D) that practices nondiscrimination in the
provision of assistance.' '' In HUD's regulatory definition of
``private nonprofit organization,'' HUD clarifies that the
organization's accounting system must be functioning and operated in
accordance with generally accepted accounting principles. HUD has
included this language to make certain that accounting systems are
workable and abide by definite, accurate standards. As reflected in the
statutory definition of ``private nonprofit organization,'' HUD may
establish requirements for the designation of a fiscal agent. HUD has
determined that the fiscal agent, such as a Unified Funding Agency, a
term that is also defined in section 424 of the McKinney-Vento Act,
must maintain a functioning accounting system for the organization in
accordance with generally accepted accounting principles.
Permanent housing is consistent with the statutory definition of
``permanent housing'' in section 401 of the McKinney-Vento Act, but
does not track the statutory language. HUD's regulatory definition of
``permanent housing'' states: ``The term `permanent housing' means
community-based housing without a designated length of stay, and
includes both permanent supportive housing and rapid re-housing.''
Additionally, in the regulatory definition of ``permanent housing,''
HUD clarifies that to be permanent housing, ``the program participant
must be the tenant on a lease for a term of at least one year that is
renewable and is terminable only for cause. The lease must be renewable
for terms that are a minimum of one month long. HUD has determined that
requiring a lease for a term of at least one year that is renewable and
terminable only for cause, assists program participants in obtaining
stability in housing, even when the rental assistance is temporary.
These requirements are consistent with Section 8 requirements.
Specific request for comment. HUD specifically requests comment on
requiring a lease for a term of at least one year to be considered
permanent housing.
Project is consistent with the statutory definition of ``project''
in section 401 of the McKinney-Vento Act, but does not track the
statutory language. Section 401 defines ``project'' as, with respect to
activities carried out under subtitle C, eligible activities described
in section 423(a), undertaken pursuant to a specific endeavor, such as
serving a particular population or providing a particular resource. In
HUD's definition of ``project'' in this interim rule, the eligible
activities described in section 423(a) of the McKinney-Vento Act have
been identified. In the regulatory text, HUD has clarified that it is a
group of one or more of these eligible costs that are identified as a
project in an application to HUD for Continuum of Care funds.
Recipient is defined to mean an applicant that signs a grant
agreement with HUD. HUD's definition of ``recipient'' is consistent
with the statutory definition of ``recipient,'' but does not track the
statutory language. Section 424 of the McKinney-Vento Act defines
``recipient'' as ``an eligible entity who--(A) submits an application
for a grant under section 422 that is approved by the Secretary; (B)
receives the grant directly from the Secretary to support approved
projects described in the application; and (C)(i) serves as a project
sponsor for the projects; or (ii) awards the funds to project sponsors
to carry out the projects.'' All of the activities specified by the
statutory definition are in the rule: (A) and (B) are contained in the
definition and (C) is covered in the sections of the rule dealing with
what a recipient can do with grant funds.
Safe haven is based on the definition of safe haven in the
McKinney-Vento Act prior to amendment by the HEARTH Act. Although no
longer used in statute, HUD's position is that the term remains
relevant for implementation of the Continuum of Care program and,
therefore, HUD proposes to include the term in the Continuum of Care
program regulations. The term ``safe haven'' is used for purposes of
determining whether a person is chronically homeless. The housing must
serve hard-to-reach homeless persons with severe mental illness who
came from the streets and have been unwilling or unable to participate
in supportive services. In addition, the housing must provide 24-hour
residence for eligible persons for an unspecified period, have an
overnight capacity limited to 25 or fewer persons, and provide low-
demand services and referrals for the residents.
Subrecipient is defined to mean a private nonprofit organization,
State or local government, or instrumentality of a State or local
government that receives a subgrant from the recipient to operate a
project. The definition of ``subrecipient'' is consistent with the
definition of ``project sponsor'' found in section 401 of the McKinney-
Vento Act, but does not track the statutory language. To be consistent
with the Emergency Solutions Grants program regulation, and also to
ensure that the relationship between the recipient and subrecipient is
clear, HUD is using the term subrecipient, instead of project sponsor,
throughout this regulation.
Transitional housing is based on the definition of ``transitional
housing'' in section 401 of the McKinney-Vento Act, as follows: ``The
term `transitional housing' means housing, the purpose of which is to
facilitate the movement of individuals and families experiencing
homelessness to permanent housing within 24 months or such longer
period as the Secretary determines necessary.'' The definition has been
expanded to distinguish this type of housing from emergency shelter.
This distinction is necessitated by the McKinney-Vento Act's explicit
distinction between what activities can or cannot be funded under the
Continuum of Care program. The regulatory definition clarifies that, to
be transitional housing, program participants must have signed a lease
or occupancy agreement that is for a term of at least one month and
that ends in 24 months and cannot be extended.
Unified Funding Agency (UFA) means an eligible applicant selected
by the Continuum of Care to apply for a grant for the entire Continuum,
which has the capacity to carry out the duties delegated to a UFA in
this rule, which is approved by HUD and to which HUD awards a grant.
HUD's regulatory definition of UFA departs slightly from the statutory
definition. The statutory definition refers to the collaborative
applicant. The differences between the statutory definition and HUD's
regulatory definition reflect HUD's substitution of Continuum of Care
for collaborative applicant.
Establishing and Operating the Continuum of Care (Subpart B)
In general. The statutory authority for the Continuum of Care
program is section 422 of the McKinney-Vento Act. As stated under
section 1002 of the HEARTH Act, one of the main purposes of the HEARTH
Act is to codify the Continuum of Care planning process. Consequently,
under this interim rule,
[[Page 45427]]
HUD focuses on the rules and responsibilities of those involved in the
Continuum of Care planning process and describes how applications and
grant funds will be processed.
As discussed earlier in the preamble, HUD's interim rule provides
for the duties and functions of the collaborative applicant found in
section 401 of the McKinney-Vento Act to be designated to the Continuum
of Care, with the exception of applying to HUD for grant funds. HUD
chose this approach because the Continuum might not be a legal entity,
and therefore cannot enter into enforceable contractual agreements, but
is the appropriate body for establishing and implementing decisions
that affect the entire geographic area covered by the Continuum,
including decisions related to funding. This approach allows the
Continuum to retain its duties related to planning and prioritizing
need (otherwise designated by statute to the collaborative applicant),
while the authority to sign a grant agreement with HUD is designated to
an eligible applicant that can enter into a contractual agreement. All
of the duties assigned to the Continuum are based on the comparable
duties of section 402(f) of the McKinney-Vento Act.
Subpart B of the interim rule identifies how Continuums of Care are
established, as well as the required duties and functions of the
Continuum of Care.
Establishing the Continuum of Care. In order to be eligible for
funds under the Continuum of Care program, representatives from
relevant organizations within a geographic area must establish a
Continuum of Care. As discussed earlier in this preamble, this body is
responsible for carrying out the duties identified in this interim
regulation. Representatives from relevant organizations include
nonprofit homeless assistance providers, victim service providers,
faith-based organizations, governments, businesses, advocates, public
housing agencies, school districts, social service providers, mental
health agencies, hospitals, universities, affordable housing
developers, law enforcement, and organizations that serve veterans and
homeless and formerly homeless individuals. Where these organizations
are located within the geographic area served by the Continuum of Care,
HUD expects a representative of the organization to be a part of the
Continuum of Care.
Specific request for comment. HUD specifically requests comments on
requiring Continuums of Care to have a board that makes the decisions
for the Continuum. HUD requires two characteristics for all board
compositions. These characteristics are that the Board must be
representative of the subpopulations of homeless persons that exist
within the geographic area, and include a homeless or formerly homeless
person. Continuums will have 2 years from the effective date of the
interim rule to establish a board that meets the criteria established
in this section. No board member may participate or influence
discussions or decisions concerning the award of a grant or other
financial benefits for an organization that the member represents.
HUD is considering four additional characteristics for all board
compositions for incorporation in the final rule. HUD did not implement
them at this stage in order to seek public comment prior to
implementing them as requirements. HUD proposes that all boards must
have a chair or co-chairs; be composed of an uneven number, serving
staggered terms; include members from the public and private sectors;
and include a member from at least one Emergency Solutions Grants
program (ESG) recipient's agency located within the Continuum's
geographic area. HUD is requesting comment on all of these proposed
requirements; however, HUD specifically requests comments from
Continuums of Care and ESG recipients on the requirement that the Board
include an ESG recipient as part of its membership. HUD invites ESG
recipients and Continuums to share challenges that will be encountered
when implementing this requirement. Ensuring that ESG recipients are
represented on the Board is important to HUD; therefore, in communities
where ESG recipients and/or Continuums do not feel this requirement is
feasible, HUD asks commenters to provide suggestions for how ESG
recipients can be involved in the Continuum at one of the core
decision-making levels.
Responsibilities of the Continuum of Care. The interim rule
establishes three major duties for which the Continuum of Care is
responsible: To operate the Continuum of Care, to designate an HMIS for
the Continuum of Care, and to plan for the Continuum of Care.
This section of the interim rule establishes requirements within
these three major duties.
Operating the Continuum of Care. The interim rule provides that the
Continuum of Care must abide by certain operational requirements. These
requirements will ensure the effective management of the Continuum of
Care process and ensure that the process is inclusive and fair. HUD has
established eight duties required of the Continuum necessary to
effectively operate the Continuum of Care. HUD has established the
specific minimum standards for operating and managing a Continuum of
Care for two main reasons. First, the selection criteria established
under section 427 of the McKinney-Vento Act require HUD to measure the
Continuum of Care's performance in reducing homelessness by looking at
the overall performance of the Continuum, as opposed to measuring
performance project-by-project as was done prior to the enactment of
the HEARTH Act. This Continuum of Care performance approach results in
cooperation and coordination among providers. Second, because
Continuums of Care will have grants of up to 3 percent of Final Pro
Rata Need (FPRN) to be used for eligible Continuum of Care planning
costs, HUD is requiring more formal decision-making and operating
standards for the Continuum of Care. This requirement ensures that the
Continuums have appropriate funding to support planning costs.
One of the duties established in this interim rule is the
requirement that the Continuum establish and operate a centralized or
coordinated assessment system that provides an initial, comprehensive
assessment of the needs of individuals and families for housing and
services. As detailed in the Emergency Solutions Grants program interim
rule published on December 5, 2011, through the administration of the
Rapid Re-Housing for Families Demonstration program and the
Homelessness Prevention and Rapid Re-Housing program, as well as best
practices identified in communities, HUD has learned that centralized
or coordinated assessment systems are important in ensuring the success
of homeless assistance and homeless prevention programs in communities.
In particular, such assessment systems help communities systematically
assess the needs of program participants and effectively match each
individual or family with the most appropriate resources available to
address that individual or family's particular needs.
Therefore, HUD has required, through this interim rule, each
Continuum of Care to develop and implement a centralized or coordinated
assessment system for its geographic area. Such a system must be
designed locally in response to local needs and conditions. For
example, rural areas will have significantly different systems than
urban ones. While the common thread between typical models is the use
of a
[[Page 45428]]
common assessment tool, the form, detail, and use of that tool will
vary from one community to the next. Some examples of centralized or
coordinated assessment systems include: A central location or locations
within a geographic area where individuals and families must be present
to receive homeless services; a 211 or other hotline system that
screens and directly connects callers to appropriate homeless housing/
service providers in the area; a ``no wrong door'' approach in which a
homeless family or individual can show up at any homeless service
provider in the geographic area but is assessed using the same tool and
methodology so that referrals are consistently completed across the
Continuum of Care; a specialized team of case workers that provides
assessment services to providers within the Continuum of Care; or in
larger geographic areas, a regional approach in which ``hubs'' are
created within smaller geographic areas. HUD intends to develop
technical assistance materials on a range of centralized and
coordinated assessment types, including those most appropriate for
rural areas.
HUD recognizes that imposing a requirement for a centralized or
coordinated assessment system may have certain costs and risks. Among
the risks that HUD wishes specifically to address are the risks facing
individuals and families fleeing domestic violence, dating violence,
sexual assault, and stalking. In developing the baseline requirements
for a centralized or coordinated intake system, HUD is considering
whether victim service providers should be exempt from participating in
a local centralized or coordinated assessment process, or whether
victim service providers should have the option to participate or not.
Specific request for comment. HUD specifically seeks comment from
Continuum of Care-funded victim service providers on this question. As
set forth in this interim rule, each Continuum of Care is to develop a
specific policy on how its particular system will address the needs of
individuals and families who are fleeing, or attempting to flee,
domestic violence, dating violence, sexual assault, or stalking, but
who are seeking shelter or services from non-victim service providers.
These policies could include reserving private areas at an assessment
location for evaluations of individuals or families who are fleeing, or
attempting to flee, domestic violence, dating violence, sexual assault,
or stalking; a separate ``track'' within the assessment framework that
is specifically designed for domestic violence victims; or the location
of victim service providers with centralized assessment teams.
HUD invites suggestions for ensuring that the requirements it
imposes regarding centralized or coordinated assessment systems will
best help communities use their resources effectively and best meet the
needs of all families and individuals who need assistance. Questions
that HUD asks commenters to specifically address are: What barriers to
accessing housing/services might a centralized or coordinated intake
system pose to victims of domestic violence? How can those barriers be
eliminated? What specific measures should be implemented to ensure
safety and confidentiality for individuals and families who are fleeing
or attempting to flee domestic violence situations? How should those
additional standards be implemented to ensure that victims of domestic
violence have immediate access to housing and services without
increasing the burden on those victims? For communities that already
have centralized or coordinated assessment systems in place, are
victims of domestic violence and/or domestic violence service providers
integrated into that system? Under either scenario (they are integrated
into an assessment process or they are not integrated into it), how
does your community ensure the safety and confidentiality of this
population, as well as access to homeless housing and services? What
HUD-sponsored training would be helpful to assist communities in
completing the initial assessment of victims of domestic violence in a
safe and confidential manner?
In addition to comments addressing the needs of victims of domestic
violence, dating violence, sexual assault, and stalking, HUD invites
general comments on the use of a centralized or coordinated assessment
system, particularly from those in communities that have already
implemented one of these systems who can share both what has worked
well and how these systems could be improved. HUD specifically seeks
comment on any additional risks that a centralized or coordinated
assessment system may create for victims of domestic violence, dating
violence, sexual assault, or stalking who are seeking emergency shelter
services due to immediate danger, regardless of whether they are
seeking services through a victim service provider or nonvictim service
provider.
Another duty set forth in this part, is the requirement to
establish and consistently follow written standards when administering
assistance under this part. These requirements, established in
consultation with recipients of Emergency Solutions Grants program
funds within the geographic area, are intended to coordinate service
delivery across the geographic area and assist Continuums of Care and
their recipients in evaluating the eligibility of individuals and
families consistently and administering assistance fairly and
methodically. The written standards can be found in Sec. 578.7(a)(9)
of this interim rule.
Designating and operating an HMIS. The Continuum of Care is
responsible for designating an HMIS and an eligible applicant to manage
the HMIS, consistent with the requirements, which will be codified in
24 CFR part 580. This duty is listed under section 402(f)(2) of the
McKinney-Vento Act. In addition, the Continuum is responsible for
reviewing, revising, and approving a privacy plan, security plan, and
data quality plan for the HMIS and ensuring consistent participation of
recipients and subrecipients in the HMIS.
Continuum of Care planning. The Continuum is responsible for
coordinating and implementing a system for its geographic area to meet
the needs of the homeless population and subpopulations within the
geographic area. The interim rule defines the minimum requirements for
this systematic approach under Sec. 578.7(c)(1), such as emergency
shelters, rapid rehousing, transitional housing, permanent supportive
housing, and prevention strategies. Because there are not sufficient
resources available through the Continuum of Care program to prevent
and end homelessness, coordination and integration of other funding
streams, including the Emergency Solutions Grants program and
mainstream resources, is integral to carrying out the Continuum of Care
System.
HUD has determined that since the Continuum of Care will be the
larger planning organization, the Continuum of Care must develop and
follow a Continuum of Care plan that adheres, not only to the
requirements being established by this interim rule, but to the
requirements and directions of the most recently issued notice of
funding availability (NOFA).
While these planning duties are not explicitly provided in section
402(f) of the Act, HUD has included them to facilitate and clarify the
Continuum of Care planning process. Consistent with the goals of the
HEARTH Act, HUD strives, through this interim rule, to provide a
comprehensive, well-
[[Page 45429]]
coordinated and clear planning process, which involves the creation of
the Continuum of Care and the duties the Continuum of Care will have to
fulfill.
Other planning duties for Continuums established in this section of
the interim rule are planning for and conducting at least a biennial-
point-in-time count of homeless persons within the geographic area,
conducting an annual gaps analysis of the homeless needs and services
available within the geographic area, providing information necessary
to complete the Consolidated Plan(s) within the geographic area, and
consulting with State and local government Emergency Solutions Grants
program recipients within the Continuum of Care on the plan for
allocating Emergency Solutions Grants program funds and reporting on
and evaluating the performance of Emergency Solutions Grants program
recipients and subrecipients.
Preparing an application for funds. A major function of the
Continuum of Care is preparing and overseeing an application for funds
under this part. This section of the interim rule establishes the
duties of the Continuum of Care related to the preparation of the
application. This section of the interim rule establishes that the
Continuum is responsible for designing, operating, and following a
collaborative process for the development of applications, as well as
approving the submission of applications, in response to a NOFA
published by HUD.
The Continuum must also establish priorities for funding projects
within the geographic area and determine the number of applications
being submitted for funding. As previously noted in this preamble,
since the Continuum of Care might not be a legal entity, and therefore
may not be able to enter into a contractual agreement with HUD, the
Continuum must select one or more eligible applicants to submit an
application for funding to HUD on its behalf. If the Continuum of Care
is an eligible applicant, the Continuum of Care may submit an
application. If the Continuum selects more than one application, the
Continuum must select one eligible applicant to be the collaborative
applicant. That applicant will collect and combine the required
application information from all of the other eligible applicants and
for all projects within the geographic area that the Continuum has
designated. If only one application is submitted by the collaborative
applicant, the collaborative applicant will collect and combine the
required application information from all projects within the
geographic area that the Continuum has designated for funding. The
collaborative applicant will always be the only applicant that can
apply for Continuum of Care planning costs. In the case that there is
one application for projects, the recipient of the funds is required to
have signed agreements with its subrecipients as set forth in Sec.
578.23(c), and is required to monitor and sanction subrecipients in
compliance with Sec. 578.107.
Whether the Continuum of Care submits the application or designates
an eligible applicant to submit the application for funding, the
Continuum of Care retains all of its duties.
Unified Funding Agencies. To be designated as the Unified Funding
Agency (UFA) for the Continuum of Care, the Continuum must select the
collaborative applicant to apply to HUD to be designated as the UFA for
the Continuum. The interim rule establishes the criteria HUD will use
when determining whether to designate the collaborative applicant as a
UFA. These standards were developed to ensure that collaborative
applicants have the capacity to manage the grant and carry out the
duties in 578.11(b), and are described below.
The duties of the UFA established in Sec. 578.11 are consistent
with the duties set forth in section 402(g) of the Act. Even if the
Continuum designates a UFA to submit the application for funding, the
Continuum of Care retains all of its duties.
Remedial actions. Section 402(c) of the McKinney-Vento Act gives
HUD the authority to ensure the fair distribution of grant amounts for
this program, such as designating another body as a collaborative
applicant, replacing the Continuum of Care for the geographic area, or
permitting other eligible entities to apply directly for grants.
Section 578.13 of this interim rule addresses the remedial actions that
may be taken.
Overview of the Application and Grant Award Process (Subpart C)
Eligible applicants. Under this interim rule, eligible applicants
consist of nonprofit organizations, State and local governments, and
instrumentalities of local governments. An eligible applicant must have
been designated by the Continuum of Care to submit an application for
grant funds under this part. The Continuum's designation must state
whether the Continuum is designating more than one applicant to apply
for funds, and if it is, which applicant is being designated the
collaborative applicant. A Continuum of Care that is designating only
one applicant for funds must designate that applicant to be the
collaborative applicant. For-profit entities are not eligible to apply
for grants or to be subrecipients of grant funds.
Section 401(10) of the McKinney-Vento Act identifies that
collaborative applicants may be legal entities, and a legal entity may
include a consortium of instrumentalities of a State or local
government that has constituted itself as an entity. HUD has not
included a consortium in the list of eligible applicants. As noted
earlier in this preamble, a Continuum of Care is defined to mean a
group that is composed of representatives of organizations across the
entire geographic area claimed by the Continuum of Care. A Continuum is
able to combine more than one metropolitan city or county into the
geographic area that the Continuum represents. In essence, the
Continuum of Care acts as a consortium, and it is therefore HUD's
position that the inclusion of consortiums in the interim rule would be
redundant.
Determining the Continuum's maximum award amount. The total amount
for which a Continuum of Care is eligible to apply and be awarded is
determined through a four-step process, including the following
factors: A Continuum's PPRN amount; renewal demand; any additional
increases in amounts for leasing, rental assistance, and operating
costs based on Fair Market Rents (FMRs); planning and UFA cost funds;
and the amounts available for bonus dollars.
Using the formula that will be discussed below, HUD will first
determine a Continuum of Care's PPRN amount, as authorized under
section 427(b)(2)(B) of the McKinney-Vento Act. This amount is the sum
of the PPRN amounts for each metropolitan city, urban county, non-urban
county, and insular area claimed by the Continuum of Care as part of
its geographic area, excluding any counties applying for, or receiving
funds under the Rural Housing Stability Assistance program, the
regulations for which will be established in 24 CFR part 579. The PPRN
for each of these areas is based upon the ``need formula'' under Sec.
579.17(a)(2) and (3). Under the McKinney-Vento Act, HUD is required to
publish, by regulation, the formula used to establish grant amounts.
The need formula under Sec. 579.17(a)(2) and (3) satisfies this
requirement, and HUD specifically seeks comment on this formula. HUD
will announce the PPRN amounts prior to the publication of the NOFA on
its Web site.
To establish the amount on which the need formula is run, HUD will
deduct an amount, which will be published in
[[Page 45430]]
the NOFA, to be set aside to provide a bonus, and the amount necessary
to fund Continuum of Care planning activities and UFA costs from the
total funds made available for the program each fiscal year. On this
amount, HUD will use the following process to establish an area's PPRN.
First, 2 percent of the total funds available shall be allocated among
the four insular areas (American Samoa, Guam, the Commonwealth of the
Northern Marianas, and the Virgin Islands) based upon the percentage
each area received in the previous fiscal year under section 106 of the
Housing and Community Development Act of 1974. Second, 75 percent of
the remaining funds made available shall be allocated to metropolitan
cities and urban counties that have been funded under the Emergency
Solutions Grants program (formerly known as the Emergency Shelter
Grants program) every year since 2004. Third, the remaining funds made
available shall be allocated to Community Development Block Grant
(CDBG) metropolitan cities and urban counties that have not been funded
under the Emergency Solutions Grants program every year since 2004 and
all other counties in the United States and Puerto Rico.
Recognizing that in some federal fiscal years, the amount available
for the formula may be less than the amount required to renew all
existing projects eligible for renewal in that year for at least one
year, HUD has included a method for distributing the reduction of funds
proportionally across all Continuums of Care in Sec. 578.17(a)(4) of
this interim rule. HUD will publish the total dollar amount that each
Continuum will be required to deduct from renewal projects Continuum-
wide, and Continuums will have the authority to determine how to
administer the cuts to projects across the Continuum.
Specific request for comment. HUD specifically requests comment on
the method established in Sec. 578.17(a)(4) to reduce the total amount
required to renew all projects eligible for renewal in that one year,
for at least one year, for each Continuum of Care when funding is not
sufficient to renew all projects nationwide for at least one year.
The second step in determining a Continuum's maximum award amount
is establishing a Continuum of Care's ``renewal demand.'' The
Continuum's renewal demand is the sum of the annual renewal amounts of
all projects eligible within the Continuum of Care's geographic area to
apply for renewal in that federal fiscal year's competition before any
adjustments to rental assistance, leasing, and operating line items
based on changes to the FMRs in the geographic area.
Third, HUD will determine the Continuum of Care's Final Pro Rata
Need (FPRN), which is the higher of: (1) PPRN, or (2) renewal demand
for the Continuum of Care. The FPRN establishes the base for the
maximum award amount for the Continuum of Care.
Fourth, HUD will determine the maximum award amount. The maximum
award amount for the Continuum of Care is the FPRN amount plus any
additional eligible amounts for Continuum planning; establishing fiscal
controls for the Continuum; updates to leasing, operating, and rental
assistance line items based on changes to FMR; and the availability of
any bonus funding during the competition.
Application process. Each fiscal year, HUD will issue a NOFA. All
applications, including applications for grant funds, and requests for
designation as a UFA or HPC, must be submitted to HUD in accordance
with the requirements of the NOFA and contain such information as the
NOFA specifies. Applications may request up to the maximum award amount
for Continuums of Care.
An applicant that is a State or a unit of general local government
must have a HUD-approved, consolidated plan in accordance with HUD's
Consolidated Plan regulations in 24 CFR part 91. The applicant must
submit a certification that the application for funding is consistent
with the HUD-approved consolidated plan(s) in the project's
jurisdiction(s). Applicants that are not States or units of general
local government must submit a certification that the application for
funding is consistent with the jurisdiction's HUD-approved consolidated
plan. The certification must be made by the unit of general local
government or the State, in accordance with HUD's regulations in 24 CFR
part 91, subpart F. The required certification must be submitted by the
funding application submission deadline announced in the NOFA.
An applicant may provide assistance under this program only in
accordance with HUD subsidy layering requirements in section 102 of the
Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545). In
this interim rule, HUD clarifies that the applicant must submit
information in its application on other sources of funding the
applicant has received, or reasonably expects to receive, for a
proposed project or activities.
Awarding funds. HUD will review applications in accordance with the
guidelines and procedures specified in the NOFA and award funds to
recipients through a national competition based on selection criteria
as defined in section 427 of the McKinney-Vento Act. HUD will announce
the awards and notify selected applicants of any conditions imposed on
the awards.
Grant agreements. A recipient of a conditionally awarded grant must
satisfy all requirements for obligation of funds; otherwise, HUD will
withdraw its offer of the award. These conditions include establishing
site control, providing proof of match, complying with environmental
review under Sec. 578.31, and documenting financial feasibility within
the deadlines under Sec. 578.21(a)(3). HUD has included in the interim
rule the deadlines for conditions that may be extended and the reasons
for which HUD will consider an extension.
The interim rule requires that site control be established by each
recipient receiving funds for acquisition, rehabilitation funding, new
construction, or operating costs, or for providing supportive services.
HUD has determined that the time to establish site control is 12 months
for projects not receiving new construction, acquisition, or
rehabilitation funding, as stated under section 426(a) of the McKinney-
Vento Act, not 9 months as stated under section 422(d) of the McKinney-
Vento Act, for projects receiving operating and supportive service
funds. HUD's determination on the time needed to establish site control
is based on previous program policy, and the longer time frame takes
into consideration the reality of the housing market. Projects
receiving acquisition, rehabilitation, or new construction funding must
provide evidence of site control no later than 24 months after the
announcement of grant awards, as provided under section 422(d) of the
McKinney-Vento Act.
The interim rule requires that HUD perform an environmental review
for each property as required under HUD's environmental regulations in
24 CFR part 50. All recipients of Continuum of Care program funding
under this part must supply all available, relevant information
necessary to HUD, and carry out mitigating measures required by HUD.
The recipient, its project partners, and its project partner's
contractors may not perform any eligible activity for a project under
this part, or commit or expend HUD or local funds for such activities
until HUD has performed an environmental review and the recipient has
received HUD approval of the property agreements.
Executing grant agreements. If a Continuum designates more than one
applicant for the geographic area, HUD
[[Page 45431]]
will enter into a grant agreement with each designated recipient for
which an award is announced. If a Continuum designates only one
recipient for the geographic area, HUD may enter into one grant
agreement with that recipient for new awards, if any; and one grant
agreement for renewals and Continuum of Care planning costs and UFA
costs, if any. These two grant agreements will cover the entire
geographic area, and a default by the recipient under one of these
agreements will also constitute a default under the other. If the
Continuum is a UFA, HUD will enter into one grant agreement with the
UFA for new awards, if any; and one for renewal and Continuum of Care
planning costs and UFA costs, if any. Similarly, these two grant
agreements will cover the entire geographic area and a default by the
recipient under one of those agreements will also constitute a default
under the other.
HUD requires the recipient to enter into the agreement described in
Sec. 578.23(c). Under this agreement, the grant recipient must agree
to ensure that the operation of the project will be in accordance with
the McKinney-Veto Act and the requirements under this part. In
addition, the recipient must monitor and report the progress of the
projects to the Continuum of Care and to HUD. The recipient must ensure
that individuals and families experiencing homelessness are involved in
the operation of the project, maintain confidentiality of program
participants, and monitor and report matching funds to HUD, among other
requirements. The recipient must also agree to use the centralized or
coordinated assessment system established by the Continuum of Care,
unless the recipient or subrecipient is a victim service provider.
Victim service providers may choose not to use the centralized or
coordinated assessment system provided that all victim service
providers in the area use a centralized or coordinated assessment
system that meets HUD's minimum requirements. HUD has provided this
optional exception because it understands the unique role that victim
service providers have within the Continuum of Care.
Renewals. The interim rule provides that HUD may fund, through the
Continuum of Care program, all projects that were previously eligible
under the McKinney-Vento Act prior to the enactment of the HEARTH Act.
These projects may be renewed to continue ongoing leasing, operations,
supportive services, rental assistance, HMIS, and administration beyond
the initial funding period even if those projects would not be eligible
under the Continuum of Care program. For projects that would no longer
be eligible under the Continuum of Care program (e.g., safe havens),
but which are serving homeless persons; HUD wants to ensure that
housing is maintained and that persons do not become homeless because
funding is withdrawn.
HUD may renew projects that were submitted on time and in such
manner as required by HUD, but did not have a total score that would
allow the project to be competitively funded. HUD may choose to
exercise this option to ensure that homeless or formerly homeless
persons do not lose their housing. The interim rule provides, based on
the language in section 421(e) of the McKinney-Vento Act, that HUD may
renew the project, upon a finding that the project meets the purposes
of the Continuum of Care program, for up to one year and under such
conditions as HUD deems appropriate.
Annual Performance Report. The interim rule also provides that HUD
may terminate the renewal of any grant and require the recipient to
repay the renewal grant if the recipient fails to submit a HUD Annual
Performance Report (APR) within 90 days of the end of the program year
or if the recipient submits an APR that HUD deems unacceptable or shows
noncompliance with the requirements of the grant and this part. Section
578.103(e) of the Continuum of Care program regulations further
clarifies that recipients receiving grant funds for acquisition,
rehabilitation, or new construction are expected to submit APRs for 15
years from the date of initial occupancy or the date of initial service
provision, unless HUD provides an exception. The recipient's submission
of the APR helps HUD review whether the recipient is carrying out the
project in the manner proposed in the application. Recipients agree to
submit an APR as a condition of their grant agreement. This requirement
allows HUD to ensure that recipients submit APRs on grant agreements
that have expired as a condition of receiving approval for a new grant
agreement for the renewal project.
Appeals. The interim rule provides certain appeal options for
applicants that were not awarded funding.
Under section 422(g) of the McKinney-Vento Act, if more than one
collaborative applicant submits an application covering the same
geographic area, HUD must award funds to the application that scores
the highest score based on the selection criteria set forth in section
427 of the Act. Consistent with HUD's use of the term Continuum of Care
in the interim rule where the statute uses collaborative applicant, as
explained earlier in the preamble, the interim rule stipulates that if
more than one Continuum of Care claims the same geographic area, then
HUD will award funds to the Continuum applicant(s) whose application(s)
has the highest total score and that no projects from the lower scoring
Continuum of Care will be funded (and that any projects submitted with
both applications will not be funded). To appeal HUD's decision to fund
the competing Continuum of Care, the applicant(s) from the lower-
scoring Continuum of Care must file the written appeal in such form and
manner as HUD may require within 45 days of the date of HUD's
announcement of award.
If an applicant has had a certification of consistency with a
consolidated plan withheld, that applicant may appeal such a decision
to HUD. HUD has established a procedure to process the appeals and no
later than 45 days after the date of receipt of an appeal, HUD will
make a decision.
Section 422(h) of the McKinney-Vento Act provides the authority for
a solo applicant to submit an application to HUD and be awarded a grant
by HUD if it meets the criteria under section 427 of the McKinney-Vento
Act. The interim rule clarifies that a solo applicant must submit its
application to HUD by the deadline established in the NOFA to be
considered for funding. The statute also requires that HUD establish an
appeal process for organizations that attempted to participate in the
Continuum of Care's process and believe they were denied the right to
reasonable participation, as reviewed in the context of the local
Continuum's process. An organization may submit a solo application to
HUD and appeal the Continuum's decision not to include it in the
Continuum's application. If HUD finds that the solo applicant was not
permitted to participate in the Continuum of Care process in a
reasonable manner, then HUD may award the grant to that solo applicant
and may direct the Continuum to take remedial steps to ensure
reasonable participation in the future. HUD may also reduce the award
to the Continuum's applicant(s).
Section 422(h)(1) of the McKinney-Vento Act requires that ``HUD
establish a timely appeal procedure for grant amounts awarded or denied
under this subtitle to a collaborative application.'' The interim rule
sets an appeal process for denied or decreased funding under Sec.
578.35(c). Applicants that are denied funds by HUD, or that requested
more funds than HUD awarded, may appeal
[[Page 45432]]
by filing a written appeal within 45 days of the date of HUD's
announcement of the award. HUD will notify applicant of its decision on
the appeal within 60 days of the date of HUD's receipt of the written
appeal.
Program Components and Eligible Costs (Subpart D)
Program components. The interim rule provides that Continuum of
Care funds may be used for projects under five program components:
Permanent housing, transitional housing, supportive services only,
HMIS, and, in some cases, homelessness prevention. Administrative costs
are eligible under all components. Where possible, the components set
forth in the Continuum of Care program are consistent with the
components set forth under the Emergency Solutions Grants program. This
will ease the administrative burden on recipients of both programs and
will ensure that reporting requirements and data quality benchmarks are
consistently established and applied to like projects. One significant
distinction between the Emergency Solutions Grants program and this
part can be found in the eligible activities and administration
requirements for assistance provided under the rapid rehousing
component in this interim rule. The significant differences between
this component in the Emergency Solutions Grants program and this part
are discussed below.
The interim rule sets forth the costs eligible for each program
component in Sec. 578.37(a). The eligible costs for contributing data
to the HMIS designated by the Continuum of Care are also eligible under
all components.
Consistent with the definition of permanent housing in section 401
of the McKinney-Vento Act and Sec. 578.3 of this interim rule, the
permanent housing component is community-based housing without a
designated length of stay that permits formerly homeless individuals
and families to live as independently as possible. The interim rule
clarifies that Continuum of Care funds may be spent on two types of
permanent housing: Permanent supportive housing for persons with
disabilities (PSH) and rapid rehousing that provides temporary
assistance (i.e., rental assistance and/or supportive services) to
program participants in a unit that the program participant retains
after the assistance ends.
Although the McKinney-Vento Act authorizes permanent housing
without supportive services, the interim rule does not. Based on its
experience with the Supportive Housing and Shelter Plus Care programs,
HUD has determined that programs should require at least case
management for some initial period after exiting homelessness. HUD has
imposed the requirement that rapid rehousing include, at a minimum,
monthly case management meetings with program participants (except
where prohibited by the Violence Against Women Act (VAWA) and the
Family Violence Prevention and Services Act (FVPSA)) and allows for a
full range of supportive services to be provided for up to 6 months
after the rental assistance stops. Many other HUD programs, such as
Section 8 and HOME, provide housing without supportive services to low-
income individuals and families.
With respect to rapid rehousing, the interim rule provides that
funds under this part may be used to provide supportive services and
short-term and/or medium-term rental assistance. While the time frames
under which a program participant may receive short-term or medium-term
rental assistance set forth in this part match the time frames set
forth in the Emergency Solutions Grants program, the supportive
services available to program participants receiving rapid rehousing
assistance under the Continuum of Care program are not limited to
housing relocation and stabilization services as they are in the
Emergency Solutions Grants program. Program participants receiving
rapid rehousing under this part may receive any of the supportive
services set forth in Sec. 578.53 during their participation in the
program. The Continuum of Care, however, does have the discretion to
develop written policies and procedures that limit the services
available to program participants that better align the services
available to program participants with those set forth in the Emergency
Solutions Grants program.
Specific request for comment. While HUD's experience with the
Supportive Housing and Shelter Plus Care programs is the basis for
HUD's determination to require case management for some initial period
after exiting homelessness, HUD specifically welcomes comment on other
experiences with monthly case management.
The interim rule provides that the HMIS component is for funds that
are used by HMIS Leads only. Eligible costs include leasing a structure
in which the HMIS is operated, operating funds to operate a structure
in which the HMIS is operated, and HMIS costs related to establishing,
operating, and customizing a Continuum of Care's HMIS.
As set forth in Section 424(c) of the McKinney-Veto Act, Continuum
of Care funds may be used only for the homelessness prevention
component by recipients in Continuums of Care that have been designated
HPCs by HUD. Eligible activities are housing relocation and
stabilization services, and short- and/or medium-term rental
assistance, as set forth in 24 CFR 576.103, necessary to prevent an
individual or family from becoming homeless.
Planning activities. Under this interim rule, HUD lists eligible
planning costs for the Continuum of Care under Sec. 578.39(b) and (c).
HUD will allow no more than 3 percent of the FPRN, or a maximum amount
to be established by the NOFA, to be used for certain costs. These
costs must be related to designing a collaborative process for an
application to HUD, evaluating the outcomes of funded projects under
the Continuum of Care and Emergency Solutions Grants programs, and
participating in the consolidated plan(s) for the geographic area(s).
Under section 423 of the McKinney-Vento Act, a collaborative applicant
may use no more than 3 percent of total funds made available to pay for
administrative costs related to Continuum of Care planning.
HUD is defining ``of the total funds made available'' to mean FPRN,
the higher of PPRN or renewal demand, in the interim rule. HUD has
determined that FPRN strikes the correct balance, as it is the higher
of PPRN or renewal demand. This will help Continuums of Care (CoC)
balance: (1) Having sufficient planning dollars to be successful in its
duties and compete for new money (which would be the PPRN), and (2)
being able to monitor and evaluate actual projects in operation (and
plan for renewal demand). The administrative funds related to CoC
planning made available will be added to a CoC's FPRN to establish the
CoCs maximum award amount.
Unified Funding Agency Costs. Under this interim rule, HUD lists
eligible UFA costs in Sec. 578.41(b) and (c). Similar to the cap on
planning costs for CoC, HUD will allow no more than 3 percent of the
FPRN, or a maximum amount to be established by the NOFA, whichever is
less, to be used for UFA costs. This amount is in addition to the
amount made available for CoC planning costs. UFA costs include costs
associated with ensuring that all financial transactions carried out
under the Continuum of Care program are conducted and records
maintained in accordance with generally accepted accounting principles,
including arranging for an annual survey, audit, or evaluation of the
financial records of each project carried out by a subrecipient funded
by a grant received through the Continuum of Care program. The funds
made
[[Page 45433]]
available to UFAs related to establishing fiscal controls will be added
to a CoC's FPRN to establish the CoC maximum award amount.
Leasing. Under this interim rule, grant funds may be used to pay
the costs of leasing a structure or structures, or portions of
structures, to provide housing or supportive services. The interim rule
further clarifies that leasing means that the lease is between the
recipient of funds and the landlord. HUD recognizes that some grantees
receiving funds through the Supportive Housing Program may have been
using their leasing funds in a manner consistent with the rental
assistance requirements established in Sec. 578.51; therefore, since
the Continuum of Care program authorizes both leasing and rental
assistance, the rule provides for an allowance for projects originally
approved to carry out leasing to renew and request funds for rental
assistance, so long as the rental assistance meets the requirements in
Sec. 578.51. The rule provides that a recipient of a grant awarded
under the McKinney-Vento Act, prior to enactment of the HEARTH Act,
must apply for leasing if the lease is between the recipient and the
landlord, notwithstanding that the grant was awarded prior to the
HEARTH Act amendments to the McKinney-Vento Act.
The interim rule provides that leasing funds may not be used to
lease units or structures owned by the recipient, subrecipient, their
parent organization(s), any other related organization(s), or
organizations that are members of a partnership where the partnership
owns the structure, unless HUD authorizes an exception for good cause.
The interim rule establishes minimum requirements that a request for an
exception must include. These exceptions are based on HUD's experience
in administering the Homelessness Prevention and Rapid Re-Housing
Program (HPRP).
The interim rule establishes that projects for leasing may require
that program participants pay an occupancy charge (or in the case of a
sublease, rent) of no more than 30 percent of their income. Income must
be calculated in accordance with HUD's regulations in 24 CFR 5.609 and
24 CFR 5.611(a). However, the interim rule clarifies that projects may
not charge program fees.
Rental assistance. Under this interim rule, rental assistance is an
eligible cost for permanent and transitional housing, and this rule
clarifies that the rental assistance may be short-term, up to 3 months
of rent; medium-term, for 3 to 24 months of rent; and long-term, for
longer than 24 months of rent. This section provides that rental
assistance may include tenant-based, project-based, or sponsor-based
rental assistance. This section also provides that project-based rental
assistance may include rental assistance to preserve existing permanent
supportive housing for homeless individuals and families. Given that
the availability of affordable rental housing has been shown to be a
key factor in reducing homelessness, the availability of funding for
short-term, medium-term, and long-term rental assistance under both the
Emergency Solutions Grants program and the Continuum of Care program is
not inefficient use of program funds, but rather effective use of
funding for an activity that lowers the number of homeless persons.
As noted in the above discussion of rental housing available for
funding under the Continuum of Care program, one eligible form of
rental assistance is tenant-based, which allows the program participant
to retain rental assistance for another unit. The interim rule limits
this retention to within the Continuum of Care boundaries. HUD has
determined that Continuum of Care program funds must be used within the
Continuum's geographic boundaries. If program participants move outside
of the Continuum, the Continuum may pay moving costs, security
deposits, and the first month of rent for another unit; however, the
Continuum would have to organize assistance with the relevant Continuum
of Care for the program participant if rental assistance is to
continue. The program participant may be transferred to a rental
assistance program in a different Continuum without having to become
homeless again. The recipient may also limit the movement of the
assistance to a smaller area if this is necessary to coordinate service
delivery.
Under this interim rule, the only exception to the limitation for
retention of tenant-based rental assistance is for program participants
who are victims of domestic violence, dating violence, sexual assault,
or stalking. Under the definition of ``tenant-based'' in the McKinney-
Vento Act (section 401(28) of the McKinney-Vento Act), these
participants must have complied with all other obligations of the
program and reasonably believe that he or she is imminently threatened
by harm from further violence if he or she remains in the assisted
dwelling unit.
In the interim rule, HUD has clarified that the imminent threat of
harm must be from further domestic violence, dating violence, sexual
assault, or stalking, which would include threats from a third party,
such as a friend or family member of the perpetrator of the violence.
HUD requires that the program participant provide appropriate
documentation of the original incident of domestic violence, dating
violence, sexual assault, or stalking, and any evidence of the current
imminent threat of harm. Examples of appropriate documentation of the
original incident of domestic violence, dating violence, sexual
assault, or stalking include written observation by the housing or
service provider; a letter or other documentation from a victim service
provider, social worker, legal assistance provider, pastoral counselor,
mental health provider, or other professional from whom the victim has
sought assistance; or medical or dental, court, or law enforcement
records. Documentation of reasonable belief of further domestic
violence, dating violence, sexual assault, or stalking includes written
observation by the housing or service provider; a letter or other
written documentation from a victim service provider, social worker,
legal assistance provider, pastoral counselor, mental health provider,
or other professional from whom the victim has requested assistance; a
current restraining order, recent court order, or other court records;
or law enforcement reports or records. The housing or service provider
may also consider other documentation such as emails, voicemails, text
messages, social media posts, and other communication. Because of the
particular safety concerns surrounding victims of domestic violence,
the interim rule provides that acceptable evidence for both the
original violence and the reasonable belief include an oral statement.
This oral statement does not need to be verified, but it must be
documented by a written certification by the individual or head of
household.
This provision is specific to victims of domestic violence, dating
violence, sexual assault, and stalking who are receiving tenant-based
rental assistance in permanent housing. This interim rule contains
other policies for moving program participants receiving any type of
assistance under this interim rule, including tenant-based rental
assistance, within the Continuum of Care geographic area, or smaller
geographic area required by the provider to coordinate service
delivery. Moving program participants outside of the geographic area
where providers can coordinate service-delivery is administratively
difficult for providers and makes it difficult to monitor that program
participants have access to, and are receiving, appropriate supportive
[[Page 45434]]
services; therefore, moves outside of the geographic area where the
provider can effectively deliver and monitor service coordination are
allowed only under exceptional circumstances. HUD has established these
provisions to provide an exception and to address the challenges that
are associated with such a move.
Based on HUD's experience in administering the Shelter Plus Care
program, the interim rule includes provisions to clarify when rental
payments may continue to be made to a landlord when the program
participant no longer resides in the unit. For vacated units, the
interim rule provides that assistance may continue for a maximum of 30
days from the end of the month in which the unit was vacated, unless
the unit is occupied by another eligible person. A person staying in an
institution for less than 90 days is not considered as having vacated
the unit. Finally, the recipient may use grant funds, in an amount not
to exceed one month's rent, to pay for any damage to housing due to the
action of the program participant, one-time, per program participant,
per unit. This assistance can be provided only at the time the program
participant exits the housing unit.
Supportive services. Grant funds may be used to pay eligible costs
of supportive services for the special needs of program participants.
All eligible costs are eligible to the same extent for program
participants who are unaccompanied homeless youth; persons living with
Human Immunodeficiency Virus (HIV)/Acquired Immune Deficiency Syndrome
(AIDS) (HIV/AIDS); and victims of domestic violence, dating violence,
sexual assault, or stalking. Any cost that is not described as an
eligible cost under this interim rule is not an eligible cost of
providing supportive services. Eligible costs consist of assistance
with moving costs, case management, child care, education services,
employment assistance and job training, housing search and counseling
services, legal services, life skills training, mental health services,
outpatient health services, outreach services, substance abuse
treatment services, transportation, and utility deposits.
The definition of ``supportive services'' in section 401(27) of the
McKinney-Vento Act includes the provision of mental health services,
trauma counseling, and victim services. HUD has determined that victim
services are eligible as supportive services, and are included as
eligible program costs in this interim rule. Providers are allowed to
provide services specifically to victims of domestic violence, dating
violence, sexual assault, and stalking. The eligible costs for
providing victim services are listed as eligible costs in the
supportive services funding category. Rather than create a new eligible
line item in the project budget, HUD has determined that these costs
can be included in the funding categories already established.
Indirect costs. Indirect costs are allowed as part of eligible
program costs. Programs using indirect cost allocations must be
consistent with Office of Management and Budget (OMB) Circulars A-87
and A-122, as applicable. OMB Circular A-87 and the regulations at 2
CFR part 225 pertain to ``Cost Principles for State, Local, and Indian
Tribal Governments.'' OMB Circular A-122 and the regulations codified
at 24 CFR part 230 pertain to ``Cost Principles for Non-Profit
Organizations.''
Other costs. In addition to the eligible costs described in this
preamble, the regulation addresses the following other eligible costs:
acquisition, rehabilitation, new construction, operating costs, HMIS,
project administrative costs, and relocation costs.
High-Performing Communities (Subpart E)
Section 424 of the McKinney-Vento Act establishes the authority for
the establishment of and requirements for HPCs. Applications must be
submitted by the collaborative applicant at such time and in such
manner as HUD may require and contain such information as HUD
determines necessary under Sec. 578.17(b). Applications will be posted
on the HUD Web site (www.hud.gov) for public comments. In addition to
HUD's review of the applications, interested members of the public will
be able to provide comment to HUD regarding the applications.
Requirements. The Continuum of Care must use HMIS data (HUD will
publish data standards and measurement protocols) to determine that the
standards for qualifying as a HPC are met. An applicant must submit a
report showing how the Continuum of Care program funds were expended in
the prior year, and provide information that the Continuum meets the
standards for HPCs.
Standards. In order to qualify as an HPC, a Continuum of Care must
demonstrate through reliable data that it meets all of the required
standards. The interim rule clarifies which standards will be measured
with reliable data from a Continuum's HMIS and which standards will be
measured through reliable data from other sources and presented in a
narrative form or other format prescribed by HUD.
Continuums must use the HMIS to demonstrate the following measures:
(1) That the mean length of homelessness must be less than 20 days for
the Continuum's geographic area, or the Continuum's mean length of
episodes for individuals and families in similar circumstances was
reduced by at least 10 percent from the preceding year; (2) that less
than 5 percent of individuals and families that leave homelessness
become homeless again any time within the next 2 years, or the
percentage of individuals and families in similar circumstances who
became homeless again within 2 years after leaving homelessness was
decreased by at least 20 percent from the preceding year; and (3) for
Continuums of Care that served homeless families with youth defined as
homeless under other federal statutes, that 95 percent of those
families did not become homeless again within a 2-year period following
termination of assistance and that 85 percent of those families
achieved independent living in permanent housing for at least 2 years
following the termination of assistance.
The McKinney-Vento Act requires that HUD set forth standards for
preventing homelessness among the subset of those at the highest risk
of becoming homeless among those homeless families and youth defined as
homeless under other federal statutes, the third measure above, one of
which includes achieving independent living in permanent housing among
this population. HUD has set forth the standards of 95 percent and 85
percent. HUD recognizes that these standards are high, but standards
are comparable to the other standards in the Act, which are high. It is
HUD's position that HPCs should be addressing the needs of those
homeless individuals within their communities prior to receiving
designation of a HPC and being allowed to spend funds in accordance
with Sec. 578.71.
The final standard that the Continuum must use its HMIS data to
demonstrate is provided under section 424(d)(4) of the Act. The statute
requires each homeless individual or family who sought homeless
assistance to be included in the data system used by that community.
HUD has defined this as bed-coverage and service-volume coverage rates
of at least 80 percent. The documentation that each homeless individual
or family who sought homeless assistance be included in the HMIS is not
measurable by HUD. This type of standard would be entirely reliant upon
self-reporting. Additionally, individuals and families
[[Page 45435]]
have the right to decline having their data entered into the HMIS. HUD
uses bed-coverage rates and service-volume coverage rates as a proxy
for measuring the rate of inclusion of persons who are present for
services or housing in the HMIS. This is a measurable standard, and HUD
defines the calculation in the HMIS rule; therefore, the measurement
will be consistent between Continuums.
Continuums must use reliable data from other sources and presented
in a narrative form or other format prescribed by HUD to measure two
standards: Community action and renewing HPC status. Section 424(d)(4)
of the McKinney-Vento Act establishes another standard for HPCs, which
is ``community action.'' This statutory section provides that
communities that compose the geographic area must have actively
encouraged homeless individuals and families to participate in housing
and services available in the geographic area and included each
homeless individual or family who sought homeless assistance services
in the data system used by that community for determining compliance.
HUD has defined ``communities that compose the geographic area'' to
mean the entire geographic area of the Continuum. This definition will
also provide consistency of measurement since most of HUD's
measurements are across the entire Continuum of Care geographic area.
HUD has further defined ``actively encourage'' within this standard as
a comprehensive outreach plan, including specific steps for identifying
homeless persons and referring them to appropriate housing and services
in that geographic area. The measurement of the last part of this
standard, ``each homeless individual or family who sought homeless
assistance services in the data system used by that community,'' will
be measured using reliable data from an HMIS and has been discussed
earlier in this preamble. HUD has determined this will provide clarity
and ensure consistent measurement across Continuums.
The interim rule provides that a Continuum of Care that was an HPC
in the prior year and used Continuum funds for activities described
under Sec. 578.71 must demonstrate that these activities were
effective at reducing the number of persons who became homeless in that
community, to be renewed as a HPC.
Selection. HUD will select up to 10 Continuums of Care each year
that best meet the application requirements and the standards set forth
in Sec. 578.65. Consistent with section 424 of the McKinney-Vento Act,
the interim rule provides a HPC designation for the grants awarded in
the same competition in which the designation is applied for and made.
The designation will be for a period of one year.
Eligible activities. Recipients and subrecipients in Continuums
that have been designated an HPC may use grant funds to provide housing
relocation and stabilization services and short- and/or medium-term
rental assistance to individuals and families at risk of homelessness
as set for in the Emergency Solutions Grants program. All eligible
activities discussed in this section must be effective at stabilizing
individuals and families in their current housing, or quickly moving
such individuals and families to other permanent housing. This is the
only time that Continuum of Care funds may be used to serve nonhomeless
individuals and families. Recipients and subrecipients using grant
funds on these eligible activities must follow the written standards
established by the Continuum of Care in Sec. 578.7(a)(9)(v), and the
recordkeeping requirements set for the Emergency Solutions Grants
program rule.
Program Requirements (Subpart F)
All recipients of Continuum of Care funding must comply with the
program regulations and the requirements of the NOFA issued annually by
HUD.
Matching. The HEARTH Act allows for a new, simplified match
requirement. All eligible funding costs except leasing must be matched
with no less than a 25 percent cash or in-kind match. The interim rule
clarifies that the match must be provided for the entire grant, except
that recipients that are UFAs or are the sole recipient for the
Continuum may provide the match on a Continuum-wide basis.
For in-kind match, the governmentwide grant requirements of HUD's
regulations in 24 CFR 84.23 (for private nonprofit organizations) and
85.24 (for governments) apply. The regulations in 24 CFR parts 84 and
85 establish uniform administrative requirements for HUD grants. The
requirements of 24 CFR part 84 apply to subrecipients that are private
nonprofit organizations. The requirements of 24 CFR part 85 apply to
the recipient and subrecipients that are units of general purpose local
government. The match requirement in 24 CFR 84.23 and in 24 CFR 85.24
applies to administration funds, as well as Continuum of Care planning
costs and UFA's financial management costs. All match must be spent on
eligible activities as required under subpart D of this interim rule,
except that recipients and subrecipients in HPCs may use match on
eligible activities described under Sec. 578.71.
General operations. Recipients of grant funds must provide housing
or services that comply with all applicable State and local housing
codes, licensing requirements, and any other requirements in the
project's jurisdiction. In addition, this interim rule clarifies that
recipients must abide by housing quality standards and suitable
dwelling size. Recipients must also assess supportive services on an
ongoing basis, have residential supervision, and provide for
participation of homeless individuals as required under section 426(g)
of the McKinney-Vento Act.
Specific request for comment. With respect to housing quality
standards, HUD includes in this rule the longstanding requirement from
the Shelter Plus Care program that recipients or subrecipients, prior
to providing assistance on behalf of a program participant, must
physically inspect each unit to assure that the unit meets housing
quality standards. This requirement is designed to ensure that program
participants are placed in housing that is suitable for living.
Additionally, these requirements are consistent with HUD's physical
inspection requirements in its other mainstream rental assistance
programs. Notwithstanding that this is a longstanding requirement, HUD
welcomes comment on alternatives to inspection of each unit that may be
less burdensome but ensure that the housing provided to a program
participant is decent, safe, and sanitary.
Under Section 578.75, General Operations, subsection (h), entitled
``Supportive Service Agreements,'' states that recipients and
subrecipients may require program participants to take part in
supportive services so long as they are not disability-related
services, provided through the project as a condition of continued
participation in the program. Examples of disability-related services
include, but are not limited to, mental health services, outpatient
health services, and provision of medication, which are provided to a
person with a disability to address a condition caused by the
disability.
This provision further states that if the purpose of the project is
to provide substance abuse treatment services, recipients and
subrecipients may require program participants to take part in such
services as a condition of continued participation in the program. For
example, if a Continuum of Care recipient operates a transitional
housing program with substance abuse treatment
[[Page 45436]]
services, the recipient may require program participants to participate
in those services. By contrast, in a program that offers services but
whose purpose is not substance abuse treatment, a recipient may not
require a person who is an alcoholic, for example, to sign a supportive
service agreement at initial occupancy stating that he or she will
participate in substance abuse treatment services as a condition of
occupancy. All program participants must, however, meet all terms and
conditions of tenancy, including lease requirements. If, as a result of
a person's behavior stemming from substance use, a person violates the
terms of the lease, a recipient may consider requiring participation in
services or any other action necessary in order for such a person to
successfully meet the requirements of tenancy.
Finally, the interim rule clarifies that in units where the
qualifying member of the household has died, or has been incarcerated
or institutionalized for more than 90 days, assistance may continue
until the expiration of the lease in effect at the time of the
qualifying member's death, incarceration, or institutionalization.
Displacement, relocation, and acquisition. All recipients must
ensure that they have taken all reasonable steps to minimize the
displacement of persons as a result of projects assisted under this
part. This section of the interim rule is substantially revised from
the previous programs to increase clarity and comprehension of the
directions to recipients and subrecipients in the use of grant funds.
Timeliness standards. Recipients must initiate approved activities
and projects promptly. Recipients of funds for rehabilitation and new
construction must begin construction activities within 9 months of the
signing of the grant, and such activities must be completed within 24
months. HUD is providing these requirements to assist communities in
meeting the obligation and expenditure deadline historically imposed by
the annual HUD appropriations act. HUD may reduce a grant term to a
term of one year if implementation delays reduce the amount of funds
that can be used during the original grant term.
Limitation on use of funds. Recipients of funds provided under this
part must abide by any limitations that apply to the use of such funds,
such as use of funds for explicitly religious activities.
The limitation on use of funds also addresses limitation on uses
where religious activities may be concerned. It is HUD's position that
faith-based organizations are able to compete for HUD funds and
participate in HUD programs on an equal footing with other
organizations; that no group of applicants competing for HUD funds
should be subject, as a matter of discretion, to greater or fewer
requirements than other organizations solely because of their religious
character or affiliation, or, alternatively, the absence of religious
character or affiliation. HUD's general principles regarding the equal
participation of such organizations in its programs are codified at 24
CFR 5.109. Program-specific requirements governing faith-based
activities are codified in the regulations for the individual HUD
programs. (See, for example, 24 CFR 574.300(c), 24 CFR 582.115(c), and
24 CFR 583.150(b).)
HUD's equal participation regulations were prompted by Executive
Order 13279, Equal Protection of the Laws for Faith-Based and Community
Organizations, issued by President Bush on December 12, 2002, and
published in the Federal Register on December 16, 2002 (67 FR 77141).
Executive Order 13279 set forth principles and policymaking criteria to
guide federal agencies in ensuring the equal protection of the laws for
faith-based and community organizations. Executive Order 13279 was
amended by Executive Order 13559 (Fundamental Principles and
Policymaking Criteria for Partnerships With Faith-Based and Other
Neighborhood Organizations), issued by President Obama on November 17,
2010, and published in the Federal Register on November 22, 2010 (75 FR
71319).
Executive Order 13559 expands on the equal participation principles
provided in Executive Order 13279 to strengthen the capacity of faith-
based and other neighborhood organizations to deliver services
effectively and ensure the equal treatment of program beneficiaries.
Executive Order 13559 reiterates a key principle underlying
participation of faith-based organizations in federally funded
activities and that is that faith-based organizations be eligible to
compete for federal financial assistance used to support social service
programs and to participate fully in social service programs supported
with federal financial assistance without impairing their independence,
autonomy, expression outside the programs in question, or religious
character.
With respect to program beneficiaries, the Executive Order states
that organizations, in providing services supported in whole or in part
with federal financial assistance, and in their outreach activities
related to such services, should not be allowed to discriminate against
current or prospective program beneficiaries on the basis of religion,
a religious belief, a refusal to hold a religious belief, or a refusal
to attend or participate in a religious practice. The Executive Order
directs that organizations that engage in explicitly religious
activities (including activities that involve overt religious content
such as worship, religious instruction, or proselytization) must
perform such activities and offer such services outside of programs
that are supported with direct federal financial assistance (including
through prime awards or subawards), separately in time or location from
any such programs or services supported with direct federal financial
assistance, and participation in any such explicitly religious
activities must be voluntary for the beneficiaries of the social
service program supported with such federal financial assistance. For
purposes of greater clarity and comprehensibility, the Executive Order
uses the term ``explicitly religious'' in lieu of ``inherently
religious.'' The Executive Order further directs that if a beneficiary
or prospective beneficiary of a social service program supported by
federal financial assistance objects to the religious character of an
organization that provides services under the program, that
organization shall, within a reasonable time after the date of the
objection, refer the beneficiary to an alternative provider.
Executive Order 13559 provides for the establishment of an
Interagency Working Group on Faith-Based and Other Neighborhood
Partnerships (Working Group) to review and evaluate existing
regulations, guidance documents, and policies, and directs the OMB to
issue guidance to agencies on uniform implementation following receipt
of the Working Group's report. On April 27, 2012, the Working Group
issued its report, recommending a model set of regulations and guidance
for agencies to adopt.\1\
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\1\ The report is available at: http://www.whitehouse.gov/sites/default/files/uploads/finalfaithbasedworkinggroupreport.pdf.
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HUD intends to wait for OMB guidance before initiating any
rulemaking directed to broader changes to HUD's existing faith-based
regulations, to ensure consistency with faith-based regulations of
other federal agencies. However, HUD has revised its regulatory
provisions governing faith-based activities to incorporate the
principles of Executive Order 13559 pertaining to equal treatment of
program beneficiaries and to adopt terminology, such as ``explicitly
religious'' and ``overt
[[Page 45437]]
religious content,'' that offers greater clarity to the limitations
placed on faith-based organizations when using federal funds for their
supportive services. Additionally, HUD is putting in place through this
rulemaking the provision of Executive Order 13559 that directs the
referral to alternative providers. Executive Order 13559 provides that
if a beneficiary or prospective beneficiary of a social service program
supported by federal financial assistance objects to the religious
character of an organization that provides services under the program,
that organization shall, within a reasonable time frame after the date
of the objection, refer the beneficiary to an alternative provider.
While HUD will benefit from OMB guidance on other provisions of the
Executive Order, specifically those which the Working Group is charged
to provide recommendations, the ``referral'' provision of the Executive
Order is one that HUD believes it can immediately put in place. HUD
may, following receipt of public comment and further consideration of
this issue, revise how recipients and subrecipients document the
referral to other providers when beneficiaries may assert objections to
the original provider. For now, HUD is requiring that any objections
and any referrals be documented in accordance with the recordkeeping
provisions of Sec. 578.013.
This section of the interim rule also contains limitations on the
types of eligible assistance that may not be combined in a single
structure or housing unit. As the Continuum of Care substantially
increases the types of assistance that may be combined in a project
from previous programs, HUD has established standards in this section
to provide recipients with clarity about the types of activities that
may not be carried out in a single structure or housing unit.
Termination of assistance. The interim rule provides that a
recipient may terminate assistance to a participant who violates
program requirements or conditions of occupancy. The recipient must
provide a formal process that recognizes the due process of law.
Recipients may resume assistance to a participant whose assistance has
been terminated.
Recipients that are providing permanent supportive housing for
hard-to-house populations of homeless persons must exercise judgment
and examine all circumstances in determining whether termination is
appropriate. Under this interim rule, HUD has determined that a
participant's assistance should be terminated only in the most severe
cases. HUD is carrying over this requirement from the Shelter Plus Care
program.
Fair Housing and Equal Opportunity requirements. The Continuum of
Care, as well as its members and subrecipients, are required to comply
with applicable civil rights laws. Section 578.93, addressing
nondiscrimination and equal opportunity requirements, is provided to
offer greater direction to recipients and subrecipients on the use of
grant funds. Section 578.93(a) states that the nondiscrimination and
equal opportunity requirements set forth in 24 CFR 5.105(a) apply. This
includes, but is not limited to, the Fair Housing Act, Title VI of the
Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973
(Section 504), and title II of the Americans with Disabilities Act.
Section 578.93(b) explains when recipients and subrecipients may
exclusively serve a particular subpopulation in transitional or
permanent housing. As part of these requirements, recipients must also
administer programs and activities receiving federal financial
assistance in the most integrated setting appropriate to the needs of
qualified individuals with disabilities. This ``integration mandate''
requires that HUD-funded programs or activities enable individuals with
disabilities to interact with nondisabled persons to the fullest extent
possible. In reviewing requests for funding through the Continuum of
Care NOFA, HUD will be considering each recipient's proposals to
provide integrated housing to individuals with disabilities.
There are certain situations in which a recipient or subrecipient
may limit housing to a specific subpopulation, so long as admission
does not discriminate against any protected class, as well as instances
where recipients or subrecipients may limit admission or provide a
preference to certain subpopulations of homeless persons and families
who need the specialized services provided in the housing. For example,
Sec. 578.93(b)(2) states that the housing may be limited to homeless
veterans, so long as admission is not denied based on any membership in
a protected class; e.g., homeless veterans with families must be
admitted. Similarly, housing may be limited to domestic violence
victims and their families or persons who are at risk of
institutionalization, so long as admission is not denied based on any
membership in a protected class.
Section 578.93(b)(3) states that housing may be limited to families
with children.
Section 578.93(b)(1) states that, in consideration of personal
privacy, housing may only be limited to a single sex when such housing
consists of a single structure with shared bedrooms or bathing
facilities such that the considerations of personal privacy and the
physical limitations of the configuration of the housing make it
appropriate for the housing to be limited to one sex.
Further, Sec. Sec. 578.93(b)(4) and (5) clearly outline instances
when sex offenders or violent offenders may be excluded from housing,
and when projects providing sober housing may exclude persons.
HUD's Section 504 regulations permit housing funded under a
particular program to be reserved for persons with a specific
disability when a federal statute or executive order specifically
authorizes such a limitation. Section 578.93(b)(6) states that if the
housing is assisted with funds under a federal program that is limited
by federal statute or executive order to a specific subpopulation, the
housing may be limited to that subpopulation.
Section 578.93(b)(7) provides clarification to recipients of funds
under this part as to when a project can limit admission to a specific
subpopulation of homeless individuals and families based on the service
package offered in the project. To help recipients better understand
these requirements, the following paragraphs provide a detailed
explanation of the regulatory provision, along with a few examples.
Section 578.93(b)(7) states that recipients may limit admission to
or provide a preference for the housing to subpopulations of homeless
persons and families who need the specialized supportive services that
are provided in the housing. The regulation contains the following
examples: Substance abuse addiction treatment, domestic violence
services, or a high-intensity package designed to meet the needs of
hard-to-reach homeless persons. However, Sec. 578.93(b)(7) further
states that while the housing may offer services for a particular type
of disability, no otherwise eligible individual with a disability, or
family that includes an individual with a disability, who may benefit
from the services provided may be excluded on the grounds that they do
not have a particular disability. Below are general examples to offer
guidance on this subsection. Please note that these examples are
nonexhaustive, but emphasize that the proper focus is on the services
available as part of the Continuum of Care project as opposed to a
person's category or subcategory of disability. While these general
principles are offered to help clarify this
[[Page 45438]]
section, a change in the factual scenario may change the analysis.
One clarifying example is as follows. A private, nonprofit
organization or a local government applies for and receives a new grant
under this part to provide project-based rental assistance and
services, including case management, intensive therapy provided by a
psychiatrist, and medication management. The recipient or subrecipient
may establish a preference for individuals who are chronically
homeless. When filling an opening in the housing, the recipient or
subrecipient may target chronically homeless individuals or families,
but if there are no such individuals or families either on a waiting
list or applying for entrance to the program, the recipient or
subrecipient cannot deny occupancy to individuals or families who apply
for entrance into the program and who may benefit from the services
provided. When filling a vacancy in the housing, the recipient or
subrecipient, if presented with two otherwise eligible persons, one who
is chronically homeless and one who is not, may give a preference to
the chronically homeless individual.
By comparison, Sec. 578.93(b)(6) addresses situations where
Continuum of Care funds are combined with HUD funding for housing that
may be restricted to a specific disability. For example, if Continuum
of Care funds for a specific project are combined with construction or
rehabilitation funding for housing from the Housing Opportunities for
People With AIDS program, the program may limit eligibility for the
project to persons with HIV/AIDS and their families. An individual or a
family that includes an individual with a disability may be denied
occupancy if the individual or at least one member of the family does
not have HIV/AIDS.
In another example, a private, nonprofit organization applies for
and receives Continuum of Care funds from a local governmental entity
to rehabilitate a five-unit building, and provides services including
assistance with daily living and mental health services. While the
nonprofit organization intends to target and advertise the project as
offering services for persons with developmental disabilities, an
individual with a severe psychiatric disability who does not have a
developmental disability but who can benefit from these services cannot
be denied.
Section 578.93(e) incorporates the ``preventing involuntary family
separation'' requirement set forth in Section 404 of the McKinney-Veto
Act into this interim rule. This provision clarifies, especially for
projects where the current policy is to deny the admittance of a boy
under the age of 18, that denying admittance to a project based on age
and gender is no longer permissible. HUD encourages Continuums of Care
to use their centralized or coordinated assessment systems to find
appropriate shelter or housing for families with male children under
the age of 18.
Specific request for comment. HUD specifically seeks comments from
Continuum of Care-funded recipients on this requirement. HUD invites
comments about the difficulty that recipients are going to experience,
if any, in implementing this requirement. In addition to comments about
the difficulties, HUD invites communities that have already implemented
this requirement locally to describe their methods for use in HUD's
technical assistance materials and for posting on the HUD Homeless
Resource Exchange.
Other standards. In addition to the program requirements described
in this preamble, the interim rule sets forth other program
requirements by which all recipients of grant funds must abide. These
include a limitation on the use of grant funds to serve persons defined
as homeless under other federal laws, conflicts of interest standards,
and standards for identifying uses of program income.
Additionally, recipients are required to follow other federal
requirements contained in this interim rule under Sec. 578.99. These
include compliance with such federal requirements as the Coastal
Barriers Resources Act, OMB Circulars, HUD's Lead-Based Paint
regulations, and audit requirements. The wording of these requirements
has been substantially revised from previous programs, with the
objective being to increase clarity and comprehension of the directions
to recipients and subrecipients in the use of grant funds.
Administration (Subpart G)
Technical assistance. The purpose of technical assistance under the
Continuum of Care program is to increase the effectiveness with which
Continuums of Care, eligible applicants, recipients, subrecipients, and
UFAs implement and administer their Continuum of Care planning process.
Technical assistance will also improve the capacity to prepare
applications, and prevent the separation of families in projects funded
under the Emergency Solutions Grants, Continuum of Care, and Rural
Housing Stability Assistance programs. Under this interim rule,
technical assistance means the transfer of skills and knowledge to
entities that may need, but do not possess, such skills and knowledge.
The assistance may include written information, such as papers,
manuals, guides, and brochures; person-to-person exchanges; and
training and related costs.
Therefore, as needed, HUD may advertise and competitively select
providers to deliver technical assistance. HUD may enter into
contracts, grants, or cooperative agreements to implement the technical
assistance. HUD may also enter into agreements with other federal
agencies when awarding technical assistance funds.
Recordkeeping requirements. Grant recipients under the Supportive
Housing Program and the Shelter Plus Care program have always been
required to show compliance with regulations through appropriate
records. However, the existing regulations are not specific about the
records to be maintained. The interim rule for the Continuum of Care
program elaborates upon the recordkeeping requirements to provide
sufficient notice and clarify the documentation that HUD requires for
assessing compliance with the program requirements. The recordkeeping
requirements for documenting homeless status were published in the
December 5, 2011, Defining Homeless final rule. Because these
recordkeeping requirements already went through a 60-day comment
period, HUD is not seeking further comment on these requirements.
Additionally, recordkeeping requirements with similar levels of
specificity apply to documentation of ``at risk of homelessness'' and
these requirements can be found in Sec. 576.500(c) of the Emergency
Solutions Grants program interim rule published on December 5, 2011.
Because the documentation requirements pertaining to ``at risk of
homelessness'' were already subject to a 60-day public comment period,
HUD is not seeking additional comment on these requirements. Further
requirements are modeled after the recordkeeping requirements for the
HOME Investment Partnerships Program (24 CFR 92.508) and other HUD
regulations.
Included along with these changes are new or expanded requirements
regarding confidentiality, rights of access to records, record
retention periods, and reporting requirements. Most significantly, to
protect the safety and privacy of all program participants, the
Continuum of Care rule broadens the program's confidentiality
requirements. The McKinney-Vento Act requires only procedures to ensure
the
[[Page 45439]]
confidentiality of records pertaining to any individual provided family
violence prevention or treatment services under this program. The
interim rule requires written procedures to ensure the security and
confidentiality of all records containing personally identifying
information of any individual or family who applies for and/or receives
Continuum of Care assistance.
Grant and project changes. The interim rule provides that
recipients of grants may not make any significant changes to use of
grant funds without prior HUD approval, evidenced by a grant amendment
signed by HUD and the recipient. The interim rule provides separate
standards for determining when a grant amendment is required for
Continuums having only one recipient, including UFAs, and Continuums
having more than one recipient. Additionally, the interim rule provides
contingencies that must be met before HUD will approve the grant
amendment. These contingencies are necessary to ensure that recipients
meet the capacity requirements established in the NOFA and to ensure
that eligible persons within the geographic area are better served and,
since the Continuum of Care program is a competitive program, that the
priorities established under the NOFA continue to be met. Any changes
to an approved grant or project that do not require a grant amendment,
as set forth in this section, must be fully documented in the
recipient's or subrecipient's records.
Sanctions. The interim rule establishes sanctions based on existing
regulations and strengthens the enforcement procedures and array of
remedial actions and sanctions for recipients and subrecipients of
Continuum of Care funds. These revisions draw from the requirements at
24 CFR 85.43 and other HUD program regulations.
Close-out. The interim rule provides that grants must be closed out
at the end of their grant term if recipients are not seeking renewal.
Section 578.109 of this interim rule specifies the actions that must be
taken after the closeout, including grantee submission of financial,
final performance, or other reports required by HUD within 90 days of
the end of the grant term. Any unused funds must be deobligated and
returned to HUD.
The interim rule stipulates, for grants seeking renewal, that
failure to submit final performance reports, or other reports required
by HUD within 90 days, may cause renewal funds to be withdrawn and
grant funds expended on the renewal grant to be repaid.
III. Regulations for HUD Homeless Assistance Programs Existing Prior to
Enactment of HEARTH Act
Because grants are still being administered under the Shelter Plus
Care program and the Supportive Housing program, the regulations for
these programs in 24 CFR parts 582, and 583, respectively, will remain
in the Code of Federal Regulations for the time being. When no more, or
very few, grants remain under these programs, HUD will remove the
regulations in these parts by a separate rule (if no grants exist) or
will replace them with a savings clause, which will continue to govern
grant agreements executed prior to the effective date of the HEARTH Act
regulations.
IV. Conforming Regulations
In addition to establishing the new regulations for the Continuum
of Care program, HUD is amending the following regulations, which
reference the Shelter Plus Care Program and the Supportive Housing
Program, to include reference to the Continuum of Care program. These
regulations are the regulations pertaining to: (1) Family Income and
Family Payment; Occupancy Requirements for Section 8 and Public
Housing, Other HUD-Assisted Housing Serving Persons with Disabilities,
and Section 8 Project-Based Assistance, the regulations for which are
in 24 CFR part 5, subpart F, specifically, Sec. 5.601 (Purpose and
Applicability), paragraphs (d) and (e) of this section; Sec. 5.603
(Definitions), specifically the definition of ``Responsible Entity;''
Sec. 5.617 (Self-Sufficiency Incentives for Persons with
Disabilities--Disallowance of Increase in Annual Income), paragraph (a)
of this section; (2) Environmental Review Responsibilities for Entities
Assuming HUD Environmental Responsibilities, the regulations for which
are in 24 CFR part 58, specifically Sec. 58.1 (Purpose and
Applicability), paragraph (b)(3) of this section; and (3) the
Consolidated Submissions for Community Planning and Development
Programs, the regulations for which are in 24 CFR part 91,
specifically, Sec. 91.2 (Applicability), paragraph (b) of this
section.
V. Justification for Interim Rulemaking
In accordance with its regulations on rulemaking at 24 CFR part 10,
HUD generally publishes its rules for advance public comment.\2\ Notice
and public procedures may be omitted, however, if HUD determines that,
in a particular case or class of cases, notice and public comment
procedure are ``impracticable, unnecessary, or contrary to the public
interest.'' (See 24 CFR 10.1.)
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\2\ The Administrative Procedure Act (5 U.S.C. Subchapter II)
(APA), which governs federal rulemaking, provides in section 553(a)
that matters involving a military or foreign affairs function of the
United States or a matter relating to federal agency management or
personnel or to public property, loans, grants, benefits, or
contracts are exempt from the advance notice and public comment
requirement of sections 553(b) and (c) of the APA. In its
regulations in 24 CFR 10.1, HUD has waived the exemption for advance
notice and public comment for matters that relate to public
property, loans, grants, benefits, or contracts, and has committed
to undertake notice and comment rulemaking for these matters.
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In this case, HUD has determined that it would be contrary to the
public interest to delay promulgation of the regulations for the
Continuum of Care program.\3\ Congress has provided funding for this
new program in the Consolidated and Further Continuing Appropriations
Act, 2012 (Pub. L. 112-55, approved November 18, 2011) (FY 2012
Appropriations Act). The FY 2012 Appropriations Act, under the account
for Homeless Assistance Grants, appropriates not less than $1.593
billion for the Continuum of Care and Rural Housing Stability programs.
While many federal programs, including HUD programs, received a
reduction in funding in the FY 2012 Appropriations Act, Congress
increased funding for HUD's homeless assistance grants, including the
Continuum of Care program. Additionally, the Conference Report
accompanying the FY 2012 Appropriations Act (House Report 112-284)
states in relevant part, as follows: ``The conferees express concern
that HUD continued to implement pre-HEARTH grant programs in FY 2011,
due to a lack of regulations. The conferees direct HUD to publish at
least interim guidelines for the Emergency Solutions Grants and
Continuum of Care programs this fiscal year and to implement the new
grant programs as soon as possible so that the updated policies and
practices in HEARTH can begin to govern the delivery of homeless
assistance funding.'' (See Conf. Rpt. at page 319. Emphasis added.)
Given this congressional direction, HUD is issuing this rule providing
for regulations for the Continuum of Care program as an interim rule.
Having interim regulations in place will allow HUD to move forward in
making FY 2012 funds available to grantees, and avoid a significant
delay that would result from issuance, first, of a proposed rule. As
[[Page 45440]]
has been discussed in this preamble, the foundation for the Continuum
of Care regulations is the criteria and requirements provided in NOFAs
for the Continuum of Care Homeless Assistance Grants Competition
program, which HUD has funded for more than 10 years. Through the
Continuum of Care Homeless Assistance Grants Competition program, HUD
provided funding for the Supportive Housing program, the Shelter Plus
Care program, and the Section 8 Moderate Rehabilitation Single Room
Occupancy program. The HEARTH Act consolidated these three competitive
programs into the statutorily established Continuum of Care program,
which was established as a single grant program. Interim regulations
will provide certainty with respect to funding requirements and
eligible expenditures for FY 2012, and the public comment solicited
through this interim rule will help inform the public procedures that
HUD is contemplating in its regulations in 24 CFR part 10, and this
public comment, in turn, will inform the final rule that will follow
this interim rule and govern the funding years following FY 2012.
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\3\ Although HUD's regulation in 24 CFR 10.1 provide that HUD
will involve public participation in its rulemaking, this regulation
also provides that notice and public procedure will be omitted if
HUD determines in a particular case or class of cases that notice
and public procedure are impracticable, unnecessary, or contrary to
the public interest.
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For the reasons stated above, HUD is issuing this rule to take
immediate effect, but welcomes all comments on this interim rule and
all comments will be taken into consideration in the development of the
final rule.
VI. Findings and Certifications
Regulatory Review--Executive Orders 12866 and 13563
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and, therefore, subject to review by the Office of Management and
Budget (OMB) in accordance with the requirements of the order.
Executive Order 13563 (Improving Regulations and Regulatory Review)
directs executive agencies to analyze regulations that are ``outmoded,
ineffective, insufficient, or excessively burdensome, and to modify,
streamline, expand, or repeal them in accordance with what has been
learned.'' Executive Order 13563 also directs that, where relevant,
feasible, and consistent with regulatory objectives, and to the extent
permitted by law, agencies are to identify and consider regulatory
approaches that reduce burdens and maintain flexibility and freedom of
choice for the public. This rule was determined to be a ``significant
regulatory action,'' as defined in section 3(f) of Executive Order
12866 (although not an economically significant regulatory action, as
provided under section 3(f)(1) of the Executive Order).
As has been discussed in this preamble, this interim rule
establishes the regulations for the Continuum of Care program, which is
the HEARTH Act's codification of HUD's long-standing Continuum of Care
planning process. The HEARTH Act not only codified in law the planning
system known as Continuum of Care, but consolidated the three existing
competitive homeless assistance grant programs (Supportive Housing,
Shelter Plus Care, and Single Room Occupancy) into the single grant
program known as the Continuum of Care program. As discussed in the
preceding section of the preamble, HUD funded these three programs for
more than 10 years through a NOFA, which was titled the Continuum of
Care Homeless Assistance Grants Competition Program. However, the
funding of the three competitive grant programs, although done through
a single NOFA, delineated the different statutes and regulations that
governed each of the three programs (see, for example, HUD's 2008
Continuum of Care NOFA at 73 FR 398450, specifically page 39845). In
consolidating these three competitive programs into a single grant
program, the HEARTH Act achieves the administrative efficiency that HUD
strived to achieve to the extent possible, through its administrative
establishment of the Continuum of Care planning process. To the extent
permitted by the HEARTH Act and where feasible, the regulations build-
in flexibility for grantees, based on experience in administering the
Continuum of Care program to date. Given the transition from
administrative operation of the Continuum of Care program to statutory
operation of the Continuum of Care program, this interim rule would
also have no discernible impact upon the economy.
The docket file is available for public inspection in the
Regulations Division, Office of the General Counsel, Room 10276, 451
7th Street SW., Washington, DC 20410-0500. Due to security measures at
the HUD Headquarters building, please schedule an appointment to review
the docket file by calling the Regulations Division at 202-708-3055
(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.
Environmental Impact
A Finding of No Significant Impact (FONSI) with respect to the
environment has been made in accordance with HUD regulations at 24 CFR
part 50, which implement section 102(2)(C) of the National
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding of
No Significant Impact is available for public inspection between the
hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office
of General Counsel, Department of Housing and Urban Development, 451
7th Street SW., Room 10276, Washington, DC 20410-0500. Due to security
measures at the HUD Headquarters building, please schedule an
appointment to review the FONSI by calling the Regulations Division at
202-708-3055 (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.
Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
(UMRA) establishes requirements for federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and on the private sector. This interim rule does not
impose a federal mandate on any State, local, or tribal government, or
on the private sector, within the meaning of UMRA.
Regulatory Flexibility Act
The Regulatory Flexibility Act (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. This rule solely
addresses the allocation and use of grant funds under the new McKinney-
Vento Act homeless assistance programs, as consolidated and amended by
the HEARTH Act. As discussed in the preamble, the majority of the
regulatory provisions proposed by this rule track the regulatory
provisions of the Continuum of Care program, with which prospective
recipients of the Supportive Housing program and the Shelter Plus Care
program are familiar. Accordingly, the program requirements should
raise minimal issues because applicants and grantees are familiar with
these requirements, and in response to HUD's solicitations to them on
the burden of the requirements for the Supportive Housing program and
the Shelter Plus Care program, grantees have not advised that such
requirements are burdensome. Therefore, HUD has determined that this
rule would not
[[Page 45441]]
have a significant economic impact on a substantial number of small
entities.
Notwithstanding HUD's determination that this rule will not have a
significant effect on a substantial number of small entities, HUD
specifically invites comments regarding any less burdensome
alternatives to this rule that will meet HUD's objectives as described
in this preamble.
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 final rule does not have
federalism implications and does not impose substantial direct
compliance costs on State and local governments nor preempts State law
within the meaning of the Executive Order.
Paperwork Reduction Act
The information collection requirements contained in this interim
rule have been submitted to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). 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 OMB
control number.
The burden of the information collections in this interim rule is
estimated as follows:
Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
Response
Information collection Number of frequency Total annual Burden hours Total annual
respondents (average) responses per response hours
----------------------------------------------------------------------------------------------------------------
Sec. 578.5(a) Establishing 450 1 450 8.0 3,600
the CoC.......................
Sec. 578.5(b) Establishing 450 1 450 5.0 2,250
the Board.....................
Sec. 578.7(a)(1) Hold CoC 450 2 900 4.0 3,600
Meetings......................
Sec. 578.7(a)(2) Invitation 450 1 450 1.0 450
for New Members...............
Sec. 578.7(a)(4) Appoint 450 2 900 0.5 450
committees....................
Sec. 578.7(a)(5) Governance 450 1 450 7.0 3,150
charter.......................
Sec. 578.7(a)(6) and (7) 450 4 450 9.0 4,050
Monitor performance and
evaluation....................
Sec. 578.7(a)(8) Centralized 450 1 450 8.0 3,600
or coordinated assessment
system........................
Sec. 578.7(a)(9) Written 450 1 450 5.0 2,250
standards.....................
Sec. 578.7(b) Designate HMIS. 450 1 450 10.0 4,500
Sec. 578.9 Application for 450 1 450 180.0 81,000
funds.........................
Sec. 578.11(c) Develop CoC 450 1 450 9.0 4,050
plan..........................
Sec. 578.21(c) Satisfying 8,000 1 8,000 4.0 32,000
conditions....................
Sec. 578.23 Executing grant 8,000 1 8,000 1.0 8,000
agreements....................
Sec. 578.35(b) Appeal--solo.. 10 1 10 4.0 40
Sec. 578.35(c) Appeal--denied 15 1 15 1.0 15
or decreased funding..........
Sec. 578.35(d) Appeal-- 10 1 10 5.0 50
competing CoC.................
Sec. 578.35(e) Appeal-- 5 1 5 2.0 10
Consolidated Plan
certification.................
Sec. 578.49(a)--Leasing 5 1 5 1.5 7.5
exceptions....................
Sec. 578.65 HPC Standards.... 20 1 20 10.0 200
Sec. 578.75(a)(1) State and 7,000 1 7,000 0.5 3,500
local requirements--
appropriate service provision.
Sec. 578.75(a)(1) State and 20 1 20 3.0 60
local requirements--housing
codes.........................
Sec. 578.75(b) Housing 72,800 2 145,600 1.0 145,600
quality standards.............
Sec. 578.75(b) Suitable 72,800 2 145,600 0.08 11,648
dwelling size.................
Sec. 578.75(c) Meals......... 70,720 1 70,720 0.5 35,360
Sec. 578.75(e) Ongoing 8,000 1 8,000 1.5 12,000
assessment of supportive
services......................
Sec. 578.75(f) Residential 6,600 3 19,800 0.75 14,850
supervision...................
Sec. 578.75(g) Participation 11,500 1 11,500 1.0 11,500
of homeless individuals.......
Sec. 578.75(h) Supportive 3,000 100 30,000 0.5 15,000
service agreements............
Sec. 578.77(a) Signed leases/ 104,000 2 208,000 1.0 208,000
occupancy agreements..........
Sec. 578.77(b) Calculating 1,840 200 368,000 0.75 276,000
occupancy charges.............
Sec. 578.77(c) Calculating 2,000 200 400,000 0.75 300,000
rent..........................
Sec. 578.81(a) Use 20 1 20 0.5 10
restriction...................
Sec. 578.91(a) Termination of 400 1 400 4.00 1,600
assistance....................
Sec. 578.91(b) Due process 4,500 1 4,500 3.0 13,500
for termination of assistance.
Sec. 578.95(d)--Conflict-of- 10 1 10 3.0 30
Interest exceptions...........
Sec. 578.103(a)(3) 300,000 1 300,000 0.25 75,000
Documenting homelessness......
Sec. 578.103(a)(4) 10,000 1 10,000 0.25 2,500
Documenting at risk of
homelessness..................
Sec. 578.103(a)(5) 200 1 200 0.5 100
Documenting imminent threat of
harm..........................
Sec. 578.103(a)(7) 350,000 6 2,100,000 0.25 525,000
Documenting program
participant records...........
Sec. 578.103(a)(7) 8,000 12 96,000 1.0 96,000
Documenting case management...
Sec. 578.103(a)(13) 8,000 1 8,000 1.0 8,000
Documenting faith-based
activities....................
Sec. 578.103(b) 11,500 1 11,500 1.0 11,500
Confidentiality procedures....
Sec. 578.105(a) Grant/project 20 2 40 2.0 80
changes--UFAs.................
Sec. 578.105(b) Grant/project 800 1 800 2.0 1,600
changes--multiple project
applicants....................
--------------------------------------------------------------------------------
Total...................... .............. ............... .............. .............. 1,921,710.5
----------------------------------------------------------------------------------------------------------------
[[Page 45442]]
In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments
from members of the public and affected agencies concerning this
collection of information to:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions HUD, including
whether the information will have practical utility;
(2) Evaluate the accuracy of HUD's estimate of the burden of the
proposed collection of information;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond, including through the use of appropriate automated
collection techniques or other forms of information technology; e.g.,
permitting electronic submission of responses.
Interested persons are invited to submit comments regarding the
information collection requirements in this rule. Comments must refer
to the proposal by name and docket number (FR-5476-I-01) and be sent
to: HUD Desk Officer, Office of Management and Budget, New Executive
Office Building, Washington, DC 20503, Fax: (202) 395-6947, and Reports
Liaison Officer, Office of the Assistant Secretary for Community
Planning and Development, Department of Housing and Urban Development,
451 Seventh Street SW., Room 7233, Washington, DC 20410-7000.
Interested persons may submit comments regarding the information
collection requirements electronically through the Federal eRulemaking
Portal at http://www.regulations.gov. HUD strongly encourages
commenters to submit comments electronically. Electronic submission of
comments allows the commenter maximum time to prepare and submit a
comment, ensures timely receipt by HUD, and enables HUD to make them
immediately available to the public. Comments submitted electronically
through the http://www.regulations.gov Web site can be viewed by other
commenters and interested members of the public. Commenters should
follow the instructions provided on that site to submit comments
electronically.
List of Subjects in 24 CFR Part 578
Community facilities, Continuum of Care, Emergency solutions
grants, Grant programs--housing and community development, Grant
program--social programs, Homeless, Rural housing, Reporting and
recordkeeping requirements, Supportive housing programs-- housing and
community development, Supportive services.
Accordingly, for the reasons described in the preamble, HUD adds
part 578 to subchapter C of chapter V of subtitle B of 24 CFR to read
as follows:
PART 578--CONTINUUM OF CARE PROGRAM
Subpart A--General Provisions
Sec.
578.1 Purpose and scope.
578.3 Definitions.
Subpart B--Establishing and Operating a Continuum of Care
578.5 Establishing the Continuum of Care.
578.7 Responsibilities of the Continuum of Care.
578.9 Preparing an application for funds.
578.11 Unified Funding Agency.
578.13 Remedial action.
Subpart C--Application and Grant Award Process
578.15 Eligible applicants.
578.17 Overview of application and grant award process.
578.19 Application process.
578.21 Awarding funds.
578.23 Executing grant agreements.
578.25 Site control.
578.27 Consolidated plan.
578.29 Subsidy layering.
578.31 Environmental review.
578.33 Renewals.
578.35 Appeal.
Subpart D--Program Components and Eligible Costs
578.37 Program components and uses of assistance.
578.39 Continuum of Care planning activities.
578.41 Unified Funding Agency costs.
578.43 Acquisition.
578.45 Rehabilitation.
578.47 New construction.
578.49 Leasing.
578.51 Rental assistance.
578.53 Supportive services.
578.55 Operating costs.
578.57 Homeless Management Information System.
578.59 Project administrative costs.
578.61 Relocation costs.
578.63 Indirect costs.
Subpart E--High-Performing Communities
578.65 Standards.
578.67 Publication of application.
578.69 Cooperation among entities.
578.71 HPC-eligible activities.
Subpart F--Program Requirements
578.73 Matching requirements.
578.75 General operations.
578.77 Calculating occupancy charges and rent.
578.79 Limitation on transitional housing.
578.81 Term of commitment, repayment of grants, and prevention of
undue benefits.
578.83 Displacement, relocation, and acquisition.
578.85 Timeliness standards.
578.87 Limitation on use of funds.
578.89 Limitation on use of grant funds to serve persons defined as
homeless under other federal laws.
578.91 Termination of assistance to program participants.
578.93 Fair Housing and Equal Opportunity.
578.95 Conflicts of interest.
578.97 Program income.
578.99 Applicability of other federal requirements.
Subpart G--Grant Administration
578.101 Technical assistance.
578.103 Recordkeeping requirements.
578.105 Grant and project changes.
578.107 Sanctions.
578.109 Closeout.
Authority: 42 U.S.C. 11371 et seq., 42 U.S.C. 3535(d).
Subpart A--General Provisions
Sec. 578.1 Purpose and scope.
(a) The Continuum of Care program is authorized by subtitle C of
title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C.
11381-11389).
(b) The program is designed to:
(1) Promote communitywide commitment to the goal of ending
homelessness;
(2) Provide funding for efforts by nonprofit providers, States, and
local governments to quickly rehouse homeless individuals (including
unaccompanied youth) and families, while minimizing the trauma and
dislocation caused to homeless individuals, families, and communities
by homelessness;
(3) Promote access to and effective utilization of mainstream
programs by homeless individuals and families; and
(4) Optimize self-sufficiency among individuals and families
experiencing homelessness.
Sec. 578.3 Definitions.
As used in this part:
Act means the McKinney-Vento Homeless Assistance Act as amended (42
U.S.C. 11371 et seq.).
Annual renewal amount means the amount that a grant can be awarded
on an annual basis when renewed. It includes funds only for those
eligible activities (operating, supportive services, leasing, rental
assistance, HMIS, and administration) that were funded in the original
grant (or the original grant as amended), less the unrenewable
activities (acquisition, new construction, rehabilitation, and any
administrative costs related to these activities).
Applicant means an eligible applicant that has been designated by
the Continuum of Care to apply for assistance under this part on behalf
of that Continuum.
[[Page 45443]]
At risk of homelessness. (1) An individual or family who:
(i) Has an annual income below 30 percent of median family income
for the area, as determined by HUD;
(ii) Does not have sufficient resources or support networks, e.g.,
family, friends, faith-based or other social networks, immediately
available to prevent them from moving to an emergency shelter or
another place described in paragraph (1) of the ``Homeless'' definition
in this section; and
(iii) Meets one of the following conditions:
(A) Has moved because of economic reasons two or more times during
the 60 days immediately preceding the application for homelessness
prevention assistance;
(B) Is living in the home of another because of economic hardship;
(C) Has been notified in writing that their right to occupy their
current housing or living situation will be terminated within 21 days
of the date of application for assistance;
(D) Lives in a hotel or motel and the cost of the hotel or motel
stay is not paid
by charitable organizations or by federal, State, or local government
programs for low-income individuals;
(E) Lives in a single-room occupancy or efficiency apartment unit
in which there reside more than two persons, or lives in a larger
housing unit in which there reside more than 1.5 people per room, as
defined by the U.S. Census Bureau;
(F) Is exiting a publicly funded institution, or system of care
(such as a health-care facility, a mental health facility, foster care
or other youth facility, or correction program or institution); or
(G) Otherwise lives in housing that has characteristics associated
with instability and an increased risk of homelessness, as identified
in the recipient's approved consolidated plan;
(2) A child or youth who does not qualify as ``homeless'' under
this section, but qualifies as ``homeless'' under section 387(3) of the
Runaway and Homeless Youth Act (42 U.S.C. 5732a(3)), section 637(11) of
the Head Start Act (42 U.S.C. 9832(11)), section 41403(6) of the
Violence Against Women Act of 1994 (42 U.S.C. 14043e-2(6)), section
330(h)(5)(A) of the Public Health Service Act (42 U.S.C.
254b(h)(5)(A)), section 3(m) of the Food and Nutrition Act of 2008 (7
U.S.C. 2012(m)), or section 17(b)(15) of the Child Nutrition Act of
1966 (42 U.S.C. 1786(b)(15)); or
(3) A child or youth who does not qualify as ``homeless'' under
this section, but qualifies as ``homeless'' under section 725(2) of the
McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), and the
parent(s) or guardian(s) of that child or youth if living with her or
him.
Centralized or coordinated assessment system means a centralized or
coordinated process designed to coordinate program participant intake
assessment and provision of referrals. A centralized or coordinated
assessment system covers the geographic area, is easily accessed by
individuals and families seeking housing or services, is well
advertized, and includes a comprehensive and standardized assessment
tool.
Chronically homeless. (1) An individual who:
(i) Is homeless and lives in a place not meant for human
habitation, a safe haven, or in an emergency shelter; and
(ii) Has been homeless and living or residing in a place not meant
for human habitation, a safe haven, or in an emergency shelter
continuously for at least one year or on at least four separate
occasions in the last 3 years; and
(iii) Can be diagnosed with one or more of the following
conditions: substance use disorder, serious mental illness,
developmental disability (as defined in section 102 of the
Developmental Disabilities Assistance Bill of Rights Act of 2000 (42
U.S.C. 15002)), post-traumatic stress disorder, cognitive impairments
resulting from brain injury, or chronic physical illness or disability;
(2) An individual who has been residing in an institutional care
facility, including a jail, substance abuse or mental health treatment
facility, hospital, or other similar facility, for fewer than 90 days
and met all of the criteria in paragraph (1) of this definition, before
entering that facility; or
(3) A family with an adult head of household (or if there is no
adult in the family, a minor head of household) who meets all of the
criteria in paragraph (1) of this definition, including a family whose
composition has fluctuated while the head of household has been
homeless.
Collaborative applicant means the eligible applicant that has been
designated by the Continuum of Care to apply for a grant for Continuum
of Care planning funds under this part on behalf of the Continuum.
Consolidated plan means the HUD-approved plan developed in
accordance with 24 CFR 91.
Continuum of Care and Continuum means the group organized to carry
out the responsibilities required under this part and that is composed
of representatives of organizations, including nonprofit homeless
providers, victim service providers, faith-based organizations,
governments, businesses, advocates, public housing agencies, school
districts, social service providers, mental health agencies, hospitals,
universities, affordable housing developers, law enforcement,
organizations that serve homeless and formerly homeless veterans, and
homeless and formerly homeless persons to the extent these groups are
represented within the geographic area and are available to
participate.
Developmental disability means, as defined in section 102 of the
Developmental Disabilities Assistance and Bill of Rights Act of 2000
(42 U.S.C. 15002):
(1) A severe, chronic disability of an individual that--
(i) Is attributable to a mental or physical impairment or
combination of mental and physical impairments;
(ii) Is manifested before the individual attains age 22;
(iii) Is likely to continue indefinitely;
(iv) Results in substantial functional limitations in three or more
of the following areas of major life activity:
(A) Self-care;
(B) Receptive and expressive language;
(C) Learning;
(D) Mobility;
(E) Self-direction;
(F) Capacity for independent living;
(G) Economic self-sufficiency.
(v) Reflects the individual's need for a combination and sequence
of special, interdisciplinary, or generic services, individualized
supports, or other forms of assistance that are of lifelong or extended
duration and are individually planned and coordinated.
(2) An individual from birth to age 9, inclusive, who has a
substantial developmental delay or specific congenital or acquired
condition, may be considered to have a developmental disability without
meeting three or more of the criteria described in paragraphs (1)(i)
through (v) of the definition of ``developmental disability'' in this
section if the individual, without services and supports, has a high
probability of meeting these criteria later in life.
Eligible applicant means a private nonprofit organization, State,
local government, or instrumentality of State and local government.
Emergency shelter is defined in 24 CFR part 576.
Emergency Solutions Grants (ESG) means the grants provided under 24
CFR part 576.
[[Page 45444]]
Fair Market Rent (FMR) means the Fair Market Rents published in the
Federal Register annually by HUD.
High-performing community (HPC) means a Continuum of Care that
meets the standards in subpart E of this part and has been designated
as a high-performing community by HUD.
Homeless means:
(1) An individual or family who lacks a fixed, regular, and
adequate nighttime residence, meaning:
(i) An individual or family with a primary nighttime residence that
is a public or private place not designed for or ordinarily used as a
regular sleeping accommodation for human beings, including a car, park,
abandoned building, bus or train station, airport, or camping ground;
(ii) An individual or family living in a supervised publicly or
privately operated shelter designated to provide temporary living
arrangements (including congregate shelters, transitional housing, and
hotels and motels paid for by charitable organizations or by federal,
State, or local government programs for low-income individuals); or
(iii) An individual who is exiting an institution where he or she
resided for 90 days or less and who resided in an emergency shelter or
place not meant for human habitation immediately before entering that
institution;
(2) An individual or family who will imminently lose their primary
nighttime residence, provided that:
(i) The primary nighttime residence will be lost within 14 days of
the date of application for homeless assistance;
(ii) No subsequent residence has been identified; and
(iii) The individual or family lacks the resources or support
networks, e.g., family, friends, faith-based or other social networks,
needed to obtain other permanent housing;
(3) Unaccompanied youth under 25 years of age, or families with
children and youth, who do not otherwise qualify as homeless under this
definition, but who:
(i) Are defined as homeless under section 387 of the Runaway and
Homeless Youth Act (42 U.S.C. 5732a), section 637 of the Head Start Act
(42 U.S.C. 9832), section 41403 of the Violence Against Women Act of
1994 (42 U.S.C. 14043e-2), section 330(h) of the Public Health Service
Act (42 U.S.C. 254b(h)), section 3 of the Food and Nutrition Act of
2008 (7 U.S.C. 2012), section 17(b) of the Child Nutrition Act of 1966
(42 U.S.C. 1786(b)), or section 725 of the McKinney-Vento Homeless
Assistance Act (42 U.S.C. 11434a);
(ii) Have not had a lease, ownership interest, or occupancy
agreement in permanent housing at any time during the 60 days
immediately preceding the date of application for homeless assistance;
(iii) Have experienced persistent instability as measured by two
moves or more during the 60-day period immediately preceding the date
of applying for homeless assistance; and
(iv) Can be expected to continue in such status for an extended
period of time because of chronic disabilities; chronic physical health
or mental health conditions; substance addiction; histories of domestic
violence or childhood abuse (including neglect); the presence of a
child or youth with a disability; or two or more barriers to
employment, which include the lack of a high school degree or General
Education Development (GED), illiteracy, low English proficiency, a
history of incarceration or detention for criminal activity, and a
history of unstable employment; or
(4) Any individual or family who:
(i) Is fleeing, or is attempting to flee, domestic violence, dating
violence, sexual assault, stalking, or other dangerous or life-
threatening conditions that relate to violence against the individual
or a family member, including a child, that has either taken place
within the individual's or family's primary nighttime residence or has
made the individual or family afraid to return to their primary
nighttime residence;
(ii) Has no other residence; and
(iii) Lacks the resources or support networks, e.g., family,
friends, and faith-based or other social networks, to obtain other
permanent housing.
Homeless Management Information System (HMIS) means the information
system designated by the Continuum of Care to comply with the HMIS
requirements prescribed by HUD.
HMIS Lead means the entity designated by the Continuum of Care in
accordance with this part to operate the Continuum's HMIS on its
behalf.
Permanent housing means community-based housing without a
designated length of stay, and includes both permanent supportive
housing and rapid rehousing. To be permanent housing, the program
participant must be the tenant on a lease for a term of at least one
year, which is renewable for terms that are a minimum of one month
long, and is terminable only for cause.
Permanent supportive housing means permanent housing in which
supportive services are provided to assist homeless persons with a
disability to live independently.
Point-in-time count means a count of sheltered and unsheltered
homeless persons carried out on one night in the last 10 calendar days
of January or at such other time as required by HUD.
Private nonprofit organization means an organization:
(1) No part of the net earnings of which inure to the benefit of
any member, founder, contributor, or individual;
(2) That has a voluntary board;
(3) That has a functioning accounting system that is operated in
accordance with generally accepted accounting principles, or has
designated a fiscal agent that will maintain a functioning accounting
system for the organization in accordance with generally accepted
accounting principles; and
(4) That practices nondiscrimination in the provision of
assistance.
A private nonprofit organization does not include governmental
organizations, such as public housing agencies.
Program participant means an individual (including an unaccompanied
youth) or family who is assisted with Continuum of Care program funds.
Project means a group of eligible activities, such as HMIS costs,
identified as a project in an application to HUD for Continuum of Care
funds and includes a structure (or structures) that is (are) acquired,
rehabilitated, constructed, or leased with assistance provided under
this part or with respect to which HUD provides rental assistance or
annual payments for operating costs, or supportive services under this
subtitle.
Recipient means an applicant that signs a grant agreement with HUD.
Safe haven means, for the purpose of defining chronically homeless,
supportive housing that meets the following:
(1) Serves hard to reach homeless persons with severe mental
illness who came from the streets and have been unwilling or unable to
participate in supportive services;
(2) Provides 24-hour residence for eligible persons for an
unspecified period;
(3) Has an overnight capacity limited to 25 or fewer persons; and
(4) Provides low-demand services and referrals for the residents.
State means each of the 50 States, the District of Columbia, the
Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of
the Northern Marianas, and the Virgin Islands.
Subrecipient means a private nonprofit organization, State, local
government, or instrumentality of State or local government that
receives a
[[Page 45445]]
subgrant from the recipient to carry out a project.
Transitional housing means housing, where all program participants
have signed a lease or occupancy agreement, the purpose of which is to
facilitate the movement of homeless individuals and families into
permanent housing within 24 months or such longer period as HUD
determines necessary. The program participant must have a lease or
occupancy agreement for a term of at least one month that ends in 24
months and cannot be extended.
Unified Funding Agency (UFA) means an eligible applicant selected
by the Continuum of Care to apply for a grant for the entire Continuum,
which has the capacity to carry out the duties in Sec. 578.11(b),
which is approved by HUD and to which HUD awards a grant.
Victim service provider means a private nonprofit organization
whose primary mission is to provide services to victims of domestic
violence, dating violence, sexual assault, or stalking. This term
includes rape crisis centers, battered women's shelters, domestic
violence transitional housing programs, and other programs.
Subpart B--Establishing and Operating a Continuum of Care
Sec. 578.5 Establishing the Continuum of Care.
(a) The Continuum of Care. Representatives from relevant
organizations within a geographic area shall establish a Continuum of
Care for the geographic area to carry out the duties of this part.
Relevant organizations include nonprofit homeless assistance providers,
victim service providers, faith-based organizations, governments,
businesses, advocates, public housing agencies, school districts,
social service providers, mental health agencies, hospitals,
universities, affordable housing developers, law enforcement, and
organizations that serve veterans and homeless and formerly homeless
individuals.
(b) The board. The Continuum of Care must establish a board to act
on behalf of the Continuum using the process established as a
requirement by Sec. 578.7(a)(3) and must comply with the conflict-of-
interest requirements at Sec. 578.95(b). The board must:
(1) Be representative of the relevant organizations and of projects
serving homeless subpopulations; and
(2) Include at least one homeless or formerly homeless individual.
(c) Transition. Continuums of Care shall have 2 years after August
30, 2012 to comply with the requirements of paragraph (b) of this
section.
Sec. 578.7 Responsibilities of the Continuum of Care.
(a) Operate the Continuum of Care. The Continuum of Care must:
(1) Hold meetings of the full membership, with published agendas,
at least semi-annually;
(2) Make an invitation for new members to join publicly available
within the geographic at least annually;
(3) Adopt and follow a written process to select a board to act on
behalf of the Continuum of Care. The process must be reviewed, updated,
and approved by the Continuum at least once every 5 years;
(4) Appoint additional committees, subcommittees, or workgroups;
(5) In consultation with the collaborative applicant and the HMIS
Lead, develop, follow, and update annually a governance charter, which
will include all procedures and policies needed to comply with subpart
B of this part and with HMIS requirements as prescribed by HUD; and a
code of conduct and recusal process for the board, its chair(s), and
any person acting on behalf of the board;
(6) Consult with recipients and subrecipients to establish
performance targets appropriate for population and program type,
monitor recipient and subrecipient performance, evaluate outcomes, and
take action against poor performers;
(7) Evaluate outcomes of projects funded under the Emergency
Solutions Grants program and the Continuum of Care program, and report
to HUD;
(8) In consultation with recipients of Emergency Solutions Grants
program funds within the geographic area, establish and operate either
a centralized or coordinated assessment system that provides an
initial, comprehensive assessment of the needs of individuals and
families for housing and services. The Continuum must develop a
specific policy to guide the operation of the centralized or
coordinated assessment system on how its system will address the needs
of individuals and families who are fleeing, or attempting to flee,
domestic violence, dating violence, sexual assault, or stalking, but
who are seeking shelter or services from nonvictim service providers.
This system must comply with any requirements established by HUD by
Notice.
(9) In consultation with recipients of Emergency Solutions Grants
program funds within the geographic area, establish and consistently
follow written standards for providing Continuum of Care assistance. At
a minimum, these written standards must include:
(i) Policies and procedures for evaluating individuals' and
families' eligibility for assistance under this part;
(ii) Policies and procedures for determining and prioritizing which
eligible individuals and families will receive transitional housing
assistance;
(iii) Policies and procedures for determining and prioritizing
which eligible individuals and families will receive rapid rehousing
assistance;
(iv) Standards for determining what percentage or amount of rent
each program participant must pay while receiving rapid rehousing
assistance;
(v) Policies and procedures for determining and prioritizing which
eligible individuals and families will receive permanent supportive
housing assistance; and
(vi) Where the Continuum is designated a high-performing community,
as described in subpart G of this part, policies and procedures set
forth in 24 CFR 576.400(e)(3)(vi), (e)(3)(vii), (e)(3)(viii), and
(e)(3)(ix).
(b) Designating and operating an HMIS. The Continuum of Care must:
(1) Designate a single Homeless Management Information System
(HMIS) for the geographic area;
(2) Designate an eligible applicant to manage the Continuum's HMIS,
which will be known as the HMIS Lead;
(3) Review, revise, and approve a privacy plan, security plan, and
data quality plan for the HMIS.
(4) Ensure consistent participation of recipients and subrecipients
in the HMIS; and
(5) Ensure the HMIS is administered in compliance with requirements
prescribed by HUD.
(c) Continuum of Care planning. The Continuum must develop a plan
that includes:
(1) Coordinating the implementation of a housing and service system
within its geographic area that meets the needs of the homeless
individuals (including unaccompanied youth) and families. At a minimum,
such system encompasses the following:
(i) Outreach, engagement, and assessment;
(ii) Shelter, housing, and supportive services;
(iii) Prevention strategies.
(2) Planning for and conducting, at least biennially, a point-in-
time count of homeless persons within the geographic area that meets
the following requirements:
(i) Homeless persons who are living in a place not designed or
ordinarily used as a regular sleeping accommodation for
[[Page 45446]]
humans must be counted as unsheltered homeless persons.
(ii) Persons living in emergency shelters and transitional housing
projects must be counted as sheltered homeless persons.
(iii) Other requirements established by HUD by Notice.
(3) Conducting an annual gaps analysis of the homeless needs and
services available within the geographic area;
(4) Providing information required to complete the Consolidated
Plan(s) within the Continuum's geographic area;
(5) Consulting with State and local government Emergency Solutions
Grants program recipients within the Continuum's geographic area on the
plan for allocating Emergency Solutions Grants program funds and
reporting on and evaluating the performance of Emergency Solutions
Grants program recipients and subrecipients.
Sec. 578.9 Preparing an application for funds.
(a) The Continuum must:
(1) Design, operate, and follow a collaborative process for the
development of applications and approve the submission of applications
in response to a NOFA published by HUD under Sec. 578.19 of this
subpart;
(2) Establish priorities for funding projects in the geographic
area;
(3) Determine if one application for funding will be submitted for
all projects within the geographic area or if more than one application
will be submitted for the projects within the geographic area;
(i) If more than one application will be submitted, designate an
eligible applicant to be the collaborative applicant that will collect
and combine the required application information from all applicants
and for all projects within the geographic area that the Continuum has
selected funding. The collaborative applicant will also apply for
Continuum of Care planning activities. If the Continuum is an eligible
applicant, it may designate itself;
(ii) If only one application will be submitted, that applicant will
be the collaborative applicant and will collect and combine the
required application information from all projects within the
geographic area that the Continuum has selected for funding and apply
for Continuum of Care planning activities;
(b) The Continuum retains all of its responsibilities, even if it
designates one or more eligible applicants other than itself to apply
for funds on behalf of the Continuum. This includes approving the
Continuum of Care application.
Sec. 578.11 Unified Funding Agency.
(a) Becoming a Unified Funding Agency. To become designated as the
Unified Funding Agency (UFA) for a Continuum, a collaborative applicant
must be selected by the Continuum to apply to HUD to be designated as
the UFA for the Continuum.
(b) Criteria for designating a UFA. HUD will consider these
criteria when deciding whether to designate a collaborative applicant a
UFA:
(1) The Continuum of Care it represents meets the requirements in
Sec. 578.7;
(2) The collaborative applicant has financial management systems
that meet the standards set forth in 24 CFR 84.21 (for nonprofit
organizations) and 24 CFR 85.20 (for States);
(3) The collaborative applicant demonstrates the ability to monitor
subrecipients; and
(4) Such other criteria as HUD may establish by NOFA.
(c) Requirements. HUD-designated UFAs shall:
(1) Apply to HUD for funding for all of the projects within the
geographic area and enter into a grant agreement with HUD for the
entire geographic area.
(2) Enter into legally binding agreements with subrecipients, and
receive and distribute funds to subrecipients for all projects within
the geographic area.
(3) Require subrecipients to establish fiscal control and
accounting procedures as necessary to assure the proper disbursal of
and accounting for federal funds in accordance with the requirements of
24 CFR parts 84 and 85 and corresponding OMB circulars.
(4) Obtain approval of any proposed grant agreement amendments by
the Continuum of Care before submitting a request for an amendment to
HUD.
Sec. 578.13 Remedial action.
(a) If HUD finds that the Continuum of Care for a geographic area
does not meet the requirements of the Act or its implementing
regulations, or that there is no Continuum for a geographic area, HUD
may take remedial action to ensure fair distribution of grant funds
within the geographic area. Such measures may include:
(1) Designating a replacement Continuum of Care for the geographic
area;
(2) Designating a replacement collaborative applicant for the
Continuum's geographic area; and
(3) Accepting applications from other eligible applicants within
the Continuum's geographic area.
(b) HUD must provide a 30-day prior written notice to the Continuum
and its collaborative applicant and give them an opportunity to
respond.
Subpart C--Application and Grant Award Process
Sec. 578.15 Eligible applicants.
(a) Who may apply. Nonprofit organizations, States, local
governments, and instrumentalities of State or local governments are
eligible to apply for grants.
(b) Designation by the Continuum of Care. Eligible applicant(s)
must have been designated by the Continuum of Care to submit an
application for grant funds under this part. The designation must state
whether the Continuum is designating more than one applicant to apply
for funds and, if it is, which applicant is being designated as the
collaborative applicant. If the Continuum is designating only one
applicant to apply for funds, the Continuum must designate that
applicant to be the collaborative applicant.
(c) Exclusion. For-profit entities are not eligible to apply for
grants or to be subrecipients of grant funds.
Sec. 578.17 Overview of application and grant award process.
(a) Formula. (1) After enactment of the annual appropriations act
for each fiscal year, and issuance of the NOFA, HUD will publish, on
its Web site, the Preliminary Pro Rata Need (PPRN) assigned to
metropolitan cities, urban counties, and all other counties.
(2) HUD will apply the formula used to determine PPRN established
in paragraph (a)(3) of this section, to the amount of funds being made
available under the NOFA. That amount is calculated by:
(i) Determining the total amount for the Continuum of Care
competition in accordance with section 413 of the Act or as otherwise
directed by the annual appropriations act;
(ii) From the amount in paragraph (a)(2)(i) of this section,
deducting the amount published in the NOFA as being set aside to
provide a bonus to geographic areas for activities that have proven to
be effective in reducing homelessness generally or for specific
subpopulations listed in the NOFA or achieving homeless prevention and
independent living goals established in the NOFA and to meet policy
priorities set in the NOFA; and
(iii) Deducting the amount of funding necessary for Continuum of
Care planning activities and UFA costs.
(3) PPRN is calculated on the amount determined under paragraph
(a)(2) of this section by using the following formula:
[[Page 45447]]
(i) Two percent will be allocated among the four insular areas
(American Samoa, Guam, the Commonwealth of the Northern Marianas, and
the Virgin Islands) on the basis of the ratio of the population of each
insular area to the population of all insular areas.
(ii) Seventy-five percent of the remaining amount will be
allocated, using the Community Development Block Grant (CDBG) formula,
to metropolitan cities and urban counties that have been funded under
either the Emergency Shelter Grants or Emergency Solutions Grants
programs in any one year since 2004.
(iii) The amount remaining after the allocation under paragraphs
(a)(1) and (2) of this section will be allocated, using the CDBG
formula, to metropolitan cities and urban counties that have not been
funded under the Emergency Solutions Grants program in any year since
2004 and all other counties in the United States and Puerto Rico.
(4) If the calculation in paragraph (a)(2) of this section results
in an amount less than the amount required to renew all projects
eligible for renewal in that year for at least one year, after making
adjustments proportional to increases in fair market rents for the
geographic area for leasing, operating, and rental assistance for
permanent housing, HUD will reduce, proportionately, the total amount
required to renew all projects eligible for renewal in that year for at
least one year, for each Continuum of Care. HUD will publish, via the
NOFA, the total dollar amount that every Continuum will be required to
deduct from renewal projects Continuum-wide.
(b) Calculating a Continuum of Care's maximum award amount. (1)
Establish the PPRN amount. First, HUD will total the PPRN amounts for
each metropolitan city, urban county, other county, and insular area
claimed by the Continuum as part of its geographic area, excluding any
counties applying for or receiving funding from the Rural Housing
Stability Assistance program under 24 CFR part 579.
(2) Establishing renewal demand. Next, HUD will determine the
renewal demand within the Continuum's geographic area. Renewal demand
is the sum of the annual renewal amounts of all projects within the
Continuum eligible to apply for renewal in that fiscal year's
competition, before any adjustments to rental assistance, leasing, and
operating line items based on FMR changes.
(3) Establishing FPRN. The higher of PPRN or renewal demand for the
Continuum of Care is the FPRN, which is the base for the maximum award
amount for the Continuum.
(4) Establishing the maximum award amount. The maximum award amount
for the Continuum is the FPRN amount plus any additional eligible
amounts for Continuum planning; UFA costs; adjustments to leasing,
operating and rental assistance line items based on changes to FMR; and
available bonuses.
Sec. 578.19 Application process.
(a) Notice of Funding Availability. After enactment of the annual
appropriations act for the fiscal year, HUD will issue a NOFA in
accordance with the requirements of 24 CFR part 4.
(b) Applications. All applications to HUD, including applications
for grant funds and requests for designation as a UFA or HPC, must be
submitted at such time and in such manner as HUD may require, and
contain such information as HUD determines necessary. At a minimum, an
application for grant funds must contain a list of the projects for
which it is applying for funds; a description of the projects; a list
of the projects that will be carried out by subrecipients and the names
of the subrecipients; a description of the subpopulations of homeless
or at risk of homelessness to be served by projects; the number of
units to be provided and/or the number of persons to be served by each
project; a budget request by project; and reasonable assurances that
the applicant, or the subrecipient, will own or have control of a site
for the proposed project not later than the expiration of the 12-month
period beginning upon notification of an award for grant assistance.
Sec. 578.21 Awarding funds.
(a) Selection. HUD will review applications in accordance with the
guidelines and procedures provided in the NOFA and will award funds to
recipients through a national competition based on selection criteria
as defined in section 427 of the Act.
(b) Announcement of awards. HUD will announce awards and notify
selected applicants of any conditions imposed on awards. Conditions
must be satisfied before HUD will execute a grant agreement with the
applicant.
(c) Satisfying conditions. HUD will withdraw an award if the
applicant does not satisfy all conditions imposed on it. Correcting all
issues and conditions attached to an award must be completed within the
time frame established in the NOFA. Proof of site control, match,
environmental review, and the documentation of financial feasibility
must be completed within 12 months of the announcement of the award, or
24 months in the case of funds for acquisition, rehabilitation, or new
construction. The 12-month deadline may be extended by HUD for up to 12
additional months upon a showing of compelling reasons for delay due to
factors beyond the control of the recipient or subrecipient.
Sec. 578.23 Executing grant agreements.
(a) Deadline. No later than 45 days from the date when all
conditions are satisfied, the recipient and HUD must execute the grant
agreement.
(b) Grant agreements. (1) Multiple applicants for one Continuum. If
a Continuum designates more than one applicant for the geographic area,
HUD will enter into a grant agreement with each designated applicant
for which an award is announced.
(2) One applicant for a Continuum. If a Continuum designates only
one applicant for the geographic area, after awarding funds, HUD may
enter into a grant agreement with that applicant for new awards, if
any, and one grant agreement for renewals, Continuum of Care planning,
and UFA costs, if any. These two grants will cover the entire
geographic area. A default by the recipient under one of those grant
agreements will also be a default under the other.
(3) Unified Funding Agencies. If a Continuum is a UFA that HUD has
approved, then HUD will enter into one grant agreement with the UFA for
new awards, if any, and one grant agreement for renewals, Continuum of
Care planning and UFA costs, if any. These two grants will cover the
entire geographic area. A default by the UFA under one of those grant
agreements will also be a default under the other.
(c) Required agreements. Recipients will be required to sign a
grant agreement in which the recipient agrees:
(1) To ensure the operation of the project(s) in accordance with
the provisions of the McKinney-Veto Act and all requirements under 24
CFR part 578;
(2) To monitor and report the progress of the project(s) to the
Continuum of Care and HUD;
(3) To ensure, to the maximum extent practicable, that individuals
and families experiencing homelessness are involved, through
employment, provision of volunteer services, or otherwise, in
constructing, rehabilitating, maintaining, and operating facilities for
the project and in providing supportive services for the project;
(4) To require certification from all subrecipients that:
[[Page 45448]]
(i) Subrecipients will maintain the confidentiality of records
pertaining to any individual or family that was provided family
violence prevention or treatment services through the project;
(ii) The address or location of any family violence project
assisted under this part will not be made public, except with written
authorization of the person responsible for the operation of such
project;
(iii) Subrecipients will establish policies and practices that are
consistent with, and do not restrict, the exercise of rights provided
by subtitle B of title VII of the Act and other laws relating to the
provision of educational and related services to individuals and
families experiencing homelessness;
(iv) In the case of projects that provide housing or services to
families, that subrecipients will designate a staff person to be
responsible for ensuring that children being served in the program are
enrolled in school and connected to appropriate services in the
community, including early childhood programs such as Head Start, part
C of the Individuals with Disabilities Education Act, and programs
authorized under subtitle B of title VII of the Act;
(v) The subrecipient, its officers, and employees are not debarred
or suspended from doing business with the Federal Government; and
(vi) Subrecipients will provide information, such as data and
reports, as required by HUD; and
(5) To establish such fiscal control and accounting procedures as
may be necessary to assure the proper disbursal of, and accounting for
grant funds in order to ensure that all financial transactions are
conducted, and records maintained in accordance with generally accepted
accounting principles, if the recipient is a UFA;
(6) To monitor subrecipient match and report on match to HUD;
(7) To take the educational needs of children into account when
families are placed in housing and will, to the maximum extent
practicable, place families with children as close as possible to their
school of origin so as not to disrupt such children's education;
(8) To monitor subrecipients at least annually;
(9) To use the centralized or coordinated assessment system
established by the Continuum of Care as set forth in Sec. 578.7(a)(8).
A victim service provider may choose not to use the Continuum of Care's
centralized or coordinated assessment system, provided that victim
service providers in the area use a centralized or coordinated
assessment system that meets HUD's minimum requirements and the victim
service provider uses that system instead;
(10) To follow the written standards for providing Continuum of
Care assistance developed by the Continuum of Care, including the
minimum requirements set forth in Sec. 578.7(a)(9);
(11) Enter into subrecipient agreements requiring subrecipients to
operate the project(s) in accordance with the provisions of this Act
and all requirements under 24 CFR part 578; and
(12) To comply with such other terms and conditions as HUD may
establish by NOFA.
Sec. 578.25 Site control.
(a) In general. When grant funds will be used for acquisition,
rehabilitation, new construction, operating costs, or to provide
supportive services, the recipient or subrecipient must demonstrate
that it has site control within the time frame established in section
Sec. 578.21 before HUD will execute a grant agreement. This
requirement does not apply to funds used for housing that will
eventually be owned or controlled by the individuals or families served
or for supportive services provided at sites not operated by the
recipient or subrecipient.
(b) Evidence. Acceptable evidence of site control is a deed or
lease. If grant funds will be used for acquisition, acceptable evidence
of site control will be a purchase agreement. The owner, lessee, and
purchaser shown on these documents must be the selected applicant or
intended subrecipient identified in the application for assistance.
(c) Tax credit projects. (1) Applicants that plan to use the low-
income housing tax credit authorized under 26 U.S.C. 42 to finance a
project must prove to HUD's satisfaction that the applicant or
subrecipient identified in the application is in control of the limited
partnership or limited liability corporation that has a deed or lease
for the project site.
(i) To have control of the limited partnership, the applicant or
subrecipient must be the general partner of the limited partnership or
have a 51 percent controlling interest in that general partner.
(ii) To have control of the limited liability company, the
applicant or subrecipient must be the sole managing member.
(2) If grant funds are to be used for acquisition, rehabilitation,
or new construction, the recipient or subrecipient must maintain
control of the partnership or corporation and must ensure that the
project is operated in compliance with law and regulation for 15 years
from the date of initial occupancy or initial service provision. The
partnership or corporation must own the project site throughout the 15-
year period. If grant funds were not used for acquisition,
rehabilitation, or new construction, then the recipient or subrecipient
must maintain control for the term of the grant agreement and any
renewals thereof.
Sec. 578.27 Consolidated plan.
(a) States or units of general local government. An applicant that
is a State or a unit of general local government must have a HUD-
approved, complete or abbreviated, consolidated plan in accordance with
24 CFR part 91. The applicant must submit a certification that the
application for funding is consistent with the HUD-approved
consolidated plan(s) for the jurisdiction(s) in which the proposed
project will be located. Funded applicants must certify in a grant
agreement that they are following the HUD-approved consolidated plan.
(b) Other applicants. Applicants that are not States or units of
general local government must submit a certification by the
jurisdiction(s) in which the proposed project will be located that the
applicant's application for funding is consistent with the
jurisdiction's HUD-approved consolidated plan. The certification must
be made by the unit of general local government or the State, in
accordance with the consistency certification provisions under 24 CFR
part 91, subpart F. If the jurisdiction refuses to provide a
certification of consistency, the applicant may appeal to HUD under
Sec. 578.35.
(c) Timing of consolidated plan certification submissions. The
required certification that the application for funding is consistent
with the HUD-approved consolidated plan must be submitted by the
funding application submission deadline announced in the NOFA.
Sec. 578.29 Subsidy layering.
HUD may provide assistance under this program only in accordance
with HUD subsidy layering requirements in section 102 of the Housing
and Urban Development Reform Act of 1989 (42 U.S.C. 3545) and 24 CFR
part 4, subpart A. An applicant must submit information in its
application on other sources of governmental assistance that the
applicant has received, or reasonably expects to receive, for a
proposed project or activities. HUD's review of this information is
intended to prevent excessive public assistance for
[[Page 45449]]
proposed project or activities by combining (layering) assistance under
this program with other governmental housing assistance from federal,
State, or local agencies, including assistance such as tax concessions
or tax credits.
Sec. 578.31 Environmental review.
(a) Activities under this part are subject to environmental review
by HUD under 24 CFR part 50. The recipient or subrecipient shall supply
all available, relevant information necessary for HUD to perform, for
each property, any environmental review required by 24 CFR part 50. The
recipient or subrecipient must carry out mitigating measures required
by HUD or select an alternate eligible property. HUD may eliminate from
consideration any application that would require an Environmental
Impact Statement.
(b) The recipient or subrecipient, its project partners, and their
contractors may not acquire, rehabilitate, convert, lease, repair,
dispose of, demolish, or construct property for a project under this
part, or commit or expend HUD or local funds for such eligible
activities under this part, until HUD has performed an environmental
review under 24 CFR part 50 and the recipient or subrecipient has
received HUD approval of the property.
Sec. 578.33 Renewals.
(a) In general. Awards made under this part and title IV of the
Act, as in effect before August 30, 2012 (the Supportive Housing
Program and the Shelter Plus Care program), may be renewed to continue
ongoing leasing, operations, supportive services, rental assistance,
HMIS, and administration beyond the initial funding period. To be
considered for funding, recipients must submit a request in a form
specified by HUD, must meet the requirements of this part, and must
submit the request within the time frame established by HUD.
(b) Length of renewal. HUD may award up to 3 years of funds for
supportive services, leasing, HMIS, and operating costs. Renewals of
tenant-based and sponsor-based rental assistance may be for up to one
year of rental assistance. Renewals of project-based rental assistance
may be for up to 15 years of rental assistance, subject to availability
of annual appropriations.
(c) Assistance available. (1) Assistance during each year of a
renewal period may be for:
(i) Up to 100 percent of the amount for supportive services and
HMIS costs in the final year of the prior funding period;
(ii) Up to 100 percent of the amount for leasing and operating in
the final year of the prior funding period adjusted in proportion to
changes in the FMR for the geographic area; and
(iii) For rental assistance, up to 100 percent of the result of
multiplying the number and unit size(s) in the grant agreement by the
number of months in the renewal grant term and the applicable FMR.
(d) Review criteria. (1) Awards made under title IV of the Act, as
in effect before August 30, 2012 are eligible for renewal in the
Continuum of Care program even if the awardees would not be eligible
for a new grant under the program, so long as they continue to serve
the same population and the same number of persons or units in the same
type of housing as identified in their most recently amended grant
agreement signed before August 30, 2012. Grants will be renewed if HUD
receives a certification from the Continuum that there is a
demonstrated need for the project, and HUD finds that the project
complied with program requirements applicable before August 30, 2012.
For purposes of meeting the requirements of this part, a project will
continue to be administered in accordance with 24 CFR 582.330, if the
project received funding under the Shelter Plus Care program, or 24 CFR
583.325, if the project received funding under the Supportive Housing
Program.
(2) Renewal of awards made after August 30, 2012. Review criteria
for competitively awarded renewals made after August 30, 2012 will be
described in the NOFA.
(e) Unsuccessful projects. HUD may renew a project that was
eligible for renewal in the competition and was part of an application
that was not funded despite having been submitted on time, in the
manner required by HUD, and containing the information required by HUD,
upon a finding that the project meets the purposes of the Continuum of
Care program. The renewal will not exceed more than one year and will
be under such conditions as HUD deems appropriate.
(f) Annual Performance Report condition. HUD may terminate the
renewal of any grant and require the recipient to repay the renewal
grant if:
(1) The recipient fails to timely submit a HUD Annual Performance
Report (APR) for the grant year immediately prior to renewal; or
(2) The recipient submits an APR that HUD deems unacceptable or
shows noncompliance with the requirements of the grant and this part.
Sec. 578.35 Appeal.
(a) In general. Failure to follow the procedures or meet the
deadlines established in this section will result in denial of the
appeal.
(b) Solo applicants. (1) Who may appeal. Nonprofits, States, and
local governments, and instrumentalities of State or local governments
that attempted to participate in the Continuum of Care planning process
in the geographic area in which they operate, that believe they were
denied the right to participate in a reasonable manner, and that
submitted a solo application for funding by the application deadline
established in the NOFA, may appeal the decision of the Continuum to
HUD.
(2) Notice of intent to appeal. The solo applicant must submit a
written notice of intent to appeal, with a copy to the Continuum, with
their funding application.
(3) Deadline for submitting proof. No later than 30 days after the
date that HUD announces the awards, the solo applicant shall submit in
writing, with a copy to the Continuum, all relevant evidence supporting
its claim, in such manner as HUD may require by Notice.
(4) Response from the Continuum of Care. The Continuum shall have
30 days from the date of its receipt of the solo applicant's evidence
to respond to HUD in writing and in such manner as HUD may require,
with a copy to the solo applicant.
(5) Decision. HUD will notify the solo applicant and the Continuum
of its decision within 60 days of receipt of the Continuum's response.
(6) Funding. If HUD finds that the solo applicant was not permitted
to participate in the Continuum of Care planning process in a
reasonable manner, then HUD may award a grant to the solo applicant
when funds next become available and may direct the Continuum of Care
to take remedial steps to ensure reasonable participation in the
future. HUD may also reduce the award to the Continuum's applicant(s).
(c) Denied or decreased funding. (1) Who may appeal. Eligible
applicants that are denied funds by HUD, or that requested more funds
than HUD awarded to them, may appeal the award by filing a written
appeal, in such form and manner as HUD may require by Notice, within 45
days of the date of HUD's announcement of the award.
(2) Decision. HUD will notify the applicant of its decision on the
appeal within 60 days of HUD's receipt of the written appeal. HUD will
reverse a decision only when the applicant can show that HUD error
caused the denial or decrease.
[[Page 45450]]
(3) Funding. Awards and increases to awards made upon appeal will
be made from next available funds.
(d) Competing Continuums of Care. (1) In general. If more than one
Continuum of Care claims the same geographic area, HUD will award funds
to the Continuum applicant(s) whose application(s) has the highest
total score. No projects will be funded from the lower scoring
Continuum. No projects that are submitted in two or more competing
Continuum of Care applications will be funded.
(2) Who may appeal. The designated applicant(s) for the lower
scoring Continuum may appeal HUD's decision to fund the application(s)
from the competing Continuum by filing a written appeal, in such form
and manner as HUD may require by Notice, within 45 days of the date of
HUD's announcement of the award.
(3) Decision. HUD will notify the applicant(s) of its decision on
the appeal within 60 days of the date of HUD's receipt of the written
appeal. HUD will reverse a decision only upon a showing by the
applicant that HUD error caused the denial.
(e) Consolidated plan certification. (1) In general. An applicant
may appeal to HUD a jurisdiction's refusal to provide a certification
of consistency with the Consolidated Plan.
(2) Procedure. The applicant must submit a written appeal with its
application to HUD and send a copy of the appeal to the jurisdiction
that denied the certification of consistency. The appeal must include,
at a minimum:
(i) A copy of the applicant's request to the jurisdiction for the
certification of consistency with the Consolidated Plan;
(ii) A copy of the jurisdiction's response stating the reasons for
denial, including the reasons the proposed project is not consistent
with the jurisdiction's Consolidated Plan in accordance with 24 CFR
91.500(c); and
(iii) A statement of the reasons why the applicant believes its
project is consistent with the jurisdiction's Consolidated Plan.
(3) Jurisdiction response. The jurisdiction that refused to provide
the certification of consistency with the jurisdiction's Consolidated
Plan shall have 10 days after receipt of a copy of the appeal to submit
a written explanation of the reasons originally given for refusing to
provide the certification and a written rebuttal to any claims made by
the applicant in the appeal.
(4) HUD review. (i) HUD will issue its decision within 45 days of
the date of HUD's receipt of the jurisdiction's response. As part of
its review, HUD will consider:
(A) Whether the applicant submitted the request to the appropriate
political jurisdiction; and
(B) The reasonableness of the jurisdiction's refusal to provide the
certificate.
(ii) If the jurisdiction did not provide written reasons for
refusal, including the reasons why the project is not consistent with
the jurisdiction's Consolidated Plan in its initial response to the
applicant's request for a certification, HUD will find for the
applicant without further inquiry or response from the political
jurisdiction.
Subpart D--Program Components and Eligible Costs
Sec. 578.37 Program components and uses of assistance.
(a) Continuum of Care funds may be used to pay for the eligible
costs listed in Sec. 578.39 through Sec. 578.63 when used to
establish and operate projects under five program components: permanent
housing; transitional housing; supportive services only; HMIS; and, in
some cases, homelessness prevention. Although grant funds may be used
by recipients and subrecipients in all components for the eligible
costs of contributing data to the HMIS designated by the Continuum of
Care, only HMIS Leads may use grant funds for an HMIS component.
Administrative costs are eligible for all components. All components
are subject to the restrictions on combining funds for certain eligible
activities in a single project found in Sec. 578.87(c). The eligible
program components are:
(1) Permanent housing (PH). Permanent housing is community-based
housing, the purpose of which is to provide housing without a
designated length of stay. Grant funds may be used for acquisition,
rehabilitation, new construction, leasing, rental assistance, operating
costs, and supportive services. PH includes:
(i) Permanent supportive housing for persons with disabilities
(PSH). PSH can only provide assistance to individuals with disabilities
and families in which one adult or child has a disability. Supportive
services designed to meet the needs of the program participants must be
made available to the program participants.
(ii) Rapid rehousing. Continuum of Care funds may provide
supportive services, as set forth in Sec. 578.53, and/or short-term
(up to 3 months) and/or medium-term (for 3 to 24 months) tenant-based
rental assistance, as set forth in Sec. 578.51(c), as necessary to
help a homeless individual or family, with or without disabilities,
move as quickly as possible into permanent housing and achieve
stability in that housing. When providing short-term and/or medium-term
rental assistance to program participants, the rental assistance is
subject to Sec. 578.51(a)(1), but not Sec. 578.51(a)(1)(i) and (ii);
(a)(2); (c) and (f) through (i); and (l)(1). These projects:
(A) Must follow the written policies and procedures established by
the Continuum of Care for determining and prioritizing which eligible
families and individuals will receive rapid rehousing assistance, as
well as the amount or percentage of rent that each program participant
must pay.
(B) May set a maximum amount or percentage of rental assistance
that a program participant may receive, a maximum number of months that
a program participant may receive rental assistance, and/or a maximum
number of times that a program participant may receive rental
assistance. The recipient or subrecipient may also require program
participants to share in the costs of rent. For the purposes of
calculating rent for rapid rehousing, the rent shall equal the sum of
the total monthly rent for the unit and, if the tenant pays separately
for utilities, the monthly allowance for utilities (excluding
telephone) established by the public housing authority for the area in
which the housing is located.
(C) Limit rental assistance to no more than 24 months to a
household.
(D) May provide supportive services for no longer than 6 months
after rental assistance stops.
(E) Must re-evaluate, not less than once annually, that the program
participant lacks sufficient resources and support networks necessary
to retain housing without Continuum of Care assistance and the types
and amounts of assistance that the program participant needs to retain
housing. The recipient or subrecipient may require each program
participant receiving assistance to notify the recipient or
subrecipient of changes in the program participant's income or other
circumstances (e.g., changes in household composition) that affect the
program participant's need for assistance. When notified of a relevant
change, the recipient or subrecipient must reevaluate the program
participant's eligibility and the amount and types of assistance that
the program participant needs.
(F) Require the program participant to meet with a case manager not
less than once per month to assist the program participant in ensuring
long-term housing stability. The project is exempt
[[Page 45451]]
from this requirement if the Violence Against Women Act of 1994 (42
U.S.C. 13925 et seq.) or the Family Violence Prevention and Services
Act (42 U.S.C. 10401 et seq.) prohibits the recipient carrying out the
project from making its housing conditional on the participant's
acceptance of services.
(2) Transitional Housing (TH). Transitional housing facilitates the
movement of homeless individuals and families to PH within 24 months of
entering TH. Grant funds may be used for acquisition, rehabilitation,
new construction, leasing, rental assistance, operating costs, and
supportive services.
(3) Supportive Service Only (SSO). Funds may be used for
acquisition, rehabilitation, relocation costs, or leasing of a facility
from which supportive services will be provided, and supportive
services in order to provide supportive services to unsheltered and
sheltered homeless persons for whom the recipient or subrecipient is
not providing housing or housing assistance. SSO includes street
outreach.
(4) HMIS. Funds may be used by HMIS Leads to lease a structure in
which the HMIS is operated or as operating funds to operate a structure
in which the HMIS is operated, and for other costs eligible in Sec.
578.57.
(5) Homelessness prevention. Funds may be used by recipients in
Continuums of Care-designated high-performing communities for housing
relocation and stabilization services, and short- and/or medium-term
rental assistance, as described in 24 CFR 576.105 and 24 CFR 576.106,
that are necessary to prevent an individual or family from becoming
homeless.
(b) Uses of assistance. Funds are available to pay for the eligible
costs listed in Sec. 578.39 through Sec. 578.63 when used to:
(1) Establish new housing or new facilities to provide supportive
services;
(2) Expand existing housing and facilities in order to increase the
number of homeless persons served;
(3) Bring existing housing and facilities into compliance with
State and local government health and safety standards, as described in
Sec. 578.87;
(4) Preserve existing permanent housing and facilities that provide
supportive services;
(5) Provide supportive services for residents of supportive housing
or for homeless persons not residing in supportive housing;
(6) Continue funding permanent housing when the recipient has
received funding under this part for leasing, supportive services,
operating costs, or rental assistance;
(7) Establish and operate an HMIS or comparable database; and
(8) Establish and carry out a Continuum of Care planning process
and operate a Continuum of Care.
(c) Multiple purposes. Structures used to provide housing,
supportive housing, supportive services, or as a facility for HMIS
activities may also be used for other purposes. However, assistance
under this part will be available only in proportion to the use of the
structure for supportive housing or supportive services. If eligible
and ineligible activities are carried out in separate portions of the
same structure or in separate structures, grant funds may not be used
to pay for more than the actual cost of acquisition, construction, or
rehabilitation of the portion of the structure or structures used for
eligible activities. If eligible and ineligible activities are carried
out in the same structure, the costs will be prorated based on the
amount of time that the space is used for eligible versus ineligible
activities.
Sec. 578.39 Continuum of Care planning activities.
(a) In general. Collaborative applicants may use up to 3 percent of
their FPRN, or a maximum amount to be established by the NOFA, for
costs of:
(1) Designing and carrying out a collaborative process for the
development of an application to HUD;
(2) Evaluating the outcomes of projects for which funds are awarded
in the geographic area under the Continuum of Care and the Emergency
Solutions Grants programs; and
(3) Participating in the consolidated plan(s) for the geographic
area(s).
(b) Continuum of Care planning activities. Eligible planning costs
include the costs of:
(1) Developing a communitywide or regionwide process involving the
coordination of nonprofit homeless providers, victim service providers,
faith-based organizations, governments, businesses, advocates, public
housing agencies, school districts, social service providers, mental
health agencies, hospitals, universities, affordable housing
developers, law enforcement, organizations that serve veterans, and
homeless and formerly homeless individuals;
(2) Determining the geographic area that the Continuum of Care will
serve;
(3) Developing a Continuum of Care system;
(4) Evaluating the outcomes of projects for which funds are awarded
in the geographic area, including the Emergency Solutions Grants
program;
(5) Participating in the consolidated plan(s) of the
jurisdiction(s) in the geographic area; and
(6) Preparing and submitting an application to HUD on behalf of the
entire Continuum of Care membership, including conducting a sheltered
and unsheltered point-in-time count and other data collection as
required by HUD.
(c) Monitoring costs. The costs of monitoring recipients and
subrecipients and enforcing compliance with program requirements are
eligible.
Sec. 578.41 Unified Funding Agency costs.
(a) In general. UFAs may use up to 3 percent of their FPRN, or a
maximum amount to be established by the NOFA, whichever is less, for
fiscal control and accounting costs necessary to assure the proper
disbursal of, and accounting for, federal funds awarded to
subrecipients under the Continuum of Care program.
(b) UFA costs. UFA costs include costs of ensuring that all
financial transactions carried out under the Continuum of Care program
are conducted and records are maintained in accordance with generally
accepted accounting principles, including arranging for an annual
survey, audit, or evaluation of the financial records of each project
carried out by a subrecipient funded by a grant received through the
Continuum of Care program.
(c) Monitoring costs. The costs of monitoring subrecipients and
enforcing compliance with program requirements are eligible for costs.
Sec. 578.43 Acquisition.
Grant funds may be used to pay up to 100 percent of the cost of
acquisition of real property selected by the recipient or subrecipient
for use in the provision of housing or supportive services for homeless
persons.
Sec. 578.45 Rehabilitation.
(a) Use. Grant funds may be used to pay up to 100 percent of the
cost of rehabilitation of structures to provide housing or supportive
services to homeless persons.
(b) Eligible costs. Eligible rehabilitation costs include
installing cost-effective energy measures, and bringing an existing
structure to State and local government health and safety standards.
(c) Ineligible costs. Grant funds may not be used for
rehabilitation of leased property.
Sec. 578.47 New construction.
(a) Use. Grant funds may be used to:
(1) Pay up to 100 percent of the cost of new construction,
including the
[[Page 45452]]
building of a new structure or building an addition to an existing
structure that increases the floor area by 100 percent or more, and the
cost of land associated with that construction, for use as housing.
(2) If grant funds are used for new construction, the applicant
must demonstrate that the costs of new construction are substantially
less than the costs of rehabilitation or that there is a lack of
available appropriate units that could be rehabilitated at a cost less
than new construction. For purposes of this cost comparison, costs of
rehabilitation or new construction may include the cost of real
property acquisition.
(b) Ineligible costs. Grant funds may not be used for new
construction on leased property.
Sec. 578.49 Leasing.
(a) Use. (1) Where the recipient or subrecipient is leasing the
structure, or portions thereof, grant funds may be used to pay for 100
percent of the costs of leasing a structure or structures, or portions
thereof, to provide housing or supportive services to homeless persons
for up to 3 years. Leasing funds may not be used to lease units or
structures owned by the recipient, subrecipient, their parent
organization(s), any other related organization(s), or organizations
that are members of a partnership, where the partnership owns the
structure, unless HUD authorized an exception for good cause.
(2) Any request for an exception must include the following:
(i) A description of how leasing these structures is in the best
interest of the program;
(ii) Supporting documentation showing that the leasing charges paid
with grant funds are reasonable for the market; and
(iii) A copy of the written policy for resolving disputes between
the landlord and tenant, including a recusal for officers, agents, and
staff who work for both the landlord and tenant.
(b) Requirements. (1) Leasing structures. When grants are used to
pay rent for all or part of a structure or structures, the rent paid
must be reasonable in relation to rents being charged in the area for
comparable space. In addition, the rent paid may not exceed rents
currently being charged by the same owner for comparable unassisted
space.
(2) Leasing individual units. When grants are used to pay rent for
individual housing units, the rent paid must be reasonable in relation
to rents being charged for comparable units, taking into account the
location, size, type, quality, amenities, facilities, and management
services. In addition, the rents may not exceed rents currently being
charged for comparable units, and the rent paid may not exceed HUD-
determined fair market rents.
(3) Utilities. If electricity, gas, and water are included in the
rent, these utilities may be paid from leasing funds. If utilities are
not provided by the landlord, these utility costs are an operating
cost, except for supportive service facilities. If the structure is
being used as a supportive service facility, then these utility costs
are a supportive service cost.
(4) Security deposits and first and last month's rent. Recipients
and subrecipients may use grant funds to pay security deposits, in an
amount not to exceed 2 months of actual rent. An advance payment of the
last month's rent may be provided to the landlord in addition to the
security deposit and payment of the first month's rent.
(5) Occupancy agreements and subleases. Occupancy agreements and
subleases are required as specified in Sec. 578.77(a).
(6) Calculation of occupancy charges and rent. Occupancy charges
and rent from program participants must be calculated as provided in
Sec. 578.77.
(7) Program income. Occupancy charges and rent collected from
program participants are program income and may be used as provided
under Sec. 578.97.
(8) Transition. Beginning in the first year awards are made under
the Continuum of Care program, renewals of grants for leasing funds
entered into under the authority of title IV, subtitle D of the Act as
it existed before May 20, 2009, will be renewed either as grants for
leasing or as rental assistance, depending on the characteristics of
the project. Leasing funds will be renewed as rental assistance if the
funds are used to pay rent on units where the lease is between the
program participant and the landowner or sublessor. Projects requesting
leasing funds will be renewed as leasing if the funds were used to
lease a unit or structure and the lease is between the recipient or
subrecipient and the landowner.
Sec. 578.51 Rental assistance.
(a) Use. (1) Grant funds may be used for rental assistance for
homeless individuals and families. Rental assistance cannot be provided
to a program participant who is already receiving rental assistance, or
living in a housing unit receiving rental assistance or operating
assistance through other federal, State, or local sources.
(i) The rental assistance may be short-term, up to 3 months of
rent; medium-term, for 3 to 24 months of rent; or long-term, for longer
than 24 months of rent and must be administered in accordance with the
policies and procedures established by the Continuum as set forth in
Sec. 578.7(a)(9) and this section.
(ii) The rental assistance may be tenant-based, project-based, or
sponsor-based, and may be for transitional or permanent housing.
(2) Grant funds may be used for security deposits in an amount not
to exceed 2 months of rent. An advance payment of the last month's rent
may be provided to the landlord, in addition to the security deposit
and payment of first month's rent.
(b) Rental assistance administrator. Rental assistance must be
administered by a State, unit of general local government, or a public
housing agency.
(c) Tenant-based rental assistance. Tenant-based rental assistance
is rental assistance in which program participants choose housing of an
appropriate size in which to reside. When necessary to facilitate the
coordination of supportive services, recipients and subrecipients may
require program participants to live in a specific area for their
entire period of participation, or in a specific structure for the
first year and in a specific area for the remainder of their period of
participation. Program participants who are receiving rental assistance
in transitional housing may be required to live in a specific structure
for their entire period of participation in transitional housing.
(1) Up to 5 years worth of rental assistance may be awarded to a
project in one competition.
(2) Program participants who have complied with all program
requirements during their residence retain the rental assistance if
they move within the Continuum of Care geographic area.
(3) Program participants who have complied with all program
requirements during their residence and who have been a victim of
domestic violence, dating violence, sexual assault, or stalking, and
who reasonably believe they are imminently threatened by harm from
further domestic violence, dating violence, sexual assault, or stalking
(which would include threats from a third party, such as a friend or
family member of the perpetrator of the violence), if they remain in
the assisted unit, and are able to document the violence and basis for
their belief, may retain the rental assistance and move to a different
Continuum of Care geographic area if they move out of the
[[Page 45453]]
assisted unit to protect their health and safety.
(d) Sponsor-based rental assistance. Sponsor-based rental
assistance is provided through contracts between the recipient and
sponsor organization. A sponsor may be a private, nonprofit
organization, or a community mental health agency established as a
public nonprofit organization. Program participants must reside in
housing owned or leased by the sponsor. Up to 5 years worth of rental
assistance may be awarded to a project in one competition.
(e) Project-based rental assistance. Project-based rental
assistance is provided through a contract with the owner of an existing
structure, where the owner agrees to lease the subsidized units to
program participants. Program participants will not retain rental
assistance if they move. Up to 15 years of rental assistance may be
awarded in one competition.
(f) Grant amount. The amount of rental assistance in each project
will be based on the number and size of units proposed by the applicant
to be assisted over the grant period. The amount of rental assistance
in each project will be calculated by multiplying the number and size
of units proposed by the FMR of each unit on the date the application
is submitted to HUD, by the term of the grant.
(g) Rent reasonableness. HUD will only provide rental assistance
for a unit if the rent is reasonable. The recipient or subrecipient
must determine whether the rent charged for the unit receiving rental
assistance is reasonable in relation to rents being charged for
comparable unassisted units, taking into account the location, size,
type, quality, amenities, facilities, and management and maintenance of
each unit. Reasonable rent must not exceed rents currently being
charged by the same owner for comparable unassisted units.
(h) Payment of grant. (1) The amount of rental assistance in each
project will be reserved for rental assistance over the grant period.
An applicant's request for rental assistance in each grant is an
estimate of the amount needed for rental assistance. Recipients will
make draws from the grant funds to pay the actual costs of rental
assistance for program participants.
(2) For tenant-based rental assistance, on demonstration of need:
(i) Up to 25 percent of the total rental assistance awarded may be
spent in any year of a 5-year grant term; or
(ii) A higher percentage if approved in advance by HUD, if the
recipient provides evidence satisfactory to HUD that it is financially
committed to providing the housing assistance described in the
application for the full 5-year period.
(3) A recipient must serve at least as many program participants as
shown in its application for assistance.
(4) If the amount in each grant reserved for rental assistance over
the grant period exceeds the amount that will be needed to pay the
actual costs of rental assistance, due to such factors as contract
rents being lower than FMRs and program participants being able to pay
a portion of the rent, recipients or subrecipients may use the excess
funds for covering the costs of rent increases, or for serving a
greater number of program participants.
(i) Vacancies. If a unit assisted under this section is vacated
before the expiration of the lease, the assistance for the unit may
continue for a maximum of 30 days from the end of the month in which
the unit was vacated, unless occupied by another eligible person. No
additional assistance will be paid until the unit is occupied by
another eligible person. Brief periods of stays in institutions, not to
exceed 90 days for each occurrence, are not considered vacancies.
(j) Property damage. Recipients and subrecipients may use grant
funds in an amount not to exceed one month's rent to pay for any damage
to housing due to the action of a program participant. This shall be a
one-time cost per participant, incurred at the time a participant exits
a housing unit.
(k) Resident rent. Rent must be calculated as provided in Sec.
578.77. Rents collected from program participants are program income
and may be used as provided under Sec. 578.97.
(l) Leases. (1) Initial lease. For project-based, sponsor-based, or
tenant-based rental assistance, program participants must enter into a
lease agreement for a term of at least one year, which is terminable
for cause. The leases must be automatically renewable upon expiration
for terms that are a minimum of one month long, except on prior notice
by either party.
(2) Initial lease for transitional housing. Program participants in
transitional housing must enter into a lease agreement for a term of at
least one month. The lease must be automatically renewable upon
expiration, except on prior notice by either party, up to a maximum
term of 24 months.
Sec. 578.53 Supportive services.
(a) In general. Grant funds may be used to pay the eligible costs
of supportive services that address the special needs of the program
participants. If the supportive services are provided in a supportive
service facility not contained in a housing structure, the costs of
day-to-day operation of the supportive service facility, including
maintenance, repair, building security, furniture, utilities, and
equipment are eligible as a supportive service.
(1) Supportive services must be necessary to assist program
participants obtain and maintain housing.
(2) Recipients and subrecipients shall conduct an annual assessment
of the service needs of the program participants and should adjust
services accordingly.
(b) Duration. (1) For a transitional housing project, supportive
services must be made available to residents throughout the duration of
their residence in the project.
(2) Permanent supportive housing projects must provide supportive
services for the residents to enable them to live as independently as
is practicable throughout the duration of their residence in the
project.
(3) Services may also be provided to former residents of
transitional housing and current residents of permanent housing who
were homeless in the prior 6 months, for no more than 6 months after
leaving transitional housing or homelessness, respectively, to assist
their adjustment to independent living.
(4) Rapid rehousing projects must require the program participant
to meet with a case manager not less than once per month as set forth
in Sec. 578.37(a)(1)(ii)(F), to assist the program participant in
maintaining long-term housing stability.
(c) Special populations. All eligible costs are eligible to the
same extent for program participants who are unaccompanied homeless
youth; persons living with HIV/AIDS; and victims of domestic violence,
dating violence, sexual assault, or stalking.
(d) Ineligible costs. Any cost that is not described as an eligible
cost under this section is not an eligible cost of providing supportive
services using Continuum of Care program funds. Staff training and the
costs of obtaining professional licenses or certifications needed to
provide supportive services are not eligible costs.
(e) Eligible costs.
(1) Annual Assessment of Service Needs. The costs of the assessment
required by Sec. 578.53(a)(2) are eligible costs.
(2) Assistance with moving costs. Reasonable one-time moving costs
are eligible and include truck rental and hiring a moving company.
[[Page 45454]]
(3) Case management. The costs of assessing, arranging,
coordinating, and monitoring the delivery of individualized services to
meet the needs of the program participant(s) are eligible costs.
Component services and activities consist of:
(i) Counseling;
(ii) Developing, securing, and coordinating services;
(iii) Using the centralized or coordinated assessment system as
required under Sec. 578.23(c)(9).
(iv) Obtaining federal, State, and local benefits;
(v) Monitoring and evaluating program participant progress;
(vi) Providing information and referrals to other providers;
(vii) Providing ongoing risk assessment and safety planning with
victims of domestic violence, dating violence, sexual assault, and
stalking; and
(viii) Developing an individualized housing and service plan,
including planning a path to permanent housing stability.
(4) Child care. The costs of establishing and operating child care,
and providing child-care vouchers, for children from families
experiencing homelessness, including providing meals and snacks, and
comprehensive and coordinated developmental activities, are eligible.
(i) The children must be under the age of 13, unless they are
disabled children.
(ii) Disabled children must be under the age of 18.
(iii) The child-care center must be licensed by the jurisdiction in
which it operates in order for its costs to be eligible.
(5) Education services. The costs of improving knowledge and basic
educational skills are eligible.
(i) Services include instruction or training in consumer education,
health education, substance abuse prevention, literacy, English as a
Second Language, and General Educational Development (GED).
(ii) Component services or activities are screening, assessment and
testing; individual or group instruction; tutoring; provision of books,
supplies, and instructional material; counseling; and referral to
community resources.
(6) Employment assistance and job training. The costs of
establishing and operating employment assistance and job training
programs are eligible, including classroom, online and/or computer
instruction, on-the-job instruction, services that assist individuals
in securing employment, acquiring learning skills, and/or increasing
earning potential. The cost of providing reasonable stipends to program
participants in employment assistance and job training programs is also
an eligible cost.
(i) Learning skills include those skills that can be used to secure
and retain a job, including the acquisition of vocational licenses and/
or certificates.
(ii) Services that assist individuals in securing employment
consist of:
(A) Employment screening, assessment, or testing;
(B) Structured job skills and job-seeking skills;
(C) Special training and tutoring, including literacy training and
pre-vocational training;
(D) Books and instructional material;
(E) Counseling or job coaching; and
(F) Referral to community resources.
(7) Food. The cost of providing meals or groceries to program
participants is eligible.
(8) Housing search and counseling services. Costs of assisting
eligible program participants to locate, obtain, and retain suitable
housing are eligible.
(i) Component services or activities are tenant counseling;
assisting individuals and families to understand leases; securing
utilities; and making moving arrangements.
(ii) Other eligible costs are:
(A) Mediation with property owners and landlords on behalf of
eligible program participants;
(B) Credit counseling, accessing a free personal credit report, and
resolving personal credit issues; and
(C) The payment of rental application fees.
(9) Legal services. Eligible costs are the fees charged by licensed
attorneys and by person(s) under the supervision of licensed attorneys,
for advice and representation in matters that interfere with the
homeless individual or family's ability to obtain and retain housing.
(i) Eligible subject matters are child support; guardianship;
paternity; emancipation; legal separation; orders of protection and
other civil remedies for victims of domestic violence, dating violence,
sexual assault, and stalking; appeal of veterans and public benefit
claim denials; landlord tenant disputes; and the resolution of
outstanding criminal warrants.
(ii) Component services or activities may include receiving and
preparing cases for trial, provision of legal advice, representation at
hearings, and counseling.
(iii) Fees based on the actual service performed (i.e., fee for
service) are also eligible, but only if the cost would be less than the
cost of hourly fees. Filing fees and other necessary court costs are
also eligible. If the subrecipient is a legal services provider and
performs the services itself, the eligible costs are the subrecipient's
employees' salaries and other costs necessary to perform the services.
(iv) Legal services for immigration and citizenship matters and
issues related to mortgages and homeownership are ineligible. Retainer
fee arrangements and contingency fee arrangements are ineligible.
(10) Life skills training. The costs of teaching critical life
management skills that may never have been learned or have been lost
during the course of physical or mental illness, domestic violence,
substance abuse, and homelessness are eligible. These services must be
necessary to assist the program participant to function independently
in the community. Component life skills training are the budgeting of
resources and money management, household management, conflict
management, shopping for food and other needed items, nutrition, the
use of public transportation, and parent training.
(11) Mental health services. Eligible costs are the direct
outpatient treatment of mental health conditions that are provided by
licensed professionals. Component services are crisis interventions;
counseling; individual, family, or group therapy sessions; the
prescription of psychotropic medications or explanations about the use
and management of medications; and combinations of therapeutic
approaches to address multiple problems.
(12) Outpatient health services. Eligible costs are the direct
outpatient treatment of medical conditions when provided by licensed
medical professionals including:
(i) Providing an analysis or assessment of an individual's health
problems and the development of a treatment plan;
(ii) Assisting individuals to understand their health needs;
(iii) Providing directly or assisting individuals to obtain and
utilize appropriate medical treatment;
(iv) Preventive medical care and health maintenance services,
including in-home health services and emergency medical services;
(v) Provision of appropriate medication;
(vi) Providing follow-up services; and
(vii) Preventive and noncosmetic dental care.
(13) Outreach services. The costs of activities to engage persons
for the purpose of providing immediate support and intervention, as
well as identifying
[[Page 45455]]
potential program participants, are eligible.
(i) Eligible costs include the outreach worker's transportation
costs and a cell phone to be used by the individual performing the
outreach.
(ii) Component activities and services consist of: initial
assessment; crisis counseling; addressing urgent physical needs, such
as providing meals, blankets, clothes, or toiletries; actively
connecting and providing people with information and referrals to
homeless and mainstream programs; and publicizing the availability of
the housing and/or services provided within the geographic area covered
by the Continuum of Care.
(14) Substance abuse treatment services. The costs of program
participant intake and assessment, outpatient treatment, group and
individual counseling, and drug testing are eligible. Inpatient
detoxification and other inpatient drug or alcohol treatment are
ineligible.
(15) Transportation. Eligible costs are:
(i) The costs of program participant's travel on public
transportation or in a vehicle provided by the recipient or
subrecipient to and from medical care, employment, child care, or other
services eligible under this section.
(ii) Mileage allowance for service workers to visit program
participants and to carry out housing quality inspections;
(iii) The cost of purchasing or leasing a vehicle in which staff
transports program participants and/or staff serving program
participants;
(iv) The cost of gas, insurance, taxes, and maintenance for the
vehicle;
(v) The costs of recipient or subrecipient staff to accompany or
assist program participants to utilize public transportation; and
(vi) If public transportation options are not sufficient within the
area, the recipient may make a one-time payment on behalf of a program
participant needing car repairs or maintenance required to operate a
personal vehicle, subject to the following:
(A) Payments for car repairs or maintenance on behalf of the
program participant may not exceed 10 percent of the Blue Book value of
the vehicle (Blue Book refers to the guidebook that compiles and quotes
prices for new and used automobiles and other vehicles of all makes,
models, and types);
(B) Payments for car repairs or maintenance must be paid by the
recipient or subrecipient directly to the third party that repairs or
maintains the car; and
(C) The recipients or subrecipients may require program
participants to share in the cost of car repairs or maintenance as a
condition of receiving assistance with car repairs or maintenance.
(16) Utility deposits. This form of assistance consists of paying
for utility deposits. Utility deposits must be a one-time fee, paid to
utility companies.
(17) Direct provision of services. If the service described in
paragraphs (e)(1) through (e)(16) of this section is being directly
delivered by the recipient or subrecipient, eligible costs for those
services also include:
(i) The costs of labor or supplies, and materials incurred by the
recipient or subrecipient in directly providing supportive services to
program participants; and
(ii) The salary and benefit packages of the recipient and
subrecipient staff who directly deliver the services.
Sec. 578.55 Operating costs.
(a) Use. Grant funds may be used to pay the costs of the day-to-day
operation of transitional and permanent housing in a single structure
or individual housing units.
(b) Eligible costs. (1) The maintenance and repair of housing;
(2) Property taxes and insurance;
(3) Scheduled payments to a reserve for replacement of major
systems of the housing (provided that the payments must be based on the
useful life of the system and expected replacement cost);
(4) Building security for a structure where more than 50 percent of
the units or area is paid for with grant funds;
(5) Electricity, gas, and water;
(6) Furniture; and
(7) Equipment.
(c) Ineligible costs. Program funds may not be used for rental
assistance and operating costs in the same project. Program funds may
not be used for the operating costs of emergency shelter- and
supportive service-only facilities. Program funds may not be used for
the maintenance and repair of housing where the costs of maintaining
and repairing the housing are included in the lease.
Sec. 578.57 Homeless Management Information System.
(a) Eligible costs. (1) The recipient or subrecipient may use
Continuum of Care program funds to pay the costs of contributing data
to the HMIS designated by the Continuum of Care, including the costs
of:
(i) Purchasing or leasing computer hardware;
(ii) Purchasing software or software licenses;
(iii) Purchasing or leasing equipment, including telephones, fax
machines, and furniture;
(iv) Obtaining technical support;
(v) Leasing office space;
(vi) Paying charges for electricity, gas, water, phone service, and
high-speed data transmission necessary to operate or contribute data to
the HMIS;
(vii) Paying salaries for operating HMIS, including:
(A) Completing data entry;
(B) Monitoring and reviewing data quality;
(C) Completing data analysis;
(D) Reporting to the HMIS Lead;
(E) Training staff on using the HMIS; and
(F) Implementing and complying with HMIS requirements;
(viii) Paying costs of staff to travel to and attend HUD-sponsored
and HUD-approved training on HMIS and programs authorized by Title IV
of the McKinney-Vento Homeless Assistance Act;
(ix) Paying staff travel costs to conduct intake; and
(x) Paying participation fees charged by the HMIS Lead, as
authorized by HUD, if the recipient or subrecipient is not the HMIS
Lead.
(2) If the recipient or subrecipient is the HMIS Lead, it may also
use Continuum of Care funds to pay the costs of:
(i) Hosting and maintaining HMIS software or data;
(ii) Backing up, recovering, or repairing HMIS software or data;
(iii) Upgrading, customizing, and enhancing the HMIS;
(iv) Integrating and warehousing data, including development of a
data warehouse for use in aggregating data from subrecipients using
multiple software systems;
(v) Administering the system;
(vi) Reporting to providers, the Continuum of Care, and HUD; and
(vii) Conducting training on using the system, including traveling
to the training.
(3) If the recipient or subrecipient is a victim services provider,
or a legal services provider, it may use Continuum of Care funds to
establish and operate a comparable database that complies with HUD's
HMIS requirements.
(b) General restrictions. Activities funded under this section must
comply with the HMIS requirements.
Sec. 578.59 Project administrative costs.
(a) Eligible costs. The recipient or subrecipient may use up to 10
percent of any grant awarded under this part, excluding the amount for
Continuum of Care Planning Activities and UFA costs, for the payment of
project administrative costs related to the planning and execution of
Continuum
[[Page 45456]]
of Care activities. This does not include staff and overhead costs
directly related to carrying out activities eligible under Sec. 578.43
through Sec. 578.57, because those costs are eligible as part of those
activities. Eligible administrative costs include:
(1) General management, oversight, and coordination. Costs of
overall program management, coordination, monitoring, and evaluation.
These costs include, but are not limited to, necessary expenditures for
the following:
(i) Salaries, wages, and related costs of the recipient's staff,
the staff of subrecipients, or other staff engaged in program
administration. In charging costs to this category, the recipient may
include the entire salary, wages, and related costs allocable to the
program of each person whose primary responsibilities with regard to
the program involve program administration assignments, or the pro rata
share of the salary, wages, and related costs of each person whose job
includes any program administration assignments. The recipient may use
only one of these methods for each fiscal year grant. Program
administration assignments include the following:
(A) Preparing program budgets and schedules, and amendments to
those budgets and schedules;
(B) Developing systems for assuring compliance with program
requirements;
(C) Developing agreements with subrecipients and contractors to
carry out program activities;
(D) Monitoring program activities for progress and compliance with
program requirements;
(E) Preparing reports and other documents directly related to the
program for submission to HUD;
(F) Coordinating the resolution of audit and monitoring findings;
(G) Evaluating program results against stated objectives; and
(H) Managing or supervising persons whose primary responsibilities
with regard to the program include such assignments as those described
in paragraph (a)(1)(i)(A) through (G) of this section.
(ii) Travel costs incurred for monitoring of subrecipients;
(iii) Administrative services performed under third-party contracts
or agreements, including general legal services, accounting services,
and audit services; and
(iv) Other costs for goods and services required for administration
of the program, including rental or purchase of equipment, insurance,
utilities, office supplies, and rental and maintenance (but not
purchase) of office space.
(2) Training on Continuum of Care requirements. Costs of providing
training on Continuum of Care requirements and attending HUD-sponsored
Continuum of Care trainings.
(3) Environmental review. Costs of carrying out the environmental
review responsibilities under Sec. 578.31.
(b) Sharing requirement. (1) UFAs. If the recipient is a UFA that
carries out a project, it may use up to 10 percent of the grant amount
awarded for the project on project administrative costs. The UFA must
share the remaining project administrative funds with its
subrecipients.
(2) Recipients that are not UFAs. If the recipient is not a UFA, it
must share at least 50 percent of project administrative funds with its
subrecipients.
Sec. 578.61 Relocation costs.
(a) In general. Relocation costs under the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 are
eligible.
(b) Eligible relocation costs. Eligible costs are costs to provide
relocation payments and other assistance to persons displaced by a
project assisted with grant funds in accordance with Sec. 578.83.
Sec. 578.63 Indirect costs.
(a) In general. Continuum of Care funds may be used to pay indirect
costs in accordance with OMB Circulars A-87 or A-122, as applicable.
(b) Allocation. Indirect costs may be allocated to each eligible
activity as provided in subpart D, so long as that allocation is
consistent with an indirect cost rate proposal developed in accordance
with OMB Circulars A-87 or A-122, as applicable.
(c) Expenditure limits. The indirect costs charged to an activity
subject to an expenditure limit under Sec. Sec. 578.39, 578.41, and
578.59 must be added to the direct costs charged for that activity when
determining the total costs subject to the expenditure limits.
Subpart E--High-Performing Communities
Sec. 578.65 Standards.
(a) In general. The collaborative applicant for a Continuum may
apply to HUD to have the Continuum be designated a high-performing
community (HPC). The designation shall be for grants awarded in the
same competition in which the designation is applied for and made.
(b) Applying for HPC designation. The application must be submitted
at such time and in such manner as HUD may require, must use HMIS data
where required to show the standards for qualifying are met, and must
contain such information as HUD requires, including at a minimum:
(1) A report showing how the Continuum of Care program funds
received in the preceding year were expended;
(2) A specific plan for how grant funds will be expended; and
(3) Information establishing that the Continuum of Care meets the
standards for HPCs.
(c) Standards for qualifying as an HPC. To qualify as an HPC, a
Continuum must demonstrate through:
(1) Reliable data generated by the Continuum of Care's HMIS that it
meets all of the following standards:
(i) Mean length of homelessness. Either the mean length of episode
of homelessness within the Continuum's geographic area is fewer than 20
days, or the mean length of episodes of homelessness for individuals or
families in similar circumstances was reduced by at least 10 percent
from the preceding federal fiscal year.
(ii) Reduced recidivism. Of individuals and families who leave
homelessness, less than 5 percent become homeless again at any time
within the next 2 years; or the percentage of individuals and families
in similar circumstances who become homeless again within 2 years after
leaving homelessness was decreased by at least 20 percent from the
preceding federal fiscal year.
(iii) HMIS coverage. The Continuum's HMIS must have a bed coverage
rate of 80 percent and a service volume coverage rate of 80 percent as
calculated in accordance with HUD's HMIS requirements.
(iv) Serving families and youth. With respect to Continuums that
served homeless families and youth defined as homeless under other
federal statutes in paragraph (3) of the definition of homeless in
Sec. 576.2:
(A) 95 percent of those families and youth did not become homeless
again within a 2-year period following termination of assistance; or
(B) 85 percent of those families achieved independent living in
permanent housing for at least 2 years following termination of
assistance.
(2) Reliable data generated from sources other than the Continuum's
HMIS that is provided in a narrative or other form prescribed by HUD
that it meets both of the following standards:
(i) Community action. All the metropolitan cities and counties
within the Continuum's geographic area have a
[[Page 45457]]
comprehensive outreach plan, including specific steps for identifying
homeless persons and referring them to appropriate housing and services
in that geographic area.
(ii) Renewing HPC status. If the Continuum was designated an HPC in
the previous federal fiscal year and used Continuum of Care grant funds
for activities described under Sec. 578.71, that such activities were
effective at reducing the number of individuals and families who became
homeless in that community.
Sec. 578.67 Publication of application.
HUD will publish the application to be designated an HPC through
the HUD Web site, for public comment as to whether the Continuum
seeking designation as an HPC meets the standards for being one.
Sec. 578.69 Cooperation among entities.
An HPC must cooperate with HUD in distributing information about
its successful efforts to reduce homelessness.
Sec. 578.71 HPC-eligible activities.
In addition to using grant funds for the eligible costs described
in subpart D of this part, recipients and subrecipients in Continuums
of Care designated as HPCs may also use grant funds to provide housing
relocation and stabilization services and short- and/or medium-term
rental assistance to individuals and families at risk of homelessness
as set forth in 24 CFR 576.103 and 24 CFR 576.104, if necessary to
prevent the individual or family from becoming homeless. Activities
must be carried out in accordance with the plan submitted in the
application. When carrying out housing relocation and stabilization
services and short- and/or medium-term rental assistance, the written
standards set forth in Sec. 578.7(a)(9)(v) and recordkeeping
requirements of 24 CFR 576.500 apply.
Subpart F--Program Requirements
Sec. 578.73 Matching requirements.
(a) In general. The recipient or subrecipient must match all grant
funds, except for leasing funds, with no less than 25 percent of funds
or in-kind contributions from other sources. For Continuum of Care
geographic areas in which there is more than one grant agreement, the
25 percent match must be provided on a grant-by-grant basis. Recipients
that are UFAs or are the sole recipient for their Continuum, may
provide match on a Continuum-wide basis. Cash match must be used for
the costs of activities that are eligible under subpart D of this part,
except that HPCs may use such match for the costs of activities that
are eligible under Sec. 578.71.
(b) Cash sources. A recipient or subrecipient may use funds from
any source, including any other federal sources (excluding Continuum of
Care program funds), as well as State, local, and private sources,
provided that funds from the source are not statutorily prohibited to
be used as a match. The recipient must ensure that any funds used to
satisfy the matching requirements of this section are eligible under
the laws governing the funds in order to be used as matching funds for
a grant awarded under this program.
(c) In-kind contributions. (1) The recipient or subrecipient may
use the value of any real property, equipment, goods, or services
contributed to the project as match, provided that if the recipient or
subrecipient had to pay for them with grant funds, the costs would have
been eligible under Subpart D, or, in the case of HPCs, eligible under
Sec. 578.71.
(2) The requirements of 24 CFR 84.23 and 85.24 apply.
(3) Before grant execution, services to be provided by a third
party must be documented by a memorandum of understanding (MOU) between
the recipient or subrecipient and the third party that will provide the
services. Services provided by individuals must be valued at rates
consistent with those ordinarily paid for similar work in the
recipient's or subrecipient's organization. If the recipient or
subrecipient does not have employees performing similar work, the rates
must be consistent with those ordinarily paid by other employers for
similar work in the same labor market.
(i) The MOU must establish the unconditional commitment, except for
selection to receive a grant, by the third party to provide the
services, the specific service to be provided, the profession of the
persons providing the service, and the hourly cost of the service to be
provided.
(ii) During the term of the grant, the recipient or subrecipient
must keep and make available, for inspection, records documenting the
service hours provided.
Sec. 578.75 General operations.
(a) State and local requirements. (1) Housing and facilities
constructed or rehabilitated with assistance under this part must meet
State or local building codes, and in the absence of State or local
building codes, the International Residential Code or International
Building Code (as applicable to the type of structure) of the
International Code Council.
(2) Services provided with assistance under this part must be
provided in compliance with all applicable State and local
requirements, including licensing requirements.
(b) Housing quality standards. Housing leased with Continuum of
Care program funds, or for which rental assistance payments are made
with Continuum of Care program funds, must meet the applicable housing
quality standards (HQS) under 24 CFR 982.401 of this title, except that
24 CFR 982.401(j) applies only to housing occupied by program
participants receiving tenant-based rental assistance. For housing
rehabilitated with funds under this part, the lead-based paint
requirements in 24 CFR part 35, subparts A, B, J, and R apply. For
housing that receives project-based or sponsor-based rental assistance,
24 CFR part 35, subparts A, B, H, and R apply. For residential property
for which funds under this part are used for acquisition, leasing,
services, or operating costs, 24 CFR part 35, subparts A, B, K, and R
apply.
(1) Before any assistance will be provided on behalf of a program
participant, the recipient, or subrecipient, must physically inspect
each unit to assure that the unit meets HQS. Assistance will not be
provided for units that fail to meet HQS, unless the owner corrects any
deficiencies within 30 days from the date of the initial inspection and
the recipient or subrecipient verifies that all deficiencies have been
corrected.
(2) Recipients or subrecipients must inspect all units at least
annually during the grant period to ensure that the units continue to
meet HQS.
(c) Suitable dwelling size. The dwelling unit must have at least
one bedroom or living/sleeping room for each two persons.
(1) Children of opposite sex, other than very young children, may
not be required to occupy the same bedroom or living/sleeping room.
(2) If household composition changes during the term of assistance,
recipients and subrecipients may relocate the household to a more
appropriately sized unit. The household must still have access to
appropriate supportive services.
(d) Meals. Each recipient and subrecipient of assistance under this
part who provides supportive housing for homeless persons with
disabilities must provide meals or meal preparation facilities for
residents.
(e) Ongoing assessment of supportive services. To the extent
practicable, each
[[Page 45458]]
project must provide supportive services for residents of the project
and homeless persons using the project, which may be designed by the
recipient or participants. Each recipient and subrecipient of
assistance under this part must conduct an ongoing assessment of the
supportive services needed by the residents of the project, the
availability of such services, and the coordination of services needed
to ensure long-term housing stability and must make adjustments, as
appropriate.
(f) Residential supervision. Each recipient and subrecipient of
assistance under this part must provide residential supervision as
necessary to facilitate the adequate provision of supportive services
to the residents of the housing throughout the term of the commitment
to operate supportive housing. Residential supervision may include the
employment of a full- or part-time residential supervisor with
sufficient knowledge to provide or to supervise the provision of
supportive services to the residents.
(g) Participation of homeless individuals. (1) Each recipient and
subrecipient must provide for the participation of not less than one
homeless individual or formerly homeless individual on the board of
directors or other equivalent policymaking entity of the recipient or
subrecipient, to the extent that such entity considers and makes
policies and decisions regarding any project, supportive services, or
assistance provided under this part. This requirement is waived if a
recipient or subrecipient is unable to meet such requirement and
obtains HUD approval for a plan to otherwise consult with homeless or
formerly homeless persons when considering and making policies and
decisions.
(2) Each recipient and subrecipient of assistance under this part
must, to the maximum extent practicable, involve homeless individuals
and families through employment; volunteer services; or otherwise in
constructing, rehabilitating, maintaining, and operating the project,
and in providing supportive services for the project.
(h) Supportive service agreement. Recipients and subrecipients may
require the program participants to take part in supportive services
that are not disability-related services provided through the project
as a condition of continued participation in the program. Examples of
disability-related services include, but are not limited to, mental
health services, outpatient health services, and provision of
medication, which are provided to a person with a disability to address
a condition caused by the disability. Notwithstanding this provision,
if the purpose of the project is to provide substance abuse treatment
services, recipients and subrecipients may require program participants
to take part in such services as a condition of continued participation
in the program.
(i) Retention of assistance after death, incarceration, or
institutionalization for more than 90 days of qualifying member. For
permanent supportive housing projects surviving, members of any
household who were living in a unit assisted under this part at the
time of the qualifying member's death, long-term incarceration, or
long-term institutionalization, have the right to rental assistance
under this section until the expiration of the lease in effect at the
time of the qualifying member's death, long-term incarceration, or
long-term institutionalization.
Sec. 578.77 Calculating occupancy charges and rent.
(a) Occupancy agreements and leases. Recipients and subrecipients
must have signed occupancy agreements or leases (or subleases) with
program participants residing in housing.
(b) Calculation of occupancy charges. Recipients and subrecipients
are not required to impose occupancy charges on program participants as
a condition of residing in the housing. However, if occupancy charges
are imposed, they may not exceed the highest of:
(1) 30 percent of the family's monthly adjusted income (adjustment
factors include the number of people in the family, age of family
members, medical expenses, and child-care expenses);
(2) 10 percent of the family's monthly income; or
(3) If the family is receiving payments for welfare assistance from
a public agency and a part of the payments (adjusted in accordance with
the family's actual housing costs) is specifically designated by the
agency to meet the family's housing costs, the portion of the payments
that is designated for housing costs.
(4) Income. Income must be calculated in accordance with 24 CFR
5.609 and 24 CFR 5.611(a). Recipients and subrecipients must examine a
program participant's income initially, and if there is a change in
family composition (e.g., birth of a child) or a decrease in the
resident's income during the year, the resident may request an interim
reexamination, and the occupancy charge will be adjusted accordingly.
(c) Resident rent. (1) Amount of rent. (i) Each program participant
on whose behalf rental assistance payments are made must pay a
contribution toward rent in accordance with section 3(a)(1) of the U.S.
Housing Act of 1937 (42 U.S.C. 1437a(a)(1)).
(ii) Income of program participants must be calculated in
accordance with 24 CFR 5.609 and 24 CFR 5.611(a).
(2) Review. Recipients or subrecipients must examine a program
participant's income initially, and at least annually thereafter, to
determine the amount of the contribution toward rent payable by the
program participant. Adjustments to a program participant's
contribution toward the rental payment must be made as changes in
income are identified.
(3) Verification. As a condition of participation in the program,
each program participant must agree to supply the information or
documentation necessary to verify the program participant's income.
Program participants must provide the recipient or subrecipient with
information at any time regarding changes in income or other
circumstances that may result in changes to a program participant's
contribution toward the rental payment.
Sec. 578.79 Limitation on transitional housing.
A homeless individual or family may remain in transitional housing
for a period longer than 24 months, if permanent housing for the
individual or family has not been located or if the individual or
family requires additional time to prepare for independent living.
However, HUD may discontinue assistance for a transitional housing
project if more than half of the homeless individuals or families
remain in that project longer than 24 months.
Sec. 578.81 Term of commitment, repayment of grants, and prevention
of undue benefits.
(a) In general. All recipients and subrecipients receiving grant
funds for acquisition, rehabilitation, or new construction must operate
the housing or provide supportive services in accordance with this
part, for at least 15 years from the date of initial occupancy or date
of initial service provision. Recipient and subrecipients must execute
and record a HUD-approved Declaration of Restrictive Covenants before
receiving payment of grant funds.
(b) Conversion. Recipients and subrecipients carrying out a project
that provides transitional or permanent housing or supportive services
in a structure may submit a request to HUD to convert a project for the
direct benefit of very low-income persons. The request must be made
while the project is operating as homeless housing or supportive
services for homeless
[[Page 45459]]
individuals and families, must be in writing, and must include an
explanation of why the project is no longer needed to provide
transitional or permanent housing or supportive services. The primary
factor in HUD's decision on the proposed conversion is the unmet need
for transitional or permanent housing or supportive services in the
Continuum of Care's geographic area.
(c) Repayment of grant funds. If a project is not operated as
transitional or permanent housing for 10 years following the date of
initial occupancy, HUD will require repayment of the entire amount of
the grant used for acquisition, rehabilitation, or new construction,
unless conversion of the project has been authorized under paragraph
(b) of this section. If the housing is used for such purposes for more
than 10 years, the payment amount will be reduced by 20 percentage
points for each year, beyond the 10-year period in which the project is
used for transitional or permanent housing.
(d) Prevention of undue benefits. Except as provided under
paragraph (e) of this section, upon any sale or other disposition of a
project site that received grant funds for acquisition, rehabilitation,
or new construction, occurring before the 15-year period, the recipient
must comply with such terms and conditions as HUD may prescribe to
prevent the recipient or subrecipient from unduly benefiting from such
sale or disposition.
(e) Exception. A recipient or subrecipient will not be required to
comply with the terms and conditions prescribed under paragraphs (c)
and (d) of this section if:
(1) The sale or disposition of the property used for the project
results in the use of the property for the direct benefit of very low-
income persons;
(2) All the proceeds are used to provide transitional or permanent
housing that meet the requirements of this part;
(3) Project-based rental assistance or operating cost assistance
from any federal program or an equivalent State or local program is no
longer made available and the project is meeting applicable performance
standards, provided that the portion of the project that had benefitted
from such assistance continues to meet the tenant income and rent
restrictions for low-income units under section 42(g) of the Internal
Revenue Code of 1986; or
(4) There are no individuals and families in the Continuum of Care
geographic area who are homeless, in which case the project may serve
individuals and families at risk of homelessness.
Sec. 578.83 Displacement, relocation, and acquisition.
(a) Minimizing displacement. Consistent with the other goals and
objectives of this part, recipients and subrecipients must ensure that
they have taken all reasonable steps to minimize the displacement of
persons (families, individuals, businesses, nonprofit organizations,
and farms) as a result of projects assisted under this part.
``Project,'' as used in this section, means any activity or series of
activities assisted with Continuum of Care funds received or
anticipated in any phase of an undertaking.
(b) Temporary relocation. (1) Existing Building Not Assisted under
Title IV of the McKinney-Vento Act. No tenant may be required to
relocate temporarily for a project if the building in which the project
is being undertaken or will be undertaken is not currently assisted
under Title IV of the McKinney-Vento Act. The absence of such
assistance to the building means the tenants are not homeless and the
tenants are therefore not eligible to receive assistance under the
Continuum of Care program. When a tenant moves for such a project under
conditions that cause the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 (URA), 42 U.S.C. 4601-4655,
to apply, the tenant must be treated as permanently displaced and
offered relocation assistance and payments consistent with paragraph
(c) of this section.
(2) Existing Transitional Housing or Permanent Housing Projects
Assisted Under Title IV of the McKinney-Vento Act. Consistent with
paragraph (c)(2)(ii) of this section, no program participant may be
required to relocate temporarily for a project if the person cannot be
offered a decent, safe, and sanitary unit in the same building or
complex upon project completion under reasonable terms and conditions.
The length of occupancy requirements in Sec. 578.79 may prevent a
program participant from returning to the property upon completion (See
paragraph (c)(2)(iii)(D) of this section). Any program participant who
has been temporarily relocated for a period beyond one year must be
treated as permanently displaced and offered relocation assistance and
payments consistent with paragraph (c) of this section. Program
participants temporarily relocated in accordance with the policies
described in this paragraph must be provided:
(i) Reimbursement for all reasonable out-of-pocket expenses
incurred in connection with the temporary relocation, including the
cost of moving to and from the temporarily occupied housing and any
increase in monthly rent/occupancy charges and utility costs; and
(ii) Appropriate advisory services, including reasonable advance
written notice of:
(A) The date and approximate duration of the temporary relocation;
(B) The location of the suitable, decent, safe, and sanitary
dwelling to be made available for the temporary period;
(C) The reasonable terms and conditions under which the program
participant will be able to occupy a suitable, decent, safe, and
sanitary dwelling in the building or complex upon completion of the
project; and
(D) The provisions of paragraph (b)(2)(i) of this section.
(c) Relocation assistance for displaced persons. (1) In general. A
displaced person (defined in paragraph (c)(2) of this section) must be
provided relocation assistance in accordance with the requirements of
the URA and implementing regulations at 49 CFR part 24. A displaced
person must be advised of his or her rights under the Fair Housing Act.
Whenever possible, minority persons must be given reasonable
opportunities to relocate to decent, safe, and sanitary replacement
dwellings, not located in an area of minority concentration, that are
within their financial means. This policy, however, does not require
providing a person a larger payment than is necessary to enable a
person to relocate to a comparable replacement dwelling. See 49 CFR
24.205(c)(2)(ii)(D).
(2) Displaced person. (i) For the purposes of paragraph (c) of this
section, the term ``displaced person'' means any person (family,
individual, business, nonprofit organization, or farm) that moves from
real property, or moves personal property from real property,
permanently, as a direct result of acquisition, rehabilitation, or
demolition for a project. This includes any permanent, involuntary move
for a project, including any permanent move from the real property that
is made:
(A) After the owner (or person in control of the site) issues a
notice to move permanently from the property, or refuses to renew an
expiring lease, if the move occurs after the date of the submission by
the recipient or subrecipient of an application for assistance to HUD
(or the recipient, as applicable) that is later approved and funded and
the recipient or subrecipient has site control as evidenced in
accordance with Sec. 578.25(b); or
[[Page 45460]]
(B) After the owner (or person in control of the site) issues a
notice to move permanently from the property, or refuses to renew an
expiring lease, if the move occurs after the date the recipient or
subrecipient obtains site control, as evidenced in accordance with
Sec. 578.25(b), if that occurs after the application for assistance;
or
(C) Before the date described under paragraph (c)(2)(i)(A) or (B)
of this section, if the recipient or HUD determines that the
displacement resulted directly from acquisition, rehabilitation, or
demolition for the project; or
(D) By a tenant of a building that is not assisted under Title IV
of the McKinney-Vento Act, if the tenant moves after execution of the
agreement covering the acquisition, rehabilitation, or demolition of
the property for the project; or
(ii) For the purposes of paragraph (c) of this section, the term
``displaced person'' means any person (family, individual, business,
nonprofit organization, or farm) that moves from real property, or
moves personal property from real property, permanently, as a direct
result of acquisition, rehabilitation, or demolition for a project.
This includes any permanent, involuntary move for a project that is
made by a program participant occupying transitional housing or
permanent housing assisted under Title IV of the McKinney-Vento Act, if
any one of the following three situations occurs:
(A) The program participant moves after execution of the agreement
covering the acquisition, rehabilitation, or demolition of the property
for the project and is either not eligible to return upon project
completion or the move occurs before the program participant is
provided written notice offering the program participant an opportunity
to occupy a suitable, decent, safe, and sanitary dwelling in the same
building or complex upon project completion under reasonable terms and
conditions. Such reasonable terms and conditions must include a lease
(or occupancy agreement, as applicable) consistent with Continuum of
Care program requirements, including a monthly rent or occupancy charge
and monthly utility costs that does not exceed the maximum amounts
established in Sec. 578.77; or
(B) The program participant is required to relocate temporarily,
does not return to the building or complex, and any one of the
following situations occurs:
(1) The program participant is not offered payment for all
reasonable out-of-pocket expenses incurred in connection with the
temporary relocation;
(2) The program participant is not eligible to return to the
building or complex upon project completion; or
(3) Other conditions of the temporary relocation are not
reasonable; or
(C) The program participant is required to move to another unit in
the same building or complex, and any one of the following situations
occurs:
(1) The program participant is not offered reimbursement for all
reasonable out-of-pocket expenses incurred in connection with the move;
(2) The program participant is not eligible to remain in the
building or complex upon project completion; or
(3) Other conditions of the move are not reasonable.
(iii) Notwithstanding the provisions of paragraph (c)(2)(i) or (ii)
of this section, a person does not qualify as a ``displaced person''
if:
(A) The person has been evicted for serious or repeated violation
of the terms and conditions of the lease or occupancy agreement; the
eviction complied with applicable federal, State, or local requirements
(see Sec. 578.91); and the recipient or subrecipient determines that
the eviction was not undertaken for the purpose of evading the
obligation to provide relocation assistance;
(B) The person moved into the property after the submission of the
application but, before signing a lease or occupancy agreement and
commencing occupancy, was provided written notice of the project's
possible impact on the person (e.g., the person may be displaced,
temporarily relocated, or incur a rent increase) and the fact that the
person would not qualify as a ``displaced person'' (or for any
relocation assistance provided under this section), as a result of the
project;
(C) The person is ineligible under 49 CFR 24.2(a)(9)(ii));
(D) The person is a program participant occupying transitional
housing or permanent housing assisted under Title IV of the Act who
must move as a direct result of the length-of- occupancy restriction
under Sec. 578.79; or
(E) HUD determines that the person was not displaced as a direct
result of acquisition, rehabilitation, or demolition for the project.
(iv) The recipient may request, at any time, HUD's determination of
whether a displacement is or would be covered under this section.
(3) Initiation of negotiations. For purposes of determining the
formula for computing replacement housing payment assistance to be
provided to a displaced person pursuant to this section, if the
displacement is a direct result of privately undertaken rehabilitation,
demolition, or acquisition of the real property, ``initiation of
negotiations'' means the execution of the agreement between the
recipient and the subrecipient, or between the recipient (or
subrecipient, as applicable) and the person owning or controlling the
property. In the case of an option contract to acquire property, the
initiation of negotiations does not become effective until execution of
a written agreement that creates a legally enforceable commitment to
proceed with the purchase, such as a purchase agreement.
(d) Real property acquisition requirements. Except for acquisitions
described in 49 CFR 24.101(b)(1) through (5), the URA and the
requirements of 49 CFR part 24, subpart B apply to any acquisition of
real property for a project where there are Continuum of Care funds in
any part of the project costs.
(e) Appeals. A person who disagrees with the recipient's (or
subrecipient's, if applicable) determination concerning whether the
person qualifies as a displaced person, or the amount of relocation
assistance for which the person is eligible, may file a written appeal
of that determination with the recipient (see 49 CFR 24.10). A low-
income person who is dissatisfied with the recipient's determination on
his or her appeal may submit a written request for review of that
determination to the local HUD field office.
Sec. 578.85 Timeliness standards.
(a) In general. Recipients must initiate approved activities and
projects promptly.
(b) Construction activities. Recipients of funds for rehabilitation
or new construction must meet the following standards:
(1) Construction activities must begin within 9 months of the later
of signing of the grant agreement or of signing an addendum to the
grant agreement authorizing use of grant funds for the project.
(2) Construction activities must be completed within 24 months of
signing the grant agreement.
(3) Activities that cannot begin until after construction
activities are completed must begin within 3 months of the date that
construction activities are completed.
(c) Distribution. A recipient that receives funds through this part
must:
(1) Distribute the funds to subrecipients (in advance of
expenditures by the subrecipients);
[[Page 45461]]
(2) Distribute the appropriate portion of the funds to a
subrecipient no later than 45 days after receiving an approvable
request for such distribution from the subrecipient; and
(3) Draw down funds at least once per quarter of the program year,
after eligible activities commence.
Sec. 578.87 Limitation on use of funds.
(a) Maintenance of effort. No assistance provided under this part
(or any State or local government funds used to supplement this
assistance) may be used to replace State or local funds previously
used, or designated for use, to assist homeless persons.
(b) Faith-based activities. (1) Equal treatment of program
participants and program beneficiaries. (i) Program participants.
Organizations that are religious or faith-based are eligible, on the
same basis as any other organization, to participate in the Continuum
of Care program. Neither the Federal Government nor a State or local
government receiving funds under the Continuum of Care program shall
discriminate against an organization on the basis of the organization's
religious character or affiliation. Recipients and subrecipients of
program funds shall not, in providing program assistance, discriminate
against a program participant or prospective program participant on the
basis of religion or religious belief.
(ii) Beneficiaries. In providing services supported in whole or in
part with federal financial assistance, and in their outreach
activities related to such services, program participants shall not
discriminate against current or prospective program beneficiaries on
the basis of religion, a religious belief, a refusal to hold a
religious belief, or a refusal to attend or participate in a religious
practice.
(2) Separation of explicitly religious activities. Recipients and
subrecipients of Continuum of Care funds that engage in explicitly
religious activities, including activities that involve overt religious
content such as worship, religious instruction, or proselytization,
must perform such activities and offer such services outside of
programs that are supported with federal financial assistance
separately, in time or location, from the programs or services funded
under this part, and participation in any such explicitly religious
activities must be voluntary for the program beneficiaries of the HUD-
funded programs or services.
(3) Religious identity. A faith-based organization that is a
recipient or subrecipient of Continuum of Care program funds is
eligible to use such funds as provided under the regulations of this
part without impairing its independence, autonomy, expression of
religious beliefs, or religious character. Such organization will
retain its independence from federal, State, and local government, and
may continue to carry out its mission, including the definition,
development, practice, and expression of its religious beliefs,
provided that it does not use direct program funds to support or engage
in any explicitly religious activities, including activities that
involve overt religious content, such as worship, religious
instruction, or proselytization, or any manner prohibited by law. Among
other things, faith-based organizations may use space in their
facilities to provide program-funded services, without removing or
altering religious art, icons, scriptures, or other religious symbols.
In addition, a Continuum of Care program-funded religious organization
retains its authority over its internal governance, and it may retain
religious terms in its organization's name, select its board members on
a religious basis, and include religious references in its
organization's mission statements and other governing documents.
(4) Alternative provider. If a program participant or prospective
program participant of the Continuum of Care program supported by HUD
objects to the religious character of an organization that provides
services under the program, that organization shall, within a
reasonably prompt time after the objection, undertake reasonable
efforts to identify and refer the program participant to an alternative
provider to which the prospective program participant has no objection.
Except for services provided by telephone, the Internet, or similar
means, the referral must be to an alternate provider in reasonable
geographic proximity to the organization making the referral. In making
the referral, the organization shall comply with applicable privacy
laws and regulations. Recipients and subrecipients shall document any
objections from program participants and prospective program
participants and any efforts to refer such participants to alternative
providers in accordance with the requirements of Sec. 578.103(a)(13).
Recipients shall ensure that all subrecipient agreements make
organizations receiving program funds aware of these requirements.
(5) Structures. Program funds may not be used for the acquisition,
construction, or rehabilitation of structures to the extent that those
structures are used for explicitly religious activities. Program funds
may be used for the acquisition, construction, or rehabilitation of
structures only to the extent that those structures are used for
conducting eligible activities under this part. When a structure is
used for both eligible and explicitly religious activities, program
funds may not exceed the cost of those portions of the acquisition, new
construction, or rehabilitation that are attributable to eligible
activities in accordance with the cost accounting requirements
applicable to the Continuum of Care program. Sanctuaries, chapels, or
other rooms that a Continuum of Care program-funded religious
congregation uses as its principal place of worship, however, are
ineligible for Continuum of Care program-funded improvements.
Disposition of real property after the term of the grant, or any change
in the use of the property during the term of the grant, is subject to
governmentwide regulations governing real property disposition (see 24
CFR parts 84 and 85).
(6) Supplemental funds. If a State or local government voluntarily
contributes its own funds to supplement federally funded activities,
the State or local government has the option to segregate the federal
funds or commingle them. However, if the funds are commingled, this
section applies to all of the commingled funds.
(c) Restriction on combining funds. In a single structure or
housing unit, the following types of assistance may not be combined:
(1) Leasing and acquisition, rehabilitation, or new construction;
(2) Tenant-based rental assistance and acquisition, rehabilitation,
or new construction;
(3) Short- or medium-term rental assistance and acquisition,
rehabilitation, or new construction;
(4) Rental assistance and leasing; or
(5) Rental assistance and operating.
(d) Program fees. Recipients and subrecipients may not charge
program participants program fees.
Sec. 578.89 Limitation on use of grant funds to serve persons defined
as homeless under other federal laws.
(a) Application requirement. Applicants that intend to serve
unaccompanied youth and families with children and youth defined as
homeless under other federal laws in paragraph (3) of the homeless
definition in Sec. 576.2 must demonstrate in their application, to
HUD's satisfaction, that the use of grant funds to serve such persons
is an equal or greater priority than serving persons defined as
homeless under paragraphs (1), (2), and (4) of the
[[Page 45462]]
definition of homeless in Sec. 576.2. To demonstrate that it is of
equal or greater priority, applicants must show that it is equally or
more cost effective in meeting the overall goals and objectives of the
plan submitted under section 427(b)(1)(B) of the Act, especially with
respect to children and unaccompanied youth.
(b) Limit. No more than 10 percent of the funds awarded to
recipients within a single Continuum of Care's geographic area may be
used to serve such persons.
(c) Exception. The 10 percent limitation does not apply to
Continuums in which the rate of homelessness, as calculated in the most
recent point-in-time count, is less than one-tenth of one percent of
the total population.
Sec. 578.91 Termination of assistance to program participants.
(a) Termination of assistance. The recipient or subrecipient may
terminate assistance to a program participant who violates program
requirements or conditions of occupancy. Termination under this section
does not bar the recipient or subrecipient from providing further
assistance at a later date to the same individual or family.
(b) Due process. In terminating assistance to a program
participant, the recipient or subrecipient must provide a formal
process that recognizes the rights of individuals receiving assistance
under the due process of law. This process, at a minimum, must consist
of:
(1) Providing the program participant with a written copy of the
program rules and the termination process before the participant begins
to receive assistance;
(2) Written notice to the program participant containing a clear
statement of the reasons for termination;
(3) A review of the decision, in which the program participant is
given the opportunity to present written or oral objections before a
person other than the person (or a subordinate of that person) who made
or approved the termination decision; and
(4) Prompt written notice of the final decision to the program
participant.
(c) Hard-to-house populations. Recipients and subrecipients that
are providing permanent supportive housing for hard-to-house
populations of homeless persons must exercise judgment and examine all
extenuating circumstances in determining when violations are serious
enough to warrant termination so that a program participant's
assistance is terminated only in the most severe cases.
Sec. 578.93 Fair Housing and Equal Opportunity.
(a) Nondiscrimination and equal opportunity requirements. The
nondiscrimination and equal opportunity requirements set forth in 24
CFR 5.105(a) are applicable.
(b) Housing for specific subpopulations. Recipients and
subrecipients may exclusively serve a particular homeless subpopulation
in transitional or permanent housing if the housing addresses a need
identified by the Continuum of Care for the geographic area and meets
one of the following:
(1) The housing may be limited to one sex where such housing
consists of a single structure with shared bedrooms or bathing
facilities such that the considerations of personal privacy and the
physical limitations of the configuration of the housing make it
appropriate for the housing to be limited to one sex;
(2) The housing may be limited to a specific subpopulation, so long
as admission does not discriminate against any protected class under
federal nondiscrimination laws in 24 CFR 5.105 (e.g., the housing may
be limited to homeless veterans, victims of domestic violence and their
children, or chronically homeless persons and families).
(3) The housing may be limited to families with children.
(4) If the housing has in residence at least one family with a
child under the age of 18, the housing may exclude registered sex
offenders and persons with a criminal record that includes a violent
crime from the project so long as the child resides in the housing.
(5) Sober housing may exclude persons who refuse to sign an
occupancy agreement or lease that prohibits program participants from
possessing, using, or being under the influence of illegal substances
and/or alcohol on the premises.
(6) If the housing is assisted with funds under a federal program
that is limited by federal statute or Executive Order to a specific
subpopulation, the housing may be limited to that subpopulation (e.g.,
housing also assisted with funding from the Housing Opportunities for
Persons with AIDS program under 24 CFR part 574 may be limited to
persons with acquired immunodeficiency syndrome or related diseases).
(7) Recipients may limit admission to or provide a preference for
the housing to subpopulations of homeless persons and families who need
the specialized supportive services that are provided in the housing
(e.g., substance abuse addiction treatment, domestic violence services,
or a high intensity package designed to meet the needs of hard-to-reach
homeless persons). While the housing may offer services for a
particular type of disability, no otherwise eligible individuals with
disabilities or families including an individual with a disability, who
may benefit from the services provided may be excluded on the grounds
that they do not have a particular disability.
(c) Affirmatively furthering fair housing. A recipient must
implement its programs in a manner that affirmatively furthers fair
housing, which means that the recipient must:
(1) Affirmatively market their housing and supportive services to
eligible persons regardless of race, color, national origin, religion,
sex, age, familial status, or handicap who are least likely to apply in
the absence of special outreach, and maintain records of those
marketing activities;
(2) Where a recipient encounters a condition or action that impedes
fair housing choice for current or prospective program participants,
provide such information to the jurisdiction that provided the
certification of consistency with the Consolidated Plan; and
(3) Provide program participants with information on rights and
remedies available under applicable federal, State and local fair
housing and civil rights laws.
(d) Accessibility and integrative housing and services for persons
with disabilities. Recipients and subrecipients must comply with the
accessibility requirements of the Fair Housing Act (24 CFR part 100),
Section 504 of the Rehabilitation Act of 1973 (24 CFR part 8), and
Titles II and III of the Americans with Disabilities Act, as applicable
(28 CFR parts 35 and 36). In accordance with the requirements of 24 CFR
8.4(d), recipients must ensure that their program's housing and
supportive services are provided in the most integrated setting
appropriate to the needs of persons with disabilities.
(e) Prohibition against involuntary family separation. The age and
gender of a child under age 18 must not be used as a basis for denying
any family's admission to a project that receives funds under this
part.
Sec. 578.95 Conflicts of interest.
(a) Procurement. For the procurement of property (goods, supplies,
or equipment) and services, the recipient and its subrecipients must
comply with the codes of conduct and conflict-of-interest requirements
under 24 CFR 85.36 (for governments) and 24 CFR
[[Page 45463]]
84.42 (for private nonprofit organizations).
(b) Continuum of Care board members. No Continuum of Care board
member may participate in or influence discussions or resulting
decisions concerning the award of a grant or other financial benefits
to the organization that the member represents.
(c) Organizational conflict. An organizational conflict of interest
arises when, because of activities or relationships with other persons
or organizations, the recipient or subrecipient is unable or
potentially unable to render impartial assistance in the provision of
any type or amount of assistance under this part, or when a covered
person's, as in paragraph (d)(1) of this section, objectivity in
performing work with respect to any activity assisted under this part
is or might be otherwise impaired. Such an organizational conflict
would arise when a board member of an applicant participates in
decision of the applicant concerning the award of a grant, or provision
of other financial benefits, to the organization that such member
represents. It would also arise when an employee of a recipient or
subrecipient participates in making rent reasonableness determinations
under Sec. 578.49(b)(2) and Sec. 578.51(g) and housing quality
inspections of property under Sec. 578.75(b) that the recipient,
subrecipient, or related entity owns.
(d) Other conflicts. For all other transactions and activities, the
following restrictions apply:
(1) No covered person, meaning a person who is an employee, agent,
consultant, officer, or elected or appointed official of the recipient
or its subrecipients and who exercises or has exercised any functions
or responsibilities with respect to activities assisted under this
part, or who is in a position to participate in a decision-making
process or gain inside information with regard to activities assisted
under this part, may obtain a financial interest or benefit from an
assisted activity, have a financial interest in any contract,
subcontract, or agreement with respect to an assisted activity, or have
a financial interest in the proceeds derived from an assisted activity,
either for him or herself or for those with whom he or she has
immediate family or business ties, during his or her tenure or during
the one-year period following his or her tenure.
(2) Exceptions. Upon the written request of the recipient, HUD may
grant an exception to the provisions of this section on a case-by-case
basis, taking into account the cumulative effects of the criteria in
paragraph (d)(2)(ii) of this section, provided that the recipient has
satisfactorily met the threshold requirements of paragraph (d)(2)(ii)
of this section.
(i) Threshold requirements. HUD will consider an exception only
after the recipient has provided the following documentation:
(A) Disclosure of the nature of the conflict, accompanied by a
written assurance, if the recipient is a government, that there has
been public disclosure of the conflict and a description of how the
public disclosure was made; and if the recipient is a private nonprofit
organization, that the conflict has been disclosed in accordance with
their written code of conduct or other conflict-of-interest policy; and
(B) An opinion of the recipient's attorney that the interest for
which the exception is sought would not violate State or local law, or
if the subrecipient is a private nonprofit organization, the exception
would not violate the organization's internal policies.
(ii) Factors to be considered for exceptions. In determining
whether to grant a requested exception after the recipient has
satisfactorily met the threshold requirements under paragraph (c)(3)(i)
of this section, HUD must conclude that the exception will serve to
further the purposes of the Continuum of Care program and the effective
and efficient administration of the recipient's or subrecipient's
project, taking into account the cumulative effect of the following
factors, as applicable:
(A) Whether the exception would provide a significant cost benefit
or an essential degree of expertise to the program or project that
would otherwise not be available;
(B) Whether an opportunity was provided for open competitive
bidding or negotiation;
(C) Whether the affected person has withdrawn from his or her
functions, responsibilities, or the decision-making process with
respect to the specific activity in question;
(D) Whether the interest or benefit was present before the affected
person was in the position described in paragraph (c)(1) of this
section;
(E) Whether undue hardship will result to the recipient, the
subrecipient, or the person affected, when weighed against the public
interest served by avoiding the prohibited conflict;
(F) Whether the person affected is a member of a group or class of
persons intended to be the beneficiaries of the assisted activity, and
the exception will permit such person to receive generally the same
interests or benefits as are being made available or provided to the
group or class; and
(G) Any other relevant considerations.
Sec. 578.97 Program income.
(a) Defined. Program income is the income received by the recipient
or subrecipient directly generated by a grant-supported activity.
(b) Use. Program income earned during the grant term shall be
retained by the recipient, and added to funds committed to the project
by HUD and the recipient, used for eligible activities in accordance
with the requirements of this part. Costs incident to the generation of
program income may be deducted from gross income to calculate program
income, provided that the costs have not been charged to grant funds.
(c) Rent and occupancy charges. Rents and occupancy charges
collected from program participants are program income. In addition,
rents and occupancy charges collected from residents of transitional
housing may be reserved, in whole or in part, to assist the residents
from whom they are collected to move to permanent housing.
Sec. 578.99 Applicability of other federal requirements.
In addition to the requirements set forth in 24 CFR part 5, use of
assistance provided under this part must comply with the following
federal requirements:
(a) Environmental review. Activities under this part are subject to
environmental review by HUD under 24 CFR part 50 as noted in Sec.
578.31.
(b) Section 6002 of the Solid Waste Disposal Act. State agencies
and agencies of a political subdivision of a state that are using
assistance under this part for procurement, and any person contracting
with such an agency with respect to work performed under an assisted
contract, must comply with the requirements of Section 6003 of the
Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act. In accordance with Section 6002, these agencies and
persons must:
(1) Procure items designated in guidelines of the Environmental
Protection Agency (EPA) at 40 CFR part 247 that contain the highest
percentage of recovered materials practicable, consistent with
maintaining a satisfactory level of competition, where the purchase
price of the item exceeds $10,000 or the value of the quantity acquired
in the preceding fiscal year exceeded $10,000;
(2) Procure solid waste management services in a manner that
maximizes energy and resource recovery; and
[[Page 45464]]
(3) Must have established an affirmative procurement program for
the procurement of recovered materials identified in the EPA
guidelines.
(c) Transparency Act Reporting. Section 872 of the Duncan Hunter
Defense Appropriations Act of 2009, and additional requirements
published by the Office of Management and Budget (OMB), requires
recipients to report subawards made either as pass-through awards,
subrecipient awards, or vendor awards in the Federal Government Web
site www.fsrs.gov or its successor system. The reporting of award and
subaward information is in accordance with the requirements of the
Federal Financial Assistance Accountability and Transparency Act of
2006, as amended by section 6202 of Public Law 110-252 and in OMB
Policy Guidance issued to the federal agencies on September 14, 2010
(75 FR 55669).
(d) The Coastal Barrier Resources Act of 1982 (16 U.S.C. 3501 et
seq.) may apply to proposals under this part, depending on the
assistance requested.
(e) Applicability of OMB Circulars. The requirements of 24 CFR part
85--Administrative Requirements for Grants and Cooperative Agreements
to State, Local, and Federally Recognized Indian Tribal Governments and
2 CFR part 225--Cost Principles for State, Local and Indian Tribal
Governments (OMB Circular A-87)--apply to governmental recipients and
subrecipients except where inconsistent with the provisions of this
part. The requirements of 24 CFR part 84--Uniform Administrative
Requirements for Grants and Agreements with Institutions of Higher
Education, Hospitals, and Other Non-Profit Organizations; 2 CFR part
230--Cost Principles for Non-Profit Organizations (OMB Circular A-122);
and 2 CFR part 220--Cost Principles for Education Institutions apply to
the nonprofit recipients and subrecipients, except where inconsistent
with the provisions of the McKinney-Vento Act or this part.
(f) Lead-based paint. The Lead-Based Paint Poisoning Prevention Act
(42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard
Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing
regulations at 24 CFR part 35, subparts A, B, H, J, K, M, and R apply
to activities under this program.
(g) Audit. Recipients and subrecipients must comply with the audit
requirements of OMB Circular A-133, ``Audits of States, Local
Governments, and Non-profit Organizations.''
(h) Davis-Bacon Act. The provisions of the Davis-Bacon Act do not
apply to this program.
(i) Section 3 of the Housing and Urban Development Act. Recipients
and subrecipients must, as applicable, comply with Section 3 of the
Housing and Urban Development Act of 1968 and its implementing
regulations at 24 CFR part 135, as applicable.
Subpart G--Grant Administration
Sec. 578.101 Technical assistance.
(a) Purpose. The purpose of Continuum of Care technical assistance
is to increase the effectiveness with which Continuums of Care,
eligible applicants, recipients, subrecipients, and UFAs implement and
administer their Continuum of Care planning process; improve their
capacity to prepare applications; prevent the separation of families in
projects funded under the Emergency Solutions Grants, Continuum of
Care, and Rural Housing Stability Assistance programs; and adopt and
provide best practices in housing and services for persons experiencing
homelessness.
(b) Defined. Technical assistance means the transfer of skills and
knowledge to entities that may need, but do not possess, such skills
and knowledge. The assistance may include, but is not limited to,
written information such as papers, manuals, guides, and brochures;
person-to-person exchanges; web-based curriculums, training and
Webinars, and their costs.
(c) Set-aside. HUD may set aside funds annually to provide
technical assistance, either directly by HUD staff or indirectly
through third-party providers.
(d) Awards. From time to time, as HUD determines the need, HUD may
advertise and competitively select providers to deliver technical
assistance. HUD may enter into contracts, grants, or cooperative
agreements, when necessary, to implement the technical assistance. HUD
may also enter into agreements with other federal agencies for awarding
the technical assistance funds.
Sec. 578.103 Recordkeeping requirements.
(a) In general. The recipient and its subrecipients must establish
and maintain standard operating procedures for ensuring that Continuum
of Care program funds are used in accordance with the requirements of
this part and must establish and maintain sufficient records to enable
HUD to determine whether the recipient and its subrecipients are
meeting the requirements of this part, including:
(1) Continuum of Care records. Each collaborative applicant must
keep the following documentation related to establishing and operating
a Continuum of Care:
(i) Evidence that the Board selected by the Continuum of Care meets
the requirements of Sec. 578.5(b);
(ii) Evidence that the Continuum has been established and operated
as set forth in subpart B of this part, including published agendas and
meeting minutes, an approved Governance Charter that is reviewed and
updated annually, a written process for selecting a board that is
reviewed and updated at least once every 5 years, evidence required for
designating a single HMIS for the Continuum, and monitoring reports of
recipients and subrecipients;
(iii) Evidence that the Continuum has prepared the application for
funds as set forth in Sec. 578.9, including the designation of the
eligible applicant to be the collaborative applicant.
(2) Unified funding agency records. UFAs that requested grant
amendments from HUD, as set forth in Sec. 578.105, must keep evidence
that the grant amendment was approved by the Continuum. This evidence
may include minutes of meetings at which the grant amendment was
discussed and approved.
(3) Homeless status. Acceptable evidence of the homeless as status
is set forth in 24 CFR 576.500(b).
(4) At risk of homelessness status. For those recipients and
subrecipients that serve persons at risk of homelessness, the recipient
or subrecipient must keep records that establish ``at risk of
homelessness'' status of each individual or family who receives
Continuum of Care homelessness prevention assistance. Acceptable
evidence is found in 24 CFR 576.500(c).
(5) Records of reasonable belief of imminent threat of harm. For
each program participant who moved to a different Continuum of Care due
to imminent threat of further domestic violence, dating violence,
sexual assault, or stalking under Sec. 578.51(c)(3), each recipient or
subrecipient of assistance under this part must retain:
(i) Documentation of the original incidence of domestic violence,
dating violence, sexual assault, or stalking, only if the original
violence is not already documented in the program participant's case
file. This may be written observation of the housing or service
provider; a letter or other documentation from a victim service
provider, social worker, legal assistance provider, pastoral counselor,
mental health provider, or other professional from whom the victim has
sought assistance; medical or dental records; court records or law
enforcement records; or written certification by the
[[Page 45465]]
program participant to whom the violence occurred or by the head of
household.
(ii) Documentation of the reasonable belief of imminent threat of
further domestic violence, dating violence, or sexual assault or
stalking, which would include threats from a third-party, such as a
friend or family member of the perpetrator of the violence. This may be
written observation by the housing or service provider; a letter or
other documentation from a victim service provider, social worker,
legal assistance provider, pastoral counselor, mental health provider,
or other professional from whom the victim has sought assistance;
current restraining order; recent court order or other court records;
law enforcement report or records; communication records from the
perpetrator of the violence or family members or friends of the
perpetrator of the violence, including emails, voicemails, text
messages, and social media posts; or a written certification by the
program participant to whom the violence occurred or the head of
household.
(6) Annual income. For each program participant who receives
housing assistance where rent or an occupancy charge is paid by the
program participant, the recipient or subrecipient must keep the
following documentation of annual income:
(i) Income evaluation form specified by HUD and completed by the
recipient or subrecipient; and
(ii) Source documents (e.g., most recent wage statement,
unemployment compensation statement, public benefits statement, bank
statement) for the assets held by the program participant and income
received before the date of the evaluation;
(iii) To the extent that source documents are unobtainable, a
written statement by the relevant third party (e.g., employer,
government benefits administrator) or the written certification by the
recipient's or subrecipient's intake staff of the oral verification by
the relevant third party of the income the program participant received
over the most recent period; or
(iv) To the extent that source documents and third-party
verification are unobtainable, the written certification by the program
participant of the amount of income that the program participant is
reasonably expected to receive over the 3-month period following the
evaluation.
(7) Program participant records. In addition to evidence of
``homeless'' status or ``at-risk-of-homelessness'' status, as
applicable, the recipient or subrecipient must keep records for each
program participant that document:
(i) The services and assistance provided to that program
participant, including evidence that the recipient or subrecipient has
conducted an annual assessment of services for those program
participants that remain in the program for more than a year and
adjusted the service package accordingly, and including case management
services as provided in Sec. 578.37(a)(1)(ii)(F); and
(ii) Where applicable, compliance with the termination of
assistance requirement in Sec. 578.91.
(8) Housing standards. The recipient or subrecipient must retain
documentation of compliance with the housing standards in Sec.
578.75(b), including inspection reports.
(9) Services provided. The recipient or subrecipient must document
the types of supportive services provided under the recipient's program
and the amounts spent on those services. The recipient or subrecipient
must keep record that these records were reviewed at least annually and
that the service package offered to program participants was adjusted
as necessary.
(10) Match. The recipient must keep records of the source and use
of contributions made to satisfy the match requirement in Sec. 578.73.
The records must indicate the grant and fiscal year for which each
matching contribution is counted. The records must show how the value
placed on third party in-kind contributions was derived. To the extent
feasible, volunteer services must be supported by the same methods that
the organization uses to support the allocation of regular personnel
costs.
(11) Conflicts of interest. The recipient and its subrecipients
must keep records to show compliance with the organizational conflict-
of-interest requirements in Sec. 578.95(c), the Continuum of Care
board conflict-of-interest requirements in Sec. 578.95(b), the other
conflict requirements in Sec. 578.95(d), a copy of the personal
conflict-of-interest policy developed and implemented to comply with
the requirements in Sec. 578.95, and records supporting exceptions to
the personal conflict-of-interest prohibitions.
(12) Homeless participation. The recipient or subrecipient must
document its compliance with the homeless participation requirements
under Sec. 578.75(g).
(13) Faith-based activities. The recipient and its subrecipients
must document their compliance with the faith-based activities
requirements under Sec. 578.87(b).
(14) Affirmatively Furthering Fair Housing. Recipients and
subrecipients must maintain copies of their marketing, outreach, and
other materials used to inform eligible persons of the program to
document compliance with the requirements in Sec. 578.93(c).
(15) Other federal requirements. The recipient and its
subrecipients must document their compliance with the federal
requirements in Sec. 578.99, as applicable.
(16) Subrecipients and contractors. (i) The recipient must retain
copies of all solicitations of and agreements with subrecipients,
records of all payment requests by and dates of payments made to
subrecipients, and documentation of all monitoring and sanctions of
subrecipients, as applicable.
(ii) The recipient must retain documentation of monitoring
subrecipients, including any monitoring findings and corrective actions
required.
(iii) The recipient and its subrecipients must retain copies of all
procurement contracts and documentation of compliance with the
procurement requirements in 24 CFR 85.36 and 24 CFR part 84.
(17) Other records specified by HUD. The recipient and
subrecipients must keep other records specified by HUD.
(b) Confidentiality. In addition to meeting the specific
confidentiality and security requirements for HMIS data, the recipient
and its subrecipients must develop and implement written procedures to
ensure:
(1) All records containing protected identifying information of any
individual or family who applies for and/or receives Continuum of Care
assistance will be kept secure and confidential;
(2) The address or location of any family violence project assisted
with Continuum of Care funds will not be made public, except with
written authorization of the person responsible for the operation of
the project; and
(3) The address or location of any housing of a program participant
will not be made public, except as provided under a preexisting privacy
policy of the recipient or subrecipient and consistent with State and
local laws regarding privacy and obligations of confidentiality;
(c) Period of record retention. All records pertaining to Continuum
of Care funds must be retained for the greater of 5 years or the period
specified below. Copies made by microfilming, photocopying, or similar
methods may be substituted for the original records.
(1) Documentation of each program participant's qualification as a
family or individual at risk of homelessness or as a homeless family or
individual and other program participant records must
[[Page 45466]]
be retained for 5 years after the expenditure of all funds from the
grant under which the program participant was served; and
(2) Where Continuum of Care funds are used for the acquisition, new
construction, or rehabilitation of a project site, records must be
retained until 15 years after the date that the project site is first
occupied, or used, by program participants.
(d) Access to records. (1) Federal Government rights.
Notwithstanding the confidentiality procedures established under
paragraph (b) of this section, HUD, the HUD Office of the Inspector
General, and the Comptroller General of the United States, or any of
their authorized representatives, must have the right of access to all
books, documents, papers, or other records of the recipient and its
subrecipients that are pertinent to the Continuum of Care grant, in
order to make audits, examinations, excerpts, and transcripts. These
rights of access are not limited to the required retention period, but
last as long as the records are retained.
(2) Public rights. The recipient must provide citizens, public
agencies, and other interested parties with reasonable access to
records regarding any uses of Continuum of Care funds the recipient
received during the preceding 5 years, consistent with State and local
laws regarding privacy and obligations of confidentiality and
confidentiality requirements in this part.
(e) Reports. In addition to the reporting requirements in 24 CFR
parts 84 and 85, the recipient must collect and report data on its use
of Continuum of Care funds in an Annual Performance Report (APR), as
well as in any additional reports as and when required by HUD. Projects
receiving grant funds only for acquisition, rehabilitation, or new
construction must submit APRs for 15 years from the date of initial
occupancy or the date of initial service provision, unless HUD provides
an exception under Sec. 578.81(e).
Sec. 578.105 Grant and project changes.
(a) For Unified Funding Agencies and Continuums having only one
recipient. (1) The recipient may not make any significant changes
without prior HUD approval, evidenced by a grant amendment signed by
HUD and the recipient. Significant grant changes include a change of
recipient, a shift in a single year of more than 10 percent of the
total amount awarded under the grant for one approved eligible activity
category to another activity and a permanent change in the
subpopulation served by any one project funded under the grant, as well
as a permanent proposed reduction in the total number of units funded
under the grant.
(2) Approval of substitution of the recipient is contingent on the
new recipient meeting the capacity criteria in the NOFA under which the
grant was awarded, or the most recent NOFA. Approval of shifting funds
between activities and changing subpopulations is contingent on the
change being necessary to better serve eligible persons within the
geographic area and ensuring that the priorities established under the
NOFA in which the grant was originally awarded, or the most recent
NOFA, are met.
(b) For Continuums having more than one recipient. (1) The
recipients or subrecipients may not make any significant changes to a
project without prior HUD approval, evidenced by a grant amendment
signed by HUD and the recipient. Significant changes include a change
of recipient, a change of project site, additions or deletions in the
types of eligible activities approved for a project, a shift of more
than 10 percent from one approved eligible activity to another, a
reduction in the number of units, and a change in the subpopulation
served.
(2) Approval of substitution of the recipient is contingent on the
new recipient meeting the capacity criteria in the NOFA under which the
grant was awarded, or the most recent NOFA. Approval of shifting funds
between activities and changing subpopulations is contingent on the
change being necessary to better serve eligible persons within the
geographic area and ensuring that the priorities established under the
NOFA in which the grant was originally awarded, or the most recent
NOFA, are met.
(c) Documentation of changes not requiring a grant amendment. Any
other changes to an approved grant or project must be fully documented
in the recipient's or subrecipient's records.
Sec. 578.107 Sanctions.
(a) Performance reviews. (1) HUD will review the performance of
each recipient in carrying out its responsibilities under this part,
with or without prior notice to the recipient. In conducting
performance reviews, HUD will rely primarily on information obtained
from the records and reports from the recipient and subrecipients, as
well as information from on-site monitoring, audit reports, and
information generated from HUD's financial and reporting systems (e.g.,
LOCCS and e-snaps) and HMIS. Where applicable, HUD may also consider
relevant information pertaining to the recipient's performance gained
from other sources, including citizen comments, complaint
determinations, and litigation.
(2) If HUD determines preliminarily that the recipient or one of
its subrecipients has not complied with a program requirement, HUD will
give the recipient notice of this determination and an opportunity to
demonstrate, within the time prescribed by HUD and on the basis of
substantial facts and data that the recipient has complied with the
requirements. HUD may change the method of payment to require the
recipient to submit documentation before payment and obtain HUD's prior
approval each time the recipient draws down funds. To obtain prior
approval, the recipient may be required to manually submit its payment
requests and supporting documentation to HUD in order to show that the
funds to be drawn down will be expended on eligible activities in
accordance with all program requirements.
(3) If the recipient fails to demonstrate to HUD's satisfaction
that the activities were carried out in compliance with program
requirements, HUD may take one or more of the remedial actions or
sanctions specified in paragraph (b) of this section.
(b) Remedial actions and sanctions. Remedial actions and sanctions
for a failure to meet a program requirement will be designed to prevent
a continuation of the deficiency; to mitigate, to the extent possible,
its adverse effects or consequences; and to prevent its recurrence.
(1) HUD may instruct the recipient to submit and comply with
proposals for action to correct, mitigate, and prevent noncompliance
with program requirements, including:
(i) Preparing and following a schedule of actions for carrying out
activities and projects affected by the noncompliance, including
schedules, timetables, and milestones necessary to implement the
affected activities and projects;
(ii) Establishing and following a management plan that assigns
responsibilities for carrying out the remedial actions;
(iii) Canceling or revising activities or projects likely to be
affected by the noncompliance, before expending grant funds for them;
(iv) Reprogramming grant funds that have not yet been expended from
affected activities or projects to other eligible activities or
projects;
(v) Suspending disbursement of grant funds for some or all
activities or projects;
(vi) Reducing or terminating the remaining grant of a subrecipient
and either reallocating those funds to other
[[Page 45467]]
subrecipients or returning funds to HUD; and
(vii) Making matching contributions before or as draws are made
from the recipient's grant.
(2) HUD may change the method of payment to a reimbursement basis.
(3) HUD may suspend payments to the extent HUD determines necessary
to preclude the further expenditure of funds for affected activities or
projects.
(4) HUD may continue the grant with a substitute recipient of HUD's
choosing.
(5) HUD may deny matching credit for all or part of the cost of the
affected activities and require the recipient to make further matching
contributions to make up for the contribution determined to be
ineligible.
(6) HUD may require the recipient to reimburse the recipient's line
of credit in an amount equal to the funds used for the affected
activities.
(7) HUD may reduce or terminate the remaining grant of a recipient.
(8) HUD may condition a future grant.
(9) HUD may take other remedies that are legally available.
(c) Recipient sanctions. If the recipient determines that a
subrecipient is not complying with a program requirement or its
subrecipient agreement, the recipient must take one of the actions
listed in paragraphs (a) and (b) of this section.
(d) Deobligation. HUD may deobligate funds for the following
reasons:
(1) If the timeliness standards in Sec. 578.85 are not met;
(2) If HUD determines that delays completing construction
activities for a project will mean that the funds for other funded
activities cannot reasonably be expected to be expended for eligible
costs during the remaining term of the grant;
(3) If the actual total cost of acquisition, rehabilitation, or new
construction for a project is less than the total cost agreed to in the
grant agreement;
(4) If the actual annual leasing costs, operating costs, supportive
services costs, rental assistance costs, or HMIS costs are less than
the total cost agreed to in the grant agreement for a one-year period;
(5) Program participants have not moved into units within 3 months
of the time that the units are available for occupancy; and
(6) The grant agreement may set forth in detail other circumstances
under which funds may be deobligated and other sanctions may be
imposed.
Sec. 578.109 Closeout.
(a) In general. Grants will be closed out in accordance with the
requirements of 24 CFR parts 84 and 85, and closeout procedures
established by HUD.
(b) Reports. Applicants must submit all reports required by HUD no
later than 90 days from the date of the end of the project's grant
term.
(c) Closeout agreement. Any obligations remaining as of the date of
the closeout must be covered by the terms of a closeout agreement. The
agreement will be prepared by HUD in consultation with the recipient.
The agreement must identify the grant being closed out, and include
provisions with respect to the following:
(1) Identification of any closeout costs or contingent liabilities
subject to payment with Continuum of Care program funds after the
closeout agreement is signed;
(2) Identification of any unused grant funds to be deobligated by
HUD;
(3) Identification of any program income on deposit in financial
institutions at the time the closeout agreement is signed;
(4) Description of the recipient's responsibility after closeout
for:
(i) Compliance with all program requirements in using program
income on deposit at the time the closeout agreement is signed and in
using any other remaining Continuum of Care program funds available for
closeout costs and contingent liabilities;
(ii) Use of real property assisted with Continuum of Care program
funds in accordance with the terms of commitment and principles;
(iii) Use of personal property purchased with Continuum of Care
program funds; and
(iv) Compliance with requirements governing program income received
subsequent to grant closeout.
(5) Other provisions appropriate to any special circumstances of
the grant closeout, in modification of or in addition to the
obligations in paragraphs (c)(1) through (4) of this section.
Dated: June 28, 2012.
Mark Johnston,
Assistant Secretary for Community Planning and Development (Acting).
[FR Doc. 2012-17546 Filed 7-30-12; 8:45 am]
BILLING CODE 4210-67-P