24 C.F.R. Subpart B—Program Requirements
Title 24 - Housing and Urban Development
A rental rehabilitation program shall comply with the following requirements: (a) Lower income benefit—(1) 100 percent benefit standard. Except as provided in paragraphs (a)(2) and (a)(3) of this section, all rental rehabilitation grant amounts must be used for the benefit of low-income families. (2) Reduction to 70 percent benefit standard. The 100 percent benefit standard will be reduced to 70 percent if the grantee certifies in its Program Description under §511.20 (or thereafter in a written amendment to its grant agreement) that: (i) The reduction is necessary to meet one or both of the following objectives: (A) To minimize the displacement of tenants in projects to be rehabilitated; or (B) To provide a reasonable margin for error due to unforeseen, sudden changes in neighborhood rent or for other reasonable contingencies; (ii) A rental rehabilitation program that meets the 100 percent benefit standard cannot be developed; and (iii) The public has been consulted regarding this inability. (3) Reduction to 50 percent benefit standard. The benefit standard will be reduced to not less than 50 percent only in extraordinary circumstances approved by HUD. Approval may be granted at the request of the grantee before undertaking any project that will have the effect of reducing the benefit for low-income families for the grantee's program below 70 percent, only where HUD determines that a reduction is necessary to meet an important community need and that the net program impact will strongly favor low-income families. Approval may be granted thereafter only where HUD determines that the grantee made reasonable efforts to meet the higher benefit standard, but was unable to do so because of circumstances beyond its control. (4) Definition of benefit. For purposes of this paragraph (a), benefit for low-income families will be considered to occur only where dwelling units in projects rehabilitated with rental rehabilitation grants are initially occupied by such families after rehabilitation. (b) Use of rental rehabilitation grants for housing for families. (1) Each grantee shall ensure that an equitable share of rental rehabilitation grant amounts will be used to assist in the provision of housing designed for occupancy by families with children, particularly families requiring three or more bedrooms. HUD will assure that on a national basis at least 15 percent of each year's rental rehabilitation grant amounts (excluding those grant amounts expended for administrative costs under §511.71) are used to rehabilitate units containing three or more bedrooms. HUD reserves the right prospectively to establish three or more bedroom unit targets for individual grantees if the national goal is in danger of not being met, or if HUD finds that a grantee's production of three or more bedroom units is significantly below that of grantees in similar circumstances. In addition, at least 70 percent of each grantee's annual rental rehabilitation grant must be used to rehabilitate units containing two or more bedrooms. HUD may approve a lower percentage standard submitted by the grantee in its Program Description under §511.20, or thereafter, based on HUD's determination that the lower standard is justified by factors such as a short waiting list of large families requiring assistance or the nature of the housing stock available for rehabilitation. (2) If a unit of general local government has an ordinance which requires rehabilitation to meet seismic standards, the grantee may use up to the full amount of its annual rental rehabilitation grant for Federal Fiscal Year 1988 and later years (including reallocations under §511.33(b) of funds for the same fiscal year) without regard to the requirements of paragraph (b)(1) of this section, but only to the extent it uses such grant amounts to rehabilitate projects to meet the seismic standards required by the local ordinance and to the extent these units in the rehabilitated project are initially occupied after rehabilitation by very low income families. The grantee or State recipient shall identify as prescribed by HUD in reports required under the C/MI System projects which have been rehabilitated to meet the requirements of a local seismic standards ordinance and contain units which are initially occupied by very low income families after rehabilitation. In determining compliance with paragraph (b)(1) of this section for annual grants under which one or more projects have been rehabilitated to meet the requirements of a local seismic standards ordinance, based on the grantee's or State recipient's reports, HUD will: (i) Calculate the maximum rental rehabilitation grant amount permissible under §511.11(e)(2)(i) for the project(s) rehabilitated to meet seismic standards; (ii) Calculate the maximum permissible rental rehabilitation grant amount for the 0 to 1 bedroom units in such project(s) initially occupied by very low income families after rehabilitation; (iii) Divide the amount calculated in §511.10(b)(2)(ii) by the amount calculated in §511.10(b)(2)(i); (iv) Multiply the quotient in §511.10(b)(2)(iii) by the actual rental rehabilitation grant amount expended for the project; and (v) Deduct the product in §511.10(b)(iv) from the amount of the grantee's annual rental rehabilitation grant. The grantee will be required to meet the 70 percent, or other approved level, under this §511.10(b) only as to the amount of its annual grant remaining after making the foregoing deduction. (c) Selection of neighborhoods—(1) Neighborhood median income and area. Rental rehabilitation grants shall only be used to assist the rehabilitation of projects located in neighborhoods where the median family income does not exceed 80 percent of the median family income for the area. For purposes of paragraph (c) of this section, neighborhood means an area (as determined by the grantee or, as appropriate, the State recipient) that surrounds a project and tends to determine, along with the condition and quality of the project and the dwelling units therein, the rents that are charged for such units. A neighborhood must have a median family income that does not exceed 80 percent of the median family income for the Metropolitan Statistical Area (MSA) in which it is located, or, in the case of a neighborhood not within an MSA, a median family income that does not exceed 80 percent of the median family income for the State's non-metropolitan areas, or at the grantee's option, the non-metropolitan county in which the neighborhood is located. (2) Neighborhood rent affordability. Rental rehabilitation grant amounts shall only be used to assist the rehabilitation of projects located in neighborhoods in which— (i) The rents for standard units are generally affordable to low-income families at the time of the selection of the neighborhood; and (ii) The character of the neighborhood indicates that the rents are not likely to increase at a rate significantly greater than the rate for rent increases that can reasonably be anticipated to occur in the market area for the 5-year period following the selection of the neighborhood. (d) [Reserved] (e) Rehabilitation standards. Each grantee or State recipient shall adopt written rehabilitation standards with which each assisted project must comply after rehabilitation. At a minimum, such standards shall require that after rehabilitation each unit in the entire project must meet the Section 8 Housing Quality Standards for Existing Housing contained at 24 CFR 882.109. (f) Eligible project costs. Eligible project costs include only: (1) The actual rehabilitation costs necessary to: (i) Correct substandard conditions, as reasonably defined by the grantee in its rehabilitation standards adopted under §511.10(e); (ii) Make essential improvements, as reasonably defined by the grantee or State recipient in its rehabilitation standards adopted under §511.10(e), including energy-related repairs, improvements necessary to permit the use of rehabilitated projects by handicapped persons, and activities of lead based paint hazards, as required by part 35 of this title; (iii) Repair major housing systems in danger of failure, as reasonably defined by the grantee or State recipient in its rehabilitation standards under §511.10(e); and (2) Other costs (soft costs) that are associated with the rehabilitation or rehabilitation financing; are not for services provided or costs incurred by the grantee, State recipient, or the PHA; and are not paid for as administrative costs under §511.71. Such costs may include (but are not limited to): (i) Architectural, engineering or related professional services required in the preparation of rehabilitation plans and drawings or writeups; (ii) Costs of processing and settling the financing for a project, such as private lender origination fees, credit reports, fees for title evidence, fees for recordation and filing of legal documents, building permits, attorneys' fees, private appraisal fees and fees for an independent rehabilitation cost estimate; (iii) Relocation payments made to tenants who are displaced by the rehabilitation activities; and (iv) Costs for the owner to provide information services to tenants as required by §§511.13(b), 511.14 (a)(3) and (a)(4), and 511.15(b). (3)(i) Rehabilitation eligible under §511.10(f)(1) is limited to work done after the commitment to the project (as defined in §511.2) is made, except to the extent that such costs also meet all of the following conditions: (A) Prior to undertaking any rehabilitation before the project is committed in the C/MI System (hereafter called “precommitment rehabilitation”), the owner and grantee or State recipient agree in writing to include such rehabilitation costs in the project cost, if and when the payment is approved for assistance under this part; (B) The precommitment rehabilitation costs meet all other requirements of this part, including compliance with the other Federal requirements cited in §511.16, where applicable. In particular, HUD approval of the grantee's certification of completion of environmental responsibilities, when required under 24 CFR part 58, must occur prior to execution of the written agreements to include the costs; and (C) The precommitment rehabilitation costs were incurred by the owner after the date of the Appropriation Act which made available the grant amounts for the project in question. (ii) Other project-related costs eligible under §511.10(f)(2) are also limited to those costs incurred after the commitment to the project is made by the grantee or State recipient and the project is set up in the C/MI System, except to the extent such costs also meet all of the following conditions: (A) The grantee or State recipient and the owner agreed in writing before the costs were incurred that such costs could be included in the project cost, if and when the project was approved for assistance under this part, or the grantee specifically agrees in writing to include such costs in the project cost on or before the date the project is set up in the C/MI System; (B) The costs also meet the conditions stated in §511.10(f)(3)(i)(B) and §511.10(f)(3)(i)(C). (4) For projects where the owner or other individuals are performing some or all of the rehabilitation work without compensation (to the extent permitted by §511.16(a)): (i) If the owner is not a practicing, licensed contractor, rehabilitation costs eligible under §511.10(f)(1) are limited to the cost of materials purchased by the owner and used on the project and the cost of other eligible work performed by practicing, licensed contractors, subcontractors or tradesmen on the project. (ii) If the owner is a practicing, licensed contractor, then eligible project costs may include an amount, in addition to that permitted under paragraph (f)(4)(i) of this section, for the contractor's paid labor, overhead and profit, similar in amount to what these items would be if the work were being performed on a project that was not owned by the contractor. (iii) Under either paragraph (f)(4)(i) or (f)(4)(ii) of this section, donated labor or work is not part of eligible project cost. (g) Project selection priorities—(1) Projects with units occupied by very low income families. While the program can be used for rehabilitating both occupied and vacant units, the grantee shall assure that priority is given to the selection of projects containing units that do not meet the rehabilitation standards adopted under §511.10(e) and which are occupied by very low income families before rehabilitation. (2) Units that are accessible to the handicapped. As stated in 24 CFR 8.30, the grantee shall, subject to the priority in §511.10(g)(1) and in accordance with other requirements in this part, give priority to the selection of projects that will result in dwelling units being made readily accessible to and usable by individuals with handicaps. [55 FR 20050, May 14, 1990, as amended at 55 FR 36612, Sept. 6, 1990; 61 FR 7061, Feb. 23, 1996; 64 FR 50225, Sept. 15, 1999] (a) Rehabilitation. To receive assistance under this part, a project must require rehabilitation, measured by whether the project before the assisted rehabilitation does not meet the rehabilitation standards under §511.10(e). If a project is terminated before completion of rehabilitation (as defined in §511.2), whether voluntarily by the grantee or otherwise, amounts equal to the rental rehabilitation grant amounts already dispersed for the project under the C/MI System are not eligible project costs, whether or not the grantee has already expended such grant amounts to pay for project costs. If such amount is not repaid, the grantee may be subject to corrective and remedial actions under §511.82. (b) Primarily residential rental use. Rental rehabilitation grants shall only be used to rehabilitate projects to be used for “primarily residential rental” use. For purposes of this part, a project is used for primarily residential rental purposes if at least 51 percent of the rentable floor space of the project is used for residential rental purposes after rehabilitation, except that in the case of a two-unit building, at least 50 percent of the rentable floor space after rehabilitation must be used for residential rental purposes after rehabilitation. “Primarily residential rental” use also includes cooperative or mutual housing that has a resale structure that enables the cooperative to maintain rents affordable to low-income families. (c) Privately owned real property—(1) General. Rental rehabilitation grant amounts shall only be used for eligible costs of projects that are in private ownership at the time the commitment is made to a specific local project, as defined in §511.2, or projects that are publicly owned at commitment which meet the requirements in §511.11(c)(2). (2) Publicly owned project at the time of commitment. Rental rehabilitation grant amounts may be used to assist publicly owned projects under the following conditions: (i)(A) For a publicly owned project where the commitment to a specific local project occurs on or after December 22, 1989, the grantee or State recipient—taking into consideration: the size of the project; the complexity of the rehabilitation; the anticipated time necessary to identify, and transfer to, an eligible private owner; and other relevant factors—must determine that it will commence rehabilitation within 90 days of commitment under the C/MI System, and that rehabilitation will be completed and the project transferred to an eligible private owner within the two years and 90 days from the date of commitment in the C/MI system or the time remaining under §511.33(c) for expenditure of the rental rehabilitation grant amounts committed to the project, whichever is shorter. The Project Completion Report under the C/MI system identifying the private entity to which ownership has been transferred shall be submitted within 90 days of the final draw, but not later than two years and 90 days after the date of commitment. (B) For a publicly owned project where the commitment to a specific local project occurred before December 22, 1989, the grantee or State recipient—taking into consideration: the size of the project; the complexity of the rehabilitation; the anticipated time necessary to identify, and transfer to, an eligible private owner; and other relevant factors—must determine that the rehabilitation will be completed and the project transferred to an eligible private owner within the time remaining for expenditure of the rental rehabilitation fiscal year grant amounts proposed to be used for the project in accordance with §511.33(c) before drawing down rental rehabilitation grant amounts for the project. The Project Completion Report identifying the private entity to which ownership has been transferred shall be submitted within 90 days of the final draw. (ii) If the grants or State recipient fails to complete the rehabilitation, transfer the property to an eligible private owner (which includes obtaining the agreements from the new owner required by this part, including §511.11(d)), and submit the Project Completion Report within the allowable period, then HUD will suspend the grantee's and/or the State recipient's authority to set up any new projects in the C/MI System and may require the grantee to repay to its grant account in the C/MI System all rental rehabilitation grant amounts drawn down with respect to the project. If payment is not received, HUD may proceed to deobligate up to the full amount of the grantee's remaining uncommitted rental rehabilitation grant amounts, whether or not such grant amounts otherwise are available for deobligation under §511.33(c). A suspension of set-up authority shall terminate when the grantee or State recipient has transferred the project to private ownership, as required by this part, and has submitted a Project Completion Report under the C/MI System identifying the private owner, or repays its grant account as required by this paragraph, or HUD lifts the suspension at its discretion. (iii) After the grantee has repaid the grant amounts to its grant account as provided in §511.11(c)(2)(ii), the grant amounts may be committed and expended by the grantee for new projects within the periods originally allowed for these grant amounts, or deobligated by HUD under §511.33 or §511.82 to the same extent as any other grant amounts subject to this part. (3) Private, non-profit organizations. Non-profit organizations that are privately controlled are eligible to receive rental rehabilitation grant amounts under the same terms and conditions as any other private project owner under this part. For purposes of this requirement, non-profit organizations must have governing bodies which are controlled 51 percent or more by private individuals who are acting in a private capacity. For purposes of this provision, an individual is deemed to be acting in a private capacity if he or she is not legally bound to act on behalf of a public body (including the grantee), and is not being paid by a public body (including the grantee) while performing functions in connection with the non-profit organization. (4) Manufactured housing units. Notwithstanding whether they are classified as real or personal property under applicable State law, manufactured housing units may be assisted under this part under the following conditions: (i) The unit is on a permanent foundation; (ii) The utility hook-ups are permanent; (iii) The unit is designed for use as a permanent residence; (iv) The unit also meets the Section 8 Housing Quality Standards for Manufactured Homes set forth in 24 CFR 882.109(o). (5) Religious organizations. Rental Rehabilitation grant amounts may be used to assist the rehabilitation of properties formerly owned by religious organizations, such as churches, provided that both of the following conditions are met: (i) Title to the property to be rehabilitated must be transferred to a wholly secular entity prior to commitment, and this entity shall comply with all obligations of a project owner under this part. The entity may be an existing or newly established entity (which may be an entity established, but not controlled, by the religious organization); and (ii) The completed project must be used exclusively by the owner entity for secular purposes, available to all persons regardless of religion, for the period and subject to the obligations described in §511.11(d). In particular, there must be no religious or membership criteria for tenants of the property. (d) Long-term owner obligations. (1) Each project assisted under this part is subject to the following specific obligations for a period of at least ten years after completion of the rehabilitation: (i) The project shall remain in private ownership and in primarily residential rental use for the required period, unless the project is sold to another private owner who agrees to continue to manage the property in accordance with Rental Rehabilitation Program requirements for the remainder of the required period, or a hardship exception is approved by the grantee for reasons that occur after completion of the rehabilitation. (ii) The owner shall not convert the units in the project to condominium ownership or any form of cooperative ownership not eligible for assistance under this part for the required period. (iii) The owner shall not discriminate against prospective tenants on the basis of their receipt of, or eligibility for, housing assistance under any Federal, State or local housing assistance program or, except for a housing project for elderly persons, on the basis that the tenants have a minor child or children who will be residing with them, for the required period. (iv) The owner shall comply with the nondiscrimination and equal opportunity requirements and with the affirmative marketing requirements and procedures adopted under §511.13, for the required period. (2)(i) With respect to projects which are privately owned when the commitment to a specific local project is made, the obligations required under §511.10 (d)(1) and (d)(3) shall be included in the written, legally binding commitment or project agreement between the owner and the grantee or State recipient which is executed on or before the date the project is committed. (ii) With respect to projects which are publicly owned when the commitment is made, these obligations shall be included in a written agreement between the grantee or State recipient and the private owner, executed on or before completion of rehabilitation. (iii) By drawing down rental rehabilitation grant amounts for a project which is publicly owned when the commitment is made, the public owner itself accepts the obligations of this part, including §511.11(d)(1)(i) (except for private ownership before completion of rehabilitation), (d)(1)(ii), (d)(1)(iii) and (d)(1)((iv) and agrees to include these obligations in the agreement with the private owner required by §511.11(d)(2)(ii). (3) The grantee or State recipient shall ensure that the written agreements with private owners required by §511.11 (d)(1) and (d)(2) are legally enforceable, are recorded against the project in the local land records (or in the case of a manufactured housing unit, against the unit in the manner appropriate for such real or personal property under State and local law), and that the agreements contain remedies adequate to enforce their provisions. A remedy will be deemed adequate for purposes of this paragraph if it requires the entire amount of the rental rehabilitation grant assistance for the project to be a secondary lien secured by the property, repayable by the owner, or any subsequent transferee, upon a prohibited conversion, sale or use in an amount equal to the entire amount of such assistance, less 10 percent for each full year after completion of the project up to the time the prohibited conversion, sale or use occurs, except in the case of projects of 25 units or more. For projects of 25 units or more the entire amount of such assistance shall be repaid if the project is converted, sold or used in violation of this section during the 10-year period. Such lien may not be subordinate to a lien in favor of the grantee, State recipient or any person with whom the owner has business or family ties, except as may be necessary to secure federally tax exempt financing for the project. (e) Maximum rental rehabilitation grant amounts for projects. (1) Rental rehabilitation grant amounts used for any project shall not exceed 50 percent of the total eligible project costs, as defined in §511.10(f). However, where refinancing of existing indebtedness is involved, the grantee may approve a higher amount for a project where it determines, and documents in its records, that: (i)(A) Rehabilitation of the project is important to the overall stability of the neighborhood (as defined at §511.10(c)(2)) and for the provision of housing at rents affordable to low-income families, or (B) The project has special costs to facilitate use by the elderly or handicapped; and (ii) The refinancing and the higher grant amount are necessary to make the project feasible. This higher grant amount may not exceed the lesser of 75 percent of the eligible project costs or 50 percent of the sum of the eligible project costs and the amount necessary to refinance the existing indebtedness. (2) Per unit. (i) Except as provided in paragraph (e)(2)(ii) of this section, the rental rehabilitation grant amounts used for any project may not exceed the sum of the following dollar amounts for dwelling units in the project: (A) $5,000 per unit for units with no bedrooms; (B) $6,500 per unit for units with one bedroom; (C) $7,500 per unit for units with two bedrooms; and (D) $8,500 per unit for units with three or more bedrooms. (ii) HUD may approve higher rental rehabilitation grant amounts for projects in areas of high material and labor costs where the grantee demonstrates to HUD's satisfaction that a higher amount is necessary to conduct a rental rehabilitation program in the area and that it has taken every appropriate step to contain the amount of the rental rehabilitation grant within the dollar limits specified in paragraph (e)(2)(i) of this section. These higher amounts will be determined as follows: (A) HUD may approve higher per unit amounts for a unit of general local government's entire rental rehabilitation program up to, but not to exceed, an amount derived by applying the HUD-approved High Cost Percentage for Base Cities for the area to the applicable per unit dollar limits; (B) HUD may, on a project-by-project basis, increase the level permitted under §511.11(e)(2)(i) by multiplying the original limits by up to a maximum of 140 percent and then adding the product to the original limits. Therefore, the maximum high cost grant amount per project that may be approved is 240 percent of the original per unit limits. (f) Rent or occupancy restrictions. (1) A project rehabilitated with rental rehabilitation grant amounts under this part is not subject to State or local rent control unless the rent control requirements or agreements: (i) Were entered into under a State law or local ordinance of general applicability that was enacted and in effect in the jurisdiction before November 30, 1983 and (ii) Apply generally to projects not assisted under the Rental Rehabilitation Program. (2) State and local rent controls expressly preempted by paragraph (f) of this section include, but are not limited to, rent laws or ordinances, rent regulating agreements, rent regulations, low income occupancy agreements extending beyond one year from the date of completion of rehabilitation of a project, financial penalties for failure to achieve certain low income occupancy or rent projections, or restrictions on return on investment or other similar policies that prevent an owner, whether for-profit or non-profit, from maximizing return or setting rent levels as the owner chooses. Grantees or State recipients shall not include any preempted rent or occupancy restrictions in any commitments or project agreements with the owners of Rental Rehabilitation projects. (g) [Reserved] [55 FR 20050, May 14, 1990, as amended at 61 FR 7061, Feb. 23, 1996] (a) No person who is an employee, agent, consultant, officer, or elected or appointed official of the grantee or State recipient (or of any public agency that performs administrative functions in the RRP) that receives rental rehabilitation grant amounts and who exercises or has exercised any functions or responsibilities with respect to assisted rehabilitation activities, or who is in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from the activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during their tenure or for one year thereafter. (b) The appropriate HUD Field Office may grant an exception to the exclusion in paragraph (a) of the section on a case-by-case basis when it determines that such an exception will serve to further the purposes of the Rental Rehabilitation Program and the effective and efficient administration of the local rental rehabilitation program or the project. An exception may be considered only after the grantee or State recipient has provided a disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict and a description of how the public disclosure was made and an opinion of the grantee's or State recipient's attorney that the interest for which the exception is sought would not violate State or local laws. In determining whether to grant a requested exception, HUD shall consider the cumulative effect of the following factors, where applicable: (1) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the local rental rehabilitation program or the project that would otherwise not be available; (2) Whether an opportunity was provided for open competitive bidding or negotiation; (3) Whether the person affected is a member of a group or class intended to be the beneficiaries of the rehabilitation 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; (4) Whether the affected person has withdrawn from his or her functions or responsibilities, or the decisionmaking process, with respect to the specific rehabilitation activity in question; (5) Whether the interest or benefit was present before the affected person was in a position as described in this paragraph; (6) Whether undue hardship will result either to the grantee, State recipient or the person affected when weighed against the public interest served by avoiding the prohibited conflict; and (7) Any other relevant considerations. In addition to the nondiscrimination and equal opportunity requirements set forth in 24 CFR part 5, the following requirements apply: (a) Affirmative marketing. The grantee shall adopt appropriate procedures and requirements for affirmatively marketing units in rehabilitated rental rehabilitation projects through the provision of information regarding the availability of units that are vacant after rehabilitation or that later become vacant. Affirmative marketing steps consist of good faith efforts to provide information and otherwise to attract eligible persons from all racial, ethnic and gender groups in the housing market area to the available housing. (These affirmative marketing procedures will not apply to units rented to families with housing assistance provided by a PHA.) The grantee shall establish procedures, requirements and assessment criteria for marketing units in the Rental Rehabilitation Program that are appropriate to accomplish affirmative marketing objectives. The grantee shall annually assess the affirmative marketing program to determine: Good faith efforts that have been made to carry out such procedures and requirements; objectives that have been met; and corrective actions that are required. (1) For each grantee, the affirmative marketing requirements and procedures adopted must include: (i) Methods for how the grantee will inform the public, owners and potential tenants about Federal fair housing laws and the grantee's affirmative marketing policy (such as the use of the Equal Housing Opportunity logotype or slogan in press releases and solicitations for owners, and written communications to fair housing and other groups); (ii) Requirements and practices each owner (including the grantee or any other public owner) must adhere to in order to carry out the grantee's affirmative marketing procedures and requirements (e.g., use of commercial media, use of community contacts, use of the Equal Housing Opportunity logotype or slogan, display of fair housing poster); (iii) Procedures to be used by owners (including the grantee or any other public owner) to inform and solicit applications from persons in the housing market area who are not likely to apply for the housing without special outreach (e.g., use of community organizations, churches, employment centers, fair housing groups or housing counseling agencies); (iv) Records that will be kept describing efforts taken by the grantee and by the owners (including the grantee or any other public owner) to affirmatively market units and records to assess the results of these actions; (v) A description of how the grantee will assess the affirmative marketing efforts of owners (including the grantee or any other public owner), and the results of those efforts, and what corrective actions will be taken where an owner fails to follow these affirmative marketing requirements. (2) For States distributing rental rehabilitation grant amounts to units of general local government, the affirmative marketing procedures and requirements shall also set out the actions that State recipients must take to meet the objectives set out in §511.13(b), the record keeping and reporting requirements such State will require of State recipients, and the procedures that such State will follow to determine what action has been taken by State recipients to assess the results of these affirmative marketing efforts. (3) The grantee or State recipient shall require compliance with the conditions of its affirmative marketing requirements and procedures adopted under paragraph (b) of this section by means of an agreement with the owner that shall be applicable for a period of ten years beginning on the date of completion of rehabilitation, as defined in §511.2. (b) [Reserved] [55 FR 20050, May 14, 1990, as amended at 61 FR 5208, Feb. 9, 1996] (a) General policies. The grantee and any State recipient shall: (1) Ensure that the rehabilitation will not cause the displacement of any very low income family by a family that is not a very low income family. (2) Consistent with the other goals and objectives of this part, minimize displacement. To the extent feasible, residential occupants shall be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary and affordable dwelling unit in the project (see paragraph (g)(1)(iii) of this section). (3) Administer all phases of the RRP, including the selection of units to be rehabilitated and the provision of notices, counseling, referrals, other advisory services and relocation payments, in a manner that does not result in discrimination because of race, color, religion, sex, age, handicap, familial status or national origin. (4) Adopt and make public a written tenant assistance policy (TAP) that describes the assistance that will be provided to tenants who reside in the project and which includes a statement of nondiscrimination policy consistent with paragraph (a)(3) of this section. The TAP shall comply with the provisions of this section. Each tenant in the project shall be provided a copy of the TAP and advised of the impact of the project on him or her. For privately owned projects, such notice shall be given immediately after submission of the application by the owner of a property, or earlier. For publicly owned projects, such notice shall be given immediately after the commitment (defined in §511.2), or earlier. (b) Relocation assistance for displaced persons. A displaced person (defined in paragraph (g) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, 49 CFR part 24, which contains the government-wide regulations implementing the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601–4655). Tenants shall be advised of their rights under the Fair Housing Act (42 U.S.C. 3601–19) and of replacement housing opportunities in such a manner that, to the extent possible, tenants are provided a choice between relocating within their own neighborhoods and other neighborhoods consistent with the grantee's or State recipient's responsibility to affirmatively further fair housing. As permitted under 49 CFR 24.2(k), for purposes of making replacement housing payments, the term initiation of negotiations means: (1) For a privately owned project, execution of the legally binding agreement between the grantee or State recipient and the project owner under which the grantee or State recipient agrees to provide rental rehabilitation grant amounts for the project. (2) For a publicly owned project, the commitment as defined in §511.2 or such earlier notice as the grantee or State recipient determines to be appropriate. (c) Real property acquisition requirements. The acquisition of real property for a project is subject to the URA and the requirements described in 49 CFR part 24, subpart B. (d) Application of Community Development Block Grant (CDBG) requirements. If CDBG funds are used to pay any part of the cost of the rehabilitation activities, as described in 24 CFR 570.202(b) or similar eligible activities, the project is subject to the requirements of section 104(d) of the Housing and Community Development Act of 1974, as amended, and implementing regulations at 24 CFR 570.606(b) (Entitlement Program and HUD-administered Small Cities Program) and 24 CFR 570.496a(b) (State CDBG Program). (e) Appeals. If a person disagrees with the grantee's or State recipient's determination concerning the person's eligibility for, or the amount of, relocation assistance, the person may file a written appeal (request for reconsideration) of that determination with the grantee or State recipient. The appeal procedures to be followed are described in 49 CFR 24.10. A low-income person that has been displaced from a dwelling may submit a further written request for review of the grantee's decision to the appropriate HUD Field Office. However, a low-income person's request for review of a State recipient's decision shall be submitted to the State grantee. (f) Compliance responsibility. (1) The grantee and any State recipient are responsible for ensuring compliance with the URA, the regulations at 49 CFR part 24, and the requirements of this section, notwithstanding any third party's contractual obligation to the grantee or State recipient to comply with these provisions. (2) The cost of required assistance may be paid from local public funds, funds available under the rules of this part, or funds available from other sources. (3) The grantee or State recipient must maintain records in sufficient detail to demonstrate compliance with the provisions of this section. (g) Definition of a displaced person. (1) For purposes 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 and involuntarily as a direct result of rehabilitation, demolition or acquisition for a project assisted under this part. Permanent, involuntary moves for an assisted project include a permanent move from the project that is made: (i) After notice by the property owner, grantee, or State recipient to move permanently from the property, if the move occurs on or after the following date: (A) If the notice is provided by the property owner, the date that the owner (or person in control of the site) submits a request for assistance under this part that is later approved and funded. (B) If the notice is provided by the grantee or State recipient, the date of the commitment to a specific local project. (ii) Before the date described in paragraph (g)(1)(i) of this section, if either the grantee or HUD determines that the displacement resulted directly from rehabilitation, acquisition or demolition for the project; (iii) By a tenant-occupant of a dwelling unit after the initiation of negotiations, if: (A) The tenant has not been provided a reasonable opportunity to lease and occupy a suitable, decent, safe and sanitary dwelling in the project following the completion of the project at a rent, including estimated average utility costs, that does not exceed the greater of: (1) The tenant's rent and estimated average utility costs before the commitment; or (2) The total tenant payment, as determined under 24 CFR 813.107, if the tenant is low-income, or 30 percent of gross household income if the tenant is not low-income; or (B) The tenant has been required to relocate temporarily, but: (1) The tenant is not offered payment 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 rent and utility costs, or other conditions of the temporary relocation are not reasonable, and (2) The tenant does not return to the project; or (C) The tenant is required to move to another unit within the project but is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move or other conditions of the move are not reasonable. (2) A person does not qualify as a displaced person, if: (i) The person has been evicted for cause based upon a serious or repeated violation of material terms of the lease or occupancy agreement, and the grantee or State recipient determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance; or (ii) The person moved into the property after the owner's submission of the request for assistance but, before commencing occupancy, received written notice of the owner's intent to terminate the person's occupancy for the project; or (iii) The person is ineligible under 49 CFR 24.2(g)(2); or (iv) The grantee or State recipient determines that the person was not displaced as a direct result of rehabilitation, acquisition or demolition of the project, and the HUD Field Office concurs in that determination. (3) The grantee may, at any time, ask HUD to determine whether a specific displacement is or would be covered by these rules. 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 part 35, subparts A, B, J, K, and R of this title apply to activities under these programs. [64 FR 50225, Sept. 15, 1999] In addition to the Federal requirements set forth in 24 CFR part 5, Grantees and, where applicable, State recipients shall comply with the following requirements: (a) Labor standards. All laborers and mechanics (except laborers and mechanics employed by a State or local government acting as the principal contractor on the project) employed in the rehabilitation of a project assisted under the Rental Rehabilitation Program that contains 12 or more dwelling units after rehabilitation shall be paid wages at rates not less than those prevailing on similar rehabilitation in the locality, if such a rate category exists, or other appropriate rate as determined by the Secretary of Labor in accordance with the Davis-Bacon Act (40 U.S.C. 276a—276a–5), and contracts involving their employment shall be subject to the provisions, as applicable, of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327–333). (If CDBG funds are used to finance certain costs for projects of 8 or more units, these labor standards may apply (see 24 CFR 570.603).) If a project is subject to Federal labor standards requirements, individuals are not permitted to perform work thereon which is covered by such requirements without compensation in accordance with such requirements, except that persons who own a project in their own name may personally perform uncompensated work on their own projects. Grantees, State recipients, owners, contractors and subcontractors shall comply with applicable implementing regulations in 29 CFR parts 1, 3, and 5. (b) Environment and historic preservation. Section 104(g) of the Housing and Community Development Act of 1974 and 24 CFR part 58, which prescribe procedures for compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321–4361), and the additional laws and authorities listed at 24 CFR 58.5. (c) Pet ownership in housing for the elderly or handicapped. The provisions of 24 CFR part 243 apply to any project assisted under this part for which preference in tenant selection is given for all units in the project to elderly or handicapped persons or elderly or handicapped families, as defined in 24 CFR 812.2. (d) Flood insurance. (1) Under the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001–4128), a grantee may not approve the commitment of rental rehabilitation grant amounts to a project located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, unless: (i) The community in which the area is situated is participating in the National Flood Insurance Program (see 44 CFR parts 59 through 79), or less than a year has passed since FEMA notification regarding such hazards; and (ii) Flood insurance is obtained as a condition of approval of the commitment. (2) Grantees with projects located in an area identified by FEMA as having special flood hazards are responsible for assuring that flood insurance under the National Flood Insurance Program is obtained and maintained. (3) This paragraph §511.16(g) does not apply in the case of allocations administered by a State under §511.51(a). [55 FR 20050, May 14, 1990, as amended at 61 FR 5208, Feb. 9, 1996]
Title 24: Housing and Urban Development
PART 511—RENTAL REHABILITATON GRANT PROGRAM
Subpart B—Program Requirements
§ 511.10 Grant requirements.
§ 511.11 Project requirements.
§ 511.12 Conflicts of interest.
§ 511.13 Nondiscrimination, equal opportunity, and affirmative marketing requirements.
§ 511.14 Tenant assistance, displacement, relocation, and acquisition.
§ 511.15 Lead-based paint.
§ 511.16 Other Federal requirements.
