Emergency Solutions Grants (ESG) Program, Solicitation of Comment on Specific Issues, 31538-31559 [2015-13485]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 80, Number 106 (Wednesday, June 3, 2015)]
[Proposed Rules]
[Pages 31538-31559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-13485]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 91 and 576

[Docket No. FR-5474-N-02]
RIN 2506-AC29


Emergency Solutions Grants (ESG) Program, Solicitation of Comment 
on Specific Issues

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Regulatory review; request for comments.

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SUMMARY: On December 5, 2011, HUD published an interim rule entitled 
``Homeless Emergency Assistance and Rapid Transition to Housing: 
Emergency Solutions Grants Program and Consolidated Plan Conforming 
Amendments'' (interim rule). The comment period for the interim rule 
ended on February 3, 2012. Because recipients and subrecipients have 
now had more experience implementing the interim rule, HUD recognizes 
that they may have additional input and comments for HUD to consider in 
its development of the ESG final rule (final rule). Therefore, this 
document takes comments for 60 days to allow additional time for public 
input, and for HUD to solicit specific comment on certain issues.

DATES: Comment due date: August 3, 2015.

ADDRESSES: Interested persons are invited to submit comments responsive 
to this request for information to the Regulations Division, Office of 
General Counsel, Department of Housing and Urban Development, 451 7th 
Street SW., Room 10276, Washington, DC 20410-7000. Communications must 
refer to the above docket number and title and should contain the 
information specified in the ``Request for Comments'' of this notice.
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
https://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 
https://www.regulations.gov Web site can be viewed by interested members 
of the public. Commenters should follow instructions provided on that 
site to submit comments electronically.
    Submission of Hard Copy Comments. Comments may be submitted by mail 
or hand delivery. To ensure that the information is fully considered by 
all of the reviewers, each commenter submitting hard copy comments, by 
mail or hand delivery, should submit comments or requests to the 
address above, addressed to the attention of the Regulations Division. 
Due to security measures at all federal agencies, submission of 
comments or requests by mail often result in delayed delivery. To 
ensure timely receipt of comments, HUD recommends that any comments 
submitted by mail be submitted at least 2 weeks in advance of the 
public comment deadline. All hard copy comments received by mail or 
hand delivery are a part of the public record and will be posted to 
https://www.regulations.gov without change.

    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 Comments. All comments submitted to HUD 
regarding this notice will be available, without charge, 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 documents must be scheduled by 
calling the Regulation Division at 202-708-3055 (this is not a toll-
free number). Copies of all comments submitted will also be available 
for inspection and downloading at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Norm Suchar, Director, Office of 
Special Needs Assistance Programs, Office of Community Planning and 
Development, Department of Housing and Urban Development, 451 7th 
Street SW., Room 7262, Washington, DC 20410-7000, telephone number 
(202) 708-4300 (this is not a toll-free number). Persons with hearing 
or speech impairments may access this number through TTY by calling the 
toll-free Federal Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION: 

[[Page 31539]]

I. Introduction

A. Background

1. Reasons for Re-Opening Public Comment Period
    The Homeless Emergency Assistance and Rapid Transition to Housing 
Act of 2009 (HEARTH Act) (Division B of Pub. L. 111-22), enacted into 
law on May 20, 2009, amended the McKinney-Vento Homeless Assistance Act 
(42 U.S.C. 11371 et seq.) (McKinney-Vento Act) to consolidate the 
following homeless programs--the Supportive Housing Program, the 
Shelter Plus Care program, and Moderate Rehabilitation Single Room 
Occupancy program--into a single program, the Continuum of Care 
Program. The HEARTH Act also revised the Emergency Shelter Grants 
program and renamed it the Emergency Solutions Grants (ESG) program, 
which is the subject of this notice.
    The HEARTH Act broadened the emergency shelter and homelessness 
prevention activities of the Emergency Solutions Grants program beyond 
those of its predecessor program, the Emergency Shelter Grants program, 
and added short- and medium-term rental assistance and services to 
rapidly re-house persons experiencing homelessness. The change in the 
program's name reflects the change in the program's focus from 
addressing the needs of homeless people in emergency or transitional 
shelters to assisting people to quickly regain stability in permanent 
housing after experiencing a housing crisis or becoming homeless.
    On December 5, 2011, at 76 FR 75954, HUD published an interim rule 
for ESG entitled ``Homeless Emergency Assistance and Rapid Transition 
to Housing: Emergency Solutions Grants Program and Consolidated Plan 
Conforming Amendments.'' \1\ The interim rule revised the regulations 
for the Emergency Shelter Grants Program by establishing the new 
requirements for the Emergency Solutions Grants Program at 24 CFR part 
576 and making corresponding amendments to HUD's Consolidated Plan 
regulations at 24 CFR part 91.
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    \1\ It is available at the following link: https://www.hudexchange.info/resource/1927/hearth-esg-program-and-consolidated-plan-conforming-amendments.
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    The interim rule took effect on January 4, 2012, and the public 
comment period for the interim rule ended on February 3, 2012. HUD has 
carefully reviewed all comments received in response to the interim 
rule. However, since the issuance of the interim rule, communities have 
gained valuable experience implementing the Emergency Solutions Grants 
(ESG) program, and HUD has been working with and hearing from ESG 
recipients, ESG subrecipients, Continuums of Care (CoCs), interest and 
advocacy groups, and other stakeholders to gather information about 
this experience. As is the case with any new program, ESG recipients 
and subrecipients have raised questions and issues about various 
components of the interim rule. HUD appreciates the questions and 
feedback provided to date, and consequently has decided to re-open the 
public comment period on the interim rule for the purpose of seeking 
broader input on implementation of the interim rule, before HUD makes 
final decisions for the final rule. In fact, HUD is raising many of the 
issues for consideration in this notice in order to be able to more 
clearly establish in the final rule what is or is not eligible and what 
the limitations are with ESG funds, in many cases based on recipient or 
subrecipient feedback. This notice offers an opportunity for ESG 
recipients and subrecipients, the public, and all interested parties to 
provide their feedback about particular issues in the interim rule.
    Re-opening public comment period for the interim rule supports 
HUD's goals of increasing public access to and participation in 
developing HUD regulations and other related documents, and promoting 
more efficient and effective rulemaking through public involvement.
2. Statutory and Regulatory Changes Affecting the ESG Program
    Since HUD issued the ESG interim rule, the following significant 
statutory or regulatory changes have occurred or are in progress, which 
will impact the ESG program:
    a. MAP-21. On July 18, 2012, President Obama signed into law the 
``Moving Ahead for Progress in the 21st Century Act'' (MAP-21) (Pub. L. 
112-141, 126 Stat. 405), which changed the program requirements in the 
following four areas:
     Changed the applicable environmental review requirements 
from 24 CFR part 50 back to part 58.
     Defined the term ``local government'' to include an 
instrumentality of a unit of general purpose local government (other 
than a public housing agency) to act on behalf of the local government 
with regard to ESG activities, and to include a combination of general 
purpose local governments.
     Defined the term ``State'' to include an instrumentality 
of a State to act on behalf of the State with regard to ESG activities.
     Allowed a metropolitan city and urban county that each 
receive an ESG allocation and are in the same Continuum of Care (CoC) 
to receive a joint allocation of ESG funds.
    HUD's ESG final rule will incorporate these statutory changes, 
which are in effect now. Later in this notice, HUD seeks comment on 
specifics related to implementing joint allocations and 
instrumentalities.
    b. VAWA 2013. The Violence Against Women Reauthorization Act (VAWA) 
of 2013 (Pub. L. 113-4, 127 Stat. 54) was enacted on March 7, 2013. On 
August 6, 2013, at 78 FR 47717, HUD issued a Federal Register notice 
that provided an overview of the applicability of VAWA 2013 to HUD 
programs. This notice listed the HUD programs--including the ESG 
program--that VAWA 2013 added to the list of covered programs, 
described the changes that VAWA 2013 made to existing VAWA protections, 
and identified certain issues for which HUD specifically sought public 
comment. VAWA will be implemented through notice and comment rulemaking 
and a proposed rule was published in the Federal Register on April 1, 
2015. However, the core protections of VAWA--not denying or terminating 
assistance to victims of domestic violence and expanding the VAWA 
protections to victims of sexual assault--are in effect, and do not 
require notice and comment rulemaking for compliance. Recipients and 
subrecipients should proceed to comply with the basic VAWA protections, 
and HUD's program offices have advised program participants of the 
immediate applicability of the core protections.\2\ The ESG regulations 
will reflect all applicable VAWA protections following promulgation of 
a VAWA final rule.
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    \2\ Listserv message from HUD's Office of Special Needs 
Assistance Programs, at https://www.hudexchange.info/news/reauthorization-of-the-violence-against-women-act-vawa.
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    c. OMB OmniCircular. On December 26, 2013, at 78 FR 78590, the 
Office of Management and Budget (OMB) issued final guidance on 
administrative costs, cost principles and audit requirements for 
federal awards. This final guidance supersedes and streamlines 
requirements from OMB Circulars A-21, A-87, A-110, and A-122 and 
Circulars A-89, A-102, and A-133. OMB has finalized the guidance in 
Title 2 of the Code of Federal Regulations (CFR). OMB charged federal 
agencies with adopting the policies and procedures in the final 
guidance by December 26, 2014. HUD is in the process of adopting

[[Page 31540]]

such guidance in regulation and, when adopted, the ESG regulations will 
cross-reference to the applicable regulations addressing these award 
requirements.
    d. Equal Access rule. The ``Equal Access to Housing in HUD 
Programs--Regardless of Sexual Orientation or Gender Identity'' final 
rule (77 FR 5662) was published on February 3, 2012. It amends 24 CFR 
5.105 to create a new regulatory provision that generally prohibits 
HUD's assisted and insured housing programs, including ESG, from 
considering a person's marital status, sexual orientation, or gender 
identity (a person's internal sense of being male or female) in making 
housing assistance available. CPD Notice 15-02, ``Appropriate Placement 
for Transgender Persons in Single-Sex Emergency Shelters and Other 
Facilities,'' published in February 2015, provides guidance on how 
recipients of ESG funding can ensure compliance with this rule.
    e. Definition of Chronically Homeless. HUD intends to finalize the 
definition of ``chronically homeless,'' which affects 24 CFR part 91 
(the Consolidated Plan regulations). Once published, it will apply to 
part 91, and the current definition will be amended. This will 
establish a consistent definition of chronically homeless across HUD's 
homeless assistance programs.
    f. HMIS final rule. HUD intends to publish a final rule for 
Homeless Management Information Systems (HMIS). Once published, this 
rule will apply to all entities using the CoC's HMIS, including 
Consolidated Plan jurisdictions (both those that receive ESG funds and 
those that do not) and ESG subrecipients. The ESG regulations will 
reflect applicable HMIS requirements following promulgation of the HMIS 
final rule.

B. How To Read This Notice

    In re-opening the public comment period for the ESG rule, HUD 
strives to present a structure to this notice that is informative and 
encourages meaningful public input to the questions posed by HUD. 
Accordingly, this notice commences with solicitation of comments on 
definitions and then generally follows the organization of the 
regulations in the interim rule. This notice describes specific areas 
of the interim rule on which HUD seeks additional public comment, in 
order to assist HUD in deciding policy for the final ESG rule. In 
addition to seeking additional feedback and comment on certain 
provisions of the ESG interim rule, for some provisions, HUD proposes 
specific language for comment. This notice contains some regulatory 
language to provide context to certain questions or proposed language 
presented by HUD, but it may be helpful to the reader to review this 
notice in conjunction with the interim rule. HUD appreciates and values 
the feedback that commenters provide, particularly feedback that draws 
on their experience with the interim rule.
    The issues addressed in this notice are limited; there are several 
reasons for this. First, HUD has received public comments on numerous 
issues, and many of these comments are sufficient for HUD to be able to 
make a decision--in some cases, a change--for the final rule. Such 
issues are not specifically addressed in this notice. For example, HUD 
is planning to change the income requirement for re-evaluation from 
``at or below 30 percent AMI'' to ``below 30 percent AMI'' to match the 
requirement at initial intake, because many people have been confused 
by the distinction. Second, some issues--including the definition of 
``homeless,'' the corresponding recordkeeping requirements, and the 
definition of ``chronically homeless''--are not subject to further 
public comment. Public comment for the definition of ``homeless'' and 
the corresponding recordkeeping requirements were addressed in the 
Defining Homeless final rule published in the December 5, 2011, Federal 
Register. Likewise, please note that there are some elements of the ESG 
program that HUD cannot change because they are statutory, such as the 
cap on Street Outreach and Emergency Shelter program components, or the 
fact that public housing agencies (PHAs) cannot be recipients or 
subrecipients (with limited exceptions). Lastly, HUD requests that 
commenters not resubmit any comments already submitted in the first 
public comment period unless they provide new information or insights 
based on research or experience with the program. As mentioned above, 
HUD has already carefully considered the first set of comments. These 
are all available online at: www.regulations.gov/#!docketDetail;D=HUD-
2011-0153. When the final rule is published, HUD will provide a 
response to each comment received in either comment period. Please take 
these factors into consideration when developing and submitting 
comments.

II. Areas of the Consolidated Plan and ESG Interim Rule on Which HUD 
Seeks Additional Public Comment

A. Definitions

    HUD seeks comments on possible changes to several definitions 
included in the interim rule at Sec. Sec.  91.5 and 576.2.
    1. At risk of homelessness (Sec. Sec.  91.5 and 576.2): HUD 
received many comments requesting further elaboration about the 
condition referenced at Sec.  576.2(1)(iii)(G), which states: 
``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.'' HUD recognizes that, given 
the variety of types, characteristics, and conditions of housing in 
urban, suburban, and rural areas around the country, this definition 
could encompass many different housing situations. However, it is 
important to note that this condition focuses on characteristics of the 
housing, not the household. For example, in a housing unit that does 
not have the capacity for utilities (e.g., broken water pipes, non-
functional wiring for electricity, etc.), the lack of utilities would 
be a characteristic of the housing. Other examples might include a 
leaking roof or damage from rodents. On the other hand, if the 
utilities have been shut off in a housing unit, due to the household's 
inability to pay, HUD considers this a characteristic of the household, 
not a characteristic of the housing (of course, that household might 
still be able to receive ESG assistance under a different category of 
the At Risk of Homelessness definition).
    HUD is considering adding specificity to this condition in the ESG 
final rule, and seeks comments on the following questions:
    a. What types of housing conditions exist in your region that would 
support this interpretation, or what housing conditions exist that 
would necessitate different regulatory language?
    b. What characteristics, if any, should be added to this portion of 
the definition of ``At Risk of Homelessness'' to aid recipients in 
determining who is at risk of homelessness?

    Note:  For the corresponding recordkeeping requirement, see 
Section II.C.19.a. of this notice.

    2. Emergency shelter (Sec. Sec.  91.5 and 576.2): The definition of 
``emergency shelter'' in the interim rule states: ``Any facility, the 
primary purpose of which is to provide a temporary shelter for the 
homeless in general or for specific populations of the homeless, and 
which

[[Page 31541]]

does not require occupants to sign leases or occupancy agreements. Any 
project funded as an emergency shelter under a Fiscal Year 2010 
Emergency [Shelter] Grant may continue to be funded under ESG.'' HUD is 
considering revising the definition in Sec.  576.2 to address several 
issues, and seeks comment on the following proposed definition 
(italicized language added or changed from the interim rule 
definition): ``Emergency shelter means any facility (including any 
building or portion of a building), the primary purpose of which is to 
provide a temporary shelter for homeless individuals or families in 
general or for specific populations of homeless individuals or 
families. If occupancy creates rights of tenancy under state or local 
law, the primary purpose is not temporary shelter. The use of the 
building as an emergency shelter must not be inconsistent with 
applicable state and local law, including zoning and building codes.'' 
Each of the proposed changes addressed by the above language is 
described in greater detail below, with some alternatives discussed. 
Further, HUD seeks comment on an additional clause for inclusion in the 
definition: adding to the definition that the facility (building or 
portion of a building) must also be designated as an emergency shelter 
on the CoC's most recent Housing Inventory Count.
    HUD's proposed changes to the definition of emergency shelter are 
designed to convey the following: (1) It is not solely the structure of 
the building that makes something an emergency shelter, it is its 
purpose--essentially temporary sleeping accommodation--and local zoning 
laws and building codes determine whether a particular use or structure 
is allowed in an area; (2) The primary purpose of emergency shelter is 
to provide a habitable place for a homeless individual or family to 
sleep, and occupancy by an individual or family in an emergency shelter 
is temporary (no rights of tenancy are conferred by occupancy); and (3) 
The homeless shelter provider and program participant relationship is 
fundamentally different than that of a landlord-tenant relationship.
    Below is a discussion of the intent of the proposed changes as well 
as specific questions for public comment.
    a. Adding ``building or portion of a building.'' HUD recognizes 
that an emergency shelter can take many shapes, especially in rural 
areas and during local emergencies (e.g. hypothermia season), and 
communities need flexibility to ensure that all homeless persons have a 
safe place to sleep at night. In light of this recognition, HUD is 
considering changing the definition of emergency shelter to include the 
term ``building or portion of a building.'' This change is intended to 
clarify that an emergency shelter might consist of a building (such as 
one designed as an emergency shelter facility or a residential-style 
building), or it might consist of only a portion of a building, such as 
a wing, room, or floor of a building, or even one or more apartment 
units, in which homeless families or individuals are given temporary 
shelter, as evidenced by restrictions on occupancy and use. HUD intends 
for each of these possible arrangements to be covered under the 
emergency shelter definition, and HUD invites comments as to whether 
adding ``building or portion of a building'' would be helpful 
clarification.
    The requirements that apply to each emergency shelter would apply 
to each building or portion of a building used as an emergency shelter. 
Further, each separate building would be considered a separate 
emergency shelter, even if multiple buildings are located on the same 
site. However, multiple emergency shelters (whether whole buildings or 
portions of buildings) could comprise a single emergency shelter 
project if the recipient or subrecipient decides to group the shelters 
together under HUD's proposed definition of ``project'' (discussed 
below). Consequently, the recipient or subrecipient could apply a 
single set of written standards to all emergency shelters that are 
classified as the same emergency shelter project. HUD will consider 
other requirements that could apply when determining where the word 
``project'' is to be used in the final rule, with the goal of improving 
the ease of administering a ``project'' for recipients and 
subrecipients. However, note that any ESG requirement that uses 
``emergency shelter'' but not ``project'' would apply on a shelter-by-
shelter basis, not project-wide. For example, a subrecipient might be 
able to group two or more shelters under one emergency shelter project 
for purposes of funding and written standards, but could not group the 
shelters together for purposes of meeting the involuntary family 
separation prohibition, which uses ``emergency shelter,'' not 
``project.''
    With respect to this idea, HUD seeks comment on the following 
specific questions:
    (1) If HUD were to add ``building or portion of a building'' to the 
definition of ``emergency shelter,'' are there any particular issues or 
challenges that it would cause for ESG recipients and subrecipients, 
and if so, what are they? Or, would this be a helpful addition, and if 
so, how?
    (2) Alternatively, HUD is considering adding ``building, buildings, 
or portions(s) of a building.'' However, in order to consider multiple 
buildings to be a single emergency shelter, HUD would need to make 
additional qualifications to be consistent with the nondiscrimination 
and other ESG requirements. HUD seeks comment on the following 
questions related to this proposal:
    (a) Should HUD require the shelter buildings to be within a certain 
distance of each other to be considered the same emergency shelter? For 
example, could two emergency shelter buildings on opposite sides of a 
large urban county be considered a single emergency shelter, or should 
HUD set a distance limit? Is there a circumstance under which there 
would be an advantage--either administrative or otherwise--to consider 
two emergency shelter buildings as a single shelter, especially if they 
can be administered as the same project, with the same written 
standards and other rules?
    (b) Should HUD require the buildings to be operated by the same 
subrecipient to be considered the same emergency shelter?
    (c) Are there any other requirements HUD should establish in order 
to establish commonalities that makes the different buildings a single 
emergency shelter?
    (d) If multiple shelter buildings could be considered a single 
project, would it make a significant difference in your community if 
HUD were to adopt ``building, buildings, or portion'' of a building, as 
opposed to ``building or portion of a building?''
    (3) Are there any other considerations about this distinction that 
are important for HUD to take into account in determining the final 
rule on this topic?
    b. Clarifying that occupancy in an emergency shelter must not 
create any rights of tenancy under state or local law. In formally 
recognizing that a facility could include an apartment or other 
building to serve as an emergency shelter, HUD aims to distinguish 
emergency shelter provided by a recipient or subrecipient where the 
shelter resident is sleeping in an apartment or other standard unit 
from the provision of rental assistance. This bolsters the requirement 
that emergency shelter is temporary. Therefore, HUD is considering 
adding the following sentence to the definition of emergency shelter: 
``If occupancy creates rights of tenancy under state or local law, the 
primary purpose is not temporary shelter.'' In other words, if the 
shelter

[[Page 31542]]

resident's occupancy of a space creates a right of tenancy or 
entitlement to occupancy to that space, it is not temporary and, 
therefore, it is not emergency shelter. HUD seeks comment on this 
proposal, in particular: In communities that have ``right to shelter'' 
laws, would this addition create any conflicts? If any problems could 
arise, what are they?
    c. Establishing a clearer distinction between emergency shelter and 
transitional housing, including removing ``leases or occupancy 
agreements'' from the definition. The primary distinction between 
emergency shelter and transitional housing is incorporated into the 
statutory definitions of these terms in the McKinney-Vento Act, as 
follows: The purpose of an emergency shelter is to provide temporary 
shelter; the purpose of transitional housing is ``to facilitate the 
movement of individuals and families experiencing homelessness to 
permanent housing within 24 months.'' HUD's proposed definition 
incorporates two related issues for the public to consider:
    (1) In the ESG and CoC Program interim rules, HUD attempted to 
further clarify for recipients the distinction between the two by 
stating that transitional housing projects must require a lease or 
occupancy agreement and emergency shelters could not. HUD received many 
questions about what constitutes an occupancy agreement, and has since 
determined that this is not necessarily the best way to make this 
distinction. This is in part because an occupancy agreement is, simply, 
a document that is a contract between two parties that is not a legal 
lease under local landlord/tenant law (though in some communities an 
occupancy agreement meets the requirements of a lease). Therefore, HUD 
is proposing removing the phrase ``and which does not require occupants 
to sign leases or occupancy agreements'' from the definition of 
emergency shelter.
    (2) In its place, HUD is considering adding to the definition a 
requirement that each emergency shelter must be designated as such on 
the most recent Housing Inventory Count (HIC) for the applicable CoC 
for the geographic area, in order to establish a clear and consistent 
location to identify the status for each emergency shelter or 
transitional housing project each year. Under this proposal, each 
recipient or subrecipient would be required to choose the status of a 
particular project, based on the primary purpose of the project, as 
either emergency shelter or transitional housing, and indicate this 
designation formally on the HIC. Per this proposal, the purpose of the 
project would become the distinguishing factor, as designated on the 
HIC. This designation would only apply to the project's eligibility for 
funding under HUD's CoC or ESG Programs.
    HUD recognizes that in some ESG-funded ``transitional shelter'' 
projects, program participants tend to stay for longer than 3 or 6 
months, and the program has a heavy service focus. HUD intends to 
require these types of projects to carefully consider their purpose. 
HUD also notes that if a subrecipient's emergency shelter contains 
overnight sleeping accommodations (i.e. not a day shelter), it could 
operate a rapid re-housing project in conjunction with that emergency 
shelter, to help move program participants to permanent housing. The 
primary purpose of the emergency shelter bed would be to provide 
temporary shelter, and the primary purpose of the rapid re-housing 
project would be to help program participants move quickly into 
permanent housing (whereas the primary purpose of a transitional 
housing project is to provide housing for up to 24 months while 
facilitating the movement to permanent housing). In addition, any 
emergency shelter that has used ESG funds for renovation and is under a 
3- or 10-year minimum period of use requirement would be required to be 
designated as an emergency shelter. Likewise, any building 
rehabilitated under the transitional housing component of the CoC 
Program would be required to be designated as transitional housing.
    If included in the final rule, HUD plans to issue guidance to help 
recipients and subrecipients make this determination. This Notice is 
not intended to provide that guidance; rather, it is intended to 
introduce this concept, and seek public comment on it in order to 
determine whether to move forward with it in the ESG final rule, and in 
the CoC final rule. HUD seeks public comment on including a requirement 
in the definition of emergency shelter for recipients and subrecipients 
to designate emergency shelter projects on the HIC; specifically the 
following questions:
    (a) Would it be helpful to include a provision making the HIC the 
required place for designating whether a particular bed is considered 
emergency shelter or transitional housing? Or would it create an 
unnecessary burden, or would it make no difference since emergency 
shelters must be designated on the HIC already?
    (b) If added, should it be included in the definition of emergency 
shelter or elsewhere in the final rule (e.g. the emergency shelter 
requirements section at Sec.  576.102 or documentation section at Sec.  
576.500)? Alternatively, should it be required elsewhere, such as in 
the subrecipient agreement?
    (c) Finally, HUD has considered that there may be an ESG 
subrecipient with an emergency shelter in an area that is either not 
covered by a CoC or where the CoC has not submitted a HIC, for some 
reason. Has this scenario occurred? Should HUD address this in the 
final rule?
    d. Removing or altering the concept of ``grandfathering in'' 
projects in the interim rule. The ESG interim rule includes the 
following language, ``Any project funded as an emergency shelter under 
a Fiscal Year 2010 Emergency [Shelter] Grant may continue to be funded 
under ESG.'' The current language was intended to continue funding of 
``transitional shelters'' which were included in the definition of 
``emergency shelter'' under the Emergency Shelter Grants Program. HUD 
is considering whether to remove, alter, or maintain this clause in the 
definition, based on the changes described above which more clearly 
define an emergency shelter versus transitional housing.
    If HUD were to remove this clause, HUD recognizes that there may be 
some facilities currently classified as emergency shelters that would 
not meet the revised definition of emergency shelter as proposed, and 
these facilities would not be eligible for continued funding under the 
ESG Program. HUD seeks comment on the following questions related to 
this issue:
    (1) If removing the ``grandfathering'' clause would not affect your 
project or community, what strategies have you undertaken to meet the 
needs without providing ESG-funded transitional shelter or transitional 
housing?
    (2) If removing the ``grandfathering'' clause would affect your 
project or your community, please describe the significance of the 
impact, specifically the number of beds that would lose ESG funding as 
a result. Also, what is it about the project that makes it not 
temporary, or what is the purpose of the project or activities provided 
that make it overlap between transitional housing and emergency 
shelter?
    (3) How could HUD change the definition of emergency shelter--
specifically, the ``grandfathering clause''--to ensure that beds that 
are truly needed as emergency shelter in the community can continue to 
receive ESG funds in the future?
    e. Ensuring that emergency shelters are placed in locations that 
are not inconsistent with an area's zoning and

[[Page 31543]]

building code. Especially as HUD clarifies that buildings such as 
apartment buildings can be used as emergency shelters, HUD wants to 
ensure that recipients and subrecipients fully understand that the use 
of a building as emergency shelter (e.g., the designation as such) must 
be in compliance with state and local laws. For this reason, HUD is 
considering adding the following language either to the definition of 
emergency shelter or to the requirements in Sec.  576.102, to emphasize 
it: ``The use of the building as an emergency shelter must not be 
inconsistent with the applicable state and local law, including zoning 
and building codes.'' If HUD were to adopt such language in the final 
rule:
    (1) Would it be helpful in ensuring that all recipients and 
subrecipients understand the context in which emergency shelter must be 
provided, especially if it is a building or portion of a building that 
is not traditionally used as emergency shelter, or would including this 
language make no practical difference?
    (2) If HUD were to include this requirement, would it be most 
appropriate in the definition or the elsewhere in the final rule (e.g. 
Sec.  576.102(a))?
    (3) Additionally, would it be helpful to remind recipients and 
subrecipients in the final rule that all emergency shelters must be 
operated consistently with state or local law? If so, should that 
reminder be incorporated into the definition of emergency shelter or 
elsewhere in the final rule?
    f. Other comments. In addition to the specific feedback requested 
above, HUD seeks any additional feedback on this the revised, proposed 
definition of emergency shelter.
    3. Local government and State (Instrumentalities) (Sec.  576.2): 
MAP-21 expanded the statutory definition of ``local government'' to 
include an instrumentality of the unit of general purpose local 
government, other than a public housing agency, provided that the 
instrumentality is established pursuant to legislation and designated 
by the chief executive to act on behalf of the local government 
regarding activities funded under title IV of the McKinney-Vento Act. 
MAP-21 also expanded the statutory definition of ``state'' to include 
any instrumentality of a state that is designated by the governor to 
act on behalf of the state.
    HUD is considering the following standards for recognizing 
instrumentalities under ESG and seeks comments on the following 
proposals, specifically how burdensome it would be to obtain this 
information:
    a. Instrumentality of a State. For HUD to recognize an 
instrumentality as the state for ESG, the state must submit the 
following to the local HUD field office:
    (1) The governor's written designation of the instrumentality to 
act on behalf of the state with respect to activities funded under ESG; 
and
    (2) A legal opinion from the attorney general of the state that the 
instrumentality either:
    (a) Meets each of the following criteria:
    (i) Is used for a governmental purpose and performs a governmental 
function;
    (ii) Performs its function on behalf of the state;
    (iii) The state has the authority to appoint members of the 
governing body of the entity, or the control and supervision of the 
entity is vested in the state government;
    (iv) Statutory authority is needed by the state to create and/or 
use the entity; and
    (v) No part of the net earnings inures to the benefit of any 
private shareholder, member or individual; or
    (b) The entity otherwise qualifies as an instrumentality of the 
state under its state law.
    b. Instrumentality of a local government. For HUD to recognize an 
instrumentality as the metropolitan city or urban county for ESG, the 
metropolitan city/urban county must submit the following to the local 
HUD field office:
    (1) The chief executive's written designation of the 
instrumentality to act on behalf of the metropolitan city/the urban 
county with respect to activities funded under ESG; and
    (2) Certification by the metropolitan city or urban county (chief 
executive or authorized attorney for the metropolitan city or urban 
county) that:
    (a) The instrumentality is established pursuant to legislation to 
act on behalf of the metropolitan city/the county with regard to 
homeless assistance activities, but is not a public housing authority/
agency; and
    (b) The instrumentality either:
    (i) Meets the following criteria:
    (A) The entity is used for a governmental purpose and performs a 
governmental function;
    (B) The entity performs its function on behalf of the metropolitan 
city/the county;
    (C) The metropolitan city/the county has the authority to appoint 
members of the governing body of the entity or the control and 
supervision of the entity is vested in the metropolitan city/the 
county;
    (D) State or local statutory authority is needed to create and/or 
use the entity; and
    (E) No part of the net earnings inures to the benefit of any 
private shareholder, member or individual; or
    (ii) Otherwise qualifies as an instrumentality of the metropolitan 
city/urban county under its state or local law.
    4. Project (Sec.  576.2): HUD is considering adding a definition of 
``project,'' in order to establish a clear meaning for the term's 
primary use in the ESG final rule. HUD is considering that this 
definition read as follows:

    Project means an activity or group of related activities under a 
single program component, designed by the recipient or subrecipient 
to accomplish, in whole or in part, a specific objective, and which 
uses a single HMIS implementation for data entry on these 
activities. A project may include both ESG-funded and non-ESG-funded 
activities. This definition does not apply to the term ``project'' 
when used in the requirements related to environmental review, 
project-based rental assistance, or the Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970.

Under this proposed definition, a single organization could self-define 
the project in accordance with this definition, and administer one or 
more than one project. For example, a nonprofit subrecipient could 
administer a Rapid Re-housing project that only provides case 
management to persons receiving rental assistance through another 
federal program. Or, it could administer a Rapid Re-housing project 
that provides various activities under the Rapid Re-housing component. 
Alternatively, it could set up and administer two rapid re-housing 
projects in two different locations (e.g., in different parts of a 
state), in a single location (e.g. one project for city-funded 
activities and one project for state-funded activities), or it could 
consider the two as a single rapid re-housing project. However, if a 
single provider used ESG funds for rapid re-housing and emergency 
shelter, these would be two separate projects. Similarly--related to 
the proposed definition of emergency shelter discussed above--multiple 
emergency shelters (whether whole buildings or portions of buildings) 
could comprise a single emergency shelter project. Also note that this 
proposed definition requires activities defined as a project to use the 
same HMIS implementation. This means that if an ESG recipient/
subrecipient operates rapid re-housing activities, for example, in two 
different CoCs that use different HMIS implementations, they would need 
to consider these two separate projects. In addition, this definition 
of project may have implications for other aspects of the ESG final 
rule: For

[[Page 31544]]

example, a recipient or subrecipient could establish a single set of 
written standards at the project level (also addressed under written 
standards, below). Finally, note that this definition of ``project'' 
would not apply to the term when used for purposes of the Integrated 
Disbursement and Information System (IDIS).
    HUD seeks comment on the following questions related to the 
definition of ``project:''
    (1) HUD could allow each recipient or subrecipient to self-define 
the project in accordance with HUD's definition (such as the one 
proposed above), such as in a recipient's Annual Action Plan, in a 
subrecipient's request for funding from the recipient, or in the 
subrecipient agreement. Should HUD require recipients or subrecipients 
to formally define or declare each project, and should HUD define how 
it should be done? If so, what should that requirement be?
    (2) What are the potential effects--positive and negative--of 
adopting the proposed definition?
    (3) Are there suggestions for alternate definitions or changes to 
this definition?
    5. Rapid Re-housing (Sec.  91.5): HUD is reviewing whether to 
revise the definition in Sec.  91.5 as follows (italicized text 
replaces current language):

The provision of a package of rental assistance, financial 
assistance, and/or services, tailored to the household, necessary to 
help a homeless individual or family move as quickly as possible 
into permanent housing and achieve stability in that housing.

This definition would be consistent with a model established by HUD in 
collaboration with the U.S. Interagency Council on Homelessness, other 
federal agencies, and stakeholders. HUD seeks comment on this proposed 
definition.

B. Request for Comment on the Amendments to Consolidated Submissions 
for Community Planning and Development (CPD) Programs (24 CFR Part 91)

    1. Submission of Action Plans--Timing (Sec.  91.15 and Sec.  
91.115): HUD is considering revising the Consolidated Plan regulations 
to prohibit Consolidated Plan jurisdictions from submitting Action 
Plans to HUD before formula allocations have been announced for each 
fiscal year, as explained in CPD Notice 2014-015, published on October 
21, 2014.\3\ However, this CPD Notice identified ways in which a 
jurisdiction could initiate citizen participation on its proposed plan 
before the jurisdiction knows its actual allocation amounts for a given 
year. HUD solicits comments on whether HUD should revise the 
regulations governing citizen participation (Sec.  91.105 and Sec.  
91.115) to reflect the CPD Notice; that is, to allow a jurisdiction to 
conduct citizen participation on a proposed plan that does not reflect 
actual allocation amounts, but only if the proposed plan provides 
``contingency language'' explaining how the jurisdiction will adjust 
the proposed plan to reflect actual allocation amounts once known. (See 
also the discussions of Sec.  570.200 and Sec.  91.500 in sections 
II.B.2 and II.B.7 of this Notice, respectively.)
---------------------------------------------------------------------------

    \3\ CPD Notice 2014-015 is available at: https://www.hudexchange.info/resources/documents/Notice-CPD-14-015-Guidance-Submitting-Con-Plans-Annual-Action-Plans-FY-2015.pdf.
---------------------------------------------------------------------------

    2. Reimbursement for Pre-Agreement Costs in the Entitlement 
Community Development Block Grant (CDBG) Program (Sec.  570.200(h)): In 
conjunction with CPD Notice 2014-15 HUD issued a waiver to certain CDBG 
Entitlement grantees to allow them to reimburse themselves for costs 
incurred as of the earlier of the grantee's program year start date or 
the date the Consolidated Plan/Action Plan is received by HUD. Should 
HUD revise the Consolidated Plan rule to prohibit submission of Action 
Plans before formula allocations have been announced, as described 
above, HUD would also pursue a conforming revision to the Entitlement 
CDBG program regulations; such a change would permanently adopt the 
alternative requirements provided by the waiver. HUD seeks comment on 
this proposal. (See also the discussions of Sec. Sec.  91.15 and 
91.115, and Sec.  91.500 in sections II.B.1 and II.B.7 of this Notice, 
respectively.)
    3. Area-Wide Systems Coordination Requirements--Consultation and 
Coordination (Sec.  91.100(a)(2) and (d), Sec.  91.110(b) and (e), 
Sec.  576.400(a), (b), and (c)): See Section II.C.12 of this Notice for 
more detail.
    4. Housing and Homeless Needs Assessment (Sec.  91.205 and Sec.  
91.305):
    a. ``Nearing the termination of rapid re-housing assistance'' 
(Sec.  91.205(b)(1)(i)(K) and Sec.  91.305(b)(1)(i)(K)). HUD is 
reconsidering the inclusion of the following element in the housing 
needs assessment (currently required as a narrative in the Consolidated 
Plan): ``Formerly homeless families and individuals who are receiving 
rapid re-housing assistance and are nearing the termination of that 
assistance.'' HUD originally included this element to encourage 
Consolidated Plan jurisdictions to identify those households who are 
housed but who might be more likely to become homeless again than other 
households, and to focus on helping these families stay housed after 
their rapid re-housing assistance ends. HUD received a comment 
indicating that the requirement to obtain this data is too burdensome 
for states, and is considering removing the requirement for both states 
and local governments due to the difficulty in obtaining consistent and 
accurate data. Alternatively, HUD could attempt to clarify the 
requirement by changing it to ``Formerly homeless families and 
individuals who are receiving ESG or CoC-funded rapid re-housing 
assistance and are within 30 days of the end of that assistance.'' HUD 
seeks comment on the following questions:
    (1) Is this information useful as a part of a jurisdiction's 
analysis of housing needs and its planning process? If so, in what 
ways? If not, should HUD eliminate this as a requirement in the final 
rule for states, local governments, or both?
    (2) Is there a better way for HUD to encourage jurisdictions to 
identify and focus efforts on the households most likely to become 
homeless again? HUD seeks suggestions about how the requirement could 
be changed to make it easier to capture this or similar information.
    b. Estimating needs for States (Sec.  91.305(b)(1)(i)). For states, 
the interim rule also added a requirement to estimate the number and 
type of families in need of housing assistance for public housing 
residents (paragraph (b)(1)(i)(F)) and families on the public housing 
and Housing Choice Voucher tenant-based waiting list (paragraph 
(b)(1)(i)(G)). HUD received a comment that it is too burdensome for 
states to collect this data, and is reconsidering the inclusion of both 
of these elements for states. HUD seeks comment on the following 
questions:
    (1) Is this information useful as a part of a state's analysis of 
housing needs and its planning process? If so, in what ways?
    (2) How are states collecting this data? Are states obtaining 
reliable estimates on these elements?
    (3) Should HUD remove either of these elements from the housing 
needs assessment of the Consolidated Plan for states, and why or why 
not?
    c. Estimation of homeless data (Sec.  91.305(c)(i) and Sec.  
91.205(c)(i)). The interim rule requires Consolidated Plan 
jurisdictions to include, in their Housing and Homeless Needs 
Assessment, the following:

for each category of homeless persons specified by HUD (including 
chronically

[[Page 31545]]

homeless individuals and families, families with children, veterans 
and their families, and unaccompanied youth), the number of persons 
experiencing homelessness on a given night, the number of persons 
who experience homelessness each year, the number of persons who 
lose their housing and become homeless each year, the number of 
persons who exit homelessness each year, and the number of days that 
persons experience homelessness.

    HUD expects Consolidated Plan jurisdictions to obtain this data 
from CoCs, and CoCs will be able to obtain most elements from the local 
HMIS and the PIT count. However, CoCs must ensure that the data 
reflects the boundaries of the Consolidated Plan jurisdiction rather 
than the boundaries of the CoC. The HMIS Data Standards Manual at 
https://www.hudexchange.info/resources/documents/HMIS-Data-Standards-Manual.pdf, released in 2014, establishes certain data elements to be 
collected in HMIS that enable jurisdictions to report on the above-
required measures. However, HUD recognizes that communities are 
currently working towards setting up their HMIS solutions in order to 
fully meet these requirements, and that some of this data may only be 
based on estimates until the new data standards are fully implemented. 
When a CoC's claimed geographic area includes multiple Consolidated 
Plan jurisdictions that CoC will need to disaggregate CoC-wide data for 
each Consolidated Plan jurisdiction. States, territories, and local 
Consolidated Plan jurisdictions with multiple CoCs need to compile 
relevant data from all of CoCs within their geographic area. HUD 
recognizes that some Consolidated Plan jurisdictions might have 
encountered challenges related to collecting data for the Homeless 
Needs Assessment of the Consolidated Plan due to the overlap of CoC 
boundaries and Consolidated Plan jurisdictions. HUD seeks feedback 
about how jurisdictions are currently providing estimates for these 
measures, specifically:
    (1) What steps are CoCs currently carrying out to disaggregate CoC-
wide data for the Consolidated Plan jurisdiction, when their 
geographies do not align?
    (2) What are the barriers to obtaining accurate data for these 
measures at the Consolidated Plan jurisdiction level?
    (3) Are Consolidated Plan jurisdictions using this data for 
planning or other purposes, and how?
    (4) Based on the information above, should HUD make any additional 
changes to the regulation? If so, what would be most helpful?
    d. Scope of Consolidated Plan Data for States (Sec.  91.305). In 
its Action Plan, each state is required to describe ``. . . the 
geographic areas of the state . . . in which it will direct assistance 
during the ensuing program year, giving the rationale for the 
priorities for allocating investment geographically . . .'' (required 
at Sec.  91.320(f) for the Action Plan and found in the eCon Planning 
Suite on screen AP-50). Because the information gathered for the 
Consolidated Plan Housing and Homeless Needs Assessment establishes the 
need in the state and is the basis for the Strategic Plan and Action 
Plan, it is important for the public and for HUD to understand the 
scope of data being reported. However, there might be great variance in 
the universe of data that states report in their Needs Assessment: Some 
states include data from entitlement jurisdictions that receive their 
own allocation of Community Development Block Grant (CDBG), HOME 
Investment Partnerships (HOME), ESG, and/or Housing Opportunities for 
Persons With AIDS (HOPWA) funding, some only report data on non-
entitlement jurisdictions, and some states include partial data from 
entitlement jurisdictions. In fact, the eCon Planning Suite pre-
populates some default data in compliance with different program 
regulations that require entitlement jurisdictions' data to be either 
included or excluded for different parts of the Consolidated Plan Needs 
Assessment. Because homeless data is not pre-populated in the eCon 
Planning Suite, it might be unclear whether, and which, data from 
entitlements are included in the state's Consolidated Plan Homeless 
Needs Assessment.
    In the final rule, HUD is considering adding one of the following 
requirements to Sec.  91.305 to help obtain the most precise data 
possible so that each state can better demonstrate how it is tracking 
and addressing homelessness in its area, and seeks comments on which 
option HUD should select, if any:
    (1) The state has the option to include in its Homeless Needs 
Assessment data on entitlement jurisdictions within its boundaries, and 
must cite all data sources. If the state's Needs Assessment includes 
data from any entitlement jurisdictions, it must cite which entitlement 
jurisdictions' data is included and the source of that data (if 
appropriate, the state could reference the applicable entitlement 
jurisdiction's Consolidated Plan). If the state's Homeless Needs 
Assessment is limited to non-entitlement areas' data, then the 
Consolidated Plan must indicate this; or
    (2) The state must only report non-entitlement data in its Homeless 
Needs Assessment. If a state intends to allocate funds to an 
entitlement jurisdiction, the state would be required to incorporate 
the entitlement jurisdiction's data in its Homeless Needs Assessment by 
reference only (e.g., provide a link to a Web site or to the 
jurisdiction's Consolidated Plan containing the data).
    e. Funding services to people on tribal lands (Sec. Sec.  91.205, 
91.305). HUD intends to provide ESG recipients with the discretion to 
choose whether or not to use ESG to fund nonprofit organizations 
serving people living on tribal lands. HUD is considering adding the 
following language: ``An ESG recipient may fund activities in tribal 
areas located within the recipient's jurisdiction, provided that the 
recipient includes these areas in its Consolidated Plan.'' HUD seeks 
comment on this proposal--specifically:
    (1) What effects will this requirement have?
    (2) How are ESG recipients already including tribal areas in their 
consolidated planning process?
    (3) If included, should this language be added at part 91 or in 
part 576?
    f. States' use of HMIS and PIT data (Sec.  91.305(c)(1)). The 
interim rule does not include the following requirement for states, 
which is in the regulation for local governments: ``At a minimum, the 
recipient must use data from the Homeless Management Information System 
(HMIS) and data from the Point-In-Time (PIT) count conducted in 
accordance with HUD standards.'' HUD is considering including this 
requirement for states in the final rule, because most states are 
already obtaining this data from CoCs and HMIS systems, and this change 
would make the collection consistent with the requirement for 
metropolitan cities and urban counties. HUD seeks comment on this 
addition.
    g. Coordination between the Con Plan jurisdiction and CoC on 
Planning (24 CFR 91.100(a)(2)(i) and 91.110(b)(1)). Currently, the 
consultation provisions at 24 CFR 91.100(a)(2)(i) and 91.110(b)(1) 
require each Consolidated Planning jurisdiction to consult with the 
applicable CoC(s) when preparing the portions of the consolidated plan 
describing the jurisdiction or state's homeless strategy and the 
resources available to address the needs of homeless persons and 
persons at risk of homelessness. In order to develop this strategy, Con 
Plan jurisdictions must assess the needs and identify available 
resources to address those needs. For the final rule, HUD is 
considering specifying that the consultation

[[Page 31546]]

requirements include a requirement for the Con Plan jurisdiction to 
consult with the applicable CoC(s) on the following homeless-specific 
aspects of the Con Plan: the jurisdiction's homeless needs assessment 
(Sec. Sec.  91.205(c) and 91.305(c)), one-year goals and specific 
action steps for reducing and ending homelessness (Sec. Sec.  
91.220(i)(1) and 91.320(h)(1)), and performance reports (Sec.  91.520).
    HUD expects that in many places, especially where the geographic 
boundaries of CoCs and Con Plan jurisdiction are coterminous, CoCs and 
Con Plan jurisdictions are already coordinating to align the strategies 
in the Con Plan and CoC plan. HUD has received questions about what 
acceptable consultation, participation, and collaboration consist of, 
between the CoCs and Con Plan jurisdictions, and especially for states. 
The purpose of proposing this requirement would be to specify the 
requirements and ensure that Con Plan jurisdictions and CoCs are 
collaborating on all aspects of the plan that directly impact the 
homeless goals and strategies, in order to develop a more complete and 
cohesive strategy to end homelessness in these overlapping plans.
    HUD seeks comment on this concept, specifically:
    (1) Would this requirement facilitate or improve collaboration and 
coordination between CoCs and Con Plan jurisdictions on homelessness 
activities? If so, how? If not, why not?
    (2) Are the current consultation requirements in the interim rule 
sufficient for Con Plan jurisdictions to establish the needs and 
strategies for addressing homelessness in the jurisdiction?
    (3) Should HUD include this requirement, or are there other ways 
that HUD could, in the final rule, facilitate better coordination 
between CoCs and Con Plan jurisdictions to ensure that their plans 
establish closely aligned and complementary goals to end homelessness?
    5. Process for Making Subawards (Sec. Sec.  91.220(l)(4)(iii) and 
91.320(k)(3)(iii)):
    HUD received comments from numerous respondents recommending that 
HUD require ESG recipients to describe how they will use performance 
data to select subrecipients. Based on these comments, HUD is 
considering including language in the final rule that would implement 
this suggestion, and seeks comments on what impact this would have on 
ESG recipients. For those recipients that currently select 
subrecipients based on performance data, HUD seeks feedback about 
processes currently used, including any specific performance 
indicators. Additionally, HUD seeks comment on whether there are any 
further requirements that HUD should include related to selecting 
subrecipients based on performance to help recipients implement this 
proposed requirement.
    6. Written Standards for ESG Recipients (Sec.  91.220(l)(4) and 
Sec.  91.320(k)(3), and Sec.  576.400(e)): See section II.C.14 of this 
Notice for more detail.
    7. HUD Approval of Action Plans (Sec.  91.500): HUD is considering 
amending the list of examples of substantially incomplete Action Plans 
at Sec.  91.500(b), to include plans which do not reflect a 
jurisdiction's actual allocation amounts for that year. HUD envisions 
that this would also cover situations in which a jurisdiction submits a 
proposed plan on which it has conducted citizen participation, which 
neither reflects actual allocation amounts nor contains contingency 
language on how the jurisdiction will adjust its plan to reflect actual 
amounts. (See also the discussions of Sec. Sec.  91.15 and 91.115, and 
Sec.  570.200 in sections II.B.1 and II.B.2 of this Notice, 
respectively.)
    8. Performance Reports Related to Homelessness for ESG Recipients 
(Sec.  91.520(g)): HUD proposes to require that ESG recipients and 
subrecipients use HMIS (except those subrecipients that are prohibited 
from doing so under VAWA) in compliance with the forthcoming HMIS rule, 
to collect and report on data in the Consolidated Annual Performance 
Evaluation Report (CAPER), as specified by HUD, and seeks comments on 
this proposal.

C. Request for Comment on Emergency Solutions Grants Program 
Regulations (24 CFR Part 576)

    1. Emphasis on Rapid Re-housing: HUD has been encouraging ESG 
recipients to spend more of their funds on rapid re-housing, since it 
is often a cost-effective way to make a significant impact on 
homelessness in a community and help achieve the national goal of 
ending homelessness. HUD is considering ways to continue this policy, 
and seeks feedback on what requirements and/or incentives could be 
established in the final rule for recipients to focus more on rapid re-
housing, or whether HUD should simply continue to encourage this focus 
through guidance.
    HUD received several comments recommending that HUD limit the 
amount of funds that an ESG recipient can spend on homelessness 
prevention activities. However, HUD cannot place a cap on homelessness 
prevention activities without a statutory change. Instead, HUD seeks 
creative ways to encourage more rapid re-housing--possibly through the 
final rule. For example, if a recipient intended to spend funds on 
homelessness prevention, HUD could require the recipient to justify, in 
the Consolidated Plan, how meeting the needs of persons at risk of 
homelessness is more effective at ending homelessness (without this 
justification, the Consolidated Plan would be determined substantially 
incomplete and could not be approved). Another option could be to 
establish performance measures and link the local CoC application 
scoring to ESG recipients' achievement of those measures. Another 
option could be to require only the rent reasonableness standard for 
rapid re-housing activities, but require both the Fair Market Rent 
(FMR) and rent reasonableness standard for homelessness prevention 
activities. HUD seeks comments on whether to adopt these or suggestions 
for other methods to increase the amount of funds recipients spend on 
rapid re-housing activities.
    2. Street Outreach and Emergency Shelter Components (Sec.  576.101 
and Sec.  576.102):
    a. Essential services under the Emergency Shelter Component (Sec.  
576.102(a)). The interim rule states that ESG funds may be used for 
costs of providing essential services to individuals and families in an 
emergency shelter. HUD has received feedback that this could be 
interpreted in two different ways:
    (1) Only individuals and families who spent the prior night in an 
emergency shelter can receive ESG-funded essential services, no matter 
where those services are provided; or
    (2) Anyone who meets the homeless definition can receive essential 
services, as long as the services are provided in the emergency 
shelter.
    HUD proposes to clarify who can receive essential services under 
the Emergency Shelter component--including in day shelters--by changing 
the language as follows (proposed portions italicized):

    ESG funds may be used for costs of providing essential services 
to homeless families and individuals as follows:
    (a) When provided in an emergency shelter, the services may be 
provided to persons:
    (i) who meet the criteria described in paragraph (1) of the 
homeless definition, and
    (ii) who are either staying in that emergency shelter, or who 
are sleeping on the street or another place described in paragraph 
(1) of the homeless definition (excluding those in transitional 
housing) and are referred to services by an emergency shelter, and

[[Page 31547]]

    (b) When provided in a facility that is not an emergency 
shelter, the services may be provided only to persons meet the 
criteria described in paragraph (1) of the homeless definition 
(excluding those in transitional housing) and who are referred to 
services by an emergency shelter.''

    In other words, if an individual or family meets Category 1 of the 
homeless definition (excluding those in transitional housing) and is 
staying in an overnight or day shelter, they can receive eligible 
essential services in that shelter. Otherwise, if an individual or 
family meets Category 1 of the homeless definition (excluding those in 
transitional housing) and is referred by a shelter, they can receive 
eligible essential services at any provider's location. This change 
would widen the array of essential services that can be provided to 
those most in need--expanding the language to allow ESG funds to be 
used to pay for facility-based essential services to most persons 
sleeping on the street. HUD would require the referral from an 
emergency shelter as a linkage to the Emergency Shelter component, 
under which the services will be provided. HUD would consider this 
change in order to improve service coordination and also to ensure that 
the services charged to the grant are necessary and appropriate to the 
individual or family. HUD wants to encourage, to the extent possible, 
that non-facility-based services are provided by mainstream programs, 
not ESG. HUD seeks comment on this proposed change.
    b. ``Unavailable'' and ``Inaccessible'' Services (Sec.  576.101(a) 
and Sec.  576.102(a)). Under the Street Outreach and Emergency Shelter 
components of the interim rule, ESG funds may only be used for certain 
essential services ``to the extent that other appropriate [emergency 
health services, emergency mental health services, mental health 
services, outpatient health services, legal services, substance abuse 
treatment services] are unavailable or inaccessible within the 
community.'' HUD has received questions and comments about this 
requirement, specifically, what it means to be ``unavailable or 
inaccessible.'' HUD had originally included this restriction in order 
to prioritize ESG funds for housing rather than services that should be 
available through mainstream systems. However, HUD recognizes that 
sometimes services are necessary and not provided by any other 
resource; in these cases, certain essential services are eligible under 
ESG. HUD is not considering removing this restriction from the 
regulation in the final rule, but is considering changes to help 
communities implement the requirement and document compliance. HUD 
specifically seeks additional comment on:
    (1) Whether HUD should define or set a standard for ``unavailable'' 
and ``inaccessible'' within the rule, and if so, what definition or 
standard would best help recipients and subrecipients implement this 
requirement?
    (2) Whether only one term should be used, and if so, which one and 
why?
    (3) How have recipients and subrecipients implemented this 
requirement under the interim rule? Have they documented it for each 
program participant, or generally at the community level, and why? What 
can HUD learn from these experiences that it should implement in the 
final rule?
    c. Day shelters (Sec.  576.102(a)). While a shelter that provides 
temporary daytime accommodations and services can be funded as an 
emergency shelter under the ESG interim rule, HUD receives questions 
about day shelters and is therefore considering explicitly stating in 
the final rule that day shelters are emergency shelters, and specifying 
the conditions under which a day shelter may receive funding under the 
Emergency Shelter component, including several requirements to ensure 
that ESG funds are used for homeless persons most in need. HUD is 
considering adding the following language at 576.102(a):

    A day shelter may be funded as an emergency shelter under this 
section only if: (1) The shelter's primary purpose is to provide 
temporary daytime accommodations and services to individuals and 
families who meet paragraph 1 of the homeless definition in this 
section (except those in transitional housing); and (2) those 
persons can stay in the shelter for as many hours as it is open.'' 
ESG funds for operating costs in a day shelter may only be incurred 
to the extent the shelter is used for persons assisted in the 
shelter who meet the definition of homeless under paragraph (1) 
(except those in transitional housing), and essential services 
provided in a day shelter may only be provided to persons meeting 
the definition of homeless under paragraph (1) (except those in 
transitional housing).

HUD seeks comment on the following questions regarding day shelters:

    (1) What impact would adding these requirements for day shelters 
have in your community? For instance, would this require any changes to 
emergency shelter policies or procedures in your community?
    (2) What changes, if any, would need to be made to this provision 
of the regulation so that your community can fund or continue to fund 
day shelters with ESG?
    (3) Are there any changes to the documentation requirements for 
program participants in emergency shelters that would be needed for day 
shelters?
    d. Involuntary family separation (Sec.  576.102(b)). This 
requirement states that ``The age of a child under age 18 must not be 
used as a basis for denying any family's admission to an emergency 
shelter that uses ESG funding or services and provides shelter to 
families with children under age 18.'' HUD interprets this provision to 
mean that if a shelter serves any families with children, the shelter 
must serve all members of a family with children under 18, regardless 
of age or gender. HUD is not proposing to change this provision because 
it is statutory. However, HUD is considering possible regulatory 
changes that would help recipients and subrecipients implement the 
statutory provision, and seeks ideas based on actual issues that have 
occurred in communities.
    HUD is also proposing that a shelter must serve all members of the 
family together if the members of the family so choose (e.g. it may not 
separate adult men from women and children in a family and serve them 
on a different floor or in a different building). HUD seeks comments on 
this proposal.
    e. Fees in emergency shelters (Sec.  576.102). In the past, HUD has 
allowed emergency shelters to charge reasonable fees for staying in the 
shelter. HUD is considering revising this policy, in the final rule, to 
explicitly allow emergency shelters to charge reasonable occupancy 
fees, but specify that the amount of the fee charged must account for 
the capacity of the client to afford to pay the fee, and the fee itself 
cannot be a barrier to occupancy in the shelter, and this fee must be 
counted as program income. Additionally, HUD will consider adding 
language prohibiting recipients or subrecipients providing Rapid Re-
housing or Homelessness Prevention assistance to charge program 
participants any costs above any required contribution to rent 
payments. This change would increase consistency between the 
requirements of the ESG Program and the CoC Program. HUD seeks comment 
on these ideas.
    f. Minimum Period of Use--Street Outreach component (Sec.  
576.101(b)). The current minimum period of use requirement states: 
``The recipient or subrecipient must provide services to homeless 
individuals and families for at least the period during which ESG funds 
are provided.'' This language comes from the statute, which requires 
that the recipient certify, with respect to the Street Outreach and 
Emergency

[[Page 31548]]

Shelter components, that it will ``provide services or shelter to 
homeless individuals and families for the period during which such 
assistance is provided, without regard to a particular site or 
structure as long as the same general population is served.'' HUD is 
considering clarifying the regulatory language to help recipients and 
subrecipients understand how to comply with this requirement, as 
follows: ``The recipient or subrecipient providing the street outreach 
services must provide the street outreach services to homeless 
individuals and families for at least as long as that organization is 
expending ESG funds for street outreach activities.''
    g. Minimum Period of Use--Emergency Shelter component (Sec.  
576.102(c)). HUD seeks comment on the following:
    (1) Essential services and shelter operations. Similar to the 
minimum period of use change being considered under the Street Outreach 
component, HUD is considering clarifying the language at 576.102(c)(2) 
as follows (changed language is italicized) to help recipients and 
subrecipients understand how to comply with this requirement: ``Where 
the recipient or subrecipient uses ESG funds solely for essential 
services or shelter operations, the recipient or subrecipient must 
provide services or shelter to homeless individuals and families for at 
least as long as it is expending ESG funds for essential services or 
shelter operations, without regard to a particular site or structure so 
long as the site or structure serves the same type of persons 
originally served with the assistance (e.g. families with children, 
unaccompanied youth, disabled individuals or victims of domestic 
violence) or serves homeless persons in the same area where the 
recipient or subrecipient originally provided the services or 
shelter.''
    (2) Renovation. Under the Emergency Shelter component, HUD is 
proposing the following language at Sec.  576.102(c)(1), to account for 
partial building renovations and renovations of seasonal shelters 
(proposed portions italicized): ``Each building or portion of a 
building for which ESG funds are used for renovation must be maintained 
as a shelter for not less than a period of 3 or 10 years, depending on 
the type of renovation and the value of the building or portion of the 
building being renovated. In the case of a seasonal shelter for which 
ESG renovation funds were used, it must be operated as a seasonal 
shelter (e.g., 5 months every year) for 3 or 10 calendar years, as 
applicable.''
    (3) Subrecipient agreement. HUD is considering requiring that the 
applicable period of use must be stated in the subrecipient agreement.
    (4) Requirements that apply during minimum period of use. HUD is 
considering revising Sec.  576.102(c)(1) and (2) to clarify and expand 
the requirements that apply during the minimum period of use when 
emergency shelters expend ESG funds for Operating Costs, Essential 
Services for a shelter project, or Renovation, as follows (as a 
reminder, for Operating Costs and Essential Services, the minimum 
period of use is the period during which the ESG services are provided; 
for Renovation, it is 3 or 10 years, as applicable):
    (i) Each person who stays in the shelter must be homeless as 
defined under Sec.  576.2;
    (ii) Program participant and shelter data must be entered into the 
local HMIS (or comparable database, as applicable) as required under 
Sec.  576.400(f);
    (iii) The shelter must meet the minimum habitability standards for 
emergency shelters under Sec.  576.403(b);
    (iv) The recipient or subrecipient must maintain records for the 
shelter and the shelter applicants and program participants as required 
under Sec.  576.500, including documentation of each program 
participant's eligibility and homeless status (Sec.  576.500(b)) and 
confidentiality requirements for survivors of domestic violence (Sec.  
576.500(x));
    (v) The shelter must meet the faith-based activities requirements 
under Sec.  576.406 and the nondiscrimination requirements and 
affirmative outreach requirements in Sec.  576.407.
    h. Essential Services for Street Outreach, Case Management (Sec.  
576.101(a)(2)) and Emergency Shelter, Case Management (obtaining 
identification documents) (Sec.  576.102(a)(1)(i)). HUD is considering 
explicitly allowing ESG funds to be used to pay for recipient or 
subrecipient staff time to help program participants obtain 
identification documents such as birth certificates and social security 
cards, and for the cost of such documents, if they are necessary to 
help a program participant obtain public benefits, employment, housing, 
or other mainstream resources.
    i. Local Residency Requirements. HUD is considering establishing a 
requirement, in the final rule, that recipients must not deny services 
or shelter funded under the Emergency Shelter and Street Outreach 
components based on whether or not their last permanent residence was 
in the jurisdiction. That is, if a person is homeless on the streets of 
a jurisdiction and is seeking emergency shelter there, they must be 
able to receive ESG-funded assistance, regardless of whether their last 
residence was inside or outside of the jurisdiction. HUD seeks comment 
on this idea, and feedback about any issues that this might raise with 
the implementation of ESG or communities' efforts to end homelessness.
    3. Rapid Re-housing component (defining ``rapid'' and ``as quickly 
as possible'') (Sec.  576.104): This section states, ``ESG funds may be 
used to provide housing relocation and stabilization services and 
short- and/or medium-term rental assistance as necessary to help a 
homeless individual or family move as quickly as possible into 
permanent housing and achieve stability in that housing.'' HUD has 
received questions about what ``rapid'' and ``as quickly as possible'' 
mean in practice, and is considering whether to establish a standard or 
time limit in which an individual or family could be rapidly re-housed. 
HUD is considering the following options: Setting the standard at a 
particular number of days (possibly 7, 30, or some other time limit 
over 30 days) per individual; setting a standard at an average number 
of days for an ESG recipient; requiring communities to set a standard 
based on local data and systems; or continuing the current policy and 
not setting such a standard. HUD seeks comments on:
    (1) Should HUD establish a standard or time limit for rapid re-
housing? Why or why not?
    (2) If HUD should set such a standard or time limit, what would be 
an appropriate limit, based on local experiences with rapid re-housing?
    (3) If HUD should set a standard at a particular number of days, at 
what point would the ``clock'' start--at the initial intake assessment, 
at the point the program participant is determined eligible and 
enrolled in the program, or other? Should HUD define it or allow the 
recipient or subrecipient to define it?
    (4) What impact the proposed number of days would have on local 
program administration. For example, would this conflict with any local 
goals or other program requirements?
    (5) If implemented, what should the consequence be if a recipient 
or subrecipient does not meet the standard?
    4. Housing Relocation and Stabilization Services (Sec.  576.105):
    a. Late fees. HUD is considering explicitly allowing late fees on 
the program participant's utility and rental payments (other than late 
fees

[[Page 31549]]

associated with the 6 months of rental arrears, which are already 
allowed) and utility reconnection fees for the program participant to 
be included as an allowable cost under housing relocation and 
stabilization services, and seeks comment on this proposal.
    b. Court costs (Sec.  576.105(b)(4)). HUD is considering allowing, 
as a legal services activity under Sec.  576.105(b)(4), court costs 
incurred by the landlord during an eviction proceeding as an eligible 
ESG cost, so long as it is necessary for the program participant to pay 
them in order to be stabilized in their housing. HUD is considering 
adding this because payment of this cost may help prevent homelessness 
for the program participant and it may be an incentive for landlords to 
work with the program participant. HUD seeks comment on this proposal, 
specifically:
    (1) Should HUD allow a property owner's court costs to be eligible 
under ESG? Why or why not?
    (2) Should HUD allow ESG to be used to pay a property owner's court 
costs only when a court orders the tenant to pay those costs?
    (3) If HUD should allow such costs, how would recipients/
subrecipients determine and document that the costs are ``necessary'' 
to stabilize a program participant's housing? Should HUD impose any 
limits on the amount of such costs that may be paid with ESG funds?
    c. Trash removal (Sec.  576.105(a)(5)). HUD is considering 
including trash removal as an eligible utility cost at Sec.  
576.105(a)(5), in part to be consistent with the definition of utility 
used to calculate gross rent for purposes of FMR, and in part because 
in some places, particularly rural areas, tenants are required to pay 
for trash removal. HUD seeks comment on this proposal.
    d. Mediation (Sec.  576.105(b)(3)). Under the interim rule, 
mediation cannot be used to help eligible individuals and families 
(including homeless youth) move back into housing they have left, when 
that might be the best placement for them, and the option they would 
choose. As such, HUD is considering adding language at Sec.  
576.105(b)(3) to allow ESG funds to pay for mediation services--under 
both the Rapid Re-housing and Homelessness Prevention components--to 
help individuals and families move back into their former housing and/
or move in with friends or family members, after they have already 
moved to an emergency shelter, the streets, or another place described 
in paragraph (1) of the homeless definition or, for homelessness 
prevention, after the program participant has moved to other, 
temporary, housing. HUD proposes the following language (italicized 
language added): ``ESG funds may be used pay for mediation between the 
program participant and the owner or person(s) with whom the program 
participant is living or proposes to live, to help the program 
participant move into, return to, or remain in housing.'' HUD seeks 
comment on this proposal; specifically:
    (1) What impact would this rule change have?
    (2) Are there other concerns HUD should be aware of regarding 
placing individuals and families in such housing situations?
    e. Broker fees (Sec.  576.105(b)(1)). HUD is considering explicitly 
allowing ESG to pay for fees to real estate agents, or ``broker fees,'' 
so long as the fee is reasonable and necessary for the household to 
obtain appropriate permanent housing, by including language at Sec.  
576.105(b)(1), Housing Search and Placement activities. HUD seeks 
comment on this proposal; specifically, is this a necessary cost in 
order to quickly move individuals and families to permanent housing?
    f. Housing Stability Case Management (Sec.  576.105(b)(2)). HUD has 
received numerous questions about the language in the interim rule 
stating that for ESG housing stability case management, ``. . . 
assistance cannot exceed 30 days during the period the program 
participant is seeking permanent housing . . .'' HUD included this 
provision recognizing that many clients are enrolled in Rapid Re-
housing while residing in shelters, but intentionally limited it, for 
two main reasons. First, HUD intended this restriction as an incentive 
to quickly re-house program participants, since any case management 
over 30 days would have to be paid with non-Federal funds or, if 
applicable, charged under the Street Outreach component or Emergency 
Shelter component, which are subject to an expenditure cap. Second, HUD 
intended that recipients/subrecipients that provide case management to 
persons in shelter under the Rapid Re-housing program focus on placing 
these program participants into housing. HUD aims to ensure that 
recipients/subrecipients are helping program participants obtain 
housing and not just charging essential services costs for persons in 
shelter to the Rapid Re-housing component in order to get around the 
Emergency Shelter/Street Outreach cap. However, HUD recognizes that 
sometimes it takes longer than 30 days to rapidly re-house a program 
participant. In addition, one recipient noted that HUD allows the 
payment of storage fees for up to 3 months under the Rapid Re-housing 
component and requires monthly case management to be provided during 
that time, but only allows housing stability case management to be 
charged to the Rapid Re-housing component for up to 30 days. Therefore, 
HUD seeks comment on the following questions related to this provision 
of the rule:
    (1) For program participants who are receiving assistance under 
both the Emergency Shelter and Rapid Re-housing components (i.e., those 
staying in a shelter and receiving services to get rapidly re-housed), 
how are recipients/subrecipients currently determining when to charge 
the case management costs to each component?
    (2) Has the 30-day limit on charging housing stability case 
management to the Rapid Re-housing component had an effect on 
increasing the rates at which program participants find housing? If 
not, why not?
    (3) If HUD were to change the limit to 90 days, what impact would 
this have?
    (4) If HUD eliminated this restriction, is there a different way to 
distinguish between housing stability case management and case 
management under the emergency shelter component, which is subject to 
the cap?
    g. Credit reports (Sec.  576.105(b)(5) and Sec.  576.105(b)(2)). At 
Sec.  576.105(b)(5), Credit Repair, and Sec.  576.105(b)(2), Housing 
Stability Case Management, HUD is considering allowing ESG funds to be 
used to pay for a credit report for program participants being assisted 
under the Homelessness Prevention and Rapid Re-housing components, if 
the program participant has exhausted all opportunities to receive a 
free credit report in a given year and if the report is necessary to 
stabilize the individual or family in their current housing or quickly 
move them to permanent housing. HUD seeks comments from providers' 
experience on whether this would be a helpful addition to the rule, or 
whether it would not make a difference if included.
    5. Short-Term and Medium-Term Rental Assistance (Sec.  576.106):
    a. Rental assistance in shared housing--general. HUD proposes to 
clarify in the final rule that ESG funds may be used to provide rental 
assistance in shared housing. Except for the FMR requirements 
(established under Sec.  576.106(d)(1) and addressed below), all ESG 
requirements that apply to rental assistance would apply to rental 
assistance provided in shared housing. Among other things, these 
requirements include the following:
     There must be a legally-binding, written lease between the 
owner and the program participant;

[[Page 31550]]

     There must be a rental assistance agreement between the 
recipient or subrecipient and the owner;
     The housing must meet ESG habitability standards;
     The program participant must meet the eligibility 
requirements for either Rapid Re-housing or Homelessness Prevention 
assistance;
     The rental assistance must be provided in accordance with 
the applicable written standards;
     Rental assistance may not be provided to a program 
participant who is receiving tenant-based rental assistance, or living 
in a housing unit receiving project-based rental assistance or 
operating assistance, through other public sources; and
     The shared housing must meet the rent reasonableness 
standards.
    HUD seeks comments on these ideas; specifically:
    (1) Whether HUD should adopt these policies for rental assistance 
in shared housing, and, if so, any concerns or issues that may arise in 
implementation;
    (2) Suggestions about documentation that HUD should require in 
order to reduce fraud or ensure that the landlord is not a ``support 
network'' that can assist the program participant without rental or 
financial assistance, such as a family member or friend;
    (3) Whether HUD should include all of the above or whether any 
elements should be added or deleted from the list; and
    (4) How could providing ESG rental assistance to individuals and 
families that share housing work under state or local law? How do 
recipients/subrecipients currently make this type of arrangement work, 
especially with respect to a program participant's lease, and if the 
other renters are not ESG program participants?
    b. Rental assistance in shared housing--FMR. With respect to the 
FMR for shared housing, HUD is considering establishing the following 
standard: When assisting an individual or family with rental assistance 
in shared housing, recipients and subrecipients would be required to 
use an adjusted FMR that is the household's pro-rata share of the FMR 
for the shared housing unit size. For example, in the case of a single-
person household who will occupy one bedroom in a 4-bedroom house, the 
FMR used would be the household's pro-rata share of the 4-bedroom FMR 
(i.e. \1/4\ of the 4-bedroom FMR). Note that HUD's ultimate 
determination on this issue for the final rule will be influenced by 
the comments received, and the decision made, regarding the related FMR 
issue discussed below. HUD seeks comment on this idea, or whether there 
is an alternate calculation that HUD should use for determining the FMR 
in shared housing.
    c. Rent restrictions (Fair Market Rent) (Sec.  576.106(d)): The ESG 
interim rule states that ``rental assistance cannot be provided unless 
the rent does not exceed the FMR established by HUD, as provided under 
24 CFR part 888, and complies with HUD's standard of rent 
reasonableness, as established under 24 CFR 982.507.'' HUD received 
feedback expressing concern that, unlike the Housing Choice Voucher 
program, the ESG program uses FMR to limit the units for which rental 
assistance may be provided, and this does not provide enough 
flexibility for recipients and subrecipients to quickly find available 
units. Two of HUD's goals are to ensure that the units for which ESG 
assistance is provided will be affordable to program participants after 
the assistance ends, and limit the amount that may be expended on a 
given household so that more program participants can be assisted. 
However, HUD is considering alternatives for changes to the final rule 
to provide recipients and subrecipients with more flexibility in order 
to quickly find appropriate units. The options HUD is considering to 
include in the final rule, on which HUD seeks feedback are as follows:
    (1) ESG funds could be used to pay rental assistance for units 
where the rent is at or below the payment standard set by the PHA for 
the area (i.e. up to the FMR, up to 110 percent of FMR if that is the 
PHA's payment standard, or higher if HUD has provided a waiver to the 
PHA).
    (2) ESG funds could be used to pay rental assistance for units 
where the rent is above FMR, but ESG funds could only be used to pay up 
to the FMR amount (any amount of rent above the FMR would have to be 
paid by either the program participant, or the recipient/subrecipient 
with non-ESG funds). However, HUD is concerned that allowing program 
participants to pay for the cost of a unit above FMR might disadvantage 
those who need the ESG assistance most, since it might be easier to 
find units above the FMR and therefore, those who are more able to 
contribute to the rent would be more likely to receive ESG assistance. 
Therefore, HUD also seeks comments as to as the extent of this risk and 
if there are any requirements that can be put into place to prevent 
this practice.
    (3) ESG could require only the rent reasonableness standard for 
rapid re-housing, but require both the FMR and rent reasonableness 
standard for homelessness prevention assistance. This might be one way 
to both increase flexibility and also encourage recipients and 
subrecipients to provide more rapid re-housing assistance.
    (4) HUD could adopt the standard used in the HOPWA program, 
described at 24 CFR 574.320(a), which allows recipients (or possibly 
subrecipients) to establish a rent standard that is no more than the 
published FMR used for Housing Choice Vouchers or the ``HUD-approved 
community-wide exception rent for the unit size. However, on a unit by 
unit basis, the [recipient] may increase that amount by up to 10 
percent for up to 20 percent of the units assisted.''
    (5) HUD could maintain the FMR and/or rent reasonableness standards 
but add in some other type of flexibility--HUD seeks suggestions for 
additional options.
    Note that in all cases HUD is planning to continue to require that 
the unit at least meet the rent reasonableness standard. Finally, one 
of HUD's primary concerns is that the program participants be able to 
remain in the unit after the assistance ends. If HUD included one of 
the above options to provide more flexibility to recipients and 
subrecipients by paying higher rents, how could they ensure that the 
units would remain affordable to program participants without housing 
assistance?
    In addition, HUD is considering only allowing a recipient to pay 
rent over the FMR if the recipient includes its proposal to do so in 
the Consolidated Plan/Action Plan. That way, the recipient would be 
required to obtain and assess citizen feedback as to whether additional 
flexibility is necessary in its area before being able to pay rents 
above FMR.
    d. Last month's rent, security deposits, and rental arrears 
(Sec. Sec.  576.105(a) and 576.106).
    (1) HUD is considering re-categorizing ``last month's rent'' and 
``security deposit'' as rental assistance, rather than housing 
relocation and stabilization services (financial assistance), because 
last month's rent is counted in the maximum-allowed 24 months of 
assistance, which could be confusing. Last month's rent is often paid 
at the same time as the security deposit, so it might make sense to 
consider them together. If this change is made, the FMR/rent 
reasonableness standards and lease and rental assistance agreement 
requirements would apply when security deposits and last month's rent 
are used to move a program participant into a unit. HUD will also 
consider consistency with the CoC Program in making a final decision. 
HUD seeks

[[Page 31551]]

comment about this proposal, specifically whether the proposal would 
reduce confusion and improve administrative ease or whether there are 
potential negative consequences, and if so, what are they?
    (2) HUD is considering explicitly stating that the FMR and rent 
reasonableness standards apply when rental arrears are being paid for a 
unit in which the program participant is staying, but not when the 
rental arrears are being paid for a unit in which the program 
participant no longer lives or is leaving. HUD seeks comment on this 
and any potential issues that could arise if HUD were to adopt this 
policy.
    e. Providing subrecipients with discretion to set caps and 
conditions (Sec.  576.106(b)). HUD is considering changing the language 
as follows, to enable subrecipients to set caps on the assistance 
provided to a household (italicized language added): ``Subject to the 
requirements of this section, the recipient or subrecipient 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, 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.'' HUD seeks comments on this; in particular, any 
concerns that recipients might have with providing subrecipients with 
this discretion.
    f. Rental Assistance Agreement requirements (Sec.  576.106(e)).
    (1) HUD is considering listing the elements that must, at a 
minimum, be included in the rental assistance agreement. The following 
two elements are already required in the interim rule, and HUD plans to 
keep them in the final rule:
     The same payment due date, grace period, and late payment 
penalty requirements as the program participant's lease; and
     A provision requiring the owner to give the recipient/
subrecipient a copy of any notice to the program participant to vacate 
the housing unit, or any complaint used under state or local law to 
commence an eviction action against the program participant.
    HUD seeks comment on which, if any, of the following new 
requirements to include, and seeks suggestions on any others that 
should be required:
     The term of the assistance (e.g., number months for which 
it is being provided);
     The type of assistance being provided (e.g., tenant- or 
project-based rental assistance, rental arrears);
     The amount of funds to be paid by the recipient/
subrecipient and the amount to be paid by the tenant;
     the address of the property for which payments are being 
made; and
     the signature and date of both the recipient/subrecipient 
representative and the property owner.
    (2) The interim rule states that ``a recipient or subrecipient may 
make rental assistance payments only to an owner with whom the 
recipient or subrecipient has entered into a rental assistance 
agreement.'' HUD proposes to specify in the final rule that when ESG 
Rapid Re-housing assistance, either project-based or tenant-based, is 
used to assist a program participant to move into housing owned by a 
recipient or subrecipient, a rental assistance agreement is not 
required. However, under this proposal, the organization would be 
required to document and maintain on file the elements required to be 
included in a rental assistance agreement. HUD seeks comment on this 
proposal.
    g. Lease (Sec.  576.106(g)). HUD is proposing to add the following 
requirement to the lease provision of the ESG final rule, for tenant-
based rental assistance (it currently only applies to PBRA), and seeks 
comments on this proposal: ``The program participant's lease must not 
condition the term of occupancy on the provision of rental assistance 
payments or the household's participation in the ESG program.''
    h. Using ESG funds for an unoccupied unit. HUD is considering 
allowing ESG recipients to choose to continue to assist a current 
program participant with ESG funds, in tenant- or project-based rental 
assistance, when a program participant is in an institution (such as a 
hospital or jail) during a portion of the time they are receiving ESG 
assistance. If implemented, ESG funds could be used for up to 90 days 
while that program participant is in the institution. However, if the 
recipient/subrecipient has knowledge that the program participant will 
not exit the institution before 90 days (e.g., if the program 
participant's jail sentence is for longer than 90 days), then the month 
in which the program participant enters the institution is the last 
month for which ESG funds may be used for the program participant's 
unit. This change would ensure consistency with the CoC Program. HUD 
seeks comment on this proposal.
    i. Advance payments of rental assistance (Sec.  576.105(a)(3)). HUD 
is considering prohibiting payments of rental assistance to a property 
owner for more than 1 month at a time in advance (except when providing 
an advance payment of the last month's rent under section Sec.  
576.105(a)(3)), and seeks comments on this idea.
    j. Subleasing. Under the interim rule, subleasing--that is, the 
person or organization that holds the primary lease with the owner 
enters into a lease with an individual to rent the unit--is not 
allowed, for either tenant-based or project-based rental assistance. If 
HUD allowed subleasing in the final rule:
    (1) Would this allow recipients to more effectively serve program 
participants?
    (2) Would it make a significant difference for program 
participants? In what ways would it help them?
    (3) What language could HUD include in the final rule that would 
ensure that (a) program participants' rights are protected, and (b) the 
appropriate payments are made to the owner?
    k. Tenant-based rental assistance (TBRA) (Sec.  576.106(h)). HUD 
has received numerous questions about whether recipients may provide 
ESG assistance outside their Con Plan jurisdiction, allow program 
participants to move outside their jurisdiction, or limit assistance to 
residents of the jurisdiction. HUD is considering changing the language 
at Sec.  576.106(h)(2) to specify the circumstances under which any of 
the options listed above may be carried out. HUD is considering the 
following revisions, and seeks comment on them:
    (1) Under ESG TBRA, the program participant must be able to choose 
the unit in which they will live, with the following specifications:
    (i) The recipient may allow a program participant to choose a unit 
outside of the recipient's jurisdictional boundaries, may limit TBRA to 
the recipient's jurisdictional boundaries, or, when necessary to 
facilitate the coordination of supportive services, may limit TBRA to a 
designated geographic area that encompasses, overlaps, or falls within 
the recipient's jurisdictional boundaries.
    (ii) Unless otherwise specified by the recipient, a unit of general 
purpose local government that administers TBRA as a subrecipient may 
allow a program participant to choose a unit outside of the local 
government's jurisdictional boundaries, may limit TBRA to the local 
government's jurisdictional boundaries, or, when necessary to 
facilitate the coordination of supportive services, may limit TBRA to a 
designated geographic area--such as the CoC's geographic area--that 
encompasses, overlaps, or falls within the recipient's jurisdictional 
boundaries.

[[Page 31552]]

    (iii) Unless prohibited by the recipient, a private nonprofit 
organization that administers TBRA as a subrecipient may allow a 
program participant to choose a unit outside of the recipient's 
jurisdictional boundaries or, when necessary to facilitate the 
coordination or provision of services, may limit TBRA to a designated 
geographic area--such as the CoC's geographic area or a smaller area 
within the recipient's jurisdiction--that encompasses, overlaps, or 
falls within the recipient's jurisdictional boundaries.
    (2) The amount or type of assistance cannot be conditioned on the 
program participant moving outside the jurisdiction's boundaries (that 
is, a recipient or subrecipient may not require that a program 
participant move outside the jurisdiction in order to receive the 
rental assistance).
    (3) HUD is considering establishing a requirement, in the final 
rule, that recipients must not deny ESG Rapid Re-housing assistance to 
homeless individuals and families based on whether or not their last 
permanent residence was in the recipient's jurisdiction. That is, if a 
person is homeless on the streets or in an emergency shelter in a 
jurisdiction and is seeking ESG-funded Rapid Re-housing assistance, 
they must be able to be assessed for, and, if eligible, receive, ESG 
Rapid Re-housing assistance, regardless of whether their last residence 
was inside or outside of the jurisdiction. HUD seeks comment on this 
idea, and feedback about any issues that this might raise with the 
implementation of ESG or communities' efforts to end homelessness.
    l. Project-based rental assistance (PBRA) (Sec.  576.106(i)). HUD 
received many comments about how to implement PBRA for the Rapid Re-
housing and Homelessness Prevention components. HUD recognizes that 
using ESG funds to provide PBRA for these types of assistance is 
challenging; however, including PBRA as an option for recipients and 
subrecipients to use when providing assistance is statutorily required. 
Therefore, HUD is looking for ways to further align the rule with TBRA 
and eliminate some of the burdensome requirements. However, at its 
core, PBRA is a different type of housing solution and carries with it 
special considerations. Below are issues related to PBRA about which 
HUD is considering revisions to the rule and on which HUD seeks 
additional public comment. HUD welcomes other suggestions on ways to 
improve the administration of PBRA as well.
    (1) HUD is considering defining ``project-based rental assistance'' 
as follows: ``Project-based rental assistance, for purposes of the ESG 
program, means rental assistance that a recipient or subrecipient 
provides for individuals or families who live in a specific housing 
development or unit, and the assistance is attached to the development 
or unit.''
    (2) Some commenters recommended that HUD remove the 1-year lease 
requirement and allow for a lease like TBRA with a flexible term. HUD 
is considering adopting this recommendation, but seeks additional 
comment on potential impacts that this policy would have.
    (3) The interim rule, at Sec.  576.106(i)(4), provides that if the 
project-based rental assistance payments are terminated for a 
particular program participant, the household may stay in its unit 
(subject to the terms of the lease) and the rental assistance may be 
moved to another unit in the same building. HUD is considering allowing 
the assistance to be transferred to another unit in a different 
building in the same development, and seeks comment on this idea, 
particularly whether it would increase flexibility.
    6. Administrative Activities (Sec.  576.108) & Indirect Costs 
(Sec.  576.109):
    a. Training. For Sec.  576.108(a)(2), HUD is considering changing 
the language in the final rule to allow ESG to pay for the costs of a 
subrecipient to attend a training provided by the recipient on ESG, and 
more clearly establish the limits of the training allowed under ESG, as 
follows: ``Eligible training costs include the costs of providing 
training on ESG requirements and attending HUD-sponsored, HUD-approved, 
or recipient-sponsored ESG training.''
    b. Other comments. HUD seeks other feedback regarding changes it 
should make for the final rule about eligible Administrative costs and 
indirect costs. However, note that the 7.5 percent cap on 
Administrative costs is statutory and therefore HUD is prohibited from 
changing it. Also, HUD must also comply with the OMB requirements on 
cost principles when making any changes to the language.
    7. Submission Requirements and Grant Approval (Joint Agreements) 
(Sec.  576.200): MAP-21 included a provision allowing the following: 
``A metropolitan city and an urban county that each receive an 
allocation under such title IV [of the McKinney-Vento Homeless 
Assistance Act] and are located within a geographic area that is 
covered by a single continuum of care may jointly request the Secretary 
of Housing and Urban Development to permit the urban county or the 
metropolitan city, as agreed to by such county and city, to receive and 
administer their combined allocations under a single grant.'' In the 
final rule, HUD is considering establishing the requirements for 
recipients to request a joint allocation of ESG funds, and seeks 
comment on the following ideas:
    a. Coordination with CDBG. A jurisdiction may only enter into a 
joint agreement with another jurisdiction for ESG if it will also have 
a joint agreement with that jurisdiction for CDBG for the same program 
year. Also, under the CDBG program, only a single metropolitan city and 
urban county may enter into a joint agreement; therefore, this 
limitation would apply to ESG as well. That is, only a metropolitan 
city and urban county that each receives an ESG allocation, which are 
located within a geographic area that is covered by a single CoC and 
which receive a joint allocation for CDBG, may enter into joint 
agreements.
    b. Timing of the joint agreement. The first time the jurisdictions 
enter into a joint agreement, the entities may enter into a joint 
agreement for any program year (that is, they would not have to wait 
until the next time the urban county requalifies as an urban county to 
enter into a joint agreement). However, the duration of the agreement 
must be until the next time the urban county requalifies as an urban 
county (currently this occurs every 3 years).
    c. Lead entity responsibilities. The recipients must select a 
``lead entity'' for the joint grant, which must be the lead entity for 
CDBG. The responsibilities of the lead entity are as follows:
    (1) The lead entity, as the ESG recipient, assumes full 
responsibility for the execution of the ESG program under 24 CFR part 
576, with respect to the Consolidated Plan requirements at 24 CFR part 
91, and with respect to the joint grant. HUD will hold the lead entity 
accountable for the accomplishment of the ESG program, for following 
its Consolidated Plan, the grant agreement, and for ensuring that 
actions necessary for such accomplishment are taken by all 
subrecipients; and
    (2) The lead entity is required to submit the ESG portions of the 
Action Plan and the CAPER for the entire geographic area encompassed by 
the joint agreement.
    d. Cooperation agreement. The jurisdictions must execute a legally 
binding ``cooperation agreement'' that establishes each recipient's 
desire to combine their grant allocations and administer a joint ESG 
program, establishes which government will be the lead entity, 
identifies and authorizes the lead entity to act in a representative

[[Page 31553]]

capacity for the other government for the purposes of the joint ESG 
program, and provides that the lead entity assumes overall 
responsibility for ensuring the joint ESG program is carried out in 
compliance with the requirements of 24 CFR part 576.
    e. Requirements of the joint request. The lead entity must submit 
the joint request to HUD before the entities start their Consolidated 
Plan in the eCon Planning Suite (this is because a single 
identification is required in the system). At a minimum, the joint 
request must include:
    (1) A letter from the lead entity that identifies which governments 
seek to combine their grant allocations and administer a joint ESG 
program for their jurisdictions and indicates which federal fiscal 
year(s) grants the governments seek to combine;
    (2) A copy of the cooperation agreement; and
    (3) Documentation that shows the lead entity has sufficient 
authority and administrative capacity to administer the joint grant on 
behalf of the other government (if the joint agreement arrangement 
requires the lead entity to provide assistance outside its 
jurisdiction, the lead entity may want to consider including this in 
the documentation, specifically).
    f. Approval of the joint request. A joint request will be deemed 
approved unless HUD notifies the city and the county otherwise within 
45 days following submission of the joint request.
    g. Consolidated Plan requirements.
    (1) The metropolitan city and urban county must align their 
Consolidated Plan program years (done via the process at Sec.  91.10).
    (2) For the program year that the jurisdictions enter into a joint 
agreement, HUD is reviewing whether to require the lead entity to 
submit a new Consolidated Plan (because the former Consolidated Plan 
would no longer reflect the correct recipient and information). 
However, in the case that entities enter into a joint agreement in the 
middle of an urban county requalification period, this would not 
``restart the clock'' for that time period.
    i. Grant amount total. When two or more entities enter into a 
cooperation agreement and sign a joint grant agreement with HUD, the 
grant amount is the sum of the amounts authorized for the individual 
ESG recipients.
    j. ESG subrecipient. An urban county or metropolitan city that has 
entered into a joint agreement under the ESG program is permitted to 
apply to the state for ESG funds, if the state allows.
    8. Matching Requirement (Sec.  576.201):
    HUD has received numerous questions seeking clarifications on the 
match requirements. HUD is carefully reviewing whether and how to amend 
and clarify this section, with the goal of helping recipients better 
understand the match requirement and be able to meet it. HUD seeks 
comment on the following ideas:
    a. Additional sources of matching contributions. HUD received a 
comment requesting that HUD reconsider Sec.  576.201(c)(1), in which 
all matching contributions must meet all requirements that apply to the 
ESG funds provided by HUD . . .'' HUD is considering adding exceptions 
to this rule--that is, HUD is considering providing a list of 
activities that are not eligible to be paid for with ESG funds but 
could be used as match, because they are technically eligible according 
to the statute, but not by rule. This list would include costs such as: 
Training costs for ESG recipients/subrecipients at ESG-related (but not 
HUD-sponsored) conferences such as those hosted by the National 
Alliance to End Homelessness or the Council of State Community 
Development Agencies (COSCDA); or the cash value of donated household 
furnishings and furniture for program participants to help establish 
them in housing, which can contribute to stability. HUD seeks comment 
on this proposal and suggestions for other items to include on this 
list.
    b. Cash match. HUD is considering additional ways to enable 
subrecipients to contribute match to the recipient's program to meet 
the matching requirement. Section 416 of the McKinney-Vento Homeless 
Assistance Act states that recipients are ``required to supplement the 
[ESG funding] . . . with an equal amount of funds from sources other 
than [ESG].'' HUD has interpreted this requirement to mean that the 
matching funds must be contributed to and used to support the 
recipient's ESG program. Any policy designed to improve flexibility 
must meet this statutory requirement. Given this restriction, HUD seeks 
feedback and ideas for ways to clarify or expand the current regulatory 
language to improve recipients' ability to meet the matching 
requirement. One possible scenario HUD is considering changing the 
regulation to allow is where a subrecipient conducts two (or more) ESG-
eligible activities--for example, emergency shelter and rapid re-
housing--but only has an agreement with the recipient to receive ESG 
funds for one--for example, rapid re-housing. HUD is considering 
changing the rule to allow the funds spent on emergency shelter 
activities (in this example) to be used to meet the matching 
requirement, if the activity is conducted in accordance with all ESG 
requirements and if the recipient includes this emergency shelter 
activity as a part of the recipient's overall program design (e.g. in 
the Action Plan and CAPER). HUD might even consider requiring it to be 
included in the subrecipient's funding agreement, but seeks comment on 
whether this would be too burdensome. Would this be helpful? Are there 
any other issues HUD should consider in determining whether and how to 
change this policy?
    c. Noncash contributions (depreciation of donated buildings) (Sec.  
576.201(d)(2)). The interim rule does not allow the depreciation of the 
value of a donated building to be used as match, because currently, for 
donated buildings, match only includes the purchase value of the 
building in the year it was donated. HUD is considering allowing 
depreciation of donated buildings to be used as a source of in-kind 
match in the final rule, by changing the language at Sec.  
576.201(d)(2) to the following:

For equipment and buildings donated by a third party, the recipient 
may count as match either the property's fair market value or the 
depreciation amounts that would otherwise be allowable costs. The 
fair market value must be independently appraised when the recipient 
or subrecipient receives title. This value may only be divided and 
counted as match for fiscal year grants that are active when the 
property is first used in an ESG activity or project. If a 
property's fair market value is counted as match, the property's 
depreciation amounts cannot be counted as match or allowable costs 
for any federal grant. Annual depreciation amounts must be 
determined in a manner consistent with Generally Accepted Accounting 
Principles (GAAP) and may be counted as match for those fiscal year 
grants for which the amounts would be allowable costs under the 
applicable cost principles, provided that those amounts are never 
charged to any Federal grant.

    d. Memorandum of understanding for noncash services as match. For 
noncash services (e.g., volunteer services), HUD is also considering 
adopting the CoC Program requirement (at Sec.  578.73(c)(3)), requiring 
a memorandum of understanding between the recipient or subrecipient and 
the third party that will provide the services. This would provide for 
consistency with the CoC Program and also ensure that the amounts used 
as match are consistently applied.
    e. When to count matching funds. HUD proposes to clarify that the 
matching funds are counted as match for the ESG program when the 
allowable cost is incurred, or, for in-kind match,

[[Page 31554]]

when the donated service is actually provided to the recipient/
subrecipient or the donation is used for the program.
    f. Other programs as match for ESG. Sometimes, other programs 
cannot be used as match for ESG because their requirements conflict 
with ESG requirements. For example, HOME TBRA funds may be used for 
more than 24 months, whereas ESG funds are capped at 24 months of 
assistance (also, HOME TBRA funds must not require services, whereas 
ESG requires monthly case management under the interim rule--see 
section II.C.15.b. of this Notice). In the final rule, HUD is 
considering specifying that when HOME TBRA, or any program where the 
program time limit may be extended beyond 24 months, is used as match 
for the ESG Program funds, any renewal to extend that other program's 
assistance beyond 24 months would not invalidate its use as match for 
ESG for up to 24 months. In other words, the ESG recipient would be 
able to count as match the HOME TBRA funds that meet all of the ESG 
requirements for up to 24 months (if the case management requirement is 
removed, as discussed below), but not count any funds expended beyond 
that time period. HUD seeks comment on this idea.
    9. Obligation, Expenditure, and Payment Requirements (Sec.  
576.203(a)(i)):
    a. State as HMIS lead. To account for situations where the state is 
the HMIS lead, HUD is considering augmenting the state obligation 
requirement, as follows: ``With respect to funds for HMIS: if the state 
is the HMIS lead, this requirement may be met by a procurement contract 
or written designation of a department within the state government to 
directly carry out HMIS activities.''
    b. Exceptions. HUD is considering adding an exception to Sec.  
576.203, to allow HUD to grant a recipient an extension of up to 3 
months for the obligation requirements and up to 12 months for the 
expenditure deadline, for good cause.
    c. Subrecipient agreements. HUD is considering establishing, in the 
final rule, minimum elements that must be included in any subrecipient 
agreement. Although 2 CFR part 200 includes certain elements that must 
be provided to subrecipients at the time of the award (at 2 CFR part 
200.331), the ESG rule contains more specific language about the ESG 
requirements that apply to subrecipients and language that must be 
included in the subrecipient agreement (such as any written standards 
the recipient requires the subrecipient to develop), so it might be 
helpful to include them all in one place. HUD seeks comment on whether 
it would be most helpful to include the minimum required elements for a 
subrecipient agreement in the regulation (e.g. to improve ease of 
recipients for monitoring their subrecipients and/or reduce burden for 
recipients), or whether to instead issue guidance, such as a sample 
subrecipient agreement.
    10. Pre-Award Costs (Sec.  576.204): HUD is reviewing whether to 
explicitly allow pre-award costs in the final rule, and to describe 
requirements that must be met before charging them to the grant. HUD is 
considering including the following language:

    ESG recipients may use grant funds to pay pre-award costs 
incurred on or after the recipient's program year start date, under 
the following conditions:
    (1) The costs and corresponding activities must comply with the 
requirements under this part (including the environmental review 
requirements in section Sec.  576.407(d)); and
    (2) Before incurring pre-award costs, the recipient must 
describe the corresponding activities in its proposed action plan 
and satisfy the recipient's citizen participation plan requirements 
addressing Sec.  91.105(b) (for local governments and territories) 
or Sec.  91.115(b) (for states).

    11. Reallocations (Sec. Sec.  576.301, 576.302, and 576.303):
    a. Timeframe for substantial amendments (Sec.  576.301(c), Sec.  
576.302(c), and Sec.  576.303(d)). HUD is considering lengthening the 
time allowed for a recipient to submit a substantial amendment to its 
Consolidated Plan when the recipient has received reallocated funds, 
from 45 days after the date of notification to 60 or 90 days after the 
date of notification, or even allowing state recipients to reallocate 
the funds within its normal Consolidated Plan allocation process. This 
would allow recipients to have more time and flexibility to align the 
substantial amendment and funds with the following year's Consolidated 
Plan/Action Plan. HUD seeks comment on this proposal.
    b. Reallocation of State ESG funds (Sec.  576.302). HUD is also 
considering changes to the process when a State declines its ESG 
allocation, which is described at Sec.  576.302. HUD seeks comment on 
the following two options:
    (1) Remove the paragraph at Sec.  576.302(a)(2), which requires HUD 
to make ESG funds available to all of the non-urban counties in a 
state. HUD is considering this change because it believes it might be 
administratively infeasible for a number of reasons, including that 
each of the non-urban counties would be required to develop and submit 
an abbreviated Consolidated Plan that meets HUD's requirements. It is 
likely that the metropolitan cities and urban counties that already 
receive an allocation of CDBG funds are those best suited for, and 
capable of, administering the ESG program; or
    (2) Change the requirement so that the funds declined by a state 
are distributed by formula to other state recipients.
    c. Reallocation of local government ESG funds (Sec.  576.301(d)). 
HUD is considering the following change related to reallocation of 
grant funds returned by a metropolitan city or an urban county, under 
Sec.  576.301(d) (changed or added sections italicized):

    The same requirements that apply to grant funds allocated under 
Sec.  576.3 apply to grant funds reallocated under this section, 
except that the state must distribute:
    (1) Funds returned by metropolitan cities:
    (i) First, to private nonprofit organizations operating in the 
metropolitan city's jurisdiction;
    (ii) If funds remain, to private nonprofit organizations and 
units of general purpose local government located throughout the 
state; and
    (2) Funds returned by urban counties:
    (i) First, to private nonprofit organizations and units of 
general purpose local government within the county, excluding 
metropolitan cities that receive ESG funds and governments that are 
part of the urban county;
    (ii) Next, to metropolitan cities within the county that receive 
ESG funds; then
    (iii) If funds remain, to private nonprofit organizations and 
units of general purpose local government located throughout the 
state, excluding governments that are part of the urban county.

    12. Area-Wide Systems Coordination Requirements--Consultation and 
Coordination (Sec.  91.100(a)(2) and (d), Sec.  91.110(b) and (e), 
Sec.  576.400(a), (b), and (c)):
    a. ESG recipient Consultation with Continuums of Care. HUD 
recognizes that for some ESG recipients, such as states that must 
coordinate with many CoCs and metropolitan cities/urban counties that 
must coordinate with regional CoCs, the requirements in this section of 
the regulation can present a challenge. However, HUD believes that this 
consultation process is critical for the ESG recipient to be able to 
plan for the best use of resources in the relevant area(s). HUD has 
received many questions about how ESG recipients should consult with 
the CoC(s) to meet the current requirements effectively. Based on these 
questions, HUD seeks general comment on the following questions to 
inform the inclusion of any additional consultation requirements in the 
final rule:
    (1) The practices and processes that recipients and CoCs have used 
to meet the consultation requirements and

[[Page 31555]]

feedback, positive and negative, based on local experiences with the 
consultation process. HUD seeks constructive suggestions on how to 
improve local consultation, particularly through changes to the final 
rule.
    (2) HUD received a comment that it may be particularly difficult 
for ESG recipients to consult and coordinate with Balance of State 
CoCs. HUD is interested in hearing from other state recipients on 
whether they are experiencing a similar challenge. HUD also seeks 
comment on whether there are any requirements that could be added or 
removed from the interim rule to alleviate this issue.
    (3) With respect to reallocation of funds under Sec.  576.301, HUD 
is considering adding a stronger role for CoCs, in particular to help 
decide where the funds should be allocated. HUD is considering 
requiring that a state ESG recipient consult with the CoC covering the 
jurisdiction that returned the funds, and, if funds remain after the 
state distributed funds in accordance with Sec.  576.301(d)(1), then 
the state must consult with CoCs covering other areas of the state in 
which it proposes to distribute the funds in accordance with Sec.  
576.301(d)(2). HUD seeks comment on this potential requirement.
    (4) Should HUD specify different standards for consultation for 
different types or sizes of jurisdictions? For example, when the 
metropolitan city's or urban county's jurisdiction covers the exact 
geographic area as the CoC, HUD could require monthly consultation; for 
a county-based CoC with more than one ESG recipient, HUD could require 
consultation four times per year with each ESG recipient; for a state 
ESG recipient that includes multiple CoCs, HUD could require a lower 
level of consultation. HUD seeks feedback on this concept.
    (5) Should HUD require an MOU between the CoC and the Consolidated 
Plan jurisdiction detailing how they will collaborate?
    b. Defining ``consultation,'' ``coordinating,'' and 
``integrating.'' HUD received several comments requesting a definition 
of ``consultation'' with CoCs (Sec.  576.400(a)), examples of 
``coordinating and integrating'' ESG-funded activities with other 
programs targeted to homeless people in the area covered by the CoC 
(Sec.  576.400(b)) and with mainstream resources for which homeless and 
persons at risk of homelessness might be eligible (Sec.  576.400(c)). 
Therefore, HUD seeks comment on the following questions:
    (1) Should definitions of ``consultation,'' ``coordinating,'' and 
``integrating'' be included in HUD's regulations in 24 CFR part 91 and/
or 24 CFR part 576? Considering the manner in which your jurisdiction 
currently consults, coordinates, and integrates, what should the 
definition(s) include? HUD is particularly interested in how an ESG 
recipient whose jurisdiction is incorporated into multiple CoCs' 
geographic areas, especially states, meets these requirements and what 
sort of definition would work best for these recipients.
    (2) Instead of establishing one definition, HUD could require 
jurisdictions to define these terms themselves in their Consolidated 
Plan, and meet their own requirements. Would jurisdictions prefer this 
option? HUD specifically requests examples of definitions that 
jurisdictions would implement.
    (3) Should HUD set a different standard for states? If so, how 
should it be different?
    c. Improving collaboration between ESG recipients and CoCs. HUD is 
considering a change to the CoC Program interim rule and the ESG 
interim rule that would require all CoC boards to include a member from 
at least one Emergency Solutions Grants program (ESG) recipient's staff 
located within the CoC's geographic area. HUD would consider this 
change in order to promote meaningful collaboration between CoCs and 
ESG recipients. For states and other recipients whose jurisdictions 
cover more than one CoC, this might mean that a representative of the 
recipient would be required to be on multiple CoC boards. When a CoC's 
geographic area contains multiple ESG recipients' jurisdictions, it 
might mean that not all ESG recipients will be required to be on the 
CoC's board. However, when asked to participate on the CoC's board, ESG 
recipients would be required to participate. Ultimately, it is the 
responsibility of the CoC to develop a process for selecting the board. 
HUD is requesting comment on this proposed requirement for ESG 
recipients, including potential challenges. Ensuring that ESG 
recipients are coordinating closely with the CoC is important to HUD; 
therefore, in communities where ESG recipients and/or CoCs do not 
believe that this requirement is feasible, HUD asks commenters to 
provide suggestions for how ESG recipients can be involved in the CoC 
at one of the core decision-making levels.
    d. Consulting with tribal groups. HUD received several comments 
requesting that HUD include tribal groups as a part of the required 
consultation process. Should HUD require consultation with tribal 
groups to the extent that the recipient intends to fund organizations 
serving people or activities on tribal lands?
    e. Requiring coordination with CoC and Rural Housing Stability 
Programs (Sec.  576.400(b)). HUD proposes to add the CoC and Rural 
Housing Stability Programs to the list of ``other targeted homeless 
services'' with which ESG recipients must coordinate, at Sec.  
576.400(b).
    f. Other feedback. In general, with respect to the consultation and 
coordination requirements:
    (1) HUD seeks suggestions about particular provisions of the 
regulation that could be added or removed to assist with implementation 
and to make the process more useful for jurisdictions and CoCs.
    (2) HUD also seeks feedback about current experiences with the 
consultation requirements, including what processes and procedures 
recipients are currently using to meet the requirements, how well these 
are working in the community, and whether there are specific 
impediments with the current consultation requirements.
    13. Area-Wide Systems Coordination Requirements--Coordinated 
Assessment (Sec.  576.400(d)): HUD received numerous comments on the 
coordinated assessment requirement in the first public comment period, 
particularly related to what costs are eligible and how to charge them 
to the ESG grant. HUD is considering addressing these issues in 
guidance or including clarifications in the final rule. In addition, 
HUD intends to change the term ``coordinated assessment'' to 
``coordinated entry'' in both the ESG and CoC final rules, and 
therefore uses the term ``coordinated entry'' in this Notice. However, 
HUD has also received questions about the following issues, and seeks 
comment as to whether any changes should be made in the final rule with 
respect to these questions:
    a. Coordinated entry for walk-ins. How would coordinated entry work 
under circumstances where the recipient or subrecipient conducts intake 
based on who walks in--for example, legal services provided on site at 
a courthouse? Are there special considerations for such instances that 
HUD should consider in the final rule?
    b. Coordinated entry and Street Outreach. Section 576.400(d): HUD 
is considering changing Sec.  576.400(d) to clarify that that use of 
the coordinated entry is not required when providing services under the 
Street Outreach component. However, the use of coordinated entry will 
continue to be required by recipients and subrecipients of all other 
forms of ESG assistance.

[[Page 31556]]

    14. Area-Wide Systems Coordination Requirements--Written Standards 
for ESG Recipients (Sec. Sec.  91.220(l)(4) and 91.320(k)(3), and 
576.400(e)): In its Action Plan, each ESG recipient must establish and 
consistently apply, or, if it is a state, elect to require that its 
subrecipients establish and consistently apply, written standards for 
providing ESG assistance, in accordance with Sec.  91.320(k)(3) for 
states and Sec.  91.220(l)(4) for metropolitan cities and urban 
counties and territories. HUD seeks comment on the following questions 
related to the required written standards:
    a. When subrecipients receive ESG funds from multiple recipients. 
An ESG recipient or subrecipient could be subject to differing, or even 
conflicting, written standards. For example, this could occur when a 
nonprofit subrecipient receives ESG funds from both a state and local 
government and is subject to two sets of written standards. HUD seeks 
comments on recipient and subrecipient experiences with multiple 
funding sources and complying with conflicting written standards. 
Specifically:
    (1) What have recipients and subrecipients done to resolve any 
conflicts or prevent confusion?
    (2) Has this been a significant issue? Should HUD address this 
issue in the final rule, and if so, how? One option could be for HUD to 
require the local (metropolitan city or urban county) recipient's 
standards to supersede the state's standards when there is a conflict. 
What issues might arise if HUD were to establish this requirement?
    b. Asset policy. Under the former Homelessness Prevention and Rapid 
Re-Housing Program (HPRP), HUD recommended that grantees and 
subgrantees develop policies to evaluate a household's assets, as a 
part of considering the full array of ``resources and support 
networks'' available to a program participant. HUD also recommended 
that this policy be consistent throughout the CoC. Under the ESG 
written standards, HUD is considering requiring recipients to develop 
such a policy regarding the treatment of assets, in order to more 
consistently and completely assess a household's resources during the 
initial and reevaluation for Homelessness Prevention and reevaluations 
for Rapid Re-housing assistance. HUD seeks comment on local experiences 
with this under HPRP and whether adding this as a requirement in the 
written standards would help provide consistency in assessing resources 
and assets during the initial evaluation and reevaluations for ESG 
assistance.
    c. Written standards for subrecipients of local governments. In 
order to provide a greater amount of local flexibility in limiting and 
prioritizing eligibility for ESG assistance, HUD is considering 
allowing ESG recipients that are local governments and territories to 
pass the requirement to establish written standards down to their 
subrecipients, similar to the regulation for states at Sec. Sec.  
91.320(k)(3) and 576.400(e)(2).
    d. Other feedback. HUD will carefully consider the written 
standards to be included in the final rule, and seeks feedback about 
the current written standards, based on recipient and subrecipient 
experiences. Specifically:
    (1) How have the existing written standards helped the recipient or 
subrecipient design and run its ESG program?
    (2) Are there other written standards that HUD should be require? 
Are there any that are not useful?
    (3) Are there any where a slight clarification in the language 
would help recipients understand and implement the requirement more 
effectively?
    e. Written standards for projects. If HUD were to adopt the 
definition of ``project'' proposed earlier in this Notice, HUD would 
consider allowing written standards to be established at the project 
level. The purpose of doing this would be to improve the ease of 
administering the program, for recipients and subrecipients. For 
example, if an emergency shelter project consists of more than one 
emergency shelter buildings, allowing a recipient--or even a 
subrecipient--to establish written standards at the project level may 
be administratively easier. HUD seeks comment on whether this would be 
helpful, or whether there might be any problems with adopting written 
standards at the project level.
    f. Limiting eligibility and targeting ESG assistance. HUD proposes 
to specify, in the final rule (either in the written standards at Sec.  
576.400(e) or at Sec.  576.407), when and how recipients and 
subrecipients may establish stricter criteria for eligibility and 
target assistance to particular groups and subpopulations of homeless 
persons. Under the interim rule, the recipient, or subrecipient, under 
limited circumstances, may only allow targeting or limiting of 
eligibility via the written standards; if not included with sufficient 
specificity, subrecipients may not target program participants or 
impose stricter eligibility criteria. For example, a project designed 
for homeless veterans and their families must serve homeless persons 
who are not veterans unless the applicable written standards explicitly 
authorize that project or project type to limit eligibility to veterans 
and their families. HUD seeks to make this process simpler, and 
establish clearer guidelines. HUD is considering allowing subrecipients 
to target and set stricter eligibility criteria with the approval of 
the recipient--without requiring that the policy be included in the 
written standards--or allowing the recipient to establish a policy for 
targeting or setting stricter eligibility criteria for all 
subrecipients in the written standards.
    Specifically, HUD seeks comment on the following questions 
regarding the requirements at Sec.  576.400(e) related to establishing 
stricter eligibility criteria or prioritizing ESG assistance:
    (1) At what level should decisions about targeting and eligibility 
for homelessness prevention and rapid re-housing be made--the recipient 
level, the CoC level, the subrecipient level, or some combination? Have 
the existing requirements to include such decisions in the applicable 
written standards created an impediment to the recipient's or 
subrecipient's flexibility? If so, how?
    (2) Likewise, at what level should decisions about emergency 
shelter and street outreach be made--the local government recipient 
level, the CoC level, the subrecipient level, or some combination?
    (3) Is it burdensome for recipients to include specific policies 
for setting stricter eligibility criteria or targeting assistance in 
their written standards in the Action Plan?
    (4) What impact would these proposed policies have on the program 
participants?
    (5) HUD welcomes other feedback and thoughts about the targeting/
eligibility proposal described above.
    15. Evaluation of Program Participant Eligibility and Needs (Sec.  
576.401):
    a. Initial evaluations (Sec.  576.401(a)). HUD is reviewing whether 
to distinguish between an initial evaluation under the Street Outreach 
and Emergency Shelter components and an initial evaluation under the 
Homelessness Prevention and Rapid Re-housing components. Specifically, 
HUD is considering providing that, while an initial evaluation will 
still be required under Street Outreach and Emergency Shelter, the 
recipient/subrecipient will not be required to determine ``the amount 
and type of assistance the individual or family needs to regain 
stability in permanent housing'' as a part of the evaluation for 
assistance. HUD seeks feedback as to whether this would be helpful, or 
if any important information could be lost if HUD does not require 
this.

[[Page 31557]]

    b. Housing stability case management requirements (Sec.  
576.401(e)(i)). The interim rule requirements for monthly meetings with 
a case manager and developing a housing stability case plan are 
intended to help ensure that the ESG-funded emergency, short-, or 
medium-term assistance will be effective in assisting program 
participants regain long-term housing stability and avoid relapses into 
homelessness. It also has the effect of emphasizing that ESG is 
intended to serve those who are most in need of the assistance. 
Finally, it helps recipients ensure that they are spending scarce ESG 
funds on program participants that are still in the units. However, HUD 
received many comments about this requirement, and has also determined 
that this case management requirement prevents recipients and 
subrecipients from using HOME TBRA funds as match for ESG because 
services must not be mandatory when providing HOME TBRA assistance. HUD 
seeks additional comment on the following questions:
    (1) HUD requests that recipients/subrecipients inform HUD about 
their experiences with these requirements; for example, how does your 
organization fulfill these requirements? If HUD were to clarify in the 
final rule that a meeting by phone or videoconference would suffice 
(which is allowed now but not explicit in the rule), does that make a 
difference? If HUD were to allow the monthly meeting to simply consist 
of a brief check-in or follow-up with the program participant (but 
still be charged as a case management activity), would that help?
    (2) If HUD should change the requirement, what would be a more 
preferable case management requirement? For example, HUD could change 
the language to require program participants to meet with a case 
manager ``at a frequency appropriate to the client's needs.'' What 
might be the positive and negative effects of making this change?
    (3) Are these requirements effective in assisting the program 
participants to achieve stability? Do they encourage recipients/
subrecipients to serve those who are most in need? If not, then knowing 
that the intended purpose of case management is to ensure that the ESG-
funded emergency, short- or medium-term assistance will be effective in 
helping program participants regain long-term housing stability and 
avoid relapses into homelessness, is there a requirement that could be 
added--instead of case management--that would meet the intended 
purpose, but not require recipients or subrecipients to conduct monthly 
case management?
    16. Shelter and Housing Standards (Sec.  576.403): HUD received 
significant feedback and comment about the ``habitability standards,'' 
and seeks comments on the following proposals:
    a. Essential services only (emergency shelters). Under the interim 
rule, if a shelter only receives ESG funds for essential services 
costs, it is not currently required to meet the minimum standards for 
emergency shelters at Sec.  576.403(a). HUD is reviewing whether to 
require an emergency shelter to meet these minimum standards if the 
emergency shelter receives ESG funding for essential services. This 
would include emergency shelters, including day shelters that receive 
non-ESG funds for operating expenses but use ESG for the provision of 
essential services to persons in the shelter. It would not include a 
subrecipient that receives ESG for essential services only but is not 
an emergency shelter (e.g., a legal services provider).
    b. Housing Relocation and Stabilization Services only (Homelessness 
Prevention assistance to remain in unit). HUD is considering removing 
the requirement that a unit must meet the minimum habitability 
standards for permanent housing when homelessness prevention 
assistance, under Sec.  576.105(b) (services only), is used to help a 
program participant remain in the unit. Alternatively, HUD could allow 
ESG funds to be used to help a program participant remain in their unit 
for a short time (up to 30 days) before an inspection is performed. In 
this case, if the unit does not meet the habitability standards at the 
time of inspection, recipients/subrecipients would be prohibited from 
using any additional ESG assistance to help the program participant 
remain in their unit; however, ESG funds could be used to help the 
program participant move to a new unit. HUD seeks comment on these two 
options.
    c. Housing Quality Standards. Some recipients might prefer to use 
HUD's Housing Quality Standards (HQS) instead of the ESG habitability 
standards; however, HQS is less stringent in the areas of fire safety 
and interior air quality, which is why it cannot be used to meet the 
habitability standards under the interim rule. However, HUD recognizes 
that HQS is the standard used for other HUD programs, and allowing it 
to be used may reduce the burden of meeting this requirement for some 
recipients and subrecipients. Therefore, for the final rule, HUD is 
considering explicitly allowing a certification that a particular 
permanent housing unit meets HQS to qualify as meeting the minimum 
standards for permanent housing under ESG.
    17. Conflicts of Interest (Sec.  576.404):
    a. Organizational conflicts of interest (Sec.  576.404(a)). Based 
on experiences with HPRP, HUD included a provision in the ESG interim 
rule that was intended to ensure that recipients or subrecipients would 
not ``feather their own nests''--that is, steer program participants 
into housing that they own or only serve those that are already in 
housing that they own. This provision, at Sec.  576.404(a), states: 
``No subrecipient may, with respect to individuals or families 
occupying housing owned by the subrecipient, or a parent or subsidiary 
of the subrecipient, carry out the initial evaluation required under 
Sec.  576.401 or administer homelessness prevention assistance under 
Sec.  576.103.'' With respect to this conflict of interest provision:
    (1) HUD is considering including recipients in this conflict of 
interest requirement. Based on recipient/subrecipient experiences, is 
this an issue that warrants concern?
    (2) For rapid re-housing only, HUD is considering removing this 
provision altogether. That is, HUD could allow recipients/subrecipients 
to rapidly re-house ``Category 1'' homeless program participants into 
housing that they or their parent/subsidiary organization owns, because 
in some cases, these providers might be some of the most well-suited in 
the community to provide the assistance that persons being rapidly re-
housed need. Are there any potential issues with this? Should HUD leave 
the requirement in place as-is, to prevent potential steering or 
conflicts of interest?
    (3) For homelessness prevention assistance and rapid re-housing 
assistance (if HUD retains the conflict of interest requirement for 
rapid re-housing), HUD is considering adding a provision to prohibit 
recipients/subrecipients from providing housing search and placement 
services to assist program participants to move into housing that the 
recipient/subrecipient owns. HUD seeks comment on this idea.
    b. Individual conflicts of interest (Sec.  576.404(b)). It is 
generally HUD's policy under its homeless programs to prohibit personal 
conflicts of interest. For example, if a city staff member makes 
decisions about grants and also sits on the board of directors of a 
potential subrecipient, this should be a conflict of interest that 
requires an exception from HUD. This was omitted from the ESG interim 
rule; HUD is considering including this provision in

[[Page 31558]]

the final rule. HUD seeks comment on how significant an issue this type 
of conflict of interest is, based on the experience of recipients, 
subrecipients, and other stakeholders in the community, and whether HUD 
should prohibit it without requiring an exception.
    18. Other Federal Requirements--Limiting Eligibility and Targeting 
(Sec.  576.407): The emergency shelter or housing may be limited to a 
specific subpopulation so long as the recipient/subrecipient 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 and their families, victims of domestic 
violence and their families, or chronically homeless persons and 
families), and does comply with the nondiscrimination and equal access 
requirements under 24 CFR 5.109, and Sec.  576.406. HUD seeks comment 
on the following policies proposed for inclusion in the final rule, for 
permanent housing and for emergency shelters:
    a. Rapid Re-housing and Homelessness Prevention. A project \4\ may 
limit eligibility to or provide a preference to subpopulations of 
individuals and families who are homeless or at risk of homelessness 
and need the specialized services offered by the project (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 project 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.
---------------------------------------------------------------------------

    \4\ Here, HUD is using the word ``project'' as it is proposed 
above in this Notice. If HUD ultimately adopts a different 
definition or term based on public comments received, HUD will 
adjust this provision accordingly.
---------------------------------------------------------------------------

    b. Emergency shelters. Recipients and subrecipients may exclusively 
serve a particular homeless subpopulation in emergency shelter if the 
shelter addresses a need identified by the recipient and meets one of 
the following conditions:
    (1) The emergency shelter may be limited to one sex where it 
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 emergency shelter make 
it appropriate for the shelter to be limited to one sex;
    (2) The shelter may be limited to families with children, but if it 
serves families with children, it must serve all families with children 
(it may not separate based on the age of a child under 18, regardless 
of gender);
    (3) If the shelter serves at least one family with a child under 
the age of 18, the shelter may exclude registered sex offenders and 
persons with a criminal record that includes a violent crime from the 
project so long as the child is served in the shelter; and
    (4) An emergency shelter may limit admission to or provide a 
preference to subpopulations of homeless individuals and families who 
need the specialized services provided (e.g., substance abuse addiction 
treatment programs; victim service providers that serve both men and 
women; veterans and their families). While the shelter 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.
    19. Recordkeeping and Reporting Requirements (Sec.  576.500):
    a. At risk of homelessness (Sec.  576.500(c)(1)(iv)). Under the 
``at risk of homelessness'' recordkeeping requirements at Sec.  
576.500(c)(1)(iv), HUD is considering including, in the final rule, 
specific documentation standards for each of the seven conditions that 
would be required for a program participant to qualify for assistance 
under this definition. Note that HUD will consider comments received 
here with the other comments requested on this characteristic earlier 
in this document. The changes are as follows:
    (A) Has moved because of economic reasons two or more times during 
the 60 days immediately preceding the application for homelessness 
prevention assistance. Acceptable documentation includes, but is not 
limited to: Certification by the individual or head of household and 
any available supporting documentation that the individual or family 
moved two or more times during the 60-day period immediately preceding 
the date of application for homeless assistance, and that the reasons 
for the moves were economic. Such supporting documentation could 
include:
    (1) For documentation of ``two or more moves:'' Recorded statements 
or records obtained from each owner, renter, or provider of housing in 
which the individual or family resided; proof of address and dates of 
residency at two or more locations, such as a utility bill or lease;
    (2) For documentation of ``economic reasons:'' Other third-party 
verification to document that the reasons for the moves were economic, 
including notifications of job termination or reduction in hours, 
documentation of different jobs in different locations (e.g., migratory 
workers), or job applications; bills and statements, such as utility 
bills or medical bills, demonstrating a sudden increase in expenses; 
bank statements demonstrating that the household could not afford rent; 
or, where such statements or records are unobtainable, a written record 
of the intake worker's due diligence in attempting to obtain these 
statements or records.
    (B) Is living in the home of another because of economic hardship. 
Acceptable documentation includes, but is not limited to: Certification 
by the individual or head of household and any available supporting 
documentation that the individual or family is living in the home of 
another because of economic hardship. Such supporting documentation 
could include: Written/recorded statements or records obtained from the 
owner or renter in which the individual or family resides and proof of 
homeownership or the lease by that owner or renter; other third-party 
verification to document that the reasons the individual or family is 
living there is because of economic hardship, including notifications 
of job termination or reduction in hours, or job applications, bills 
and statements, such as utility bills or medical bills, demonstrating a 
sudden increase in expenses, bank statements demonstrating that the 
household could not afford rent; or, where these statements or records 
are unobtainable, a written record of the intake worker's due diligence 
in attempting to obtain these statements or records.
    (C) Has been notified in writing that their right to occupy their 
current housing or living situation will be terminated within 21 days 
after the date of application for assistance. Acceptable documentation 
is:
    (1) For living arrangements where there is a written or oral lease 
agreement under states law: A court order resulting from an eviction 
action that requires the individual or family to leave their residence 
within 21 days after the date of their application for homeless 
assistance; or the equivalent notice under applicable state law; or
    (2) For informal living arrangements, staying with a family or 
friend (i.e., ``love evictions''): An oral statement by

[[Page 31559]]

the individual or head of household that the owner or renter of the 
housing in which they currently reside will not allow them to stay for 
more than 21 days after the date of application for homeless 
assistance. The intake worker must record the statement and certify 
that it was found credible. To be found credible, the oral statement 
must either:
    (i) Be verified by the owner or renter of the housing in which the 
individual or family resides at the time of application for homeless 
assistance and documented by a written certification by the owner or 
renter or by the intake worker's recording of the owner or renter's 
oral statement; or
    (ii) if the intake worker is unable to contact the owner or renter, 
be documented by a written certification by the intake worker of their 
diligence in attempting to obtain the owner or renter's verification 
and the written certification by the individual or head of household 
seeking assistance that their statement was true and complete.
    (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. Acceptable 
documentation includes, but is not limited to: Certification by the 
individual or head of household and any available supporting 
documentation that the individual or family is living in a hotel or 
motel not paid by a charitable organization or government program, such 
as receipts from the motel/hotel or a written statement from the motel/
hotel management; or, where these statements or records are 
unobtainable, a written record of the intake worker's due diligence in 
attempting to obtain these statements or records.
    (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 persons per room, as 
defined by the U.S. Census Bureau. Acceptable documentation includes, 
but is not limited to: Certification by the individual or head of 
household and any available supporting documentation that the 
individual or family is living in a severely overcrowded situation, 
such a written statement from the intake worker who visited the unit 
and witnessed the severely overcrowded unit or evidence thereof.
    (F) Is exiting a publicly funded institution, or system of care. 
Acceptable documentation is: Certification by the individual or head of 
household and any available supporting documentation that the 
individual or family is exiting a publicly-funded institution or system 
of care. Such documentation could include: Discharge paperwork or a 
written or oral referral from a social worker, case manager, or other 
appropriate official of the institution, stating the beginning and end 
dates of the time residing in the institution. All oral statements must 
be recorded by the intake worker; or, where these statements or records 
are unobtainable, a written record of the intake worker's due diligence 
in attempting to obtain these statements or records.
    (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. Acceptable documentation 
includes, but is not limited to: A statement, in the approved 
Consolidated Plan/Annual Action Plan, identifying these 
characteristics, and available supporting documentation that the 
individual or family is living in housing that has characteristics 
associated with instability and an increased risk of homelessness, 
which must follow HUD's order of priority for documentation: third-
party documentation first, intake worker observations second, and 
certification from the person seeking assistance third.
    b. Determinations of ineligibility--Street Outreach (Sec.  
576.500(d)). HUD is proposing that for the Street Outreach component, 
HUD will not require recipients/subrecipients to keep documentation of 
the reason(s) for determinations of ineligibility, in order to reduce a 
recordkeeping burden. HUD seeks comment on any issues that may arise if 
this requirement is eliminated.
    c. Maintenance of effort recordkeeping requirement (Sec.  
576.500(l)). The interim rule states: ``The recipient and its 
subrecipients that are units of general purpose local government must 
keep records to demonstrate compliance with the maintenance of effort 
requirement, including records of the unit of the general purpose local 
government's annual budgets and sources of funding for street outreach 
and emergency shelter services.'' This might be an overly burdensome 
recordkeeping requirement for recipients and subrecipients that are in 
compliance with this requirement--that is, how does a local government 
demonstrate that it is not using ESG funds to replace other local 
government funds? Therefore, HUD is considering removing this from the 
recordkeeping section. HUD would continue to monitor to ensure that 
recipients are meeting the requirements of Sec.  576.101(c); this 
change would simply eliminate a difficult and potentially ineffective 
recordkeeping requirement. HUD seeks comment on this idea.
    d. Records of services and assistance provided (Sec.  576.500(l)). 
Currently, only recipients are required to ``keep records of the types 
of essential services, rental assistance, and housing stabilization and 
relocation services provided under the recipient's program, and the 
amounts spent on these services and assistance.'' HUD is considering 
adding ``and subrecipients'' to this recordkeeping requirement, and 
seeks comment on whether this change would be burdensome or useful.
    e. Period of record retention (Sec.  576.500(y)(2) and (3)). Under 
the interim rule, records for major renovation or conversion must be 
retained until 10 years after the date ESG funds are first obligated, 
but the minimum period of use requirements, at Sec.  576.102(c)(1), 
begin at the date of first occupancy after the completed renovation. 
HUD is considering whether to change the record retention requirements 
so that they are the same as the ``minimum period of use'' requirements 
in Sec.  576.102(c), as follows: ``Where ESG funds are used for the 
renovation or conversion of an emergency shelter, the records must be 
retained for a period that is not less than the minimum period of 
use.'' HUD seeks comment on this proposal.
    20. Recipient Sanctions (Sec.  576.501(c)): Under the interim rule, 
at Sec.  576.501(c), when a recipient reallocates or reprograms ESG 
funds as a part of subrecipient sanctions, these funds must be expended 
by the same deadline as all other funds. HUD is considering removing 
this expenditure requirement to provide recipients, especially states, 
with additional flexibility in situations where a subrecipient 
compliance issue or other impediment causes delays in the recipient's 
ability to expend all of the funds by the 24-month deadline. HUD seeks 
comment on this proposal.

    Dated: May 27, 2015.
Harriet Tregoning,
Principal Deputy Assistant Secretary for Community Planning and 
Development.
[FR Doc. 2015-13485 Filed 6-2-15; 8:45 am]
 BILLING CODE 4210-67-P