PART 4—HUD REFORM ACT Authority: 42 U.S.C. 3535(d), 3537a, 3545. Source: 61 FR 14449, Apr. 1, 1996, unless otherwise noted. Subpart A—Accountability in the Provision of HUD Assistance § 4.1 Purpose. The provisions of this subpart A are authorized under section 102 of the Department of Housing and Urban Development Reform Act of 1989 (Pub. L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a) (hereinafter, Section 102). Both the provisions of Section 102 and this subpart A apply for the purposes of Section 102. Section 102 contains a number of provisions designed to ensure greater accountability and integrity in the way in which the Department makes assistance available under certain of its programs. § 4.3 Definitions. Applicant Assistance under any program or discretionary fund administered by the Secretary Assistance within the jurisdiction of the Department Assistance within the jurisdiction of the Department to any housing project (1) Assistance which is provided directly by HUD to any person or entity, but not to subrecipients. It includes assistance for the acquisition, rehabilitation, operation conversion, modernization, renovation, or demolition of any property containing five or more dwelling units that is to be used primarily for residential purposes. It includes assistance to independent group residences, board and care facilities, group homes and transitional housing but does not include primarily nonresidential facilities such as intermediate care facilities, nursing homes and hospitals. It also includes any change requested by a recipient in the amount of assistance previously provided, except changes resulting from annual adjustments in Section 8 rents under Section 8(c)(2)(A) of the United States Housing Act of 1937 (42 U.S.C. 1437f); (2) Assistance to residential rental property receiving a tax credit under Federal, State or local law. (3) For purposes of this definition, assistance includes assistance resulting from annual adjustments in Section 8 rents under Section 8(c)(2)(A) of the United States Housing Act of 1937, unless the initial assistance was made available before April 15, 1991, and no other assistance subject to this subpart A was made available on or after that date. Housing project (2) Residential rental property receiving a tax credit under Federal, State, or local law. Interested party Selection criteria § 4.5 Notice and documentation of assistance subject to section 102(a). (a) Notice. (b) Documentation of decisions. [61 FR 14449, Apr. 1, 1996, as amended at 80 FR 75934, Dec. 7, 2015] § 4.7 Notice of funding decisions. HUD will publish a Notice in the Federal Register (a) Assistance subject to Section 102(a); and (b) Assistance that is provided through grants or cooperative agreements on a discretionary (non-formula, non-demand) basis, but that is not provided on the basis of a competition. § 4.9 Disclosure requirements for assistance subject to section 102(b). (a) Receipt and reasonable expectation of receipt. (i) The total amount of assistance received during the Federal fiscal year during which the application was submitted; (ii) The total amount of assistance requested for the fiscal year in which any pending application, including the current application, was submitted; and (iii) For the fiscal year described in paragraph (a)(1)(ii) of this section, the total amount of assistance from the Department or any other entity that is likely to be made available on a formula basis or in the form of program income as defined in 2 CFR 200.80. (2) In the case of assistance that will be provided pursuant to contract over a period of time (such as project-based assistance under Section 8 of the United States Housing Act of 1937), all amounts that are to be provided over the term of the contract, irrespective of when they are to be received. (b) Content of disclosure. (1) Other governmental assistance that is or is expected to be made available, based upon a reasonable assessment of the circumstances, with respect to the project or activities for which the assistance is sought; (2) The name and pecuniary interest of any interested party; and (3) A report of the expected sources and uses of funds for the project or activity which is the subject of the application, including governmental and non-governmental sources of funds and private capital resulting from tax benefits. (c) In the case of mortgage insurance under 24 CFR subtitle B, chapter II, the mortgagor is responsible for making the disclosures required under Section 102(b) and this section, and the mortgagee is responsible for furnishing the mortgagor's disclosures to the Department. (Approved by the Office of Management and Budget under control number 2510-0011) [61 FR 14449, Apr. 1, 1996, as amended at 80 FR 75934, Dec. 7, 2015] § 4.11 Updating of disclosure. (a) During the period in which an application for assistance covered under Section 102(b) is pending, or in which such assistance is being provided, the applicant must report to the Department, or to the State or unit of general local government, as appropriate: (1) Any information referred to in Section 102(b) that the applicant should have disclosed with respect to the application, but did not disclose; (2) Any information referred to in Section 102(b) that initially arose after the time for making disclosures under that subsection, including the name and pecuniary interest of any person who did not have a pecuniary interest in the project or activity that exceeded the threshold in Section 102(b) at the time of the application, but that subsequently exceeded the threshold. (b) With regard to changes in information that was disclosed under Sections 102(b) or 102(c): (1) For programs administered by the Assistant Secretary for Community Planning and Development: (i) Any change in other government assistance covered by Section 102(b) that exceeds the amount of all assistance that was previously disclosed by the lesser of $250,000 or 10 percent of the assistance; (ii) Any change in the expected sources or uses of funds that exceed the amount of all previously disclosed sources or uses by the lesser of $250,000 or 10 percent of previously disclosed sources; (2) For all other programs: (i) Any change in other government assistance under Section 102(b)(1) that exceeds the amount of assistance that was previously disclosed; (ii) Any change in the pecuniary interest of any person under Section 102(b)(2) that exceeds the amount of all previously disclosed interests by the lesser of $50,000 or 10 percent of such interest; (iii) For all projects receiving a tax credit under Federal, Sate or local law, any change in the expected sources or uses of funds that were previously disclosed; (iv) For all other projects: (A) Any change in the expected source of funds from a single source that exceeds the lesser of the amount previously disclosed for that source of funds by $250,000 or 10 percent of the funds previously disclosed for that source; (B) Any change in the expected sources of funds from all sources previously disclosed that exceeds the lesser of $250,000 or 10 percent of the amounts previously disclosed from all sources of funds; (C) Any change in a single expected use of funds that exceeds the lesser of $250,000 or 10 percent of the previously disclosed use; (D) Any change in the use of all funds that exceeds the lesser of $250,000 or 10 percent of the previously disclosed uses for all funds. (c) Period of coverage. (Approved by the Office of Management and Budget under control number 2510-0011) § 4.13 Limitation of assistance subject to section 102(d). (a) In making the certification for assistance subject to Section 102(d), the Secretary will consider the aggregate amount of assistance from the Department and from other sources that is necessary to ensure the feasibility of the assisted activity. The Secretary will take into account all factors relevant to feasibility, which may include, but are not limited to, past rates of returns for owners, sponsors, and investors; the long-term needs of the project and its tenants; and the usual and customary fees charged in carrying out the assisted activity. (b) If the Department determines that the aggregate of assistance within the jurisdiction of the Department to a housing project from the Department and from other governmental sources exceeds the amount that the Secretary determines is necessary to make the assisted activity feasible, the Department will consider all options available to enable it to make the required certification, including reductions in the amount of Section 8 subsidies. The Department also may impose a dollar-for-dollar, or equivalent, reduction in the amount of HUD assistance to offset the amount of other government assistance. In grant programs, this could result in a reduction of any grant amounts not yet drawn down. The Department may make these adjustments immediately, or in conjunction with servicing actions anticipated to occur in the near future ( e.g., (c) If an applicant does not meet the $200,000 disclosure requirement in § 4.7(b), an applicant must certify whether there is, or is expected to be made, available with respect to the housing project any other governmental assistance. The Department may also require any applicant subject to this subpart A to submit such a certification in conjunction with the Department's processing of any subsequent servicing action on that project. If there is other government assistance for purposes of the two preceding sentences, the applicant must submit such information as the Department deems necessary to make the certification and subsequent adjustments under Section 102(d). (d) The certification under Section 102(d) shall be retained in the official file for the housing project. Subpart B—Prohibition of Advance Disclosure of Funding Decisions § 4.20 Purpose. The provisions of this subpart B are authorized under section 103 of the Department of Housing and Urban Development Reform Act of 1989 (Pub. L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a) (hereinafter, Section 103). Both the provisions of Section 103 and this subpart B apply for the purposes of Section 103. Section 103 proscribes direct or indirect communication of certain information during the selection process by HUD employees to persons within or outside of the Department who are not authorized to receive that information. The purpose of the proscription is to preclude giving an unfair advantage to applicants who would receive information not available to other applicants or to the public. Section 103 also authorizes the Department to impose a civil money penalty on a HUD employee who knowingly discloses protected information, if such a violation of Section 103 is material, and authorizes the Department to sanction the person who received information improperly by, among other things, denying assistance to that person. § 4.22 Definitions. Application Assistance Disclose Employee Material or materially Person Selection process Federal Register. § 4.24 Scope. (a) Coverage. (b) Applicability. § 4.26 Permissible and impermissible disclosures. (a) Notwithstanding the provisions of Section 103, an employee is permitted to disclose information during the selection process with respect to: (1) The requirements of a HUD program or programs, including unpublished policy statements and the provision of technical assistance concerning program requirements, provided that the requirements or statements are disclosed on a uniform basis to any applicant or potential applicant. For purposes of this part, the term “technical assistance” includes such activities as explaining and responding to questions about program regulations, defining terms in an application package, and providing other forms of technical guidance that may be described in a NOFA. The term “technical assistance” also includes identification of those parts of an application that need substantive improvement, but this term does not include advising the applicant how to make those improvements. (2) The dates by which particular decisions in the selection process will be made; (3) Any information which has been published in the Federal Register (4) Any information which has been made public through means other than the Federal Register (5) An official audit, inquiry or investigation, if the disclosure is made to an auditor or investigator authorized by the HUD Inspector General to conduct the audit or investigation; (6) Legal activities, including litigation, if the disclosure is made to an attorney who is representing or is otherwise responsible to the Department in connection with the activities; or (7) Procedures that are required to be performed to process an application, e.g., environmental or budget reviews, and technical assistance from experts in fields who are regularly employed by other government agencies, provided that the agency with which the expert is employed or associated is not an applicant for HUD assistance during the pending funding cycle. (b) An authorized employee, during the selection process, may contact an applicant for the purpose of: (1) Communication of the applicant's failure to qualify, after a preliminary review for eligibility and completeness with respect to his or her application, and the reasons for the failure to qualify, or the fact of the applicant's failure to be determined to be technically acceptable after a full review; or (2) Clarification of the terms of the applicant's application. A clarification, for the purpose of this paragraph (b), may include a request for additional information consistent with regulatory requirements. (c) Prohibition of advance disclosure of funding decisions. During the selection process an employee shall not knowingly disclose any covered selection information regarding the selection process to any person other than an employee authorized to receive that information. (1) The following disclosures of information are, at any time during the selection process, a violation of Section 103: (i) Information regarding any applicant's relative standing; (ii) The amount of assistance requested by any applicant; (iii) Any information contained in an application; (2) The following disclosures of information, before the deadline for the submission of applications, shall be a violation of Section 103: (i) The identity of any applicant; and (ii) The number of applicants. § 4.28 Civil penalties. Whenever any employee knowingly and materially violates the prohibition in Section 103, the Department may impose a civil money penalty on the employee in accordance with the provisions of 24 CFR part 30. § 4.30 Procedure upon discovery of a violation. (a) In general. (1) Contact the HUD Ethics Law Division to provide information about the alleged violation; or (2) Contact the HUD Office of Inspector General to request an inquiry or investigation into the matter. (b) Ethics Law Division. (c) Inspector General. (d) Protection of employee complainants. (2) Any employee who has authority to take, direct others to take, recommend or approve a personnel action is prohibited from threatening, taking, failing to take, recommending, or approving any personnel action as reprisal against another employee for providing information to investigating officials. § 4.32 Investigation by Office of Inspector General. The Office of Inspector General shall review every alleged violation of Section 103. If after a review the Office of Inspector General determines that further investigation is not warranted, it shall notify the Ethics Law Division of that determination. If, after a review, the Office of Inspector General determines that additional investigation is warranted, it shall conduct the investigation and upon completion issue a report of the investigation to the Ethics Law Division as to each alleged violation. § 4.34 Review of Inspector General's report by the Ethics Law Division. After receipt of the Inspector General's report, the Ethics Law Division shall review the facts and circumstances of the alleged violations. In addition, the Ethics Law Division may: (a) Return the report to the Inspector General with a request for further investigation; (b) Discuss the violation with the employee alleged to have committed the violation; or (c) Interview any other person, including employees who it believes will be helpful in furnishing information relevant to the inquiry. § 4.36 Action by the Ethics Law Division. (a) After review of the Inspector General's report, the Ethics Law Division shall determine whether or not there is sufficient information providing a reasonable basis to believe that a violation of Section 103 or this subpart B has occurred. (b) If the Ethics Law Division determines that there is no reasonable basis to believe that a violation of Section 103 or this subpart B has occurred, it shall close the matter and send its determination to the Office of Inspector General. (c) If the Ethics Law Division determines that there is sufficient information to provide a reasonable basis to believe that a violation of Section 103 or this subpart B has occurred, it shall: (1) Send its determination to the Office of Inspector General; and (2) Refer the matter to the appropriate official for review as to whether to impose a civil money penalty in accordance with 24 CFR part 30; provided, however, that the Ethics Law Division shall not make a civil money penalty recommendation unless it finds the violation to have been knowing and material. The decision to impose a civil money penalty in a particular matter may be made only upon referral from the Ethics Law Division. (d) In determining whether a violation is material, the Ethics Law Division shall consider the following factors, as applicable: (1) The content of the disclosure and its significance to the person to whom the disclosure was made; (2) The time during the selection process when the disclosure was made; (3) The person to whom the disclosure was made; (4) The dollar amount of assistance requested by the person to whom the disclosure was made; (5) The dollar amount of assistance available for a given competition or program; (6) The benefit, if any, received or expected by the employee, the employee's relatives or friends, or any other person with whom the employee is affiliated; (7) The potential injury to the Department. (e) If the Ethics Law Division determines that there is sufficient information to provide a reasonable basis to believe that a violation of Section 103 or this subpart B has occurred, it may, in addition to referring the matter under 24 CFR part 30, refer the matter to an appropriate HUD official for consideration of any other available disciplinary action. Any referral authorized by this paragraph (e) shall be reported to the Inspector General and may be reported to the employee's supervisor. § 4.38 Administrative remedies. (a) If the Department receives or obtains information providing a reasonable basis to believe that a violation of Section 103 has occurred, the Department may impose a sanction, as determined to be appropriate, upon an applicant for or a recipient of assistance who has received covered selection information. (b) In determining whether a sanction is appropriate and if so which sanction or sanctions should be sought, the Secretary shall give consideration to the applicant's conduct with respect to the violation. In so doing, the Secretary shall consider the factors listed at § 4.36(d), as well as any history of prior violations in any HUD program, the benefits received or expected, deterrence of future violations and the extent of any complicity in the violation. (c) The Secretary may impose a sanction authorized by this section whether or not the Ethics Law Division refers a case under 24 CFR part 30, and whether or not a civil money penalty is imposed.