24 CFR Part 93 — Housing Trust Fund

PART 93—HOUSING TRUST FUND Authority: 42 U.S.C. 3535(d), 12 U.S.C. 4568. Source: 80 FR 5220, Jan. 30, 2015, unless otherwise noted. Subpart A—General § 93.1 Overview. (a) This part implements the Housing Trust Fund (HTF) program established under section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended (12 U.S.C. 4501 et seq. (b) Section 1337 of the Act requires a percentage of the unpaid principal balance of total new business for the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) (collectively, the government-sponsored enterprises or GSEs) to be setaside and allocated as a dedicated source of annual funding for the HTF, unless allocations are suspended by the Director of the Federal Housing Finance Agency, the agency that regulates the GSEs. These funds will be deposited into an HTF account established in the Treasury of the United States by the Secretary of the Treasury to carry out the HTF program. The Act also provides that the HTF may be funded with amounts appropriated, transferred, or credited to the HTF under other provisions of law. § 93.2 Definitions. 1937 Act et seq. Act et seq Annual income. Commitment (1) The grantee has executed a legally binding written agreement (that includes the date of the signature of each person signing the agreement) with an eligible recipient for a project that meets the definition of “commit to a specific local project” of paragraph (2) of this definition. (2) “Commit to a specific local project” means: (i) If the project consists of rehabilitation or new construction (with or without acquisition), the grantee and recipient have executed a written legally binding agreement under which HTF assistance will be provided to the recipient for an identifiable project for which construction can reasonably be expected to start within 12 months of the agreement date. The written agreement for rehabilitation or new construction of rental housing may also provide operating cost assistance and/or operating cost assistance reserves. (ii) If the project consists of acquisition of standard housing and the grantee is providing HTF funds to a recipient to acquire rental housing, or to a first-time homebuyer family to acquire single family housing for homeownership, the grantee and recipient or the family have executed a written agreement under which HTF assistance will be provided for the purchase of the rental housing or single family housing and the property title will be transferred to the recipient or family within 6 months of the agreement date. The written agreement for acquisition of rental housing may also provide operating cost assistance and/or operating cost assistance reserves. (iii) If the project is for renewal of operating cost assistance or operating cost assistance reserves, the grantee and the recipient must have executed a legally binding written agreement under which HTF funds will be provided to the recipient for operating cost assistance or operating cost assistance reserves for the identified HTF project. Consolidated plan Displaced homemaker (1) Is an adult; (2) Has not worked full-time full-year in the labor force for a number of years, but has, during such years, worked primarily without remuneration to care for the home and family; and (3) Is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment. Extremely low-income families Family First-time homebuyer Foster adult Foster child Full-time student Grantee HTF allocation plan HTF funds Homeownership (1) The land may be owned in fee simple or the homeowner may have a 99-year ground lease. (i) For housing located in the insular areas, the ground lease must be 40 years or more. (ii) For housing located on Indian trust or restricted Indian lands or a Community Land Trust, the ground lease must be 50 years or more. (iii) For manufactured housing, the ground lease must be for a period at least equal to the applicable period of affordability in § 93.304(e). (2) Right to possession under a contract for deed, installment contract, or land contract (pursuant to which the deed is not given until the final payment is made) is not an equivalent form of ownership. (3) The ownership interest may be subject only to the restrictions on resale required under § 93.304; mortgages, deeds of trust, or other liens or instruments securing debt on the property as approved by the grantee; or any other restrictions or encumbrances that do not impair the good and marketable nature of title to the ownership interest. (4) The grantee must determine whether or not ownership or membership in a cooperative or mutual housing project constitutes homeownership under State law; however, if the cooperative or mutual housing project receives low income housing tax credits, the ownership or membership does not constitute homeownership. Homeownership counseling Household Housing Housing counseling HUD Income-eligible Insular areas Live-in aide Neighborhood Poverty line Program income (1) Proceeds from the disposition by sale or long-term lease of real property acquired, rehabilitated, or constructed with HTF funds; (2) Gross income from the use or rental of real property owned by the grantee that was acquired, rehabilitated, or constructed with HTF funds, minus costs that were incidental to generation of the income; therefore, program income does not include gross income from the use, rental, or sale of real property received by the recipient, unless the funds are paid by the recipient to the grantee); (3) Payments of principal and interest on loans made using HTF funds; (4) Proceeds from the sale of loans made with HTF funds; (5) Proceeds from the sale of obligations secured by loans made with HTF funds; (6) Interest earned on program income pending its disposition; and (7) Any other interest or return on the investment of HTF funds, as permitted under § 93.200(b). Project Project completion Public Housing Agency (PHA) Recipient (1) Make acceptable assurances to the grantee that it will comply with the requirements of the HTF program during the entire period that begins upon selection of the recipient to receive HTF funds, and ending upon the conclusion of all HTF-funded activities; (2) Demonstrate the ability and financial capacity to undertake, comply, and manage the eligible activity; (3) Demonstrate its familiarity with the requirements of other Federal, State, or local housing programs that may be used in conjunction with HTF funds to ensure compliance with all applicable requirements and regulations of such programs; and (4) Have demonstrated experience and capacity to conduct an eligible HTF activity as evidenced by its ability to: (i) Own, construct, or rehabilitate, and manage and operate an affordable multifamily rental housing development; or (ii) Design, construct, or rehabilitate, and market affordable housing for homeownership. (iii) Provide forms of assistance, such as down payments, closing costs, or interest rate buydowns for purchasers. Reconstruction Shortage of standard rental units both affordable and available to extremely low-income renter households (1) For any State or other geographical area the gap between: (i) The number of units with complete plumbing and kitchen facilities with a rent that does not exceed 30 percent of 30 percent of the adjusted area median income (AMI) as determined by HUD that either are occupied by extremely low-income renter households or are vacant for rent; and (ii) The number of extremely low-income renter households. (2) If the number of units described in paragraph (1)(i) of this definition exceeds the number of extremely low-income households described in paragraph (1)(ii) of this definition, there is no shortage. Single family housing Single parent (1) Is unmarried or legally separated from a spouse; and (2) Has one or more minor children of whom the individual has custody or joint custody, or is pregnant. State State-designated entity Subgrantee Tribally designated housing entity Unit of general local government Urban county Very low-income renter households Very low-income families [80 FR 5220, Jan. 30, 2015, as amended at 81 FR 90657, Dec. 14, 2016; 88 FR 9664, Feb. 14, 2023] § 93.3 Waivers. HUD may, upon a determination of good cause and subject to statutory limitations, waive any provision of this part and delegate this authority in accordance with section 106 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)). Subpart B—Allocation Formula; Reallocations § 93.50 Formula allocation. (a) Allocations to States. (b) Amount available for allocation. (c) Allocations for the insular areas. (d) Allocations for the 50 States, the Commonwealth of Puerto Rico, and the District of Columbia Amounts available for allocations. (2) Allocations. (ii) The factor described in § 93.51(a) is weighted 0.5. The factors described in § 93.51(b) and (d) are weighted at 0.125 and the factor described in § 93.51(c) of this section is weighted at 0.25. (iii) The sum of the four needs factors for each State is then multiplied by the construction cost factor described in § 93.51(e) of this section and by the total amount of funds available for State allocations. § 93.51 Formula factors. (a) Need factor one. (b) Need factor two. (c) Need factor three. (1) Extremely low-income renter households in the State living with either incomplete kitchen or plumbing facilities, more than one person per room, or paying more than 50 percent of income for housing costs, to (2) The aggregate number of extremely low-income renter households living with either incomplete kitchen or plumbing facilities, more than one person per room, or paying more than 50 percent of income for housing costs in all the States. (d) Need factor four. (e) Construction cost factor. (1) Means the cost of construction or building rehabilitation in the State relative to the national cost of construction or building rehabilitation; and (2) Is calculated so that values higher than 1.0 indicate that the State's construction costs are higher than the national average, a value of 1.0 indicates that the State's construction costs are exactly the same as the national average, and values lower than 1.0 indicate that the State's cost of construction are lower than the national average. § 93.52 Minimum allocations. (a) In accordance with the HTF statute, HUD is required to provide each of the States and the District of Columbia with a minimum grant of $3 million. If the formula amount determined for a fiscal year is less than $3 million to any of the 50 States or the District of Columbia, then the allocation to that State or the District of Columbia is increased to $3 million, and allocations to States and the District of Columbia above $3 million and to the Commonwealth of Puerto Rico and the insular areas are adjusted by an equal amount on a pro rata basis. (b) If in any fiscal year, funding in the HTF is insufficient to provide each of the 50 States and the District of Columbia with a minimum grant of $3 million, HUD will, through notice published in the Federal Register § 93.53 Federal Register notice of formula allocations. Not later than 60 calendar days after the date that HUD determines the formula amounts under this subpart, HUD will publish a notice in the Federal Register § 93.54 Reallocations by formula. (a) HUD will reallocate under this section: (1) Any HTF funds available for reallocation because HUD reduced or recaptured funds from an HTF grantee under § 93.400(d) for failure to commit or expend the funds within the time specified, or under § 93.453 for failure to comply substantially with any provision of this part; (2) Any HTF funds reduced for failure by the grantee to obtain funds required to be reimbursed or returned under § 93.450; and (3) Any HTF funds remitted to HUD under § 93.403(b)(4) when a grantee ceases to be an HTF grantee for any reason. (b) Any reallocation of funds must be made only among all participating States, except those States from which the funds were recaptured or reduced. (c) Any amounts that become available for reallocation shall be added to amounts for formula allocation in the succeeding fiscal year. Subpart C—Participation and Submission Requirements; Distribution of Assistance § 93.100 Participation and submission requirements. (a) Notification of intent to participate. (b) Submission requirement. § 93.101 Distribution of assistance. (a) A State may choose to be the HTF grantee to receive and administer its grant or it may choose a qualified State-designated entity to be the HTF grantee. (b) Each grantee is responsible for distributing HTF funds throughout the State according to the State's assessment of the priority housing needs within the State, as identified in the State's approved consolidated plan. (c) An HTF grantee may choose to directly fund projects by eligible recipients in accordance with the State's HTF allocation plan or to fund projects by eligible recipients through one or more subgrantees. An HTF subgrantee that is a unit of general local government must have a consolidated plan under 24 CFR part 91, and must include an HTF allocation plan in its consolidated plan (see 24 CFR 91.220(l)(4)), and must select projects by eligible recipients in accordance with its HTF allocation plan. Because a State has only one consolidated plan, and HTF allocation plan for an HTF subgrantee that is a State agency must be included in the State's HTF allocation plan. The grantee or subgrantee must determine that the applicant is an eligible recipient that meets the definition of “recipient” in § 93.2 before awarding HTF assistance. (d) If the HTF grantee subgrants HTF funds to subgrantees, the grantee must ensure that its subgrantees comply with the requirements of this part and carry out the responsibilities of the grantee. The grantee must annually review the performance of subgrantees in accordance with 24 CFR 93.404(a). Subpart D—Program Requirements § 93.150 Site and neighborhood standards. (a) General. et seq., (b) New rental housing. [80 FR 5220, Jan. 30, 2015, as amended at 89 FR 38290, May 7, 2024] § 93.151 Income determinations. (a) General. (1) If a family is applying for or living in an HTF-assisted rental unit, and the unit is assisted under the public housing program, then a grantee must accept the public housing agency's determination of the family's annual income and adjusted income under §§ 5.609 and 5.611 of this title, respectively. (2) If a family is applying for or living in an HTF-assisted rental unit, and the family is assisted under a Federal tenant-based rental assistance program ( e.g., (3) If a family is applying for or living in an HTF-assisted rental unit, and the unit is assisted with a Federal or State project-based rental subsidy program, then a grantee must accept the public housing agency, owner, or rental subsidy provider's determination of the family's annual income and adjusted income under the rules of that program. (4) In all other cases, the grantee must calculate annual income in accordance with paragraphs (b) through (e) of this section. (b) Definition of “annual income.” (i) “ Annual income” (ii) “ Adjusted gross income” (2) The grantee may use only one definition of annual income for each HTF-assisted program ( e.g., e.g., (c) Determining annual income Tenants in HTF-assisted housing. (2) HTF-assisted homebuyers. (d) Required documentation for Annual Income calculations. e.g., (2) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (3) Obtain a written statement from the administrator of a government program under which the family receives benefits and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. (e) Determining family composition and projecting income. (2) The grantee is not required to re-examine the family's income at the time the HTF assistance is provided, unless more than six months has elapsed since the grantee determined that the family qualified as income eligible. (f) Adjusted Income. e.g., [88 FR 9664, Feb. 14, 2023] Subpart E—Eligible and Prohibited Activities § 93.200 Eligible activities: General. (a)(1) HTF funds may be used for the production, preservation, and rehabilitation of affordable rental housing and affordable housing for first-time homebuyers through the acquisition (including assistance to homebuyers), new construction, reconstruction, or rehabilitation of nonluxury housing with suitable amenities, including real property acquisition, site improvements, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations; for operating costs of HTF-assisted rental housing; and for reasonable administrative and planning costs. Not more than one third of each annual grant may be used for operating cost assistance and operating cost assistance reserves. Operating cost assistance and operating cost assistance reserves may be provided only to rental housing acquired, rehabilitated, reconstructed, or newly constructed with HTF funds. Not more than 10 percent of the annual grant shall be used for housing for homeownership. HTF-assisted housing must be permanent housing. The specific eligible costs for these activities are found in §§ 93.201 and 93.202. The activities and costs are eligible only if the housing meets the property standards in § 93.301, as applicable, upon project completion. (2) Acquisition of vacant land or demolition must be undertaken only with respect to a particular housing project intended to provide affordable housing within the time frames established in the definition of “commitment” in § 93.2. (3) HTF funds may be used to purchase and/or rehabilitate a manufactured housing unit, and purchase the land upon which a manufactured housing unit is located. The manufactured housing unit must, at the time of project completion, be connected to permanent utility hook-ups and be located on land that is owned by the manufactured housing unit owner or land for which the manufactured housing owner has a lease for a period at least equal to the applicable period of affordability. (b) Forms of assistance to projects. (c) Multi-unit projects. (2) After project completion, the number of units designated as HTF-assisted may be reduced only in accordance with § 93.203, except that in a project consisting of all HTF-assisted units, one unit may be converted to an onsite manager's unit if the grantee determines the conversion is reasonable and that, based on one fewer HTF-assisted unit, the costs charged to the HTF program do not exceed the actual costs of the HTF-assisted units and do not exceed the subsidy limit established pursuant to § 93.300(a). (d) Terminated projects. i.e., § 93.201 Eligible project costs. HTF funds may be used to pay the following eligible costs: (a) Development hard costs. (1) For new construction projects, costs to meet the new construction standards of the grantee in § 93.301; (2) For rehabilitation, costs to meet the property standards for rehabilitation projects in § 93.301(b); (3) For both new construction and rehabilitation projects, costs: (i) To demolish existing structures; (ii) To make utility connections including off-site connections from the property line to the adjacent street; and (iii) To make improvements to the project site that are in keeping with improvements of surrounding, standard projects. Site improvements may include onsite roads and sewer and water lines necessary to the development of the project. The project site is the property, owned by the project owner, upon which the project is located. (4) For both new construction and rehabilitation of multifamily rental housing projects, costs to construct or rehabilitate laundry and community facilities that are located within the same building as the housing and which are for the use of the project residents and their guests. (5) Costs to make utility connections or to make improvements to the project site, in accordance with the provisions of paragraphs (a)(3)(ii) and (iii) of this section are also eligible in connection with the acquisition of standard housing. (b) Refinancing costs. (2) The grantee must establish refinancing guidelines and state them in its consolidated plan described in 24 CFR part 91. The guidelines shall describe the conditions under which the grantee will refinance existing debt. At minimum, the guidelines must demonstrate that rehabilitation is the primary eligible activity and ensure that this requirement is met by establishing a minimum level of rehabilitation per unit or a required ratio between rehabilitation and refinancing. (c) Acquisition costs. (d) Related soft costs. (1) Architectural, engineering, or related professional services required to prepare plans, drawings, specifications, or work write-ups. The costs may be paid if they were incurred not more than 24 months before the date that HTF funds are committed to the project and the grantee expressly permits HTF funds to be used to pay the costs in the written agreement committing the funds. (2) Costs to process and settle the financing for a project, such as private lender origination fees, credit reports, fees for title evidence, fees for recordation and filing of legal documents, building permits, attorneys' fees, private appraisal fees and fees for an independent cost estimate, and builders' or developers' fees. (3) Costs of a project audit, including certification of costs performed by a certified public accountant, that the grantee may require with respect to the development of the project. (4) Costs to provide information services such as affirmative marketing and fair housing information to prospective homeowners and tenants as required by § 93.350. (5) For new construction or rehabilitation, the cost of funding an initial operating deficit reserve, which is a reserve to meet any shortfall in project income during the period of project rent-up (not to exceed 18 months) and which may only be used to pay project operating expenses, scheduled payments to a replacement reserve, and debt service. Any HTF funds placed in an operating deficit reserve that remain unexpended after the period of project rent-up may be retained for project reserves if permitted by the grantee. (6) Staff and overhead costs of the grantee directly related to carrying out the project, such as work specifications preparation, loan processing, and inspections. For multi-unit projects, such costs must be allocated among HTF-assisted units in a reasonable manner and documented. Although these costs may be charged as project costs, these costs cannot be charged to or paid by the assisted families. (7) For both new construction and rehabilitation, costs for the payment of impact fees that are charged for all projects within a jurisdiction. (e) Operating cost assistance and operating cost assistance reserves. (1) Operating costs are costs for insurance, utilities, real property taxes, and maintenance and scheduled payments to a reserve for replacement of major systems (provided that the payments must be based on the useful life of each major system and expected replacement cost) of an HTF-assisted unit. The eligible amount of HTF funds per unit for operating cost assistance is determined based on the deficit remaining after the monthly rent payment for the HTF-assisted unit is applied to the HTF-assisted unit's share of monthly operating costs. The maximum amount of the operating cost assistance to be provided to an HTF-assisted rental project must be based on the underwriting of the project and must be specified in a written agreement between the grantee and the recipient. The written agreement may commit, from a fiscal year HTF grant, funds for operating cost assistance for a multiyear period provided that the grantee is able meet its expenditure deadline in § 93.400(d). The grantee may renew operating cost assistance with future fiscal year HTF grants during the affordability period and the amount must be based on the need for the operating cost assistance at the time the assistance is renewed. (2) An operating cost assistance reserve may be funded by the grantee for HTF-assisted units in a project where the grantee determines in its underwriting of the project the reserve is necessary to ensure the project's financial feasibility. If the operating cost assistance reserve is funded with appropriated HTF funds, the allowable amount of the reserve shall not exceed the amount determined by the grantee to be necessary to provide operating cost assistance for HTF-assisted units, for a period not to exceed 5 years, based on an analysis of potential deficits remaining after the expected rent payments for the HTF-assisted unit are applied to the HTF-assisted unit's expected share of operating costs. The grantee may renew operating cost assistance reserves with future fiscal year HTF grants during the affordability period and the amount must be based on the need for the operating cost assistance reserve at the time the assistance for the reserve is renewed. If the operating cost assistance reserve is funded with non-appropriated HTF funds, the reserve may be funded for the period of affordability. (f) Relocation costs. (1) Relocation payments include replacement housing payments, payments for moving expenses, and payments for reasonable out-of-pocket costs incurred in the temporary relocation of persons. (2) Other relocation assistance means staff and overhead costs directly related to providing advisory and other relocation services to persons displaced by the project, including timely written notices to occupants, referrals to comparable and suitable replacement property, property inspections, counseling, and other assistance necessary to minimize hardship. (g) Costs relating to payment of loans. (1) The loan was used for eligible costs specified in this section, and (2) The HTF assistance is part of the original financing for the project and the project meets the requirements of this part. (h) Construction undertaken before the HTF funds are committed to the project. § 93.202 Eligible administrative and planning costs. (a) General. (b) General management, oversight and coordination. (1) Salaries, wages, and related costs of the grantee's staff. In charging costs to this category the grantee may either include the entire salary, wages, and related costs allocable to the program of each person whose primary any (i) Developing systems and schedules for ensuring compliance with program requirements; (ii) Developing interagency agreements and agreements with entities receiving HTF funds; (iii) Monitoring HTF-assisted housing for progress and compliance with program requirements; (iv) Preparing reports and other documents related to the program for submission to HUD; (v) Coordinating the resolution of audit and monitoring findings; (vi) Evaluating program results against stated objectives; and (vii) Managing or supervising persons whose primary responsibilities with regard to the program include such assignments as those described in paragraphs (a)(1)(i) through (vi) of this section; (2) Travel costs incurred for official business in carrying out the program; (3) Administrative services performed under third party contracts or agreements, including such services as general legal services, accounting services, and audit services; (4) Other costs for goods and services required for administration of the program, including such goods and services as rental or purchase of equipment, insurance, utilities, office supplies, and rental and maintenance (but not purchase) of office space; and (c) Staff and overhead. e.g., (d) Public information. (e) Fair housing. (f) Indirect costs. (g) Preparation of the consolidated plan. (h) Other Federal requirements. § 93.203 HTF funds and public housing. (a) HTF funds may be used for new construction or rehabilitation of public housing units only in accordance with the following: (1) HTF funds may be used for new construction of public housing as part of the Choice Neighborhoods (Choice) program under a HUD appropriation act or for new public housing units that have been allocated and will receive low-income housing tax credits under section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42). (2) HTF funds may be used for the rehabilitation of existing public housing units in which the public housing assistance will be converted and used at the properties under the Rental Assistance Demonstration (RAD) program under HUD's 2012 Appropriations Act (Pub. L. 112-55, 125 Stat. 552, approved November 18, 2011) or subsequent statutes. HTF funds may also be used for the rehabilitation of existing public housing under the Choice program, and of existing public housing units that have been allocated and will receive low-income housing tax credits under section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42). (b) The public housing units constructed using funds under this part must replace units that were removed from a public housing agency's public housing inventory as part of a Choice program grant, or as part of a mixed-financed development under section 35 of the 1937 Act. The number of replacement units cannot be more than the number of units removed from the public housing agency's inventory. The public housing units constructed or rehabilitated using funds under this part must receive Public Housing Operating Fund assistance (and may receive Public Housing Capital Fund assistance) under section 9 of the 1937 Act. These units cannot receive operating costs assistance or operating cost assistance reserves under this part. (c) Except as provided in paragraph (b) of this section, HTF-assisted housing may not receive Operating Fund or Capital Fund assistance under section 9 of the 1937 Act during the HTF period of affordability. (d) Consistent with § 93.200(c), HTF funds may be used for affordable housing in a project that also contains public housing units, provided that the HTF funds are not used for the public housing units and HTF funds are used only for eligible costs, in accordance with this part. § 93.204 Prohibited activities and fees. (a) HTF funds may not be used to: (1) Provide assistance (other than assistance to a homebuyer to acquire housing previously assisted with HTF funds or renewal of operating cost assistance or renewal of operating cost assistance reserve) to a project previously assisted with HTF funds during the period of affordability established by the grantee in the written agreement under § 93.404 (c)(2)(iv). However, additional HTF funds may be committed to a project up to one year after project completion, but the amount of HTF funds in the project may not exceed the maximum per-unit development subsidy amount established pursuant to § 93.300. (2) Pay for the acquisition of property owned by the grantee, except for property acquired by the grantee with HTF funds or property acquired in anticipation of carrying out an HTF project. (3) Pay delinquent taxes, fees, or charges on properties to be assisted with HTF funds. (4) Pay for political activities, advocacy, lobbying (whether directly or through other parties), counseling services (except for housing counseling), travel expenses (other than those eligible under § 93.202(b)), or preparing or providing advice on tax returns. The prohibited use of funds for political activities includes influencing the selection, nomination, election, or appointment of one or more candidates to any Federal, State, or local office as codified in section 501 of the Internal Revenue Code of 1986 (26 U.S.C. 501). (5) Pay for administrative, outreach, or other costs to manage and operate the grantee of HTF funds, except those administrative costs necessary to carry out the HTF program in § 93.202, including housing counseling. (6) Pay for any cost that is not eligible under § 93.201 and § 93.202. (b)(1) The grantee may not charge (and must prohibit subgrantees and recipients from charging) servicing, origination, or other fees for the costs of administering the HTF program. However, the grantee may charge owners of rental projects reasonable annual fees for monitoring compliance during the period of affordability. The fees must be based upon the average actual cost of performing the monitoring of HTF-assisted rental projects. The basis for determining the amount of the fee must be documented and the fee must be included in the costs of the project as part of the project underwriting. (2) The grantee may also charge nominal application fees (although these fees are not an eligible HTF cost) to eligible recipients, to discourage frivolous applications. The amount of application fees must be appropriate to the type of application and may not create an undue impediment to an extremely low-income family to be able to participate in the grantee's program. (3) All fees are applicable credits under 2 CFR part 200, subpart E. (4) In addition, the grantee must prohibit project owners from charging fees that are not customarily charged in rental housing ( e.g., (i) Reasonable application fees to prospective tenants; (ii) Parking fees to tenants only if such fees are customary for rental housing projects in the neighborhood; and (iii) Fees for services such as bus transportation or meals, as long as the services are voluntary and fees are charged for services provided. Subpart F—Income Targeting § 93.250 Income targeting. (a) In any fiscal year in which the total amount available for allocation of HTF funds is less than $1 billion, the grantee must use 100 percent of its HTF grant for the benefit of extremely low-income families or families with incomes at or below the poverty line (whichever is greater). In any fiscal year in which the total amount available for allocation of HTF funds is greater than $1 billion, the grantee must use at least 75 percent of its grant for the benefit of extremely low-income families or families with incomes at or below the poverty line. (b) Any grant funds not used in accordance with paragraph (a) of this section must be used for the benefit of very-low income families. Subpart G—Project Requirements § 93.300 Maximum per-unit development subsidy amount, underwriting, and subsidy layering. (a) Maximum per-unit development subsidy amount. (b) Underwriting and subsidy layering. (1) An examination of the sources and uses of funds for the project (including any operating cost assistance, operating cost assistance reserve, or project-based rental assistance that will be provided to the project) and a determination that the costs are reasonable; and (2) An assessment, at minimum, of the current market demand in the neighborhood in which the project will be located, the experience of the recipient, the financial capacity of the recipient, and firm written financial commitments for the project. (3) For HTF-funded downpayment assistance, a market analysis is not required. § 93.301 Property standards. (a) New construction projects. (2) HUD requirements. (i) Accessibility. (ii) Energy efficiency. (iii) Disaster mitigation. e.g., (iv) Written cost estimates, construction contracts, and construction documents. (v) Construction progress inspections. (vi) Broadband infrastructure. (A) The location of the new construction makes installation of broadband infrastructure infeasible; or (B) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden. (b) Rehabilitation projects. (1) Rehabilitation standards. (i) Health and safety. (ii) Major systems. e.g., (iii) Lead-based paint. (iv) Accessibility. (v) [Reserved]. (vi) Disaster mitigation. e.g., (vii) State and local codes, ordinances, and zoning requirements. (viii) Housing standards. Federal Register (ix) Capital Needs Assessments. (x) Broadband infrastructure. (A) The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible; (B) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or (C) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible. (2) Construction documents and cost estimates. i.e., (3) Frequency of inspections. (c) Acquisition of standard housing. (2) All other existing housing that is acquired with HTF assistance for rental housing must meet the rehabilitation property standards requirements of paragraph (b) of this section. The grantee must document this compliance based upon an inspection that is conducted no earlier than 90 calendar days before the date of commitment of HTF assistance. If the property does not meet these standards, HTF funds cannot be used to acquire the property unless it is rehabilitated to meet the standards of paragraph (b) of this section. (3) Existing housing that is acquired for homeownership (e.g., down payment assistance) must be decent, safe, sanitary, and in good repair. The grantee must establish standards to determine that the housing is decent, safe, sanitary, and in good repair. At minimum, the standards must provide that the housing meets all applicable State and local standards and code requirements, and the housing does not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the Federal Register (d) Manufactured housing. (e) Ongoing property condition standards: Rental housing Ongoing property standards. (i) Minimum Property Standards. Federal Register (ii) Health and safety. (iii) Lead-based paint. (2) Inspections. (3) Corrective and remedial actions. (4) Inspection procedures. (f) Environmental provisions New construction projects environmental requirements Historic preservation Standards. Secretary of the Interior's Standards for Rehabilitation, Secretary of the Interior's Professional Qualification Standards; (B) Archaeological resources. e.g., (ii) Farmland. (iii) Airport zones. (iv) Coastal Barrier Resource System. (v) Coastal zone management. (vi) Floodplains. (A) Construction and other activities in the 100-year floodplain are to be avoided when practicable. If there are no practicable alternatives to new construction or substantial improvement in the 100-year floodplain, the structure must be elevated at least the base flood elevation (BFE) or floodproofed to one foot above the BFE. Elevated and floodproofed buildings must adhere to National Flood Insurance Program standards. The primary sources of floodplain data are Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps (FIRMs). When FEMA provides interim flood hazard data, such as Advisory Base Flood Elevations (ABFE) or preliminary maps or studies, the latest of these sources shall be used. (B) No HTF assistance may be approved with respect to: ( 1 ( 2 ( 3 (vii) Wetlands. (B) A wetland means those areas that are inundated by surface or ground water with a frequency sufficient to support, and under normal circumstances, does or would support a prevalence of vegetative or aquatic life that requires saturated or seasonally saturated soil conditions for growth and reproduction. Wetlands generally include swamps, marshes, bogs, and similar areas such as sloughs, potholes, wet meadows, river overflows, mud flats, and natural ponds. This definition includes those wetland areas separated from their natural supply of water as a result of activities, such as the construction of structural flood protection methods or solid-fill road beds, or mineral extraction and navigation improvements. This definition is independent of the definition of jurisdictional wetland used by the U. S. Army Corps of Engineers under section 404 of the Clean Water Act (33 U.S.C. 1251 et seq. (viii) Explosives and hazards. (ix) Contamination. (A) All proposed multifamily (more than four housing units) HTF projects require a Phase I Environmental Site Assessment (ESA-ASTM). If the Phase I ESA identifies recognized environmental concerns (RECs), a Phase II (ESA-ASTM) will be required. ASTM reports shall be prepared in accordance with the most current ASTM standard. Single family housing does not require a Phase I ESA. (B) HTF projects must avoid sites located within 0.25 miles of a Superfund or CERCLIS (Comprehensive Environmental Response, Compensation, and Liability Information System) site or other contaminated site reported to Federal, State, or local authorities without a statement in writing from the U.S. Environmental Protection Agency (EPA) or the appropriate State agency that there is no hazard that could affect the health and safety of the occupants or conflict with the intended use of the property. (x) Noise. (B) External noise levels: ( 1 ( 2 e.g., ( 3 e.g., require (xi) Endangered species. (xii) Wild and scenic rivers. (xiii) Safe drinking water. (xiv) Sole-source aquifers. (2) Rehabilitation projects environmental requirements Historic preservation. Secretary of the Interior's Standards for Rehabilitation, Secretary of the Interior's Professional Qualification Standards; (B) Archaeological resources. e.g., (ii) Farmland. (iii) Airport zones. (iv) Coastal Barrier Resource System. (v) Coastal zone management. (vi) Floodplains. (A) Construction and other activities in the 100-year floodplain are to be avoided when practicable. If there are no practicable alternatives to new construction or substantial improvement in the 100-year floodplain, the structure must be elevated at least to the base flood elevation (BFE) or floodproofed to one foot above the BFE. Elevated and floodproofed buildings must adhere to National Flood Insurance Program standards. The primary sources of floodplain data are Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps (FIRMS). When FEMA provides interim flood hazard data, such as Advisory Base Flood Elevations (ABFE) or preliminary maps or studies, the latest of these sources shall be used. (B) No HTF assistance may be approved with respect to: ( 1 ( 2 ( 3 (vii) Wetlands. et seq. (viii) Explosives and hazards. (ix) Contamination. (A) All proposed multifamily (more than four housing units) HTF project activities require a Phase I Environmental Site Assessment (ESA—ASTM). If the Phase I ESA identifies recognized environmental concerns (RECs), a Phase II (ESA-ASTM) will be required. ASTM reports shall be prepared in accordance with the most current ASTM standard. Single family housing does not require a Phase I ESA. (B) HTF projects must avoid sites located within 0.25 miles of a Superfund or CERCLIS (Comprehensive Environmental Response, Compensation, and Liability Information System) site or other contaminated site reported to Federal, State, or local authorities without a statement in writing from EPA or the appropriate State agency that there is no hazard that could affect the health and safety of the occupants or conflict with the intended utilization of the property. (x) Noise Internal noise levels. (B) [Reserved]. (xi) Endangered species. (B) The grantee must avoid all actions that adversely modify the critical habitat of such species. (xii) Wild and scenic rivers. (xiii) Safe drinking water. (xiv) Sole-source aquifers. (3) Acquisition projects environmental requirements. (B) All other existing housing that is acquired with HTF assistance must meet the property standards requirements of paragraph (f)(2) of this section. (ii) If under paragraph (f)(3)(i)(A) or paragraph (B) of this section, the property does not meet these standards, with the exception of the noise standards in paragraph (f)(2) of this section, HTF funds cannot be used to acquire the property. (4) Manufactured housing environmental requirements. [80 FR 5220, Jan. 30, 2015, as amended at 81 FR 92636, Dec. 20, 2016; 88 FR 30497, May 11, 2023] § 93.302 Qualification as affordable housing: rental housing. (a) Eligible tenants. (b) Rent limitations Extremely low-income tenants. (ii) Very-low income tenants. (2) If the unit receives Federal or State project-based rental subsidy, and the tenant pays as a contribution toward rent not more than 30 percent of the tenant's adjusted income, the maximum rent is the rent allowable under the Federal or State project-based rental subsidy program. (c) Initial rent schedule and utility allowance. (2) The grantee must annually review and approve rents proposed by the owner for HTF units. For all units for which the tenant is paying utilities, the grantee must ensure that the rents do not exceed the maximum rent minus the monthly allowances for utilities. (d) Periods of affordability. (2) The affordability requirements apply without regard to the term of any loan or mortgage, repayment of the HTF investment, or the transfer of ownership. They must be imposed by a deed restriction, covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD under which the grantee and beneficiaries have the right to require specific performance, except that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure. The affordability requirements must be recorded in accordance with State recordation laws. (3) The grantee may use purchase options, rights of first refusal, or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (4) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (5) The termination of the restrictions on the project does not terminate the grantee's repayment obligation under § 93.403. (e) Tenant income. (2) An owner who re-examines a tenant's annual income through a statement and certification in accordance with § 93.151(d)(2) must examine the source documentation of the income of each tenant every 6th year of the affordability period unless the tenant or unit is assisted under the public housing program, Federal or State project-based rental assistance program, or a Federal tenant-based rental assistance program ( e.g., (f) Over-income tenants. (g) Fixed and floating HTF units. (h) Tenant selection. (i) Onsite inspections and financial oversight. [80 FR 5220, Jan. 30, 2015, as amended at 88 FR 9665, Feb. 14, 2023] § 93.303 Tenant protections and selection. (a) Lease. (b) Prohibited lease terms. (1) Agreement to be sued. (2) Treatment of property. (3) Excusing owner from responsibility. (4) Waiver of notice. (5) Waiver of legal proceedings. (6) Waiver of a jury trial. (7) Waiver of right to appeal court decision. (8) Tenant chargeable with cost of legal actions regardless of outcome. (9) Mandatory supportive services. (c) Termination of tenancy. (d) Tenant selection. (1) Limit the housing to income-eligible families; (2) Are reasonably related to the applicants' ability to perform the obligations of the lease ( i.e., (3) Limit eligibility or give a preference to a particular segment of the population if permitted in its written agreement with the grantee (and only if the limitation or preference is described in the grantee's consolidated plan). (i) Any limitation or preference must not violate nondiscrimination requirements in § 93.350. A limitation or preference does not violate nondiscrimination requirements if the housing also receives funding from a Federal program that limits eligibility to a particular segment of the population ( e.g., (ii) If a project does not receive funding from a Federal program that limits eligibility to a particular segment of the population, the project may have a limitation or preference for persons with disabilities who need services offered at a project only if: (A) The limitation or preference is limited to the population of families (including individuals) with disabilities that significantly interfere with their ability to obtain and maintain housing; (B) Such families will not be able to obtain or maintain themselves in housing without appropriate supportive services; and (C) Such services cannot be provided in a nonsegregated setting. The families must not be required to accept the services offered at the project. In advertising the project, the owner may advertise the project as offering services for a particular type of disability; however, the project must be open to all otherwise eligible persons with disabilities who may benefit from the services provided in the project. (4) Do not exclude an applicant with a voucher under the Section 8 Tenant-Based Assistance: Housing Choice Voucher program (24 CFR part 982) or an applicant participating in a HOME tenant-based rental assistance program (24 CFR part 92) because of the status of the prospective tenant as a holder of such voucher or comparable HOME tenant-based assistance document. (5) Provide for the selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; (6) Give prompt written notification to any rejected applicant of the grounds for any rejection; and (7) Comply with the VAWA requirements prescribed in § 93.356. [80 FR 5220, Jan. 30, 2015, as amended at 81 FR 80805, Nov. 16, 2016] § 93.304 Qualification as affordable housing: Homeownership. (a) Homeownership activities. (b) Single family housing. (c) Modest housing. (d) First-time homebuyer and income requirements. (e) Period of affordability. (f) Resale or recapture requirements. (g) Special considerations for single family properties with more than one unit. (2) If HTF funds are also used to assist the income-eligible homebuyer in acquiring one or more of the rental units in the single family property, the affordability requirements of § 93.302 apply to assisted rental units, except that the grantee must impose resale restrictions on all assisted units (owner-occupied and rental units) in the single-family housing. The affordability requirements on all assisted units continue for the period of affordability. If HTF funds are used to assist only the rental units in such a property, then the requirements of § 93.302 would apply and the owner-occupied unit would not be subject to the income targeting or affordability provisions of this section. (h) Lease-purchase. (2) If HTF funds are used to acquire housing that will be resold to a homebuyer through a lease-purchase program, the HTF affordability requirements for rental housing in § 93.302 shall apply if the housing is not transferred to an eligible homebuyer within 42 months after project completion. (i) Contract to purchase. (j) If there is no ratified sales contract with an eligible homebuyer for the housing within 9 months of the date of completion of construction or rehabilitation, the housing must be rented to an eligible tenant in accordance with § 93.301. (k) Preserving affordability. (2) The total amount of original and additional HTF assistance may not exceed the maximum per-unit development subsidy amount established pursuant to § 93.300. As an alternative to charging the cost to the HTF program under § 93.201, the grantee may charge the cost to the HTF program under § 93.302 as a reasonable administrative cost of its HTF program, so that the additional HTF funds for the housing are not subject to the maximum per-unit subsidy amount. (l) Agreements with lending institutions. (2) No fees may be charged to the family for the HTF homeownership assistance ( e.g., (m) Written policies. (1) Underwriting standards for homeownership assistance that examine the family's housing debt, overall debt, income, and ability to maintain the housing; (2) Anti-predatory lending; and (3) Refinancing loans to which HTF loans are subordinated to ensure that the terms of the new loan are reasonable. § 93.305 Qualification as affordable housing: modest housing requirements for homeownership; resale or recapture requirements. (a) Housing that is for acquisition by a family pursuant to § 93.304 must be modest housing. (1) The housing must be modest housing as follows: The housing has a purchase price for the type of single family housing that does not exceed 95 percent of the median purchase price for the area for newly constructed or standard housing. The grantee must use the HTF affordable homeownership limits provided by HUD for newly constructed housing and for existing housing. HUD will provide limits for affordable newly constructed housing based on 95 percent of the median purchase price for the area using Federal Housing Administration (FHA) single family mortgage program data for newly constructed housing, with a minimum limit based on 95 percent of the U.S. median purchase price for new construction for nonmetropolitan areas. HUD will provide limits for affordable existing housing based on 95 percent of the median purchase price for the area using FHA single family mortgage program data for existing housing data and other appropriate data that are available nation-wide for sales of existing housing, with a minimum limit based on 95 percent of the state-wide nonmetropolitan area median purchase price using these data. For States with no non-metropolitan areas, the minimum purchase price is defined as the lesser of the State non-metro or the United States non-metro median. (2) In lieu of the limits provided by HUD, the grantee may determine 95 percent of the median area purchase price for single family housing in the jurisdiction annually, as follows: The grantee must set forth the price for different types of single family housing for the jurisdiction. The grantee may determine separate limits for existing housing and newly constructed housing. For housing located outside of metropolitan areas, a grantee may aggregate sales data from more than one county, if the counties are contiguous and similarly situated. The following information must be included in the annual action plan of the consolidated plan submitted to HUD for review and updated in each action plan: (i) The 95 percent of median area purchase price must be established in accordance with a market analysis that ensured that a sufficient number of recent housing sales are included in the survey. (ii) Sales must cover the requisite number of months based on volume: For 500 or more sales per month, a one- month reporting period; for 250 through 499 sales per month, a 2-month reporting period; for less than 250 sales per month, at least a 3-month reporting period. The data must be listed in ascending order of sales price. (iii) The address of the listed properties must include the location within the grantee. Lot, square, and subdivision data may be substituted for the street address. (iv) The housing sales data must reflect all, or nearly all, of the one- family house sales in the entire area. (v) To determine the median, take the middle sale on the list if an odd number of sales, and if an even number, take the higher of the middle numbers and consider it the median. After identifying the median sales price, the amount should be multiplied by 0.95 to determine 95 percent of the median area purchase price. (b) Resale or recapture requirements. Homeownership Minimum period of affordability in years Under $30,000 10 $30,000-$50,000 20 Over $50,000 30 (1) Resale. (2) Recapture. (ii) The following options for recapture requirements are acceptable to HUD. The grantee may adopt, modify, or develop its own recapture requirements for HUD approval. In establishing its recapture requirements, the grantee is subject to the limitation that, when the recapture requirement is triggered by a sale (voluntary or involuntary) of the housing unit, the amount recaptured cannot exceed the net proceeds, if any. The net proceeds are the sales price minus superior loan repayment (other than HTF funds) and any closing costs. (A) Recapture entire amount. (B) Reduction during affordability period. (C) Shared net proceeds. (D) Owner investment returned first. (E) Amount subject to recapture. i.e., Subpart H—Other Federal Requirements § 93.350 Other federal requirements and nondiscrimination; affirmative marketing. (a) General. (b) Affirmative marketing. (2) The affirmative marketing requirements and procedures adopted must include: (i) Methods for informing the public, owners, and potential tenants about Federal fair housing laws and the grantee's affirmative marketing policy ( e.g., (ii) Requirements and practices the grantee and owner must adhere to in order to carry out the grantee's affirmative marketing procedures and requirements ( e.g., (iii) Procedures to be used by the grantee and owners to inform and solicit applications from persons in the housing market area who are not likely to apply for the rental housing or homeownership assistance program without special outreach ( e.g., (iv) Records that will be kept describing actions taken by the grantee and owners to affirmatively market rental housing units and homeownership assistance program and records to assess the results of these actions; and (v) A description of how the grantee will annually assess the success of affirmative marketing actions and what corrective actions will be taken where affirmative marketing requirements are not met. (3) A grantee that subgrants HTF funds to subgrantees must require each subgrantee to either follow the grantee's procedures and requirements or adopt its own affirmative marketing procedures and requirements that meet this section. [80 FR 5220, Jan. 30, 2015, as amended at 81 FR 90657, Dec. 14, 2016] § 93.351 Lead-based paint. Housing assisted with HTF funds is subject to the regulations at 24 CFR part 35, subparts A, B, J, K, and R. § 93.352 Displacement, relocation, and acquisition. (a) Minimizing displacement. (b) Temporary relocation. (1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied housing and any increase in monthly rent/utility costs. (2) Appropriate advisory services, including reasonable advance written notice of: (i) The date and approximate duration of the temporary relocation; (ii) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period; (iii) The terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the building/complex upon completion of the project; and (iv) The provisions of paragraph (b)(1) of this section. (c) Relocation assistance for displaced persons General. (2) Displaced person. (A) After notice by the owner to move permanently from the property, if the move occurs on or after: ( 1 ( 2 (B) Before the date described in paragraph (c)(2)(i)(A) of this section, if the grantee or HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the project; or (C) By a tenant-occupant of a dwelling unit, if any one of the following three situations occurs: ( 1 ( i ( ii ( 2 ( i ( ii ( 3 (ii) Notwithstanding paragraph (c)(2)(i) of this section, a person does not qualify as a “displaced person” if: (A) The person has been evicted for cause based upon a serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable Federal, State or local law, or other good cause, and the grantee determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance. The effective date of any termination or refusal to renew must be preceded by at least 30 calendar days advance written notice to the tenant specifying the grounds for the action. (B) The person moved into the property after the submission of the application, but before signing a lease and commencing occupancy, was provided written notice of the project, its possible impact on the person ( e.g., (C) The person is ineligible under 49 CFR 24.2(g)(2); or (D) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project. (iii) The grantee may, at any time, ask HUD to determine whether a displacement is or would be covered by this rule. (3) Initiation of negotiations. (d) Optional relocation assistance. (e) Real property acquisition requirements. (f) Appeals. § 93.353 Conflict of interest. (a) Applicability of 2 CFR 200.318. (b) Conflicts prohibited. (c) Persons covered. (d) Exceptions: Threshold requirements. (1) A disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict and a description of how the public disclosure was made; and (2) An opinion of the grantee's attorney that the interest for which the exception is sought would not violate State or local law. (e) Factors to be considered for exceptions. (1) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program or project which would otherwise not be available; (2) Whether the person affected is a member of a group or class of income eligible persons intended to be the beneficiaries of the assisted activity, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class; (3) Whether the affected person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted activity in question; (4) Whether the interest or benefit was present before the affected person was in a position as described in paragraph (c) of this section; (5) Whether undue hardship will result either to the grantee or the person affected when weighed against the public interest served by avoiding the prohibited conflict; and (6) Any other relevant considerations. (f) Recipient General (2) Exceptions. (i) Whether the person receiving the benefit is a member of a group or class of low-income persons intended to be the beneficiaries of the assisted housing, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class; (ii) Whether the person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted housing in question; (iii) Whether the tenant protection requirements of § 93.303 are being observed; (iv) Whether the affirmative marketing requirements of § 93.350 are being observed and followed; and (v) Any other factor relevant to the grantee's determination, including the timing of the requested exception. § 93.354 Funding Accountability and Transparency Act. The HTF grant to the grantee and all assistance provided to subgrantees and recipients shall be considered a Federal award for purposes of the Federal Funding Accountability and Transparency Act of 2006 (31 U.S.C. 6101 note). § 93.355 Eminent domain. No HTF funds may be used in conjunction with property taken by eminent domain, unless eminent domain is employed only for a public use, except that, public use shall not be construed to include economic development that primarily benefits any private entity. § 93.356 VAWA requirements. (a) General. (2) For the HTF program, the “covered housing provider,” as this term is used in HUD's regulations in 24 CFR part 5, subpart L, refers to: (i) The owner of HTF-assisted rental housing for the purposes of 24 CFR 5.2005(d)(1), (2), (3), and (4) and 5.2009(a); and (ii) The owner and the grantee for purposes of 24 CFR 5.2005(e) and 5.2007, except as otherwise provided in paragraph (f) of this section. (b) Notification requirements. (c) Bifurcation of lease requirements. (d) VAWA lease term/addendum. (e) Period of applicability. (f) Emergency transfer plan. (1) Establish a preference under the grantee's HTF program for tenants who qualify for emergency transfers under 24 CFR 5.2005(e); and (2) Coordinate with victim service providers and advocates to develop the emergency transfer plan, make referrals, and facilitate emergency transfers to safe and available units. [81 FR 80805, Nov. 16, 2016] Subpart I—Program Administration § 93.400 Housing Trust Fund (HTF) accounts. (a) General. (b) HTF Treasury account. (c) HTF local account. (2) The HTF local account must be interest-bearing. (d) Reductions. (1) Any fiscal year grant funds in the HTF Treasury account that are not committed within 24 months after the date of HUD's execution of the HTF grant agreement; (2) Any fiscal year grant funds in the HTF local account that are not expended within 5 years after the date of HUD's execution of the HTF grant agreement; (3) Any amounts pursuant to § 93.453; and (4) Amounts that the grantee fails to obtain and that were required to be reimbursed or returned under § 93.450. § 93.401 HTF grant agreement. Allocated and reallocated funds will be made available pursuant to an HTF grant agreement. § 93.402 Program disbursement and information system. (a) General. (b) Project set-up. i.e., (2) If the project set-up information is not completed within 20 calendar days of the date of the initial project set-up, the project may be canceled by the system. In addition, a project that has been committed in the system for 12 months without an initial disbursement of funds may be canceled by the system. (c) Disbursement of HTF Funds. (2) Funds drawn from the HTF Treasury account are subject to the Intergovernmental Cooperation Act (31 U.S.C. 6501 et seq. (3) Funds in the HTF local account must be disbursed before requests are made for funds in the HTF Treasury account. (d) Project completion. (2) Additional HTF funds for development-related costs may be committed to a project up to one year after project completion, but the amount of HTF funds in the project may not exceed the maximum per-unit development subsidy amount established pursuant to § 93.300. (e) Access by other participants. § 93.403 Program income and repayments. (a) Program income. (b) Repayments. (2) Any HTF funds invested in a project that is terminated before completion, either voluntarily or otherwise, must be repaid by the grantee, in accordance with paragraph (b)(3) of this section. (3) HUD will instruct the grantee to either repay the funds to the HTF Treasury account or the local account. Generally, if the HTF funds were disbursed from the grantee's HTF Treasury account, they must be repaid to the HTF Treasury account. If the HTF funds were disbursed from the grantee's HTF local account, they must be repaid to the local account. (4) If the grantee is no longer a grantee in the HTF program when the repayment is made, the funds must be remitted to HUD and reallocated in accordance with § 93.54 of this part. § 93.404 Grantee responsibilities; written agreements; onsite inspections; financial oversight. (a) Responsibilities. (b) Executing a written agreement. (c) Provisions in written agreements. (1) Subgrantee. (i) Use of the HTF funds. e.g., (ii) Deadlines. (iii) Audit. (iv) Program income. (v) Uniform administrative requirements. (vi) Other program requirements. (vii) Affirmative marketing. (viii) Requests for disbursement of funds. (ix) Reversion of assets. (x) Records and reports. (xi) Enforcement of the agreement. (xii) Written agreement. (xiii) Duration of the agreement. (xiv) Fees. (A) The subgrantee may charge owners of rental projects reasonable annual fees for compliance monitoring during the period of affordability. The fees must be based upon the average actual cost of performing the monitoring of HTF-assisted rental projects. The basis for determining the amount of the fee amount must be documented and the fee must be included in the costs of the project as part of the project underwriting; (B) The subgrantee may charge nominal application fees (although these fees are not an eligible HTF cost) to discourage frivolous applications. The amount of application fees must be appropriate to the type of application and may not create an undue impediment to an income-eligible family's, or other potential recipient's participation in the HTF program; and (C) The subgrantee may charge homebuyers a fee for housing counseling. (2) Eligible recipient. (i) Use of the HTF funds. (ii) Deadlines. (iii) Audit. (iv) Affordability. e.g., (v) Project requirements. (vi) Other program requirements. (vii) Affirmative marketing. (viii) Requests for disbursement of funds. (ix) Records and reports. (x) Enforcement of the agreement. (xi) Duration of the agreement. (xii) Fees. (3) First-time homebuyer. (i) Use of the HTF funds. e.g., e.g., (ii) Resale or recapture restrictions. (iii) Enforcement of the agreement. (d) Onsite inspections Project completion. (2) Period of affordability. (ii) The onsite inspections must occur 12 months after project completion and at least once every 3 years thereafter during the period of affordability. (iii) If there are observed deficiencies for any of the inspectable items established by the grantee, in accordance with the inspection requirements of § 93.301, a follow-up onsite inspection must occur within 12 months, or within a reasonable time frame established by the grantee depending on the severity of the deficiency, to verify that all observed deficiencies have been corrected. The grantee may establish a list of non-hazardous deficiencies for which correction can be verified by third party documentation rather than reinspection. The grantee must adopt a more frequent inspection schedule for properties that have been found to have health and safety violations. Life-threatening health and safety deficiencies must be corrected immediately, in accordance with § 93.301. (iv) The property owner must annually certify to the grantee that each building in the project is suitable for occupancy, taking into account State and local health, safety, and other applicable codes, ordinances, and requirements, and the ongoing property standards established by the grantee to meet the requirements of § 93.301. (v) Inspections must be based on a statistically valid sample of units appropriate for the size of the HTF-assisted project, as set forth by HUD through notification published in the Federal Register. (e) Financial oversight. [80 FR 5220, Jan. 30, 2015, as amended at 81 FR 80805, Nov. 16, 2016; 88 FR 30497, May 11, 2023] § 93.405 Applicability of uniform administrative requirements, cost principles, and audits. The requirements of 2 CFR part 200 apply to the grantees and subgrantees receiving HTF funds, except for the following provisions: §§ 200.307, 200.311, 300.328(b), 200.329, and 200.333. If there is a conflict between the definitions in 2 CFR part 200 and 24 CFR part 93, the definitions in part 93 govern. § 93.406 Audits. (a) Audits of the grantee and subgrantees must be conducted in accordance with 2 CFR part 200, subpart F. The use of HTF grant funds by the grantee must be audited not less than annually to ensure compliance with this part. Any financial statement submitted by the grantee to HUD must be reviewed by an independent certified public accountant, in accordance with Statements on Standards for Accounting and Review Services, which is issued by the American Institute of Certified Public Accountants. (b) The written agreement providing HTF assistance to the recipient must specify that the recipient will submit to the grantee a cost certification performed by a certified public accountant for each project assisted with HTF funds. The agreement must specify that the recipient will submit to the grantee an annual audit performed on each project assisted with HTF funds, beginning the first year following the cost certification and with the final annual audit occurring the last year of the affordability period. § 93.407 Recordkeeping. (a) General. (1) Program records. (ii) The subsidy layering guidelines adopted in accordance with § 93.300. (iii) If HTF funds are used for housing for first-time homebuyers, the procedures used for establishing 95 percent of the median purchase price for the area in accordance with § 93.305, as set forth in the consolidated plan. (iv) If HTF funds are used for acquisition of housing for homeownership, the resale guidelines established in accordance with § 93.304, as set forth in the consolidated plan. (v) Records documenting compliance with the 24-month commitment deadline of § 93.400(d)(l). (vi) Records documenting compliance with the 10 percent limitation on administrative and planning costs in accordance with § 93.202. (2) Project records. (ii) The source and application of funds for each project, including supporting documentation, in accordance with 2 CFR 200.333 through 200.337, and records to document the eligibility and allowability of the project costs, including the documentation of the actual HTF-eligible development costs of each HTF-assisted unit (through allocation of costs, if permissible under § 93.200(c)) where HTF funds are used to assist less than all of the units in a multi-unit project. (iii) Records demonstrating that each rental housing or homeownership project meets the maximum per-unit subsidy amount established pursuant to § 93.300(a), and the subsidy layering and underwriting evaluation in accordance with § 93.300. (iv) Records ( e.g., (v) Records demonstrating that each family is income-eligible. (vi) Records demonstrating that each rental housing project meets the affordability and income targeting requirements of § 93.302 for the required period. Records must be kept for each family assisted. (vii) Records demonstrating that each lease for an assisted rental housing unit complies with the tenant and participant protections of § 93.303. Records must be kept for each family assisted. (viii) Records demonstrating that the purchase price for each housing unit for a first-time homebuyer does not exceed 95 percent of the median purchase price for the area, in accordance with § 93.305. (ix) Records demonstrating that each housing unit for a first-time homebuyer meets the affordability requirements of § 93.304 for the required period. (x) Records demonstrating that a site and neighborhood standards review was conducted for each project that included new construction of rental housing assisted under this part, to determine that the site meets the requirements of § 93.150. (xi) Records (written agreements) demonstrating compliance with the written agreements requirements in § 93.404. (3) Financial records. (ii) Records concerning the HTF Treasury account and local account required to be established and maintained by § 93.400, including deposits, disbursements, balances, supporting documentation, and any other information required by the program disbursement and information system established by HUD. (iii) Records identifying the source and application of program income and repayments. (iv) Records demonstrating adequate budget control, in accordance with 2 CFR part 200, including evidence of periodic account reconciliations. (4) Program administration records. (ii) Records demonstrating compliance with the applicable uniform administrative requirements required by § 93.405. (iii) Records documenting required inspections, monitoring reviews and audits, and the resolution of any findings or concerns. (5) Records concerning other Federal requirements. (ii) Data on the extent to which each racial and ethnic group and single-headed households (by gender of household head) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with HTF funds. (iii) Records demonstrating compliance with the affirmative marketing procedures and requirements of § 93.350. (iv) Records demonstrating compliance with the lead-based paint requirements of 24 CFR part 35, subparts A, B, J, K, M, and R. (v) Records demonstrating compliance with requirements of § 93.352 regarding displacement, relocation, and real property acquisition. (vi) Records supporting exceptions to the conflict-of-interest prohibition pursuant to § 93.353. (vii) Debarment and suspension certifications required by 24 CFR5.105(c) and 2 CFR part 2424. (viii) Records demonstrating compliance with § 93.354. (ix) Records demonstrating compliance with 2 CFR 200.321 regarding the grantee's activities related to minority business enterprise (MBE) and women's business enterprise (WBE). (x) Documentation on emergency transfers requested under 24 CFR 5.2005(e) and § 93.356 pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests. (xi) Documentation of actions undertaken to meet the requirements of 24 CFR part 75, which implements section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701u). (b) Period of record retention. (1) For rental housing projects, records may be retained for 5 years after the project completion date, except that records of individual tenant income verifications, project rents, and project inspections must be retained for the most recent 5-year period, until 5 years after the affordability period terminates. (2) For homeownership housing projects, records may be retained for 5 years after the project completion date, except for documents imposing resale or recapture restrictions that must be retained for 5 years after the affordability period terminates. (3) Written agreements must be retained for 5 years after the agreement terminates. (4) Records covering displacements and acquisitions must be retained for 5 years after the date by which all persons displaced from the property and all persons whose property is acquired for the project have received the final payment to which they are entitled, in accordance with § 93.352. (5) If any litigation, claim, negotiation, audit, monitoring, inspection, or other action has been started before the expiration of the required record retention period, records must be retained until completion of the action and resolution of all issues that arise from it, or until the end of the required period, whichever is later. (c) Access to records. (2) HUD and the Comptroller General of the United States, and any of their representatives, have the right of access to any pertinent books, documents, papers, or other records of the grantee, subgrantees, and recipients, to make audits, examinations, excerpts, and transcripts. [80 FR 5220, Jan. 30, 2015, as amended at 81 FR 80805, Nov. 16, 2016; 85 FR 61567, Sept. 29, 2020] § 93.408 Performance reports. Each grantee must develop and maintain a system to track the use of its HTF funds, and submit annual performance and management reports on its HTF program in accordance with 24 CFR 91.520. HUD will make the performance and management reports publicly available. Subpart J—Performance Reviews and Sanctions § 93.450 Accountability of recipients. The grantee shall review each recipient to determine compliance with the requirements of this part and the terms of the written agreement in accordance with the grantee's policies, procedures, and systems established pursuant to § 93.404(a). (a) Misuse of funds Reimbursement requirement. (2) Determination. (i) The grantee provides notification and opportunity for discretionary review to HUD; and (ii) HUD does not subsequently reverse the determination. (b) Reduction for failure to obtain return of misused funds. (2) In any case in which a failure to obtain reimbursement or return occurs during a year immediately preceding a year in which HTF grants will not be made, the grantee shall pay to HUD, for reallocation among the other grantees, an amount equal to the amount of the reduction for the entity that would otherwise apply. § 93.451 Performance reviews. (a) General. (b) Standards for comprehensive performance review. § 93.452 Corrective and remedial actions. (a) General. (b) Performance review. (2) If the grantee fails to demonstrate to HUD's satisfaction that it has met the requirement, HUD will take corrective or remedial action in accordance with this section or § 93.453. (c) Corrective and remedial actions. (1) HUD may instruct the grantee to submit and comply with proposals for action to correct, mitigate, and prevent a performance deficiency, including: (i) Preparing and following a schedule of actions for carrying out the affected activities, consisting of schedules, timetables, and milestones necessary to implement the affected activities; (ii) Establishing and following a management plan that assigns responsibilities for carrying out the remedial actions; (iii) Canceling or revising activities likely to be affected by the performance deficiency, before expending HTF funds for the activities; (iv) Reprogramming HTF funds that have not yet been expended from affected activities to other eligible activities; (v) Reimbursing its HTF account in any amount not used in accordance with the requirements of this part; (vi) Suspending disbursement of HTF funds for affected activities; and (vii) Establishing procedures to ensure compliance with HTF requirements; (2) HUD may also change the method of payment from an advance to reimbursement basis and may require supporting documentation to be submitted for HUD review for each payment request before payment is made; determine the grantee to be high risk and impose special conditions or restrictions on the allocation in accordance with 2 CFR 200.207 or 200.338; and take other remedies that may be legally available. § 93.453 Notice and opportunity for hearing; sanctions. (a) If HUD finds after reasonable notice and opportunity for hearing that a grantee has substantially failed to comply with any provision of this part, and until HUD is satisfied that there is no longer any such failure to comply: (1) HUD shall reduce the funds in the grantee's HTF account by the amount of any expenditures that were not in accordance with the requirements of this part or require the grantee to repay to HUD any amount of the HTF grant that was not used in accordance with the requirements of this part; and (2) HUD may do one or more of the following: (i) Prevent withdrawals from the grantee's HTF account for activities affected by the failure to comply; (ii) Restrict the grantee's activities under this part to activities or recipients not affected by the failure to comply; (iii) Remove the State from participation in allocations or reallocations of funds made available under §§ 93.50 through 93.54 of this part; or (iv) Terminate any HTF assistance to the grantee. HUD may, on due notice, suspend payments at any time after the issuance of a notice of opportunity for hearing pursuant to paragraph (a) of this section, pending such hearing and a final decision, to the extent that HUD determines such action to be necessary to preclude the further expenditure of funds for activities affected by the failure to comply. (b) Proceedings.

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