(5) The entitlement amount determined for each individual unit of goverment, in both metropolitan and nonmetropolitan areas, the amount determined to be available for general purpose discretionary grants in metropolitan areas (including any metropolitan area "set-aside" funds), and the amount determined to be available for general purpose discretionary grants in nonmetropolitan areas shall each be reduced by an amount bearing the same ratio to such total amount prior to reduction as the ratio determined in paragraph (f)(4) of this section; and

(6) In the case of general purpose discretionary funds for either metropolitan or nonmetropolitan areas, any such reduction shall be made prior to the allocation of such funds among the States as provided in §570.104 (c)(1) and (c)(2).

§ 570.104 Funds for discretionary grants.

(a) Secretary's funds. From the amount appropriated for community development block grants each fiscal year, excluding funds described in § 570.101(a), (b), and (c), HUD will determine an amount for each of the fiscal years 1975, 1976, and 1977 which is two percent (2%) and an amount for each of the fiscal years 1978, 1979, and 1980 which is three percent (3%) of such appropriated funds for use in making grants:

(1) In behalf of new communities approved under Title VII of the Housing and Urban Development Act of 1970 or Title IV of the Housing and Urban Development Act of 1968, or in behalf of new community projects assisted under Title X of the National Housing Act which meet eligibility standards set forth in Title VII of the Housing and Urban Development Act of 1970 and which were the subject of an application or preapplication under such title prior to January 14, 1975;

(2) To States and units of general local government which jointly apply for such funds for addressing problems that are areawide in scope;

(3) In Guam, the Virgin Islands, American Samoa, and the Trust Territory of the Pacific Islands;

(4) To States and units of general local government for use in demon

strating innovative community development projects;

(5) To States, units of general local government, and Indian tribes for use in meeting emergency community development needs caused by federally recognized disasters as defined in § 570.407(a) (but not more than 25 percent for each of fiscal years 1975, 1976, and 1977, and 15 percent for each of fiscal years 1978, 1979, and 1980, of the total amount reserved and set aside in the Secretary's fund under this section for each such year will be used for this purpose);

(6) To States and units of general local government where HUD finds it necessary to correct inequities resulting from the allocation provisions of this subpart;

(7) To Indian tribes (all community development block grant assistance for Indian programs will come from the Secretary's fund); and

(8) To States, units of general local government, Indian tribes, or areawide planning organizations for the purpose of providing technical assistance in planning, developing, and administering assistance under this title. The Secretary may also provide such technical assistance under this paragraph directly or through contracts. Grants from the Secretary's fund may be made in addition to any other community development block grants which may be made to the same recipient under this subpart.

(b) Transition/categorical program settlement fund. Using funds appropriated for each of the fiscal years 1975 through 1980 for this purpose as described in § 570.101(b), grants may be made to facilitate an orderly transition to the community development block grant program, and for financial settlement of projects and programs that were terminated and consolidated by this Act, primarily urban renewal projects, to units of general local government which require assistance that cannot be provided through the operation of the allocation provisions described in this subpart.

(c) General purpose funds-(1) Metropolitan areas. Any portion of the amount allocated to metropolitan areas under § 570.101, which remains

after the allocation of: Basic grant amounts to metropolitan cities and urban counties under § 570.102; Holdharmless grants to which units of general local governments in metropolitan areas are entitled under § 570.103, and "set-aside" funds for that fiscal year as described under § 570.101(a) for each fiscal year 1975 through 1980 that are not used for hold-harmless, except as such remaining amount may be modified by pro rata reduction in § 570.103(b), will be allocated for grants to units of general local government, other than metropolitan cities and urban counties, and to States for use in metropolitan areas, allocating for the metropolitan area of each State the greater of an amount that bears the same ratio to the total amount for such areas of all States as either:

(1) The average of ratios between: (A) The population of the metropolitan area in that State and the population of the metropolitan areas of all States;

(B) The extent of poverty in the metropolitan area in that State and the extent of poverty in the metropolitan areas of all States; and

(C) The extent of housing overcrowding in the metropolitan area in that State and the extent of housing overcrowding in the metropolitan areas of all States; or

(ii) The average of the ratios between: (A) The age of housing in the metropolitan area in that State and the age of housing in the metropolitan areas of all States;

(B) The extent of poverty in the metropolitan area of that State and the extent of poverty in the metropolitan areas of all States; and

(C) The population of the metropolitan area in that State and the population of the metropolitan areas of all States. In determining the average of ratios under paragraph (c)(1)(i) of this section, the ratio involving the extent of poverty shall be counted twice and each of the other ratios shall be counted once (0.50 +0.25 +0.25=1.00); and in determining the average of ratios under paragraph (c)(1)(ii), the ratios involving the age of housing shall be counted two and one-half times, the

ratio involving the extent of poverty shall be counted one and one-half times, and the ratio involving population will be counted once (0.50 +0.30+0.20=1.00). In computing these ratios for metropolitan areas, there will be excluded the demographic values for any metropolitan cities, any urban counties, any units of general local government which are entitled to hold-harmless grants under § 570.103(b), and any Indian tribes.

In order to compensate for the discrepancy between the total of the amounts to be allocated under this paragraph and the total amount of funds available for such purpose, the Secretary shall make a further pro rata reduction of each amount allocated to the metropolitan area in each State under this paragraph so that each State will be allocated an amount representing the same percentage of the total amount of funds available for such allocation as the percentage such State would have been allocated under this paragraph if the total amount of funds available for this purpose had equaled the total amount allocated to all States under this paragraph.

(2) Nonmetropolitan areas. Any portion of the amount allocated to nonmetropolitan areas under § 570.101 which remains after providing the allocation of hold-harmless grants to which units of general local government in nonmetropolitan areas are entitled under § 570.103(b), and except as such remaining amount may be modified by pro rata reduction in § 570.103(f), will be allocated for grants to units of general local government in nonmetropolitan areas or to States for use in nonmetropolitan areas, allocating for the nonmetropolitan areas of each State the greater of an amount which bears the same ratio to the total of that remaining amount as either:

(i) The average of ratios between: (A) The population of the nonmetropolitan area in that State and the population of the nonmetropolitan areas in all States;

(B) The extent of poverty in the nonmetropolitan area in that State

and the extent of poverty in the nonmetropolitan areas in all States;

(C) The extent of housing overcrowding by units in the nonmetropolitan areas in that State and the extent of housing overcrowding by units in the nonmetropolitan areas in all States; or

(ii) The average ratios between: (A) The age of housing in the nonmetropolitan area in that State and the age of housing in the nonmetropolitan areas of all States;

(B) The extent of poverty in the nonmetropolitan area of that State and the extent of proverty in the nonmetropolitan areas of all States; and

(C) The population of the nonmetropolitan area of that State and the population of the nonmetropolitan areas of all States.

once

In determining the average of ratios under paragraph (c)(2)(i) of this section, the ratios involving the extent of poverty shall be counted twice, and each other ratio shall be counted once (0.50 +0.25 +0.25=1.00); and in determining the average of ratios under paragraph (c)(2)(ii), the ratio involving the age of housing shall be counted two and one-half times, the ratios involving the extent of poverty shall be counted one and one-half times, and the ratio involving population shall be counted (0.50 +0.30+0.20=1.00). In computing these ratios for nonmetropolitan areas, there will be excluded the demographic values for any units of general local government which are entitled to hold-harmless grants under § 570.103(b), and any Indian tribes. In order to compensate for the discrepancy between the total of the amounts to be allocated under this paragraph and the total of the amount of funds available for such purpose the Secretary shall make a further pro rata reduction of each amount allocated to the nonmetropolitan areas in each State under this paragraph so that each State will be allocated an amount representing the same percentage of the total amount of funds available for such allocation as the percentage such State would have been allocated under this paragraph if the total amount of funds available for this purpose had

equalled the total amount allocated to all States under this paragraph.

(d) Exclusions of demographic values. (1) In excluding the demographic values of population, poverty, housing overcrowding, and age of housing for units of general local government which are entitled to holdharmless grants as required under paragraphs (c) (1) and (2) of this section, only two-thirds of such data will be excluded for fiscal year 1978 and one-third of such data for fiscal year 1979. In 1980 and subsequent years, no such exclusion is to be made.

(2) The demographic values of population, poverty, housing overcrowding, and age of housing of all Indian tribes shall be excluded as part of any computations required by paragraphs (c) (1) and (2) of this section, whether or not they are entitled to hold-harmless grants. It is recognized that all such data on Indian tribes is not generally available from the Bureau of the Census and that missing portions of data will have to be estimated. In accomplishing such estimates the Secretary may use such other related information available from reputable sources as may seem appropriate, regardless of the data's point or period of time, and shall use the best judgment possible in adjusting such data to reflect the same point or period of time as the overall data from which the Indian tribes are being deducted, so that such deductions shall not create an imbalance with that overall data.

(e) Urban Development Actions Grants fund. Using funds appropriated for each of the fiscal years 1978, 1979, and 1980 for such purpose, grants may be made to assist severely distressed cities and urban counties to provide supplemental assistance in alleviating excessive physical and economic deterioration. Such funds allotted shall not exceed $400,000,000 for each of these fiscal years.

§ 570.105 Qualification as urban county.

(a) Determination of qualification. The Secretary will determine the qualifications of counties to receive entitlements as urban counties pursuant to §570.102(b) upon receipt of ap

plications from counties in a form and manner prescribed by HUD. The Secretary shall determine eligibility and applicable portions of each eligible county for purposes of fund allocation under 570.102(b) on the basis of information available from the U.S. Bureau of Census with respect to population and other pertinent demographic characteristics, and based on information provided by the county and its included units of general local government.

(b) Qualification as an urban, county. A county will qualify as an urban county if such county:

(1) (i) Is in a metropolitan area;

(ii) Is authorized under State law to undertake essential community development and housing assistance activities ("essential activities") in its unincorporated areas, if any, which are not units of general local government; and

(iii) Has either a combined population of 200,000 or more (excluding the population of metropolitan cities and Indian tribes therein) consisting of persons residing:

(A) In such unincorporated areas.

(B) In its included units of general local government in which it is authorized under State law to undertake essential activities (without the consent of the governing body of the locality, or upon the consent of the governing body of the locality and the county has received such consent) and which do not elect to have their population excluded from the county for purposes of participation in the block grant program; and

(C) In its included units of general local government with which it has entered into cooperation agreements to undertake or to assist in the undertaking of essential activities. Such cooperation agreements may consist of the provision by the county of funds or services or both in pursuit of such essential activities; or

(2) Has a population in excess of 100,000, a population density of 5,000 persons per square mile, and contains within its boundaries no incorporated place as defined by the United States Bureau of Census.

(c) Essential activities. For purposes of this section, the term "essential ac

tivities" means community renewal and lower income housing activities, specifically urban renewal and publicly assisted housing. In determining whether a county has the required powers, the Secretary will consider both its authority and, where applicable, the authority of its designated agency or agencies.

(d) Opinion as to authority. A county wishing to qualify as an urban county shall, at a time designated by HUD and in a form prescribed by HUD, describe its authority for undertaking essential activities. Such description shall include an opinion with respect to such authority by the appropriate legal officer of the county.

§ 570.106 Qualification and submission dates.

The Secretary will fix qualification and submission dates necessary to permit the computations and determinations required under this Subpart to be made in a timely manner and all such computations and determinations will be final and conclusive.

§ 570.107 Reallocation of funds.

(a) Metropolitan areas. Any amounts allocated to a metropolitan city, urban county, or other unit of general local government for basic grants or holdharmless grants in metropolitan areas in any fiscal year which are not applied for by the date fixed by the Secretary for that purpose, or which are disapproved by the Secretary as part of the application review or program monitoring processes, will be reallocated for use by the Secretary in making grants to States, metropolitan cities, urban counties, or other units of general local governmer:t; first in any metropolitan area in the same State, and second, in any other metropolitan area. Any other amounts allocated to a State for use in its metropolitan areas for any fiscal year under § 570.104(c)(1) which the Secretary determines, on the basis of applications and other evidence available, are not likely to be fully obligated by the Secretary within a reasonable time, will be reallocated by the Secretary within such time period as to allow a reasonable expectation that such funds may

be used for making grants to States, metropolitan cities, urban counties, and other units of general local government, in metropolitan areas in any State prior to the allocation of discretionary balance funds from the next ensuing fiscal year's appropriation.

(b) Nonmetropolitan areas. Any amounts allocated to a unit of general local government for any fiscal year for hold-harmless grants in a nonmetropolitan area which are not applied for by the date fixed by the Secretary for that purpose, or which are disapproved by the Secretary as part of the application review or program monitoring processes, will be reallocated by the Secretary for use in making grants to units of general local government in nonmetropolitan areas in any State or to any State for use outside of metropolitan areas. Any other amounts allocated to nonmetropolitan areas of a State for any fiscal year under § 570.104(c)(2) which the Secretary determines, on the basis of application and other evidence available, are not likely to be fully obligated within a reasonable time, will be reallocated by the Secretary to allow a reasonable expectation that the funds may be used for making grants to units of general local government in nonmetropolitan areas of other States and to other States for use in nonmetropolitan areas prior to the allocation of discretionary balance funds from the next ensuing fiscal year's appropriation.

(c) Policies governing reallocation. Each fiscal year, HUD will publish the policies to be employed in the reallocation of funds for that year.

Subpart C-Eligible Activities

AUTHORITY: Title I, Housing and Community Development Act of 1974 (42 US.C. 5301, et seq.); Title I, Housing and Community Development of 1977 (Pub. L. 95-128); and sec. 7(d), Department of Housing and Urban Development Act (42 U.S.C. 3535(d)). SOURCE: 43 FR 8439, Mar. 1, 1978, unless otherwise noted.

§ 570.200/ General policies.

(a) Determinations of eligibility. This subpart sets forth the variety of eligible activities that may be under

taken with assistance under this Part (block grant funds) to meet community development and housing needs and priorities principally for low- and moderate-income persons or for the prevention or elimination of slums and blight. The listing of certain eligible types of activities in this subpart does not by itself, however, render specific activities, proposed to be conducted by individual applicants, eligible for block grant assistance. There are other requirements that must also be met to qualify a specific activity for assistance. An activity may be assisted only in those instances where it complies with the eligibility criteria of this subpart, with all other applicable requirements of this Part as they may apply to applicants under Subparts D, E, F, or G, such as those relating to equal opportunity, and the basic statutory objectives of the block grant program. In particular, activities conducted by entitlement recipients under Subpart D must comply with the requirements set forth in § 570.302 regarding benefit to low- and moderate-income persons or elimination of slums and blight, and small city discretionary recipients must comply with similar requirements set forth in Subpart F. Further, there must be compliance with all applicable environmental review and clearance procedures set forth in 24 CFR Part 58.

(b) Urban Development Action Grants. Grant assistance may be provided with Urban Development Action Grants pursuant to Subpart G for:

(1) Activities eligible for assistance pursuant to this Subpart; and

(2) Such other activities, including new housing construction, as the Secretary may determine to be consistent with the statutory objectives of the Urban Development Action Grant (UDAG) program as provided for in § 570.453. The provisions of § 570.207 regarding ineligible activities apply to the UDAG program, except where an activity is determined to be consistent with the statutory objectives of the UDAG program pursuant to § 570.453, the limitations set forth in § 570.207 do not apply.

In making determinations of eligibility with regard to Urban Development