each of the fractions described in that paragraph; and

(ii) Determining for each urban county the amount which bears the same ratio to the total amount calculated under paragraph (b) (1) (1) of this section as the average of the ratios between:

(A) The population of that urban county and the population of all metropolitan cities and urban counties;

(B) The extent of poverty in that urban county and the extent of poverty in all metropolitan cities and urban counties; and

(C) The extent of housing overcrowding by units in that urban county and the extent of housing overcrowding by units in all metropolitan cities and urban counties.

(2) In determining the average of ratios under paragraph (b) (1) (ii) of this section, the ratio involving the extent of poverty will be counted twice.

(3) In computing amounts or exclusions with respect to an urban county in any fiscal year, there will be excluded any metropolitan city, any other unit of general local government within the county which is to receive a hold-harmless grant for that fiscal year pursuant to § 570.103, and any other unit of general local government the population of which has been excluded from the county's population as part of the urban county qualification process, pursuant to § 570.105.

(4) In excluding the population, poverty, and housing overcrowding data of units of general local government which are to receive a hold-harmless grant from the computations in this paragraph, as required by paragraph (b) (3) of this section, the Secretary will exclude only two-thirds of such data for Fiscal Year 1978 and one-third of such data for Fiscal Year 1979.

(c) Phase-in provisions. During the first three years for which funds are approved for distribution to a metropolitan city or urban county, the basic grant amount of those cities and counties as computed under paragraphs (a) and (b) will be adjusted if the amount so computed for the first year exceeds the city's or county's hold-harmless amount for that year as determined under § 570.103. The adjustments will be made so that:

(1) The amount for the first year does not exceed one-third of the full basic

grant amount or the hold-harmless amount, whichever is the greater;

(2) The amount for the second year does not exceed two-thirds of the full basic grant amount, or the hold-harmless amount, or the amount allowed under paragraph (c) (1) of this section, whichever is the greatest; and

(3) The amount for the third year does not exceed the full basic grant amount.

§ 570.103 Hold-harmless grants.

(a) Metropolitan cities and urban counties. Any metropolitan city or urban county having a hold-harmless amount, as calculated under paragraph (c) of this section, in any fiscal year which exceeds its basic grant amount for that year as computed under § 570.102 will be entitled to receive a hold-harmless grant, in addition to its basic grant. Except as provided in paragraph (d) of this section, the amount of the hold-harmless grant will be equal to the difference between the basic grant amount and the hold-harmless amount.

(b) Other units of general local government. Any other unit of general local government will be entitled to receive a hold-harmless grant if, during the five fiscal year period ending June 30, 1972 (or June 30, 1973, in the case of a locality which first received a grant for a neighborhood development program in that fiscal year), it had been carrying out one or more urban renewal projects, code enforcement programs, or neighborhood development programs under Title I of the Housing Act of 1949, or model cities programs under Title I of the Demonstration Cities and Metropolitan Development Act of 1966, under commitments for assistance entered into with HUD during that period. Except as provided in paragraph (d) of this section, such hold-harmless grant will equal the hold-harmless amount as computed under paragraph (c) of this section.

(c) Calculation of hold-harmless amount. (1) For each unit of general local government having entitlement for either a basic grant amount or a hold-harmless grant, the Secretary will calculate a hold-harmless amount for each of the first five fiscal years beginning with Fiscal Year 1975, and, for a unit of general local government first qualifying for a basic grant amount after the fourth such fiscal year, for the first two years that unit of general local

government receives a basic grant amount.

(2) The hold-harmless amount will be the sum of:

(i) The annual average during the five fiscal years ending June 30, 1972, of:

(A) Commitments for grants for urban renewal (excluding neighborhood development programs) under Part A of Title I of the Housing Act of 1949. For the purposes of this calculation, "commitments for grants" means any of the following conditions occurring during the five year base period:

(1) Funds reserved and not either cancelled or allocated;

(2) Funds reserved and allocated; and funds allocated which had not previously been reserved.

(B) Loans made for the purpose of rehabilitation of property under section 312 of the Housing Act of 1964;

(C) Grants for open space land projects, including urban beautification and historic preservation, under Title VII of the Housing Act of 1961;

(D) Grants for water and sewer projects under section 702 of the Housing and Urban Development Act of 1965;

(E) Grants for neighborhood facilities under section 703 of the Housing and Urban Development Act of 1965; and (F) Loans for public facilities under Title II of the Housing Amendments of 1955; and

(ii) The average annual grant for a neighborhood development program under Part B of Title I of the Housing Act of 1949 made during the five fiscal years ending June 30, 1972, or during Fiscal Year 1973 in the case where the initial grant for this purpose was made in that fiscal year; and

(iii) In the case of a unit of general local government having a model cities program which was funded or extended in Fiscal Year 1973 for a period ending after June 30, 1973, amounts based on the following percentages of the average annual grant made for the model cities program under Title I of the Demonstration Cities and Metropolitan Development Act of 1966 during fiscal years ending June 30, 1972:

(A) One hundred percent for each of a number of years, which, when combined with the number of funding years for which the unit of general local government has received grants prior to Fiscal Year 1975, equals five.

(B) Eighty percent for the year immediately following year five as determined in paragraph (c) (2) (iii) (A) of this section;

(C) Sixty percent for the year immediately following the year provided in paragraph (c) (2) (iii) (B) of this section; and

(D) Forty percent for the year immediately following the year provided in paragraph (c) (2) (iii) (C) of this section. For the purpose of calculating holdharmless amounts, the average annual grant under paragraphs (c) (2) (ii) and (iii) of this section will be established by dividing the total amount of grants made to the unit of general local government by the number of months of program activity for which such grants were made and multiplying the result by twelve. In calculating the holdharmless amount, any portion of grants which were made as one-time payments for relocation costs under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601) will be excluded. In calculating the average annual grant under paragraph (c) (2) (iii) of this section, the Secretary will exclude Planned Variations grants and grants for such other special purposes as relocation costs for Project Rehab in model cities programs. In attributing credit to metropolitan cities for grants or loans for the purpose of calculating the hold-harmless amount, the Secretary will be guided primarily by the location of the project, and, in addition, the identity of the local government which contracted for such grants or loans. Thus, where a county park authority received a grant to provide recreational facilities in a metropolitan city, the city would be credited with the grant in the hold-harmless calculation, and not the county.

(d) Phase-out of hold-harmless. (1) In determining the hold-harmless grant for Fiscal Years 1975, 1976, and 1977, the full hold-harmless amount calculated under paragraph (c) of this section will be used in accordance with paragraphs (a) and (b) of this section. In Fiscal Years 1978 and 1979, if the hold-harmless amount exceeds the basic grant amount for a locality in any such year, as computed under § 570.102, it will be reduced so that

(i) In Fiscal Year 1978, the excess of the hold-harmless amount over the basic grant amount for that year will equal

two-thirds of the difference between such hold-harmless and basic grant amounts;

and

(ii) In Fiscal Year 1979, the excess of the hold-harmless amount over the basic grant amount for that year will equal one-third of the difference between such hold-harmless and basic grant amounts.

(2) In Fiscal Year 1980, no hold-harmless grants will be made.

(3) In determining the adjustments under paragraph (d) (1) of this section for units of general local government not qualifying for a basic grant, the provisions of paragraph (d) (1) (i) and (ii) of this section will be applied as though such units had entitlement to a basic grant amount of zero.

(e) Waiver of hold-harmless. Any unit of general local government qualifying for a hold-harmless grant under the conditions contained in paragraph (b) of this section may, not later than thirty days prior to January 1, 1975, or not later than 30 days prior to the beginning of any fiscal year thereafter, irrevocably waive its eligibility for such grants. Such waiver must be submitted to the Secretary in writing. In the case of such a waiver, the unit of general local government shall not be excluded from the computations described in § 570.102 (b) (3) and § 570.104(c) (1) and (2).

(a) Secretary's fund. From the amount appropriated for community development block grants each fiscal year, excluding the transition fund described in paragraph (b) and fifty million dollars in each of Fiscal Years 1975 and 1976, HUD will determine an amount which is two percent 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;

(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 demonstrating innovative community development projects;

(5) To States and units of general local government for use in meeting emergency community development needs caused by disasters that, in the determination of the President, are of sufficient severity and magnitude to warrant major disaster assistance by the Federal government, (but not more than one-fourth of the total amount reserved and set aside in the Secretary's fund under this section for each year will be used for this purpose); and

(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.

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 fund. Using funds appropriated for Fiscal Years 1975, 1976 and 1977 for this purpose, grants may be made to units of general local government having urgent community development needs which cannot be met through the operation of the allocation provisions of this subpart. Grants under this paragraph may not exceed the total amount appropriated in each fiscal year for this purpose.

(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 (i) basic grant amounts to metropolitan cities and urban counties under $570.102, and (ii) hold-harmless grants to which units of general local government in metropolitan areas are entitled, under § 570.103, plus fifty million dollars in each of Fiscal Year 1975 and Fiscal Year 1976, 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 each such metropolitan area an amount which bears the same ratio to the total of those remaining amounts as the average of the ratios between:

(A) The population of that metropolitan area and the population of all metropolitan areas;

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

(C) The extent of housing overcrowding by units in that metropolitan area

and the extent of housing overcrowding by units in all metropolitan areas.

In determining the average ratios for metropolitan areas, the ratio involving the extent of poverty will be counted twice; and in computing amounts for metropolitan areas there will be excluded any metropolitan cities, urban counties, and any units of general local government which receive hold-harmless grants under § 570.103(b).

(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), 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 an amount which bears the same ratio to the total of those remaining amounts as the average of the ratios between:

(i) The population of the nonmetropolitan area in that State and the population of the nonmetropolitan area in all States.

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

(iii) The extent of housing overcrowding by units in the nonmetropolitan area in that State and the extent of housing overcrowding by units in the nonmetropolitan area in all States.

In determining the average of ratios for nonmetropolitan areas, the ratio involving the extent of poverty will be counted twice; and in computing amounts for nonmetropolitan areas there will be excluded units of general local government in nonmetropolitan areas which receive hold-harmless grants under § 570.103(b).

(d) Adjustment to exclusions for holdharmless grants. In excluding the population, poverty and housing overcrowding data of units of general local government which receive hold-harmless 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.

(e) Criteria. Specific criteria for determining recipients of discretionary funds may be found in Subpart E, Ap

39-082-75- 4

plications and Criteria for Discretionary Grants.

§ 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 applications 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) Is in a metropolitan area;

(2) 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

(3) Has a combined population of 200,000 or more (excluding the population of metropolitan cities therein) consisting of persons residing:

(i) In such unincorporated areas.

(ii) 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 that of the county pursuant to § 570.102(h) (3)

or

(iii) 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 pursuant to community development block grants. Such cooperation agreements may consist of the provision by the county of funds or services or both in behalf of such essential activities.

(c) Essential activities. For purposes of this section, the term "essential activities" means community renewal and

lower income housing activities. 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.

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 hold-harmless 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 government; first, in any metropolitan area in the same State, and second, in any other metropolitan area. Any other amounts allocated to a metropolitan area 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 during the fiscal year for which the allocation has been made, will be reallocated by the Secretary sufficiently prior to the close of the fiscal year to allow a reasonable expectation that the funds may be used for making grants within that fiscal year to States, metropolitan cities, urban counties, and other units of general local government, first, in that or any other metropolitan area in the same State, and second, in any other metropolitan area.

(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 during the fiscal year for which the allocation has been made, will be reallocated by the Secretary sufficiently prior to the close of the fiscal year to allow a reasonable expectation that the funds may be used for making grants within that fiscal year to units of general local government in nonmetropolitan areas of other States and to other States for use in nonmetropolitan areas.

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

(d) Fiscal year reallocation. Metropolitan area funds reallocated for any fiscal year which are not used within that fiscal year will remain available in the next subsequent fiscal year for the same area. Nonmetropolitan area funds reallocated for any fiscal year which are not used within that fiscal year will remain available in the next subsequent fiscal year for the same area.

§ 570.108 Offset against entitlement.

To the extent that grants under Title I of the Housing Act of 1949 (urban renewal) or Title I of the Demonstration Cities and Metropolitan Development Act of 1966 (model cities) are payable from appropriations made for Fiscal Year 1975, and are made with respect to a project or program being carried on in any unit of general local government having a basic or hold-harmless grant entitlement for Fiscal Year 1975 under § 570.102 or 570.103, the amount of such grants made under such urban renewal or model cities legislation will be considered to have been made against the entitlement amount of the unit of general