Participation by States and local governments

The Secretary shall designate a State or unit of general local government to be a participating jurisdiction when it complies with procedures that the Secretary shall establish by regulation, which procedures shall only provide for the following:

(1) Allocation Not later than 20 days after funds to carry out this part become available (or, during the first year after November 28, 1990 , not later than 20 days after (A) funds to carry out this part are provided in an appropriations Act, or (B) regulations to implement this part are promulgated, whichever is later), the Secretary shall allocate funds in accordance with section 12747 of this title and promptly notify each jurisdiction receiving a formula allocation of its allocation amount. If a jurisdiction is not already a participating jurisdiction, the Secretary shall inform the jurisdiction in writing how the jurisdiction may become a participating jurisdiction.

(2) Consortia A consortium of geographically contiguous units of general local government shall be deemed to be a unit of general local government for purposes of this subchapter if the Secretary determines that the consortium— (A) has sufficient authority and administrative capability to carry out the purposes of this subchapter on behalf of its member jurisdictions, and (B) will, according to a written certification by the State (or States, if the consortium includes jurisdictions in more than one State), direct its activities to alleviation of housing problems within the State or States.

(3) Eligibility (A) Except as provided in paragraph (10), a jurisdiction receiving a formula allocation under section 12747 of this title shall be eligible to become a participating jurisdiction if its formula allocation is $750,000 or greater, or if the Secretary finds that— (i) the jurisdiction has a local housing authority and has demonstrated a capacity to carry out provisions of this part, and (ii) the State has authorized the Secretary to transfer to the jurisdiction a portion of the State’s allocation that is equal to or greater than the difference between the jurisdiction’s formula allocation and $750,000, or the State or jurisdiction has made available from the State’s or jurisdiction’s own sources an equal amount for use by the jurisdiction in conformance with the provisions of this part. (B) If a jurisdiction has met the requirements of subparagraph (A), the jurisdiction’s formula allocation for a fiscal year shall subsequently be deemed to equal the sum of the jurisdiction’s allocation under section 12747(a)(1) of this title and the amount made available to the jurisdiction under subparagraph (A)(ii).

(4) Notification If an eligible jurisdiction notifies the Secretary in writing, not later than 30 days after receiving notification under paragraph (1), of its intention to become a participating jurisdiction, the Secretary shall reserve an amount equal to the jurisdiction’s allocation (plus any reallocations for which the jurisdiction is eligible under section 12747(d)(1) of this title ) pending the jurisdiction’s designation as a participating jurisdiction. The Secretary shall reallocate, in accordance with paragraph (6) of this section, any funds reserved under the previous sentence if the Secretary determines that the jurisdiction will not meet the requirements for designation as a participating jurisdiction within a reasonable period of time.

(5) Submission of strategy Not later than 90 days after providing notification under paragraph (4), an eligible jurisdiction shall submit to the Secretary a comprehensive housing affordability strategy in accordance with section 12705 of this title .

(6) Reallocation If the Secretary determines that a jurisdiction has failed to meet the requirements of the previous 3 paragraphs or if the Secretary, after providing for amendments and resubmissions in accordance with section 12705(c)(3) of this title , disapproves the jurisdiction’s comprehensive housing affordability strategy, the Secretary shall reallocate any funds reserved for the jurisdiction as follows: (A) State If a State has failed to meet the requirements, the Secretary shall— (i) make any funds reserved for the State available by direct reallocation among applications submitted by units of general local government within the State or consortia that include units of general local government within the State, insofar as approvable applications meeting the selection criteria under section 12747(c) of this title are received within 12 months after the funds become available for the direct reallocation, and (ii) reallocate the remainder by formula in accordance with section 12747(b) of this title . (B) Local If a unit of general local government has failed to meet the requirements and is located in a State that is a participating jurisdiction, the Secretary shall reallocate to the State any funds reserved for the locality, with preference going to the provision of affordable housing within the locality. (C) Direct reallocation If a unit of general local government has failed to meet the requirements and is located in a State that is not a participating jurisdiction, the Secretary shall— (i) make any funds reserved for the locality available for use within the State by direct reallocation among units of general local government and community housing development organizations, insofar as approvable applications meeting the selection criteria under section 12747(c) of this title are received within 12 months after the funds become available for the direct reallocation with priority going to applications for affordable housing within the locality, and (ii) reallocate the remainder in accordance with section 12747(b) of this title . (D) Certain jurisdictions deemed to be participating jurisdictions If a State or unit of general local government is meeting the requirements of paragraphs (3), (4), and (5), it shall be deemed to be a participating jurisdiction for purposes of reallocation under this paragraph.

(7) Designation The Secretary shall designate an eligible jurisdiction to be a participating jurisdiction as soon as its comprehensive housing affordability strategy is approved in accordance with section 12705 of this title .

(8) Continuous designation Once a State or unit of general local government is designated a participating jurisdiction, it shall remain a participating jurisdiction for subsequent fiscal years, except as provided in paragraph (9). The provisions of paragraphs (3) through (6) shall not apply to participating jurisdictions.

(9) Revocation The Secretary may revoke a jurisdiction’s designation as a participating jurisdiction if— (A) the Secretary finds, after reasonable notice and opportunity for hearing, that the jurisdiction is unwilling or unable to carry out the provisions of this subchapter, or (B) the jurisdiction’s allocation falls below $750,000 for 3 consecutive years, below $625,000 for 2 consecutive years, or the jurisdiction does not receive a formula allocation of $500,000 or more in any 1 year, except as provided in paragraph (10). If a jurisdiction’s designation as a participating jurisdiction is revoked, any remaining line of credit in the jurisdiction’s HOME Investment Trust Fund established under section 12748 of this title shall be reallocated in accordance with paragraph (6) of this section.

(10) Threshold reduction If the amount appropriated pursuant to section 12724 of this title for any fiscal year is less than $1,500,000,000, then this section shall be applied during that year— (A) by substituting “$500,000” for “$750,000” both places it appears in paragraph (3); and (B) by substituting “$500,000”, “$410,000”, and “$335,000” for “$750,000”, “$625,000”, and “$500,000”, respectively, where they appear in paragraph (9).