1、176 24 CFR Ch. V (4110 Edition) Pt. 572 appropriate) were determined to be realistic and met the projects break-even point (which is generally the point at which all revenues are equal to all expenses). Gen-erally speaking, an economic development project that does not reach this break-even point ov
2、er time is not financially feasible. The following should be noted in this regard: A. some projects make provisions for a negative cash flow in the early years of the project while space is being leased up or sales volume built up, but the projects pro-jections should take these factors into ac-coun
3、t and provide sources of financing for such negative cash flow; and B. it is expected that a financially viable project will also project sufficient revenues to provide a reasonable return on equity in-vestment. The recipient should carefully ex-amine any project that is not economically able to pro
4、vide a reasonable return on equity investment. Under such circumstances, a business may be overstating its real equity investment (actual costs of the project may be overstated as well), or it may be over-stating some of the projects operating ex-penses in the expectation that the difference will be
5、 taken out as profits, or the business may be overly pessimistic in its market share and revenue projections and has downplayed its profits. ii. In addition to the financial under-writing reviews carried out earlier, the re-cipient should evaluate the experience and capacity of the assisted business
6、 owners to manage an assisted business to achieve the projections. Based upon its analysis of these factors, the recipient should identify those elements, if any, that pose the greatest risks contributing to the projects lack of finan-cial feasibility. 5. Return on equity investment. To the ex-tent
7、practicable, the CDBG assisted activity should provide not more than a reasonable return on investment to the owner of the as-sisted activity. This will help ensure that the grantee is able to maximize the use of its CDBG funds for its economic development objectives. However, care should also be ta
8、ken to avoid the situation where the owner is likely to receive too small a return on his/ her investment, so that his/her motivation remains high to pursue the business with vigor. The amount, type and terms of the CDBG assistance should be adjusted to allow the owner a reasonable return on his/her
9、 in-vestment given industry rates of return for that investment, local conditions and the risk of the project. 6. Disbursement of CDBG funds on a pro rata basis. To the extent practicable, CDBG funds used to finance economic development ac-tivities should be disbursed on a pro rata basis with other
10、funding sources. Recipients should be guided by the principle of not plac-ing CDBG funds at significantly greater risk than non-CDBG funds. This will help avoid the situation where it is learned that a prob-lem has developed that will block the com-pletion of the project, even though all or most of
11、the CDBG funds going in to the project have already been expended. When this happens, a recipient may be put in a po-sition of having to provide additional financ-ing to complete the project or watch the po-tential loss of its funds if the project is not able to be completed. When the recipient de-t
12、ermines that it is not practicable to dis-burse CDBG funds on a pro rata basis, the re-cipient should consider taking other steps to safeguard CDBG funds in the event of a de-fault, such as insisting on securitizing assets of the project. 60 FR 1953, Jan. 5, 1995 PART 572HOPE FOR HOMEOWN-ERSHIP OF S
13、INGLE FAMILY HOMES PROGRAM (HOPE 3) Subpart AGeneral Sec. 572.1 Overview of HOPE 3. 572.5 Definitions. 572.10 Section 8 assistance. Subpart BHomeownership Program RequirementsImplementation Grants 572.100 Acquisition and rehabilitation of eli-gible properties; rehabilitation stand-ards. 572.105 Fina
14、ncing the purchase of properties by eligible families. 572.110 Identifying and selecting eligible families for homeownership. 572.115 Transfer of homeownership inter-ests. 572.120 Affordability standards. 572.125 Replacement reserves. 572.130 Restrictions on resale by initial homeowners. 572.135 Use
15、 of proceeds from sales to eligible families, resale proceeds, and program income. 572.140 Third party rights. 572.145 Displacement prohibited; protection of nonpurchasing residents. Subpart CGrants 572.200 Planning grants. 572.205 Planning grantseligible activities. 572.210 Implementation grants. 5
16、72.215 Implementation grantseligible ac-tivities. 572.220 Implementation grantsmatching requirements. 572.225 Grant agreements; corrective and re-medial actions. 572.230 Cash and Management Information (C/MI) System. 572.235 Amendments. VerDate Nov2008 07:58 Apr 27, 2010 Jkt 220079 PO 00000 Frm 0018
17、6 Fmt 8010 Sfmt 8010 Y:SGML220079.XXX 220079WReier-Aviles on DSKGBLS3C1PROD with CFRProvided by IHSNot for ResaleNo reproduction or networking permitted without license from IHS-,-,-177 Ofc. of Asst. Secy., Comm. Planning, Develop., HUD 572.5 1See 572.420(a) concerning the availability of OMB Circul
18、ars. Subpart DSelection Process 572.300 Notices of funding availability (NOFAs); grant applications. 572.315 Rating criteria for planning grants. Subpart EOther Federal Requirements 572.400 Consolidated plan. 572.405 Nondiscrimination and equal oppor-tunity requirements. 572.410 Environmental proced
19、ures and standards. 572.415 Conflict of interest. 572.420 Miscellaneous requirements. 572.425 Recordkeeping and reports; audit of recipients. AUTHORITY: 42 U.S.C. 3535(d) and 12891. SOURCE: 58 FR 36526, July 7, 1993, unless otherwise noted. Subpart AGeneral 572.1 Overview of HOPE 3. The purpose of t
20、he HOPE for Home-ownership of Single Family Homes pro-gram (HOPE 3) is to provide homeown-ership opportunities for eligible fami-lies to purchase Federal, State, and local government-owned single family properties. HOPE 3 provides grants to eligible applicants to plan and imple-ment homeownership pr
21、ograms de-signed to meet the needs of low-income first-time homebuyers. 58 FR 36526, July 7, 1993, as amended at 61 FR 48797, Sept. 16, 1996 572.5 Definitions. The terms HUD, Indian Housing Au-thority (IHA), NAHA, 1937 Act, NOFA, and Public Housing Agency (PHA) are defined in 24 CFR part 5. Administ
22、rative costs means reasonable and necessary costs, as described and valued in accordance with OMB Cir-cular No. A87 or A1221as applicable, incurred by a recipient in carrying out a homeownership program under this part. For purposes of complying with the 15 percent limitation in 572.215(o), administ
23、rative costs do not include the costs of activities that are separately eligible under 572.215. Applicant means a private nonprofit organization; a cooperative associa-tion; or a public body in cooperation with a private nonprofit organization that applies for a HOPE 3 grant under this part. A coope
24、rative association is an eligible applicant only for eligible property it proposes to acquire and transfer ownership interests to eligible families under a homeownership pro-gram. Consolidated plan means the docu-ment that is submitted to HUD that serves as the planning document of the jurisdiction,
25、 in accordance with 24 CFR part 91. Cooperating entity means a private nonprofit organization or public body that the lead applicant has designed in its application to carry out certain functions in the HOPE 3 program. The responsibilities of a cooperating entity must be specified in a memorandum of
26、 agreement signed by the lead applicant and the cooperating entity. Cooperative association means an asso-ciation organized and existing under applicable State, local, territorial, or tribal law primarily for the purpose of acquiring, owning, and operating hous-ing for its members or shareholders, a
27、s applicable. Displaced homemaker means as the term is defined in 42 U.S.C. 12704. The individual must not have worked full- time, full-year in the labor force for at least 2 years. Eligible family means a low-income family who is a first-time homebuyer. Eligible property means a single resi-dential
28、 property, containing no more than four units, that is owned or held by HUD, the Secretary of Veterans Af-fairs, the Secretary of Agriculture, the Secretary of Defense, the Secretary of Transportation, the Resolution Trust Corporation, the Federal Deposit Insur-ance Corporation, the General Services
29、 Administration, or any other Federal agency; a State or local government (including any in rem property); or a PHA/IHA (excluding public or Indian housing under the 1937 Act). This defi-nition includes individual condo-minium units located in multifamily structures owned or held by an eligible sour
30、ce and properties held by institu-tions within the jurisdiction of the Resolution Trust Corporation. All co-operative units acquired under HOPE 3 must be located in properties con-taining no more than four units to VerDate Nov2008 07:58 Apr 27, 2010 Jkt 220079 PO 00000 Frm 00187 Fmt 8010 Sfmt 8010 Y
31、:SGML220079.XXX 220079WReier-Aviles on DSKGBLS3C1PROD with CFRProvided by IHSNot for ResaleNo reproduction or networking permitted without license from IHS-,-,-178 24 CFR Ch. V (4110 Edition) 572.5 qualify as eligible property under this part. In the case of two- to four-unit property, only property
32、 that may be di-vided so each unit may be acquired by an eligible family is eligible, except as provided in 572.115(c). For purposes of this definition, the term State or local government means any entity included in the first sentence of the definition of public body. First-time homebuyer means as
33、the term is defined in 42 U.S.C. 12704. Homeownership program means a pro-gram for homeownership meeting the requirements under this part. The pro-gram must provide for acquisition by eligible families of ownership interests in the units in an eligible property under an ownership arrangement ap-prov
34、ed by HUD under this part. All eli-gible properties assisted under the pro-gram must be initially acquired by eli-gible families. Lead applicant means an eligible ap-plicant designated in a HOPE 3 applica-tion to assume legal responsibility as the recipient and execute the grant agreement. Lease-pur
35、chase means (1) An agreement, enforceable under State (or territorial) and local law, be-tween the recipient or its designee and an eligible family under which the fam-ily: (i) Obtains the right to occupy a unit in an eligible property, subject to the payment of rent and other reasonable lease condi
36、tions, for a period of not more than two years, except as pro-vided in 572.115(a)(2); and (ii) At the end of such two years has the right to purchase the unit under the terms stated in the lease-purchase agreement, including the completion of any additional rehabilitation required during the lease-p
37、urchase period. (2) A lease-purchase agreement quali-fies as a transfer of the unit to the eli-gible family for purposes of the dead-line for transfer in 572.115(a), but it is not otherwise an ownership interest under this part. The interest that the family acquires at the end of the two- year lease
38、-purchase period must be an ownership interest under this part, and the terms and conditions of the pur-chase of such interest must meet the affordability requirements of this part. Low-income family means a family or individual qualifying as a low-income family under 24 CFR part 813 (where the reci
39、pient is not a PHA/IHA), part 913 (where the recipient is a PHA), or part 905 (where the recipient is an In-dian tribe or IHA). A low-income fam-ily is generally defined as a family whose annual income does not exceed 80 percent of median income for the area, as determined by HUD with ad-justment fo
40、r family size. HUD may es-tablish income limits higher or lower than 80 percent of median income for the area on the basis of its finding that such variations are necessary because of prevailing construction costs or un-usually high or low family incomes. Ownership interest means ownership by an eli
41、gible family by fee simple title to a unit in an eligible property (in-cluding a condominium unit), owner-ship of shares of or membership in a co-operative, or another form of owner-ship proposed and justified by the ap-plicant and approved by HUD pursuant to 572.115(b). Private nonprofit organizati
42、on means any nonprofit organization that (1) Is organized and exists under ap-plicable Federal, State, territorial, local, or tribal law; (2) Has no part of its net earnings in-uring to the benefit of any individual, corporation, or other entity; (3) Has a voluntary board; (4) Has an accounting syst
43、em or has designated a fiscal agent in accordance with requirements established by HUD; (5) Practices nondiscrimination in the provision of assistance; (6) Is a tax exempt entity under sec-tion 501(c) of the Internal Revenue Code of 1986 (26 U.S.C. 501(c), or for a private nonprofit organization in
44、the Commonwealth of Puerto Rico, is a tax-exempt entity under Puerto Rico law; (7) Is privately controlled and has a governing body that is controlled 51 percent or more by private individuals acting in a private capacity. An indi-vidual is considered to be acting in a private capacity if the indivi
45、dual is not an employee of a public body, is not ap-pointed by or acting as the representa-tive of a public body (including the ap-plicant or recipient), and is not being VerDate Nov2008 07:58 Apr 27, 2010 Jkt 220079 PO 00000 Frm 00188 Fmt 8010 Sfmt 8010 Y:SGML220079.XXX 220079WReier-Aviles on DSKGB
46、LS3C1PROD with CFRProvided by IHSNot for ResaleNo reproduction or networking permitted without license from IHS-,-,-179 Ofc. of Asst. Secy., Comm. Planning, Develop., HUD 572.100 paid by a public body (including the ap-plicant or recipient) while performing functions in connection with the non-profi
47、t organization. Program income means income earned from the program as described in parts 84 and 85 of this title, as applicable, ex-cept that program income does not in-clude proceeds from the sale and resale of properties. Such sale and resale pro-ceeds, and interest earned by the re-cipient or it
48、s designee on those pro-ceeds, are governed by 572.135(a) through (c). Public body means any State of the United States; any city, county, town, township, parish, village, or other gen-eral purpose political subdivision of a State; the Commonwealth of Puerto Rico, the District of Columbia, Guam, the
49、 Northern Mariana Islands, the Vir-gin Islands, American Samoa, or a gen-eral purpose political subdivision thereof; any Indian tribe, as defined in title I of the Housing and Community Development Act of 1974; any public agency or instrumentality of any of the foregoing jurisdictions that is cre-ated by or pursuant to State, terri-torial, local, or tribal law, including a State or local Housing Finance Agen-cy; and any PHA or IHA. For purposes of this de
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