42 U.S.C. § 12746 — Participation by States and local governments

The Secretary must designate a State or local government as a "participating jurisdiction" once it follows procedures the Secretary sets by regulation. Those procedures can only cover the following: (1) Allocation: Within 20 days after HOME funds become available (or, in the program's first year, 20 days after funds are appropriated or regulations are issued, whichever is later), the Secretary must allocate funds under section 12747 and promptly tell each jurisdiction its allocation amount. If a jurisdiction is not yet a participating jurisdiction, the Secretary must explain, in writing, how it can become one. (2) Consortia: A group of neighboring local governments counts as one "unit of general local government" if the Secretary decides the group (A) has enough authority and administrative ability to carry out this subchapter for its members, and (B) will — based on a written certification from the state(s) involved — direct its work toward solving housing problems within those states. (3) Eligibility: (A) Except as paragraph (10) provides, a jurisdiction is eligible to become a participating jurisdiction if its formula allocation is $750,000 or more, or if the Secretary finds that (i) it has a local housing authority and has shown it can carry out this part, and (ii) the state has agreed to transfer enough of its own allocation (or the state or jurisdiction has provided an equal amount from its own funds) to make up the difference between the jurisdiction's formula allocation and $750,000. (B) Once a jurisdiction meets those requirements, its formula allocation for future years is treated as the sum of its regular allocation under section 12747(a)(1) plus the extra amount from (A)(ii). (4) Notification: If an eligible jurisdiction tells the Secretary in writing, within 30 days of getting its allocation notice, that it wants to become a participating jurisdiction, the Secretary must reserve its allocation (plus any reallocation it is eligible for) while it works toward designation. The Secretary must reallocate those reserved funds if the jurisdiction will not meet the requirements within a reasonable time. (5) Submission of strategy: Within 90 days of that notification, the jurisdiction must submit a comprehensive housing affordability strategy under section 12705. (6) Reallocation: If the Secretary finds a jurisdiction failed to meet the requirements of paragraphs (3) through (5), or disapproves its housing strategy (after allowing amendments under section 12705(c)(3)), the Secretary reallocates its reserved funds this way: (A) State — if a state fails, the Secretary reallocates its funds directly among local governments and consortia within the state that submit approvable applications within 12 months, then reallocates any remainder by the section 12747(b) formula. (B) Local — if a local government in a participating state fails, the Secretary reallocates its funds to that state, preferring the funds go toward affordable housing in that same locality. (C) Direct reallocation — if a local government in a non-participating state fails, the Secretary makes its funds available directly to other local governments and community housing development organizations statewide, favoring applications for that same locality, for 12 months, then reallocates any remainder under section 12747(b). (D) A state or local government meeting the requirements of paragraphs (3), (4), and (5) is treated as a participating jurisdiction for these reallocation purposes. (7) Designation: The Secretary must designate an eligible jurisdiction as a participating jurisdiction as soon as its housing strategy is approved under section 12705. (8) Continuous designation: Once designated, a jurisdiction stays a participating jurisdiction in future years — except as paragraph (9) allows revocation — and paragraphs (3) through (6) no longer apply to it. (9) Revocation: The Secretary may revoke a jurisdiction's designation if (A) after notice and a hearing, the Secretary finds the jurisdiction is unwilling or unable to carry out this subchapter, or (B) — except as paragraph (10) provides — its allocation falls below $750,000 for 3 years running, below $625,000 for 2 years running, or below $500,000 in any single year. If revoked, any remaining line of credit in the jurisdiction's HOME Investment Trust Fund gets reallocated under paragraph (6). (10) Threshold reduction: If a fiscal year's total HOME appropriation is less than $1,500,000,000, this section applies with lower thresholds that year: (A) "$500,000" replaces "$750,000" wherever it appears in paragraph (3); and (B) "$500,000," "$410,000," and "$335,000" replace "$750,000," "$625,000," and "$500,000" in paragraph (9).