---
kind: "section"
citation: "42 U.S.C. § 12746"
title: "42"
title_heading: "The Public Health and Welfare"
number: "12746"
heading: "Participation by States and local governments"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/12746"
units:
  - "Chapter 130 — National Affordable Housing"
  - "Subchapter II — Investment in Affordable Housing"
  - "Part A — HOME Investment Partnerships"
---

# §12746. Participation by States and local governments


The [Secretary](/usc/42/12704.md?p=16) shall designate a [State](/usc/42/12704.md?p=2) or [unit of general local government](/usc/42/12704.md?p=1) to be a [participating jurisdiction](/usc/42/12704.md?p=4) when it complies with procedures that the [Secretary](/usc/42/12704.md?p=16) 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](/usc/42/12704.md?p=16) shall allocate funds in accordance with [section 12747 of this title](/usc/42/12747.md) and promptly notify each [jurisdiction](/usc/42/12704.md?p=3) receiving a formula [allocation](/usc/42/2021b.md?p=2) of its [allocation](/usc/42/2021b.md?p=2) amount. If a [jurisdiction](/usc/42/12704.md?p=3) is not already a [participating jurisdiction](/usc/42/12704.md?p=4), the [Secretary](/usc/42/12704.md?p=16) shall inform the [jurisdiction](/usc/42/12704.md?p=3) in writing how the [jurisdiction](/usc/42/12704.md?p=3) may become a [participating jurisdiction](/usc/42/12704.md?p=4).
- (2) **Consortia—** A [consortium](/usc/42/17061.md?p=4) of geographically contiguous units of general local government shall be deemed to be a [unit of general local government](/usc/42/12704.md?p=1) for purposes of this subchapter if the [Secretary](/usc/42/12704.md?p=16) determines that the [consortium](/usc/42/17061.md?p=4)—
  - (A) has sufficient authority and administrative capability to carry out the purposes of this subchapter on behalf of its member [jurisdictions](/usc/42/12704.md?p=3), and
  - (B) will, according to a written [certification](/usc/42/12704.md?p=21) by the [State](/usc/42/12704.md?p=2) (or [States](/usc/42/12704.md?p=2), if the [consortium](/usc/42/17061.md?p=4) includes [jurisdictions](/usc/42/12704.md?p=3) in more than one [State](/usc/42/12704.md?p=2)), direct its activities to alleviation of [housing](/usc/42/12704.md?p=8) problems within the [State](/usc/42/12704.md?p=2) or [States](/usc/42/12704.md?p=2).
- (3) **Eligibility—**
  - (A) Except as provided in [paragraph (10)](#10), a [jurisdiction](/usc/42/12704.md?p=3) receiving a formula [allocation](/usc/42/2021b.md?p=2) under [section 12747 of this title](/usc/42/12747.md) shall be eligible to become a [participating jurisdiction](/usc/42/12704.md?p=4) if its formula [allocation](/usc/42/2021b.md?p=2) is $750,000 or greater, or if the [Secretary](/usc/42/12704.md?p=16) finds that—
    - (i) the [jurisdiction](/usc/42/12704.md?p=3) has a local [housing](/usc/42/12704.md?p=8) authority and has demonstrated a capacity to carry out provisions of this part, and
    - (ii) the [State](/usc/42/12704.md?p=2) has authorized the [Secretary](/usc/42/12704.md?p=16) to transfer to the [jurisdiction](/usc/42/12704.md?p=3) a portion of the [State](/usc/42/12704.md?p=2)’s [allocation](/usc/42/2021b.md?p=2) that is equal to or greater than the difference between the [jurisdiction](/usc/42/12704.md?p=3)’s formula [allocation](/usc/42/2021b.md?p=2) and $750,000, or the [State](/usc/42/12704.md?p=2) or [jurisdiction](/usc/42/12704.md?p=3) has made available from the [State](/usc/42/12704.md?p=2)’s or [jurisdiction](/usc/42/12704.md?p=3)’s own sources an equal amount for use by the [jurisdiction](/usc/42/12704.md?p=3) in conformance with the provisions of this part.
  - (B) If a [jurisdiction](/usc/42/12704.md?p=3) has met the requirements of [subparagraph (A)](#3-A), the [jurisdiction](/usc/42/12704.md?p=3)’s formula [allocation](/usc/42/2021b.md?p=2) for a fiscal year shall subsequently be deemed to equal the sum of the [jurisdiction](/usc/42/12704.md?p=3)’s [allocation](/usc/42/2021b.md?p=2) under [section 12747(a)(1) of this title](/usc/42/12747.md?p=a-1) and the amount made available to the [jurisdiction](/usc/42/12704.md?p=3) under [subparagraph (A)(ii)](#3-A-ii).
- (4) **Notification—** If an eligible [jurisdiction](/usc/42/12704.md?p=3) notifies the [Secretary](/usc/42/12704.md?p=16) in writing, not later than 30 days after receiving notification under [paragraph (1)](#1), of its intention to become a [participating jurisdiction](/usc/42/12704.md?p=4), the [Secretary](/usc/42/12704.md?p=16) shall reserve an amount equal to the [jurisdiction](/usc/42/12704.md?p=3)’s [allocation](/usc/42/2021b.md?p=2) (plus any reallocations for which the [jurisdiction](/usc/42/12704.md?p=3) is eligible under [section 12747(d)(1) of this title](/usc/42/12747.md?p=d-1)) pending the [jurisdiction](/usc/42/12704.md?p=3)’s designation as a [participating jurisdiction](/usc/42/12704.md?p=4). The [Secretary](/usc/42/12704.md?p=16) shall reallocate, in accordance with [paragraph (6)](#6) of this section, any funds reserved under the previous sentence if the [Secretary](/usc/42/12704.md?p=16) determines that the [jurisdiction](/usc/42/12704.md?p=3) will not meet the requirements for designation as a [participating jurisdiction](/usc/42/12704.md?p=4) within a reasonable period of time.
- (5) **Submission of strategy—** Not later than 90 days after providing notification under [paragraph (4)](#4), an eligible [jurisdiction](/usc/42/12704.md?p=3) shall submit to the [Secretary](/usc/42/12704.md?p=16) a comprehensive [housing](/usc/42/12704.md?p=8) affordability strategy in accordance with [section 12705 of this title](/usc/42/12705.md).
- (6) **Reallocation—** If the [Secretary](/usc/42/12704.md?p=16) determines that a [jurisdiction](/usc/42/12704.md?p=3) has failed to meet the requirements of the previous 3 paragraphs or if the [Secretary](/usc/42/12704.md?p=16), after providing for amendments and resubmissions in accordance with [section 12705(c)(3) of this title](/usc/42/12705.md?p=c-3), disapproves the [jurisdiction](/usc/42/12704.md?p=3)’s comprehensive [housing](/usc/42/12704.md?p=8) affordability strategy, the [Secretary](/usc/42/12704.md?p=16) shall reallocate any funds reserved for the [jurisdiction](/usc/42/12704.md?p=3) as follows:
  - (A) **State—** If a [State](/usc/42/12704.md?p=2) has failed to meet the requirements, the [Secretary](/usc/42/12704.md?p=16) shall—
    - (i) make any funds reserved for the [State](/usc/42/12704.md?p=2) available by direct reallocation among applications submitted by units of general local government within the [State](/usc/42/12704.md?p=2) or consortia that include units of general local government within the [State](/usc/42/12704.md?p=2), insofar as approvable applications meeting the selection criteria under [section 12747(c) of this title](/usc/42/12747.md?p=c) 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](/usc/42/12747.md?p=b).
  - (B) **Local—** If a [unit of general local government](/usc/42/12704.md?p=1) has failed to meet the requirements and is located in a [State](/usc/42/12704.md?p=2) that is a [participating jurisdiction](/usc/42/12704.md?p=4), the [Secretary](/usc/42/12704.md?p=16) shall reallocate to the [State](/usc/42/12704.md?p=2) any funds reserved for the locality, with preference going to the provision of affordable [housing](/usc/42/12704.md?p=8) within the locality.
  - (C) **Direct reallocation—** If a [unit of general local government](/usc/42/12704.md?p=1) has failed to meet the requirements and is located in a [State](/usc/42/12704.md?p=2) that is not a [participating jurisdiction](/usc/42/12704.md?p=4), the [Secretary](/usc/42/12704.md?p=16) shall—
    - (i) make any funds reserved for the locality available for use within the [State](/usc/42/12704.md?p=2) by direct reallocation among units of general local government and [community housing development organizations](/usc/42/12704.md?p=6), insofar as approvable applications meeting the selection criteria under [section 12747(c) of this title](/usc/42/12747.md?p=c) are received within 12 months after the funds become available for the direct reallocation with priority going to applications for affordable [housing](/usc/42/12704.md?p=8) within the locality, and
    - (ii) reallocate the remainder in accordance with [section 12747(b) of this title](/usc/42/12747.md?p=b).
  - (D) **Certain jurisdictions deemed to be participating jurisdictions—** If a [State](/usc/42/12704.md?p=2) or [unit of general local government](/usc/42/12704.md?p=1) is meeting the requirements of paragraphs [(3)](#3), [(4)](#4), and [(5)](#5), it shall be deemed to be a [participating jurisdiction](/usc/42/12704.md?p=4) for purposes of reallocation under this paragraph.
- (7) **Designation—** The [Secretary](/usc/42/12704.md?p=16) shall designate an eligible [jurisdiction](/usc/42/12704.md?p=3) to be a [participating jurisdiction](/usc/42/12704.md?p=4) as soon as its comprehensive [housing](/usc/42/12704.md?p=8) affordability strategy is approved in accordance with [section 12705 of this title](/usc/42/12705.md).
- (8) **Continuous designation—** Once a [State](/usc/42/12704.md?p=2) or [unit of general local government](/usc/42/12704.md?p=1) is designated a [participating jurisdiction](/usc/42/12704.md?p=4), it shall remain a [participating jurisdiction](/usc/42/12704.md?p=4) for subsequent fiscal years, except as provided in [paragraph (9)](#9). The provisions of paragraphs [(3)](#3) through [(6)](#6) shall not apply to [participating jurisdictions](/usc/42/12704.md?p=4).
- (9) **Revocation—** The [Secretary](/usc/42/12704.md?p=16) may revoke a [jurisdiction](/usc/42/12704.md?p=3)’s designation as a [participating jurisdiction](/usc/42/12704.md?p=4) if—
  - (A) the [Secretary](/usc/42/12704.md?p=16) finds, after reasonable notice and opportunity for hearing, that the [jurisdiction](/usc/42/12704.md?p=3) is unwilling or unable to carry out the provisions of this subchapter, or
  - (B) the [jurisdiction](/usc/42/12704.md?p=3)’s [allocation](/usc/42/2021b.md?p=2) falls below $750,000 for 3 consecutive years, below $625,000 for 2 consecutive years, or the [jurisdiction](/usc/42/12704.md?p=3) does not receive a formula [allocation](/usc/42/2021b.md?p=2) of $500,000 or more in any 1 year, except as provided in [paragraph (10)](#10).

  If a [jurisdiction](/usc/42/12704.md?p=3)’s designation as a [participating jurisdiction](/usc/42/12704.md?p=4) is revoked, any remaining line of credit in the [jurisdiction](/usc/42/12704.md?p=3)’s HOME Investment Trust Fund established under [section 12748 of this title](/usc/42/12748.md) shall be reallocated in accordance with [paragraph (6)](#6) of this section.

- (10) **Threshold reduction—** If the amount appropriated pursuant to [section 12724 of this title](/usc/42/12724.md) 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)](#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)](#9).

## Source credit

(Pub. L. 101–625, title II, § 216, Nov. 28, 1990, 104 Stat. 4103; Pub. L. 102–550, title II, § 202(a), Oct. 28, 1992, 106 Stat. 3751.)

## Notes

### Editorial Notes

### Amendments

1992—Par. (3)(A). Pub. L. 102–550, § 202(a)(1), substituted “Except as provided in paragraph (10), a jurisdiction” for “A jurisdiction”.

Par. (9)(B). Pub. L. 102–550, § 202(a)(2), inserted “, except as provided in paragraph (10)” after “in any 1 year”.

Par. (10). Pub. L. 102–550, § 202(a)(3), added par. (10).

### Statutory Notes and Related Subsidiaries

### Effective Date of 1992 Amendment

Amendment by Pub. L. 102–550 applicable to unexpended funds allocated under subchapter II of this chapter in fiscal year 1992, except as otherwise specifically provided, see section 223 of Pub. L. 102–550, set out as a note under section 12704 of this title.

### Applicability of Grant Thresholds

Pub. L. 102–550, title II, § 202(c), Oct. 28, 1992, 106 Stat. 3752, provided that: “Notwithstanding any other provision of law, the grant thresholds provided for in section 216 [42 U.S.C. 12746], as amended by this section, and the grant thresholds provided for in section 217(b) of the Cranston-Gonzalez National Affordable Housing Act [42 U.S.C. 12747(b)], as amended by this section, shall apply.”