(1) Funds not awarded by HUD due to failure by the recipient to submit and obtain HUD approval of a consolidated plan will be reallocated in accordance with §§ 576.301 through 576.303.

(2) Recaptured funds will be awarded by formula. In October and April each year, HUD will determine if the amount of recaptured funds is at least 30 percent of the most recent fiscal year appropriation. If so, HUD will amend all existing grants and reallocate the funds. If the amount is less than 30 percent of the most recent fiscal year appropriation, the funds will be reallocated in conjunction with the next fiscal year's allocation of funding.

Grant funds returned by a metropolitan city or urban county will be reallocated as follows:

(a) Eligible recipient. HUD will make the funds available to the State in which the city or county is located.

(b) Notification of availability. HUD will promptly notify the State of the availability of the amounts to be reallocated.

(c) Application requirement. Within 45 days after the date of notification, the State must submit to HUD a substantial amendment to its consolidated plan in accordance with 24 CFR part 91.

(d) Restrictions that apply to reallocated amounts. The same requirements that apply to grant funds allocated under § 576.3 apply to grant funds reallocated under this section, except that the State must distribute the reallocated funds:

(1) To private nonprofit organizations and units of general purpose local government in the geographic area in which the metropolitan city or urban county is located;

(2) If funds remain, to private nonprofit organizations and units of general purpose local government located throughout the State.

Grant funds returned by a State will be reallocated as follows:

(a) Eligible recipients. HUD will make the funds available:

(1) To metropolitan cities and urban counties in the State that were not allocated funds under § 576.3 because the amount they would have been allocated did not meet the minimum requirement under § 576.3(b)(2);

(2) If funds remain, to county governments in the State other than urban counties;

(3) Then, if funds remain, to metropolitan cities and urban counties in the State that were allocated funds under § 576.3.

(b) Notification of availability. HUD will notify eligible recipients of the availability of the funds by a notification letter or Federal Register notice, which will specify how the awards of funds will be made.

(c) Application requirements. Within 45 days after the date of notification, the eligible recipient must submit to HUD:

(1) A substantial amendment to its approved consolidated plan in accordance with 24 CFR part 91; or

(2) If the eligible recipient does not have an approved consolidated plan, an abbreviated consolidated plan that meets the requirements in the Federal Register notice or notification letter from HUD.

(d) Restrictions that apply to reallocated amounts. The same requirements that apply to grant funds allocated under § 576.3 apply to grant funds reallocated under this section.

(a) General. Grant funds returned by a territory will be reallocated to other territories, then if funds remain, to States.

(b) Allocation method. The funds will be allocated as follows:

(1) For territories, the funds will be allocated among the territories in direct proportion with each territory's share of the total population of all of the eligible territories. If HUD determines that a territory failed to spend its funds in accordance with ESG requirements, then HUD may exclude the territory from the allocation of reallocation amounts under this section.

(2) For States, the funds will be allocated to each State in direct proportion with each State's share of the total amount of funds allocated to States under § 576.3.

(c) Notification of availability. HUD will notify eligible recipients of the availability of the fund by a letter or Federal Register notice, which will specify how the awards of funds will be made.

(d) Application requirements. Within 45 days after the date of notification, the eligible recipient must submit to HUD a substantial amendment to its consolidated plan in accordance with 24 CFR part 91.

(e) Restrictions that apply to reallocated amounts. The same requirements that apply to grant funds allocated under § 576.3 apply to grant funds reallocated under this section.