24 C.F.R. § 574.400
§ 574.400 Prohibition of substitution of funds. (24 CFR Part 574)
Operative Text
Amounts received from grants under this part may not be used to replace other amounts made available or designated by State or local governments through appropriations for use for the purposes of this part.
Section 574.400 establishes that federal grant money received under 24 CFR Part 574 cannot simply take the place of state or local government funds that were already allocated or earmarked for the same supportive housing purposes. The rule is designed to ensure that federal dollars represent a genuine addition to existing resources rather than a swap that leaves total funding unchanged. In effect, grantees must maintain their prior level of state or local financial commitment alongside any federal award.
Plain English — not legal advice.
Property owners and managers who participate in programs funded under 24 CFR Part 574 should be aware that the federal funds flowing through those grants are intended to supplement, not replace, state or local appropriations already directed toward the same purposes. Compliant operators generally document the continued presence of non-federal funding streams to demonstrate that no substitution has occurred under § 574.400. Maintaining clear records that distinguish federal grant dollars from state and local contributions supports compliance with this anti-substitution requirement.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under § 574.400, tenants and program participants benefit from a rule that is meant to preserve the overall level of public funding supporting their housing services — federal grants cannot be used to quietly offset cuts to state or local appropriations. If a tenant believes that a program has reduced its non-federal funding in a way that violates this provision, they can raise the concern with the administering agency or a local HUD field office. Tenant-rights organizations and legal aid providers familiar with HUD-funded programs can help individuals understand how this anti-substitution rule applies to the services they receive.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 3, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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