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

1. (a) Eligible recipient. HUD will make the funds available to the State in which the city or county is located.
2. (b) Notification of availability. HUD will promptly notify the State of the availability of the amounts to be reallocated.
3. (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.

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