R-01-03-22-12E1 - 3/22/2001RESOLUTION NO. R- 01- 03- 22 -12E1
WHEREAS, the City of Round Rock has received grant funds from
the United States Government under Title I of the Housing and Community
Development Act of 1974, Public Law 93 -383, and
WHEREAS, the City of Round Rock wishes to enlist the assistance
of the Round Rock Area Serving Center of Williamson County, Inc. in
utilizing said funds for transportation vouchers, Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS,
That the Mayor is hereby authorized and directed to execute on
behalf of the City a Community Development Block Grant Program
Agreement with the Round Rock Area Serving Center of Williamson County,
Inc., a copy of same being attached hereto and incorporated herein for
all purposes.
The City Council hereby finds and declares that written notice of
the date, hour, place and subject of the meeting at which this
Resolution was adopted was posted and that such meeting was open to the
public as required by law at all times during which this Resolution and
the subject matter hereof were discussed, considered and formally acted
upon, all as required by the Open Meetings Act, Chapter 551, Texas
Government Code, as amended, and the Act.
RESOLVED this 22nd day of Marc
ATT ST: City of Round Rock, Texas
01,JI (1-1 1
• 111
LAND, City Secretary
KI\ WPOOCS \RSSOLUTI \R1033381.WP0 /ee
ROOMT A. STLUKA, 'Y., Mayor
THE STATE OF TEXAS '
COUNTY OF WILLIAMSON
THIS AGREEMENT, entered into this dg day of (YIARcif2001 by and between the City of Round
Rock (herein called the "City") and Round Rock Area Serving Center of WILLIAMSON County,
Inc. (herein called the "Subrecipient ").
WHEREAS, the City of Round Rock has applied for and received funds from the United States
Government under Title I of the Housing and Community Development Act of 1974, Public Law 93-
383; and
WHEREAS, the City of Round Rock wishes to engage the Subrecipient to assist the City of Round
Rock in utilizing such funds;
NOW, THEREFORE, it is agreed between the parties hereto that;
A. Activities and Beneficiaries
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
(B- 00 -MC -48 -0514)
SECTION I:
SCOPE OF SERVICES
The Subrecipient will be responsible for administering a Community Development Block Grant
( "CDBG ") Year 2000/2001 program in a manner satisfactory to the City and consistent with any
standards required as a condition of providing these funds. Such program will include the following
activities eligible under the CDBG Program Low/Moderate Limited Clientele National Objective:
Transportation vouchers or prepaid bus tickets for persons identified through the following agencies:
Round Rock Serving Center; Any Baby Can; Round Rock Health Clinic; Bluebonnet Trails
MHMR. Under this program, the Subrecipient agrees to provide these services for:
Persons Assisted
Total Low to Moderate Income Persons 1200
B. Performance Monitoring
The City of Round Rock will monitor the performance of the Subrecipient against the goals and
performance standards required herein. Substandard performance as determined by the City will
constitute non - compliance with this Agreement. If action to correct such substandard performance is
not taken by the Subrecipient within fifteen (15) days after being notified by the City, contract
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suspension or termination procedures will be initiated in accordance with Section VI of this
Agreement.
SECTION II:
TIME OF PERFORMANCE
Services of the Subrecipient shall start on the 1st day of April, 2001 and end on the 31' day of
March, 2002. This Agreement can be extended for additional periods of one year each provided both
parties agree.
SECTION III:
PAYMENT
It is expressly agreed the total amount to be paid by the City under this Agreement shall not exceed
$42,000.00.
Payments will be contingent upon certification of the Subrecipient's financial management system in
accordance with the standards specified in OMB Circular A -110, Attachment F.
SECTION IV:
NOTICES
Notices made pursuant to this Agreement shall be directed to the following representatives:
City of Round Rock: Subrecipient:
Mona Ryan, CDBG Coordinator Lori Scott, Executive Director
City of Round Rock Round Rock Area Serving Center
221 E. Main St., Suite 316 1099 East Main (P. O. Box 5006)
Round Rock, Texas 78664 Round Rock, Texas 78664 (78683)
SECTION V:
SPECIAL CONDITIONS
The Subrecipient agrees to comply with the requirements of Title 24 Code of Federal Regulations,
Part 570 of the Housing and Urban Development (HUD) regulations concerning Community
Development Block Grants (CDBG) and all federal regulations and policies issued pursuant to these
regulations. The Subrecipient further agrees to utilize funds available under this Agreement to
supplement rather than supplant funds otherwise available.
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A. General Compliance
B. Independent Contract
C. Hold Harmless
D. Amendments
SECTION VI:
GENERAL CONDITIONS
The Subrecipient agrees to comply with all applicable federal, state and local laws and regulations
governing the funds provided under this Agreement.
It is understood and agreed that Subrecipient is an independent contractor and shall not be considered
an employee of the City. Subrecipient shall not be within protection or coverage of the City's
Workers' Compensation insurance, Health Insurance, Liability Insurance or any other Insurance that
the City from time to time may have in force and effect.
The Subrecipient shall indemnify, save harmless and exempt the City, its officers, agents, servants,
and employees from and against any and all suits, actions, legal proceedings, claims, demands,
damages, costs, expenses , attorney fees and any and all other costs or fees incident to any work done as
result of this Agreement and arising out of a willful or negligent act or omission of the Subrecipient, its
officers, agents, servants, and employees ; provided, however, that the Subrecipient shall not be liable
for any suits, actions, legal proceedings, claims, demands, damages, costs, expenses and attorneys' fees
arising out of a willful or negligent act or omission of the City, its officers, agents, servants and
employees, or third parties.
The term and conditions of this Agreement, including the attachments listed below, constitute the
entire agreement between the parties and superseded all previous communications, representations,
or agreements, either written or oral, with respect to the subject matter hereof. No modification or
amendment of this Agreement will be binding on either party unless acknowledged in written by
their duly authorized representatives.
Attachments:
a. Exhibit A — Client Data Form
b. Exhibit B — Beneficiary Report Form
c. Exhibit C — Project Budget
d. Appendix A — OMB Circular A -110
e. Appendix B — 24 CFR 570 CDBG Regulations Subpart C, Eligible Activities
f. Appendix C — 24 CFR 570 CDBG Regulations Subpart J, Grant Administration
g. Appendix D — 24 CFR 570 CDBG Regulations Subpart J, Other Program
Requirements
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E. Suspension or Termination
Either party may terminate this Agreement at any time by giving written notice to the other party of
such termination and specifying the effective date thereof at least 30 days before the effective date of
such termination. Partial terminations of the Scope of Service in Paragraph I.A. above may only be
undertaken with the prior approval of the City. In the event of any termination for convenience, all
finished or unfmished documents, data, reports or other materials prepared by Subrecipient under
this Agreement shall, at the option of the City, become property of the City.
The City may also suspend or terminate this Agreement, in whole or in part, if the Subrecipient
materially fails to comply with any term of this Agreement, or with any of the rules, regulations, or
provisions referred to herein; and the City may declare the Subrecipient ineligible for any further
participation in City contracts, in addition to other remedies as provided by law. Should the
Subrecipient fail to cure or correct such defects or failures identified by the City within the 15 days
after notification of deficiencies, and such breach of contract relate to a violation of federal law or
regulations which results in a demand for reimbursement from the Department of Housing and
Urban Development (HUD) or its successor, the City may seek reimbursement of all funds from the
City to the Subrecipient under this Agreement.
Subrecipient shall not be relieved of the liability to the City for damages sustained by the City by
virtue of any breach of this Agreement by Subrecipient and the City may withhold any payments to
the Subrecipient for the purpose as set out and until such time as the exact amount of damages due
the City from the Subrecipient is determined. Should the City become aware of any activity by the
Subrecipient which would jeopardize the City's position with HUD which would cause apayback of
CDBG funds or other City federal funds then the City may take appropriate action including
injunctive relief against Subrecipient to prevent the transaction as aforesaid. The failure of the City
to exercise this right shall in no way constitute a waiver by the City to demand payment or seek any
other relief in law or in equity to which it may be justly entitled.
F. Reversion of Assets
Pursuant to 24 CFR 570.503, Subrecipient agrees that should it discontinue the services as provided
for herein, then all unexpended CDBG funds shall be returned within 10 days to the City. The funds
remaining will be appropriated to eligible CDBG activities in keeping with the City's budgetary
process.
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A. Records and Reports
1. Recordkeeping
2. Retention
3. Client Data
4. Progress Reports
SECTION VII:
ADMINISTRATIVE REQUII2EMENTS
The Subrecipient shall maintain all records required by the federal regulations specified in 24 CFR
Part 570.506 and that are pertinent to the activities to be funded under this Agreement. Such records
shall include, but not be limited to:
a. Records providing a full description of each activity undertaken;
b. Records demonstrating that the activity undertaken meets the Low/Moderate Income
National Objective for the limited clientele benefit of the CDBG program under 24
CFR Part 570.208;
c. Records required to determine the eligibility of activities under 24 CFR Part 570.201
- 570.206;
d. Financial records as required by 24 CFR Part 570.502, and OMB Circular A -110;
and
e. Other records necessary to document compliance with Subpart K of 24 CFR 570.
The Subrecipient shall retain all records pertinent to expenditures under this Agreement for aperiod
of four (4) years after the termination of all activities funded under this Agreement, or after the
resolution of all Federal audit findings, which ever occurs later.
The Subrecipient shall maintain client data demonstrating client eligibility for services provided.
Such data shall include, but not be limited to, client name, address and annual household income
level as shown in Exhibit A. Any other basis for determining eligibility must be approved by the
City in advance in writing, and description of services provided. Such information shall be made
available to City monitors or their designees upon request.
The Subrecipient shall submit regular Quarterly Progress Reports to the City in the form and content
as required by the City. These shall include but not be limited to summary of expenditures, list of
beneficiaries and a brief narrative of accomplishments. Beneficiary reports should be submitted on
Exhibit "B" unless an alternative report is approved by the City in advance in writing.
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5. Disclosure
The Subrecipient understands that client information collected under this Agreement
is private and the use or disclosure of such information, when not directly connected with the
administration of the City's or the Subrecipient's responsibilities with respect to services provided
under this Agreement is prohibited by the U.S. Privacy Act of 1974 unless written consent is
obtained from such person receiving service and, in the case of a minor, that of a responsible
parent/guardian.
6. Close - Outs
Subrecipient obligation to the City shall not end until all closeout requirements are completed.
Activities during this close -out period shall include, but are not limited to making final payments,
disposing of program assets (including the return of unspent cash advances, and determining
custodianship of records).
7. Audits & Inspections
All Subrecipient records with respect to any matters covered by this Agreement shall be made
available to the City, or the Federal Government (grantor agency), at any time during normal
business hours, as often as the City or grantor agency deems necessary, to audit, examine, and make
excerpts or transcripts of all relevant data. Any deficiencies noted in audit reports shall be fully
cleared by the Subrecipient within 15 days after receipt by the Subrecipient. Failure by the
Subrecipient to comply with the above audit requirements shall constitute a violation of this
Agreement and may result in the withholding of future payments or cancellation of this Agreement.
The Subrecipient hereby agrees to have an annual agency audit conducted in accordance with current
City policy concerning subrecipient audits.
B. Financial Management
1. Budgets
A detailed contract budget is attached as Exhibit "C ". The City of Round Rock and the Subrecipient
may agree to revise the budget from time to time in accordance with existing city policies.
2. Fund Advances
Cash advances shall not be deposited in an interest bearing account. All accounts shall be insured by
the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration
(NCUA).
3. Indirect Costs
No indirect costs are allowed.
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4. Payment Procedures
The City will advance funds on a quarterly basis to the Subrecipient under this Agreement based on
information submitted by the Subrecipient and consistent with an approved budget and City policies
concerning payments. Payments shall be adjusted by the City in accordance with advance fund
balances available under this Agreement for costs incurred by the City on the behalf of the
Subrecipient.
C. Procurement
1. Compliance
All program assets (unexpended advanced funds) shall revert to the City upon termination of this
Agreement. The only authorized expenditures of funds shall be travel vouchers or prepaid bus
tickets as described herein.
2. OMB Standards
The Subrecipient shall not procure materials or property under this Agreement.
3. Travel
The Subrecipient shall obtain written approval in advance from the City for any travel outside the
Austin metropolitan service area (MSA) with funds provided under this Agreement. The City shall
determine that such travel is necessary and reasonable according to applicable standards outlined in
OMB Circular A87.
A. Civil Rights
1. Compliance
SECTION VIII:
PERSONNEL & PARTICIPANT CONDITIONS
The Subrecipient understands and agrees to comply with Title VI of the Civil Rights Act of 1964 as
amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 109 of Title I of the
Housing and Community Development Act of 1974, Section 504 of the Rehabilitation Act of 1973,
the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975, Executive Order
11063, and with Executive Order 11246 as amended by Executive Orders 11375 and 12086, and any
other regulations that may take effect during the term of this Agreement.
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2. Nondiscrimination
The Subrecipient shall not cause any person to be excluded from participation in, denied the benefits
of, or subjected to discrimination under any of the program's activities receiving assistance under this
Agreement based on the grounds of race, color, religion, sex, ancestry, national origin or handicap.
In order to allow the City to monitor non - discrimination, the Subrecipient will at minimum maintain
records regarding the race of persons or households assisted under this Agreement and whether
households assisted have a female head of household.
The Subrecipient shall not discriminate against any employee or applicant for employment because
of race, color, religion, sex, ancestry, national origin, or other handicap, age, marital status, or status
with regard to public assistance. The Subrecipient shall take affirmative action to insure all
employment practices are free from such discrimination. Such employment practices include but are
not limited to the following: hiring, upgrading, demotion, transfer, recruitment or recruitment
advertising, layoff, termination, rates of pay or other forms of compensation, and selection for
training, including apprenticeship. The Subrecipient agrees to post in conspicuous places, available
to employees and applicants for employment, notices to be provided by the contracting agency
setting forth the provisions of this nondiscrimination clause.
3. Section 504
The Subrecipient agrees to comply with any federal regulations issued pursuant to compliance with
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 706) or applicable updates which prohibits
discrimination against the handicapped in any federally assisted program. The City shall provide the
Subrecipient with any guidelines necessary for compliance with that portion of the regulations in
force during the term of this Agreement.
B. Conduct
1. Assignability
The Subrecipient shall not assign or transfer any interest in this Agreement without the prior written
consent of the City.
2. Hatch Act
The Subrecipient understands and agrees that no funds provided shall be in any way or to any extent
engaged in the conduct of political activities in violation of Chapter 15 of Title V United States
Code.
3. Conflict of Interest
The Subrecipient understands and agrees to abide by the provisions of 24 CFR 570.611 with respect
to conflicts of interest, and covenants that it presently has no financial interest and shall not acquire
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any financial interest, direct or indirect, which would conflict in any manner or degree with the
performance of services required under this Agreement. These conflict of interest provisions apply
to any person who is an employee, agent, consultant, officer, or elected official of the City, or of any
designated public agencies or subrecipient which are receiving funds under the CDBG Entitlement
program.
4. Subcontracts
a. Approvals
The Subrecipient shall not enter into any subcontracts with any agency or individual in the
performance of this Agreement without written consent of the City prior to the execution of such
Agreement. Any said subcontracts shall be reviewed by the City prior to approval.
b. Monitoring of Subcontractors
The Subrecipient shall monitor all subcontracted services on a regular basis to assure compliance
with this Agreement. Results of monitoring efforts shall be summarized in written reports and
supported with evidence of follow -up actions taken to correct areas of noncompliance.
c. Content
The Subrecipient shall cause all of the provisions of this Agreement in its entirety to be included in
and made a part of any subcontract executed in the performance of this Agreement.
d. Selection Process
The Subrecipient shall undertake to insure that all subcontracts let in the performance of this
Agreement shall be awarded on a fair and open basis. Executed copies of all subcontracts shall be
forwarded to the City along with documentation concerning the selection process.
5. Religious Organization
The Subrecipient understands and agrees that funds provided under this Agreement shall not be
utilized for religious activities, to promote religious interests, or for the benefit of a religious
organization in accordance with the federal regulations specified in 24 CFR 570.200(j).
6. Pending Litigation
The Subrecipient agrees to inform the City about any litigation the Subrecipient is or becomes
involved in.
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The Subrecipient agrees to conduct a criminal background check on all employees working directly
with youth. Any person who fails a background check shall not be involved in the administration of
this contract.
,
IN WITNESS WHEREOF, this Agreement is executed on this pS O( d ay of / / /(,mot.(
2001.
CITY OF ROUND ROCK
Mayor
ATTEST:
City Secretary
7. Background Checks
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ROUND ROCK AREA SERVING CENTER
Lori ott
Executive Director
Reporting Agency Information:
Name:
Address:
Contact Person:
Phone No.
EXHIBIT A
Client Data
Date:
Date of
Service
Name
Address
City
Zip
Code
Annual Family
Income
Family Size
Female Head of
Household
Yes or No
G: /Community Development/Public Services/Client Data
Reporting Agency Information:
Name:
Address:
Contact Person:
Phone No.
Date of
Service
Name
Address
City
Zip
Code
Amount Expended
CDBG
Reason for transportation voucher
G: /Community Development/Public Services /Beneficiary Report
EXHIBIT B
Beneficiary Report
Date:
Agency Name:_Round Rock Area Serving Center Program:_Transportation Vouchers
Is this project completely supported by CDBG grant dollars and grantee match?
IxI
TOTAL PROJECT BUDGET
Yes, there are 110 other local, state, federal, foundation, or donated
fund grant dollars assisting this project.
No. If "no" please indicate below the amounts, sources, and
purposes of all funding for this project that are not included within
the total amounts requested for funding.
Source
CDBG
Purpose/Expense
Transportation Vouchers
TOTAL OTHER FUNDING DOLLARS FOR PROJECT
Amount
$42,000.00
$42,000.00
Exhibit C
I CDBG funding and grantee match represents 100 % of the total funding for this project.
Appendix A OMB Circular A -110
Appendix B 24 CFR 570 CDBG Regulations Subpart C Eligible Activities
570.200 General policies.
570.201 Basic eligible activities.
570.202 Eligible rehabilitation and preservation activities.
570.203 Special economic development activities.
570.204 Special activities by Community-Based Development
Organizations (CBDOs).
570.205 Eligible planning, urban environmental design and
policy - planning- management - capacity building
activities.
570.206 Program administration costs.
570.207 Ineligible activities.
570.208 Criteria for national objectives.
Appendix C 24 CFR 570 CDBG Regulations Subpart J -- Grant Administration
570.500 Definitions.
570.501 Responsibility for grant administration.
570.502 Applicability of uniform administrative requirements.
570.503 Agreements with subrecipients.
570.504 Program income.
570.505 Use of real property.
570.506.1.1 Records to be maintained.
Appendix D 24 CFR 570 CDBG Regulations Subpart J - Other Program
Requirements
570.611 Conflict of Interest
OMB Circular A -110
Appendix A
Office of Management and Budget
THE wll TF HOUSE.
OM13 Circular A -110
Help Text Only
agernx e as
CIRCULAR A -110
(REVISED 11/19/93, As Further Amended 9/30/99)
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
htt p•// www. whitehouse .gov /omb /circulars/a110 /a110 html
CIRCULAR NO. A -110
Revised
SUBJECT: Uniform Administrative Requirements for Grants and Agreements With
Institutions of Higher Education, Hospitals, and Other Non -Profit Organizations
1. Purpose. This Circular sets forth standards for obtaining consistency and uniformity among
Federal agencies in the administration of grants to and agreements with institutions of higher
education, hospitals, and other non -profit organizations.
2. Authority. Circular A -110 is issued under the authority of 31 U.S.C. 503 (the Chief
Financial Officers Act), 31 U.S.C. 1111, 41 U.S.C. 405 (the Office of Federal Procurement
Policy Act), Reorganization Plan No. 2 of 1970, and E.O. 11541 ( "Prescribing the Duties of the
Office of Management and Budget and the Domestic Policy Council in the Executive Office of
the President ").
3. Policy. Except as provided herein, the standards set forth in this Circular are applicable to all
Federal agencies. If any statute specifically prescribes policies or specific requirements that
differ from the standards provided herein, the provisions of the statute shall govern.
The provisions of the sections of this Circular shall be applied by Federal agencies to
recipients. Recipients shall apply the provisions of this Circular to subrecipients performing
substantive work under grants and agreements that are passed through or awarded by the
primary recipient, if such subrecipients are organizations described in paragraph 1.
This Circular does not apply to grants, contracts, or other agreements between the Federal
Government and units of State or local governments covered by OMB Circular A -102, "Grants
and Cooperative Agreements with State and Local Governments," and the Federal agencies'
grants management common rule which standardized and codified the administrative
requirements Federal agencies impose on State and local grantees. In addition, subawards and
contracts to State or local governments are not covered by this Circular. However, this Circular
applies to subawards made by State and local governments to organizations covered by this
Circular. Federal agencies may apply the provisions of this Circular to commercial
organizations, foreign governments, organizations under the jurisdiction of foreign
governments, and international organizations.
4. Definitions. Definitions of key terms used in this Circular are contained in Section _ .2 in
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the Attachment.
5. Required Action. The specific requirements and responsibilities of Federal agencies and
institutions of higher education, hospitals, and other non -profit organizations are set forth in
this Circular. Federal agencies responsible for awarding and administering grants to and other
agreements with organizations described in paragraph 1 shall adopt the language in the Circular
unless different provisions are required by Federal statute or are approved by OMB.
6. OMB Responsibilities. OMB will review agency regulations and implementation of this
Circular, and will provide interpretations of policy requirements and assistance to insure
effective and efficient implementation. Any exceptions will be subject to approval by OMB, as
indicated in Section _.4 in the Attachment. Exceptions will only be made in particular cases
where adequate justification is presented.
7. Information Contact. Further information concerning this Circular may be obtained by
contacting the Office of Federal Financial Management, Office of Management and Budget,
Washington, DC 20503, telephone (202) 395 - 3993.
8. Termination Review Date. This Circular will have a policy review three years from date of
issuance.
9. Effective Date. The standards set forth in this Circular which affect Federal agencies will be
effective 30 days after publication of the final revision in the Federal Register. Those
standards which Federal agencies impose on grantees will be adopted by agencies in codified
regulations within six months after publication in the Federal Register. Earlier implementation
is encouraged.
Attachment
Grants and Agreements with Institutions of Higher Education,
Hospitals, and Other Non - Profit Organizations
SUBPART A - GENERAL
Sec.
_.1 Purpose.
.2 Definitions.
.3 Effect on other issuances.
.4 Deviations.
.5 Subawards.
SUBPART B - PRE -AWARD REQUIREMENTS
_ .10 Purpose.
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.11 Pre -award policies.
.12 Forms for applying for Federal assistance.
_ .13 Debarment and suspension.
.14 Special award conditions.
.15 Metric system of measurement.
.16 Resource Conservation and Recovery Act.
.17 Certifications and representations.
SUBPART C - POST -AWARD REQUIREMENTS
Financial and Program Management
.20 Purpose of financial and program management.
.21 Standards for financial management systems.
.22 Payment.
.23 Cost sharing or matching.
.24 Program income.
.25 Revision of budget and program plans.
.26 Non - Federal audits.
.27 Allowable costs.
.28 Period of availability of funds.
.29 Conditional exemptions.
Property Standards
_ .30 Purpose of property standards.
_ .31 Insurance coverage.
_.32 Real property.
_ .33 Federally -owned and exempt property.
.34 Equipment.
.35 Supplies and other expendable property.
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36 Intangible property.
_.37 Property trust relationship.
Procurement Standards
40 Purpose of procurement standards.
.41 Recipient responsibilities.
.42 Codes of conduct.
_.43 Competition.
.44 Procurement procedures.
.45 Cost and price analysis.
.46 Procurement records.
.47 Contract administration.
.48 Contract provisions.
Reports and Records
50 Purpose of reports and records.
.51 Monitoring and reporting program performance.
.52 Financial reporting.
_ .53 Retention and access requirements for records.
Termination and Enforcement
.60 Purpose of termination and enforcement.
.61 Termination.
.62 Enforcement.
SUBPART D - AFTER- THE -AWARD REQUIREMENTS
_.70 Purpose.
_ .71 Closeout procedures.
_ .72 Subsequent adjustments and continuing responsibilities.
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.73 Collection of amounts due.
APPENDIX A - CONTRACT PROVISIONS
* * * **
SUBPART A - General
_.1 Purpose. This Circular establishes uniform administrative requirements for Federal grants
and agreements awarded to institutions of higher education, hospitals, and other non - profit
organizations. Federal awarding agencies shall not impose additional or inconsistent
requirements, except as provided in Sections .4, and .14 or unless specifically required
by Federal statute or executive order. Non -profit organizations that implement Federal
programs for the States are also subject to State requirements.
.2 Definitions.
(a) Accrued expenditures means the charges incurred by the recipient during a given
period requiring the provision of funds for: (1) goods and other tangible property received; (2)
services performed by employees, contractors, subrecipients, and other payees; and, (3) other
amounts becoming owed under programs for which no current services or performance is
required.
(b) Accrued income means the sum of: (1) earnings during a given period from (i)
services performed by the recipient, and (ii) goods and other tangible property delivered to
purchasers, and (2) amounts becoming owed to the recipient for which no current services or
performance is required by the recipient.
(c) Acquisition cost of equipment means the net invoice price of the equipment,
including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary
to make the property usable for the purpose for which it was acquired. Other charges, such as
the cost of installation, transportation, taxes, duty or protective in- transit insurance, shall be
included or excluded from the unit acquisition cost in accordance with the recipient's regular
accounting practices.
(d) Advance means a payment made by Treasury check or other appropriate payment
mechanism to a recipient upon its request either before outlays are made by the recipient or
through the use of predetermined payment schedules.
(e) Award means financial assistance that provides support or stimulation to accomplish
a public purpose. Awards include grants and other agreements in the form of money or property
in lieu of money, by the Federal Government to an eligible recipient. The term does not
include: technical assistance, which provides services instead of money; other assistance in the
form of loans, loan guarantees, interest subsidies, or insurance; direct payments of any kind to
individuals; and, contracts which are required to be entered into and administered under
procurement laws and regulations.
(f) Cash contributions means the recipient's cash outlay, including the outlay of money
contributed to the recipient by third parties.
(g) Closeout means the process by which a Federal awarding agency determines that all
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applicable administrative actions and all required work of the award have been completed by
the recipient and Federal awarding agency.
(h) Contract means a procurement contract under an award or subaward, and a
procurement subcontract under a recipient's or subrecipient's contract.
(i) Cost sharing or matching means that portion of project or program costs not borne
by the Federal Government.
(j) Date of completion means the date on which all work under an award is completed or
the date on the award document, or any supplement or amendment thereto, on which Federal
sponsorship ends.
(k) Disallowed costs means those charges to an award that the Federal awarding agency
determines to be unallowable, in accordance with the applicable Federal cost principles or other
terms and conditions contained in the award.
(1) Equipment means tangible nonexpendable personal property including exempt
property charged directly to the award having a useful Life of more than one year and an
acquisition cost of $5000 or more per unit. However, consistent with recipient policy, lower
limits may be established.
(m) Excess property means property under the control of any Federal awarding agency
that, as determined by the head thereof, is no longer required for its needs or the discharge of its
responsibilities.
(n) Exempt property means tangible personal property acquired in whole or in part with
Federal funds, where the Federal awarding agency has statutory authority to vest title in the
recipient without further obligation to the Federal Government. An example of exempt property
authority is contained in the Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306),
for property acquired under an award to conduct basic or applied research by a non -profit
institution of higher education or non - profit organization whose principal purpose is conducting
scientific research.
(o) Federal awarding agency means the Federal agency that provides an award to the
recipient.
(p) Federal funds authorized means the total amount of Federal funds obligated by the
Federal Government for use by the recipient. This amount may include any authorized
carryover of unobligated funds from prior funding periods when permitted by agency
regulations or agency implementing instructions.
(q) Federal share of real property, equipment, or supplies means that percentage of the
property's acquisition costs and any improvement expenditures paid with Federal funds.
(r) Funding period means the period of time when Federal funding is available for
obligation by the recipient.
(s) Intangible property and debt instruments means, but is not limited to, trademarks,
copyrights, patents and patent applications and such property as loans, notes and other debt
instruments, lease agreements, stock and other instruments of property ownership, whether
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considered tangible or intangible.
(t) Obligations means the amounts of orders placed, contracts and grants awarded,
services received and similar transactions during a given period that require payment by the
recipient during the same or a future period.
(u) Outlays or expenditures means charges made to the project or program. They may
be reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum
of cash disbursements for direct charges for goods and services, the amount of indirect expense
charged, the value of third party in -kind contributions applied and the amount of cash advances
and payments made to subrecipients. For reports prepared on an accrual basis, outlays are the
sum of cash disbursements for direct charges for goods and services, the amount of indirect
expense incurred, the value of in -kind contributions applied, and the net increase (or decrease)
in the amounts owed by the recipient for goods and other property received, for services
performed by employees, contractors, subrecipients and other payees and other amounts
becoming owed under programs for which no current services or performance are required.
(v) Personal property means property of any kind except real property. It may be
tangible, having physical existence, or intangible, having no physical existence, such as
copyrights, patents, or securities.
(w) Prior approval means written approval by an authorized official evidencing prior
consent.
(x) Program income means gross income earned by the recipient that is directly
generated by a supported activity or earned as a result of the award (see exclusions in
paragraphs _.24 (e) and (h)). Program income includes, but is not limited to, income from
fees for services performed, the use or rental of real or personal property acquired under
federally - funded projects, the sale of commodities or items fabricated under an award, license
fees and royalties on patents and copyrights, and interest on loans made with award funds.
Interest earned on advances of Federal funds is not program income. Except as otherwise
provided in Federal awarding agency regulations or the terms and conditions of the award,
program income does not include the receipt of principal on loans, rebates, credits, discounts,
etc., or interest earned on any of them.
(y) Project costs means all allowable costs, as set forth in the applicable Federal cost
principles, incurred by a recipient and the value of the contributions made by third parties in
accomplishing the objectives of the award during the project period.
(z) Project period means the period established in the award document during which
Federal sponsorship begins and ends.
(aa) Property means, unless otherwise stated, real property, equipment, intangible
property and debt instruments.
(bb) Real property means land, including land improvements, structures and
appurtenances thereto, but excludes movable machinery and equipment.
(cc) Recipient means an organization receiving financial assistance directly from Federal
awarding agencies to carry out a project or program. The term includes public and private
institutions of higher education, public and private hospitals, and other quasi - public and private
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non -profit organizations such as, but not limited to, community action agencies, research
institutes, educational associations, and health centers. The term may include commercial
organizations, foreign or international organizations (such as agencies of the United Nations)
which are recipients, subrecipients, or contractors or subcontractors of recipients or
subrecipients at the discretion of the Federal awarding agency. The term does not include
government -owned contractor - operated facilities or research centers providing continued
support for mission - oriented, large -scale programs that are government -owned or controlled, or
are designated as federally- funded research and development centers.
(dd) Research and development means all research activities, both basic and applied,
and all development activities that are supported at universities, colleges, and other non - profit
institutions. "Research" is defined as a systematic study directed toward fuller scientific
knowledge or understanding of the subject studied. "Development" is the systematic use of
knowledge and understanding gained from research directed toward the production of useful
materials, devices, systems, or methods, including design and development of prototypes and
processes. The term research also includes activities involving the training of individuals in
research techniques where such activities utilize the same facilities as other research and
development activities and where such activities are not included in the instruction function.
(ee) Small awards means a grant or cooperative agreement not exceeding the small
purchase threshold fixed at 41 U.S.C. 403(11) (currently $25,000).
(ft) Subaward means an award of financial assistance in the form of money, or property
in lieu of money, made under an award by a recipient to an eligible subrecipient or by a
subrecipient to a lower tier subrecipient. The term includes financial assistance when provided
by any legal agreement, even if the agreement is called a contract, but does not include
procurement of goods and services nor does it include any form of assistance which is excluded
from the definition of "award" in paragraph (e).
(gg) Subrecipient means the legal entity to which a subaward is made and which is
accountable to the recipient for the use of the funds provided. The term may include foreign or
intemational organizations (such as agencies of the United Nations) at the discretion of the
Federal awarding agency.
(hh) Supplies means all personal property excluding equipment, intangible property, and
debt instruments as defined in this section, and inventions of a contractor conceived or first
actually reduced to practice in the performance of work under a funding agreement ("subject
inventions "), as defined in 37 CFR part 401, "Rights to Inventions Made by Nonprofit
Organizations and Small Business Firms Under Government Grants, Contracts, and
Cooperative Agreements."
(ii) Suspension means an action by a Federal awarding agency that temporarily
withdraws Federal sponsorship under an award, pending corrective action by the recipient or
pending a decision to terminate the award by the Federal awarding agency. Suspension of an
award is a separate action from suspension under Federal agency regulations implementing
E.O.s 12549 and 12689, "Debarment and Suspension."
(jj) Termination means the cancellation of Federal sponsorship, in whole or in part,
under an agreement at any time prior to the date of completion.
(kk) Third party in -kind contributions means the value of non -cash contributions
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provided by non - Federal third parties. Third party in -kind contributions may be in the form of
real property, equipment, supplies and other expendable property, and the value of goods and
services directly benefiting and specifically identifiable to the project or program.
(11) Unliquidated obligations, for financial reports prepared on a cash basis, means the
amount of obligations incurred by the recipient that have not been paid. For reports prepared on
an accrued expenditure basis, they represent the amount of obligations incurred by the recipient
for which an outlay has not been recorded.
(mm) Unobligated balance means the portion of the funds authorized by the Federal
awarding agency that has not been obligated by the recipient and is determined by deducting
the cumulative obligations from the cumulative funds authorized.
(nn) Unrecovered indirect cost means the difference between the amount awarded and
the amount which could have been awarded under the recipient's approved negotiated indirect
cost rate.
(oo) Working capital advance means a procedure where by funds are advanced to the
recipient to cover its estimated disbursement needs for a given initial period.
_.3 Effect on other issuances. For awards subject to this Circular, all administrative
requirements of codified program regulations, program manuals, handbooks and other
nonregulatory materials which are inconsistent with the requirements of this Circular shall be
superseded, except to the extent they are required by statute, or authorized in accordance with
the deviations provision in Section .4.
_ .4 Deviations. The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this Circular when exceptions are
not prohibited by statute. However, in the interest of maximum uniformity, exceptions from the
requirements of this Circular shall be permitted only in unusual circumstances. Federal
awarding agencies may apply more restrictive requirements to a class of recipients when
approved by OMB. Federal awarding agencies may apply less restrictive requirements when
awarding small awards, except for those requirements which are statutory. Exceptions on a
case -by -case basis may also be made by Federal awarding agencies.
_ .5 Subawards. Unless sections of this Circular specifically exclude subrecipients from
coverage, the provisions of this Circular shall be applied to subrecipients performing work
under awards if such subrecipients are institutions of higher education, hospitals or other
non - profit organizations. State and local government subrecipients are subject to the provisions
of regulations implementing the grants management common rule, "Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local Governments,"
published at 53 FR 8034 (3/11/88).
SUBPART B - Pre - Award Requirements
_ .10 Purpose. Sections .11 through .17 prescribes forms and instructions and other
pre -award matters to be used in applying for Federal awards.
11 Pre -award policies.
(a) Use of Grants and Cooperative Agreements, and Contracts. In each instance, the
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Federal awarding agency shall decide on the appropriate award instrument (i.e., grant,
cooperative agreement, or contract). The Federal Grant and Cooperative Agreement Act (31
U.S.C. 6301 -08) governs the use of grants, cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal purpose of a transaction is to
accomplish a public purpose of support or stimulation authorized by Federal statute. The
statutory criterion for choosing between grants and cooperative agreements is that for the latter,
"substantial involvement is expected between the executive agency and the State, local
government, or other recipient when carrying out the activity contemplated in the agreement."
Contracts shall be used when the principal purpose is acquisition of property or services for the
direct benefit or use of the Federal Government.
(b) Public Notice and Priority Setting. Federal awarding agencies shall notify the public
of its intended funding priorities for discretionary grant programs, unless funding priorities are
established by Federal statute.
.12 Forms for applying for Federal assistance.
(a) Federal awarding agencies shall comply with the applicable report clearance
requirements of 5 CFR part 1320, "Controlling Paperwork Burdens on the Public," with regard
to all forms used by the Federal awarding agency in place of or as a supplement to the Standard
Form 424 (SF -424) series.
(b) Applicants shall use the SF -424 series or those forms and instructions prescribed by
the Federal awarding agency.
(c) For Federal programs covered by E.O. 12372, "Intergovernmental Review of Federal
Programs," the applicant shall complete the appropriate sections of the SF -424 (Application for
Federal Assistance) indicating whether the application was subject to review by the State Single
Point of Contact (SPOC). The name and address of the SPOC for a particular State can be
obtained from the Federal awarding agency or the Catalog of Federal Domestic Assistance.
The SPOC shall advise the applicant whether the program for which application is made has
been selected by that State for review.
(d) Federal awarding agencies that do not use the SF -424 form should indicate whether
the application is subject to review by the State under E.O. 12372.
_ .13 Debarment and suspension. Federal awarding agencies and recipients shall comply with
the nonprocurement debarment and suspension common rule implementing E.O.s 12549 and
12689, "Debarment and Suspension." This common rule restricts subawards and contracts with
certain parties that are debarred, suspended or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.
_.14 Special award conditions. If an applicant or recipient: (a) has a history of poor
performance, (b) is not financially stable, (c) has a management system that does not meet the
standards prescribed in this Circular, (d) has not conformed to the terms and conditions of a
previous award, or (e) is not otherwise responsible, Federal awarding agencies may impose
additional requirements as needed, provided that such applicant or recipient is notified in
writing as to: the nature of the additional requirements, the reason why the additional
requirements are being imposed, the nature of the corrective action needed, the time allowed for
completing the corrective actions, and the method for requesting reconsideration of the
additional requirements imposed. Any special conditions shall be promptly removed once the
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conditions that prompted them have been corrected.
.15 Metric system of measurement. The Metric Conversion Act, as amended by the
Omnibus Trade and Competitiveness Act (15 U.S.C. 205) declares that the metric system is the
preferred measurement system for U.S. trade and commerce. The Act requires each Federal
agency to establish a date or dates in consultation with the Secretary of Commerce, when the
metric system of measurement will be used in the agency's procurements, grants, and other
business - related activities. Metric implementation may take longer where the use of the system
is initially impractical or likely to cause significant inefficiencies in the accomplishment of
federally - funded activities. Federal awarding agencies shall follow the provisions of E.O.
12770, "Metric Usage in Federal Government Programs."
.16 Resource Conservation and Recovery Act (RCRA) (Pub. L. 94 -580 codified at 42
U.S.C. 6962). Under the Act, any State agency or agency of a political subdivision of a State
which is using appropriated Federal funds must comply with Section 6002. Section 6002
requires that preference be given in procurement programs to the purchase of specific products
containing recycled materials identified in guidelines developed by the Environmental
Protection Agency (EPA) (40 CFR parts 247 -254). Accordingly, State and local institutions of
higher education, hospitals, and non -profit organizations that receive direct Federal awards or
other Federal funds shall give preference in their procurement programs funded with Federal
funds to the purchase of recycled products pursuant to the EPA guidelines.
_ .17 Certifications and representations. Unless prohibited by statute or codified regulation,
each Federal awarding agency is authorized and encouraged to allow recipients to submit
certifications and representations required by statute, executive order, or regulation on an
annual basis, if the recipients have ongoing and continuing relationships with the agency.
Annual certifications and representations shall be signed by responsible officials with the
authority to ensure recipients' compliance with the pertinent requirements.
SUBPART C - Post -Award Requirements
Financial and Program Management
.20 Purpose of financial and program management. Sections _ .21 through _ .28
prescribe standards for financial management systems, methods for making payments and rules
for: satisfying cost sharing and matching requirements, accounting for program income, budget
revision approvals, making audits, determining allowability of cost, and establishing fund
availability.
_ .21 Standards for financial management systems.
(a) Federal awarding agencies shall require recipients to relate financial data to
performance data and develop unit cost information whenever practical.
(b) Recipients' financial management systems shall provide for the following.
(1) Accurate, current and complete disclosure of the financial results of each
federally sponsored project or program in accordance with the reporting requirements set
forth in Section .52. If a Federal awarding agency requires reporting on an accrual
basis from a recipient that maintains its records on other than an accrual basis, the
recipient shall not be required to establish an accrual accounting system. These recipients
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may develop such accrual data for its reports on the basis of an analysis of the
documentation on hand.
(2) Records that identify adequately the source and application of funds for
federally - sponsored activities. These records shall contain information pertaining to
Federal awards, authorizations, obligations, unobligated balances, assets, outlays, income
and interest.
(3) Effective control over and accountability for all funds, property and other
assets. Recipients shall adequately safeguard all such assets and assure they are used
solely for authorized purposes.
(4) Comparison of outlays with budget amounts for each award. Whenever
appropriate, financial information should be related to performance and unit cost data.
(5) Written procedures to minimize the time elapsing between the transfer of funds
to the recipient from the U.S. Treasury and the issuance or redemption of checks,
warrants or payments by other means for program purposes by the recipient. To the
extent that the provisions of the Cash Management Improvement Act (CMIA) (Pub. L.
101 -453) govern, payment methods of State agencies, instrumentalities, and fiscal agents
shall be consistent with CMIA Treasury-State Agreements or the CMIA default
procedures codified at 31 CFR part 205, "Withdrawal of Cash from the Treasury for
Advances under Federal Grant and Other Programs."
(6) Written procedures for determining the reasonableness, allocability and
allowability of costs in accordance with the provisions of the applicable Federal cost
principles and the terms and conditions of the award.
(7) Accounting records including cost accounting records that are supported by
source documentation.
(c) Where the Federal Government guarantees or insures the repayment of money
borrowed by the recipient, the Federal awarding agency, at its discretion, may require adequate
bonding and insurance if the bonding and insurance requirements of the recipient are not
deemed adequate to protect the interest of the Federal Government.
(d) The Federal awarding agency may require adequate fidelity bond coverage where the
recipient lacks sufficient coverage to protect the Federal Government's interest.
(e) Where bonds are required in the situations described above, the bonds shall be
obtained from companies holding certificates of authority as acceptable sureties, as prescribed
in 31 CFR part 223, "Surety Companies Doing Business with the United States."
.22 Payment.
(a) Payment methods shall minimize the time elapsing between the transfer of funds from
the United States Treasury and the issuance or redemption of checks, warrants, or payment by
other means by the recipients. Payment methods of State agencies or instrumentalities shall be
consistent with Treasury-State CMIA agreements or default procedures codified at 31 CFR part
205.
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(b) Recipients are to be paid in advance, provided they maintain or demonstrate the
willingness to maintain: (1) written procedures that minimize the time elapsing between the
transfer of funds and disbursement by the recipient, and (2) financial management systems that
meet the standards for fund control and accountability as established in Section _.21. Cash
advances to a recipient organization shall be limited to the minimum amounts needed and be
timed to be in accordance with the actual, immediate cash requirements of the recipient
organization in carrying out the purpose of the approved program or project. The timing and
amount of cash advances shall be as close as is administratively feasible to the actual
disbursements by the recipient organization for direct program or project costs and the
proportionate share of any allowable indirect costs.
(c) Whenever possible, advances shall be consolidated to cover anticipated cash needs
for all awards made by the Federal awarding agency to the recipient.
(1) Advance payment mechanisms include, but are not limited to, Treasury check
and electronic funds transfer.
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients shall be authorized to submit requests for advances and
reimbursements at least monthly when electronic fund transfers are not used.
(d) Requests for Treasury check advance payment shall be submitted on SF -270,
"Request for Advance or Reimbursement," or other forms as may be authorized by OMB. This
form is not to be used when Treasury check advance payments are made to the recipient
automatically through the use of a predetermined payment schedule or if precluded by special
Federal awarding agency instructions for electronic funds transfer.
(e) Reimbursement is the preferred method when the requirements in paragraph (b)
cannot be met. Federal awarding agencies may also use this method on any construction
agreement, or if the major portion of the construction project is accomplished through private
market financing or Federal loans, and the Federal assistance constitutes a minor portion of the
project.
(1) When the reimbursement method is used, the Federal awarding agency shall
make payment within 30 days after receipt of the billing, unless the billing is improper.
(2) Recipients shall be authorized to submit request for reimbursement at least
monthly when electronic funds transfers are not used.
(f) Ha recipient cannot meet the criteria for advance payments and the Federal awarding
agency has determined that reimbursement is not feasible because the recipient lacks sufficient
working capital, the Federal awarding agency may provide cash on a working capital advance
basis. Under this procedure, the Federal awarding agency shall advance cash to the recipient to
cover its estimated disbursement needs for an initial period generally geared to the awardee's
disbursing cycle. Thereafter, the Federal awarding agency shall reimburse the recipient for its
actual cash disbursements. The working capital advance method of payment shall not be used
for recipients unwilling or unable to provide timely advances to their subrecipient to meet the
subrecipient's actual cash disbursements.
(g) To the extent available, recipients shall disburse funds available from repayments to
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and interest earned on a revolving fund, program income, rebates, refunds, contract settlements,
audit recoveries and interest earned on such funds before requesting additional cash payments.
(h) Unless otherwise required by statute, Federal awarding agencies shall not withhold
payments for proper charges made by recipients at any time during the project period unless (1)
or (2) apply.
(1) A recipient has failed to comply with the project objectives, the terms and
conditions of the award, or Federal reporting requirements.
(2) The recipient or subrecipient is delinquent in a debt to the United States as
defined in OMB Circular A -129, "Managing Federal Credit Programs." Under such
conditions, the Federal awarding agency may, upon reasonable notice, inform the
recipient that payments shall not be made for obligations incurred after a specified date
until the conditions are corrected or the indebtedness to the Federal Government is
liquidated.
(i) Standards governing the use of banks and other institutions as depositories of funds
advanced under awards are as follows.
(1) Except for situations described in paragraph (i)(2), Federal awarding agencies
shall not require separate depository accounts for funds provided to a recipient or
establish any eligibility requirements for depositories for funds provided to a recipient.
However, recipients must be able to account for the receipt, obligation and expenditure
of funds.
(2) Advances of Federal funds shall be deposited and maintained in insured
accounts whenever possible.
(j) Consistent with the national goal of expanding the opportunities for women -owned
and minority -owned business enterprises, recipients shall be encouraged to use women- owned
and minority-owned banks (a bank which is owned at least 50 percent by women or minority
group members).
(k) Recipients shall maintain advances of Federal funds in interest bearing accounts,
unless (1), (2) or (3) apply.
(1) The recipient receives less than $120,000 in Federal awards per year.
(2) The best reasonably available interest bearing account would not be expected to
earn interest in excess of $250 per year on Federal cash balances.
(3) The depository would require an average or minimum balance so high that it
would not be feasible within the expected Federal and non - Federal cash resources.
(1) For those entities where CMIA and its implementing regulations do not apply, interest
earned on Federal advances deposited in interest bearing accounts shall be remitted annually to
Department of Health and Human Services, Payment Management System, Rockville, MD
20852. Interest amounts up to $250 per year may be retained by the recipient for administrative
expense. State universities and hospitals shall comply with CMIA, as it pertains to interest. If
an entity subject to CMIA uses its own funds to pay pre -award costs for discretionary awards
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without prior written approval from the Federal awarding agency, it waives its right to recover
the interest under CMIA.
(m) Except as noted elsewhere in this Circular, only the following forms shall be
authorized for the recipients in requesting advances and reimbursements. Federal agencies shall
not require more than an original and two copies of these forms.
(1) SF - 270, Request for Advance or Reimbursement. Each Federal awarding
agency shall adopt the SF -270 as a standard form for all nonconstruction programs when
electronic funds transfer or predetermined advance methods are not used. Federal
awarding agencies, however, have the option of using this form for construction
programs in lieu of the SF -271, "Outlay Report and Request for Reimbursement for
Construction Programs."
(2) SF -271, Outlay Report and Request for Reimbursement for Construction
Programs Each Federal awarding agency shall adopt the SF -271 as the standard form to
be used for requesting reimbursement for construction programs. However, a Federal
awarding agency may substitute the SF -270 when the Federal awarding agency
determines that it provides adequate information to meet Federal needs.
_ .23 Cost sharing or matching.
(a) All contributions, including cash and third party in -kind, shall be accepted as part of
the recipient's cost sharing or matching when such contributions meet all of the following
criteria.
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other federally - assisted project or
program.
(3) Are necessary and reasonable for proper and efficient accomplishment of
project or program objectives.
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another award, except where
authorized by Federal statute to be used for cost sharing or matching.
(6) Are provided for in the approved budget when required by the Federal
awarding agency.
(7) Conform to other provisions of this Circular, as applicable.
(b) Unrecovered indirect costs may be included as part of cost sharing or matching only
with the prior approval of the Federal awarding agency.
(c) Values for recipient contributions of services and property shall be established in
accordance with the applicable cost principles. If a Federal awarding agency authorizes
recipients to donate buildings or land for construction/facilities acquisition projects or
long -term use, the value of the= donated property for cost sharing or matching shall be the lesser
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of (1) or (2).
(1) The certified value of the remaining life of the property recorded in the
recipient's accounting records at the time of donation.
(2) The current fair market value. However, when there is sufficient justification,
the Federal awarding agency may approve the use of the current fair market value of the
donated property, even if it exceeds the certified value at the time of donation to the
project.
(d) Volunteer services furnished by professional and technical personnel, consultants,
and other skilled and unskilled labor may be counted as cost sharing or matching if the service
is an integral and necessary part of an approved project or program. Rates for volunteer services
shall be consistent with those paid for similar work in the recipient's organization. In those
instances in which the required skills are not found in the recipient organization, rates shall be
consistent with those paid for similar work in the labor market in which the recipient competes
for the kind of services involved. In either case, paid fringe benefits that are reasonable,
allowable, and allocable may be included in the valuation.
(e) When an employer other than the recipient furnishes the services of an employee,
these services shall be valued at the employee's regular rate of pay (plus an amount of fringe
benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs),
provided these services are in the same skill for which the employee is normally paid.
(f) Donated supplies may include such items as expendable equipment, office supplies,
laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies
included in the cost sharing or matching share shall be reasonable and shall not exceed the fair
market value of the property at the time of the donation.
(g) The method used for determining cost sharing or matching for donated equipment,
buildings and land for which title passes to the recipient may differ according to the purpose of
the award, if (1) or (2) apply.
(1) If the purpose of the award is to assist the recipient in the acquisition of
equipment, buildings or land, the total value of the donated property may be claimed as
cost sharing or matching.
(2) If the purpose of the award is to support activities that require the use of
equipment, buildings or land, normally only depreciation or use charges for equipment
and buildings may be made. However, the full value of equipment or other capital assets
and fair rental charges for land may be allowed, provided that the Federal awarding
agency has approved the charges.
(h) The value of donated property shall be determined in accordance with the usual
accounting policies of the recipient, with the following qualifications.
(1) The value of donated land and buildings shall not exceed its fair market value
at the time of donation to the recipient as established by an independent appraiser (e.g.,
certified real property appraiser or General Services Administration representative) and
certified by a responsible official of the recipient.
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(2) The value of donated equipment shall not exceed the fair market value of
equipment of the same age and condition at the time of donation.
(3) The value of donated space shall not exceed the fair rental value of comparable
space as established by an independent appraisal of comparable space and facilities in a
privately - owned building in the same locality.
(4) The value of loaned equipment shall not exceed its fair rental value.
(5) The following requirements pertain to the recipient's supporting records for
in -kind contributions from third parties.
(i) Volunteer services shall be documented and, to the extent feasible,
supported by the same methods used by the recipient for its own employees.
(ii) The basis for determining the valuation for personal service, material,
equipment, buildings and land shall be documented.
.24 Program income.
(a) Federal awarding agencies shall apply the standards set forth in this section in
requiring recipient organizations to account for program income related to projects financed in
whole or in part with Federal funds.
(b) Except as provided in paragraph (h) below, program income earned during the project
period shall be retained by the recipient and, in accordance with Federal awarding agency
regulations or the terms and conditions of the award, shall be used in one or more of the ways
listed in the following.
(1) Added to funds committed to the project by the Federal awarding agency and
recipient and used to further eligible project or program objectives.
(2) Used to finance the non - Federal share of the project or program.
(3) Deducted from the total project or program allowable cost in determining the
net allowable costs on which the Federal share of costs is based.
(c) When an agency authorizes the disposition of program income as described in
paragraphs (b)(1) or (b)(2), program income in excess of any limits stipulated shall be used in
accordance with paragraph (b)(3).
(d) In the event that the Federal awarding agency does not specify in its regulations or the
terms and conditions of the award how program income is to be used, paragraph (b)(3) shall
apply automatically to all projects or programs except research. For awards that support
research, paragraph (b)(1) shall apply automatically unless the awarding agency indicates in the
terms and conditions another alternative on the award or the recipient is subject to special
award conditions, as indicated in Section _ .14.
(e) Unless Federal awarding agency regulations or the terms and conditions of the award
provide otherwise, recipients shall have no obligation to the Federal Government regarding
program income earned after the end of the project period.
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(f) If authorized by Federal awarding agency regulations or the terms and conditions of
the award, costs incident to the generation of program income may be deducted from gross
income to determine program income, provided these costs have not been charged to the award.
(g) Proceeds from the sale of property shall be handled in accordance with the
requirements of the Property Standards (See Sections _ .30 through _ .37).
(h) Unless Federal awarding agency regulations or the terms and condition of the award
provide otherwise, recipients shall have no obligation to the Federal Government with respect
to program income earned from license fees and royalties for copyrighted material, patents,
patent applications, trademarks, and inventions produced under an award. However, Patent and
Trademark Amendments (35 U.S.C. 18) apply to inventions made under an experimental,
developmental, or research award.
.25 Revision of budget and program plans.
(a) The budget plan is the financial expression of the project or program as approved
during the award process. It may include either the Federal and non - Federal share, or only the
Federal share, depending upon Federal awarding agency requirements. It shall be related to
performance for program evaluation purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and program plans, and
request prior approvals for budget and program plan revisions, in accordance with this section.
(c) For nonconstruction awards, recipients shall request prior approvals from Federal
awarding agencies for one or more of the following program or budget related reasons.
(1) Change in the scope or the objective of the project or program (even if there is
no associated budget revision requiring prior written approval).
(2) Change in a key person specified in the application or award document.
(3) The absence for more than three months, or a 25 percent reduction in time
devoted to the project, by the approved project director or principal investigator.
(4) The need for additional Federal funding.
(5) The transfer of amounts budgeted for indirect costs to absorb increases in direct
costs, or vice versa, if approval is required by the Federal awarding agency.
(6) The inclusion, unless waived by the Federal awarding agency, of costs that
require prior approval in accordance with OMB Circular A -21, "Cost Principles for
Educational Institutions," OMB Circular A -122, "Cost Principles for Non -Profit
Organizations,' or 45 CFR part 74 Appendix E, "Principles for Determining Costs
Applicable to Research and Development under Grants and Contracts with Hospitals," or
48 CFR part 31, "Contract Cost Principles and Procedures," as applicable.
(7) The transfer of funds allotted for training allowances (direct payment to
trainees) to other categories of expense.
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(8) Unless described in the application and funded in the approved awards, the
subaward, transfer or contracting out of any work under an award. This provision does
not apply to the purchase of supplies, material, equipment or general support services.
(d) No other prior approval requirements for specific items may be imposed unless a
deviation has been approved by OMB.
(e) Except for requirements listed in paragraphs (c)(1) and (c)(4) of this section, Federal
awarding agencies are authorized, at their option, to waive cost - related and administrative prior
written approvals required by this Circular and OMB Circulars A -21 and A -122. Such waivers
may include authorizing recipients to do any one or more of the following.
(1) Incur pre -award costs 90 calendar days prior to award or more than 90 calendar
days with the prior approval of the Federal awarding agency. All pre -award costs are
incurred at the recipient's risk (i.e., the Federal awarding agency is under no obligation to
reimburse such costs if for any reason the recipient does not receive an award or if the
award is less than anticipated and inadequate to cover such costs).
(2) Initiate a one -time extension of the expiration date of the award of up to 12
months unless one or more of the following conditions apply. For one - time extensions,
the recipient must notify the Federal awarding agency in writing with the supporting
reasons and revised expiration date at least 10 days before the expiration date specified in
the award. This one-time extension may not be exercised merely for the purpose of using
unobligated balances.
(i) The terms and conditions of award prohibit the extension.
(ii) The extension requires additional Federal funds.
(iii) The extension involves any change in the approved objectives or scope
of the project.
(3) Carry forward unobligated balances to subsequent funding periods.
(4) For awards that support research, unless the Federal awarding agency provides
otherwise in the award or in the agency's regulations, the prior approval requirements
described in paragraph (e) are automatically waived (i.e., recipients need not obtain such
prior approvals) unless one of the conditions included in paragraph (e)(2) applies.
(f) The Federal awarding agency may, at its option, restrict the transfer of funds among
direct cost categories or programs, functions and activities for awards in which the Federal
share of the project exceeds $100,000 and the cumulative amount of such transfers exceeds or
is expected to exceed 10 percent of the total budget as last approved by the Federal awarding
agency. No Federal awarding agency shall permit a transfer that would cause any Federal
appropriation or part thereof to be used for purposes other than those consistent with the
original intent of the appropriation.
(g) All other changes to nonconstruction budgets, except for the changes described in
paragraph (j), do not require prior approval.
(h) For construction awards, recipients shall request prior written approval promptly from
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Federal awarding agencies for budget revisions whenever (1), (2) or (3) apply.
(1) The revision results from changes in the scope or the objective of the project or
program.
(2) The need arises for additional Federal funds to complete the project.
(3) A revision is desired which involves specific costs for which prior written
approval requirements may be imposed consistent with applicable OMB cost principles
listed in Section .27.
(i) No other prior approval requirements for specific items may be imposed unless a
deviation has been approved by OMB.
(j) When a Federal awarding agency makes an award that provides support for both
construction and nonconstruction work, the Federal awarding agency may require the recipient
to request prior approval from the Federal awarding agency before making any fund or budget
transfers between the two types of work supported.
(k) For both construction and nonconstruction awards, Federal awarding agencies shall
require recipients to notify the Federal awarding agency in writing promptly whenever the
amount of Federal authorized funds is expected to exceed the needs of the recipient for the
project period by more than $5000 or five percent of the Federal award, whichever is greater.
This notification shall not be required if an application for additional funding is submitted for a
continuation award.
(1) When requesting approval for budget revisions, recipients shall use the budget forms
that were used in the application unless the Federal awarding agency indicates a letter of
request suffices.
(m) Within 30 calendar days from the date of receipt of the request for budget revisions,
Federal awarding agencies shall review the request and notify the recipient whether the budget
revisions have been approved. If the revision is still under consideration at the end of 30
calendar days, the Federal awarding agency shall inform the recipient in writing of the date
when the recipient may expect the decision.
.26 Non - Federal audits.
(a) Recipients and subrecipients that are institutions of higher education or other
non -profit organizations (including hospitals) shall be subject to the audit requirements
contained in the Single Audit Act Amendments of 1996 (31 USC 7501 -7507) and revised OMB
Circular A -133, "Audits of States, Local Governments, and Non -Profit Organizations."
(b) State and local governments shall be subject to the audit requirements contained in
the Single Audit Act Amendments of 1996 (31 USC 7501 - 7507) and revised OMB Circular
A - 133, "Audits of States, Local Governments, and Non -Profit Organizations."
(c) For -profit hospitals not covered by the audit provisions of revised OMB Circular
A - 133 shall be subject to the audit requirements of the Federal awarding agencies.
(d) Commercial organizations shall be subject to the audit requirements of the Federal
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awarding agency or the prime recipient as incorporated into the award document.
_.27 Allowable costs. For each kind of recipient, there is a set of Federal principles for
determining allowable costs. Aloowability of costs shall be determined in accordance with the
cost principles applicable to the entity incurring the costs. Thus, allowability of costs incurred
by State, local or federally - recognized Indian tribal governments is determined in accordance
with the provisions of OMB Circular A -87, "Cost Principles for State, Local, and Indian Tribal
Governments." The allowability of costs incurred by non -profit organizations is determined in
accordance with the provisions of OMB Circular A -122, "Cost Principles for Non -Profit
Organizations." The allowability of costs incurred by institutions of higher education is
determined in accordance with the provisions of OMB Circular A -21, "Cost Principles for
Educational Institutions." The allowability of costs incurred by hospitals is determined in
accordance with the provisions of Appendix E of 45 CFR part 74, "Principles for Determining
Costs Applicable to Research and Development Under Grants and Contracts with Hospitals."
The allowability of costs incurred by commercial organizations and those non - profit
organizations listed in Attachment C to Circular A -122 is determined in accordance with the
provisions of the Federal Acquisition Regulation (FAR) at 48 CFR part 31.
_ .28 Period of availability of funds. Where a funding period is specified, a recipient may
charge to the grant only allowable costs resulting from obligations incurred during the funding
period and any pre -award costs authorized by the Federal awarding agency.
.29 Conditional exemptions.
(a) OMB authorizes conditional exemption from OMB administrative requirements and
cost principles circulars for certain Federal programs with statutorily- authorized consolidated
planning and consolidated administrative funding, that are identified by a Federal agency and
approved by the head of the Executive department or establishment. A Federal agency shall
consult with OMB during its consideration of whether to grant such an exemption.
(b) To promote efficiency in State and local program administration, when Federal
non - entitlement programs with common purposes have specific statutorily- authorized
consolidated planning and consolidated administrative funding and where most of the State
agency's resources come from non - Federal sources, Federal agencies may exempt these covered
State - administered, non - entitlement grant programs from certain OMB grants management
requirements. The exemptions would be from all but the allocability of costs provisions of
OMB Circulars A -87 (Attachment A, subsection C.3), "Cost Principles for State, Local, and
Indian Tribal Governments," A -21 (Section C, subpart 4), "Cost Principles for Educational
Institutions," and A -122 (Attachment A, subsection A.4), "Cost Principles for Non - Profit
Organizations," and from all of the administrative requirements provisions of OMB Circular
A -110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of
Higher Education, Hospitals, and Other Non -Profit Organizations," and the agencies' grants
management common rule.
(c) When a Federal agency provides this flexibility, as a prerequisite to a State's
exercising this option, a State must adopt its own written fiscal and administrative requirements
for expending and accounting for all funds, which are consistent with the provisions of OMB
Circular A - 87, and extend such policies to all subrecipients. These fiscal and administrative
requirements must be sufficiently specific to ensure that: funds are used in compliance with all
applicable Federal statutory and regulatory provisions, costs are reasonable and necessary for
operating these programs, and funds are not be used for general expenses required to carry out
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other responsibilities of a State or its subrecipients.
Property Standards
_.30 Purpose of property standards. Sections .31 through _.37 set forth uniform
standards governing management and disposition of property furnished by the Federal
Government whose cost was charged to a project supported by a Federal award. Federal
awarding agencies shall require recipients to observe these standards under awards and shall
not impose additional requirements, unless specifically required by Federal statute. The
recipient may use its own property management standards and procedures provided it observes
the provisions of Sections _.31 through _.37.
_ .31 Insurance coverage. Recipients shall, at a minimum, provide the equivalent insurance
coverage for real property and equipment acquired with Federal funds as provided to property
owned by the recipient. Federally -owned property need not be insured unless required by the
terms and conditions of the award.
.32 Real property. Each Federal awarding agency shall prescribe requirements for recipients
concerning the use and disposition of real property acquired in whole or in part under awards.
Unless otherwise provided by statute, such requirements, at a minimum, shall contain the
following.
(a) Title to real property shall vest in the recipient subject to the'condition that the
recipient shall use the real property for the authorized purpose of the project as long as it is
needed and shall not encumber the property without approval of the Federal awarding agency.
(b) The recipient shall obtain written approval by the Federal awarding agency for the use
of real property in other federally- sponsored projects when the recipient determines that the
property is no longer needed for the purpose of the original project. Use in other projects shall
be limited to those under federally- sponsored projects (i.e., awards) or programs that have
purposes consistent with those authorized for support by the Federal awarding agency.
(c) When the real property is no longer needed as provided in paragraphs (a) and (b), the
recipient shall request disposition instructions from the Federal awarding agency or its
successor Federal awarding agency. The Federal awarding agency shall observe one or more of
the following disposition instructions.
(1) The recipient maybe permitted to retain title without further obligation to the
Federal Government after it compensates the Federal Government for that percentage of
the current fair market value of the property attributable to the Federal participation in
the project.
(2) The recipient may be directed to sell the property under guidelines provided by
the Federal awarding agency and pay the Federal Government for that percentage of the
current fair market value of the property attributable to the Federal participation in the
project (after deducting actual and reasonable selling and fix -up expenses, if any, from
the sales proceeds). When the recipient is authorized or required to sell the property,
proper sales procedures shall be established that provide for competition to the extent
practicable and result in the highest possible return.
(3) The recipient may be directed to transfer title to the property to the Federal
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Government or to an eligible third party provided that, in such cases, the recipient shall
be entitled to compensation for its attributable percentage of the current fair market value
of the property.
_ .33 Federally -owned and exempt property.
(a) Federally -owned property.
(1) Title to federally -owned property remains vested in the Federal Government.
Recipients shall submit annually an inventory listing of federally -owned property in their
custody to the Federal awarding agency. Upon completion of the award or when the
property is no longer needed, the recipient shall report the property to the Federal
awarding agency for further Federal agency utilization.
(2) If the Federal awarding agency has no further need for the property, it shall be
declared excess and reported to the General Services Administration, unless the Federal
awarding agency has statutory authority to dispose of the property by alternative methods
(e.g., the authority provided by the Federal Technology Transfer Act (15 U.S.C. 3710 (I))
to donate research equipment to educational and non -profit organizations in accordance
with E.O. 12821, "Improving Mathematics and Science Education in Support of the
National Education Goals. ") Appropriate instructions shall be issued to the recipient by
the Federal awarding agency.
(b) Exempt property. When statutory authority exists, the Federal awarding agency has
the option to vest title to property acquired with Federal funds in the recipient without further
obligation to the Federal Government and under conditions the Federal awarding agency
considers appropriate. Such property is "exempt property." Should a Federal awarding agency
not establish conditions, title to exempt property upon acquisition shall vest in the recipient
without further obligation to the Federal Government.
_ .34 Equipment.
(a) Title to equipment acquired by a recipient with Federal funds shall vest in the
recipient, subject to conditions of this section.
(b) The recipient shall not use equipment acquired with Federal funds to provide services
to non - Federal outside organizations for a fee that is less than private companies charge for
equivalent services, unless specifically authorized by Federal statute, for as long as the Federal
Government retains an interest in the equipment.
(c) The recipient shall use the equipment in the project or program for which it was
acquired as long as needed, whether or not the project or program continues to be supported by
Federal funds and shall not encumber the property without approval of the Federal awarding
agency. When no longer needed for the original project or program, the recipient shall use the
equipment in connection with its other federally- sponsored activities, in the following order of
priority: (i) Activities sponsored by the Federal awarding agency which funded the original
project, then (ii) activities sponsored by other Federal awarding agencies.
(d) During the time that equipment is used on the project or program for which it was
acquired, the recipient shall make it available for use on other projects or programs if such
other use will not interfere with the work on the project or program for which the equipment
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was originally acquired. First preference for such other use shall be given to other projects or
programs sponsored by the Federal awarding agency that financed the equipment; second
preference shall be given to projects or programs sponsored by other Federal awarding
agencies. If the equipment is owned by the Federal Government, use on other activities not
sponsored by the Federal Government shall be permissible if authorized by the Federal
awarding agency. User charges shall be treated as program income.
(e) When acquiring replacement equipment, the recipient may use the equipment to be
replaced as trade -in or sell the equipment and use the proceeds to offset the costs of the
replacement equipment subject to the approval of the Federal awarding agency.
(f) The recipient's property management standards for equipment acquired with Federal
funds and federally -owned equipment shall include all of the following.
(1) Equipment records shall be maintained accurately and shall include the
following information.
(i) A description of the equipment.
(ii) Manufacturer's serial number, model number, Federal stock number,
national stock number, or other identification number.
(iii) Source of the equipment, including the award number.
(iv) Whether title vests in the recipient or the Federal Government.
(v) Acquisition date (or date received, if the equipment was furnished by the
Federal Government) and cost.
(vi) Information from which one can calculate the percentage of Federal
participation in the cost of the equipment (not applicable to equipment furnished
by the Federal Government).
(vii) Location and condition of the equipment and the date the information
was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, including date of disposal and sales price or
the method used to determine current fair market value where a recipient
compensates the Federal awarding agency for its share.
(2) Equipment owned by the Federal Government shall be identified to indicate
Federal ownership.
(3) A physical inventory of equipment shall be taken and the results reconciled
with the equipment records at least once every two years. Any differences between
quantities determined by the physical inspection and those shown in the accounting
records shall be investigated to determine the causes of the difference. The recipient
shall, in connection with the inventory, verify the existence, current utilization, and
continued need for the equipment.
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(4) A control system shall be in effect to insure adequate safeguards to prevent
loss, damage, or theft of the equipment. Any loss, damage, or theft of equipment shall be
investigated and fully documented; if the equipment was owned by the Federal
Government, the recipient shall promptly notify the Federal awarding agency.
(5) Adequate maintenance procedures shall be implemented to keep the equipment
in good condition.
(6) Where the recipient is authorized or required to sell the equipment, proper sales
procedures shall be established which provide for competition to the extent practicable
and result in the highest possible return.
(g) When the recipient no longer needs the equipment, the equipment may be used for
other activities in accordance with the following standards. For equipment with a current per
unit fair market value of $5000 or more, the recipient may retain the equipment for other uses
provided that compensation is made to the original Federal awarding agency or its successor.
The amount of compensation shall be computed by applying the percentage of Federal
participation in the cost of the original project or program to the current fair market value of the
equipment. If the recipient has no need for the equipment, the recipient shall request disposition
instructions from the Federal awarding agency. The Federal awarding agency shall determine
whether the equipment can be used to meet the agency's requirements. If no requirement exists
within that agency, the availability of the equipment shall be reported to the General Services
Administration by the Federal awarding agency to determine whether a requirement for the
equipment exists in other Federal agencies. The Federal awarding agency shall issue
instructions to the recipient no later than 120 calendar days after the recipient's request and the
following procedures shall govem.
(1) If so instructed or if disposition instructions are not issued within 120 calendar
days after the recipient's request, the recipient shall sell the equipment and reimburse the
Federal awarding agency an amount computed by applying to the sales proceeds the
percentage of Federal participation in the cost of the original project or program.
However, the recipient shall be permitted to deduct and retain from the Federal share
$500 or ten percent of the proceeds, whichever is less, for the recipient's selling and
handling expenses.
(2) If the recipient is instructed to ship the equipment elsewhere, the recipient shall
be reimbursed by the Federal Government by an amount which is computed by applying
the percentage of the recipient's participation in the cost of the original project or -
program to the current fair market value of the equipment, plus any reasonable shipping
or interim storage costs incurred.
(3) If the recipient is instructed to otherwise dispose of the equipment, the recipient
shall be reimbursed by the Federal awarding agency for such costs incurred in its -
disposition.
(4) The Federal awarding agency may reserve the right to transfer the title to the
Federal Government or to a third party named by the Federal Government when such
third party is otherwise eligible under existing statutes. Such transfer shall be subject to
the following standards.
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(i) The equipment shall be appropriately identified m the award or otherwise
made known to the recipient in writing.
(ii) The Federal awarding agency shall issue disposition instructions within
120 calendar days after receipt of a final inventory. The final inventory shall list all
equipment acquired with grant funds and federally -owned equipment. If the
Federal awarding agency fails to issue disposition instructions within the 120
calendar day period, the recipient shall apply the standards of this section, as
appropriate.
(iii) When the Federal awarding agency exercises its right to take title, the
equipment shall be subject to the provisions for federally -owned equipment.
_.35 Supplies and other expendable property.
(a) Title to supplies and other expendable property shall vest in the recipient upon
acquisition. If there is a residual inventory of unused supplies exceeding $5000 in total
aggregate value upon termination or completion of the project or program and the supplies are
not needed for any other federally- sponsored project or program, the recipient shall retain the
supplies for use on non - Federal sponsored activities or sell them, but shall, in either case,
compensate the Federal Government for its share. The amount of compensation shall be
computed in the same manner as for equipment.
(b) The recipient shall not use supplies acquired with Federal funds to provide services to
non - Federal outside organizations for a fee that is less than private companies charge for
equivalent services, unless specifically authorized by Federal statute as long as the Federal
Govemment retains an interest in the supplies.
.36 Intangible property.
(a) The recipient may copyright any work that is subject to copyright and was developed,
or for which ownership was purchased, under an award. The Federal awarding agency(ies)
reserve a royalty-free, nonexclusive and irrevocable right to reproduce, publish, or otherwise
use the work for Federal purposes, and to authorize others to do so.
(b) Recipients are subject to applicable regulations governing patents and inventions,
including government -wide regulations issued by the Department of Commerce at 37 CFR part
401, "Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts and Cooperative Agreements."
(c) The Federal Government has the right to:
(1) obtain, reproduce, publish or otherwise use the data first produced under an
award; and
(2) authorize others to receive, reproduce, publish, or otherwise use such data for
Federal purposes.
(d) (1) In addition, hi response to a Freedom of Information Act (FOIA) request for
research data relating to published research findings produced under an award that were used
by the Federal Government in developing an agency action that has the force and effect of law,
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the Federal awarding agency shall request, and the recipient shall provide, within a reasonable
time, the research data so that they can be made available to the public through the procedures
established under the FOIA. If the Federal awarding agency obtains the research data solely in
response to a FOIA request, the agency may charge the requester a reasonable fee equaling the
full incremental cost of obtaining the research data. This fee should reflect costs incurred by the
agency, the recipient, and applicable subrecipients. This fee is in addition to any fees the
agency may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).
(2) The following definitions apply for purposes of paragraph (d) of this section:
(i) Research data is defined as the recorded factual material commonly
accepted in the scientific community as necessary to validate research findings, but
not any of the following: preliminary analyses, drafts of scientific papers, plans for
future research, peer reviews, or cormnunications with colleagues. This "recorded"
material excludes physical objects (e.g., laboratory samples). Research data also do
not include:
(A) Trade secrets, commercial information, materials necessary to be
held confidential by a researcher until they are published, or similar
information which is protected under law; and
(B) Personnel and medical information and similar information the
disclosure of which would constitute a clearly unwarranted invasion of
personal privacy, such as information that could be used to identify a
particular person in a research study.
(ii) Published is defined as either when:
(A) Research findings are published in a peer- reviewed scientific or
technical journal; or
(B) A Federal agency publicly and officially cites the research findings
in support of an agency action that has the force and effect of law.
(iii) Used by the Federal Government in developing an agency action that
has the force and effect of law is defined as when an agency publicly and officially
cites the research findings in support of an agency action that has the force and
effect of law.
(e) Title to intangible property and debt instruments acquired under an award or
subaward vests upon acquisition in the recipient. The recipient shall use that property for the
originally- authorized purpose, and the recipient shall not encumber the property without
approval of the Federal awarding agency. When no longer needed for the originally authorized
purpose, disposition of the intangible property shall occur in accordance with the provisions of
paragraph _ .34(g).
_ .37 Property trust relationship. Real property, equipment, intangible property and debt
instruments that are acquired or improved with Federal funds shall be held in trust by the
recipient as trustee for the beneficiaries of the project or program under which the property was
acquired or improved. Agencies may require recipients to record liens or other appropriate
notices of record to indicate that personal or real property has been acquired or improved with
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Federal funds and that use and disposition conditions apply to the property.
Procurement Standards
_.40 Purpose of procurement standards. Sections _.41 through _.48 set forth standards
for use by recipients in establishing procedures for the procurement of supplies and other
expendable property, equipment, real property and other services with Federal funds. These
standards are furnished to ensure that such materials and services are obtained in an effective
manner and in compliance with the provisions of applicable Federal statutes and executive
orders. No additional procurement standards or requirements shall be imposed by the Federal
awarding agencies upon recipients, unless specifically required by Federal statute or executive
order or approved by OMB.
_ .41 Recipient responsibilities. The standards contained in this section do not relieve the
recipient of the contractual responsibilities arising under its contract(s). The recipient is the
responsible authority, without recourse to the Federal awarding agency, regarding the
settlement and satisfaction of all contractual and administrative issues arising out of
procurements entered into in support of an award or other agreement. This includes disputes,
claims, protests of award, source evaluation or other matters of a contractual nature. Matters
concerning violation of statute are to be referred to such Federal, State or local authority as may
have proper jurisdiction.
.42 Codes of conduct. The recipient shall maintain written standards of conduct governing
the performance of its employees engaged in the award and administration of contracts. No
employee, officer, or agent shall participate in the selection, award, or administration of a
contract supported by Federal funds if a real or apparent conflict of interest would be involved.
Such a conflict would arise when the employee, officer, or agent, any member of his or her
immediate family, his or her partner, or an organization which employs or is about to employ
any of the parties indicated herein, has a financial or other interest in the firm selected for an
award. The officers, employees, and agents of the recipient shall neither solicit nor accept
gratuities, favors, or anything of monetary value from contractors, or parties to subagreements.
However, recipients may set standards for situations in which the financial interest is not
substantial or the gift is an unsolicited item of nominal value. The standards of conduct shall
provide for disciplinary actions to be applied for violations of such standards by officers,
employees, or agents of the recipient.
_ .43 Competition. All procurement transactions shall be conducted in a manner to provide,
to the maximum extent practical, open and free competition. The recipient shall be alert to
organizational conflicts of interest as well as noncompetitive practices among contractors that
may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective
contractor performance and eliminate unfair competitive advantage, contractors that develop or
draft specifications, requirements, statements of work, invitations for bids and/or requests for
proposals shall be excluded from competing for such procurements. Awards shall be made to
the bidder or offeror whose bid or offer is responsive to the solicitation and is most
advantageous to the recipient, price, quality and other factors considered. Solicitations shall
clearly set forth all requirements that the bidder or offeror shall fulfill in order for the bid or
offer to be evaluated by the recipient. Any and all bids or offers may be rejected when it is in
the recipient's interest to do so.
_ .44 Procurement procedures.
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(a) All recipients shall establish written procurement procedures. These procedures shall
provide for, at a minimum, that (1), (2) and (3) apply.
(1) Recipients avoid purchasing unnecessary items.
(2) Where appropriate, an analysis is made of lease and purchase alternatives to
determine which would be the most economical and practical procurement for the
Federal Govemment.
(3) Solicitations for goods and services provide for all of the following.
(i) A clear and accurate description of the technical requirements for the
material, product or service to be procured. In competitive procurements, such a
description shall not contain features which unduly restrict competition.
(ii) Requirements which the bidder /offeror must fulfill and all other factors
to be used in evaluating bids or proposals.
(iii) A description, whenever practicable, of technical requirements in terms
of functions to be performed or performance required, including the range of
acceptable characteristics or minimum acceptable standards.
(iv) The specific features of "brand name or equal" descriptions that bidders
are required to meet when such items are included in the solicitation.
(v) The acceptance, to the extent practicable and economically feasible, of
products and services dimensioned in the metric system of measurement.
(vi) Preference, to the extent practicable and economically feasible, for
products and services that conserve natural resources and protect the environment
and are energy efficient.
(b) Positive efforts shall be made by recipients to utilize small businesses,
minority - owned firms, and women's business enterprises, whenever possible. Recipients of
Federal awards shall take all of the following steps to further this goal.
(1) Ensure that small businesses, minority -owned firms, and women's business
enterprises are used to the fullest extent practicable.
(2) Make information on forthcoming opportunities available and arrange time
frames for purchases and contracts to encourage and facilitate participation by small
businesses, minority -owned firms, and women's business enterprises.
(3) Consider in the contract process whether firms competing for larger contracts
intend to subcontract with small businesses, minority -owned firms, and women's
business enterprises.
(4) Encourage contracting with consortiums of small businesses, minority-owned
firms and women's business enterprises when a contract is too large for one of these firms
to handle individually.
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(5) Use the services and assistance, as appropriate, of such organizations as the
Small Business Administration and the Department of Commerce's Minority Business
Development Agency in the solicitation and utilization of small businesses, minority-
owned firms and women's business enterprises.
(c) The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable
contracts, purchase orders, and incentive contracts) shall be determined by the recipient but
shall be appropriate for the particular procurement and for promoting the best interest of the
program or project involved. The "cost- plus -a- percentage -of- cost" or "percentage of
construction cost" methods of contracting shall not be used.
(d) Contracts shall be made only with responsible contractors who possess the potential
ability to perform successfully under the terms and conditions of the proposed procurement.
Consideration shall be given to such matters as contractor integrity, record of past performance,
financial and technical resources or accessibility to other necessary resources. In certain
circumstances, contracts with certain parties are restricted by agencies' implementation of E.O.s
12549 and 12689, "Debarment and Suspension."
(e) Recipients shall, on request, make available for the Federal awarding agency,
pre -award review and procurement documents, such as request for proposals or invitations for
bids, independent cost estimates, etc., when any of the following conditions apply.
(1) A recipient's procurement procedures or operation fails to comply with the
procurement standards in the Federal awarding agency's implementation of this Circular.
(2) The procurement is expected to exceed the small purchase threshold fixed at 41
U.S.C. 403 (11) (currently $25,000) and is to be awarded without competition or only
one bid or offer is received in response to a solicitation.
(3) The procurement, which is expected to exceed the small purchase threshold,
specifies a "brand name" product.
(4) The proposed award over the small purchase threshold is to be awarded to
other than the apparent low bidder under a sealed bid procurement.
(5) A proposed contract modification changes the scope of a contract or increases
the contract amount by more than the amount of the small purchase threshold.
_ .45 Cost and price analysis. Some form of cost or price analysis shall be made and
documented in the procurement files in connection with every procurement action. Price
analysis maybe accomplished in various ways, including the comparison of price quotations
submitted, market prices and similar indicia, together with discounts. Cost analysis is the
review and evaluation of each element of cost to determine reasonableness, allocability and
allowability.
.46 Procurement records. Procurement records and files for purchases in excess of the small
purchase threshold shall include the following at a minimum: (a) basis for contractor selection,
(b) justification for lack of competition when competitive bids or offers are not obtained, and
(c) basis for award cost or price.
.47 Contract administration. A system for contract administration shall be maintained to
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ensure contractor conformance with the terms, conditions and specifications of the contract and
to ensure adequate and timely follow up of all purchases. Recipients shall evaluate contractor
performance and document, as appropriate, whether contractors have met the terms, conditions
and specifications of the contract.
_ .48 Contract provisions. The recipient shall include, in addition to provisions to define a
sound and complete agreement, the following provisions in all contracts. The following
provisions shall also be applied to subcontracts.
(a) Contracts in excess of the small purchase threshold shall contain contractual
provisions or conditions that allow for administrative, contractual, or legal remedies in
instances in which a contractor violates or breaches the contract terms, and provide for such
remedial actions as may be appropriate.
(b) All contracts in excess of the small purchase threshold shall contain suitable
provisions for termination by the recipient, including the manner by which termination shall be
effected and the basis for settlement. In addition, such contracts shall describe conditions under
which the contract may be terminated for default as well as conditions where the contract may
be terminated because of circumstances beyond the control of the contractor.
(c) Except as otherwise required by statute, an award that requires the contracting (or
subcontracting) for construction or facility improvements shall provide for the recipient to
follow its own requirements relating to bid guarantees, performance bonds, and payment bonds
unless the construction contract or subcontract exceeds $100,000. For those contracts or
subcontracts exceeding $100,000, the Federal awarding agency may accept the bonding policy
and requirements of the recipient, provided the Federal awarding agency has made a
determination that the Federal Government's interest is adequately protected. If such a
determination has not been made, the minimum requirements shall be as follows.
(1) A bid guarantee from each bidder equivalent to five percent of the bid price.
The "bid guarantee" shall consist of a firm commitment such as a bid bond, certified
check, or other negotiable instrument accompanying a bid as assurance that the bidder
shall, upon acceptance of his bid, execute such contractual documents as may be required
within the time specified.
(2) A performance bond on the part of the contractor for 100 percent of the
contract price. A "performance bond" is one executed in connection with a contract to
secure fulfillment of all the contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of the contract
price. A "payment bond" is one executed in connection with a contract to assure payment
as required by statute of all persons supplying labor and material in the execution of the
work provided for in the contract.
(4) Where bonds are required in the situations described herein, the bonds shall be
obtained from companies holding certificates of authority as acceptable sureties pursuant
to 31 CFR part 223, "Surety Companies Doing Business with the United States."
(d) All negotiated contracts (except those for less than the small purchase threshold)
awarded by recipients shall include a provision to the effect that the recipient, the Federal
awarding agency, the Comptroller General of the United States, or any of their duly authorized
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representatives, shall have access to any books, documents, papers and records of the contractor
which are directly pertinent to a specific program for the purpose of making audits,
examinations, excerpts and transcriptions.
(e) All contracts, including small purchases, awarded by recipients and their contractors
shall contain the procurement provisions of Appendix A to this Circular, as applicable.
Reports and Records
_.50 Purpose of reports and records. Sections _.51 through _.53 set forth the procedures
for monitoring and reporting on the recipient's financial and program performance and the
necessary standard reporting forms. They also set forth record retention requirements.
.51 Monitoring and reporting program performance.
(a) Recipients are responsible for managing and monitoring each project, program,
subaward, function or activity supported by the award. Recipients shall monitor subawards to
ensure subrecipients have met the audit requirements as delineated in Section _ .26.
(b) The Federal awarding agency shall prescribe the frequency with which the
performance reports shall be submitted. Except as provided in paragraph .51(f),
performance reports shall not be required more frequently than quarterly or, less frequently than
annually. Annual reports shall be due 90 calendar days after the grant year; quarterly or
semi - annual reports shall be due 30 days after the reporting period. The Federal awarding
agency may require annual reports before the anniversary dates of multiple year awards in lieu
of these requirements. The final performance reports are due 90 calendar days after the
expiration or termination of the award.
(c) If inappropriate, a final technical or performance report shall not be required after
completion of the project.
(d) When required, performance reports shall generally contain, for each award, brief
information on each of the following.
(1) A comparison of actual accomplishments with the goals and objectives
established for the period, the findings of the investigator, or both. Whenever appropriate
and the output of programs or projects can be readily quantified, such quantitative data
should be related to cost data for computation of unit costs.
(2) Reasons why established goals were not met, if appropriate.
(3) Other pertinent information including, when appropriate, analysis and
explanation of cost overruns or high unit costs.
(e) Recipients shall not be required to submit more than the original and two copies of
performance reports.
(f) Recipients shall immediately notify the Federal awarding agency of developments that
have a significant impact on the award- supported activities. Also, notification shall be given in
the case of problems, delays, or adverse conditions which materially impair the ability to meet
the objectives of the award. This notification shall include a statement of the action taken or
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contemplated, and any assistance needed to resolve the situation.
(g) Federal awarding agencies may make site visits, as needed.
(h) Federal awarding agencies shall comply with clearance requirements of 5 CFR part
1320 when requesting performance data from recipients.
52 Financial reporting.
(a) The following forms or such other forms as may be approved by OMB are authorized
for obtaining financial information from recipients.
(1) SF -269 or SF -269A, Financial Status Report.
(i) Each Federal awarding agency shall require recipients to use the SF -269
or SF -269A to report the status of funds for all nonconstruction projects or
programs. A Federal awarding agency may, however, have the option of not
requiring the SF -269 or SF -269A when the SF -270, Request for Advance or
Reimbursement, or SF -272, Report of Federal Cash Transactions, is determined to
provide adequate information to meet its needs, except that a final SF -269 or
SF -269A shall be required at the completion of the project when the SF -270 is
used only for advances.
(ii) The Federal awarding agency shall prescribe whether the report shall be
on a cash or accrual basis. If the Federal awarding agency requires accrual
information and the recipient's accounting records are not normally kept on the
accrual basis, the recipient shall not be required to convert its accounting system,
but shall develop such accrual information through best estimates based on an
analysis of the documentation on hand.
(iii) The Federal awarding agency shall determine the frequency of the
Financial Status Report for each project or program, considering the size and
complexity of the particular project or program. However, the report shall not be
required more frequently than quarterly or less frequently than annually. A final
report shall be required at the completion of the agreement.
(iv) The Federal awarding agency shall require recipients to submit the
SF -269 or SF -269A (an original and no more than two copies) no later than 30
days after the end of each specified reporting period for quarterly and semi - annual
reports, and 90 calendar days for annual and final reports. Extensions of reporting
due dates may be approved by the Federal awarding agency upon request of the
recipient.
(2) SF -272, Report of Federal Cash Transactions.
(i) When funds are advanced to recipients the Federal awarding agency shall
require each recipient to submit the SF -272 and, when necessary, its continuation
sheet, SF -272a. The Federal awarding agency shall use this report to monitor cash
advanced to recipients and to obtain disbursement information for each agreement
with the recipients.
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(ii) Federal awarding agencies may require forecasts of Federal cash
requirements in the "Remarks" section of the report. .
(iii) When practical and deemed necessary, Federal awarding agencies may
require recipients to report in the "Remarks" section the amount of cash advances
received in excess of three days. Recipients shall provide short narrative
explanations of actions taken to reduce the excess balances.
(iv) Recipients shall be required to submit not more than the original and
two copies of the SF -272 15 calendar days following the end of each quarter. The
Federal awarding agencies may require a monthly report from those recipients
receiving advances totaling $1 million or more per year.
(v) Federal awarding agencies may waive the requirement for submission of
the SF -272 for any one of the following reasons: (1) When monthly advances do
not exceed $25,000 per recipient, provided that such advances are monitored
through other forms contained in this section; (2) If, in the Federal awarding
agency's opinion, the recipient's accounting controls are adequate to minimize
excessive Federal advances; or, (3) When the electronic payment mechanisms .
provide adequate data.
(b) When the Federal awarding agency needs additional information or more frequent
reports, the following shall be observed.
(1) When additional information is needed to comply with legislative requirements,
Federal awarding agencies shall issue instructions to require recipients to submit such
information under the "Remarks" section of the reports.
(2) When a Federal awarding agency determines that a recipient's accounting
system does not meet the standards in Section .21, additional pertinent information to
further monitor awards may be obtained upon written notice to the recipient until such
time as the system is brought up to standard. The Federal awarding agency, in obtaining
this information, shall comply with report clearance requirements of 5 CFR part 1320. '
(3) Federal awarding agencies are encouraged to shade out any line item on any
report if not necessary.
(4) Federal awarding agencies may accept the identical information from the
recipients in machine readable format or computer printouts or electronic outputs in lieu
of prescribed formats.
(5) Federal awarding agencies may provide computer or electronic outputs to
recipients when such expedites or contributes to the accuracy of reporting.
53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention and access to records for
awards to recipients. Federal awarding agencies shall not impose any other record retention or
access requirements upon recipients.
(b) Financial records, supporting documents, statistical records, and all other records
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pertinent to an award shall be retained for a period of three years from the date of submission of
the final expenditure report or, for awards that are renewed quarterly or annually, from the date
of the submission of the quarterly or annual financial report, as authorized by the Federal
awarding agency. The only exceptions are the following.
(1) If any litigation, claim, or audit is started before the expiration of the 3 -year
period, the records shall be retained until all litigation, claims or audit findings involving
the records have been resolved and final action taken.
(2) Records for real property and equipment acquired with Federal funds shall be
retained for 3 years after final disposition.
(3) When records are transferred to or maintained by the Federal awarding agency,
the 3 -year retention requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc. as specified in
paragraph _ .53(g).
(c) Copies of original records maybe substituted for the original records if authorized by
the Federal awarding agency.
(d) The Federal awarding agency shall request transfer of certain records to its custody
from recipients when it determines that the records possess long term retention value. However,
in order to avoid duplicate recordkeeping, a Federal awarding agency may make arrangements
for recipients to retain any records that are continuously needed for joint use.
(e) The Federal awarding agency, the Inspector General, Comptroller General of the
United States, or any of their duly authorized representatives, have the right of timely and
unrestricted access to any books, documents, papers, or other records of recipients that are
pertinent to the awards, in order to make audits, examinations, excerpts, transcripts and copies
of such documents. This right also includes timely and reasonable access to a recipient's
personnel for the purpose of interview and discussion related to such documents. The rights of
access in this paragraph are not limited to the required retention period, but shall last as long as
records are retained.
(1) Unless required by statute, no Federal awarding agency shall place restrictions on
recipients that limit public access to the records of recipients that are pertinent to an award,
except when the Federal awarding agency can demonstrate that such records shall be kept
confidential and would have been exempted from disclosure pursuant to the Freedom of
Information Act (5 U.S.C. 552) if the records had belonged to the Federal awarding agency.
(g) Indirect cost rate proposals, cost allocations plans, etc. Paragraphs (g)(1) and (g)(2)
apply to the following types of documents, and their supporting records: indirect cost rate
computations or proposals, cost allocation plans, and any similar accounting computations of .
the rate at which a particular group of costs is chargeable (such as computer usage chargeback
rates or composite fringe benefit rates).
(1) If submitted for negotiation. If the recipient submits to the Federal awarding
agency or the subrecipient submits to the recipient the proposal, plan, or other
computation to form the basis for negotiation of the rate, then the 3 -year retention period
for its supporting records starts on the date of such submission.
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(2) If not submitted for negotiation. If the recipient is not required to submit to the
Federal awarding agency or the subrecipient is not required to submit to the recipient the
proposal, plan, or other computation for negotiation purposes, then the 3 -year retention
period for the proposal, plan, or other computation and its supporting records starts at the
end of the fiscal year (or other accounting period) covered by the proposal, plan, or other
computation.
Termination and Enforcement
.60 Purpose of termination and enforcement. Sections .61 and .62 set forth uniform
suspension, termination and enforcement procedures.
.61 Termination.
(a) Awards may be terminated in whole or in part only if (1), (2) or (3) apply.
(1) By the Federal awarding agency, if a recipient materially fails to comply with
the terms and conditions of an award.
(2) By the Federal awarding agency with the consent of the recipient, in which case
the two parties shall agree upon the termination conditions, including the effective date
and, in the case of partial termination, the portion to be terminated.
(3) By the recipient upon sending to the Federal awarding agency written
notification setting forth the reasons for such termination, the effective date, and, in the
case of partial termination, the portion to be terminated. However, if the Federal
awarding agency determines in the case of partial termination that the reduced or
modified portion of the grant will not accomplish the purposes for which the grant was
made, it may terminate the grant in its entirety under either paragraphs (a)(1) or (2).
(b) If costs are allowed under an award, the responsibilities of the recipient referred to in
paragraph _.71(a), including those for property management as applicable, shall be
considered in the termination of the award, and provision shall be made for continuing
responsibilities of the recipient after termination, as appropriate.
_ .62 Enforcement.
(a) Remedies for noncompliance. If a recipient materially fails to comply with the terms
and conditions of an award, whether stated in a Federal statute, regulation, assurance,
application, or notice of award, the Federal awarding agency may, in addition to imposing any
of the special conditions outlined in Section _ .14, take one or more of the following actions,
as appropriate in the circumstances.
(1) Temporarily withhold cash payments pending correction of the deficiency by
the recipient or more severe enforcement action by the Federal awarding agency.
(2) Disallow (that is, deny both use of funds and any applicable matching credit
for) all or part of the cost of the activity or action not in compliance.
(3) Wholly or partly suspend or terminate the current award.
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(4) Withhold further awards for the project or program.
(5) Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, the awarding agency shall
provide the recipient an opportunity for hearing, appeal, or other administrative proceeding to
which the recipient is entitled under any statute or regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of a recipient resulting from obligations
incurred by the recipient during a suspension or after termination of an award are not allowable
unless the awarding agency expressly authorizes them in the notice of suspension or
termination or subsequently. Other recipient costs during suspension or after termination which
are necessary and not reasonably avoidable are allowable if (1) and (2) apply.
(1) The costs result from obligations which were properly incurred by the recipient
before the effective date of suspension or termination, are not in anticipation of it, and in
the case of a termination, are noncancellable.
(2) The costs would be allowable if the award were not suspended or expired
normally at the end of the funding period in which the termination takes effect.
(d) Relationship to debarment and suspension. The enforcement remedies identified in
this section, including suspension and termination, do not preclude a recipient from being
subject to debarment and suspension under E.O.s 12549 and 12689 and the Federal awarding
agency implementing regulations (see Section _.13).
SUBPART D - After the - Award Requirements
.70 Purpose. Sections _.71 through _.73 contain closeout procedures and other
procedures for subsequent disallowances and adjustments.
.71 Closeout procedures.
(a) Recipients shall submit, within 90 calendar days after the date of completion of the
award, all financial, performance, and other reports as required by the terms and conditions of
the award. The Federal awarding agency may approve extensions when requested by the
recipient.
(b) Unless the Federal awarding agency authorizes an extension, a recipient shall
liquidate all obligations incurred under the award not later than 90 calendar days after the
funding period or the date of completion as specified in the terms and conditions of the award
or in agency implementing instructions.
(c) The Federal awarding agency shall make prompt payments to a recipient for allowable
reimbursable costs under the award being closed out.
(d) The recipient shall promptly refund any balances of unobligated cash that the Federal
awarding agency has advanced or paid and that is not authorized to be retained by the recipient
for use in other projects. OMB Circular A -129 governs unretumed amounts that become
delinquent debts. -
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(e) When authorized by the terms and conditions of the award, the Federal awarding
agency shall make a settlement for any upward or downward adjustments to the Federal share
of costs after closeout reports are received.
(f) The recipient shall account for any real and personal property acquired with Federal
funds or received from the Federal Government in accordance with Sections _ .31 through
.37.
(g) In the event a final audit has not been performed prior to the closeout of an award, the
Federal awarding agency shall retain the right to recover an appropriate amount after fully
considering the recommendations on disallowed costs resulting from the final audit.
_ .72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following.
(1) The right of the Federal awarding agency to disallow costs and recover funds
on the basis of a later audit or other review.
(2) The obligation of the recipient to return any funds due as a result of later
refunds, corrections, or other transactions.
(3) Audit requirements in Section .26.
(4) Property management requirements in Sections _ .31 through _ .37.
(5) Records retention as required in Section _.53.
(b) After closeout of an award, a relationship created under an award may be modified or
ended in whole or in part with the consent of the Federal awarding agency and the recipient,
provided the responsibilities of the recipient referred to in paragraph _ .73(a), including those
for property management as applicable, are considered and provisions made for continuing
responsibilities of the recipient, as appropriate.
.73 Collection of amounts due.
(a) Any funds paid to a recipient in excess of the amount to which the recipient is finally
determined to be entitled under the terms and conditions of the award constitute a debt to the
Federal Government. If not paid within a reasonable period after the demand for payment, the
Federal awarding agency may reduce the debt by (1), (2) or (3).
(1) Making an administrative offset against other requests for reimbursements.
(2) Withholding advance payments otherwise due to the recipient.
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, the Federal awarding agency shall charge
interest on an overdue debt in accordance with 4 CFR Chapter It, "Federal Claims Collection
Standards."
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Appendix A
Contract Provisions
All contracts, awarded by a recipient including small purchases, shall contain the following
provisions as applicable:
1. Equal Employment Opportunity - All contracts shall contain a provision requiring
compliance with E.O. 11246, "Equal Employment Opportunity," as amended by E.O. 11375,
"Amending Executive Order 11246 Relating to Equal Employment Opportunity," and as
supplemented by regulations at 41 CFR part 60, "Office of Federal Contract Compliance
Programs, Equal Employment Opportunity, Department of Labor."
2. Copeland "Anti- Kickback" Act (18 U.S.C. 874 and 40 U.S.C. 276c) - All contracts and
subgrants in excess of $2000 for construction or repair awarded by recipients and subrecipients
shall include a provision for compliance with the Copeland "Anti- Kickback" Act (18 U.S.C.
874), as supplemented by Department of Labor regulations (29 CFR part 3, "Contractors and
Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or
Grants from the United States "). The Act provides that each contractor or subrecipient shall be
prohibited from inducing, by any means, any person employed in the construction, completion,
or repair of public work, to give up any part of the compensation to which he is otherwise
entitled. The recipient shall report all suspected or reported violations to the Federal awarding
agency.
3. Davis -Bacon Act, as amended (40 U.S.C. 276a to a -7) - When required by Federal program
legislation, all construction contracts awarded by the recipients and subrecipients of more than
$2000 shall include a provision for compliance with the Davis -Bacon Act (40 U.S.C. 276a to
a -7) and as supplemented by Department of Labor regulations (29 CFR part 5, "Labor
Standards Provisions Applicable to Contracts Goveming Federally Financed and Assisted
Construction "). Under this Act, contractors shall be required to pay wages to laborers and
mechanics at a rate not less than the minimum wages specified in a wage determination made
by the Secretary of Labor. In addition, contractors shall be required to pay wages not less than
once a week. The recipient shall place a copy of the current prevailing wage determination
issued by the Department of Labor in each solicitation and the award of a contract shall be
conditioned upon the acceptance of the wage determination. The recipient shall report all
suspected or reported violations to the Federal awarding agency.
4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327 -333) - Where applicable,
all contracts awarded by recipients in excess of $2000 for construction contracts and in excess
of $2500 for other contracts that involve the employment of mechanics or laborers shall include
a provision for compliance with Sections 102 and 107 of the Contract Work Hours and Safety
Standards Act (40 U.S.C. 327 -333), as supplemented by Department of Labor regulations (29
CFR part 5). Under Section 102 of the Act, each contractor shall be required to compute the
wages of every mechanic and laborer on the basis of a standard work week of 40 hours. Work
in excess of the standard work week is permissible provided that the worker is compensated at
a rate of not Less than 1 %z times the basic rate of pay for all hours worked in excess of 40 hours
in the work week. Section 107 of the Act is applicable to construction work and provides that
no laborer or mechanic shall be required to work in surroundings or under working conditions
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which are unsanitary, hazardous or dangerous. These requirements do not apply to the
purchases of supplies or materials or articles ordinarily available on the open market, or
contracts for transportation or transmission of intelligence.
5. Rights to Inventions Made Under a Contract or Agreement - Contracts or agreements for
the performance of experimental, developmental, or research work shall provide for the rights
of the Federal Government and the recipient in any resulting invention in accordance with 37
CFR part 401, "Rights to Inventions Made by Nonprofit Organizations and Small Business
Firms Under Government Grants, Contracts and Cooperative Agreements," and any
implementing regulations issued by the awarding agency.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act (33
U.S.C. 1251 et seq.), as amended - Contracts and subgrants of amounts in excess of $100,000
shall contain a provision that requires the recipient to agree to comply with all applicable
standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.)
and the Federal Water Pollution Control Act as amended (33 U.S.C. 1251 et seq.). Violations
shall be reported to the Federal awarding agency and the Regional Office of the Environmental
Protection Agency (EPA).
7. Byrd Anti- Lobbying Amendment (31 U.S.C. 1352) - Contractors who apply or bid for an
award of $100,000 or more shall file the required certification Each tier certifies to the tier
above that it will not and has not used Federal appropriated funds to pay any person or
organization for influencing or attempting to influence an officer or employee of any agency, a
member of Congress, officer or employee of Congress, or an employee of a member of
Congress in connection with obtaining any Federal contract, grant or any other award covered
by 31 U.S.C. 1352. Each tier shall also disclose any lobbying with non - Federal funds that takes
place in connection with obtaining any Federal award. Such disclosures are forwarded from tier
to tier up to the recipient.
8. Debarment and Suspension (E.O.s 12549 and 12689) - No contract shall be made to
parties listed on the General Services Administration's List of Parties Excluded from Federal
Procurement or Nonprocurement Programs in accordance with E.O.s 12549 and 12689,
"Debarment and Suspension." This list contains the names of parties debarred, suspended, or
otherwise excluded by agencies, and contractors declared ineligible under statutory or
regulatory authority other than E.O. 12549. Contractors with awards that exceed the small
purchase threshold shall provide the required certification regarding its exclusion status and
that of its principal employees.
The Budget 1 Legislative Information 1 Management Reform/GPRA 1 Grants Management
Financial Management 1 Procurement Policy 1 Information & Regulatory Policy
Privacy Statement
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Appendix B
24 CFR 570 CDBG Regulations Subpart C Eligible Activities
570.200 General policies.
570.201 Basic eligible activities.
570.202 Eligible rehabilitation and preservation activities.
570.203 Special economic development activities.
570.204 Special activities by Community-Based Development Organizations
(CBDOs).
570.205 Eligible planning, urban environmental design and policy- planning-
management - capacity building activities.
570.206 Program administration costs.
570.207 Ineligible activities.
570.208 Criteria for national objectives.
CDBG Regulations; Subpart C -- Eligible Activities http:/ /www.hud.gov /cpd/cdbg/subc.html
Subpart C -- Eligible Activities
• 570.200 General policies.
• 570.201 Basic eligible activities.
• 570.202 Eligible rehabilitation and preservation activities.
• 570.203 Special economic development activities.
• 570.204 Special activities by Community -Based Development Organizations (CBDOs).
• 570.205 Eligible planning, urban environmental design and policy - planning- management- capacity
building activities.
• 570.206 Program administration costs.
• 570.207 Ineligible activities.
• 570.208 Criteria for national objectives.
• 570.209 Guidelines for evaluating and selecting economic development projects.
Subpart C -- Eligible Activities
SOURCE: 53 FR 34439, Sept. 6, 1988, unless otherwise noted.
570.200 General policies.
(a) Determination of eligibility. An activity may be assisted in whole or in part with CDBG funds only if
all of the following requirements are met:
(1) Compliance with section 105 of the Act. Each activity must meet the eligibility requirements of
section 105 of the Act as further defined in this subpart.
(2) Compliance with national objectives. Grant recipients under the Entitlement and
HUD- administered Small Cities programs must certify that their projected use of funds has been
developed so as to give maximum feasible priority to activities which will carry out one of the
national objectives of benefit to low- and moderate - income families or aid in the prevention or
elimination of slums or blight; the projected use of funds may also include activities which the
recipient certifies are designed to meet other community development needs having a particular
urgency because existing conditions pose a serious and immediate threat to the health or welfare of
the community where other financial resources are not available to meet such needs. Consistent
with the foregoing, each recipient under the Entitlement and HUD- administered Small Cities
programs must ensure, and maintain evidence, that each of its activities assisted with CDBG funds
meets one of the three national objectives as contained in its certification. Criteria for determining
whether an activity addresses one or more of these objectives are contained at 570.208.
(3) Compliance with the primary objective. The primary objective of the Act is described in
section 101(c) of the Act. Consistent with this objective, Entitlement recipients and recipients of
the HUD- administered Small Cities program in Hawaii must ensure that over a period of time
specified in their certification not to exceed three years, not less than 70 percent of the aggregate of
CDBG fund expenditures shall be for activities meeting the criteria under 570.208(a) or
570.208(d)(5) or (6) for benefitting low- and moderate- income persons; Insular area recipients
must meet this requirement for each separate grant. The requirements for the HUD- administered
Small Cities program in New York are in 570.420(e)(2). Additional requirements for the
HUD- administered Small Cities program in Hawaii are in 570.430(e). In determining the
percentage of funds expended for such activities:
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(i) Cost of administration and planning eligible under 570.205 and 570.206 will be assumed
to benefit low- and moderate - income persons in the same proportion as the remainder of the
CDBG funds and, accordingly shall be excluded from the calculation;
(ii) Funds deducted by HUD for repayment of urban renewal temporary loans pursuant to
570.802(b)* shall be excluded;
*(The published regulation inadvertently refers to 570.802(b) which was removed on March
20, 1996, but still remains in effect per the savings clause of section 570.800.)
(iii) Funds expended for the repayment of loans guaranteed under the provisions of subpart
M shall also be excluded;
(iv) Funds expended for the acquisition, new construction or rehabilitation of property for
housing that qualifies under 570.208(a)(3) shall be counted for this purpose but shall be
limited to an amount determined by multiplying the total cost (including CDBG and
non -CDBG costs) of the acquisition, construction or rehabilitation by the percent of units in
such housing to be occupied by low- and moderate- income persons.
(v) Funds expended for any other activities qualifying under 570.208(a) shall be counted for
this purpose in their entirety.
(The streamlined text in the first sentence of the introductory text of paragraph (a)(3) above
replaced the following language:
The Act establishes as its primary objective the development of viable urban communities,
by providing decent housing and a suitable living environment and expanding economic
opportunities, principally for persons of low and moderate income.)
(4) Compliance with environmental review procedures. The environmental review procedures set
forth at 24 CFR part 58 must be completed for each activity (or project as defined in 24 CFR part
58 , as applicable.
(5) Costprincip/es. Costs incurred, whether charged on a direct or an indirect basis, must be in
confonnance with OMB Circulars AA = 87, "Cost Principles for State, Local and Indian Tribal
Governments"; A -122, "Cost Principles for Non- profit Organizations "; or A -21, "Cost Principles
for Educational Institutions," as applicable. All items of cost listed in Attachment B of these
Circulars that require prior Federal agency approval are allowable without prior approval of HUD
to the extent they comply with the general policies and principles stated in Attachment A of such
circulars and are otherwise eligible under this subpart C, except for the following:
(i) Depreciation methods for fixed assets shall not be changed without HUD's specific
approval or, if charged through a cost allocation plan, the Federal cognizant agency.
(ii) Fines and penalties (including punitive damages) are unallowable costs to the CDBG
program.
(iii) Pre -award costs are limited to those authorized under paragraph (h) of this section.
(b) Special policies governing facilities. The following special policies apply to:
(1) Facilities containing both eligible and ineligible uses. A public facility otherwise eligible for
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assistance under the CDBG program may be provided with CDBG funds even if it is part of a
multiple use building containing ineligible uses, if:
(i) The facility which is otherwise eligible and proposed for assistance will occupy a
designated and discrete area within the larger facility; and
(ii) The recipient can determine the costs attributable to the facility proposed for assistance
as separate and distinct from the overall costs of the multiple -use building and/or facility.
Allowable costs are limited to those attributable to the eligible portion of the building or facility.
(2) Fees for use of facilities. Reasonable fees may be charged for the use of the facilities assisted
with CDBG funds, but charges such as excessive membership fees, which will have the effect of
precluding low- and moderate - income persons from using the facilities, are not permitted.
(c) Special assessments under the CDBG program. The following policies relate to special assessments
under the CDBG program:
(1) Definition of special assessment. The term "special assessment" means the recovery of the
capital costs of a public improvement, such as streets, water or sewer lines, curbs, and gutters,
through a fee or charge levied or filed as a lien against a parcel of real estate as a direct result of
benefit derived from the installation of a public improvement, or a one -time charge made as a
condition of access to a public improvement. This term does not relate to taxes, or the
establishment of the value of real estate for the purpose of levying real estate, property, or ad
valorem taxes, and does not include periodic charges based on the use of a public improvement,
such as water or sewer user charges, even if such charges include the recovery of all or some
portion of the capital costs of the public improvement.
(2) Special assessments to recover capital costs. Where CDBG funds are used to pay all or part of
the cost of a public improvement, special assessments may be imposed as follows:
(i) Special assessments to recover the CDBG funds may be made only against properties
owned and occupied by persons not of low and moderate income. Such assessments
constitute program income.
(ii) Special assessments to recover the non -CDBG portion may be made provided that
CDBG funds are used to pay the special assessment in behalf of all properties owned and
occupied by low- and moderate- income persons; except that CDBG funds need not be used
to pay the special assessments in behalf of properties owned and occupied by
moderate - income persons if the grant recipient certifies that it does not have sufficient
CDBG funds to pay the assessments in behalf of all of the low- and moderate - income
owner - occupant persons. Funds collected through such special assessments are not program
income.
(3) Public improvements not initially assisted with CDBG funds. The payment of special
assessments with CDBG funds constitutes CDBG assistance to the public improvement. Therefore,
CDBG funds may be used to pay special assessments provided:
(i) The installation of the public improvements was carried out in compliance with
requirements applicable to activities assisted under this part including environmental, citizen
participation and Davis -Bacon requirements;
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(ii) The installation of the public improvement meets a criterion for national objectives in
570.208(a)(1), (b), or (c); and
(iii) The requirements of 570.200(c)(2)(ii) are met.
(d) Consultant activities. Consulting services are eligible for assistance under this part for professional
assistance in program planning, development of community development objectives, and other general
professional guidance relating to program execution. The use of consultants is governed by the
following:
(1) Employer - employee type of relationship. No person providing consultant services in an
employer - employee type of relationship shall receive more than a reasonable rate of compensation
for personal services paid with CDBG funds. In no event, however, shall such compensation
exceed the equivalent of the daily rate paid for Level IV of the Executive Schedule. Such services
shall be evidenced by written agreements between the parties which detail the responsibilities,
standards, and compensation.
(2) Independent contractor relationship. Consultant services provided under an independent
contractor relationship are govemed by the procurement requirements in 24 CFR 85.36, and are
not subject to the compensation limitation of Level IV of the Executive Schedule.
(e) Recipient determinations required as a condition of eligibility. In several instances under this
subpart, the eligibility of an activity depends on a special local determination. Recipients shall maintain
documentation of all such determinations. A written determination is required for any activity carried out
under the authority of 570.201(f), 570.201(i)(2), 570.201(p), 570.201(q), 570.202(b)(3), 570.206(1),
570.209, and 570.309.
(f) Means of carrying out eligible activities.
(1) Activities eligible under this subpart, other than those authorized under 570.204(a), may be
undertaken, subject to local law:
(i) By the recipient through:
(A) Its employees, or
(B) Procurement contracts governed by the requirements of 24 CFR 85.36; or
(ii) Through loans or grants under agreements with subrecipients, as defined at 570.500(c);
or
(iii) By one or more public agencies, including existing local public agencies, that are
designated by the chief executive officer of the recipient.
(2) Activities made eligible under 570.204(a) may only be undertaken by entities specified in that
section.
(g) Limitation on planning and administrative costs. No more than 20 percent of the sum of any grant,
plus program income, shall be expended for planning and program administrative costs, as defined in
570.205 and 570.206, respectively. Recipients of entitlement grants under subpart D of this part shall
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conform with this requirement by limiting the amount of CDBG funds obligated for planning plus
administration during each program year to an amount no greater than 20 percent of the sum of its
entitlement grant made for that program year (if any) plus the program income received by the recipient
and its subrecipients (if any) during that program year.
(h) Reimbursement for pre -award costs. The effective date of the grant agreement is the program year
start date or the date that the consolidated plan is received by HUD, whichever is later. For a Section 108
loan guarantee, the effective date of the grant agreement is the date of HUD execution of the grant
agreement amendment for the particular loan guarantee commitment.
(1) Prior to the effective date of the grant agreement, a recipient may incur costs or may authorize a
subrecipient to incur costs, and then after the effective date of the grant agreement pay for those
costs using its CDBG funds, provided that:
(i) The activity for which the costs are being incurred is included in a consolidated plan
action plan or an amended consolidated plan action plan (or application under subpart M of
this part) prior to the costs being incurred;
(ii) Citizens are advised of the extent to which these pre -award costs will affect future
grants;
(iii) The costs and activities funded are in compliance with the requirements of this part and
with the Environmental Review Procedures stated in 24 CFR part 58;
(iv) The activity for which payment is being made complies with the statutory and regulatory
provisions in effect at the time the costs are paid for with CDBG funds;
(v) CDBG payment will be made during a time no longer than the next two program years
following the effective date of the grant agreement or amendment in which the activity is
first included; and
(vi) The total amount of pre -award costs to be paid during any program year pursuant to this
provision is no more than the greater of 25 percent of the amount of the grant made for that
year or $300,000.
(2) Upon the written request of the recipient, HUD may authorize payment of pre- award costs for
activities that do not meet the criteria at paragraphs (h)(1)(v) or (h)(1)(vi) of this section, if HUD
determines, in writing, that there is good cause for granting an exception upon consideration of the
following factors, as applicable:
(i) Whether granting the authority would result in a significant contribution to the goals and
purposes of the CDBG program;
(ii) Whether failure to grant the authority would result in undue hardship to the recipient or
beneficiaries of the activity;
(iii) Whether granting the authority would not result in a violation of a statutory provision or
any other regulatory provision;
(iv) Whether circumstances are clearly beyond the recipient's control; or
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(v) Any other relevant considerations.
(i) Urban Development Action Grant. Grant assistance may be provided with Urban Development Action
Grant funds, subject to the provisions of subpart G, for:
(1) Activities eligible for assistance under this subpart; and
(2) Notwithstanding the provisions of 570.207, such other activities as the Secretary may
determine to be consistent with the purposes of the Urban Development Action Grant program.
(j) Constitutional prohibition. In accordance with First Amendment Church/State Principles, as a general
rule, CDBG assistance may not be used for religious activities or provided to primarily religious entities
for any activities, including secular activities. The following restrictions and limitations therefore apply
to the use of CDBG funds.
(1) CDBG funds may not be used for the acquisition of property or the construction or .
rehabilitation (including historic preservation and removal of architectural barriers) of structures to
be used for religious purposes or which will otherwise promote religious interests. This limitation
includes the acquisition of property for ownership by primarily religious entities and the
construction or rehabilitation (including historic preservation and removal of architectural barriers)
of structures owned by such entities (except as permitted under paragraph (j)(2) of this section
with respect to rehabilitation and under paragraph (j)(4) of this section with respect to repairs
undertaken in connection with public services) regardless of the use to be made of the property or
structure. Property owned by primarily religious entities may be acquired with CDBG funds at no
more than fair market value for a non - religious use.
(2) CDBG funds may be used to rehabilitate buildings owned by primarily religious entities to be
used for a wholly secular purpose under the following conditions:
(i) The building (or portion thereof) that is to be improved with the CDBG assistance has
been leased to an existing or newly established wholly secular entity (which may be an
entity established by the religious entity);
(ii) The CDBG assistance is provided to the lessee (and not the lessor) to make the
improvements;
(iii) The leased premises will be used exclusively for secular purposes available to persons
regardless of religion;
(iv) The lease payments do not exceed the fair market rent of the premises as they were
before the improvements are made;
(v) The portion of the cost of any improvements that also serve a non - leased part of the
building will be allocated to and paid for by the lessor;
(vi) The lessor enters into a binding agreement that unless the lessee, or a qualified
successor lessee, retains the use of the leased premises for a wholly secular purpose for at
least the useful life of the improvements, the lessor will pay to the lessee an amount equal to
the residual value of the improvements;
(vii) The lessee must remit the amount received from the lessor under paragraph (j)(2)(vi) of
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this section to the recipient or subrecipient from which the CDBG funds were derived.
The lessee can also enter into a management contract authorizing the lessor religious entity to use
the building for its intended secular purpose, e.g., homeless shelter, provision of public services. In
such case, the religious entity must agree in the management contract to carry out the secular
purpose in a manner free from religious influences in accordance with the principles set forth in
paragraph (j)(3) of this section.
(3) As a general rule, CDBG funds may be used for eligible public services to be provided through
a primarily religious entity, where the religious entity enters into an agreement with the recipient
or subrecipient from which the CDBG funds are derived that, in connection with the provision of
such services:
(i) It will not discriminate against any employee or applicant for employment on the basis of
religion and will not limit employment or give preference in employment to persons on the
basis of religion;
(ii) It will not discriminate against any person applying for such public services on the basis
of religion and will not limit such services or give preference to persons on the basis of
religion;
(iii) It will provide no religious instruction or counseling, conduct no religious worship or
services, engage in no religious proselytizing, and exert no other religious influence in the
provision of such public services;
(4) Where the public services provided under paragraph (j)(3) of this section are carried out on
property owned by the primarily religious entity, CDBG funds may also be used for minor repairs
to such property which are directly related to carrying out the public services where the cost
constitutes in dollar teens only an incidental portion of the CDBG expenditure for the public
services.
[53 FR 34439, Sept. 6, 1988, as amended at 54 FR 47031, Nov. 8, 1989; 57 FR 27119, June 17, 1992; 60 FR 1943, Jan. 5,
1995; 60 FR 17445, Apr. 6, 1995; 60 FR 56910, Nov. 9, 1995; 61 FR 11476, Mar. 20, 1996]
570.201 Basic eligible activities.
CDBG funds may be used for the following activities:
(a) Acquisition. Acquisition in whole or in part by the recipient, or other public or private nonprofit
entity, by purchase, long -term lease, donation, or otherwise, of real property (including air rights, water
rights, rights -of -way, easements, and other interests therein) for any public purpose, subject to the
limitations of 570.207.
(b) Disposition. Disposition, through sale, lease, donation, or otherwise, of any real property acquired
with CDBG funds or its retention for public purposes, including reasonable costs of temporarily
managing such property or property acquired under urban renewal, provided that the proceeds from any
such disposition shall be program income subject to the requirements set forth in 570.504.
(c) Public facilities and improvements. Acquisition, construction, reconstruction, rehabilitation or
installation of public facilities and improvements, except as provided in 570.207(a), carried out by the
recipient or other public or private nonprofit entities. (However, activities under this paragraph may be
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directed to the removal of material and architectural barriers that restrict the mobility and accessibility of
elderly or severely disabled persons to public facilities and improvements, including those provided for
in 570.207(a)(1).) In undertaking such activities, design features and improvements which promote
energy efficiency may be included. Such activities may also include the execution of architectural design
features, and similar treatments intended to enhance the aesthetic quality of facilities and improvements
receiving CDBG assistance, such as decorative pavements, railings, sculptures, pools of water and
fountains, and other works of art. Facilities designed for use in providing shelter for persons having
special needs are considered public facilities and not subject to the prohibition of new housing
construction described in 570.207(b)(3). Such facilities include shelters for the homeless; convalescent
homes; hospitals; nursing homes; battered spouse shelters; halfway houses for run -away children, drug
offenders or parolees; group homes for mentally retarded persons and temporary housing for disaster
victims. In certain cases, nonprofit entities and subrecipients including those specified in 570.204 may
acquire title to public facilities. When such facilities are owned by nonprofit entities or subrecipients,
they shall be operated so as to be open for use by the general public during all normal hours of operation.
Public facilities and improvements eligible for assistance under this paragraph are subject to the policies
in 570.200(b).
(d) Clearance activities. Clearance, demolition, and removal of buildings and improvements, including
movement of structures to other sites. Demolition of HUD- assisted housing units may be undertaken
only with the prior approval of HUD.
(e) Public services. Provision of public services (including labor, supplies, and materials) including but
not limited to those concerned with employment, crime prevention, child care, health, drug abuse,
education, fair housing counseling, energy conservation, welfare (but excluding the provision of income
payments identified under 570.207(b)(4)), homebuyer downpayment assistance, or recreational needs. To
be eligible for CDBG assistance, a public service must be either a new service or a quantifiable increase
in the level of an existing service above that which has been provided by or on behalf of the unit of
general local government (through funds raised by the unit or received by the unit from the State in
which it is located) in the 12 calendar months before the submission of the action plan. (An exception to
this requirement may be made if HUD determines that any decrease in the level of a service was the
result of events not within the control of the unit of general local government.) The amount of CDBG
funds used for public services shall not exceed paragraphs (e) (1) or (2) of this section, as applicable:
(1) The amount of CDBG funds used for public services shall not exceed 15 percent of each grant,
except that for entitlement grants made under subpart D of this part, the amount shall not exceed
15 percent of the grant plus 15 percent of program income, as defined in 570.500(a). For
entitlement grants under subpart D of this part, compliance is based on limiting the amount of
CDBG funds obligated for public service activities in each program year to an amount no greater
than 15 percent of the entitlement grant made for that program year plus 15 percent of the program
income received during the grantee's immediately preceding program year.
(2) A recipient which obligated more CDBG funds for public services than 15 percent of its grant
funded from Federal fiscal year 1982 or 1983 appropriations (excluding program income and any
assistance received under Public Law 98 -8), may obligate more CDBG funds than allowable under
paragraph (e)(1) of this section, so long as the total amount obligated in any program year does not
exceed:
(i) For an entitlement grantee, 15% of the program income it received during the preceding
program year; plus
(ii) a portion of the grant received for the program year which is the highest of the following
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amounts:
(A) The amount determined by applying the percentage of the grant it obligated for
public services in the 1982 program year against the grant for its current program
year;
(B) The amount determined by applying the percentage of the grant it obligated for
public services in the 1983 program year against the grant for its current program
year;
(C) The amount of funds it obligated for public services in the 1982 program year; or,
(D) The amount of funds it obligated for public services in the 1983 program year.
(f) Interim assistance.
(1) The following activities may be undertaken on an interim basis in areas exhibiting objectively
determinable signs of physical deterioration where the recipient has determined that immediate
action is necessary to arrest the deterioration and that permanent improvements will be carried out
as soon as practicable:
(i) The repairing of streets, sidewalks, parks, playgrounds, publicly owned utilities, and
public buildings; and
(ii) The execution of special garbage, trash, and debris removal, including neighborhood
cleanup campaigns, but not the regular curbside collection of garbage or trash in an area.
(2) In order to alleviate emergency conditions threatening the public health and safety in areas
where the chief executive officer of the recipient determines that such an emergency condition
exists and requires immediate resolution, CDBG funds maybe used for:
(i) The activities specified in paragraph (0(1) of this section, except for the repair of parks
and playgrounds;
(ii) The clearance of streets, including snow removal and similar activities, and
(iii) The improvement of private properties.
(3) All activities authorized under paragraph (0(2) of this section are limited to the extent
necessary to alleviate emergency conditions.
(g) Payment of non - Federal share. Payment of the non - Federal share required in connection with a
Federal grant -in -aid program undertaken as part of CDBG activities, provided, that such payment shall
be limited to activities otherwise eligible and in compliance with applicable requirements under this
subpart.
(h) Urban renewal completion. Payment of the cost of completing an urban renewal project funded under
Title I of the Housing Act of 1949 as amended. Further information regarding the eligibility of such costs
is set forth in 570.801*.
*(The published regulation inadvertently refers to 570.801 which was removed on March 20, 1996, but
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still retrains in effect per the savings clause of section 570.800.)
(i) Relocation. Relocation payments and other assistance for permanently and temporarily relocated
individuals families, businesses, nonprofit organizations, and farm operations where the assistance is
(1) required under the provisions of 570.606(b) or (c); or
(2) determined by the grantee to be appropriate under the provisions of 570.606(d).
(j) Loss of rental income. Payments to housing owners for losses of rental income incurred in holding,
for temporary periods, housing units to be used for the relocation of individuals and families displaced
by program activities assisted under this part.
(k) Housing services. As provided in section 105(a)(20) * of the Act (42 U.S.C. 5305(a1(20)) * . [Statutory text:
housing services, such as housing counseling in connection with tenant -based rental assistance and affordable housing
projects assisted under title II of the Cranston - Gonzalez National Affordable Housing Act, energy auditing, preparation of
work specifications, loan processing, inspections, tenant selection, management of tenant -based rental assistance, and other
services related to assisting owners, tenants, contractors, and other entities participating or seeking to participate in housing
activities assisted under title H of the Cranston - Gonzalez National Affordable Housing Act.]
* (Since the statute was renumbered after the regulation was published, the published regulation inadvertently refers to
section 105(a)(21) of the Act and 42 U.S.C. 5305(a)(21))
(1) Privately owned utilities. CDBG funds may be used to acquire, construct, reconstruct, rehabilitate, or
install the distribution lines and facilities of privately owned utilities, including the placing underground
of new or existing distribution facilities and lines.
(m) Construction of housing. CDBG funds may be used for the construction of housing assisted under
section 17 of the United States Housing Act of 1937.
(n) Homeownership assistance. Subject to statutory authority, CDBG funds may be used to provide
direct homeownership assistance to low- and moderate - income households, as provided in section
105(a)(24)* of the Act.
* (The technical corrections of April 29, 1996 incorrectly referred to section 105(a)(25) of the Act.)
(o) Microenterprise Assistance.*
(1) The provision of assistance either through the recipient directly or through public and private
organizations, agencies, and other subrecipients (including nonprofit and for -profit subrecipients)
to facilitate economic development by:
(i) Providing credit, including, but not limited to, grants, loans, loan guarantees, and other
forms of financial support, for the establishment, stabilization, and expansion of
. microenterprises;
(ii) Providing technical assistance, advice, and business support services to owners of
microenterprises and persons developing microenterprises; and
(iii) Providing general support, including, but not limited to, peer support programs,
counseling, child care, transportation, and other similar services, to owners of
microenterprises and persons developing microenterprises.
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(2) Services provided under this paragraph (o) shall not be subject to the restrictions on public
services contained in paragraph (e) of this section.
(3) For purposes of this paragraph (o), "persons developing microenterprises" means such
persons who have expressed interest and who are, or after an initial screening process are expected
to be, actively working toward developing businesses, each of which is expected to be a
microenterprise at the time it is formed.
(4) Assistance under this paragraph (o) may also include training, technical assistance, or other
support services to increase the capacity of the recipient or subrecipient to carry out the activities
under this paragraph (o).
* (The Jan. 5, 1995 published regulation inadvertently omitted the paragraph heading.)
(p) Technical assistance. Provision of technical assistance to public or nonprofit entities to increase the
capacity of such entities to carry out eligible neighborhood revitalization or economic development
activities. (The recipient must determine, prior to the provision of the assistance, that the activity for
which it is attempting to build capacity would be eligible for assistance under this subpart C, and that the
national objective claimed by the grantee for this assistance can reasonably be expected to be met once
the entity has received the technical assistance and undertakes the activity.) Capacity building for private
or public entities (including grantees) for other purposes may be eligible under 570.205.
(q) Assistance to institutions of higher education. Provision of assistance by the recipient to institutions
of higher education when the grantee determines that such an institution has demonstrated a capacity to
carry out eligible activities under this subpart C.
[53 FR 34439, Sept. 6, 1988, as amended at 53 FR 31239, Aug. 17, 1988; 55 FR 29308, July 18, 1990; 57 FR 27119, June
17, 1992; 60 FR 1943, Jan. 5, 1995; 60 FR 56911, Nov. 9, 1995]
Return to Table of Contents
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570.202 Eligible rehabilitation and preservation activities.
(a) Types of buildings and improvements eligible for rehabilitation assistance. CDBG funds may be used
to finance the rehabilitation of:
(1) Privately owned buildings and improvements for residential purposes; improvements to a
single - family residential property which is also used as a place of business, which are required in
order to operate the business, need not be considered to be rehabilitation of a commercial or
industrial building, if the improvements also provide general benefit to the residential occupants of
the building;
(2) Low- income public housing and other publicly owned residential buildings and improvements;
(3) Publicly or privately owned commercial or industrial buildings, except that the rehabilitation of
such buildings owned by a private for -profit business is limited to improvements to the exterior of
the building and the correction of code violations (further improvements to such buildings may be
undertaken pursuant to 570.203(b);
(4) Nonprofit -owned nonresidential buildings and improvements not eligible under 570.201(c);
and
(5) Manufactured housing when such housing constitutes part of the community's permanent
housing stock.
(b) Types of assistance. CDBG funds maybe used to finance the following types of rehabilitation
activities, and related costs, either singly, or in combination, through the use of grants, loans, loan
guarantees, interest supplements, or other means for buildings and improvements described in paragraph
(a) of this section, except that rehabilitation of commercial or industrial buildings is limited as described
in paragraph (a)(3) of this section.
(1) Assistance to private individuals and entities, including profit making and nonprofit
organizations, to acquire for the purpose of rehabilitation, and to rehabilitate properties, for use or
resale for residential purposes;
(2) Labor, materials, and other costs of rehabilitation of properties, including repair directed
toward an accumulation of deferred maintenance, replacement of principal fixtures and
components of existing structures, installation of security devices, including smoke detectors and
dead bolt locks, and renovation through alterations, additions to, or enhancement of existing
structures, which may be undertaken singly, or in combination;
(3) Loans for refinancing existing indebtedness secured by a property being rehabilitated with
CDBG funds if such financing is determined by the recipient to be necessary or appropriate to
achieve the locality's community development objectives;
(4) Improvements to increase the efficient use of energy in structures through such means as
installation of storm windows and doors, siding, wall and attic insulation, and conversion,
modification, or replacement of heating and cooling equipment, including the use of solar energy
equipment;
(5) Improvements to increase the efficient use of water through such means as water savings
faucets and shower heads and repair of water leaks;
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(6) Connection of residential structures to water distribution lines or local sewer collection lines;
(7) For rehabilitation carried out with CDBG funds, costs of:
(i) Initial homeowner warranty premiums;
(ii) Hazard insurance premiums, except where assistance is provided in the form of a grant,
and
(iii) Flood insurance premiums for properties covered by the Flood Disaster Protection Act
of 1973, pursuant to 570.605.
(iv) Procedures concerning inspection and testing for and abatement of lead -based paint,
pursuant to 570.608.
(8) Costs of acquiring tools to be lent to owners, tenants, and others who will use such tools to
carry out rehabilitation;
(9) Rehabilitation services, such as rehabilitation counseling, energy auditing, preparation of work
specifications, loan processing, inspections, and other services related to assisting owners, tenants,
contractors, and other entities, participating or seeking to participate in rehabilitation activities
authorized under this section, under section 312 of the Housing Act of 1964, as amended, under
section 810 of the Act, or under section 17 of the United States Housing Act of 1937;
(10) Assistance for the rehabilitation of housing under section 17 of the United States Housing Act
of 1937; and
(11) Improvements designed to remove material and architectural barriers that restrict the mobility
and accessibility of elderly or severely disabled persons to buildings and improvements eligible for
assistance under paragraph (a) of this section.
(c) Code enforcement. Costs incurred for inspection for code violations and enforcement of codes (e.g.,
salaries and related expenses of code enforcement inspectors and legal proceedings, but not including the
cost of correcting the violations) in deteriorating or deteriorated areas when such enforcement together
with public or private improvements, rehabilitation, or services to be provided may be expected to arrest
the decline of the area.
(d) Historic preservation. CDBG funds may be used for the rehabilitation, preservation or restoration of
historic properties, whether publicly or privately owned. Historic properties are those sites or structures
that are either listed in or eligible to be listed in the National Register of Historic Places, listed in a State
or local inventory of historic places, or designated as a State or local landmark or historic district by
appropriate law or ordinance. Historic preservation, however, is not authorized for buildings for the
general conduct of government.
(e) Renovation of closed buildings. CDBG funds may be used to renovate closed buildings, such as
closed school buildings, for use as an eligible public facility or to rehabilitate such buildings for housing.
(f) Lead - based paint activities. Lead -based paint activities as set fort in part 35 of this title.
[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1944, Jan. 5, 1995; 60 FR 56911, Nov. 9,
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CDBG Regulations; Sections 570.202 thru 570 206
1995; 64 FR 50225, Sep. 15, 1999]
570.203 Special economic development activities.
A recipient may use CDBG funds for special economic development activities in addition to other
activities authorized in this subpart which may be carried out as part of an economic development
project. Guidelines for selecting activities to assist under this paragraph are provided at 570.209. The
recipient must ensure that the appropriate level of public benefit will be derived pursuant to those
guidelines before obligating funds under this authority. Special activities authorized under this section do
not include assistance for the construction of new housing. Special economic development activities
include:
(a) The acquisition, construction, reconstruction, rehabilitation or installation of commercial or industrial
buildings, structures, and other real property equipment and improvements, including railroad spurs or
similar extensions. Such activities may be carried out by the recipient or public or private nonprofit
subrecipients.
(b) The provision of assistance to a private for -profit business, including, but not limited to, grants,
loans, loan guarantees, interest supplements, technical assistance, and other forms of support, for any
activity where the assistance is appropriate to carry out an economic development project, excluding
those described as ineligible in 570.207(a). In selecting businesses to assist under this authority, the
recipient shall minimize, to the extent practicable, displacement of existing businesses and jobs in
neighborhoods.
(c) Economic development services in connection with activities eligible under this section, including,
but not limited to, outreach efforts to market available forms of assistance; screening of applicants;
reviewing and underwriting applications for assistance; preparation of all necessary agreements;
management of assisted activities; and the screening, referral, and placement of applicants for
employment opportunities generated by CDBG - eligible economic development activities, including the
costs of providing necessary training for persons filling those positions.
[53 FR 34439, Sept. 6, 1988, as amended at 60 FR 1944, Jan. 5, 1995]
http: / /www.hud gov /cpd/cdbg/570202 htntl
570.204 Special Activities by Community-Based Development Organizations
(CBDOs).
(a) Eligible activities. The recipient may provide CDBG funds as grants or loans to any CBDO qualified
under this section to carry out a neighborhood revitalization, community economic development, or
energy conservation project. The funded project activities may include those listed as eligible under this
subpart, and, except as described in paragraph (b) of this section, activities not otherwise listed as
eligible under this subpart. For purposes of qualifying as a project under paragraphs (a)(1), (a)(2), and
(a)(3) of this section, the funded activity or activities maybe considered either alone or in concert with
other project activities either being carried out or for which funding has been committed. For purposes of
this section:
(1) Neighborhood revitalization project includes activities of sufficient size and scope to have an
impact on the decline of a geographic location within the jurisdiction of a unit of general local
govemment (but not the entire jurisdiction) designated in comprehensive plans, ordinances, or
other local documents as a neighborhood, village, or similar geographical designation; or the entire
jurisdiction of a unit of general local govemment which is under 25,000 population;
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(2) Community economic development project includes activities that increase economic
opportunity, principally for persons of low and moderate income, or that stimulate or retain
businesses or permanent jobs, including projects that include one or more such activities that are
clearly needed to address a lack of affordable housing accessible to existing or planned jobs and
those activities specified at 24 CFR 91.1(a)(1)(iii);
(3) Energy conservation project includes activities that address energy conservation, principally for
the benefit of the residents of the recipient's jurisdiction; and
(4) To carry out a project means that the CBDO undertakes the funded activities directly or
through contract with an entity other than the grantee, or through the provision of financial
assistance for activities in which it retains a direct and controlling involvement and
responsibilities.
(b) Ineligible activities. Notwithstanding that CBDOs may carry out activities that are not otherwise
eligible under this subpart, this section does not authorize:
(1) Carrying out an activity described as ineligible in 570.207(a);
(2) carrying out public services that do not meet the requirements of 570.201(e), except that:
(i) services carried out under this section that are specifically designed to increase economic
opportunities through job training and placement and other employment support services,
including, but not limited to, peer support programs, counseling, child care, transportation,
and other similar services; and
(ii) services of any type carried out under this section pursuant to a strategy approved by
HUD under the provisions of 24 CFR 91.215(e) shall not be subject to the limitations in
570.201(e)(1) or (2), as applicable;
(3) Providing assistance to activities that would otherwise be eligible under 570.203 that do not
meet the requirements of 570.209; or
(4) Carrying out an activity that would otherwise be eligible under 570.205 or 570.206, but that
would result in the recipient's exceeding the spending limitation in 570.200(g).
(c) Eligible CBDOs.
(1) A CBDO qualifying under this section is an organization which has the following
characteristics:
(i) Is an association or corporation organized under State or local law to engage in
community development activities (which may include housing and economic development
activities) primarily within an identified geographic area of operation within the jurisdiction
of the recipient, or in the case of an urban county, the jurisdiction of the county; and
(ii) Has as its primary purpose the improvement of the physical, economic or social
environment of its geographic area of operation by addressing one or more critical problems
of the area, with particular attention to the needs of persons of low and moderate income;
and
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(iii) May be either non -profit or for - profit, provided any monetary profits to its shareholders
or members must be only incidental to its operations; and
(iv) Maintains at least 51 percent of its governing body's membership for low- and
moderate - income residents of its geographic area of operation, owners or senior officers of
private establishments and other institutions located in and serving its geographic area of
operation, or representatives of low- and moderate - income neighborhood organizations
located in its geographic area of operation; and
(v) Is not an agency or instrumentality of the recipient and does not permit more than
one -third of the membership of its governing body to be appointed by, or to consist of,
elected or other public officials or employees or officials of an ineligible entity (even though
such persons may be otherwise qualified under paragraph (c)(1)(iv) of this section); and
(vi) Except as otherwise authorized in paragraph (c)(1)(v) of this section, requires the
members of its governing body to be nominated and approved by the general membership of
the organization, or by its permanent governing body; and
(vii) Is not subject to requirements under which its assets revert to the recipient upon
dissolution; and
(viii) Is free to contract for goods and services from vendors of its own choosing.
(2) A CBDO that does not meet the criteria in paragraph (c)(1) of this section may also qualify as
an eligible entity under this section if it meets one of the following requirements:
(i) Is an entity organized pursuant to section 301(d) of the Small Business Investment Act of
1958 (15 U.S.C. 681(d)), including those which are profit making; or
(ii) Is an SBA approved Section 501 State Development Company or Section 502 Local
Development Company, or an SBA Certified Section 503 Company under the Small
Business Investment Act of 1958, as amended; or
(iii) Is a Community Housing Development Organization (CHDO) under 24 CFR 92.2,
designated as a CHDO by the HOME Investment Partnerships program participating
jurisdiction, with a geographic area of operation of no more than one neighborhood, and has
received HOME funds under 24 CFR 92.300 or is expected to receive HOME funds as
described in and documented in accordance with 24 CFR 92.300(e).
(3) A CBDO that does not qualify under paragraphs (c)(1) or (2) of this section may also be
determined to qualify as an eligible entity under this section if the recipient demonstrates to the
satisfaction of HUD, through the provision of information regarding the organization's charter and
by -laws, that the organization is sufficiently similar in purpose, function, and scope to those
entities qualifying paragraph (c)(1) or (c)(2) of this section.
[60 FR 1944, Jan. 5, 1995]
570.205 Eligible planning, urban environmental design and
policy - planning- management- capacity building activities.
(a) Planning activities which consist of all costs of data gathering, studies, analysis, and preparation of
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plans and the identification of actions that will implement such plans, including, but not limited to:
(1) Comprehensive plans;
(2) Community development plans;
(3) Functional plans, in areas such as:
(i) housing, including the development of a consolidated plan;
(ii) Land use and urban environmental design;
(iii) Economic development;
(iv) Open space and recreation;
(v) Energy use and conservation;
(vi) Floodplain and wetlands management in accordance with the requirements of Executive
Orders 11988 and 11990;
(vii) Transportation;
(viii) Utilities; and
(ix) Historic preservation.
(4) Other plans and studies such as:
(i) Small area and neighborhood plans;
(ii) Capital improvements programs;
(iii) Individual project plans (but excluding engineering and design costs related to a specific
activity which are eligible as part of the cost of such activity under 570.201 - 570.204);
(iv) The reasonable costs of general environmental, urban environmental design and historic
preservation studies. However, costs necessary to comply with 24 CFR part 58, including
project specific environmental assessments and clearances for activities eligible for
assistance under this part, are eligible as part of the cost of such activities under
570.201 - 570.204. Costs for such specific assessments and clearances may also be incurred
under this paragraph but would then be considered planning costs for the purposes of
570.200(g);
(v) Strategies and action programs to implement plans, including the development of codes,
ordinances and regulations;
(vi) Support of clearinghouse functions, such as those specified in Executive Order 12372;
and
(vii) Analysis of impediments to fair housing choice.
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(b) Policy - planning- management- capacity building activities which will enable the recipient to:
(1) Determine its needs;
(2) Set Long -term goals and short-term objectives, including those related to urban environmental
design;
(3) Devise programs and activities to meet these goals and objectives;
(4) Evaluate the progress of such programs and activities in accomplishing these goals and
objectives; and
(5) Carry out management, coordination and monitoring of activities necessary for effective
planning implementation, but excluding the costs necessary to implement such plans.
[53 FR 34439, Sept. 6, 1988, as amended at 56 FR 56127, Oct. 31, 1991; 60 FR 1915, Jan. 5, 1995]
570.206 Program administration costs.
Payment of reasonable administrative costs and carrying charges related to the planning and execution of
community development activities assisted in whole or in part with funds provided under this part and,
where applicable, housing activities (described in paragraph (g) of this section) covered in the recipient's
housing assistance plan. This does not include staff and overhead costs directly related to carrying out
activities eligible under 570.201 through 570.204, since those costs are eligible as part of such activities.
(a) General management, oversight and coordination. Reasonable costs of overall program management,
coordination, monitoring, and evaluation. Such costs include, but are not necessarily limited to,
necessary expenditures for the following:
(1) Salaries, wages, and related costs of the recipient's staff, the staff of local public agencies, or
other staff engaged in program administration. In charging costs to this category the recipient may
either include the entire salary, wages, and related costs allocable to the program of each person
whose primary responsibilities with regard to the program involve program administration
assignments, or the pro rata share of the salary, wages, and related costs of each person whose job
includes any program administration assignments. The recipient may use only one of these
methods during the program year (or the grant period for grants under subpart F). Program
administration includes the following types of assignments:
(i) Providing local officials and citizens with information about the program,
(ii) Preparing program budgets and schedules, and amendments thereto;
(iii) Developing systems for assuring compliance with program requirements;
(iv) Developing interagency agreements and agreements with subrecipients and contractors
to carry out program activities;
(v) Monitoring program activities for progress and compliance with program requirements;
(vi) Preparing reports and other documents related to the program for submission to HUD;
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(vii) Coordinating the resolution of audit and monitoring findings;
(viii) Evaluating program results against stated objectives; and
(ix) Managing or supervising persons whose primary responsibilities with regard to the
program include such assignments as those described in paragraph (a)(1)(i) through (viii) of
this section.
(2) Travel costs incurred for official business in carrying out the program;
(3) Administrative services performed under third party contracts or agreements, including such
services as general legal services, accounting services, and audit services; and
(4) Other costs for goods and services required for administration of the program, including such
goods and services as rental or purchase of equipment, insurance, utilities, office supplies, and
rental and maintenance (but not purchase) of office space.
(b) Public information. The provision of information and other resources to residents and citizen
organizations participating in the planning, implementation, or assessment of activities being assisted
with CDBG funds.
(c) Fair housing activities. Provision of fair housing services designed to further the fair housing
objectives of the Fair Housing Act (42 U.S.C. 3601 - 20) by making all persons, without regard to race, color,
religion, sex, national origin, familial status or handicap, aware of the range of housing opportunities
available to them; other fair housing enforcement, education, and outreach activities; and other activities
designed to further the housing objective of avoiding undue concentrations of assisted persons in areas
containing a high proportion of low- and moderate - income persons.
(d) [Reserved]
(e) Indirect Costs. Indirect costs may be charged to the CDBG program under a cost allocation plan
prepared in accordance with OMB Circulars A -21, AA = 87, or A -122 as applicable.
(f) Submission of applications for Federal programs. Preparation of documents required for submission
to HUD to receive funds under the CDBG and UDAG programs, except as limited under subpart F at
570.433(a)(3).* In addition, CDBG funds may be used to prepare applications for other Federal programs
where the recipient determines that such activities are necessary or appropriate to achieve its community
development objectives.
* (The published regulation inadvertently references 570.433(a)(3). The correct reference should be
570.425(a)(3))
(g) Administrative expenses to facilitate housing. CDBG funds may be used for necessary administrative
expenses in planning or obtaining financing for housing as follows: for entitlement recipients, assistance
authorized by this paragraph is limited to units which are identified in the recipient's HUD approved
housing assistance plan; for HUD administered small cities recipients, assistance authorized by the
paragraph is limited to facilitating the purchase or occupancy of existing units which are to be occupied
by low- and moderate - income households, or the construction of rental or owner units where at least 20
percent of the units in each project will be occupied at affordable rents /costs by low- and
moderate - income persons. Examples of eligible actions are as follows:
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(1) The cost of conducting preliminary surveys and analysis of market needs;
(2) Site and utility plans, narrative descriptions of the proposed construction, preliminary cost
estimates, urban design documentation, and "sketch drawings," but excluding architectural,
engineering, and other details ordinarily required for construction purposes, such as structural,
electrical, plumbing, and mechanical details;
(3) Reasonable costs associated with development of applications for mortgage and insured loan
commitments, including commitment fees, and of applications and proposals under the Section 8
Housing Assistance Payments Program pursuant to 24 CFR parts 880 -883;
(4) Fees associated with processing of applications for mortgage or insured loan commitments
under programs including those administered by HUD, Fanners Home Administration (FmHA),
Federal National Mortgage Association (FNMA), and the Government National Mortgage
Association (GNMA);
(5) The cost of issuance and administration of mortgage revenue bonds used to finance the
acquisition, rehabilitation or construction of housing, but excluding costs associated with the
payment or guarantee of the principal or interest on such bonds; and
(6) Special outreach activities which result in greater landlord participation in Section 8 Housing
Assistance Payments Program- Existing Housing or similar programs for low- and
moderate - income persons.
(h) Section 17 of the United States HousingAct of 1937. Reasonable costs equivalent to those described
in paragraphs (a), (b), (e) and (1) of this section for overall program management of the Rental
Rehabilitation and Housing Development programs authorized under section 17 of the United States
Housing Act of 1937, whether or not such activities are otherwise assisted with funds provided under
this part.
(i) Whether or not such activities are otherwise assisted by funds provided under this part, reasonable
costs equivalent to those described in paragraphs (a), (b), (e), and (f) of this section for overall program
management of:
(1) A Federally designated Empowerment Zone or Enterprise Community; and
(2) The HOME program under title II of the Cranston - Gonzalez National Affordable Housing Act
(42 U.S.C. 12701 note).
[53 FR 34439, Sept. 6, 1988, and 53 FR 41330, Oct. 21, 1988, as amended at 54 FR 37411, Sept. 8, 1989; 60 FR 56912,
Nov. 9, 1995]
570.207 Ineligible activities.
The general rule is that any activity that is not authorized under the provisions of 570.201 - 570.206 is
ineligible to be assisted with CDBG funds. This section identifies specific activities that are ineligible
and provides guidance in determining the eligibility of other activities frequently associated with housing
and community development.
(a) The following activities may not be assisted with CDBG funds:
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(1) Buildings or portions thereof, used for the general conduct of govemment as defined at
570.3(d) cannot be assisted with CDBG funds. This does not include, however, the removal of
architectural barriers under 570.201(c) involving any such building. Also, where acquisition of
real property includes an existing improvement which is to be used in the provision of a building
for the general conduct of government, the portion of the acquisition cost attributable to the land is
eligible, provided such acquisition meets a national objective described in 570.208.
(2) General government expenses. Except as otherwise specifically authorized in this subpart or
under OMB Circular A -87, expenses required to carry out the regular responsibilities of the unit of
general local government are not eligible for assistance under this part.
(3) Political activities. CDBG funds shall not be used to finance the use of facilities or equipment
for political purposes or to engage in other partisan political activities, such as candidate forums,
voter transportation, or voter registration. However, a facility originally assisted with CDBG funds
may be used on an incidental basis to hold political meetings, candidate forums, or voter
registration campaigns, provided that all parties and organizations have access to the facility on an
equal basis, and are assessed equal rent or use charges, if any.
(b) The following activities may not be assisted with CDBG funds unless authorized under provisions of
570.203 or as otherwise specifically noted herein or when carried out by a entity under the provisions of
570.204.
(1) Purchase of equipment. The purchase of equipment with CDBG funds is generally ineligible.
(i) Construction equipment. The purchase of construction equipment is ineligible, but
compensation for the use of such equipment through leasing, depreciation, or use allowances
pursuant to OMB Circulars A -21, A -87 or A -122 as applicable for an otherwise eligible
activity is an eligible use of CDBG funds. However, the purchase of construction equipment
for use as part of a solid waste disposal facility is eligible under 570.201(c).
(ii) Fire protection equipment. Fire protection equipment is considered for this purpose to
be an integral part of a public facility and thus, purchase of such equipment would be
eligible under 570.201(c).
(iii) Furnishings and personal property. The purchase of equipment, fixtures, motor
vehicles, furnishings, or other personal property not an integral structural fixture is generally
ineligible. CDBG funds may be used, however, to purchase or to pay depreciation or use
allowances (in accordance with OMB Circulars A -21, A -87 or A -122, as applicable) for
such items when necessary for use by a recipient or its subrecipients in the administration of
activities assisted with CDBG funds, or when eligible as fire fighting equipment, or when
such items constitute all or part of a public service pursuant to 570.201(e).
(2) Operating and maintenance expenses. The general rule is that any expense associated with
repairing, operating or maintaining public facilities, improvements and services is ineligible.
Specific exceptions to this general rule are operating and maintenance expenses associated with
public service activities, interim assistance, and office space for program staff employed in
carrying out the CDBG program. For example, the use of CDBG funds to pay the allocable costs of
operating and maintaining a facility used in providing a public service would be eligible under
570.201(e), even if no other costs of providing such a service are assisted with such funds.
Examples of ineligible operating and maintenance expenses are:
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(i) Maintenance and repair of publicly owned streets, parks, playgrounds, water and sewer
facilities, neighborhood facilities, senior centers, centers for persons with disabilities,
parking and other public facilities and improvements. Examples of maintenance and repair
activities for which CDBG funds may not be used include the filling of pot holes in streets,
repairing of cracks in sidewalks, the mowing of recreational areas, and the replacement of
expended street light bulbs; and
(ii) Payment of salaries for staff, utility costs and similar expenses necessary for the
operation of public works and facilities.
(3) New housing construction. For the purpose of this paragraph, activities in support of the
development of low- or moderate - income housing including clearance, site assemblage, provision
of site improvements and provision of public improvements and certain housing pre - construction
costs set forth in 570.206(g), are not considered as activities to subsidize or assist new residential
construction. CDBG funds may not be used for the construction of new permanent residential
structures or for any program to subsidize or assist such new construction, except:
(i) As provided under the last resort housing provisions set forth in 24 CFR part 42;
(ii) As authorized under 570.201(m); or
(iii) When carried out by an entity pursuant to 570.204(a);
(4) Income payments. The general rule is that CDBG funds may not be used for income payments.
For purposes of the CDBG program, "income payments" means a series of subsistence -type grant
payments made to an individual or family for items such as food, clothing, housing (rent or
mortgage), or utilities, but excludes emergency grant payments made over a period of up to three
consecutive months to the provider of such items or services on behalf of an individual or family.
[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1945, Jan. 5, 1995; 60 FR 56912, Nov. 9,
1995]
1
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570.208 Criteria for national objectives.
The following criteria shall be used to determine whether a CDBG- assisted activity complies with one or
more of the national objectives as required under 570.200(a)(2):
(a) Activities benefiting low- and moderate - income persons. Activities meeting the criteria in paragraph
(a)(1), (2), (3), or (4) of this section as applicable, will be considered to benefit low- and
moderate - income persons unless there is substantial evidence to the contrary. In assessing any such
evidence, the full range of direct effects of the assisted activity will be considered. (The recipient shall
appropriately ensure that activities that meet these criteria do not benefit moderate - income persons to the
exclusion of low income persons.)
(1) Area benefit activities.
(i) An activity, the benefits of which are available to all the residents in a particular area,
where at least 51 percent of the residents are low- and moderate - income persons. Such an
area need not be coterminous with census tracts or other officially recognized boundaries
but must be the entire area served by the activity. An activity that serves an area that is not
primarily residential in character shall not qualify under this criterion.
(ii) For metropolitan cities and urban counties, an activity that would otherwise qualify
under 570.208(a)(1)(i) except that the area served contains less than 51 percent low- and
moderate - income residents will also be considered to meet the objective of benefiting low -
and moderate - income persons where the proportion of low and moderate- income persons in
the area is within the highest quartile of all areas in the recipient's jurisdiction in terms of the
degree of concentration of such persons. In applying this exception, HUD will determine the
lowest proportion a recipient may use to qualify an area for this purpose as follows:
(A) All census block groups in the recipient's jurisdiction shall be rank ordered from
the block group of highest proportion of low- and moderate - income persons to the
block group with the lowest. For urban counties, the rank ordering shall cover the
entire area constituting the urban county and shall not be done separately for each
participating unit of general local government.
(B) In any case where the total number of a recipient's block groups does not divide
evenly by four, the block group which would be fractionally divided between the
highest and second quartiles shall be considered to be part of the highest quartile.
(C) The proportion of low and moderate - income persons in the last census block
group in the highest quartile shall be identified. Any service area located within the
recipient's jurisdiction and having a proportion of low- and moderate - income persons
at or above this level shall be considered to be within the highest quartile.
(D) If block group data are not available for the entire jurisdiction, other data
acceptable to the Secretary may be used in the above calculations.
(iii) An activity to develop, establish, and operate for up to two years after the establishment
of a uniform emergency telephone number system serving an area having less than the
percentage of low- and moderate- income residents required under paragraph (a)(1)(i) of this
section or (as applicable) paragraph (a)(1)(ii) of this section, provided the recipient obtains
prior HUD approval. To obtain such approval, the recipient must:
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(A) Demonstrate that the system will contribute significantly to the safety of the
residents of the area. The request for approval must include a list of the emergency
services that will participate in the emergency telephone number system;
(B) Submit information that serves as a basis for HUD to determine whether at least
51 percent of the use of the system will be by low- and moderate - income persons. As
available, the recipient must provide information that identifies the total number of
calls actually received over the preceding 12 -month period for each of the emergency
services to be covered by the emergency telephone number system and relates those
calls to the geographic segment (expressed as nearly as possible in terms of census
tracts, block numbering areas, block groups, or combinations thereof that are
contained within the segment) of the service area from which the calls were generated.
In analyzing this data to meet the requirements of this section, HUD will assume that
the distribution of income among the callers generally reflects the income
characteristics of the general population residing in the same geographic area where
the callers reside. If HUD can conclude that the users have primarily consisted of low -
and moderate - income persons, no further submission is needed by the recipient. If a
recipient plans to make other submissions for this purpose, it may request that HUD
review its planned methodology before expending the effort to acquire the information
it expects to use to make its case;
(C) Demonstrate that other Federal funds received by the recipient are insufficient or
unavailable for a uniform emergency telephone number system. For this purpose, the
recipient must submit a statement explaining whether the lack of funds is due to the
insufficiency of the amount of the available funds, restrictions on the use of such
funds, or the prior commitment of funds by the recipient for other purposes; and
(D) Demonstrate that the percentage of the total costs of the system paid for by CDBG
funds does not exceed the percentage of low- and moderate - income persons in the
service area of the system. For this purpose, the recipient must include a description
of the boundaries of the service area of the emergency telephone number system, the
census divisions that fall within the boundaries of the service area (census tracts or
block numbering areas), the total number of persons and the total number of low- and
moderate - income persons within each census division, the percentage of low- and
moderate - income persons within the service area, and the total cost of the system.
(iv) An activity for which the assistance to a public improvement that provides benefits to
all the residents of an area is limited to paying special assessments (as defined in
570.200(c)) levied against residential properties owned and occupied by persons of low and
moderate income.
(v) For purposes of determining qualification under this criterion, activities of the same type
that serve different areas will be considered separately on the basis of their individual
service area.
(vi) In determining whether there is a sufficiently large percentage of low- and
moderate - income persons residing in the area served by an activity to qualify under
paragraphs (a)(1)(i), (ii), or (vii) of this section, the most recently available decemlial census
information must be used to the fullest extent feasible, together with the Section 8 income
limits that would have applied at the time the income information was collected by the
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Census Bureau. Recipients that believe that the census data does not reflect current relative
income levels in an area, or where census boundaries do not coincide sufficiently well with
the service area of an activity, may conduct (or have conducted) a current survey of the
residents of the area to determine the percent of such persons that are low and moderate
income. HUD will accept information obtained through such surveys, to be used in lieu of
the decennial census data, where it determines that the survey was conducted in such a
manner that the results meet standards of statistical reliability that are comparable to that of
the decennial census data for areas of similar size. Where there is substantial evidence that
provides a clear basis to believe that the use of the decennial census data would substantially
overstate the proportion of persons residing there that are low and moderate income, HUD
may require that the recipient rebut such evidence in order to demonstrate compliance with
section 105(c)(2) of the Act.
(vii) Activities meeting the requirements of paragraph (d)(5)(i) of this section maybe
considered to qualify under this paragraph, provided that the area covered by the strategy is
either a Federally - designated Empowerment Zone or Enterprise Community or primarily
residential and contains a percentage of low- and moderate - income residents that is no less
than the percentage computed by HUD pursuant to paragraph (a)(1)(ii) of this section or 70
percent, whichever is less, but in no event less than 51 percent. Activities meeting the
requirements of paragraph (d)(6)(i) of this section may also be considered to qualify under
paragraph (a)(1) of this section.
(2) Limited clientele activities.
(i) An activity which benefits a limited clientele, at least 51 percent of whom are low- or
moderate - income persons. (The following kinds of activities may not qualify under
paragraph (a)(2) of this section: activities, the benefits of which are available to all the
residents of an area; activities involving the acquisition, construction or rehabilitation of
property for housing; or activities where the benefit to low- and moderate - income persons to
be considered is the creation or retention of jobs, except as provided in paragraph (a)(2)(iv)
of this section.) To qualify under paragraph (a)(2) of this section, the activity must meet one
of the following tests:
(A) Benefit a clientele who are generally presumed to be principally low- and
moderate - income persons. Activities that exclusively serve a group of persons in any
one or a combination of the following categories may be presumed to benefit persons,
51 percent of whom are low and moderate - income: abused children, battered
spouses, elderly persons, adults meeting the Bureau of the Census' Current Population
Reports definition of "severely disabled," homeless persons, illiterate adults, persons
living with AIDS, and migrant farm workers; or
(B) Require information on family size and income so that it is evident that at least 51
percent of the clientele are persons whose family income does not exceed the low and
moderate income limit; or
(C) Have income eligibility requirements which limit the activity exclusively to low -
and moderate- income persons; or
(D) Be of such nature and be in such location that it may be concluded that the
activity's clientele will primarily be low- and moderate- income persons.
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(ii) An activity that serves to remove material or architectural barriers to the mobility or
accessibility of elderly persons or of adults meeting the Bureau of the Census' Current
Population Reports definition of "severely disabled" will be presumed to qualify under this
criterion if it is restricted, to the extent practicable, to the removal of such barriers by
assisting:
(A) The reconstruction of a public facility or improvement, or portion thereof, that
does not qualify under paragraph (a)(1) of this section;
(B) The rehabilitation of a privately owned nonresidential building or improvement
that does not qualify under paragraph (a)(1) or (4) of this section; or
(C) The rehabilitation of the common areas of a residential structure that contains
more than one dwelling unit and that does not qualify under paragraph (a)(3) of this
section.
(iii) A microenterprise assistance activity carried out in accordance with the provisions of
570.201(o) with respect to those owners of microenterprises and persons developing
microenterprises assisted under the activity during each program year who are low- and
moderate - income persons. For purposes of this paragraph, persons determined to be low and
moderate income may be presumed to continue to qualify as such for up to a three -year
period.
(iv) An activity designed to provide job training and placement and/or other employment
support services, including, but not limited to, peer support programs, counseling, child
care, transportation, and other similar services, in which the percentage of low and
moderate - income persons assisted is less than 51 percent may qualify under this paragraph
in the following limited circumstance:
(A) In such cases where such training or provision of supportive services assists
business(es), the only use of CDBG assistance for the project is to provide the job
training and/or supportive services; and
(B) The proportion of the total cost of the project borne by CDBG funds is no greater
than the proportion of the total number of persons assisted who are low or moderate
income.
(3) Housing activities. An eligible activity carried out for the purpose of providing or improving
permanent residential structures which, upon completion, will be occupied by low- and
moderate - income households. This would include, but not necessarily be limited to, the acquisition
or rehabilitation of property by the recipient, a subrecipient, a developer, an individual homebuyer,
or an individual homeowner; conversion of nonresidential structures; and new housing
construction. If the structure contains two dwelling units, at least one must be so occupied, and if
the structure contains more than two dwelling units, at least 51 percent of the units must be so
occupied. Where two or more rental buildings being assisted are or will be located on the same or
contiguous properties, and the buildings will be under common ownership and management, the
grouped buildings may be considered for this purpose as a single structure. Where housing
activities being assisted meet the requirements of 570.208(d)(5)(ii) or (d)(6)(ii) of this section, all
such housing may also be considered for this purpose as a single structure. For rental housing,
occupancy by low- and moderate - income households must be at affordable rents to qualify under
this criterion. The recipient shall adopt and make public its standards for determining "affordable
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rents" for this purpose. The following shall also qualify under this criterion:
(i) When less than 51 percent of the units in a structure will be occupied by low- and
moderate - income households, CDBG assistance may be provided in the following limited
circumstances:
(A) The assistance is for an eligible activity to reduce the development cost of the new
construction of a multifamily, non - elderly rental housing project;
(B) Not less than 20 percent of the units will be occupied by low- and
moderate- income households at affordable rents; and
(C) The proportion of the total cost of developing the project to be bome by CDBG
funds is no greater than the proportion of units in the project that will be occupied by
low- and moderate - income households.
(ii) When CDBG funds are used to assist rehabilitation eligible under 570.202(b)(9) or (10)
in direct support of the recipient's Rental Rehabilitation program authorized under 24 CFR
part 511, such funds shall be considered to benefit low- and moderate - income persons where
not less than 51 percent of the units assisted, or to be assisted, by the recipient's Rental
Rehabilitation program overall are for low- and moderate - income persons.
(iii) When CDBG funds are used for housing services eligible under 570.201(k), such funds
shall be considered to benefit low- and moderate - income persons if the housing units for
which the services are provided are HOME- assisted and the requirements at 24 CFR 92.252
or 92.254 are met.
(4) Job creation or retention activities. An activity designed to create or retain permanent jobs
where at least 51 percent of the jobs, computed on a full time equivalent basis, involve the
employment of low- and moderate - income persons. To qualify under this paragraph, the activity
must meet the following criteria:
(i) For an activity that creates jobs, the recipient must document that at least 51 percent of
the jobs will be held by, or will be available to, low- and moderate - income persons.
(ii) For an activity that retains jobs, the recipient must document that the jobs would actually
be lost without the CDBG assistance and that either or both of the following conditions
apply with respect to at least 51 percent of the jobs at the time the CDBG assistance is
provided:
(A) The job is known to be held by a low- or moderate - income person; or
(B) The job can reasonably be expected to turn over within the following two years
and that steps will be taken to ensure that it will be filled by, or made available to, a
low- or moderate - income person upon turnover.
(iii) Jobs that are not held or filled by a low- or moderate - income person may be considered
to be available to low- and moderate- income persons for these purposes only if:
(A) Special skills that can only be acquired with substantial training or work
experience or education beyond high school are not a prerequisite to fill such jobs, or
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the business agrees to hire unqualified persons and provide training; and
(B) The recipient and the assisted business take actions to ensure that low- and
moderate - income persons receive first consideration for filling such jobs.
(iv) For purposes of determining whether a job is held by or made available to a low- or
moderate - income person, the person may be presumed to be a low- or moderate - income
person if:
(A) He /she resides within a census tract (or block numbering area) that either:
(1) Meets the requirements of paragraph (a)(4)(v) of this section; or
(2) Has at least 70 percent of its residents who are low- and moderate - income
persons; or
(B) The assisted business is located within a census tract (or block numbering area)
that meets the requirements of paragraph (a)(4)(v) of this section and the job under
consideration is to be located within that census tract.
(v) A census tract (or block numbering area) qualifies for the presumptions permitted under
paragraphs (a)(4)(iv)(A)(1) and (B) of this section if it is either part of a
Federally - designated Empowerment Zone or Enterprise Community or meets the following
criteria:
(A) It has a poverty rate of at least 20 percent as determined by the most recently
available decennial census information;
(B) It does not include any portion of a central business district, as this term is used in
the most recent Census of Retail Trade, unless the tract has a poverty rate of at least
30 percent as determined by the most recently available decennial census information;
and
(C) It evidences pervasive poverty and general distress by meeting at least one of the
following standards:
(1) All block groups in the census tract have poverty rates of at least 20 percent;
(2) The specific activity being undertaken is located in a block group that has a
poverty rate of at least 20 percent; or
(3) Upon the written request of the recipient, HUD determines that the census
tract exhibits other objectively determinable signs of general distress such as
high incidence of crime, narcotics use, homelessness, abandoned housing, and
deteriorated infrastructure or substantial population decline.
(vi) As a general rule, each assisted business shall be considered to be a separate activity for
purposes of determining whether the activity qualifies under this paragraph, except:
(A) In certain cases such as where CDBG funds are used to acquire, develop or
improve a real property (e.g., a business incubator or an industrial park) the
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requirement may be met by measuring jobs in the aggregate for all the businesses
which locate on the property, provided such businesses are not otherwise assisted by
CDBG funds.
(B) Where CDBG funds are used to pay for the staff and overhead costs of an entity
making loans to businesses exclusively from non- CDBG funds, this requirement may
be met by aggregating the jobs created by all of the businesses receiving loans during
each program year.
(C) Where CDBG funds are used by a recipient or subrecipient to provide technical
assistance to businesses, this requirement may be met by aggregating the jobs created
or retained by all of the businesses receiving technical assistance during each program
year.
(D) Where CDBG funds are used for activities meeting the criteria listed at
570.209(b)(2)(v), this requirement may be met by aggregating the jobs created or
retained by all businesses for which CDBG assistance is obligated for such activities
during the program year, except as provided at paragraph (d)(7) of this section.
(E) Where CDBG funds are used by a Community Development Financial Institution
to carry out activities for the purpose of creating or retaining jobs, this requirement
may be met by aggregating the jobs created or retained by all businesses for which
CDBG assistance is obligated for such activities during the program year, except as
provided at paragraph (d)(7) of this section.
(F) Where CDBG funds are used for public facilities or improvements which will
result in the creation or retention of jobs by more than one business, this requirement
may be met by aggregating the jobs created or retained by all such businesses as a
result of the public facility or improvement.
(1) Where the public facility or improvement is undertaken principally for the
benefit of one or more particular businesses, but where other businesses might
also benefit from the assisted activity, the requirement may be met by
aggregating only the jobs created or retained by those businesses for which the
facility/improvement is principally undertaken, provided that the cost (in CDBG
funds) for the facility /improvement is less than $10,000 per permanent full -time
equivalent job to be created or retained by those businesses.
(2) In any case where the cost per job to be created or retained (as determined
under paragraph (a)(4)(vi)(F)(1) of this section) is $10,000 or more, the
requirement must be met by aggregating the jobs created or retained as a result
of the public facility or improvement by all businesses in the service area of the
facility /improvement. This aggregation must include businesses which, as a
result of the public facility/improvement, locate or expand in the service area of
the facility/improvement between the date the recipient identifies the activity in
its action plan under part 91 of this title and the date one year after the physical
completion of the facility /improvement. In addition, the assisted activity must
comply with the public benefit standards at 570.209(b).
(b) Activities which aid in the prevention or elimination of slums or blight. Activities meeting one or
more of the following criteria, in the absence of substantial evidence to the contrary, will be considered
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to aid in the prevention or elimination of slums or blight:
(1) Activities to address slums or blight on an area basis. An activity will be considered to address
prevention or elimination of slums or blight in an area if:
(i) The area, delineated by the recipient, meets a definition of a slum, blighted, deteriorated
or deteriorating area under State or local law;
(ii) Throughout the area there is a substantial number of deteriorated or deteriorating
buildings or the public improvements are in a general state of deterioration;
(iii) Documentation is maintained by the recipient on the boundaries of the area and the
condition which qualified the area at the time of its designation; and
(iv) The assisted activity addresses one or more of the conditions which contributed to the
deterioration of the area. Rehabilitation of residential buildings carried out in an area
meeting the above requirements will be considered to address the area's deterioration only
where each such building rehabilitated is considered substandard under local definition
before rehabilitation, and all deficiencies making a building substandard have been
eliminated if less critical work on the building is undertaken. At a minimum, the local
definition for this purpose must be such that buildings that it would render substandard
would also fail to meet the housing quality standards for the Section 8 Housing Assistance
Payments Program- Existing Housing (24 CFR 882.109).
(2) Activities to address slums or blight on a spot basis. Acquisition, clearance, relocation, historic
preservation and building rehabilitation activities which eliminate specific conditions of blight or
physical decay on a spot basis not located in a slum or blighted area will meet this objective.
Under this criterion, rehabilitation is limited to the extent necessary to eliminate specific
conditions detrimental to public health and safety.
(3) Activities to address slums or blight in an urban renewal area. An activity will be considered
to address prevention or elimination of slums or blight in an urban renewal area if the activity is:
(i) Located within an urban renewal project area or Neighborhood Development Program
(NDP) action area; i.e., an area in which funded activities were authorized under an urban
renewal Loan and Grant Agreement or an annual NDP Funding Agreement, pursuant to Title
I of the Housing Act of 1949; and (ii) Necessary to complete the urban renewal plan, as then
in effect, including initial land redevelopment permitted by the plan.
NOTE: Despite the restrictions in (b)(1) and (2) of this section, any rehabilitation activity which benefits
low- and moderate- income persons pursuant to paragraph (a)(3) of this section can be undertaken
without regard to the area in which it is located or the extent or nature of rehabilitation assisted.
(c) Activities designed to meet community development needs having a particular urgency. In the
absence of substantial evidence to the contrary, an activity will be considered to address this objective if
the recipient certifies that the activity is designed to alleviate existing conditions which pose a serious
and immediate threat to the health or welfare of the community which are of recent origin or which
recently became urgent, that the recipient is unable to finance the activity on its own, and that other
sources of funding are not available. A condition will generally be considered to be of recent origin if it
developed or became critical within 18 months preceding the certification by the recipient.
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(d) Additional criteria.
(1) Where the assisted activity is acquisition of real property, a preliminary determination of
whether the activity addresses a national objective may be based on the planned use of the
property after acquisition. A final determination shall be based on the actual use of the property,
excluding any short-term, temporary use. Where the acquisition is for the purpose of clearance
which will eliminate specific conditions of blight or physical decay, the clearance activity shall be
considered the actual use of the property. However, any subsequent use or disposition of the
cleared property shall be treated as a "change of use" under 570.505.
(2) Where the assisted activity is relocation assistance that the recipient is required to provide,
such relocation assistance shall be considered to address the same national objective as is
addressed by the displacing activity. Where the relocation assistance is voluntary on the part of the
grantee the recipient may qualify the assistance either on the basis of the national objective
addressed by the displacing activity or on the basis that the recipients of the relocation assistance
are low- and moderate - income persons.
(3) In any case where the activity undertaken for the purpose of creating or retaining jobs is a
public improvement and the area served is primarily residential, the activity must meet the
requirements of paragraph (a)(1) of this section as well as those of paragraph (a)(4) of this section
in order to qualify as benefiting low- and moderate - income persons.
(4) CDBG funds expended for planning and administrative costs under 570.205 and 570.206 will
be considered to address the national objectives.
(5) Where the grantee has elected to prepare an area revitalization strategy pursuant to the
authority of 91.215(e) of this title and HUD has approved the strategy, the grantee may also elect
the following options:
(1) Activities undertaken pursuant to the strategy for the purpose of creating or retaining jobs
may, at the option of the grantee, be considered to meet the requirements of this paragraph
under the criteria at paragraph (a)(1)(vii) of this section in lieu of the criteria at paragraph
(a)(4) of this section; and,
(ii) All housing activities in the area for which, pursuant to the strategy, CDBG assistance is
obligated during the program year may be considered to be a single structure for purposes of
applying the criteria at paragraph (a)(3) of this section.
(6) Where CDBG assisted activities are carried out by a Community Development Financial
Institution whose charter limits its investment area to a primarily residential area consisting of at
least 51 percent low- and moderate- income persons, the grantee may also elect the following
options:
(i) Activities carried out by the Community Development Financial Institution for the
purpose of creating or retaining jobs may, at the option of the grantee, be considered to meet
the requirements of this paragraph under the criteria at paragraph (a)(1)(vii) of this section in
lieu of the criteria at paragraph (a)(4) of this section; and
(ii) All housing activities for which the Community Development Financial Institution
obligates CDBG assistance during the program year may be considered to be a single
structure for purposes of applying the criteria at paragraph (a)(3) of this section.
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(7) Where an activity meeting the criteria at 570.209(b)(2)(v) may also meet the requirements of
either paragraph (d)(5)(i) or (d)(6)(i) of this section, the grantee may elect to qualify the activity
under either the area benefit criteria at paragraph (a)(1)(vii) of this section or the job aggregation
criteria at paragraph (a)(4)(vi)(D) of this section, but not both. Where an activity may meet the job
aggregation criteria at both paragraph (a)(4)(vi)(D) and (E) of this section, the grantee may elect to
qualify the activity under either criterion, but not both.
[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1945, Jan. 5, 1995; 60 FR 17445, Apr. 6,
1995; 60 FR 56912, Nov. 9, 1995]
Return to Table of Contents
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Appendix C
24 CFR 570 CDBG Regulations Subpart J -- Grant Administration
570.500 Definitions.
570.501 Responsibility for grant administration.
570.502 Applicability of uniform administrative requirements.
570.503 Agreements with subrecipients.
570.504 Program income.
570.505 Use of real property.
570.506 Records to be maintained.
CDBG Regulations, Subpart 5 — Grant Administration http: / /www.hud gov /cpd/cdbg/subj.html
Subpart J -- Grant Administration
• 570.500 Definitions.
• 570.501 Responsibility for grant administration.
• 570.502 Applicability of uniform administrative requirements.
• 570.503 Agreements with subrecipients.
• 570.504 Program income.
• 570.505 Use of real property.
• 570.506 Records to be maintained.
• 570.507 Reports.
• 570.508 Public access to program records.
• 570.509 Grant closeout procedures.
• 570.510 Transferring projects from urban counties to metropolitan cities.
• 570.511 Use of escrow accounts for rehabilitation of privately owned residential property.
• 570.512 [Reserved]
• 570.513 Lump sum drawdown for financing of property rehabilitation activities.
Subpart J -- Grant Administration
SOURCE: 53 FR 8058, Mar. 11, 1988, unless otherwise noted.
570.500 Definitions.
For the purposes of this subpart, the following terms shall apply:
(a) Program income means gross income received by the recipient or a subrecipient directly generated
from the use of CDBG funds, except as provided in paragraph (a)(4) of this section.
(1) Program income includes, but is not limited to, the following:
(i) Proceeds from the disposition by sale or long -term lease of real property purchased or
improved with CDBG funds;
(ii) Proceeds from the disposition of equipment purchased with CDBG funds;
(iii) Gross income from the use or rental of real or personal property acquired by the
recipient or by a subrecipient with CDBG funds, less costs incidental to generation of the
income;
(iv) Gross income from the use or rental of real property, owned by the recipient or by a
subrecipient, that was constructed or improved with CDBG funds, less costs incidental to
generation of the income;
(v) Payments of principal and interest on loans made using CDBG funds, except as provided
in paragraph (a)(3) of this section;
(vi) Proceeds from the sale of loans made with CDBG funds;
(vii) Proceeds from sale of obligations secured by loans made with CDBG funds;
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(viii) [Reserved]
(ix) Interest eamed on program income pending its disposition; and
(x) Funds collected through special assessments made against properties owned and
occupied by households not of low and moderate income, where the assessments are used to
recover all or part of the CDBG portion of a public improvement.
(2) Program income does not include income earned (except for interest described in 570.513) on
grant advances from the U.S. Treasury. The following items of income earned on grant advances
must be remitted to HUD for transmittal to the U.S. Treasury, and will not be reallocated under
section 106(c) or u of the Act:
(i) Interest earned from the investment of the initial proceeds of a grant advance by the U.S.
Treasury;
(ii) Interest earned on loans or other forms of assistance provided with CDBG funds that are
used for activities determined by HUD either to be ineligible or to fail to meet a national
objective in accordance with the requirements of subpart C of this part, or that fail
substantially to meet any other requirement of this part; and
(iii) Interest earned on the investment of amounts reimbursed to the CDBG program account
prior to the use of the reimbursed funds for eligible purposes.
(3) The calculation of the amount of program income for the recipient's CDBG program as a whole
(i.e., comprising activities carried out by a grantee and its subrecipients) shall exclude payments
made by subrecipients of principal and/or interest on CDBG - funded loans received from grantees
if such payments are made using program income received by the subrecipient. (By making such
payments, the subrecipient shall be deemed to have transferred program income to the grantee.)
The amount of program income derived from this calculation shall be used for reporting purposes,
for purposes of applying the requirement under 570.504(b)(2)(iii), and in determining limitations
on planning and administration and public services activities to be paid for with CDBG funds.
(4) Program income does not include:
(i) Any income received in a single program year by the recipient and all its subrecipients if
the total amount of such income does not exceed $25,000; and
(ii) Amounts generated by activities that are financed by a loan guaranteed under section 108
of the Act and meet one or more of the public benefit criteria specified at 570.209(b)(2)(v)
or are carried out in conjunction with a grant under section 108(q) in an area determined by
HUD to meet the eligibility requirements for designation as an Urban Empowerment Zone
pursuant to 24 CFR part 597, subpart B. Such exclusion shall not apply if CDBG funds are
used to repay the guaranteed loan. When such a guaranteed loan is partially repaid with
CDBG funds, the amount generated shall be prorated to reflect the percentage of CDBG
funds used. Amounts generated by activities financed with loans guaranteed under section
108 which are not defined as program income shall be treated as miscellaneous revenue and
shall not be subject to any of the requirements of this Part, except that the use of such funds
shall be limited to activities that are located in a revitalization strategy area and implement a
HUD approved area revitalization strategy pursuant to 91.215(e) of this title. However, such
treatment shall not affect the right of the Secretary to require the section 108 borrower to
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pledge such amounts as security for the guaranteed loan. The determination whether such
amounts shall constitute program income shall be governed by the provisions of the contract
required at 570.705(b)(1).
(5) Examples of other receipts that are not considered program income are proceeds from fund
raising activities carried out by subrecipients receiving CDBG assistance (the costs of fundraising
are generally unallowable under the applicable OMB circulars referenced in 24 CFR 84.27), funds
collected through special assessments used to recover the non -CDBG portion of a public
improvement, and proceeds from the disposition of real property acquired or improved with
CDBG funds when the disposition occurs after the applicable time period specified in
570.503(b)(8) for subrecipient - controlled property, or in 570.505 for recipient - controlled property.
(b) Revolving fund means a separate fund (with a set of accounts that are independent of other program
accounts) established for the purpose of carrying out specific activities which, in turn, generate payments
to the fund for use in carrying out the same activities. Each revolving loan fund's cash balance must be
held in an interest - bearing account, and any interest paid on CDBG funds held in this account shall be
considered interest earned on grant advances and must be remitted to HUD for transmittal to the U.S.
Treasury no less frequently than annually. (Interest paid by borrowers on eligible loans made from the
revolving loan fund shall be program income and treated accordingly.)
(c) Subrecipient means a public or private nonprofit agency, authority, or organization, or a for - profit
entity authorized under 570.201(o), receiving CDBG funds from the recipient or another subrecipient to
undertake activities eligible for such assistance under subpart C of this part. The term excludes an entity
receiving CDBG funds from the recipient under the authority of 570.204, unless the grantee explicitly
designates it as a subrecipient. The term includes a public agency designated by a unit of general Local
government to receive a loan guarantee under subpart M of this part, but does not include contractors
providing supplies, equipment, construction, or services subject to the procurement requirements in 24
CFR 85.36 or 84.40, as applicable.
[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988; 57 FR 27120, June 17, 1992; 60 FR 1952, Jan. 5,
1995; 60 FR 17446, Apr. 6, 1995; 60 FR 56914, Nov. 9, 1995]
570.501 Responsibility for grant administration.
(a) One or more public agencies, including existing local public agencies, may be designated by the chief
executive officer of the recipient to undertake activities assisted by this part. A public agency so
designated shall be subject to the same requirements as are applicable to subrecipients.
(b) The recipient is responsible for ensuring that CDBG funds are used in accordance with all program
requirements. The use of designated public agencies, subrecipients, or contractors does not relieve the
recipient of this responsibility. The recipient is also responsible for determining the adequacy of
performance under subrecipient agreements and procurement contracts, and for taking appropriate action
when performance problems arise, such as the actions described in 570.910. Where a unit of general
local government is participating with, or as part of, an urban county, or as part of a metropolitan city,
the recipient is responsible for applying to the unit of general local government the same requirements as
are applicable to subrecipients, except that the five -year period identified under 570.503(b)(8)(i) shall
begin with the date that the unit of general local government is no longer considered by HUD to be a part
of the metropolitan city or urban county, as applicable, instead of the date that the subrecipient
agreement expires.
[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 27120, June 17, 1992]
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570.502 Applicability of uniform administrative requirements.
(a) Recipients and subrecipients that are governmental entities (including public agencies) shall comply
with the requirements and standards of OMB Circular No. AA = 87, "Cost Principles for State, Local, and
Indian Tribal Governments"; OMB Circular A -128, "Audits of State and Local Governments"
(implemented at 24 CFR part 44); and with the following sections of 24 CFR part 85 "Uniform
Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments"
or the related CDBG provision, as specified in this paragraph:
(1) Section 85.3, "Definitions";
(2) Section 85.6, "Exceptions ";
(3) Section 85.12, "Special grant or subgrant conditions for high -risk grantees ";
(4) Section 85.20, "Standards for financial management systems," except paragraph (a);
(5) Section 85.21, "Payment," except as modified by 570.513;
(6) Section 85.22, "Allowable costs";
(7) Section 85.26, "Non- federal audits";
(8) Section 85.32, "Equipment," except in all cases in which the equipment is sold, the proceeds
shall be program income;
(9) Section 85.33, "Supplies ";
(10) Section 85.34, "Copyrights ";
(11) Section 85.35, "Subawards to debarred and suspended parties ";
(12) Section 85.36, "Procurement," except paragraph (a);
(13) Section 85.37, "Subgrants";
(14) Section 85.40, "Monitoring and reporting program performance," except paragraphs (b)
through (d) and paragraph (f);
(15) Section 85.41, "Financial reporting," except paragraphs (a), (b), and (e);
(16) Section 85.42, "Retention and access requirements for records," except that the period shall
be four years;
(17) Section 85.43, "Enforcement";
(18) Section 85.44, "Termination for convenience ";
(19) Section 85.51, "Later disallowances and adjustments" and
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(20) Section 85.52, "Collection of amounts due."
(b) Subrecipients, except subrecipients that are governmental entities, shall comply with the
requirements and standards of OMB Circular No. A -122, "Cost Principles for Non- profit
Organizations," or OMB Circular No. AA = 21, "Cost Principles for Educational Institutions," as applicable,
and OMB Circular A -133, "Audits of Institutions of Higher Education and Other Nonprofit Institutions"
(as set forth in 24 CFR part 45). Audits shall be conducted annually. Such subrecipients shall also
comply with the following provisions of the Uniform Administrative requirements of OMB Circular
A - 110 (implemented at 24 CFR part 84, "Uniform Administrative Requirements for Grants and
Agreements With Institutions of Higher Education, Hospitals and Other Non -Profit Organizations ") or
the related CDBG provision, as specified in this paragraph:
(1) Subpart A--"General";
(2) Subpart B--"Pre-Award Requirements," except for 84.12, "Forms for Applying for Federal
Assistance";
(3) Subpart C--"Post Requirements," except for:
(i) Section 84.22, "Payment Requirements." Grantees shall follow the standards of
85.20(b)(7) and 85.21 in making payments to subrecipients;
(ii) Section 84.23, "Cost Sharing and Matching' ;
(iii) Section 84.24, "Program Income." In lieu of 84.24, CDBG subrecipients shall follow
570.504;
(iv) Section 84.25, "Revision of Budget and Program Plans ";
(v) Section 84.32, "Real Property." In lieu of 84.32, CDBG subrecipients shall follow
570.505;
(vi) Section 84.34(g), "Equipment." In lieu of the disposition provisions of 84.34(g), the
following applies:
(A) In all cases in which equipment is sold, the proceeds shall be program income
(prorated to reflect the extent to which CDBG funds were used to acquire the
equipment); and
(B) Equipment not needed by the subrecipient for CDBG activities shall be transferred
to the recipient for the CDBG program or shall be retained after compensating the
recipient;
(vii) Section 84.51(b), (c), (d), (e), (t), (g), and (h), "Monitoring and Reporting Program
Performance";
(viii) Section 84.52, "Financial Reporting ";
(ix) Section 84.53(b), "Retention and access requirements for records." Section 84.53(b)
applies with the following exceptions:
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(ii) Substantially all other program income shall be disbursed for eligible activities before
additional cash withdrawals are made from the U.S. Treasury.
(iii) At the end of each program year, the aggregate amount of program income cash
balances and any investment thereof (except those needed for immediate cash needs, cash
balances of a revolving loan fund, cash balances from a lump -sum drawdown, or cash or
investments held for Section 108 loan guarantee security needs) that, as of the last day of the
program year, exceeds one - twelfth of the most recent grant made pursuant to 570.304 shall
be remitted to HUD as soon as practicable thereafter, to be placed in the recipient's line of
credit. This provision applies to program income cash balances and investments thereof held
by the grantee and its subrecipients. (This provision shall be applied for the first time at the
end of the program year for which Federal fiscal year 1996 funds are provided.)
(3) Program income on hand at the time of closeout shall continue to be subject to the eligibility
requirements in subpart C) and all other applicable provisions of this part until it is expended.
(4) Unless otherwise provided in any grant closeout agreement, and subject to the requirements of
paragraph (b)(5) of this section, income received after closeout shall not be governed by the
provisions of this part, except that, if at the time of closeout the recipient has another ongoing
CDBG grant received directly from HUD, funds received after closeout shall be treated as program
income of the ongoing grant program. -
(5) If the recipient does not have another ongoing grant received directly from HUD at the time of
closeout, income received after closeout from the disposition of real property or from loans
outstanding at the time of closeout shall not be govemed by the provisions of this part, except that
such income shall be used for activities that meet one of the national objectives in 570.901 and the
eligibility requirements described in section 105 of the Act.
(c) Disposition of program income received by subrecipients. The written agreement between the
recipient and the subrecipient, as required by 570.503, shall specify whether program income received is
to be returned to the recipient or retained by the subrecipient. Where program income is to be retained by
the subrecipient, the agreement shall specify the activities that will be undertaken with the program
income and that all provisions of the written agreement shall apply to the specified activities. When the
subrecipient retains program income, transfers of grant funds by the recipient to the subrecipient shall be
adjusted according to the principles described in paragraphs (b)(2) (i) and (ii) of this section. Any
program income on hand when the agreement expires, or received after the agreement's expiration, shall
be paid to the recipient as required by 570.503(b)(8).
(d) Disposition of certain program income received by urban counties. Program income derived from
urban county program activities undertaken by or within the jurisdiction of a unit of general local
government which thereafter terminates its participation in the urban county shall continue to be program
income of the urban county. The urban county may transfer the program income to the unit of general
local government, upon its termination of urban county participation, provided that the unit of general
local government has become an entitlement grantee and agrees to use the program income in its own
CDBG entitlement program.
[53 FR 8058, Mar. 11, 1988, as amended at 60 FR 56915, Nov. 9, 1995]
570.505 Use of real property.
The standards described in this section apply to real property within the recipient's control which was
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(A) The retention period referenced in 84.53(b) pertaining to individual CDBG
activities shall be four years; and
(B) The retention period starts from the date of submission of the annual performance
and evaluation report, as prescribed in 24 CFR 91.520, in which the specific activity
is reported on for the final time rather than from the date of submission of the final
expenditure report for the award;
(x) Section 84.61, "Termination." In lieu of the provisions of 84.61, CDBG subrecipients
shall comply with 570.503(b)(7); and
(4) Subpart D-- "After- the -Award Requirements," except for 84.71, "Closeout Procedures."
[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 33256, July 27, 1992; 60 FR 1916, Jan. 5, 1995; 60 FR 56915, Nov. 9,
1995]
570.503 Agreements with subrecipients.
(a) Before disbursing any CDBG funds to a subrecipient, the recipient shall sign a written agreement
with the subrecipient. The agreement shall remain in effect during any period that the subrecipient has
control over CDBG funds, including program income.
(b) At a minimum, the written agreement with the subrecipient shall include provisions concerning the
following items:
(1) Statement of work. The agreement shall include a description of the work to be performed, a
schedule for completing the work, and a budget. These items shall be in sufficient detail to provide
a sound basis for the recipient effectively to monitor performance under the agreement.
(2) Records and reports. The recipient shall specify in the agreement the particular records the
subrecipient must maintain and the particular reports the subrecipient must submit in order to
assist the recipient in meeting its recordkeeping and reporting requirements.
(3) Program income. The agreement shall include the program income requirements set forth in
570.504(c). The agreement shall also specify that, at the end of the program year, the grantee may
require remittance of all or part of any program income balances (including investments thereof)
held by the subrecipient (except those needed for immediate cash needs, cash balances of a
revolving loan fund, cash balances from a lump sum drawdown, or cash or investments held for
Section 108 loan guarantee security needs).
(4) Uniform administrative requirements. The agreement shall require the subrecipient to comply
with applicable uniform administrative requirements, as described in 570.502.
(5) Other program requirements. The agreement shall require the subrecipient to carry out each
activity in compliance with all Federal laws and regulations described in subpart K of these
regulations, except that:
(i) The subrecipient does not assume the recipient's environmental responsibilities described
at 570.604; and
(ii) The subrecipient does not assume the recipient's responsibility for initiating the review
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process under the provisions of 24 CFR part 52.
(6) Conditions for religious organizations. Where applicable, the conditions prescribed by HUD
for the use of CDBG funds by religious organizations shall be included in the agreement.
(7) Suspension and termination. The agreement shall specify that, in accordance with 24 CFR
85.43, suspension or termination may occur if the subrecipient materially fails to comply with any
term of the award, and that the award maybe terminated for convenience in accordance with 24
CFR 85.44.
(8) Reversion of assets. The agreement shall specify that upon its expiration the subrecipient shall
transfer to the recipient any CDBG funds on hand at the time of expiration and any accounts
receivable attributable to the use of CDBG funds. It shall also include provisions designed to
ensure that any real property under the subrecipient's control that was acquired or improved in
whole or in part with CDBG funds (including CDBG funds provided to the subrecipient in the
form of a loan) in excess of $25,000 is either:
(i) Used to meet one of the national objectives in 570.208 (formerly 570.901) until five
years after expiration of the agreement, or for such longer period of time as determined to be
appropriate by the recipient; or
(ii) Not used in accordance with paragraph (b)(8)(i) of this section, in which event the
subrecipient shall pay to the recipient an amount equal to the current market value of the
property less any portion of the value attributable to expenditures of non -CDBG funds for
the acquisition of, or improvement to, the property. The payment is program income to the
recipient. (No payment is required after the period of time specified in paragraph (b)(8)(i) of
this section.)
[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988; 57 FR 27120, June 17, 1992; 60 FR 56915, Nov. 9,
1995]
570.504 Program income.
(a) Recording program income. The receipt and expenditure of program income as defined in 570.500(a)
shall be recorded as part of the financial transactions of the grant program.
(b) Disposition of program income received by recipients.
(1) Program income received before grant closeout may be retained by the recipient if the income
is treated as additional CDBG funds subject to all applicable requirements governing the use of
CDBG funds.
(2) If the recipient chooses to retain program income, that program income shall be disposed of as
follows:
(i) Program income in the form of repayments to, or interest earned on, a revolving fund as
defined in 570.500(b) shall be substantially disbursed from the fund before additional cash
withdrawals are made from the U.S. Treasury for the same activity. (This rule does not
prevent a lump sum disbursement to finance the rehabilitation of privately owned properties
as provided for in 570.513.)
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acquired or improved in whole or in part using CDBG funds in excess of $25,000. These standards shall
apply from the date CDBG funds are first spent for the property until five years after closeout of an
entitlement recipient's participation in the entitlement CDBG program or, with respect to other
recipients, until five years after the closeout of the grant from which the assistance to the property was
provided.
(a) A recipient may not change the use or planned use of any such property (including the beneficiaries
of such use) from that for which the acquisition or improvement was made unless the recipient provides
affected citizens with reasonable notice of and opportunity to comment on, any proposed change, and
either:
(2) The requirements in paragraph (b) of this section are met.
(b) If the recipient determines, after consultation with affected citizens, that it is appropriate to change
the use of the property to a use which does not qualify under paragraph (a)(1) of this section, it may
retain or dispose of the property for the changed use if the recipient's CDBG program is reimbursed in
the amount of the current fair market value of the property, less any portion of the value attributable to
expenditures of non-CDBG funds for acquisition of, and improvements to, the property.
(c) If the change of use occurs after closeout, the provisions governing income from the disposition of
the real property in 570.504(b) (4) or (5), as applicable, shall apply to the use of funds reimbursed.
(d) Following the reimbursement of the CDBG program in accordance with paragraph (b) of this section,
the property no longer will be subject to any CDBG requirements.
[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988)
570.506 Records to be maintained.
Each recipient shall establish and maintain sufficient records to enable the Secretary to determine
whether the recipient has met the requirements of this part. At a minimum, the following records are
needed:
(a) Records providing a full description of each activity assisted (or being assisted) with CDBG funds,
including its location (if the activity has a geographical locus), the amount of CDBG funds budgeted,
obligated and expended for the activity, and the provision in subpart C under which it is eligible.
(b) Records demonstrating that each activity undertaken meets one of the criteria set forth in 570.208.
(Where information on income by family size is required, the recipient may substitute evidence
establishing that the person assisted qualifies under another program having income qualification criteria
at least as restrictive as that used in the definitions of "low- and moderate - income person" and "low- and
moderate - income household" (as applicable) at 570.3, such as Job Training Partnership Act (JTPA) and
welfare programs; or the recipient may substitute evidence that the assisted person is homeless; or the
recipient may substitute a copy of a verifiable certification from the assisted person that his or her family
income does not exceed the applicable income limit established in accordance with 570.3; or the
recipient may substitute a notice that the assisted person is a referral from a state, county or local
employment agency or other entity that agrees to refer individuals it determines to be low- and moderate -
income persons based on HUD's criteria and agrees to maintain documentation supporting these
(1) The new use of such property qualifies as meeting one of the national objectives in 570.208
(formerly 570.901) and is not a building for the general conduct of government; or
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determinations.) Such records shall include the following information:
(1) For each activity determined to benefit low- and moderate - income persons, the income limits
applied and the point in time when the benefit was determined.
(2) For each activity determined to benefit low and moderate - income persons based on the area
served by the activity:
(i) The boundaries of the service area;
(ii) The income characteristics of families and unrelated individuals in the service area; and
(iii) If the percent of low- and moderate- income persons in the service area is less than 51
percent, data showing that the area qualifies under the exception criteria set forth at
570.208(a)(1)(ii).
(3) For each activity determined to benefit low and moderate income persons because the activity
involves a facility or service designed for use by a limited clientele consisting exclusively or
predominantly of low- and moderate - income persons:
(i) Documentation establishing that the facility or service is designed for the particular needs
of or used exclusively by senior citizens, adults meeting the Bureau of the Census' Current
Population Reports definition of "severely disabled," persons living with AIDS, battered
spouses, abused children, the homeless, illiterate adults, or migrant farm workers, for which
the regulations provide a presumption concerning the extent to which low- and
moderate - income persons benefit; or
(ii) Documentation describing how the nature and, if applicable, the location of the facility
or service establishes that it is used predominantly by low- and moderate - income persons; or
(iii) Data showing the size and annual income of the family of each person receiving the
benefit.
(4) For each activity carried out for the purpose of providing or improving housing which is
determined to benefit low- and moderate - income persons:
(i) A copy of a written agreement with each landlord or developer receiving CDBG
assistance indicating the total number of dwelling units in each multifamily structure
assisted and the number of those units which will be occupied by low- and moderate - income
households after assistance;
(ii) The total cost of the activity, including both CDBG and non -CDBG funds;
(iii) For each unit occupied by a low- and moderate - income household, the size and income
of the household;
(iv) For rental housing only:
(A) The rent charged (or to be charged) after assistance for each dwelling unit in each
structure assisted; and
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(B) Such information as necessary to show the affordability of units occupied (or to be
occupied) by low- and moderate - income households pursuant to criteria established
and made public by the recipient;
(v) For each property acquired on which there are no structures, evidence of commitments
ensuring that the criteria in 570.208(a)(3) will be met when the structures are built;
(vi) Where applicable, records demonstrating that the activity qualifies under the special
conditions at 570.208(a)(3)(i);
(vii) For any homebuyer assistance activity qualifying under 570.201(e), 570.201(n), or
570.204, identification of the applicable eligibility paragraph and evidence that the activity
meets the eligibility criteria for that provision; for any such activity qualifying under
570.208(a), the size and income of each homebuyer's household; and
(viii) For a 570.201(k) housing services activity, identification of the HOME project(s) or
assistance that the housing services activity supports, and evidence that project(s) or
assistance meet the HOME program income targeting requirements at 24 CFR 92.252 or
92.254.
(5) For each activity determined to benefit low- and moderate - income persons based on the
creation of jobs, the recipient shall provide the documentation described in either paragraph
(b)(5)(i) or (ii) of this section.
(i) Where the recipient chooses to document that at least 51 percent of the jobs will be
available to low- and moderate - income persons, documentation for each assisted business
shall include:
(A) A copy of a written agreement containing:
(1) A commitment by the business that it will make at least 51 percent of the
jobs available to low- and moderate - income persons and will provide training
for any of those jobs requiring special skills or education;
(2) A listing by job title of the permanent jobs to be created indicating which
jobs will be available to low- and moderate - income persons, which jobs require
special skills or education, and which jobs are part-time, if any; and
(3) A description of actions to be taken by the recipient and business to ensure
that low- and moderate - income persons receive first consideration for those
jobs; and
(B) A listing by job title of the permanent jobs filled, and which jobs of those were
available to low and moderate - income persons, and a description of how first
consideration was given to such persons for those jobs. The description shall include
what hiring process was used; which low- and moderate - income persons were
interviewed for a particular job; and which low- and moderate- income persons were
hired.
(ii) Where the recipient chooses to document that at least 51 percent of the jobs will be held
by low- and moderate - income persons, documentation for each assisted business shall
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include:
(A) A copy of a written agreement containing:
(1) A commitment by the business that at least 51 percent of the jobs, on a
full -time equivalent basis, will be held by low- and moderate - income persons;
and
(2) A listing by job title of the permanent jobs to be created, identifying which
are part-time, if any;
(B) A listing by job title of the permanent jobs filled and which jobs were initially
held by low and moderate - income persons; and
(C) For each such low- and moderate - income person hired, the size and annual
income of the person's family prior to the person being hired for the job.
(6) For each activity determined to benefit low- and moderate - income persons based on the
retention of jobs:
(i) Evidence that in the absence of CDBG assistance jobs would be lost;
(ii) For each business assisted, a listing by job title of permanent jobs retained, indicating
which of those jobs are part-time and (where it is known) which are held by low- and
moderate - income persons at the time the CDBG assistance is provided. Where applicable,
identification of any of the retained jobs (other than those known to be held by low- and
moderate - income persons) which are projected to become available to low- and
moderate - income persons through job turnover within two years of the time CDBG
assistance is provided. Information upon which the job turnover projections were based
shall also be included in the record;
(iii) For each retained job claimed to be held by a low- and moderate - income person,
information on the size and annual income of the person's family;
(iv) For jobs claimed to be available to low- and moderate - income persons
based on job turnover, a description covering the items required for "available to" jobs in
paragraph (b)(5) of this section; and
(v) Where jobs were claimed to be available to low and moderate - income persons through
turnover, a listing of each job which has turned over to date, indicating which of those jobs
were either taken by, or available to, low- and moderate - income persons. For jobs made
available, a description of how first consideration was given to such persons for those jobs
shall also be included in the record.
(7) For purposes of documenting, pursuant to paragraph (b)(5)(i)(B), (b)(5)(ii)(C), (b)(6)(iii) or
(b)(6)(v) of this section, that the person for whom a job was either filled by or made available to a
low- or moderate - income person based upon the census tract where the person resides or in which
the business is located, the recipient, in lieu of maintaining records showing the person's family
size and income, may substitute records showing either the person's address at the time the
determination of income status was made or the address of the business providing the job, as
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applicable, the census tract in which that address was located, the percent of persons residing in
that tract who either are in poverty or who are low- and moderate- income, as applicable, the data
source used for determining the percentage, and a description of the pervasive poverty and general
distress in the census tract in sufficient detail to demonstrate how the census tract met the criteria
in 570.208(a)(4)(v), as applicable.
(8) For each activity determined to aid in the prevention or elimination of slums or blight based on
addressing one or more of the conditions which qualified an area as a slum or blighted area:
(i) The boundaries of the area; and
(ii) A description of the conditions which qualified the area at the time of its designation in
sufficient detail to demonstrate how the area met the criteria in 570208(b)(1).
(9) For each residential rehabilitation activity determined to aid in the prevention or elimination of
slums or blight in a slum or blighted area:
(i) The local definition of "substandard ";
(ii) A pre - rehabilitation inspection report describing the deficiencies in each structure to be
rehabilitated; and
(iii) Details and scope of CDBG assisted rehabilitation, by structure.
(10) For each activity determined to aid in the prevention or elimination of slums or blight based
on the elimination of specific conditions of blight or physical decay not located in a slum or
blighted area:
(i) A description of the specific condition of blight or physical decay treated; and
(ii) For rehabilitation carried out under this category, a description of the specific conditions
detrimental to public health and safety which were identified and the details and scope of the
CDBG assisted rehabilitation by structure.
(11) For each activity determined to aid in the prevention or elimination of slums or blight based
on addressing slums or blight in an urban renewal area, a copy of the Urban Renewal Plan, as in
effect at the time the activity is carried out, including maps and supporting documentation.
(12) For each activity determined to meet a community development need having a particular
urgency:
(i) Documentation conceming the nature and degree of seriousness of the condition
requiring assistance;
(ii) Evidence that the recipient certified that the CDBG activity was designed to address the
urgent need;
(iii) Information on the timing of the development of the serious condition; and
(iv) Evidence confirming that other financial resources to alleviate the need were not
available.
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(c) Records that demonstrate that the recipient has made the determinations required as a condition of
eligibility of certain activities, as prescribed in 570.201(f), 570.201(i)(2), 570.201(p), 570.201(q),
570.202(b)(3), 570.206(0, 570.209, and 570.309.
(d) Records which demonstrate compliance with 570.505 regarding any change of use of real property
acquired or improved with CDBG assistance.
(e) Records that demonstrate compliance with the citizen participation requirements prescribed in 24
CFR part 91, subpart B, for entitlement recipients, or in 24 CFR part 91, subpart C, for
HUD- administered small cities recipients.
(1) Records which demonstrate compliance with the requirements in 570.606 regarding acquisition,
displacement, relocation, and replacement housing.
(g) Fair housing and equal opportunity records containing:
(1) Documentation of the analysis of impediments and the actions the recipient has carried out
with its housing and community development and other resources to remedy or ameliorate any
impediments to fair housing choice in the recipient's community.
(2) Data on the extent to which each racial and ethnic group and single- headed households (by
gender of household head) have applied for, participated in, or benefited from, any program or
activity funded in whole or in part with CDBG funds. Such information shall be used only as a
basis for further investigation as to compliance with nondiscrimination requirements. No recipient
is required to attain or maintain any particular statistical measure by race, ethnicity, or gender in
covered programs.
(3) Data on employment in each of the recipient's operating units funded in whole or in part with
CDBG funds, with such data maintained in the categories prescribed on the Equal Employment
Opportunity Commission's EEO -4 form; and documentation of any actions undertaken to assure
equal employment opportunities to all persons regardless of race, color, national origin, sex or
handicap in operating units funded in whole or in part under this part.
(4) Data indicating the race and ethnicity of households (and gender of single heads of households)
displaced as a result of CDBG funded activities, together with the address and census tract of the
housing units to which each displaced household relocated. Such information shall be used only as
a basis for further investigation as to compliance with nondiscrimination requirements. No
recipient is required to attain or maintain any particular statistical measure by race, ethnicity, or
gender in covered programs.
(5) Documentation of actions undertaken to meet the requirements of 570.607(b) which
implements section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701u)
relative to the hiring and training of low- and moderate - income persons and the use of local
businesses.
(6) Data indicating the racial/ethnic character of each business entity receiving a contract or
subcontract of $25,000 or more paid, or to be paid, with CDBG funds, data indicating which of
those entities are women's business enterprises as defined in Executive Order 12138, the amount
of the contract or subcontract, and documentation of recipient's affirmative steps to assure that
minority business and women's business enterprises have an equal opportunity to obtain or
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compete for contracts and subcontracts as sources of supplies, equipment, construction and
services. Such affirmative steps may include, but are not limited to, technical assistance open to all
businesses but designed to enhance opportunities for these enterprises and special outreach efforts
to inform them of contract opportunities. Such steps shall not include preferring any business in
the award of any contract or subcontract solely or in part on the basis of race or gender.
(7) Documentation of the affirmative action measures the recipient has taken to overcome prior
discrimination, where the courts or HUD have found that the recipient has previously
discriminated against persons on the ground of race, color, national origin or sex in administering
a program or activity funded in whole or in part with CDBG funds.
(h) Financial records, in accordance with the applicable requirements listed in 570.502, including source
documentation for entities not subject to parts 84 and 85 of this title. Grantees shall maintain evidence to
support how the CDBG funds provided to such entities are expended. Such documentation must include,
to the extent applicable, invoices, schedules containing comparisons of budgeted amounts and actual
expenditures, construction progress schedules signed by appropriate parties (e.g., general contractor
and/or a project architect), and/or other documentation appropriate to the nature of the activity.
(1) Agreements and other records related to lump sum disbursements to private financial institutions for
financing rehabilitation as prescribed in 570.513; and
(j) Records required to be maintained in accordance with other applicable laws and regulations set forth
in subpart K of this part.
(Approved by the Office of Management and Budget under control number 2506 -0077)
[53 FR 34454, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1916, 1953, Jan. 5, 1995; 60 FR 56915, Nov.
9, 1995; 64 FR 38813, July 19, 1999]
Return to Table of Contents
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Appendix D
24 CFR 570 CDBG Regulations Subpart J - Other Program Requirements
570.611 Conflict of Interest
570.611 Conflict of interest.
(a) Applicability.
(1) In the procurement of supplies, equipment, construction, and services by
recipients and by subrecipients, the conflict of interest provisions in 24 CFR 85.36
and 84.42, respectively, shall apply.
(2) In all cases not govemed by 24 CFR 85.36 and 84.42, the provisions of this
section shall apply. Such cases include the acquisition and disposition of real
property and the provision of assistance by the recipient or by its subrecipients to
individuals, businesses, and other private entities under eligible activities that
authorize such assistance (e.g., rehabilitation, preservation, and other
improvements of private properties or facilities pursuant to 570.202; or grants,
loans, and other assistance to businesses, individuals, and other private entities
pursuant to 570.203, 570.204, 570.455,* or 570.703(i)).
* (The published regulation inadvertently refers to 570.455 which was removed when
streamlined regulations were published on March 20, 1996.)
(b) Conflicts prohibited. The general rule is that no persons described in paragraph (c) of this
section who exercise or have exercised any functions or responsibilities with respect to CDBG
activities assisted under this part, or who are in a position to participate in a decision making
process or gain inside information with regard to such activities, may obtain a financial interest
or benefit from a CDBG- assisted activity, or have a financial interest in any contract,
subcontract, or agreement with respect to a CDBG- assisted activity, or with respect to the
proceeds of the CDBG- assisted activity, either for themselves or those with whom they have
business or immediate family ties, during their tenure or for one year thereafter. For the UDAG
program, the above restrictions shall apply to all activities that are a part of the UDAG project,
and shall cover any such financial interest or benefit during, or at any time after, such person's
tenure.
(c) Persons covered. The conflict of interest provisions of paragraph (b) of this section apply to
any person who is an employee, agent, consultant, officer, or elected official or appointed official
of the recipient, or of any designated public agencies, or of subrecipients that are receiving funds
under this part.
(d) Exceptions. Upon the written request of the recipient, HUD may grant an exception to the
provisions of paragraph (b) of this section on a case -by -case basis when it has satisfactorily met
the threshold requirements of (d)(1) of this section, taking into account the cumulative effects of
paragraph (d)(2) of this section.
(1) Threshold requirements. HUD will consider an exception only after the recipient has
provided the following documentation:
(i) A disclosure of the nature of the conflict, accompanied by an assurance
that there has been public disclosure of the conflict and a description of
how the public disclosure was made; and
(ii) An opinion of the recipient's attorney that the interest for which the
exception is sought would not violate State or local law.
(2) Factors to be considered for exceptions. In determining whether to grant a requested
exception after the recipient has satisfactorily met the requirements of paragraph (d)(1) of this
section, HUD shall conclude that such an exception will serve to further the purposes of the Act
and the effective and efficient administration of the recipient's program or project, taking into
account the cumulative effect of the following factors, as applicable:
(i) Whether the exception would provide a significant cost benefit or an
essential degree of expertise to the program or project that would
otherwise not be available;
(ii) Whether an opportunity was provided for open competitive bidding or
negotiation;
(iii) Whether the person affected is a member of a group or class of low- or
moderate - income persons intended to be the beneficiaries of the assisted
activity, and the exception will permit such person to receive generally
the same interests or benefits as are being made available or provided to
the group or class;
(iv) Whether the affected person has withdrawn from his or her functions or
responsibilities, or the decision making process with respect to the
specific assisted activity in question;
(v) Whether the interest or benefit was present before the affected person was
in a position as described in paragraph (b) of this section;
(vi) Whether undue hardship will result either to the recipient or the person
affected when weighed against the public interest served by avoiding the
prohibited conflict; and
(vii) Any other relevant considerations.
[53 FR 34456, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 57 FR 27120, June 17, 1992; 60 FR 56916, Nov. 9,
1995]
DATE: March 16, 2001
SUBJECT: City Council Meeting — March 22, 2001
ITEM: 12.E.1. Consider a resolution authorizing the Mayor to execute a Community
Development Block Grant Program Agreement with the Round Rock
Area Serving Center of Williamson County, Inc. for transportation
vouchers. This is a new program being provided by the serving Center
to provide transportation vouchers to persons identified through local
basic needs service agencies. This public service program is being
funded with Community Development Block Grant money and is
expected to serve 1200 clients.
Resource: Joe Vining, Planning Director
Mona Ryan, Community Development Coordinator
History: Funding public services through Community Development Block Grant (CDBG)
money is a new program in fiscal year 2000/01.
Funding:
Cost: $42,000
Source of Funds: Community Development Block Grant (CDBG)
Outside Resources: U.S. Department of Housing and Urban Development
Impact: Majority of families served through these agencies have income below poverty levels
and do not own cars. The transportation vouchers will be issued to persons or
families who need to keep medical appointments and service agency appointments.
Benefit: Families or persons in need of basic services will have reliable transportation
available.
Public Comment: Public comment has been received through citizen communications and public
hearings on needs before the Community Development Advisory Commission
and the City Council.
Sponsor: Planning and Community Development Department