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R-01-11-08-14E5 - 11/8/2001o otfor CITY OF ROUND ROCK '5.. %\ ; l,• PLANNING & COMMUNITY DEVELOPMENT ��W.ie/rsl Mayor Robert A. Stlaka, Jr Mayor Pro-tem Tom Nielson Council Members Alan McGraw Carrie Pitt Earl Palmer Isabel Callahan Cary Coe City Manager Robert L. Bennett, Jr City Attorney Stephan L. Sheets December 18, 2001 Children's Support Coalition Rosemary Lee, CSC Coordinator /Community Liaison BBTCMHMR, 555 -B Round Rock West Dr. Round Rock, TX 78681 re: Community Development Block Grant Dear Rosemary Lee : Enclosed is your copy of the contract signed on November 8, 2001 by Mayor Stluka. Please sign and return the financial certification form along with your request for your first draw. The City's policy is to make quarterly disbursements on any contracts over $10,000.00. Also included is a sheet that identifies allowable and unallowable costs for subrecipients. Please make this reference material available to all employees who are involved with the management of this grant. If you have any questions concerning the process, please feel free to contact me. Mona Ryan Community Development Coordinator C: Joseph L. Vining, AICP, Director, Planning and Community Development James M. Stendebach, AICP, Assistant Director, P & CD Joanne Land, Assistant City Manager Fax: 512 -218 -3286 101 E. Old Settlers Blvd., Suite 200 Round Rock, Texas 78664 512 -218 -5428 I- 800 - 735.2989 TDD 1- 800 - 735 -2988 Voice www.ciround-rockix.us O0MA\ WORLOOX\ O : \WOOX \RESOL171 \R11108R5.WR17/sc RESOLUTION NO. R- O1- 11- 08 -14E5 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 Children's Support Coalition for youth services, and WHEREAS, the City Council desires to enter into a Community Development Block Grant Program Agreement with Children's Support Coalition for youth services, 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 Children's Support Coalition for youth services, a copy of said agreement being attached hereto as Exhibit "A" 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. A TEST: RESOLVED this 8th day of November, 2001. /64A4K Al_LAL_KI1I1 CHRISTINE R. MARTINEZ, City Sec 2 RO= 'T A. STLUKA, JRV, Mayor City of Round Rock, Texas tary THE STATE OF TEXAS COUNTY OF WILLIAMSON COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM (B- 01 -MC -48 -0514) THIS AGREEMENT, entered into this _ day of _, 2001 by and between the City of Round Rock (herein called the "GRANTEE ") and Children's Support Coalition. (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 The Subrecipient will be responsible for administering a Community Development Block Grant ( "CDBG ") Year 2001/2002 program in a manner satisfactory to the City of Round Rock 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: Children's Support Coalition Youth Fund (Youth Services). Under this program, the subrecipient agrees to provide these services for: Total Persons 100 Low to Moderate Income Persons 100 B. Level of Accomplishments SECTION I: SCOPE OF SERVICES Persons Assisted In addition to normal administrative services required as part of this Agreement, the Subrecipient agrees to provide the households /persons the following program services: 1 EXHIBIT ''An C. Staffing Activity Client Participation in Weeks Specialized Summer Camp 1 week times 40 youths = (40 youth) 40 units of service Enrichment Programs (25 youth) Psychological testing (10 youth) Tutoring Programs (youth) D. Performance Monitoring SECTION II: TIME OF PERFORMANCE 2 18 weeks times 25 youths = 450 units of service 1 week times 10 youths = 10 units of service 2 weeks times 5 youths = 10 units of service Counseling 6 weeks times 6 youths = (youth) 36 units of service Respite Care Program 10 weeks times 10 youths = (10 youth 100 units of service Note: 60 youth will receive vouchers for school supplies To undertake the activities described above and accomplish the levels of service described above, the Subrecipient will allocate staff time in support of the program funded under this agreement as follows: 1. Community Liaison 40/hr. wk. X 42 weeks = approximately 1680 hrs. (December 1, 2001 through September 30, 2002 minus vacation/off time) 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 of Round Rock will constitute non - compliance with this Agreement. If action to correct such substandard performance is not taken by the Subrecipient within thirty (30) clays after being notified by the City of Round Rock, contract suspension or termination procedures will be initiated in accordance with Section VI of this agreement. Services of the Subrecipient shall start on the 1st day of December, 2001 and end on the 30th day of September, 2002. The term of this Agreement and the provisions herein shall be extended to cover City of Round Rock Subrecipient: Mona Ryan, Community Development Coordinator Rosemary Lee Children's Support Coalition Coordinator City of Round Rock Children's Support Coalition 101 E. Old Settlers Blvd., Suite 200 BBTCMHMR Round Rock, Texas 78664 555 -B Round Rock Wst Dr. Round Rock, TX 78681 any additional time period during which the Subrecipient remains in control of CDBG funds or other assets including program income. SECTION III: PAYMENT SECTION IV: NOTICES It is expressly agreed the total amount to be paid by the City of Round Rock under this contract shall not exceed $23,000.00. Drawdowns for the payment of eligible expenses shall be made against the line item budgets specified in Paragraph LB. herein and in accordance with performance. Expenses for general administration shall also be paid against the line item budgets specified in Paragraph I.B. and in accordance with performance. 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. Notices made pursuant to this contract shall be directed to the following representatives: The Subrecipient shall agree 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. A. General Compliance SECTION V: SPECIAL CONDITIONS SECTION VI: GENERAL CONDITIONS 3 The Subrecipient agrees to comply with all applicable federal, state and local laws and regulations governing the funds provided under this contract. B. Independent Contract 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. C. Hold Harmless 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 attomeys' fees arising out of a willful or negligent act or omission of the City, its officers, agents, servants and employees, or third parties. D. Amendments 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 13 — 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 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, 4 all finished or unfinished 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 a payback 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. A. Records and Reports 1. Recordkeeping SECTION VII: ADMINISTRATIVE REQUIREMENTS 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 each activity undertaken meets one of the National Objectives of the CDBG program under 24 CFR Part 570.208; 5 c. Records required to determine the eligibility of activities under 24 CFR Part 570.201 - 570.206; d. Financial records as required by 24 CPR Part 570.502, and OMB Circular A -110; and e. Other records necessary to document compliance with Subpart K of 24 CFR 570. 2. Retention The Subrecipient shall retain all records pertinent to expenditures under this Agreement for a period 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. 3. Client Data 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 Grantee in advance in writing, and description of services provided. Such information shall be made available to Grantee monitors or their designees upon request. 4. Progress Reports The Subrecipient shall submit regular Quarterly Progress Reports to the City of Round Rock in the form, content, and frequency as required by the City of Round Rock. 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 Grantee in advance in writing. 5. Disclosure The Subrecipient understands that client information collected under this contract is private and the use or disclosure of such information, when not directly connected with the administration of the City of Round Rock's or the Subrecipient's responsibilities with respect to services provided under this contract 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. Property Records The subrecipient shall maintain real property inventory records, which clearly identifies any properties purchased, improved or sold using funds provided under this Agreement. Property retained shall continue to meet eligibility criteria and shall conform to the "changes in use" restrictions specified in 24 CFR Parts 570.503(b)(8). 7. Close -Outs 6 Subrecipient obligation to the City of Round Rock 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 all unused materials, equipment, unspent cash advances, program income balances, and receivable accounts to the City of Round Rock, and determining custodianship of records). 8. Audits & Inspections All Subrecipient records with respect to any matters covered by this Agreement shall be made available to the City of Round Rock, grantor agency, their designees or the Federal Government. At any time during normal business hours, as often as the City of Round Rock or grantor agency deems necessary, to audit, examine, and make excerpts or transcripts of all relevant data. Any deficiencies noted in audit reports must be fully cleared by the Subrecipient within 30 days after receipt by the Subrecipient. Failure by the Subrecipient to comply with the above audit requirements will constitute a violation of this contract and may result in the withholding of future payments. 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. Program Income The Subrecipient shall report quarterly all program income as defined at 24 CFR 570.504 generated by activities carried out with CDBG funds made available under this contract. The use of program income by the Subrecipient shall comply with requirements set forth in 24 CFR 570.504. By way of further limitations, the Subrecipient may use such income during the contract period for activities permitted under this contract and shall reduce requests for additional funds by the amount of any such program income balances on hand. All unused program income shall be returned to the City of Round Rock at the end of the contract period. Any interest earned on cash advances from the U.S. Treasury is not program income and shall be remitted promptly to the Grantee. Reporting of any such program income shall, at minimum, be included in quarterly reports under Section VI of this agreement. Information on program income provided in these reports will include, but not be limited to, summaries of program income generated; a summary of expenditures of these funds; and a description of the use of program income sufficient for determining eligibility of these expenses under CDBG guidelines. 3. Indirect Costs 7 If indirect costs are charged, the Subrecipient will develop an indirect cost allocation plan for determining the appropriate City of Round Rock's share of administrative costs and shall submit such plan to the City of Round Rock for approval. 4. Payment Procedures The City of Round Rock will pay to the Subrecipient funds available under this contract based on information submitted by the Subrecipient and consistent with an approved budget and city policies concerning payments. With the exception of certain advances, payments will be made for eligible expenses actually incurred by the Subrecipient, and not to exceed actual cash requirements. Payments will be adjusted by the City of Round Rock in accordance with advance fund and program income balances available under this contract for costs incurred by the City of Round Rock 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 procure materials in accordance with the requirements of Attachment 0 of OMB Circular A -110, Procurement Standards, and shall subsequently follow Attachment N, Property Management Standards, covering utilization and disposal of property. These requirements are referenced in 24 CFR Part 84, titled "Common Rule ". 3. Travel The Subrecipient shall obtain written approval from the City of Round Rock for any travel outside the metropolitan area with funds provided under this contract. The City shall determine that such travel is necessary and reasonable according to applicable standards outlined in OMB Circular A87. SECTION VIII: PERSONNEL & PARTICIPANT CONDITIONS A. Civil Rights 1. Compliance The Subrecipient agrees to comply with (city and state civil rights ordinance referenced here) and with Title VI of the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 8 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. 2. Nondiscrimination The Subrecipient will 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 contract and whether households assisted have a female head of household. The Subrecipient will 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 will 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 of Round Rock shall provide the Subrecipient with any guidelines necessary for compliance with that portion of the regulations in force during the term of this contract. 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 agrees that no funds provided, nor personnel employed under this contract, 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. 9 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 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 contract without written consent of the City of Round Rock prior to the execution of such Agreement. b. Monitoring of Subcontractors The Subrecipient will monitor all subcontracted services on a regular basis to assure contract compliance. 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 contract 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 competition basis. Executed copies of all subcontracts shall be forwarded to the City of Round Rock along with documentation concerning the selection process. 5. Religious Organization The Subrecipient agrees that funds provided under this contract will 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 10 The Subrecipient agrees to inform the City about any litigation the Subrecipient is or becomes in involved in. 7. Background Checks The Subrecipient agrees to conduct a criminal background check on all employees working directly with youth. IN WITNESS WHEREOF, this Agreement is executed on this day of , 2001. CITY OF ROUND ROCK Children's Support Coalition Robert A. Stluka, Jr. President y, c Mayor ATTEST: A'1'1'EST: Joanne Land, City Secretary Title: 11 re", Reporting Agency Information: Name: Address: Contact Person: Phone No. 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 EXHIBIT A Client Data Date: Reporting Agency Information: Name: Address: Contact Person: Phone No. Date of Service Name Address City Zip Code Amount Expended CDBG Activity G: /Community Development/Public Services /Beneficiary Report EXHIBIT B Beneficiary Report Date: EXHIBIT C BUDGET WORKSHEET - PUBLIC SERVICES For public services projects, please complete this budget worksheet. PUBLIC SERVICE CD13G FUNDS OTHER TOTAL PROJECT WORKSHEET REQUESTED SOURCES BUDGET Salary 10 000 partial inkind 10,000 FICA salary Workers Compensation Supplies 500 500 Postage 170 170 Telecommunications Other 25,000 (direct services) 22.330 47,330 TOTAL 25 000 670 58,000 Please provide a brief concise description of the proposed project and activities to be implemented. The Children's Support Coalition (CSC), a 501c(3) nonprofit organization developed from a long - standing advisory group of BBTMHMR. The CSC members meet on a monthly basis, and seek to address gaps in services within the County. The CSC's goal is to expand community based services by establishing a funding base and an array of services ' to meet the needs of at -risk youth and their families. The Children's Support Coalition works in partnership with the Community Resource Coordination Group (see brochure), a volunteer group of professionals who represent child - serving state, local and private agencies. The CRCG uses a collaborative approach for the purpose of making individualized service plans for children who are at risk of falling through the cracks in the system. Families of low to moderate income are so restricted with their basic household expenses that essential needs of their children are often put aside for lack of funds. Many children from indigent families do not have school supplies, are unable to experience esteem building activities. attend summer camp, cannot receive needed specialized counseling or afford the assistance of mentoring or tutoring. Some parents cannot visit their child at a far away hospital because of a lack of money for transportation. These children and youths often end up discouraged, defeated and depressed. Many end up with emotional /mental health problems. Others lose their desire to put forth effort in their academics. Some drop out of school. (Williamson County Juvenile Services estimate that a 1000+ youths are involved in gang related activities in our County.) This project will provide direct services to children whose needs do not meet the criteria of existing programs. Although, CSC's services are available to all children in the County, this CDBG grant will target low to moderate income children of families within the city of Round Rock and will be custom fit for each child's need, The CRCG will assist the CSC with the screening process of youths and children whose needs cannot be met through existing public services. Upon completing an application (see attachment) and showing proof of income eligibility and residence (City of Round Rock). a youth will be considered for services provided through the CSC. The array of services that may be funded will be broad and will include such activities as listed above but will also include funding for services such as mediation, some legal fees (ex.: guardianship documents). certain medical testing, summer programs and teen to adult transition services ( skills building: ex.: budget planning. job search training). Every need will be considered. The CSC will gather and maintain data on all clients served and all types of services delivered. In this way, the CSC will develop a baseline for future service need assessments. Please see next page for clarification of "direct services" 10 EXHIBIT C ** "Direct Services" are any and all services which are provided directly to the qualifying child/youth and his /her family. Direct Services do not include any monies related to administrative or salary costs. Examples of direct services are identified in the narrative but may be seen listed below (This list is not inclusive to services to be provided. Genuine needs not related to the items below will be considered for funding, as long as they meet grant application requirements.) : • school supplies •transporatation costs for a family to visit a child in a treatment facility or to take him/her •for services *specialized summer camp *respite care costs •some tuition assistance for enrichment purposes *specialized counseling costs •certain mediation expenses • some legal fees (ie. Guardianship papers) •certain psychiatric /medical tests • summer programs * young adult transition services (skills building: ie. budget planning, job search training) •mentoring * tutoring Appendix A Appendix B OMB Circular A -110 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 Appendix SUMMARY OF OMB CIRCULAR A -110 "Uniform Administrative Requirements for Grants and Cooperative Agreements with Institutions of Higher Education, Hospitals and Other Non - Profit Organizations." A. Cash Depositories 1. Physical segregation of cash deposits is not required. 2. Federal funds must be deposited in interest bearing accounts. 3. Funds must be deposited in a bank with FDIC insurance coverage. B. Bonding Insurance 1. The basic rule is that the government will not require additional insurance or bonding, but will follow the institution's practice. 2. For construction grants over $100,000 a. If federal oversight agency determines that the government's interest is protected then the institution's policies and procedures are acceptable. b. If no such determination is made then the government can require bonding. c. If determination is made that government's interests are not protected the government will require bonding. C. Retention and Custodial Requirements for Records I In general, financial records, supporting documents, statistical records, and any other pertinent records must be retained for three years. 2. Authorization needed to use microfilm or fiche. 3. The government's duly authorized representative may audit, examine, excerpt, or transcribe any of this information. D. Program Income 1. Recipient organizations are required to account for program income. 2. Program income is gross income earned by the recipient from federally supported activities, and includes but is not limited to service fees, sales of commodities, rental fees, and royalties. 3. Program income does not include interest earned on advances of federal funds. 4. Program income should be retained by the recipient and: a. Added to the project to be used to further program objectives, b. Used to finance the non - federal share of the project (requires approval), and c. Deducted from the total project costs when determining the federal share of the project. B. Cost Sharing and Matching 1. Cost sharing and matching represents that portion of the project or program not borne by the 2. Cost sharing or matching may consist of: a. Project costs incurred by the recipient. b. - Costs financed from non - federal sources such as contributions and donations. c. Project costs represented by services, and real or personal property or use thereof from non - federal sources (a.k.a. In Kind" contributions). 3. In order to be allowable as cost sharing or matching the following criteria must be met: a. There must be verifiable records. b. Should not be included as a contribution for any other federally- assisted program. c. Cost must be necessary and reasonable. d. Must be allowable under O.M.B. Circular A -1 22 and the contract. e. Costs are not paid for by federal government under another assistance agreement. f. Costs are provided for the approved budget. 4. Valuation of in -kind contributions should be based on applicable cost principles. a. Value of services should be consistent with those paid for similar work. b. Value of property must be at fair market value. c. Volunteer services must be documented. d. Basis for determining the value of personal services, material, equipment, land and buildings must be documented. F. Financial Management Systems 1. Recipients financial management system must provide for: a. Accurate, current, and complete disclosure of each project or program. b. Documentation of source and applicability of funds for federally sponsored activities. c. Control and accountability for all funds including safeguards to assure they are used only for authorized purpose. d. Comparison of actual outlays with budget amounts for each grant or agreement. e. Procedures to minimize elapsed time between receipts of funds and outlay. f. Procedures to determine reasonableness, allowability and allocability of costs in accordance with federal cost principles and terms of grant agreement. g. Accounting records supported by source documents. h. Examination by independent audit. G. Financial Reporting Requirements 1. Purpose is to establish uniform reporting procedures. 2. Reports: a. Financial status report, Form 269. b. Federal cash transactions report, Form 272. c. Request for advance or reimbursement, Form 270. d. Outlay report and request for reimbursement for construction programs, Form 27 1. 3. Frequency of reports determined by federal sponsoring agency. Generally quarterly. H. Monitoring and Reporting Program Performance 1. Recipients must monitor and report on technical performance (programmatic) through a report which presents: a. Comparison of actual accomplishments to goals. b. Findings of investigator if appropriate. c. Reasons why goals were not met. d. Other pertinent data. 2. Frequency is same as financial reports. 3. Problems or favorable developments should be reported promptly. This includes changes in budgetary needs. Payment Requirements 1. Methods of payment: a. Letter of credit. b. Advance by Treasury check. c. Reimbursement by Treasury check. 2. Letter of credit should be used if: a. Continuing relationships for at least 12 months and dollar volume is $250,000 or more. b. Recipient has the ability to maintain procedures to minimize • elapsed time. c. Financial management system meets government standards. 3. If there is no continuing relationships over $250,000 advance by Treasury check can be used. 4. If financial management system is not acceptable, then reimbursement by Treasury check is the only method available. J. Revision of Financial Plans 1. Recipients are required to immediately report deviations from financial plans and to request approval for financial plan revisions involving: a. A change in scope or objective. b. The need for additional federal funds. c. Other rebudgeting changes. 2. None of the substantive programmatic work under the grant or other agreement may be subcontracted or transferred without prior approval of the federal sponsoring agency. 1C. Suspension and Termination 1. Definitions: a. Termination - Cancellation. b. Supervision - Temporary removal of support until corrective action or termination. 2. Each federal sponsoring agency must have procedures for suspension or termination when recipient has not complied with conditions of a program. 3. Termination may be: a. For cause - failure to comply. b. For convenience - mutual agreement. L. Applying for Federal Assistance 1. Standard Form SF424. M. Property Management Standards 1. Adequate property management system to include: a. Unique identification number b. Description c. Funding source d. Acquisition cost e. Federal participation percentage f. Title vestiture g. Location, use and condition h. Disposition data i. Other data to support cost allocation 2. Federal property must be marked as such. 3. Physical inventory to be taken every two years. 4. Property must be made available for shared usage with other federal projects. 5. Control system to be in effect to safeguard against loss, damage or theft of property. 6. Adequate maintenance procedures to be implemented. 7. Disposal procedures require authorization, competitive sales, highest possible return. N. Procurement Standards 1. Recipient may follow their own procedures but must include: a. Code of conduct for officers, employees or agents engaged in awarding or administering i. Officer, employee or agent may not engage an organization in which he has a financial interest or is negotiating employment. ii. May not accept gratuities. iii. Disciplinary measures should be provided for violations. b. Open and free competition. c. Procedures to avoid purchasing unnecessary or duplicate items - lease purchase analysis. d. Solicitation based on accurate description of technical requirements. e. Positive efforts to use small and minority businesses. f. Type of contract shall be determined by recipient but not cost plus or percentage of cost contracts. g. Use of responsible contractors. h. Prior approval of sole source over S5,000. i. Some sort of price or cost analysis should be made on every procurement. j. Records for purchases of $10,000 must include: i. Basis of contractor selection. ii. Justification for lack of competition. iii. Basis for award. k. Assurance of contractor compliance with contract. 2. Subcontractors must comply with various laws and regulations. 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. of 11 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: 3/1/01 10 :11 AN1 oft (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(6) 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) Cost principles. Costs incurred, whether charged on a direct or an indirect basis, must be in conformance with OMB Circulars A -87, "Cost Principles for State, Local and Indian Tribal Govemments "; 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 3/1/01 10.11 AM of 11 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; 3/1/01 10:11 AN of 11 (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 governed 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(f), 570.209, and 570.309. (I) 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 govemed 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 3/1/01 10:11 AM 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 ofll 3/1/01 10 :11 AM 5 all (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 3/1/01 10:11 AM 7 0111 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 nile, 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 terms 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, constriction, 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 3/1/01 10:11 AM 3 o I 1 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 3/1/01 10:11 AM of 11 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; (13) 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. (I) 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 may be used for: (i) The activities specified in paragraph (f)(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 311/01 10:11 AM 0 of 11 still remains 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(a)(20)) * . [Statutory text: housing services, such as housing counseling m 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 II 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(0(21) of the Act and 42 U.S.C. 5305(0(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 tnicroenterprises; (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. 3/1/01 10:1 I AM (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 rnicroenterprises" 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] F Return to Table of ConIts 1 of11 3/1/01 10:11 AM of 11 570.202 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(6); (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 may be 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 stone 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; 3 /1 /01 10'05 AM of 1 1 (6) Connection of residential structures to water distribution lines or local sewer collection lines; (7) For rehabilitation carved 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, 3/1/01 10 -05 AM of 11 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 10 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, ]an. 5, 1995] 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 may be 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 government (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 government which is under 25,000 population; 3/1/01 10:05 AM v (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 3/1/01 10 -05 AM (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 goveming 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 goveming 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 01 3/1/01 ]0:05 AM of 11 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) F]oodplain 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. 3/1/01 10:05 Ah1 '„ni (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 570201 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; 311101 10.. AA! :013(i Kegulanons; 5ccuons ) /v.tvt tom , /v.tvo (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, A -87, or A -122 as applicable. (1) 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 d evelopment 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: 3/1/01 10805 AM ..C61.1 at,,, , (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, Farmers 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 ]ow- and moderate - income persons. (h) Section 17 of the United States Housing Act 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: 3/1/01 10:05 AM (1) Buildings or portions thereof, used for the general conduct of government 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 570208. (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: 0 of I 1 3/1/01 10'05 AM .unu ncgu.•uo u.uuw U.S.,. J / uu.... (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 57O.201(m); or (iii) When carried out by an entity pursuant to 57O.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] Return to Table of Contents 351/01 10 - 05 AM 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. hi 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. (1) 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: of 10 3/1/01 10:08 AM .. 10 (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; (13) 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 detennining 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 decennial 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 3 /1101 10:03 AM ,r in 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 may be 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. 3/1101 10:08 Ail :DBG Regulations;Scction 570.2U6 (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; (13) 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 ]ow- 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 570208(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 vimt 1n AM :UB(J Hegulanons;Section ) /U.LU6 n w w.. w.nuu.guwcpwcuuw J IV CU° .11Unl 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 maybe 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 ]ow- 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 4/1/01 10 -08 Ant .ut U Kegulauons;Seclloa ) /U.eu6 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 1/1/01 10:08 AM wCu neguIanons ;J uon J ALLVO , uy�, .... n.a,uu.gua..yw.wv , vwo.uulLL 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 $10,000 or more, the requirement must be met by aggregating the jobs created or retained as a result of the public facility or improvement by all businesses in the service area of the facility /improvement. This aggregation must include businesses which, as a result of the public facility /improvement, locate or expand in the service area of the facility /improvement between the date the recipient identifies the activity in its action plan under part 91 of this title and the date one year after the physical completion of the facility /improvement. In addition, the assisted activity must comply with the public benefit standards at 570209(b). (b) Activities which aid in the prevention or elimination of slums or blight. Activities meeting one or more of the following criteria, in the absence of substantial evidence to the contrary, will be considered 3/1/01 10 08 AM ..ur$u Kegulauens;ecuon v.LUo 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: (1) 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. 3/1/01 10:08 AN �unv �cegumuoue,o�..uw, J # V .LVu (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-teen, 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: (i) 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 carved 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. 3 /1 /01 10.08 AM 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. :11t3(i Regulations; Subpart 1 — Grant Aanu usaanon 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. n« pww ww.nuu.gowcpwcaogjcnol.nanJ 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; 1/110 1 iorni AM .VDU rccgumuuns, ouopun J -- vr nuuuu,auauv (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 eamed (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 1 06(c) or (d) of the Act: (i) Interest eamed from the investment of the initial proceeds of a grant advance by the U.S. Treasury; (ii) Interest eamed 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 3 /1 /01 10'01 AM .C15141.1,11., 6.11.11.1,11111 rlo 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(0), 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 detemining the adequacy of performance under subrecipient agreements and procurement contracts, and for taking appropriate action when perfomlance 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] 3/1/01 10 -01 AM /UV nC61.1.•auv , uuyaa• • v�.u•. r�u••uuuuu.•u.. 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. A -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 3/1/01 10 :01 A1,1 1.C611.a.0. uyd 1. J ...d..,,,...W..> ,...,,.. (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. A -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 -Award 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), (f), (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: 3/1/01 10:01 AM �ut3b xegulanons; subpart J -- (.,rant nanumsuduun • (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 govemed 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 governed 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 al 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 311'01 10:01 AS :DBG Regulations; Subpart 1 — Grant Adnunistranon nuy - i�w w w.uuu.gvwcyw wug,a" �itum (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 411101 10 -01 AM DBG Regulations; Subpart J — Grant Administration 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 may be 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, 1995J 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.) 311)01 10 :01 AOl :L)bU KegulaLOns; buopart 1 — lrtant Aaaunnsuauuu 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: (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 (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 3/1/01 10:01 A11 0 of 15 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) ]f 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 conceming 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 3/1/01 10:01 AM orl (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; (d) For each property acquired on which there are no structures, evidence of commitments .nsuring 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 ,editions at 570.208(a)(3)(i); vii) For any homebuyer assistance activity qualifying under 570,201(e), 570.201(n), or 0.204, identification of the applicable eligibility paragraph and evidence that the activity neets 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) l'or each activity determined to benefit low- and moderate - income persons based on the �utm of jobs, the recipient shall provide the documentation described in either paragraph ?(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: (I) 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. ' 'liere the recipient chooses to document that at least 51 percent of the jobs will be held and moderate - income persons, documentation for each assisted business shall 3/1/01 10:01 AM 17 .r 1 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 pennanent 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 311/01 10:01 AAl 1,f1S • 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 570.208(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: (1) 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. 3/1/01 10 -01 AM 14 of15 (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(0, 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 fiends, 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 affimialive steps to assure that minority business and women's business enterprises have an equal opportunity to obtain or 3 /1 /01 10.01 ATI ✓ ✓u ncyu.auV , uvydaa -- wm.. .-.u..uuuu �...... of IS 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. (i) 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 3/1/01 10:01 AM 570.611 Conflict of interest. (a) Applicability. (I) 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 governed 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 attomey 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: November 2, 2001 SUBJECT: City Council Meeting — November 8, 2001 ITEM: Resource: Joe Vining, Planning Director Mona Ryan, Community Development Coordinator *14.E.5. Consider a resolution authorizing the Mayor to execute a Community Development Block Grant Program Agreement with Children's Support Coalition for youth services. History: This is a new program being provided by the Children's Support Coalition to direct services to youths in need who have exhausted all other means of financial, medical, and legal resources. Funding: Community Development Block Grant Cost: $23,000 Outside Resources: U.S. Department of Housing and Urban Development Itpact: This is a new program that will provide the gap resources for at risk youth of Round Rock and is expected to serve a minimum of 100 clients. Benefit: Direct services will be provided to youth from low and moderate- income families. Public Comment: Public testimony supporting the program was given at the Community Development Advisory Commission on June 12, 2001, and at the City Council meeting on June 14, 2001. Sponsor: Planning and Community Development Department. THE STATE OF TEXAS COUNTY OF WILLIAMSON THIS AGREEMENT, entered into this U of NW, 2001 by and between the City of Round Rock (herein called the "GRANTEE ") and Children's Support Coalition. (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 The Subrecipient will be responsible for administering a Community Development Block Grant ( "CDBG ") Year 2001/2002 program in a manner satisfactory to the City of Round Rock 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: Children's Support Coalition Youth Fund (Youth Services). Under this program, the subrecipient agrees to provide these services for: Total Persons 100 Low to Moderate Income Persons 100 B. Level of Accomplishments COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM (B- 01 -MC -48 -0514) SECTION I: SCOPE OF SERVICES 1 Persons Assisted ORIGINAL' In addition to normal administrative services required as part of this Agreement, the Subrecipient agrees to provide the households /persons the following program services: C. Staffing Activity Client Participation in Weeks Specialized Summer Camp 1 week times 40 youths = (40 youth) 40 units of service Enrichment Programs 18 weeks times 25 youths = (25 youth) 450 units of service Psychological testing (10 youth) 10 units of service Tutoring Programs 2 weeks times 5 youths (5 youth) 10 units of service Counseling (6 youth) Respite Care Program 10 weeks times 10 youths (10 youth 100 units of service Note: 60 youth will receive vouchers for school supplies To undertake the activities described above and accomplish the levels of service described above, the Subrecipient will allocate staff time in support of the program funded under this agreement as follows: 1. Community Liaison 40/hr. wk. X 42 weeks = approximately 1680 hrs. (December 1, 2001 through September 30, 2002 minus vacation/off time) D. 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 of Round Rock will constitute non - compliance with this Agreement. If action to correct such substandard performance is not taken by the Subrecipient within thirty (30) days after being notified by the City of Round Rock, contract 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 December, 2001 and end on the 30th day of September, 2002. The term of this Agreement and the provisions herein shall be extended to cover 2 1 week times 10 youths = 6 weeks times 6 youths = 36 units of service City of Round Rock Subrecipient: Mona Ryan, Community Development Coordinator Rosemary Lee Children's Support Coalition Coordinator City of Round Rock Children's Support Coalition 101 E. Old Settlers Blvd., Suite 200 BBTCMHMR Round Rock, Texas 78664 555 -B Round Rock Wst Dr. Round Rock, TX 78681 any additional time period during which the Subrecipient remains in control of CDBG funds or other assets including program income. SECTION III: PAYMENT It is expressly agreed the total amount to be paid by the City of Round Rock under this contract shall not exceed $23,000.00. Drawdowns for the payment of eligible expenses shall be made against the line item budgets specified in Paragraph I.B. herein and in accordance with performance. Expenses for general administration shall also be paid against the line item budgets specified in Paragraph I.B. and in accordance with performance. 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 contract shall be directed to the following representatives: SECTION V: SPECIAL CONDITIONS The Subrecipient shall agree 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. A. General Compliance SECTION VI: GENERAL CONDITIONS 3 The Subrecipient agrees to comply with all applicable federal, state and local laws and regulations governing the funds provided under this contract. B. Independent Contract 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. C. Hold Harmless 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 attomeys' fees arising out of a willful or negligent act or omission of the City, its officers, agents, servants and employees, or third parties. D. Amendments 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 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, 4 all finished or unfinished 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 a payback 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. A. Records and Reports 1. Recordkeepine SECTION VII: ADMINISTRATIVE REQUIREMENTS 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 each activity undertaken meets one of the National Objectives of the CDBG program under 24 CFR Part 570.208; 5 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. 2. Retention The Subrecipient shall retain all records pertinent to expenditures under this Agreement for a period 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. 3. Client Data 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 Grantee in advance in writing, and description of services provided. Such information shall be made available to Grantee monitors or their designees upon request. 4. Progress Reports The Subrecipient shall submit regular Quarterly Progress Reports to the City of Round Rock in the form, content, and frequency as required by the City of Round Rock. 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 Grantee in advance in writing. 5. Disclosure The Subrecipient understands that client information collected under this contract is private and the use or disclosure of such information, when not directly connected with the administration of the City of Round Rock's or the Subrecipient's responsibilities with respect to services provided under this contract 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. Property Records The subrecipient shall maintain real property inventory records, which clearly identifies any properties purchased, improved or sold using funds provided under this Agreement. Property retained shall continue to meet eligibility criteria and shall conform to the "changes in use" restrictions specified in 24 CFR Parts 570.503(b)(8). 7. Close -Outs 6 Subrecipient obligation to the City of Round Rock 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 retum of all unused materials, equipment, unspent cash advances, program income balances, and receivable accounts to the City of Round Rock, and determining custodianship of records). 8. Audits & Inspections All Subrecipient records with respect to any matters covered by this Agreement shall be made available to the City of Round Rock, grantor agency, their designees or the Federal Government. At any time during normal business hours, as often as the City of Round Rock or grantor agency deems necessary, to audit, examine, and make excerpts or transcripts of all relevant data. Any deficiencies noted in audit reports must be fully cleared by the Subrecipient within 30 days after receipt by the Subrecipient. Failure by the Subrecipient to comply with the above audit requirements will constitute a violation of this contract and may result in the withholding of future payments. 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. Program Income The Subrecipient shall report quarterly all program income as defined at 24 CFR 570.504 generated by activities carried out with CDBG funds made available under this contract. The use of program income by the Subrecipient shall comply with requirements set forth in 24 CFR 570.504. By way of further limitations, the Subrecipient may use such income during the contract period for activities permitted under this contract and shall reduce requests for additional funds by the amount of any such program income balances on hand. All unused program income shall be returned to the City of Round Rock at the end of the contract period. Any interest earned on cash advances from the U.S. Treasury is not program income and shall be remitted promptly to the Grantee. Reporting of any such program income shall, at minimum, be included in quarterly reports under Section VI of this agreement. Information on program income provided in these reports will include, but not be limited to, summaries of program income generated; a summary of expenditures of these funds; and a description of the use of program income sufficient for determining eligibility of these expenses under CDBG guidelines. 3. Indirect Costs 7 If indirect costs are charged, the Subrecipient will develop an indirect cost allocation plan for determining the appropriate City of Round Rock's share of administrative costs and shall submit such plan to the City of Round Rock for approval. 4. Payment Procedures The City of Round Rock will pay to the Subrecipient funds available under this contract based on information submitted by the Subrecipient and consistent with an approved budget and city policies concerning payments. With the exception of certain advances, payments will be made for eligible expenses actually incurred by the Subrecipient, and not to exceed actual cash requirements. Payments will be adjusted by the City of Round Rock in accordance with advance fund and program income balances available under this contract for costs incurred by the City of Round Rock 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 procure materials in accordance with the requirements of Attachment 0 of OMB Circular A -110, Procurement Standards, and shall subsequently follow Attachment N, Property Management Standards, covering utilization and disposal of property. These requirements are referenced in 24 CFR Part 84, titled "Common Rule ". 3. Travel The Subrecipient shall obtain written approval from the City of Round Rock for any travel outside the metropolitan area with funds provided under this contract. The City shall determine that such travel is necessary and reasonable according to applicable standards outlined in OMB Circular A87. SECTION VIII: PERSONNEL & PARTICIPANT CONDITIONS A. Civil Rights 1. Compliance The Subrecipient agrees to comply with (city and state civil rights ordinance referenced here) and with Title VI of the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 8 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. 2. Nondiscrimination The Subrecipient will 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 contract and whether households assisted have a female head of household. The Subrecipient will 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 will 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 of Round Rock shall provide the Subrecipient with any guidelines necessary for compliance with that portion of the regulations in force during the term of this contract. 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 agrees that no funds provided, nor personnel employed under this contract, 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. 9 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 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 contract without written consent of the City of Round Rock prior to the execution of such Agreement. b. Monitoring of Subcontractors The Subrecipient will monitor all subcontracted services on a regular basis to assure contract compliance. 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 contract 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 competition basis. Executed copies of all subcontracts shall be forwarded to the City of Round Rock along with documentation concerning the selection process. 5. Religious Organization The Subrecipient agrees that funds provided under this contract will 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 10 The Subrecipient agrees to inform the City about any litigation the Subrecipient is or becomes in involved in. 7. Background Checks The Subrecipient agrees to conduct a criminal background check on all employees working directly with youth. IN WITNESS WHEREOF, this Agreement is executed on this 0 — day of , 2001. CITY OF ROUND ROCK Mayor ATTEST: Joanne Land, ehr 5i'n City Secretary c Children's Support Coalition ATTEST: Title: 11 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. EXHIBIT B Beneficiary Report Date: Date of Service Name Address City Zip Code Amount Expended CDBG Activity G: /Community Development/Public Services/Beneficiary Report BUDGET WORKSHEET - PUBLIC SERVICES For public services projects, please complete this budget worksheet. PUBLIC SERVICE CDBG FUNDS OTHER TOTAL PROJECT WORKSHEET REQUESTED SOURCES BUDGET Salary 10000 partial inkind 10,000 FICA salary Workers Compensation Supplies 500 500 Postage 170 170 Telecommunications Other 25,000 (direct services) _ 22,330 47 330 TOTAL 25,000 670 58 000 Please provide a brief concise description of the proposed project and activities to be implemented. The Children's Support Coalition (CSC), a 501c(3) nonprofit organization developed from a long - standing advisory group of BBTMHMR. The CSC members meet on a monthly basis, and seek to address gaps in services within the County. The CSC's goal is to expand community based services by establishing a funding base and an array of services to meet the needs of at -risk youth and their families. The Children's Support Coalition works in partnership with the Community Resource Coordination Group (see brochure), a volunteer group of professionals who represent child - serving state, local and private agencies. The CRCG uses a collaborative approach for the purpose of making individualized service plans for children who are at risk of falling through the cracks in the system. Families of low to moderate income are so restricted with their basic household expenses that essential needs of their children are often put aside for lack of funds. Many children from indigent families do not have school supplies, are unable to experience esteem building activities. attend summer camp, cannot receive needed specialized counseling or afford the assistance of mentoring or tutoring. Some parents cannot visit their child at a far away hospital because of a lack of money for transportation. These children and youths often end up discouraged, defeated and depressed. Many end up with emotional /mental health problems. Others lose their desire to put forth effort in their academics. Some drop out of school. (Williamson County Juvenile Services estimate that a 1000+ youths are involved in gang related activities in our County.) This project will provide direct services to children whose needs do not meet the criteria of existing programs. Although, CSC's services are available to all children in the County, this CDBG grant will target low to moderate income children of families within the city of Round Rock and will be custom fit for each child's need. The CRCG will assist the CSC with the screening process of youths and children whose needs cannot be met through existing public services. Upon completing an application (see attachment) and showing proof of income eligibility and residence (City of Round Rock), a youth will be considered for services provided through the CSC. The array of services that may be funded will be broad and will include such activities as listed above but will also include funding for services such as mediation, some legal fees (ex.: guardianship documents). certain medical testing. summer programs and teen to adult transition services ( skills building: ex.: budget planning, job search training). Every need will be considered. The CSC will gather and maintain data on all clients served and all types of services delivered. In this way, the CSC will develop a baseline for future service need assessments. Please see next page for clarification of "direct services" EXHIBIT C 10 EXHIBIT C * ** "Direct Services" are any and all services which are provided directly to the qualifying child/youth and his /her family. Direct Services do not include any monies related to administrative or salary costs. Examples of direct services are identified in the narrative but may be seen listed below (This list is not inclusive to services to be provided. Genuine needs not related to the items below will be considered for funding, as long as they meet grant application requirements.) *school supplies •transporatation costs for a family to visit a child in a treatment facility or to take him/her •for services *specialized summer camp *respite care costs •some tuition assistance for enrichment purposes *specialized counseling costs •certain mediation expenses •some legal fees (ie. Guardianship papers) •certain psychiatric /medical tests •summer programs *young adult transition services (skills building: ie. budget planning, job search training) •mentoring *tutoring 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 Appendix SUMMARY OF OMB CIRCULAR A -110 "Uniform Administrative Requirements for Grants and Cooperative Agreements with Institutions of Higher Education, Hospitals and Other Non - Profit Organizations." A. Cash Depositories 1. Physical segregation of cash deposits is not required. 2. Federal funds must be deposited in interest bearing accounts. 3. Funds must be deposited in a bank with FDIC insurance coverage. B. Bonding Insurance 1. The basic rule is that the government will not require additional insurance or bonding, but will follow the institution's practice. 2. For construction grants over $100,000 a. If federal oversight agency determines that the government's interest is protected then the institution's policies and procedures are acceptable. b. If no such determination is made then the government can require bonding. c. If determination is made that government's interests are not protected the government will require bonding. C. Retention and Custodial Requirements for Records I In general, financial records, supporting documents, statistical records, and any other pertinent records must be retained for three years. 2. Authorization needed to use microfilm or fiche. 3. The government's duly authorized representative may audit, examine, excerpt, or transcribe any of this information. D. Program Income 1. Recipient organizations are required to account for program income. 2. Program income is gross income earned by the recipient from federally supported activities, and includes but is not limited to service fees, sales of commodities, rental fees, and royalties. 3. Program income does not include interest earned on advances of federal funds. 4. Program income should be retained by the recipient and: a. Added to the project to be used to further program objectives, b. Used to finance the non - federal share of the project (requires approval), and c. Deducted from the total project costs when determining the federal share of the project. E. Cost Sharing and Matching 1. Cost sharing and matching represents that portion of the project or program not borne by the 2. Cost sharing or matching may consist of: a. Project costs incurred by the recipient. b. - Costs financed from non - federal sources such as contributions and donations. c. Project costs represented by services, and real or personal property or use thereof from non- federal sources (a.k.a. "In Kind" contributions). 3. In order to be allowable as cost sharing or matching the following criteria must be met: a. There must be verifiable records. b. Should not be included as a contribution for any other federally- assisted program. c. Cost must be necessary and reasonable. d. Must be allowable under O.M.B. Circular A -1 22 and the contract. e. Costs are not paid for by federal government under another assistance agreement. f. Costs are provided for the approved budget. 4. Valuation of in -kind contributions should be based on applicable cost principles. a. Value of services should be consistent with those paid for similar work. b. Value of property must be at fair market value. c. Volunteer services must be documented. d. Basis for determining the value of personal services, material, equipment, land and buildings must be documented. F. Financial Management Systems 1. Recipients financial management system must provide for: a. Accurate, current, and complete disclosure of each project or program. b. Documentation of source and applicability of funds for federally sponsored activities. c. Control and accountability for all funds including safeguards to assure they are used only for authorized purpose. d. Comparison of actual outlays with budget amounts for each grant or agreement. e. Procedures to minimize elapsed time between receipts of funds and outlay. f. Procedures to determine reasonableness, allowability and allocability of costs in accordance with federal cost principles and terms of grant agreement. g. Accounting records supported by source documents. h. Examination by independent audit. G. Financial Reporting Requirements 1. Purpose is to establish uniform reporting procedures. 2. Reports: a. Financial status report, Form 269. b. Federal cash transactions report, Form 272. c. Request for advance or reimbursement, Form 270. d. Outlay report and request for reimbursement for construction programs, Form 27 1. 3. Frequency of reports determined by federal sponsoring agency. Generally quarterly. H. Monitoring and Reporting Program Performance 1. Recipients must monitor and report on technical performance (programmatic) through a report which presents: a. Comparison of actual accomplishments to goals. b. Findings of investigator if appropriate. c. Reasons why goals were not met. d. Other pertinent data. 2. Frequency is same as financial reports. 3. Problems or favorable developments should be reported promptly. This includes changes in budgetary needs. Payment Requirements 1. Methods of payment: a. Letter of credit. b. Advance by Treasury check. c. Reimbursement by Treasury check. 2. Letter of credit should be used if: a. Continuing relationships for at least 12 months and dollar volume is $250,000 or more. b. Recipient has the ability to maintain procedures to minimize ' • elapsed time. c. Financial management system meets government standards. 3. If there is no continuing relationships over $250,000 advance by Treasury check can be used. 4. If financial management system is not acceptable, then reimbursement by Treasury check is the only method available. 3. Revision of Financial Plans 1. Recipients are required to immediately report deviations from financial plans and to request approval for financial plan revisions involving: a. A change in scope or objective. b. The need for additional federal funds. c. Other rebudgeting changes. 2. None of the substantive programmatic work under the grant or other agreement may be subcontracted or transferred without prior approval of the federal sponsoring agency. K. Suspension and Termination 1. Definitions: a. Termination - Cancellation. b. Supervision - Temporary removal of support until corrective action or termination. 2. Each federal sponsoring agency must have procedures for suspension or termination when recipient has not complied with conditions of a program. 3. Termination may be: a. For cause - failure to comply. b. For convenience - mutual agreement. L. Applying for Federal Assistance 1. Standard Form SF424. M. Property Management Standards 1. Adequate property management system to include: a. Unique identification number b. Description c. Funding source d. Acquisition cost e. Federal participation percentage f. Title vestiture g. Location, use and condition h. Disposition data i. Other data to support cost allocation 2. Federal property must be marked as such. 3. Physical inventory to be taken every two years. 4. Property must be made available for shared usage with other federal projects. 5. Control system to be in effect to safeguard against loss, damage or theft of property. 6. Adequate maintenance procedures to be implemented. 7. Disposal procedures require authorization, competitive sales, highest possible return. N. Procurement Standards 1. Recipient may follow their own procedures but must include: a. Code of conduct for officers, employees or agents engaged in awarding or administering i. Officer, employee or agent may not engage an organization in which he has a financial interest or is negotiating employment. ii. May not accept gratuities. iii. Disciplinary measures should be provided for violations. b. Open and free competition. c. Procedures to avoid purchasing unnecessary or duplicate items - lease purchase analysis. d. Solicitation based on accurate description of technical requirements. e. Positive efforts to use small and minority businesses. f. Type of contract shall be determined by recipient but not cost plus or percentage of cost contracts. g. Use of responsible contractors. h. Prior approval of sole source over $5,000. i. Some sort of price or cost analysis should be made on every procurement. j. Records for purchases of $10,000 must include: i. Basis of contractor selection. ii. Justification for lack of competition. iii. Basis for award. k. Assurance of contractor compliance with contract. 2. Subcontractors must comply with various laws and regulations. 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. 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: of 11 3/1/01 10:11 At.1 (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) Cost principles. Costs incurred, whether charged on a direct or an indirect basis, must be in conformance with OMB Circulars A -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_ (1) 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 Z of 11 3/1/01 10:11 AM 3 of 11 assistance under the CDBG program maybe 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 offacilities. 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 maybe 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; 3/1/0] 10:11 AN (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 governed 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(0, 570.209, and 570.309. (1) 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 govemed by the requirements of 24 CFR 85.36; or (ii) Through loans or grants under agreements with subrecipients, as defined at 570.500(c); OI (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 of 11 3 /1/01 10:11 AM 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 of 1 1 3/1/01 10.11 AM (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 i of 11 3/1/01 10 .11 AM 7 of 11 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 terms 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 3/1/01 10:11 AM 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 3 of 11 31]/01 10:11 AM 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; (13) 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. (1) 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 detemrines that such an emergency condition exists and requires immediate resolution, CDBG funds may be 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 (1)(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 1 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 ?ofll 3 /1 /O] 1O:IIAM still remains 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(a)(20)) * . [Statutory text: housing services, such as housing counseling in connection with tenant -based rental assistance and affordable housing projects assisted under title 11 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 11 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, reconstnict, 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. 0 of 11 3/1/01 10:11 AM (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 1 of 11 3 /1 /01 10:11 AAl 570.202 Eligible rehabilitation and preservation activities. (a) Types of buildings and improvements eligible for rehabilitation assistance. CDBG funds maybe 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 may be 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; of 11 3!1/01 ]0:05 AM (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. (1) 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, Ian. 5, 1995; 60 FR 56911, Nov. 9, of 11 3/1/01 10:05 AM 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] 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)(I), (a)(2), and (a)(3) of this section, the funded activity or activities may be 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 government (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 government which is under 25,000 population; of I 1 3/1/0110:05 Ah1 (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 1 of 11 3/1/01 10:05 AM [60 FR 1944, Jan. 5, 1995] (iii) Maybe 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 goveming 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. 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 of 11 3/1/01 10:05 AM 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. of 11 311/01 10:05 AM (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 subrecipienis 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; ' 0111 3/1/01 10:05 Ab! .LISU negulauons occuons J /o.LVL WI U i1.1.LVv of 11 (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, A -87, or A -122 as applicable. (1) 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: 311 /01 10.05 Ant (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, Farmers Hone 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 Housing Act of 1937. Reasonable costs equivalent to those described in paragraphs (a), (b), (e) and (f) 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 nose). [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: of 11 3/1/01 10:05 AM (1) Buildings or portions thereof, used for the general conduct of government 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 570208. (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 fiords is generally ineligible. (1) 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: O of 11 3 /1 /01 10:05 ANI (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] Return to Table of Contents 1 of 11 3/1/O1 10 -05 AM 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, BUD 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: of 10 3/1/01 10:08 AM (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 decennial 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 of 10 3/1/01 10.08 AM 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 maybe concluded that the activity's clientele will primarily be low- and moderate- income persons. of 10 3/1/01 10 108 AM :usU Kegulanons;ecnon J/ V.[uo (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 1 or 10 3/1/01 I0:08 Ant .LGV xegulauous;rn:uun Jiv.aoo • 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 maybe 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 borne 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(6)(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 ]ow- 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: (1) 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 of 10 3/1/01 10:08 AM 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 of 10 3 /1 /01 10:08 A1,1 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 ' of 10 3/1/01 10.08 AM 8 of 10 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: (1) 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)(2) 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. 3/1/01 10:08 AK 9 of10 (d) Additional criteria. (1) Where the assisted activity is acquisition of real property, a preliminary determination of whether the activity addresses a national objective maybe 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 fiords 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: (i) 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. 3/1/01 10.08 AM 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. .11DV nrgulauous; ouupunJ Vlau. nuuuu.auauv.l 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; of 15 3/1/01 10:01 AM (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 1 06(c) or (d) of the Act: (i) Interest earned from the investment of the initial proceeds of a grant advance by the U.S. Treasury; (ii) Interest eamed 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(u) 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 of 15 3/1/01 10:01 AM 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(6)(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 fimd'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) Subrecipierrt 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 detemsining 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] of ]5 3 /1 /01 10:01 AM 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. A -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 4 of 15 3/1/01 10:01 A/11 (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. A -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 -Award 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), (f), (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: of 15 311101 10:01 AM nvsulauulls, ouvya, . J -- ..,, Lira .1.,,,u..,a., o....,. (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 Cl 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 governed 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 retumed 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 3 of 1 5 3/1 /0 ] 10:01 AM ,LGI, Kegulaumns; JuDpar[ J - Morn Hol m...m " (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 50115 3/1/01 10 :01 AM .,.no ncgumuuna ouopm. — .,....n ..,l,...na ' 0115 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 may be 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: (1) 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: (1) Program income in the form of repayments to, or interest eamed 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.) 3 /1 /01 10:01 AM .unn xeguiaoons; auopan — vi am esuuuum"a. of 15 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 whidh 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: (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 (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 311/01 10:01 AM 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 0 of 15 3!1!01 10 :01 AM (13) 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; fv ) For each property acquired on which there are no structures, evidence of commitments insuring that the criteria in 570.208(a)(3) will be met when the structures are built; a ui) Where applicable, records demonstrating that the activity qualifies under the special inlitions at 570.208(a)(3)(i); (vii) For any homebuyer assistance activity qualifying under 570.201(e), 570.201(n), or identification of the applicable eligibility paragraph and evidence that the activity neets 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 :on of jobs, the recipient shall provide the documentation described in either paragraph si) or (ii) of this section. (1) 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 �hallinclude: (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. ''there the recipient chooses to document that at least 51 percent of the jobs will be held and moderate - income persons, documentation for each assisted business shall 1 of 11 3/1/01 10:01 AM 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 ofpcnnanent 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 12 of 15 3/1/0110:01 AM 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 570.208(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. 3 of 15 3/1/0] 10:01 AM (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. (f) 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. I701U) relative to the hiring and training of low- and moderate - income persons and the use of local businesses. (6) Data indicating the racialelhnic 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 . 14 or 15 3/1/01 10 -01 ASI • 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. (i) 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 5 of 15 3/]/01 10 -01 AM 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 governed 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 570.955 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]