COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM by NewJersey

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									 COMMUNITY DEVELOPMENT BLOCK
       GRANT PROGRAM

             2008

  PREAPPLICATION AND GUIDE
          PACKAGE




BURLINGTON COUNTY DEPARTMENT OF
     ECONOMIC DEVELOPMENT

   COMMUNITY DEVELOPMENT
         PROGRAM


               i
                       TABLE OF CONTENTS                               PAGE

Narrative (Sections I-V)                                                      1-3

Municipal/Ongoing Service Projects Schedule                                    4

Year 2008 Application Timetable                                                5

Criteria for Selection/Approvals and Implementation (Section VI-VII)          6-7

Enforcement of Spending Time Limits/The Proposal Package (Sections
VII & VIII)                                                                    7

Part II and III Application Forms/Supplementary Information                    8

Proposal Package Checklist                                                9-10

Application Certification and Authorization Form                              11

Year 2008 Annual Plan Form                                               12-13

Summary of Proposed Project Form                                         14-16

Proposed Cost Summary Form                                                    17

Project Implementation Schedule Form                                          18

Environmental Review Statement/Forms                                     19-21

Appendix 1: Sample Public Hearing Notice                                      22

Appendix 2 Eligible Activity Categories                                  23-25

Federal Regulations Part 570 (Sections as listed)                             26


NOTE: Community Development Block Grant Program 2008 Preapplication and
Guide Package available at:
www.co.burlington.nj.us/departments/economic/commdev/housing/cdbg/index.htm




                                           i
 BURLINGTON COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
               PREAPPLICATION AND GUIDE PACKAGE

                               SECTION I. Introduction

The purpose of this Guide is to provide potential applicants for CDBG funding with
sufficient detail to develop a complete proposal. The package is intended to offer
information on the types of eligible activities and the process for application
submission. It is additionally intended to provide an introduction to the objectives of
the Community Development Program.

Applicants should consider this Guide to be a supplement to the Community
Development Block Grant Program Entitlement Grant Regulations, Title 24 of the Code
of Federal Regulations, Part 570. It is important for applicants to become familiar with
these regulations. The regulations are included as an addendum to this package. The
County’s Office of Community Development will provide applicants with technical
assistance, interpretation of regulations and support, as requested.

                           SECTION II. Overall Objectives

Eligible applicants are participating units of local government, public or private non-
profit agencies, authorities or organizations, institutions of higher education, or
Community Based Development Organizations (CBDOs) as defined in Section
570.204(c) of the Regulations.

Applications will be evaluated in terms of the extent to which the Broad National
Objective of the Housing and Community Development Act of 1974 as amended (42
U.S.C. 4301, et. seq.) {The Act} can be demonstrated. Activities which meet these
objectives give maximum feasible priority to: 1) addressing identified needs of low
and moderate income families; 2) aid in the elimination of slums and blight; or 3) meet
community needs having a particular urgency because existing conditions pose an
immediate threat to public health or welfare. In order to meet the requirement to use
at least 70% of CDBG funds for the first objective, Burlington County gives highest
priority to activities that benefit low and moderate-income residents.

   1.      Principal Benefit to Low/Moderate Income Persons

           A project principally benefits low and moderate-income persons if it is
           designed to meet identified needs of low and moderate income persons as
           described in the applicant’s community development plan and it meets one
           of the following standards:

           A. The project has income eligibility requirements that limit the benefits of
              the project to low and moderate income persons {see Part
              570.208(a)(2), (3) and (4)}, or
           B. The project serves an area where the majority of the beneficiaries are
              low and moderate-income persons. These areas are defined by the 2000
              Census and include Census Tract Block Groups where the percentage of
              low/mod residents is at or above the Urban County’s upper quartile
              percentage {see Part 570.208(a)(1)}.
           C. A project which must be carried out prior to, or as an integral part of a
              project that will principally benefit low and moderate income persons.
   2.      Prevention or Elimination of Slums and Blight


                                            1
           Projects that prevent or eliminate slums or blight:

           A. A project in an area, which is a slum, a blighted, deteriorated, or
              deteriorating area, as defined by State or local law, and in which the
              applicant undertakes a comprehensive program to remedy the conditions
              qualifying the area. {See 570.208(b)(1)}.
           B. A project designed to eliminate detrimental conditions on a spot basis or
              located outside slum or blighted areas. {See 570.208(b)(2)}.

   3.      Particular Urgency

           Projects designed to meet needs having particular urgency must conform to
           the following:

           A project designed to alleviate a serious and immediate threat to the health
           or welfare of the community that is of recent origin where the applicant is
           unable to finance the project on its own and 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 application for
           funds. Recent origin must be documented fully. {See 570.208(c)}.

                           SECTION III. Eligible Activities

The following is a listing of general categories of eligible activities. More specific
information on these and other activities can be found in the attached regulations:
Part 570 Subsection C.

        Acquisition of Real Property
        Disposition of Real Property
        Public Facilities and Improvements (including Removal of Architectural Barriers)
        Clearance and Demolition Activities
        Public Services
        Relocation
        Code Enforcement
        Historic Preservation
        Economic Development Activities
        Special Activities by Community Based Development Organizations
        Housing Rehabilitation

                       SECTION IV. Limitations on Activities

Not all activities listed as eligible in the Community Development Block Grant
regulations (Part 570 Subpart C) will be considered for funding. Limitations that are
imposed, either by local policy or by regulations, are described in this section.

        Planning, Design, Administration Costs

Planning, design, management, administration and other activities listed in Part
570.205 and 570.206 will not be funded. However, project related architectural and
engineering costs might be funded when they are part of an eligible project and comply
with Burlington County Community Development Program Policy and Procedures.




                                             2
       Housing Development Projects

Applications to undertake affordable housing development projects will only be
considered for funding as part of this annual CDBG application process if carried out or
sponsored by a municipality. Housing development projects include acquisition,
rehabilitation of existing properties for rent or resale to low-income families or new
housing construction for the same purpose. As an alternative, applicants wishing to do
housing development are encouraged to request an application for HOME funds
(www.co.burlington.nj.us/departments/economic/commdev/housing/home/index.htm).
The opportunity to apply for HOME funding for affordable housing development project
is available on an ongoing basis.

       Other Housing Improvement Activities

Special housing/rehabilitation (improvement) activities that assist low-income existing
homeowners may still be proposed as part of this CDBG application process. Examples
of special housing rehabilitation activities that may be proposed include Emergency
Home Repairs, Lead Based Paint Evaluation and Abatement, Water and/or Sewer
Connections between residential properties and water distribution or sewer collection
lines.

In order to assure that the County meets its spending deadlines, the period for sub-
grantees to expend their allocations will be limited to one year.

                          SECTION V. Application Process

In 2008, this application round, the last 20 municipalities, the bottom half of the
alphabetical listing, are eligible to apply for funding. (In the year 2009, those in the
top half of the alphabetical listing, apply.) A similar division is used for non-profit
organizations. Those in the bottom half of the alphabet, N through Z, are able to apply
for this round of funding, 2008. (Those in the top half, A through M, may apply in
2009.) Certain non-profits already being funded for ongoing public services may apply
each year.




                                           3
                    MUNICIPAL APPLICATION SCHEDULE
Grant   Year 2007 (2009, 2011, 2013,        Grant   Year 2008 (2010, 2012, 2014,
etc.)                                       etc.)
 1.     Bass River Township                 21.     Medford Lakes Borough
 2.     Beverly City                        22.     Moorestown Township
 3.     Bordentown City                     23.     Mount Holly Township
 4.     Bordentown Township                 24.     Mount Laurel Township
 5.     Burlington City                     25.     New Hanover Township
 6.     Burlington Township                 26.     North Hanover Township
 7.     Cinnaminson Township                27.     Palmyra Borough
 8.     Chesterfield Township               28.     Pemberton Borough
 9.     Delanco Township                    29.     Pemberton Township
10.     Delran Township                     30.     Riverside Township
11.     Eastampton Township                 31.     Riverton Borough
12.     Edgewater Park Township             32.     Shamong Township
13.     Evesham Township                    33.     Southampton Township
14.     Fieldsboro Borough                  34.     Springfield Township
15.     Florence Township                   35.     Tabernacle Township
16.     Hainesport Township                 36.     Washington Township
17.     Lumberton Township                  37.     Westampton Township
18.     Mansfield Township                  38.     Willingboro Township
19.     Maple Shade Township                39.     Woodland Township
20.     Medford Township                    40.     Wrightstown Borough

                ONGOING SERVICE PROJECTS (apply each year)
                 Project                            Sub-grantee
Operations of Abused Women’s Shelter Providence House
Housing Counseling                   Burlington County Community Action
                                     Prog.
Emergency Home Repair                Burlington County Community Action
                                     Prog.
24-hr. Emergency Housing Hotline     Catholic Charities
Transportation Services for Senior   County of Burlington
Citizens and Disabled Residents

        Public Hearing

Municipalities wishing to submit an application to the County must first hold a public
hearing. The Public Hearing must actively solicit comments and recommendations and
be properly advertised. Evidence of this hearing and a copy of the advertisement and
minutes, must accompany the proposal submitted to the County’s Office of Community
Development. Suggestions for the wording of the advertisement for the public hearing
can be found in Appendix 2 of this Guide. Sub-recipients such as non-profit
organizations and Community-Based Development Organizations do not have to hold
public hearings.

        Timetable

All potential applicants are strongly urged to familiarize themselves with the following
timetable for application preparation and submission. This schedule must be adhered
to in order to ensure that the County meets its submission deadlines to the US
Department of Housing and Urban Development. Municipalities should be particularly
aware of the submission deadline to the County.


                                            4
            COMMUNITY DEVELOPMENT BLACK GRANT PROGRAM
                    2008 APPLICATION TIMETABLE

10/01/07            1. Publication announcing availability of applications for 2008
                    Program. Pre-application Guides issued.
10/25/07            2. Application workshop – technical assistance for Application
5:00 PM             planning and preparation.
7:00 PM             3. Public Hearing to receive comments on development of the 2008
                    Annual Plan.
10/08-12/15/07      4. Applicants evaluate eligible program areas and develop proposed
                    Application.
                    5. Municipalities advertise a public hearing to inform citizens of the
                    application content and to solicit comments and recommendations.
                    6. Municipalities conduct a public hearing.
                    7. Prepare project description and complete County Application
                    package.
                    8. Municipalities pass resolution by governing body for proposed use of
                    funds.
12/14/07            9. Last date to submit applications to Community Development Office
                    (Submit one copy only.)
12/14/07-01/31/08   10. Community Development Office reviews applications and submits
                    a summary of applications received to Executive Committee of
                    Community Development Advisory Committee.
01/24/08            11. Reorganization of Community Development Advisory Committee-
5:30 PM             nominations, election of officers and Executive Committee.
01/31/08            12. Meeting of Executive Committee to review applications.
5:30 PM
02/21/08            13. Meeting of General Community Development Advisory
5:30 PM             Committee to review recommendations of Executive Committee.
03/18/08            14. Publish Notice of 30-day comment period on 2008 Annual Plan and
                    Notice of Public Hearing #1 (04/03/08).
04/03/08            15. Public Hearing #1 conducted by Advisory Committee
5:30 PM
04/04/08            16. Publish Notice of Public Hearing #2 and Intention of Board to adopt
                    Resolution to file Application.
04/17/08            17. End 30-day comment period.
04/23/08            18. Public Hearing #2 conducted by Board of Chosen Freeholders and
7:00 PM             adoption of Resolution to file Year 2008 Application.
05/13/08            19. CDBG Application submitted to HUD Newark.
06/02/08            20. Public Notice of No Significant Impact on the Environment and
                    Request for Release of Funds.
07/01/08            21. FY 2008 Program Year starts.
07/25/08            22. Grant funds release by HUD (estimated date); Sub-grantee
                    Agreements issued.




                                             5
SECTION VI. Criteria for Selection of Proposed Activities

The following criteria will be applied in selecting activities for funding:

   1.      A proposed activity must address one of the three National Objectives of the
           Housing and Community Development Act of 1974: see Section II. Overall
           Objectives {Ref. 24 CFR 570.208}. Priority is given to projects that benefit
           low/moderate income persons.
   2.      The staff will review the applicant’s past performance in the Community
           Development Block Grant Program particularly the timely implementation of
           previously funded activities. Penalties will be levied against proposed projects
           from applicants that did not complete their most recent prior year project on time
           in accordance with the policy for Enforcement of Spending Time Limits (see
           Section VII below).
   3.      Proposed activities must be able to be accomplished within a 12 month time
           period: by September 30, 2009 (12 months from the expected date of formal
           agreements). Applicants must gauge the time needed for project design,
           obtaining permits or additional funding and other pre-project requirements and
           show all phases of the project in the Application Form Implementation Schedule
           (Form BC08-4).
   4.      No activity will be funded which will result in the demolition or conversion to
           other use of occupied or vacant-occupiable low moderate income dwelling units
           or which will cause displacement of persons from their homes.
   5.      The application must be complete. Information must be clear and sufficient to
           demonstrate that the activity is eligible and meets a national objective.
   6.      Applicant must be eligible to apply for 2008 funding based on the
           alphabetical listing under Section V. Application Process: “Every
           Other Year Process”.

                     SECTION VII. Approvals and Implementations

Following Public Hearing #2, applicants with activities that have been selected to be
included in the County’s 2008 program year application to HUD will be so notified.

Final approval from HUD is required before any activity can be funded.

Activities that are approved for the 2008 program year must be completed within a strict
time period anticipated to begin August 2008 and end September 2009.

        Implementation Schedule

If funded, recipients will be held to an implementation schedule that completes the
proposed activity within the established time frame. In developing proposed activities,
applicants must look at all factors affecting the implementation time of the activity; i.e.:
design, permitting, contracting or manpower, other funding sources, etc., to be sure they
can be coordinated to work within the established time frame for the project. Penalties will
be imposed in future year funding on applicants that do not complete 2008 activities within
the time frame.




                                                 6
       5-Year Benefit

All approved projects will be required to provide a minimum of five years of benefit to the
populations, areas and/or communities that they are designed to serve. The five year
period begins on the date that the County considers the project complete, usually upon
release of the final payment to the grant recipient or the relinquishing of excess funding by
the recipient, whichever is later.

       Enforcement of Spending Time Limits

Enforcement of the time limit on spending is essential to the County meeting the spending
deadlines established by HUD. Therefore, the following penalties for poor performance will
be imposed.

An applicant that did not complete its previous project by the end of the sub-grantee
agreement term will have the funding they would normally be granted reduced. The extent
of reduction will be 10% for each month of late performance. The Board reserves the
option of granting extensions to project completion dates of no more than three months
when additional time is warranted. The 10% reduction will not be applied against an
extension if the Board considered the extension to be warranted. Applicants that received
an extension and did not complete the project by the end of the extension will have a 15%
reduction for each month of late performance. The Board may also approve extensions to
the term of a sub-grantee agreement for convenience when a project will not be completed
by the original end date. The 10% reduction will also be applied to extension periods
approved for convenience (not as warranted).

       Enforcement of a five-year low/mod benefit – Privately owned Public Facilities

Projects involving the acquisition or improvement of privately owned real property, such as
senior centers, community centers, historic properties and most other types of public
facilities, will be encumbered by a lien, which will be released upon fulfillment of the five-
year benefit requirement.

                          SECTION VIII. The Proposal Package

2008 marks the fourth year of a five-year comprehensive community development program.
The County, on an annual basis, solicits proposals. Applicants must use the forms provided
in this Guide in developing applications for funding. The forms are designed to enable the
County to determine if a proposed project is eligible for funding and is consistent with the
overall community development program goals and objectives.

The Community Development Office reserves the right to require additional information, not
stated in the application packages, when deemed necessary to determine eligibility of a
proposed activity or management capacity of the applicant.




                                               7
   BURLINGTON COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
                 PREAPPLICATION AND GUIDE PACKAGE

                                           PART II
                                     APPLICATION FORMS


Included herein are the following:

       Application Package Checklist
       Applicant Certifications and Authorization

Form BC08-1 – Comprehensive Community Development Objectives and Outcomes

Form BC08-2 – Summary of Proposed Project

Form BC08-3 – Project Cost Summary

Form BC08-4 – Project Implementation Schedule

Form BC08-5 – Project Information Form

Form BC08-6 – Sole Source Aquifer Review

                                     PART III
                            SUPPLEMENTARY INFORMATION

Appendix 1 – Sample Public Hearing Notice

Appendix 2 – Eligible Activity Categories

Appendix 3 – Federal Regulations Part 570




                                              8
             COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
                    PROPOSAL PACKAGE CHECKLIST

CHECK IF
COMPLETE
           1.    Applicant Certifications and Authorizations: signed, witnessed
                 and dated.

           2.    Form BC08-1: Comprehensive Community Development Plan:
                 Housing and Community Development Objectives and Outcomes.

           3.    Form BC08-2: Summary of Proposed Project detailing the
                 activity proposed, location, beneficiaries and accomplishments.

           4.    Form BC08-3: A completed “Project Cost Summary” detailing
                 the project budget for the 2008 proposal.

           5.    A project location map. (Municipalities will be supplied with a
                 base map for this purpose.) This map should identify the following:
                 a. Census Tract and Block Group(s)
                 b. Location of proposed activities including boundaries of areas in
                    which activities will be concentrated and service areas of activities
                    where appropriate.

           6.    Two (2) sets of color photographs of the project location site(s)
                 are required for all construction or property improvement projects.
                 Photographs of buildings must show and label the front, back, both
                 sides and street scene and give directional loci. Photographs of other
                 projects must show and label the site and immediate surrounding area
                 for every proposed construction site. All photographs must be clearly
                 marked to indicate project. Photographs will be used to identify any
                 historic or archeological concerns. (Two original sets of photographs
                 are required).

           7.    Form BC08-4: A “Proposed Implementation Schedule” which
                 predicts activity performance to completion. All projects should be
                 undertaken and completed within a 12-month period.

           8.    Form BC08-5: Project Information Form (Water and Sewer).

           9.    Form BC08-6: Sole Source Aquifer Review Form for Non-
                 Housing.

           10.   Audit Report; Complete audit of applicant organization for the
                 most recent fiscal year, FY 2006/2007.




                                          9
11.   If applicant is a municipality, evidence of the Public Hearing:
      A) Copy of the notice of the Public Hearing (published 10 days before
      the hearing); and B) Copy of the minutes of the hearing.

12.   If applicant is a municipality, resolution of the governing body
      authorizing the submission of the application to the County.

13.   If applicant is a non-profit agency not previously funded under
      the CDBG Program within the last four years, the following items must
      be provided:
      a. Proof of your organization’s non-profit status: IRS Form 502(c)(3).
      b. A copy of IRS Form 990, Tax Return for Tax Exempt Organization.
      c. Articles of Incorporation.
      d. By-laws of the Corporation, along with a list of the corporation’s
          officers and their responsibilities.
      e. Description of your organization, to include:
              1) Broad picture of organization with a statement of mission
              2) Location
              3) History and accomplishments
      f. General administrative plan for implementation of your proposed
          project including fiscal and program management.
      g. Other sources of funding for the project:
              1) Funds applied for (sources and amounts)
              2) Funds committed to date (sources and amounts)
      h. A financial statement of the 2007 audit.




                              10
                  APPLICANT CERTIFICATIONS AND AUTHORIZATION

I, ___________________________________, __________________________, hereby
              (Typed Name)                           (Title)
certify that:

1.   The proposed project will not result in permanent involuntary displacement of any
     family, individual, business, non-profit organization or farm, or their personal
     property.

2.   Special assessments to recover capital costs of the proposed activity, either the
     CDBG funded or non CDBG portion of costs, will not be made against properties
     owned and occupied by low and moderate income persons.

3.   If selected to receive Community Development Block Grant funds, the project will be
     operated in accordance with all applicable laws and regulations, including the CDBG
     Entitlement Grant Regulations at 24 CFR Part 570, Civil Rights Acts, the Fair Housing
     Act and the Americans with Disabilities Act.

4.   I am authorized by the municipality or organization identified within to submit this
     application.


_____________________________            _______________________________
Signature                                Date


_____________________________
Witness




                                           11
FORM BC08-1

                BURLINGTON COUNTY COMMUNITY DEVELOPMENT
                          BLOCK GRANT PROGRAM
                COMPREHENSIVE COMMUNITY DEVELOPMENT PLAN
                            2008 ANNUAL PLAN

The information presented by the applicant in Housing and Community Development
Objectives and Outcomes will be used to assist the County in development of the 2008
Annual Plan. The County must prepare an Annual Plan in order to qualify to receive CDBG
funds from HUD.

COMMUNITY: ______________________________________

                  Housing and Community Development Objectives
                   Overall Objectives and Outcomes Assessment:

Provide an overall picture of the community development needs of the community and the
level of priority for addressing the different objectives and outcomes.

   1.     Identify which objective will be addressed by the activity proposed in this
          application. Choose only ONE objective:

          [ ] Suitable Living Environment – This objective relates to activities that are
          designed to benefit communities, families or individuals by addressing issues in
          their living environment.

          [ ] Decent Affordable Housing – This objective focuses on housing programs
          where the purpose of the program is to meet individual family or community
          needs and not programs where housing is an element of a larger effort.

          [ ] Creating Economic Opportunities – This objective applies to the types of
          activities related to economic development, commercial revitalization, or job
          creation.

   2.     Identify which outcome category best reflects what you are seeking to achieve
          (the results) in funding a particular activity.

          [ ] Availability/Accessibility – This outcome category applies to activities that
          make services, infrastructure, housing, or shelter available or accessible to low
          and moderate income people, including persons with disabilities. In this
          category, accessibility does not refer only to physical barriers, but also to making
          the affordable basics of daily living available and accessible to low and moderate
          income people

          [ ] Affordability – This outcome applies to activities that provide affordability in
          a variety of ways in the lives of low and moderate income people. It can include
          the creation or maintenance of affordable housing, basic infrastructure hook-ups,
          or services such as transportation or day care.

          [ ] Sustainability: Promoting Livable or Viable Communities – This
          outcome applies to projects where the activity or activities are aimed at
          improving communities or neighborhoods, helping to make them livable or viable


                                             12
          by providing benefit to persons of low and moderate income or by removing or
          eliminating slums or blighted areas, through multiple activities or services that
          sustain communities or neighborhoods.




Information Sources:




                                             13
FORM BC08-2

      BURLINGTON COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
                           PROGRAM YEAR 2008
                      SUMMARY OF PROPOSED PROJECT

1.   Applicant: _______________________________________________

2.   Address: ________________________________________________

     ________________________________________________________

3.   Project Contact Person: ____________________________________
     Alternate:
     a.      Title/Position: _______________________________________

     b.       Telephone Number(s): _________________________________

     c.       Office Hours: ________________________________________

4.   Engineer: _______________________________________________

     Engineer Contact Person: ___________________________________

     Engineer Address: _________________________________________

     Engineer Telephone Number: ________________________________

5.   Project Description: Narrative (include specific project location, street address,
     Census Tract and/or Block Group within which the activity will be undertaken and measurable
     units of accomplishment (e.g. 2,000 lf of paving; 20 rehabilitated dwelling units; 200 low-
     income residents benefiting from recreational facility):

     ___________________________________________________________________

     ___________________________________________________________________

     ___________________________________________________________________

     ___________________________________________________________________

     ___________________________________________________________________

     ___________________________________________________________________

     Census Tract _____ BG _____        Census Tract _____ BG _____

     *NOTE:           Project location maps are key elements of the application. Applicants
                      must clearly define the project location and adjacent/surrounding areas. All
                      information on the maps must be legible. Project locations maps are used for
                      the environmental review process and must be forwarded to other agencies for
                      review pursuant to project approval.
1.   If the proposed activity will serve an area outside or beyond the block group in which it is
     located, identify all census tracts and block groups that comprise the service area.

     ___________________________________________________________________

     ___________________________________________________________________




                                              14
2.       What objective from (Form BC07-1) is the project designed to address?

         ___________________________________________________________________

         ___________________________________________________________________

         ___________________________________________________________________

3.       What is the anticipated outcome of this proposed activity?

         ___________________________________________________________________

         ___________________________________________________________________

         ___________________________________________________________________

         ___________________________________________________________________

         ___________________________________________________________________

         ___________________________________________________________________

4.       Describe how the project addresses one or more of the following Statutory Objectives of the
         Housing and Community Development Act (See 24 CFR, Part 570.208)

         A.      Addresses the needs of low and moderate income persons: 570.208(a) Check Item 1
                 or 2 and describe how project addresses this objective:

                 1.              Directly benefits low/mod income households
                        NOTE: Projects that have low/moderate income eligibility
                        requirements are considered to directly benefit low and moderate-income
                        families exclusively. For the purpose of the Community Development
                        Program, the income limit for such direct benefit activities are based on family
                        size as follows:

                                     LOW INCOME GUIDELINES

Family          1           2           3          4           5           6           7           8
Size
Income        $40,400    $46,150    $51,950     $57,700     $62,300    $66,950     $71,550     $76,150
Limit
                        DESCRIPTION: ___________________________________________

                        ________________________________________________________

                        ________________________________________________________

                 2.            Serves an area where the majority of persons are
                               low/moderate income:
                        NOTE: Activities that serve a low/moderate income area, as opposed to
                        having direct beneficiaries, are eligible. The majority of beneficiaries of such
                        area benefit activities must be low and moderate-income persons. For the
                        purposes of the Community Development Block Grant Program, areas in which
                        the majority of beneficiaries are low and moderate income are Census Tract
                        Block Groups whose percentage of low/mod residents is at or below the Urban
                        County’s upper quartile percentage. Maps are on file at the Community
                        Development Office outlining these areas.

                        DESCRIPTION: ___________________________________________



                                                   15
                     ________________________________________________________

                     ________________________________________________________

     B.      Eliminates slums and blight: 570.208(b)

             DESCRIPTION: _________________________________________________

             ______________________________________________________________

             ______________________________________________________________

     C.      Meets community development needs having a particular urgency:
             570.208(c)

             DESCRIPTION: _________________________________________________

             ______________________________________________________________

             ______________________________________________________________

5.   What portion of the total number of people benefiting form proposed activity is low and
     moderate income? _________________%.

6.   What is the source of the information provided in Item 5 above?

     ___________________________________________________________________

     ___________________________________________________________________

     ___________________________________________________________________

     ___________________________________________________________________

7.   The project is eligible according to what section of the regulations: (See Subpart C, “Eligible
     Activities”, Part 570, the Community Development Block Grant Regulations) (Addendum):

     ___________________________________________________________________

     ___________________________________________________________________

     ___________________________________________________________________

     ___________________________________________________________________

8.   The total project budget for the proposed activity is $______________________ (NOTE:
     The applicant is required to provide a detailed budget proposal using the budget form
     attached.




                                                16
FORM BC08-3
APPLICANT: __________________________________________
                      BURLINGTON COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
                                       2008 PROPOSED COST SUMMARY
          A                  B                C                D                E                          F
  Budget Categories    BC Community   Agency/Municipal   Name of Other    Amount of Other           Total Program
                        Development         Share       Funding Sources    Source Share                Budget
                           Share
1.                  $                $                                  $


2.                     $                    $                                         $


3.                     $                    $                                         $


4.                     $                    $                                         $


5.                     $                    $                                         $


TOTALS:                $                    $                                         $



NOTE:
Column   A:   Itemize costs for proposed activity.
Column   B:   Indicate amount of CDBG funds to be used for each cost item and total CDBG request.
Column   C:   Indicate amount of agency/municipal funds for each cost item and total amount.
Column   D:   Name other funding sources to be used in support of proposed project.
Column   E:   Indicate amount of other funding to be used for each cost item and total amount.
Column   F:   TOTAL for each cost item (all resources)
              GRAND TOTAL PROJECT COST




                                                            17
FORM BC08-4
                       BURLINGTON COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
                                   2008 PROJECT IMPLEMENTATION SCHEDULE

APPLICANT:   __________________________________________

ACTIVITY TITLE: _______________________________________

PHASE OF       2008    OCT.   NOV.   DEC.   2009   FEB.   MARCH   APRIL   MAY   JUNE   JULY   AUG.   SEPT.
PROJECT        SEPT.                        JAN.
ACTIVITY




                                                   18
                           ENVIRONMENTAL REVIEW

All proposed activities are subject to Federal, State, local and other agency
environmental protection regulations. In order to assure compliance, as required,
the Community Development Program staff must initiate various review procedures
upon receipt of applications. To assist with and expedite the environmental review
process, applicants are required to complete the following forms:

a.    Project Information Form (Water and Sewer) Form BC08-5.
b.    Sole Source Aquifer Review Form BC08-6 Non-Housing.




                                        19
FORM BC08-5

                            PROJECT INFORMATION FORM

APPLICANT:
______________________________________________________________

ACTIVITY DESCRIPTION: ______________________________________________
___________________________________________________________________

This form must be completed for all projects involving construction

PLEASE ELABORATE ON ANY “YES” ANSWER. USE ADDITIONAL PAGES AS NEEDED.

                                                                 YES   NO
1.     Will the project encroach upon wetlands or a waterway?

2.     Will the project require potable water? If no, go to 3.

       If yes, is municipal water available?
       If yes, will a well be drilled?

3.     Will the project require wastewater disposal? If no, go
       to 4.

       If yes, is sewerage available?
       If yes, will a septic system(s) be included?

4.     Will the project involve demolition?

Proposed budget: $________________________

This attachment was completed by:

Name/Title:   ________________________________________________________

Address: ___________________________________________________________

Telephone #: ________________________________________________________




                                          20
FORM BC08-6                                                         FY __________

                COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
                       SOLE SOURCE AQUIFER REVIEW

Applicant: __________________________________________________________

Activity Description: __________________________________________________

___________________________________________________________________

             NON-HOUSING PROJECT/ACTIVITY INITIAL SCREEN CRITERIA
                 (For projects in a designated Sole Source Aquifer Area)
                                                                  ENCLOSED
                                                                  YES NO N/A
1. Will the project/activity include or directly cause: (Check
   appropriate items)
           construction or expansion of solid waste disposal,
           recycling or conversion facilities
           construction or expansion or closure of landfills
           construction or expansion of water supply facilities
           (i.e.: treatment plant, pump houses, etc.)
           construction or expansion of on-site wastewater
           treatment plants or sewage trunk lines, greater than
           1/4 mile
           construction or expansion of gas or petroleum trunk
           lines, greater than 1,200 feet
           construction or expansion of railroad spurs or similar
           extensions
           construction or expansion of municipal sewer
           treatment plants
2. Will the project/activity include storage or handling of any
   Hazardous constituents as listed in Attachment 4,
   Hazardous Constituents?

   If these constituents are used during the construction phase
   of the project, an assurance statement must be provided
   indicating that chemicals will be used in a safe and proper
   manner, and that they will be promptly removed after
   construction is completed.
3. Will the project/activity include bulk storage of petroleum
   or underground or aboveground tanks in excess of
   1,000 gallons?
4. Will the project/activity require a federal or state discharge
   Elimination permit or modification of an existing permit?

This attachment was completed by:

Name/Title: _________________________________________________________

Address: ___________________________________________________________
Telephone #: ________________________________________________________




                                          21
                                     APPENDIX 1

NOTE: TO APPEAR IN NEWSPAPER AT LEAST 10 DAYS PRIOR TO PUBLIC HEARING

                             PUBLIC HEARING NOTICE

                          NOTICE OF A PUBLIC HEARING
                           (Insert name of municipality)
            YEAR XXXIV (2008) COMMUNITY DEVELOPMENT APPLICATION

TO ALL INTERESTED PERSONS, GROUPS AND AGENCIES:

On or before ________________________, ___________________________(name
of municipality) intends to submit a request to the Burlington County Office of
Community Development for Community Development Block Grant funds. Prior to
submitting its application for funds, _________________________(municipality) will
conduct a public hearing at its regular town meeting. The hearing will be held:

DATE:         (insert date of hearing)
TIME:         (insert time of hearing)
LOCATION:     (insert the address of the place the hearing will be held)
PURPOSE:      This hearing will be held to afford interested parties the opportunity to
              review and comment on the activities that (insert name of
              municipality) will include in its application for Community Development
              funds. Residents of (insert name of municipality) are invited to attend
              this hearing and comment during the public portion of the hearing.

For additional information concerning this hearing, the public may write to or call
(insert name and phone number of municipality contact person, insert address of
municipal offices).

Persons requiring special assistance to participate in this hearing due to condition of
handicap or disability may call the above-indicated contact person 48 hours prior to
the hearing to make proper arrangements for participation.




                                           22
                                 APPENDIX 2

           ELIGIBLE ACTIVITY CATEGORIES (From 24 CFR Subpart C)
REGULATION       PROGRAM ACTIVITY CATEGORY                       EXAMPLES
570.201(a)    Acquisition of Real Property           Land, Buildings, Rights-of-Way
570.201(b)    Disposition of Real Property
570.201(c)    Public Facilities and Improvements     (General)
                                                     Senior Centers
                                                     Handicapped Centers
                                                     Homeless Facilities (Other than
                                                              single family units) See
                                                              note on P25
                                                     Youth Centers
                                                     Neighborhood Facilities
                                                     Parks, Recreational Facilities
                                                     Parking Facilities
                                                     Removal of Architectural
                                                     Barriers
                                                     Solid Waste Disposal
                                                     Improvements
                                                     Flood Drain Improvements
                                                     Water Improvements
                                                     Street Improvements
                                                     Sidewalks
                                                     Child Care Centers
                                                     Tree Planting
                                                     Sewer Improvements
                                                     Health Facilities
                                                     Facilities for Abused and
                                                              Neglected Children
                                                     Asbestos Removal
                                                     Facilities for AIDS Patients
                                                     Group Homes with Special Care
                                                              Attendance
570.200(c)    Special Assessments to Recover Capital
              Costs
570.201(d)    Clearance and Demolition               Clean up of Contaminated Sites




                                       23
REGULATION     PROGRAM ACTIVITY CATEGORY               EXAMPLES
570.201(e)   Public Services (General)      Senior Services
                                            Handicapped Services
                                            Homeless Services
                                            Youth Services
                                            Transportation Services
                                            Substance Abuse Services
                                            Battered and Abused Spouses
                                            Education
                                            Energy Conservation
                                            Homebuyer Downpayment
                                                   Assistance
                                            Recreation
                                            Employment Training
                                            Crime Awareness/Prevention
                                            Fair Housing Activities
                                                   Tenant/Landlord
                                                   Counseling
                                            Child Care Services
                                            Health Services
                                            Abused and Neglected Children
                                            Service for People with AIDS
                                            Screening for Lead based
                                                   Paint/Lead Hazards
                                                   Poisoning
570.201(f)   Interim Assistance
570.201(g)   Payment of Non-Federal Share   Federal Grant-in-Aid Program
570.201(h)   Urban Renewal Completion
570.201(i)   Relocation
570.201(l)   Privately Owned Utilities
570.201(o)   Microenterprise Assistance     Credit, business support,
                                            general support to owners
570.201(p)   Technical Assistance           Neighborhood Revitalization
                                            Economic Development
570.202(b)   Housing Rehabilitation         *See note below
                                            Emergency Home Repairs
                                            Lead Based Paint Abatement
                                            Energy Efficiency Improvements
                                            Water or Sewer Line
                                            Connections
570.202(c)   Code Enforcement               Neighborhood Revitalization
570.202(d)   Historic Preservation
570.202(f)   Lead-based Paint Hazard
             Evaluation/Reduction
570.203      Special Economic Development   Comm/Ind. Building Acquisition,
             Activities                            Construction,
                                                   Rehabilitation
                                            Loans to Businesses for
                                                   Expansion
                                            Technical Assistance and
                                                   Services for Business
                                                   Development



                                      24
REGULATION         PROGRAM ACTIVITY CATEGORY                            EXAMPLES
570.204(a)       Special Activities by Community-Based       Neighborhood Revitalization
                 Development Organizations (CBDOs)           Economic Development
                                                             Energy Conservation
570.207(b)(3)    New Housing Support                         Clearance site assemblage/
                                                                     improvements
                                                             Public Improvements


*NOTE: Acquisition, rehabilitation, or conversion activities for the purposes of
providing affordable housing for low-income renters or buyers are eligible activities
for municipalities. Housing activities are not being funded for non-profits through this
application process. See further explanation found in Part I, Section IV.
Limitations on Activities.




                                          25
                             FEDERAL REGULATIONS

                                   Part 570
                       Community Development Block Grants

Subparts      A:     General Provisions                                Pages   1-3
              C:     Eligible Activities                               Pages   3-19
              J:     Grant Administration                              Pages   19-29
              K:     Other Program Requirements                        Pages   29-33
Appendix A
Part 570 -    Guidelines and Objectives for Evaluating Project Costs
              And Financial Requirements                               Pages 33-35

(Subparts D, E, G, I, M and N are omitted as not relevant to the sub-grantee
application process).




                                         26
                     COMMUNITY DEVELOPMENT BLOCK GRANTS
                                   (24 CFR 570)
                   Part 570 – Community Development Block Grants

                               Subpart A – General Provisions
                                                570.507       Reports.
Sec.                                            570.508       Public access to program
570.1          Purpose and primary                            records.
               objective.                       570.509       Grant closeout procedures.
570.2          (Removed)                        570.510       Transferring projects from
570.3          Definitions.                                   urban counties to
570.4          Allocation of funds.                           metropolitan cities.
570.5          Waivers                          570.511       Use of escrow accounts for
                                                              rehabilitation of privately
Subpart   C – Eligible Activities                             owned residential property.
                                                570.512       (Reserved).
570.200        General policies.                570.513       Lump sum drawdown for
570.201        Basic eligible activities.                     property rehabilitation
570.202        Eligible rehabilitation and                    financing.
               preservation activities.
570.203        Special economic                 Subpart K – Other Program
               development activities.          Requirements
570.204        Special activities by
               Community Based                  570.600       General.
               Development Organizations)       570.601       Pub. L. 88-352 and Pub. L.
               CBDOs).                                        90284; affirmatively
570.205        Eligible planning, urban                       furthering fair housing; and
               environmental design and                       Executive Order 11063.
               policy-planning-                 570.602       Section 109 of the Act.
               management-capacity              570.603       Labor standards.
               building activities.             570.604       Environmental standards.
570.206        Program administrative           570.605       National Flood Insurance
               costs.                                         Program.
570.207        Ineligible activities.           570.606       Displacement, relocation,
570.208        Criteria for national                          acquisition and replacement
               objectives.                                    of housing.
570.209        Guidelines for evaluating        570.607       Employment and
               and selecting economic                         contracting opportunities.
               development projects.            570.608       Lead-based paint.
                                                570.609       Use of debarred,
Subpart   J – Grant Administration                            suspended, or ineligible
                                                              contractors or subrecipients.
570.500        Definitions.                     570.610       Uniform administrative
570.501        Responsibility for grant                       requirements and cost
               administration.                                principles.
570.502        Applicability of uniform         570.611       Conflict of interest.
               administrative                   570.612       Executive Order 12372.
               requirements.                    570.613       Eligibility restrictions for
570.503        Agreements with                                certain resident aliens.
               subrecipients.                   570.614       Architectural Barriers Act
570.504        Program income.                                and Americans with
570.505        Use of real property.                          Disabilities Act.
570.506        Records to be maintained.


                                             i
SUBPART A – General Provisions             CDBG funds means Community             Government Fiscal Assistance Act of
                                        Development Block Grant funds,            1972 and located on reservations in
§ 570.1 Purpose and primary             including funds received in the form      Oklahoma as determined by the
objective.                              of grants under Subpart D, F or §         Secretary of the Interior or in
                                        570.405 of this part, funds awarded       Alaskan Native Villages.
   (a) This part describes policies     under Section 108(q) of the Housing          Community Development
and procedures applicable to the fol-   and Community Development Act of          Financial Institution has the same
lowing programs authorized under        1974, loans guaranteed under Sub-         meaning as used in the Community
Title I of the Housing and Com-         part M of this part, urban renewal        Development Banking and Financial
munity Development Act of 1974, as      surplus grant funds, and program          Institutions Act of 1994 (12 U.S.C.
amended:                                income as defined in § 570.500(a).        4701 note).
   (1) Entitlement grants program          Chief Executive Officer of a State        Consolidated plan. The plan
(Subpart D):                            or unit of general local government       prepared in accordance with 24 CFR
   (2) Small Cities Program: HUD        means the elected official or the         Part 91, which describes needs,
administered CDBG nonentitlement        legally designated official, who has      resources, priorities and proposed
funds (Subpart F):                      the primary responsibility for the        activities to be undertaken with
   (3) State program: State-admin-      conduct of that entity’s                  respect to HUD programs, including
istered CDBG nonentitlement funds       governmental affairs. Examples of         the CDBG program. An approved
(Subpart 1):                            the “chief executive officer” of a unit   consolidated plan means a
   (4) Special Purpose Grants           of general local government are:          consolidated plan that has been
(Subpart E);                            the elected mayor of a municipality;      approved by HUD in accordance with
   (5) Urban Development Action         the elected county executive of a         24 CFR Part 91.
Grant Program (Subpart G); and          county; the chairperson of a county          Discretionary grant means a grant
   (6) Loan Guarantees (Subpart M).     commission or board in a county that      made from the various Special
(b) Subparts A, C, J, K and O applies   has no elected county executive; and      Purpose Grants in accordance with
to all programs in paragraph (a)        the official designated pursuant to       Subpart E of this part.
except as modified or limited under     law by the governing body of a unit           Entitlement amount means the
the provisions of these subparts or     of general local government.              amount of funds that a metropolitan
the applicable program regulations.        City means the following:              city is entitled to receive under the
In the application of the subparts to      (1) For purposes of the                Entitlement Grant Program, as
Special Purpose Grants or the Urban     Entitlement Community                     determined by the formula set forth
Development Action Grant Program,       Development Block Grant and Urban         in Section 106 of the Act.
the reference to funds in the form of   Development Action Grant eligibility:         Extent of growth lag shall have
grants in the term “CDBG funds”, as        (i) Any unit of general local          the meaning provided in Section
defined in § 570.3, shall mean the      government that is classified as a        102(a)(12) of the Act.
grant funds under those programs.       municipality by the United States            Extent of housing overcrowding
These subparts do not apply to the      Bureau of the Census, or                  shall have the meaning provided in
State program (Subpart I) except to        (ii) Any other unit of general local   Section 102(a)(10) of the Act.
the extent expressly referred to.       government that is a town or town-            Extent of housing overcrowding
   (b) The primary objective of the     ship and that, in the determination       means the number of housing units
programs authorized under Title I of    of the Secretary:                         with 1.01 or more persons per room
the Housing and Community                  (A) Possesses powers and               based on data compiled and
Development Act of 1974, as             performs functions comparable to          published by the United States
amended, is described in Section        those associated with municipalities;     Bureau of the census available from
101(c) of the Act {42 U.S.C.               (B) Is closely settled (except that    the latest census referable to the
5301(c)}.                               the Secretary may reduce or               same point or period in time.
                                        waive this requirement on a case-by-         Extent of poverty means the
§ 570.2 (Removed).                      case basis for the purposes               number of persons whose incomes
                                        of the Action Grant Program); and         are below the poverty level based on
§ 570.3 Definitions.                       (C) Contains within its boundaries     data compiled and published by the
                                        no incorporated places as defined by      United States Bureau of the Census
The terms HUD and Secretary are         the United States Bureau of Census        available from the latest census
defined in 24 CFR Part 5. All of the    that has not entered into cooperation     referable to the same point or period
following definitions in this section   agreements with the town or town-         in time and the latest reports from
that rely on data from the United       ship for a period covering at least       the Office of Management and
States Bureau of the Census shall       three years to undertake or assist in     Budget. For purposes of this part,
rely upon the data available from the   the undertaking of essential com-         the Secretary has determined that it
latest decennial census.                munity development and housing            is neither feasible nor appropriate to
                                        assistance activities. The determin-      make adjustments at this time in the
   Act means Title I of the Housing     ation of eligibility of a town or         computations of “extent of poverty”
and Community Development Act of        township to qualify as a city will be     for regional or area variations in
1974 as amended (42 U.S.C. 5301,        based on information available from       income and cost of living.
et seq.)                                the United States Bureau of the               Family means all persons living in
   Age of housing means the number      Census and information provided by        the same household who are related
of year-round housing units, as         the town or township and its              by birth, marriage or adoption.
further defined in Section 102(a)(11)   included units of general local              Household means all the persons
of the Act.                             government.                               who occupy a housing unit. The
   Applicant means a State, unit of        (2) For purposes of Urban              occupants may be a single family,
general local government, or an         Development Action Grant eligibility      one person living alone, two or more
Indian tribe that makes application     only, Guam, the Virgin Islands,           families living together, or any other
pursuant to the provisions of Sub-      American Samoa, the Common-               group of related or unrelated
part E, F, G or M.                      wealth of the Northern Mariana            persons who share living
   Buildings for the general conduct    Islands, the counties of Kauai, Maui      arrangements.
of government shall have the            and Hawaii in the State of Hawaii,            Income. For the purpose of
meaning provided in Section             and Indian tribes that are eligible       determining whether a family or
102(a)(21) of the Act.                  recipients under the State and Local      household is low and moderate-




                                                          1
income under Subpart C of this part,     Indian tribe shall have the meaning      referable to the same point or period
grantees may select any of the three     provided in Section 102(a)(17) of        in time.
definitions listed below for each        the Act.                                    Small business means a business
activity, except that integrally            Low- and moderate-income              that meets the criteria set forth in
related activities of the same type      household means a household              Section 3(a) of the Small Business
and qualifying under the same            having an income equal to or less        Act (15 U.S.C. 631, 636, 637).
paragraph of §570.208(a) shall use       than the Section 8 low-income limit         State shall have the meaning
the same definition of income. The       established by HUD.                      provided in Section 102(a)(2) of the
option to choose a definition does          Low- and moderate-income              Act.
not apply to activities that qualify     person means a member of a family           Unit of general local government
under § 570.208(a)(1`) (Area             having an income equal to or less        shall have the meaning provided in
benefit activities), except when the     than the Section 8 very low-income       Section 102(a)(1) of the Act.
recipient carries out a survey under     limit established by HUD. Unrelated         Urban county shall have the
§ 570.208(a)(1) generally must use       individuals will be considered as one-   meaning provided in Section
the area income data supplied by         person families for this purpose.        102(a)(6) of the Act. For the
recipients by HUD. The three                Low-income household means a          purposes of this definition, HUD will
definitions are as follows:              household having an income equal to      determine whether the county’s
(1)(i) “Annual income” as defined        or less than the Section 8 very low-     combined population contains the
under the Section 8 Housing              income limit established by HUD.         required percentage of low- and
Assistance Payments Program at 24           Low-income person means a             moderate-income persons by
CFR 813.106 (except that if the          member of a family that has an           identifying the number of persons
CDBG assistance being provided is        income equal to or less than the         that resided in applicable areas and
homeowner rehabilitation under §         Section 8 very low-income limit          units of general local government
570.202, the value of the                established by HUD. Unrelated            based on data from the most recent
homeowner’s primary residence may        individuals shall be considered as       decennial census, and using income
be excluded from any calculation of      one-person families for this purpose.    limits that would have applied for the
Net Family Assets); or                      Metropolitan area shall have the      year in which that census was taken.
   (ii) Annual Income as reported        meaning provided in Section                 Urban Development Action Grant
under the Census long-form for the       102(a)(3) of the Act.                    (UDAG) means a grant made by the
most                                        Metropolitan city shall have the      Secretary pursuant to Section 119 of
recent available decennial Census.       meaning provided in Section              the Act and Subpart G of this part.
This definition includes:                102(a)(4) of the Act.
   (A) Wages, salaries, tips,               Microenterprise shall have the        § 570.4 Allocation of funds.
commissions, etc.;                       meaning provided in Section
   (B) Self-employment income from       102(a)(22) of the Act.                      (a) The determination of eligibility
own non-farm business, including            Moderate-income household             of units of general government to
proprietorships and partnerships;        means a household having an              receive entitlement grants, the
   (C) Farm self-employment              income equal to or less than the         entitlement amounts, the allocation
income;                                  Section 8 low-income limit and           of appropriated funds to States for
   (D) Interest, dividends, net rental   greater than the Section 8 very low      use in nonentitlement areas, the
income, or income from estates or        income limit, established by HUD.        reallocation of funds, and the
trusts;                                     Moderate-income person means a        allocation of appropriated funds for
   (E) Social Security or railroad       member of a family that has an           discretionary grants under the
retirement;                              income equal to or less than the         Secretary’s Fund shall be governed
   (F) Supplemental Security             Section 8 low-income limit and           by the policies and procedures
Income, Aid to Families with             greater than the Section 8 very low-     described in Section 106 and 107 of
Dependent Children, or other public      income limit, established by HUD.        the Act.
assistance or public welfare             Unrelated individuals shall be              (b) The definitions in Section
programs;                                considered as one-person families        570.3 shall govern in applying the
   (G) Retirement, survivor, or          for this purpose.                        policies and procedures described in
disability pensions; and                    Nonentitlement amount means           Sections 106 and 107 of the Act.
   (H) Any other sources of income       the amount of funds that is allocated        (c) In determining eligibility for
received regularly, including            for use in a State’s nonentitlement      entitlement and in allocating funds
Veterans’ (VA) payments,                 areas as determined by formula set       under Section 106 of the Act for any
unemployment compensation, and           forth in Section 106 of the Act.         Federal fiscal year, HUD will
alimony; or                              Nonentitlement area shall have the       recognize corporate status and
   (ii) Adjusted gross income as         meaning provided in Section              geographical boundaries and the
defined for purposes of reporting        102(a)(7) of the Act.                    status of metropolitan areas and
under Internal Revenue Service              Population means the total            central cities effectives as of July 1
(IRS) Form 1040 for individual           resident population based on data        preceding such Federal Fiscal Year,
Federal annual income tax purposes.      compiled and published by the            subject to the following limitations:
   (1) Estimate the annual income of     United States Bureau of the Census           (1) With respect to corporate
a family or household by projecting      available from the latest census or      status as certified by the applicable
the prevailing rate of income of each    which has been upgraded by the           State and available for processing by
person at the time assistance is         Bureau top reflect the changes           the Census Bureau as of such date;
provided for the individual, family or   resulting from the Boundary and             (2) With respect to foundary
household (as applicable).               Annexation Survey, new                   changes or annexations, as are used
Estimated annual income shall            incorporations and consolidations of     by the Census Bureau in preparing
include income from all family or        governments pursuant to § 570.4,         population estimates for all general
household members, as applicable.        which reflects, where applicable,        purpose governmental units and are
Income or asset enhancement              changes resulting from the Bureau’s      available for processing by the
derived from the CDBG-assisted           latest population determination          Census Bureau as of such date,
activity shall not be considered in      through its estimating technique         except that any such boundary
calculating estimated annual income.     using natural changes (birth and         changes or annexations which result
                                         death) and net migration, and is         in the population of a unit of general
                                                                                  local government reaching or




                                                           2
exceeding 50,000 shall be                  Section 105 of the Act as further              (iii) Funds expended for the
recognized for this purpose whether        defined in this subpart.                   repayment of loans guaranteed
or not such changes are used by the           (2) Compliance with national            under the provisions of Subpart M
Census Bureau in preparing such            objectives. Grant recipients under         shall be excluded;
population estimates; and                  the Entitlement and HUD-                       (iv) Funds expended for the
    (3) With respect to the status of      Administered Small Cities Programs         acquisition, new construction or
Metropolitan Statistical Areas and         must certify that their projected use      rehabilitation of 570.208(a)(3) shall
central cities, as officially designated   of funds has been developed so as to       be counted for this purpose but shall
by the Office of Management and            give maximum feasible priority to          be limited to an amount determined
Budget as of such date.                    activities which will carry out one of     by multiplying the total cost
    (d) In determining whether a           the national objectives of benefit to      (including CDBG and non-CDBG
county qualifies as an urban county,       low and moderate income families or        costs) of the acquisition,
and in computing entitlement               aid in the prevention or elimination       construction or rehabilitation by the
amounts for urban counties, the            of slums or blight; the projected use      percent of units in such housing to
demographic values of population,          of funds may also include activities       be occupied by low and moderate
poverty, housing overcrowding, and         which the recipient certifies are          income persons.
age of housing of any Indian tribes        designed to meet other community               (v) Funds expended for any other
located within the county shall be         development needs having a                 activities qualifying under
excluded. In allocating amounts to         particular urgency because existing        §570.208(a) shall be counted for this
States for use in nonentitlement           conditions pose a serious and              purpose in their entirety.
areas, the demographic values of           immediate threat to the health or              (4) Compliance with
population, poverty, housing               welfare of the community where             environmental review procedures.
overcrowding and age of housing of         other financial resources are not          The environmental review
all Indian tribes located in all           available to meet such needs.              procedures set forth at 24 CFR Part
nonentitlement areas shall be              Consistent with the foregoing, each        58 must be completed for each
excluded. It is recognized that all        recipient under the Entitlement and        activity (or project as defined in24
such data on Indian tribes are not         HUD-administered Small Cities              CFR Part 58), as applicable.
generally available from the United        Programs must ensure, and maintain             (5) Cost principles. Costs
States Bureau of the Census and            evidence, that each of its activities      incurred, whether charged on a
that missing portions of data will         assisted with CDBG funds meets one         direct or an indirect basis, must be in
have to be estimated. In                   of the three national objectives as        conformance with OMB Circulars A-
accomplishing any such estimates           contained in its certification. Criteria   87, “Cost Principles for State, Local
the Secretary may use such other           for determining whether an activity        and Indian Tribal Governments”; A-
related information available from         addresses one or more of these             122, “Cost Principles for Non-Profit
reputable sources as may seem              objectives are contained as §              Organizations”; or A21, “Cost
appropriate, regardless of the data’s      570.208.                                   Principles for Educational
point or period of time and shall use         (3) Compliance with the primary         Institutions,” as applicable. All items
the best judgment possible in              objective. The primary objective of        of cost listed in Attachment B of
adjusting such data to reflect the         the ACT is described in Section            these Circulars that require prior
same point or period of time as the        101(c) of the Act. Consistent with         Federal agency approval are
overall data from which the Indian         this objective, Entitlement recipients     allowable without prior approval of
tribes are being deducted, so that         and recipients of the HUD-                 HUD to the extent they comply with
such deduction shall not create an         administered Small Cities Program in       the general policies and principles
imbalance with those overall data.         Hawaii must ensure that over a             stated in Attachment A of such
    (e) Amounts remaining after            period of time specified in their          circulars and are otherwise eligible
closeout of a grant that are required      certification not to exceed three          under this Subpart C, except for the
to be returned to HUD under the            years, not less than 70 percent of         following:
provisions of § 570.509, Grant             the aggregate of CDBG fund                     (i) Depreciation methods for fixed
Closeout Procedures, shall be              expenditures shall be for activities       assets shall not be charged without
considered as funds available for          meeting the criteria under §               HUD’s specific approval or, if
reallocation unless the appropriation      570.208(a) or § 570.208(d)(5) or           charged through a cost allocation
under which the funds were provided        (6) for benefiting low and moderate-       plan, the Federal cognizant agency.
to the Department has lapsed.              income persons; Insular area                   (ii) Fines and penalties (including
                                           recipients must meet this                  punitive damages) are unallowable
§ 570.5 Waivers.                           requirement for each separate grant.       costs to the CDBG program.
                                           The requirements for the HUD-                  (iii) Pre-award costs are limited to
   HUD’s authority for the waiver of       administered Small Cities Program in       those authorized under paragraph
regulations and for the suspension of      New York are in § 570.420(e)(2).           (h) of this section.
requirements to address damage in          Additional requirements for the HUD-           (b) Special policies governing
a Presdentially declared disaster area     administered Small Cities Program in       facilities. The following special
is described in 24 CFR Part 5 and in       Hawaii are in § 570.430(e). In             policies apply to:
Section 122 of the Act, respectively.      determining the percentage of funds            (1) Facilities containing both
                                           expended for such activities:              eligible and ineligible uses. A public
SUBPART C – Eligible Activities               (i) Cost of administration and          facility
                                           planning eligible under § 570.205          otherwise eligible for assistance
§ 570.200 General policies.                and § 570.206 will be assumed to           under the CDBG program may be
                                           benefit low and moderate income            provided with CDBG funds even if it
    (a) Determination of eligibility.      persons in the same proportion as          is part of a multiple use building
An activity may be assisted in whole       the remainder of the CDBG funds            containing ineligible uses, if:
or in part with CDBG funds only if all     and, accordingly shall be excluded             (i) The facility which is otherwise
of the following requirements are          from the calculation;                      eligible and proposed for assistance
met:                                          (ii) Funds deducted by HUD for          will occupy a designated and discrete
   (1) Compliance with Section 105         repayment or urban renewal                 area within the larger facility; and
of the Act. Each activity must meet        temporary loans pursuant to §                  (ii) The recipient can determine
the eligibility requirements of            570.802(b) shall be excluded;              the costs attributable to the facility
                                                                                      proposed for assistance as separate




                                                              3
and distinct from the overall costs of     assistance to the public                      (ii) Through loans or grants under
the multiple-use building and/or           improvement. Therefore, CDBG              agreements with subrecipients, as
facility.                                  funds may be used to pay special          defined at § 570.500(c); or
    (2) Fees for use of facilities.        assessments provided:                         (iii) By one or more public
Reasonable fees may be charged for             (i) The installation of the public    agencies, including existing local
the use of the facilities assisted with    improvements was carried out in           public agencies, that are designated
CDBG funds, but charges such as            compliance with requirements              by the chief executive officer of the
excessive membership fees, which           applicable to activities assisted under   recipient.
will have the effect of precluding         this part including environmental,            (2) Activities made eligible under
low- and moderate-income persons           citizen participation and Davis Bacon     § 570.204(a) may only be
from using the facilities, are not         requirements.                             undertaken by entities specified in
permitted.                                     (ii) The installation of the public   that section.
    (c) Special assessments under the      improvement meets a criterion for             (g) Limitation on planning and
CDBG program. The following                national objectives in §                  administrative costs. No more than
policies relate to special assessments     570.208(a)(1), (b), or (c); and           20% of the sum of any grant, plus
under the CDBG program:                    (iii) The requirements of §               program income, shall be expended
    (1) Definition of special              570.200(c)(2)(ii) are met.                for planning and program
assessment. The term “special                  (d) Consultant activities.            administrative costs, as defined in
assessment” means the recovery of          Consulting services are eligible for      §§ 570.205 and 570.206,
the capital costs of a public              assistance under this part for            respectively. Recipient of
improvement, such as streets, water        professional assistance in program        entitlement grants under Subpart D
or sewer lines, curbs, and gutters,        planning, development of community        of this part shall conform with this
through a fee or charge levied or          development objectives, and other         requirement by limiting the amount
filed as a lien against a parcel of real   general professional guidance             of CDBG funds obligated for planning
estate as a direct result of benefit       relating to program execution. The        plus administration during each
derived from the installation of a         use of consultants is governed by         program year to an amount no
public improvement, or a onetime           the following:                            greater than 20% of the sum of its
charge made as a condition of access           (1) Employer-employee type of         entitlement grant made for that
to a public improvement. This term         relationship. No person providing         program year (if any) plus the
does not relate to taxes, or the           consultant services in an employer-       program income received by the
establishment of the value of real         employee type of relationship shall       recipient and its subrecipients (if
estate for the purpose of levying real     receive more than a reasonable rate       any) during that program year.
estate, property, or ad valorem            of compensation for personal                  (h) Reimbursement for pre-award
taxes, and does not include periodic       services paid with CDBG funds. In         costs. The effective date of the
charges based on the use of a public       no event, however, shall such             grant agreement is the program year
improvement, such as water or              compensation exceed the equivalent        start date or the date that the
sewer users charges, even if such          of the daily rate paid for Level IV of    consolidated plan is received by
charges include the recovery of all or     the Executive Schedule. Such              HUD, whichever is later. For a
some portion of the capital costs of       services shall be evidenced by            Section 108 loan guarantee, the
the public improvement.                    written agreements between the            effective date of the grant
    (2) Special assessments to             parties that detail the                   agreement is the date of HUD
recover capital costs. Where CDBG          responsibilities, standards, and          execution of the grant agreement
funds are used to pay all or part of       compensation.                             amendment for the particular loan
the cost of a public improvement,              (2) Independent contractor            guarantee commitment.
special assessments may be imposed         relationship. Consultant services             (1) Prior to the effective date of
as follows:                                provided under an independent             the grant agreement, a recipient
    (i) Special assessments to recover     contractor relationship are governed      may incur costs or may authorize a
the CDBG funds may be made only            by the procurement requirements in        subrecipient to incur costs, and then
against properties owned and               24 CFR 85.36 and are not subject to       after the effective date of the grant
occupied by persons not of low and         the compensation limitation of Level      agreement pay for those costs using
moderate income. Such                      IV of the Executive Schedule.             its CXDBG funds, provided that:
assessments constitute program                 (e) Recipient determinations              (i) The activity for which the costs
income.                                    required as a condition of eligibility.   are being incurred is included, prior
    (ii) Special assessments to            In several instances under this           to the costs being incurred, in a
recover the non-CDBG portion may           subpart, the eligibility of an activity   consolidated plan action plan, an
be made provided that CDBG funds           depends on a special local                amended consolidated plan action
are used to pay the special                determination. Recipients shall           plan, or an application under Subpart
assessment in behalf of all properties     maintain documentation of all such        M of this part, except that a new
owned and occupied by low and              determinations. A written                 entitlement grantee preparing to
moderate income persons; except            determination is required for any         receive its first allocation of CDBG
that CDBG funds need not be used to        activity carried out under the            funds may incur costs necessary to
pay the special assessments in             authority of §§ 570.201(f),               develop its consolidated plan and
behalf of properties owned and             570.201(i)(2), 570.201(p),                undertake other administrative
occupied by moderate income                570.201(q), 570.202(b)(3),                actions necessary to receive its first
persons if the grant recipient             570.206(f), 570.209 and 570.309.          grant, prior to the costs being
certifies that it does not have                (f) Means of carrying out eligible    included in its consolidated plan;
sufficient CDBG funds to ay the            activities.                                   (ii) Citizens are advised of the
assessments in behalf of all of the            (1) Activities eligible under this    extent to which these pre-award
low and moderate income owner-             subpart, other than those authorized      costs will affect future grants;
occupied persons. Funds collected          under § 570.204(a), may be                    (iii) The costs and activities
through such special assessments           undertaken, subject to local law:         funded are in compliance with the
are not program income.                        (i) By the recipient through:         requirements of this part and with
    (3) Public improvements not                (A) Its employees, or                 the Environmental Review
initially assisted with CDBG funds.            (B) Procurement contracts             Procedures stated in 24 CFR Part 58;
The payment of special assessments         governed by the requirements of 24            (iv) The activity for which
with CDBG funds constitutes CDBG           CFR 85.36; and                            payment is being made complies




                                                             4
with the statutory and regulatory        construction or rehabilitation            religious entity enters into an
provisions in effect at the time the     (including historic preservation and      agreement with the recipient or
costs are paid for with CDBG funds;      removal of architectural barriers) of     subrecipient from which the CDBG
   (v) CDBG payment will be made         structures owned by such entities         funds are derived that, in connection
during a time no longer than the         (except as permitted under                with the provision of such services:
next two program years following         paragraph (j)(2) of this section with        (i) It will not discriminate against
the effective date of the grant          respect to rehabilitation and under       any employee or applicant for
agreement or amendment in which          paragraph (j)(4) of this section with     employment on the basis of religion
the activity is first included; and      respect to repairs undertaken in          and will not limit employment or
   (vi) The total amount of pre-         connection with public services)          given preference in employment to
award costs to be paid during any        regardless of the use to be made of       persons on the basis of religion;
program year pursuant to this            the property or structure. Property          (ii) It will not discriminate against
provision is no more than the grater     owned by primarily religious entities     any person applying for such public
of 25% of the amount of the grant        may be acquired with CDBG funds at        services on the basis of religion and
made for that year or $300,000.          no more than fair market value for a      will not limit such services or give
   (2) Upon the written request of       non-religious use.                        preference to persons on the basis of
the recipient, HUD may authorize            (2) CDBG funds may be used to          religion;
payment of pre-award costs for           rehabilitate buildings owned by              (iii) It will provide no religious
activities that do not meet the          primarily religious entities to be used   instruction or counseling, conduct no
criteria at paragraph (h)(1)(v) or       for a wholly secular purpose under        religious worship or services, engage
(h)(1)(vi) of this section, if HUD       the following conditions:                 in no religious proselytizing, and
determines, in writing, that there is       (i) The building (or portion           exert no other religious influence in
good cause for granting an exception     thereof) that is to be improved with      the provision of such public services;
upon consideration of the following      the CDBG assistance has been                 (4) Where the public services
factors, as applicable:                  leased to an existing or newly            provided under paragraph (j)(3) of
   (i) Whether granting the authority    established wholly secular entity         this section are carried out on
would result in a significant            (which may be an entity established       property owned by the primarily
contribution to the goals and            by the religious entity);                 religious entity, CDBG funds may
purposes of the CDBG program;               (ii) The CDBG assistance is            also be used for minor repairs to
   (ii) Whether failure to grant the     provided to the lessee (and not the       such property which are directly
authority would result in undue          lessor) to make the improvements;         related to carrying out the public
hardship to the recipient or                (iii) The leased premises will be      services where the cost constitutes
beneficiaries of the activity;           used exclusively for secular purposes     in dollar terms only an incidental
   (iii) Whether granting the            available to persons regardless of        portion of the CDBG expenditure for
authority would not result in a          religion;                                 the public services.
violation of a statutory provision of       (iv) The lease payments do not
any other regulatory provision;          exceed the fair market rent of the        § 570.201 Basic eligible
   (iv) Whether circumstances are        premises as, they were before the         activities.
clearly beyond the recipient’s           improvements are made;
control; or                                 (v) The portion of the cost of any     CDBG funds may be used for the
    (v) Any other relevant               improvements that also serve a non-       following activities:
considerations.                          leased part of the building will be           (a) Acquisition. Acquisition in
    (i) Urban Development Action         allocated to and paid for by the          whole or in part by the recipient, or
Grant. Grant assistance may be           lessor;                                   other public or private nonprofit
provided with Urban Development             (vi) The lessor enters into a          entity, by purchase, long-term lease,
Action Grant funds, subject to the       binding agreement that unless the         donation, or otherwise, of real
provisions of Subpart G, for:            lessee, or a qualified successor          property (including air rights water
   (1) Activities eligible for           lessee, retains the use of the leased     rights-of-way, easements, and other
assistance under this subpart; and       premises for a wholly secular             interests therein) for any public
   (2) Notwithstanding the               purpose for at least the useful life of   purpose subject to the limitations of
provisions of § 570.207, such other      the improvements, the lessor will         §570.207.
activities as the Secretary may          pay to the lessee an amount equal to          (b) Disposition. Disposition,
determine to be consistent with the      the residual value of improvements;       through sale, lease, donation or
purposes of the Urban Development           (vii) The lessee must remit the        otherwise, of any real property
Action Grant program.                    amount received from the lessor           acquired with CDBG funds or its
   (j) Constitutional prohibition. In    under paragraph (2)(vi) of this           retention for public purposes,
accordance with First Amendment          section to the recipient or               including reasonable costs of
Church/State Principles, as a general    subrecipient from which the CDBG          temporarily managing such property
rule, CDBG assistance may not be         funds were derived.                       or property acquired under urban
used for religious activities or         The lessee can also enter into a          renewal, provided that the proceeds
provided to primarily religious          management contract authorizing           from any such disposition shall be
entities for any activities, including   the lessor religious entity to use the    program income subject to the
secular activities. The following        building for its intended secular         requirements set forth in §570.504.
restrictions and limitations therefore   purpose, e.g., homeless shelter,              (c) Public facilities and improve-
apply to the use of CDBG funds.          provision of public services. In such     ments. Acquisition, construction,
   (1) CDBG funds may not be used        case, the religious entity must agree     reconstruction, rehabilitation or
for the acquisition of property or the   in the management contract to carry       installation of public facilities and
construction or rehabilitation           out the secular purpose in a manner       improvements, except as provided in
(including historic preservation and     free from religious influences in         §570.207(a), carried out by the
removal of architectural barriers) of    accordance with the principles set        recipient or other public or private
structures to be used for religious      forth in paragraph (j)(3) of this         nonprofit entities. (However,
purposes or which will otherwise         section.                                  activities under this paragraph may
promote religious interests. This           (3) As a general rule, CDBG funds      be directed to the removal of
limitation includes the acquisition of   may be used for eligible public           material and architectural barriers
property for ownership by primarily      services to be provided through a         that restrict the mobility and
religious entities and the               primarily religious entity, where the




                                                           5
accessibility of elderly or severely     (through funds raised by the unit         (D) The amount of funds it
disabled persons to public facilities    or received by the unit from the       obligated for public services in the
and improvements, including those        State in which it is located) in the   1983 program year.
provided for in §570.207(a)(1).) In      12 calendar months before the             (f) Interim assistance.
undertaking such activities, design      submission of the action plan. (An        (1) The following activities may
features and improvements that
                                         exception to this requirement may      be undertaken on an interim basis
promote energy efficiency may be
                                         be made if HUD determines that         in areas exhibiting objectively
included. Such activities may also
include the execution of architectural
                                         any decrease in the level of a         determinable signs of physical
design features, and similar             service was the result of events       deterioration where the recipient
treatments intended to enhance the       not within the control of the unit     has determined that immediate
aesthetic quality of facilities and      of general local government.) The      action is necessary to arrest the
improvements receiving CDBG              amount of CDBG funds used for          deterioration and that permanent
assistance, such as decorative           public services shall not exceed       improvements will be carried out
pavements, railings, sculptures,         paragraphs (e) (1) or (2) of this      as soon as practicable:
pools of water and fountains, and        section, as applicable:                   (i) The repairing of streets,
other works of art. Facilities               (1) The amount of CDBG funds       sidewalks, parks, playgrounds,
designed for use in providing shelter    used for public services shall not     publicly owned utilities, and public
for persons having special needs are     exceed 15 percent of each grant,       buildings; and
considered public facilities and not     except that for entitlement grants        (ii) The execution of special
subject to the prohibition of new        made under Subpart D of this           garbage, trash, and debris
housing construction described in
                                         part, the amount shall not exceed      removal, including neighborhood
§570.207(b)(3). Such facilities
                                         15% of the grant plus 15% of           cleanup campaigns, but not the
include shelters for the homeless;
convalescent homes; hospitals,           program income, as defined in          regular curbside collection of
nursing homes; battered spouse           Sec. 570.500(a). For entitlement       garbage or trash in an area.
shelters; halfway houses for             grants under Subpart D of this            (2) In order to alleviate
runaway children, drug offenders or      part, compliance is based on           emergency conditions threatening
parolees; group homes for mentally       limiting the amount of CDBG funds      the public health and safety in
retarded persons and temporary           obligated for public service           areas where the chief executive
housing for disaster victims. In         activities in each program year to     officer of the recipient determines
certain cases, nonprofit entities and    an amount no greater than 15%          that such an emergency condition
subrecipients including those            of the entitlement grant made for      exists and requires immediate
specified in §570.204 may acquire        that program year plus 15% of          resolution, CDBG funds may be
title to public facilities. When         the program income received            used for:
nonprofit entities or subrecipients      during the grantee's immediately          (i) The activities specified in
own such facilities, the general
                                         preceding program year.                paragraph (f)(1) of this section,
public shall operate them so as to be
                                             (2) A recipient which obligated    except for the repair of parks and
open for use during all normal hours
of operation. Public facilities and      more CDBG funds for public             playgrounds;
improvements eligible for assistance     services than 15% of its grant            (ii) The clearance of streets,
under this paragraph are subject to      funded from Federal fiscal year        including snow removal and
the policies in §570.200(b).             1982 or 1983 appropriations            similar activities, and
   (d) Clearance activities.             (excluding program income and             (iii) The improvement of private
Clearance, demolition, and               any assistance received under          properties.
removal of buildings and                 Public Law 98-8), may obligate            (3) All activities authorized
improvements, including                  more CDBG funds than allowable         under paragraph (f)(2) of this
movement of structures to other          under paragraph (e)(1) of this         section are limited to the extent
sites. Demolition of HUD-assisted        section, so long as the total          necessary to alleviate emergency
or HUD-owned housing units may           amount obligated in any program        conditions.
be undertaken only with the prior        year does not exceed:                     (g) Payment of non-Federal
approval of HUD.                             (i) For an entitlement grantee,    share. Payment of the non-Federal
   (e) Public services. Provision of     15% of the program income it           share required in connection with
public services (including labor,        received during the preceding          a Federal grant-in-aid program
supplies, and materials) including       program year; plus                     undertaken as part of CDBG
but not limited to those concerned           (ii) A portion of the grant        activities, provided, that such
with employment, crime                   received for the program year          payment shall be limited to
prevention, child care, health,          which is the highest of the            activities otherwise eligible and in
drug abuse, education, fair              following amounts:                     compliance with applicable
housing counseling, energy                   (A) The amount determined by       requirements under this subpart.
conservation, welfare {but               applying the percentage of the            (h) Urban renewal completion.
excluding the provision of income        grant it obligated for public          Payment of the cost of completing
payments identified under Sec.           services in the 1982 program year      an urban renewal project funded
570.207(b)(4)}, homebuyer                against the grant for its current      under title I of the Housing Act of
downpayment assistance, or               program year;                          1949 as amended. Further
recreational needs. To be eligible           (B) The amount determined by       information regarding the
for CDBG assistance, a public            applying the percentage of the         eligibility of such costs is set forth
service must be either a new             grant it obligated for public          in Sec. 570.801.
service or a quantifiable increase       services in the 1983 program year         (i) Relocation. Relocation
in the level of an existing service      against the grant for its current      payments and other assistance for
above that which has been                program year;                          permanently and temporarily
provided by or on behalf of the              (C) The amount of funds it         relocated individuals families,
unit of general local government         obligated for public services in the   businesses, nonprofit
                                         1982 program year; or,                 organizations, and farm



                                                          6
operations where the assistance is        (3) For purposes of this             industrial building, if the
(1) required under the provisions      paragraph (o), “persons                 improvements also provide
of Sec. 570.606 (b) or (c); or (2)     developing microenterprises''           general benefit to the residential
determined by the grantee to be        means such persons who have             occupants of the building;
appropriate under the provisions       expressed interest and who are,             (2) Low-income public housing
of Sec. 570.606(d).                    or after an initial screening           and other publicly owned
   (j) Loss of rental income.          process are expected to be,             residential buildings and
Payments to housing owners for         actively working toward                 improvements;
losses of rental income incurred in    developing businesses, each of              (3) Publicly or privately owned
holding, for temporary periods,        which is expected to be a               commercial or industrial buildings,
housing units to be used for the       microenterprise at the time it is       except that the rehabilitation of
relocation of individuals and          formed.                                 such buildings owned by a private
families displaced by program             (4) Assistance under this            for-profit business is limited to
activities assisted under this part.   paragraph (o) may also include          improvements to the exterior of
   (k) Housing services. Housing       training, technical assistance, or      the building and the correction of
services, as provided in section       other support services to increase      code violations {further
105(a)(21) of the Act (42 U.S.C.       the capacity of the recipient or        improvements to such buildings
5305(a)(21)).                          subrecipient to carry out the           may be undertaken pursuant to
   (l) Privately owned utilities.      activities under this paragraph         Sec. 570.203(b)};
CDBG funds may be used to              (o).                                        (4) Nonprofit-owned
acquire, construct, reconstruct,          (p) Technical assistance.            nonresidential buildings and
rehabilitate, or install the           Provision of technical assistance to    improvements not eligible under
distribution lines and facilities of   public or nonprofit entities to         Sec. 570.201(c); and
privately owned utilities, including   increase the capacity of such               (5) Manufactured housing when
the placing underground of new or      entities to carry out eligible          such housing constitutes part of
existing distribution facilities and   neighborhood revitalization or          the community's permanent
lines.                                 economic development activities.        housing stock.
   (m) Construction of housing.        (The recipient must determine,              (b) Types of assistance. CDBG
CDBG funds may be used for the         prior to the provision of the           funds may be used to finance the
construction of housing assisted       assistance, that the activity for       following types of rehabilitation
under section 17 of the United         which it is attempting to build         activities, and related costs, either
States Housing Act of 1937.            capacity would be eligible for          singly, or in combination, through
   (n) Homeownership assistance.       assistance under this Subpart C,        the use of grants, loans, loan
CDBG funds may be used to              and that the national objective         guarantees, interest supplements,
provide direct homeownership           claimed by the grantee for this         or other means for buildings and
assistance to low- or moderate-        assistance can reasonably be            improvements described in
income households in accordance        expected to be met once the             paragraph (a) of this section,
with section 105(a) of the Act.        entity has received the technical       except that rehabilitation of
   (o)(1) The provision of             assistance and undertakes the           commercial or industrial buildings
assistance either through the          activity.) Capacity building for        is limited as described in
recipient directly or through public   private or public entities (including   paragraph (a)(3) of this section.
and private organizations,             grantees) for other purposes may            (1) Assistance to private
agencies, and other subrecipients      be eligible under Sec. 570.205.         individuals and entities, including
(including nonprofit and for-profit       (q) Assistance to institutions of    profit making and nonprofit
subrecipients) to facilitate           higher education. Provision of          organizations, to acquire for the
economic development by:               assistance by the recipient to          purpose of rehabilitation, and to
   (i) Providing credit, including,    institutions of higher education        rehabilitate properties, for use or
but not limited to, grants, loans,     when the grantee determines that        resale for residential purposes;
loan guarantees, and other forms       such an institution has                     (2) Labor, materials, and other
of financial support, for the          demonstrated a capacity to carry        costs of rehabilitation of
establishment, stabilization, and      out eligible activities under this      properties, including repair
expansion of microenterprises;         Subpart C.                              directed toward an accumulation
   (ii) Providing technical                                                    of deferred maintenance,
assistance, advice, and business       Sec. 570.202 Eligible                   replacement of principal fixtures
support services to owners of          rehabilitation and preservation         and components of existing
microenterprises and persons           activities.                             structures, installation of security
developing microenterprises; and                                               devices, including smoke detectors
   (iii) Providing general support,       (a) Types of buildings and           and dead bolt locks, and
including, but not limited to, peer    improvements eligible for               renovation through alterations,
support programs, counseling,          rehabilitation assistance. CDBG         additions to, or enhancement of
child care, transportation, and        funds may be used to finance the        existing structures, which may be
other similar services, to owners      rehabilitation of:                      undertaken singly, or in
of microenterprises and persons           (1) Privately owned buildings        combination;
developing                             and improvements for residential            (3) Loans for refinancing
microenterprises.                      purposes; improvements to a             existing indebtedness secured by
   (2) Services provided this          single-family residential property      a property being rehabilitated with
paragraph (o) shall not be subject     which is also used as a place of        CDBG funds if such financing is
to the restrictions on public          business, which are required in         determined by the recipient to be
services contained in paragraph        order to operate the business,          necessary or appropriate to
(e) of this section.                   need not be considered to be            achieve the locality's community
                                       rehabilitation of a commercial or       development objectives;



                                                        7
   (4) Improvements to increase        expenses of code enforcement             or private nonprofit subrecipients
the efficient use of energy in         inspectors and legal proceedings,        may carry out such activities.
structures through such means as       but not including the cost of                 (b) The provision of assistance
installation of storm windows and      correcting the violations) in            to a private for-profit business,
doors, siding, wall and attic          deteriorating or deteriorated areas      including, but not limited to,
insulation, and conversion,            when such enforcement together           grants, loans, loan guarantees,
modification, or replacement of        with public or private                   interest supplements, technical
heating and cooling equipment,         improvements, rehabilitation, or         assistance, and other forms of
including the use of solar energy      services to be provided may be           support, for any activity where the
equipment;                             expected to arrest the decline of        assistance is appropriate to carry
   (5) Improvements to increase        the area.                                out an economic development
the efficient use of water through         (d) Historic preservation. CDBG      project, excluding those described
such means as water savings            funds may be used for the                as ineligible in Sec. 570.207(a). In
faucets and showerheads and            rehabilitation, preservation or          selecting businesses to assist
repair of water leaks;                 restoration of historic properties,      under this authority, the recipient
   (6) Connection of residential       whether publicly or privately            shall minimize, to the extent
structures to water distribution       owned. Historic properties are           practicable, displacement of
lines or local sewer collection        those sites or structures that are       existing businesses and jobs in
lines;                                 either listed in or eligible to be       neighborhoods.
   (7) For rehabilitation carried      listed in the National Register of            (c) Economic development
out with CDBG funds, costs of:         Historic Places, listed in a State or    services in connection with
   (i) Initial homeowner warranty      local inventory of historic places,      activities eligible under this
premiums;                              or designated as a State or local        section, including, but not limited
   (ii) Hazard insurance               landmark or historic district by         to, outreach efforts to market
premiums, except where                 appropriate law or ordinance.            available forms of assistance;
assistance is provided in the form     Historic preservation, however, is       screening of applicants; reviewing
of a grant; and                        not authorized for buildings for the     and underwriting applications for
   (iii) Flood insurance premiums      general conduct of government.           assistance; preparation of all
for properties covered by the              (e) Renovation of closed             necessary agreements;
Flood Disaster Protection Act of       buildings. CDBG funds may be             management of assisted activities;
1973, pursuant to Sec. 570.605.        used to renovate closed buildings,       and the screening, referral, and
   (iv) Procedures concerning          such as closed school buildings,         placement of applicants for
inspection and testing for and         for use as an eligible public facility   employment opportunities
abatement of lead-based paint,         or to rehabilitate such buildings        generated by CDBG-eligible
pursuant to Sec. 570.608.              for housing.                             economic development activities,
   (8) Costs of acquiring tools to         (f) Lead-based paint activities.     including the costs of providing
be lent to owners, tenants, and        Lead-based paint activities as set       necessary training for persons
others who will use such tools to      forth in part 35 of this title.          filling those positions.
carry out rehabilitation;
   (9) Rehabilitation services,        Sec. 570.203 Special economic            Sec. 570.204 Special activities
such as rehabilitation counseling,     development activities.                  by Community-Based
energy auditing, preparation of                                                 Development
work specifications, loan                 A recipient may use CDBG              Organizations (CBDOs).
processing, inspections, and other     funds for special economic
services related to assisting          development activities in addition          (a) Eligible activities. The
owners, tenants, contractors, and      to other activities authorized in        recipient may provide CDBG funds
other entities, participating or       this subpart which may be carried        as grants or loans to any CBDO
seeking to participate in              out as part of an economic               qualified under this section to
rehabilitation activities authorized   development project. Guidelines          carry out a neighborhood
under this section, under              for selecting activities to assist       revitalization, community
Section 312 of the Housing Act of      under this paragraph are provided        economic development, or energy
1964, as amended, under Section        at Sec. 570.209. The recipient           conservation project. The funded
810 of the Act, or under Section       must ensure that the appropriate         project activities may include
17 of the United States Housing        level of public benefit will be          those listed as eligible under this
Act of 1937;                           derived pursuant to those                subpart, and, except as described
   (10) Assistance for the             guidelines before obligating funds       in paragraph (b) of this section,
rehabilitation of housing under        under this authority. Special            activities not otherwise listed as
Section 17 of the United States        activities authorized under this         eligible under this subpart. For
Housing Act of 1937; and               section do not include assistance        purposes of qualifying as a project
   (11) Improvements designed to       for the construction of new              under paragraphs (a)(1), (a)(2),
remove material and architectural      housing. Special economic                and (a)(3) of this section, the
barriers that restrict the mobility    development activities include:          funded activity or activities may
and accessibility of elderly or           (a) The acquisition,                  be considered either alone or in
severely disabled persons to           construction, reconstruction,            concert with other project
buildings and improvements             rehabilitation or installation of        activities either being carried out
eligible for assistance under          commercial or industrial buildings,      or for which funding has been
paragraph (a) of this section.         structures, and other real property      committed. For purposes of this
   (c) Code enforcement. Costs         equipment and improvements,              section:
incurred for inspection for code       including railroad spurs or similar         (1) Neighborhood revitalization
violations and enforcement of          extensions. The recipient or public      project includes activities of
codes (e.g., salaries and related                                               sufficient size and scope to have



                                                         8
an impact on the decline of a               (3) Providing assistance to         the general membership of the
geographic location within the          activities that would otherwise be      organization, or by its permanent
jurisdiction of a unit of general       eligible under Sec. 570.203 that        governing body; and
local government (but not the           do not meet the requirements of            (vii) Is not subject to
entire jurisdiction) designated in      Sec. 570.209; or                        requirements under which its
comprehensive plans, ordinances,            (4) Carrying out an activity that   assets revert to the recipient upon
or other local documents as a           would otherwise be eligible under       dissolution; and
neighborhood, village, or similar       Sec. 570.205 or Sec. 570.206, but          (viii) Is free to contract for
geographical designation; or the        that would result in the recipient's    goods and services from vendors
entire jurisdiction of a unit of        exceeding the spending limitation       of its own choosing.
general local government which is       in Sec. 570.200(g).                        (2) A CBDO that does not meet
under 25,000 population;                    (c) Eligible CBDOs. (1) A CBDO      the criteria in paragraph (c)(1) of
   (2) Community economic               qualifying under this section is an     this section may also qualify as an
development project includes            organization that has the following     eligible entity under this section if
activities that increase economic       characteristics:                        it meets one of the following
opportunity, principally for                (i) Is an association or            requirements:
persons of low- and moderate-           corporation organized under State          (i) Is an entity organized
income, or that stimulate or retain     or local law to engage in               pursuant to section 301(d) of the
businesses or permanent jobs,           community development activities        Small Business Investment Act of
including projects that include one     (which may include housing and          1958 (15 U.S.C. 681(d)),
or more such activities that are        economic development activities)        including those which are profit
clearly needed to address a lack of     primarily within an identified          making; or
affordable housing accessible to        geographic area of operation               (ii) Is an SBA approved Section
existing or planned jobs and those      within the jurisdiction of the          501 State Development Company
activities specified at 24 CFR          recipient, or in the case of an         or Section 502 Local Development
91.1(a)(1)(iii);                        urban county, the jurisdiction of       Company, or an SBA Certified
   (3) Energy conservation project      the county; and                         Section 503 Company under the
includes activities that address            (ii) Has as its primary purpose     Small Business Investment Act of
energy conservation, principally        the improvement of the physical,        1958, as amended; or
for the benefit of the residents of     economic or social environment of          (iii) Is a Community Housing
the recipient's jurisdiction; and       its geographic area of operation        Development Organization
   (4) To carry out a project           by addressing one or more critical      (CHDO) under 24 CFR 92.2,
means that the CBDO undertakes          problems of the area, with              designated as a CHDO by the
the funded activities directly or       particular attention to the needs       HOME Investment Partnerships
through contract with an entity         of persons of low and moderate          program participating jurisdiction,
other than the grantee, or through      income; and                             with a geographic area of
the provision of financial                  (iii) May be either non-profit or   operation of no more than one
assistance for activities in which it   for-profit, provided any monetary       neighborhood, and has received
retains a direct and controlling        profits to its shareholders or          HOME funds under 24 CFR 92.300
involvement and responsibilities.       members must be only incidental         or is expected to receive HOME
   (b) Ineligible activities.           to its operations; and                  funds as described in and
Notwithstanding that CBDOs may              (iv) Maintains at least 51          documented in accordance with 24
carry out activities that are not       percent of its governing body's         CFR 92.300(e).
otherwise eligible under this           membership for low- and                    (3) A CBDO that does not
subpart, this section does not          moderate-income residents of its        qualify under paragraph (c)(1) or
authorize:                              geographic area of operation,           (2) of this section may also be
   (1) Carrying out an activity         owners or senior officers of private    determined to qualify as an
described as ineligible in Sec.         establishments and other                eligible entity under this section if
570.207(a);                             institutions located in and serving     the recipient demonstrates to the
   (2) Carrying out public services     its geographic area of operation,       satisfaction of HUD, through the
that do not meet the requirements       or representatives of low- and          provision of information regarding
of Sec. 570.201(e), except that:        moderate-income neighborhood            the organization's charter and by-
   (i) Services carried out under       organizations located in its            laws, that the organization is
this section that are specifically      geographic area of operation; and       sufficiently similar in purpose,
designed to increase economic               (v) Is not an agency or             function, and scope to those
opportunities through job training      instrumentality of the recipient        entities qualifying under
and placement and other                 and does not permit more than           paragraph (c)(1) or (2) of this
employment support services,            one-third of the membership of its      section.
including, but not limited to, peer     governing body to be appointed
support programs, counseling,           by, or to consist of, elected or        Sec. 570.205 Eligible planning,
child care, transportation, and         other public officials or employees     urban environmental design
other similar services; and             or officials of an ineligible entity    and policy-planning-
   (ii) Services of any type carried    (even though such persons may           management-capacity building
out under this section pursuant to      be otherwise qualified under            activities.
a strategy approved by HUD under        paragraph (c)(1)(iv) of this
the provisions of 24 CFR                section); and                              (a) Planning activities which
91.215(e) shall not be subject to           (vi) Except as otherwise            consist of all costs of data
the limitations in Sec.                 authorized in paragraph (c)(1)(v)       gathering, studies, analysis, and
570.201(e)(1) or (2), as                of this section, requires the           preparation of plans and the
applicable;                             members of its governing body to        identification of actions that will
                                        be nominated and approved by



                                                         9
implement such plans, including,        those related to urban                     (i) Providing local officials and
but not limited to:                     environmental design;                  citizens with information about the
   (1) Comprehensive plans;                (3) Devise programs and             program;
   (2) Community development            activities to meet these goals and         (ii) Preparing program budgets
plans;                                  objectives;                            and schedules, and amendments
   (3) Functional plans, in areas          (4) Evaluate the progress of        thereto;
such as:                                such programs and activities in            (iii) Developing systems for
   (i) Housing, including the           accomplishing these goals and          assuring compliance with program
development of a consolidated           objectives; and                        requirements;
plan;                                      (5) Carry out management,               (iv) Developing interagency
   (ii) Land use and urban              coordination and monitoring of         agreements and agreements with
environmental design;                   activities necessary for effective     subrecipients and contractors to
   (iii) Economic development;          planning implementation, but           carry out program activities;
   (iv) Open space and recreation;      excluding the costs necessary to           (v) Monitoring program
   (v) Energy use and                   implement such plans.                  activities for progress and
conservation;                                                                  compliance with program
   (vi) Floodplain and wetlands         Sec. 570.206 Program                   requirements;
management in accordance with           administrative costs.                      (vi) Preparing reports and other
the requirements of Executive                                                  documents related to the program
Orders 11988 and 11990;                     Payment of reasonable              for submission to HUD;
   (vii) Transportation;                administrative costs and carrying          (vii) Coordinating the resolution
   (viii) Utilities; and                charges related to the planning        of audit and monitoring findings;
   (ix) Historic preservation.          and execution of community                 (viii) Evaluating program
   (4) Other plans and studies          development activities assisted in     results against stated objectives;
such as:                                whole or in part with funds            and
   (i) Small area and                   provided under this part and,              (ix) Managing or supervising
neighborhood plans;                     where applicable, housing              persons whose primary
   (ii) Capital improvements            activities (described in paragraph     responsibilities with regard to the
programs;                               (g) of this section) covered in the    program include such assignments
   (iii) Individual project plans       recipient's housing assistance         as those described in paragraph
(but excluding engineering and          plan. This does not include staff      (a)(1)(i) through (viii) of this
design costs related to a specific      and overhead costs directly            section.
activity which are eligible as part     related to carrying out activities         (2) Travel costs incurred for
of the cost of such activity under      eligible under Sec. 570.201            official business in carrying out the
Sec. Sec. 570.201-570.204);             through Sec.                           program;
   (iv) The reasonable costs of         570.204, since those costs are             (3) Administrative services
general environmental, urban            eligible as part of such activities.   performed under third party
environmental design and historic           (a) General management,            contracts or agreements, including
preservation studies. However,          oversight and coordination.            such services as general legal
costs necessary to comply with 24       Reasonable costs of overall            services, accounting services, and
CFR part 58, including project          program management,                    audit services; and
specific environmental                  coordination, monitoring, and              (4) Other costs for goods and
assessments and clearances for          evaluation. Such costs include, but    services required for
activities eligible for assistance      are not necessarily limited to,        administration of the program,
under this part, are eligible as part   necessary expenditures for the         including such goods and services
of the cost of such activities under    following:                             as rental or purchase of
Sec. Sec. 570.201-570.204. Costs            (1) Salaries, wages, and related   equipment, insurance, utilities,
for such specific assessments and       costs of the recipient's staff, the    office supplies, and rental and
clearances may also be incurred         staff of local public agencies, or     maintenance (but not purchase) of
under this paragraph but                other staff engaged in program         office space.
would then be considered planning       administration. In charging costs          (b) Public information. The
costs for the purposes of Sec.          to this category the recipient may     provisions of information and
570.200(g);                             either include the entire salary,      other resources to residents and
   (v) Strategies and action            wages, and related costs allocable     citizen organizations participating
programs to implement plans,            to the program of each person          in the planning, implementation,
including the development of            whose primary responsibilities         or assessment of activities being
codes, ordinances and                   with regard to the program             assisted with CDBG funds.
regulations;                            involve program administration             (c) Fair housing activities.
   (vi) Support of clearinghouse        assignments, or the pro rata share     Provision of fair housing services
functions, such as those specified      of the salary, wages, and related      designed to further the fair
in Executive Order 12372; and           costs of each person whose job         housing objectives of the Fair
   (vii) Analysis of impediments to     includes any program                   Housing Act (42 U.S.C. 3601-20)
fair housing choice.                    administration assignments. The        by making all persons, without
   (6) Policy--planning--               recipient may use only one of          regard to race, color, religion, sex,
management--capacity building           these methods during the               national origin, familial status or
activities that will enable the         program year (or the grant period      handicap, aware of the range of
recipient to:                           for grants under Subpart F).           housing opportunities available to
   (1) Determine its needs;             Program administration includes        them; other fair housing
   (2) Set long-term goals and          the following types of                 enforcement, education, and
short-term objectives, including        assignments:                           outreach activities; and other
                                                                               activities designed to further the



                                                        10
housing objective of avoiding           applications and proposals under         eligibility of other activities
undue concentrations of assisted        the Section 8 Housing Assistance         frequently associated with housing
persons in areas containing a high      Payments Program pursuant to 24          and community development.
proportion of low and moderate          CFR parts 880-883;                          (a) The following activities may
income persons.                             (4) Fees associated with             not be assisted with CDBG funds:
   (d) [Reserved]                       processing of applications for              (1) Buildings or portions
   (e) Indirect costs. Indirect costs   mortgage or insured loan                 thereof, used for the general
may be charged to the CDBG              commitments under programs               conduct of government as defined
program under a cost allocation         including those administered by          at Sec. 570.3(d) cannot be
plan prepared in accordance with        HUD, Farmers Home                        assisted with CDBG funds. This
OMB Circular A-21, A-87, or A-122       Administration (FmHA), Federal           does not include, however, the
as applicable.                          National Mortgage Association            removal of architectural barriers
   (f) Submission of applications       (FNMA), and the Government               under Sec. 570.201(c) involving
for Federal programs. Preparation       National Mortgage Association            any such building. Also, where
of documents required for               (GNMA);                                  acquisition of real property
submission to HUD to receive                (5) The cost of issuance and         includes an existing improvement
funds under the CDBG and UDAG           administration of mortgage               which is to be used in the
programs, except as limited under       revenue bonds used to finance the        provision of a building for the
subpart F at Sec. 570.433(a)(3).        acquisition, rehabilitation or           general conduct of government,
In addition, CDBG funds may be          construction of housing, but             the portion of the acquisition cost
used to prepare applications for        excluding costs associated with          attributable to the land is eligible,
other Federal programs where the        the payment or guarantee of the          provided such acquisition meets a
recipient determines that such          principal or interest on such            national objective described in
activities are necessary or             bonds; and                               Sec. 570.208.
appropriate to achieve its                  (6) Special outreach activities         (2) General government
community development                   that result in greater landlord          expenses. Except as otherwise
objectives.                             participation in Section 8 Housing       specifically authorized in this
   (g) Administrative expenses to       Assistance Payments Program-             subpart or under OMB Circular A-
facilitate housing. CDBG funds          Existing Housing or similar              87, expenses required to carry out
may be used for necessary               programs for low and moderate            the regular responsibilities of the
administrative expenses in              income persons.                          unit of general local government
planning or obtaining financing for         (h) Section 17 of the United         are not eligible for assistance
housing as follows: for entitlement     States Housing Act of 1937.              under this part.
recipients, assistance authorized       Reasonable costs equivalent to              (3) Political activities. CDBG
by this paragraph is limited to         those described in paragraphs (a),       funds shall not be used to finance
units which are identified in the       (b), (e) and (f) of this section for     the use of facilities or equipment
recipient's HUD approved housing        overall program management of            for political purposes or to engage
assistance plan; for HUD-               the Rental Rehabilitation and            in other partisan political
administered small cities               Housing Development programs             activities, such as candidate
recipients, assistance authorized       authorized under Section 17 of the       forums, voter transportation, or
by the paragraph is limited to          United States Housing Act of             voter registration. However, a
facilitating the purchase or            1937, whether or not such                facility originally assisted with
occupancy of existing units which       activities are otherwise assisted        CDBG funds may be used on an
are to be occupied by low and           with funds provided under this           incidental basis to hold political
moderate income households, or          part.                                    meetings, candidate forums, or
the construction of rental or owner         (i) Whether or not such              voter registration campaigns,
units where at least 20 percent of      activities are otherwise assisted        provided that all parties and
the units in each project will be       by funds provided under this part,       organizations have access to the
occupied at affordable rents/costs      reasonable costs equivalent to           facility on an equal basis, and are
by low and moderate income              those described in paragraphs (a),       assessed equal rent or use
persons. Examples of eligible           (b), (e), and (f) of this section for    charges, if any.
actions are as follows:                 overall program management of:              (b) The following activities may
   (1) The cost of conducting               (1) A Federally designated           not be assisted with CDBG funds
preliminary surveys and analysis        Empowerment Zone or Enterprise           unless authorized under provisions
of market needs;                        Community; and                           of Sec. 570.203 or as otherwise
   (2) Site and utility plans,              (2) The HOME program under           specifically noted herein or when
narrative descriptions of the           title II of the Cranston-Gonzalez        carried out by a entity under the
proposed construction, preliminary      National Affordable Housing Act          provisions of Sec. 570.204.
cost estimates, urban design            (42 U.S.C. 12701 note).                     (1) Purchase of equipment. The
documentation, and “sketch                                                       purchase of equipment with CDBG
drawings,'' but excluding               Sec. 570.207 Ineligible                  funds is generally ineligible.
architectural, engineering, and         activities.                                 (i) Construction equipment. The
other details ordinarily required                                                purchase of construction
for construction purposes, such as         The general rule is that any          equipment is ineligible, but
structural, electrical, plumbing,       activity that is not authorized          compensation for the use of such
and mechanical details;                 under the provisions of Sec. Sec.        equipment through leasing,
   (3) Reasonable costs associated      570.201-570.206 is ineligible to         depreciation, or use allowances
with development of applications        be assisted with CDBG funds. This        pursuant to OMB Circulars A-21,
for mortgage and insured loan           section identifies specific activities   A-87 or A-122 as applicable for an
commitments, including                  that are ineligible and provides         otherwise eligible activity is an
commitment fees, and of                 guidance in determining the              eligible use of CDBG funds.



                                                         11
However, the purchase of                replacement of expended street        direct effects of the assisted
construction equipment for use as       light bulbs; and                      activity will be considered. (The
part of a solid waste disposal             (ii) Payment of salaries for       recipient shall appropriately
facility is eligible under Sec.         staff, utility costs and similar      ensure that activities that meet
570.201(c).                             expenses necessary for the            these criteria do not benefit
    (ii) Fire protection equipment.     operation of public works and         moderate-income persons to the
Fire protection equipment is            facilities.                           exclusion of low-income persons.)
considered for this purpose to be          (3) New housing construction.         (1) Area benefit activities. (i)
an integral part of a public facility   For the purpose of this paragraph,    An activity, the benefits of which
and thus, purchase of such              activities in support of the          are available to all the residents in
equipment would be eligible under       development of low or moderate        a particular area, where at least
Sec. 570.201(c).                        income housing including              51 percent of the residents are
    (iii) Furnishings and personal      clearance, site assemblage,           low and moderate-income
property. The purchase of               provision of site improvements        persons. Such an area need not
equipment, fixtures, motor              and provision of public               be coterminous with census tracts
vehicles, furnishings, or other         improvements and certain housing      or other officially recognized
personal property not an integral       pre-construction costs set forth in   boundaries but must be the entire
structural fixture is generally         Sec. 570.206(g), are not              area served by the activity. An
ineligible. CDBG funds may be           considered as activities to           activity that serves an area that is
used, however, to purchase or to        subsidize or assist new residential   not primarily residential in
pay depreciation or use                 construction. CDBG funds may not      character shall not qualify under
allowances (in accordance with          be used for the construction of       this criterion.
OMB Circular A-21, A-87 or A-122,       new permanent residential                (ii) For metropolitan cities and
as applicable) for such items when      structures or for any program to      urban counties, an activity that
necessary for use by a recipient or     subsidize or assist such new          would otherwise qualify under
its subrecipients in the                construction, except:                 Sec. 570.208(a)(1)(i) except that
administration of activities               (i) As provided under the last     the area served contains less than
assisted with CDBG funds, or            resort housing provisions set forth   51 percent low and moderate
when eligible as fire fighting          in 24 CFR Part 42;                    income residents will also be
equipment, or when such items              (ii) As authorized under Sec.      considered to meet the objective
constitute all or part of a public      570.201(m) or (n);                    of benefiting low and moderate
service pursuant to Sec.                   (iii) When carried out by an       income persons where the
570.201(e).                             entity pursuant to Sec.               proportion of low and moderate
    (2) Operating and maintenance       570.204(a);                           income persons in the area is
expenses. The general rule is that         (4) Income payments. The           within the highest quartile of all
any expense associated with             general rule is that CDBG funds       areas in the recipient's jurisdiction
repairing, operating or                 may not be used for income            in terms of the degree of
maintaining public facilities,          payments. For purposes of the         concentration of such persons. In
improvements and services is            CDBG program, “income                 applying this exception, HUD will
ineligible. Specific exceptions to      payments'' means a series of          determine the lowest proportion a
this general rule are operating and     subsistence-type grant payments       recipient may use to qualify an
maintenance expenses associated         made to an individual or family for   area for this purpose as follows:
with public service activities,         items such as food, clothing,            (A) All census block groups in
interim assistance, and office          housing (rent or mortgage), or        the recipient's jurisdiction shall be
space for program staff employed        utilities, but excludes emergency     rank ordered from the block group
in carrying out the CDBG program.       grant payments made over              of highest proportion of low and
For example, the use of CDBG            a period of up to three               moderate income persons to the
funds to pay the allocable costs of     consecutive months to the             block group with the lowest. For
operating and maintaining a             provider of such items or services    urban counties, the rank ordering
facility used in providing a public     on behalf of an individual or         shall cover the entire area
service would be eligible under         family.                               constituting the urban county and
Sec. 570.201(e), even if no other                                             shall not be done separately for
costs of providing such a service       Sec. 570.208 Criteria for             each participating unit of general
are assisted with such funds.           national objectives.                  local government.
Examples of ineligible operating                                                 (B) In any case where the total
and maintenance expenses are:              The following criteria shall be    number of a recipient's block
    (i) Maintenance and repair of       used to determine whether a           groups does not divide evenly by
publicly owned streets, parks,          CDBG-assisted activity complies       four, the block group which would
playgrounds, water and sewer            with one or more of the national      be fractionally divided between
facilities, neighborhood facilities,    objectives as required under Sec.     the highest and second quartiles
senior centers, centers for persons     570.200(a)(2):                        shall be considered to be part of
with a disabilities, parking and           (a) Activities benefiting low-     the highest quartile.
other public facilities and             and moderate-income persons.             (C) The proportion of low and
improvements. Examples of               Activities meeting the criteria in    moderate-income persons in the
maintenance and repair activities       paragraph (a) (1), (2), (3), or (4)   last census block group in the
for which CDBG funds may not be         of this section as applicable, will   highest quartile shall be identified.
used include the filling of pot holes   be considered to benefit low and      Any service area located within
in streets, repairing of cracks in      moderate income persons unless        the recipient's jurisdiction and
sidewalks, the mowing of                there is substantial evidence to      having a proportion of low and
recreational areas, and the             the contrary. In assessing any        moderate-income persons at or
                                        such evidence, the full range of      above this level shall be



                                                        12
considered to be within the                (C) Demonstrate that other         sufficiently well with the service
highest quartile.                      Federal funds received by the          area of an activity, may conduct
   (D) If block group data are not     recipient are insufficient or          (or have conducted) a current
available for the entire               unavailable for a uniform              survey of the residents of the area
jurisdiction, other data acceptable    emergency telephone number             to determine the percent of such
to the Secretary may be used in        system. For this purpose, the          persons that are low and
the above calculations.                recipient must submit a statement      moderate income. HUD will accept
   (iii) An activity to develop,       explaining whether the lack of         information obtained through such
establish, and operate for up to       funds is due to the insufficiency of   surveys, to be used in lieu of the
two years after the establishment      the amount of the available funds,     decennial census data, where it
of, a uniform emergency                restrictions on the use of such        determines that the survey was
telephone number system serving        funds, or the prior commitment of      conducted in such a manner that
an area having less than the           funds by the recipient for other       the results meet standards of
percentage of low- and moderate-       purposes; and                          statistical reliability that are
income residents required under            (D) Demonstrate that the           comparable to that of the
paragraph (a)(1)(i) of this section    percentage of the total costs of       decennial census data for areas of
or (as applicable) paragraph           the system paid for by CDBG            similar size. Where there is
(a)(1)(ii) of this section, provided   funds does not exceed the              substantial evidence that provides
the recipient obtains prior HUD        percentage of low- and moderate-       a clear basis to believe that the
approval. To obtain such approval,     income persons in the service area     use of the decennial census data
the recipient must:                    of the system. For this purpose,       would substantially overstate the
   (A) Demonstrate that the            the recipient must include a           proportion of persons residing
system will contribute significantly   description of the boundaries of       there that are low and moderate
to the safety of the residents of      the service area of the emergency      income, HUD may require that the
the area. The request for approval     telephone number system, the           recipient rebut such evidence in
must include a list of the             census divisions that fall within      order to demonstrate compliance
emergency services that will           the boundaries of the service area     with section 105(c)(2) of the Act.
participate in the emergency           (census tracts or block numbering          (vii) Activities meeting the
telephone number system;               areas), the total number of            requirements of paragraph
   (B) Submit information that         persons and the total number of        (d)(5)(i) of this section may be
serves as a basis for HUD to           low- and moderate-income               considered to qualify under this
determine whether at least 51%         persons within each census             paragraph, provided that the area
of the use of the system will be by    division, the percentage of low-       covered by the strategy is either a
low- and moderate-income               and moderate-income persons            Federally-designated
persons. As available, the             within the service area, and the       Empowerment Zone or Enterprise
recipient must provide information     total cost of the system.              Community or primarily residential
that identifies the total number of        (iv) An activity for which the     and contains a percentage of low-
calls actually received over the       assistance to a public                 and moderate-income residents
preceding 12-month period for          improvement that provides              that is no less than the percentage
each of the emergency services to      benefits to all the residents of an    computed by HUD pursuant to
be covered by the emergency            area is limited to paying special      paragraph (a)(1)(ii) of this section
telephone number system and            assessments (as defined in Sec.        or 70 %, whichever is less, but in
relates those calls to the             570.200(c)) levied against             no event less than 51 %. Activities
geographic segment (expressed as       residential properties owned and       meeting the requirements of
nearly as possible in terms of         occupied by persons of low and         paragraph (d)(6)(i) of this section
census tracts, block numbering         moderate income.                       may also be considered to qualify
areas, block groups, or                    (v) For purposes of determining    under paragraph (a)(1) of this
combinations thereof that are          qualification under this criterion,    section.
contained within the segment) of       activities of the same type that           (2) Limited clientele activities.
the service area from which the        serve different areas will be          (i) An activity which benefits a
calls were generated. In analyzing     considered separately on the basis     limited clientele, at least 51 % of
this data to meet the require-         of their individual service area.      whom are low- or moderate-
ments of this section, HUD will            (vi) In determining whether        income persons. (The following
assume that the distribution of        there is a sufficiently large          kinds of activities may not qualify
income among the callers               percentage of low- and moderate-       under paragraph (a)(2) of this
generally reflects the income          income persons residing in the         section: activities, the benefits of
characteristics of the general         area served by an activity to          which are available to all the
population residing in the same        qualify under paragraph (a)(1) (i),    residents of an area; activities
geographic area where the callers      (ii), or (vii) of this section, the    involving the acquisition,
reside. If HUD can conclude that       most recently available decennial      construction or rehabilitation of
the users have primarily consisted     census information must be used        property for housing; or activities
of low- and moderate-income            to the fullest extent feasible,        where the benefit to low- and
persons, the recipient needs no        together with the Section 8            moderate-income persons to be
further submission. If a recipient     income limits that would have          considered is the creation or
plans to make other submissions        applied at the time the income         retention of jobs, except as
for this purpose, it may request       information was collected by the       provided in paragraph (a)(2)(iv)
that HUD review its planned            Census Bureau. Recipients that         of this section.) To qualify under
methodology before expending           believe that the census data does      paragraph (a)(2) of this section,
the effort to acquire the              not reflect current relative income    the activity must meet one of the
information it expects to use to       levels in an area, or where census     following tests:
make its case;                         boundaries do not coincide



                                                       13
    (A) Benefit a clientele who are     this paragraph, persons                 qualify under this criterion. The
generally presumed to be                determined to be low and                recipient shall adopt and make
principally low and moderate-           moderate income may be                  public its standards for
income persons. Activities that         presumed to continue to qualify as      determining “affordable rents'' for
exclusively serve a group of            such for up to a three-year period.     this purpose. The following shall
persons in any one or a                    (iv) An activity designed to         also qualify under this criterion:
combination of the following            provide job training and                    (i) When less than 51% of the
categories may be presumed to           placement and/or other                  units in a structure will be
benefit persons, 51% of whom are        employment support services,            occupied by low and moderate-
low- and moderate-income:               including, but not limited to, peer     income households, CDBG
abused children, battered               support programs, counseling,           assistance may be provided in the
spouses, elderly persons, adults        child care, transportation, and         following limited circumstances:
meeting the Bureau of the Census'       other similar services, in which the        (A) The assistance is for an
Current Population Reports              percentage of low- and moderate-        eligible activity to reduce the
definition of “severely disabled,''     income persons assisted is less         development cost of the new
homeless persons, illiterate adults,    than 51 % may qualify under this        construction of a multifamily, non-
persons living with AIDS, and           paragraph in the following limited      elderly rental housing project;
migrant farm workers; or                circumstance:                               (B) Not less than 20 % of the
    (B) Require information on             (A) In such cases where such         units will be occupied by low and
family size and income so that it is    training or provision of supportive     moderate income households at
evident that at least 51 % of the       services assists business(es), the      affordable rents; and
clientele are persons whose family      only use of CDBG assistance for             (C) The proportion of the total
income does not exceed the low          the project is to provide the job       cost of developing the project to
and moderate income limit; or           training and/or supportive              be borne by CDBG funds is no
    (C) Have income eligibility         services; and                           greater than the proportion of
requirements which limit the               (B) The proportion of the total      units in the project that will be
activity exclusively to low and         cost of the project borne by CDBG       occupied by low and moderate-
moderate income persons; or             funds is no greater than the            income households.
    (D) Be of such nature and be in     proportion of the total number of           (ii) When CDBG funds are used
such location that it may be            persons assisted who are low- or        to assist rehabilitation eligible
concluded that the activity's           moderate-income.                        under Sec. 570.202(b)(9) or (10)
clientele will primarily be low and        (3) Housing activities. An           in direct support of the recipient's
moderate income persons.                eligible activity carried out for the   Rental Rehabilitation program
    (ii) An activity that serves to     purpose of providing or improving       authorized under 24 CFR part 511,
remove material or architectural        permanent residential structures        such funds shall be considered to
barriers to the mobility or             which, upon completion, will be         benefit low and moderate income
accessibility of elderly persons or     occupied by low- and moderate-          persons where not less than 51 %
of adults meeting the Bureau of         income households. This would           of the units assisted, or to be
the Census' Current Population          include, but not necessarily be         assisted, by the recipient's Rental
Reports definition of “severely         limited to, the acquisition or          Rehabilitation program overall are
disabled'' will be presumed to          rehabilitation of property by the       for low and moderate income
qualify under this criterion if it is   recipient, a subrecipient, a            persons.
restricted, to the extent               developer, an individual                    (iii) When CDBG funds are used
practicable, to the removal of such     homebuyer, or an individual             for housing services eligible under
barriers by assisting:                  homeowner; conversion of                Sec. 570.201(k), such funds shall
    (A) The reconstruction of a         nonresidential structures; and new      be considered to benefit low- and
public facility or improvement, or      housing construction. If the            moderate-income persons if the
portion thereof, that does not          structure contains two dwelling         housing units for which the
qualify under paragraph (a)(1) of       units, at least one must be so          services are provided are HOME-
this section;                           occupied, and if the structure          assisted and the requirements at
    (B) The rehabilitation of a         contains more than two                  24 CFR 92.252 or 92.254 are met.
privately owned nonresidential          dwelling units, at least 51% of the         (4) Job creation or retention
building or improvement that does       units must be so occupied. Where        activities. An activity designed to
not qualify under paragraph (a)(1)      two or more rental buildings being      create or retain permanent jobs
or (4) of this section; or              assisted are or will be located on      where at least 51% of the jobs,
    (C) The rehabilitation of the       the same or contiguous                  computed on a full time equivalent
common areas of a residential           properties, and the buildings will      basis, involve the employment of
structure that contains more than       be under common ownership and           low- and moderate-income
one dwelling unit and that does         management, the grouped                 persons. To qualify under this
not qualify under paragraph (a)(3)      buildings may be considered for         paragraph, the activity must meet
of this section.                        this purpose as a single structure.     the following criteria:
    (iii) A microenterprise             Where housing activities being              (i) For an activity that creates
assistance activity carried out in      assisted meet the requirements of       jobs, the recipient must document
accordance with the provisions of       paragraph Sec. 570.208 (d)(5)(ii)       that at least 51% of the jobs will
Sec. 570.201(o) with respect to         or (d)(6)(ii) of this section, all      be held by, or will be available to,
those owners of microenterprises        such housing may also be                low- and moderate-income
and persons developing                  considered for this purpose as a        persons.
microenterprises assisted under         single structure. For rental                (ii) For an activity that retains
the activity during each program        housing, occupancy by low and           jobs, the recipient must document
year who are low- and moderate-         moderate-income households              that the jobs would actually be
income persons. For purposes of         must be at affordable rents to          lost without the CDBG assistance



                                                        14
and that either or both of the              (B) It does not include any         aggregating the jobs created or
following conditions apply with         portion of a central business           retained by all businesses for
respect to at least 51% of the jobs     district, as this term is used in the   which CDBG assistance is
at the time the CDBG assistance is      most recent Census of Retail            obligated for such activities during
provided:                               Trade, unless the tract has a           the program year, except as
    (A) The job is known to be held     poverty rate of at least 30 % as        provided at paragraph (d)(7) of
by a low- or moderate-income            determined by the most recently         this section.
person; or                              available decennial census                 (E) Where CDBG funds are
    (B) The job can reasonably be       information; and                        used by a Community
expected to turn over within the            (C) It evidences pervasive          Development Financial Institution
following two years and that steps      poverty and general distress by         to carry out activities for the
will be taken to ensure that it will    meeting at least one of the             purpose of creating or retaining
be filled by, or made available to,     following standards:                    jobs, this requirement may be met
a low- or moderate-income person            (1) All block groups in the         by aggregating the jobs created or
upon turnover.                          census tract have poverty rates of      retained by all businesses for
    (iii) Jobs that are not held or     at least 20%;                           which CDBG assistance is
filled by a low- or moderate-               (2) The specific activity being     obligated for such activities during
income person may be considered         undertaken is located in a block        the program year, except as
to be available to low- and             group that has a poverty rate of at     provided at paragraph (d)(7) of
moderate-income persons for             least 20 %; or                          this section.
these purposes only if:                     (3) Upon the written request of        (F) Where CDBG funds are used
    (A) Special skills that can only    the recipient, HUD determines           for public facilities or
be acquired with substantial            that the census tract exhibits          improvements which will result in
training or work experience or          other objectively determinable          the creation or retention of jobs
education beyond high school are        signs of general distress such as       by more than one business, this
not a prerequisite to fill such jobs,   high incidence of crime, narcotics      requirement may be met by
or the business agrees to hire          use, homelessness, abandoned            aggregating the jobs created or
unqualified persons and provide         housing, and deteriorated               retained by all such businesses as
training; and                           infrastructure or substantial           a result of the public facility or
    (B) The recipient and the           population decline.                     improvement.
assisted business take actions to           (vi) As a general rule, each           (1) Where the public facility or
ensure that low- and moderate-          assisted business shall be              improvement is undertaken
income persons receive first            considered to be a separate             principally for the benefit of one or
consideration for filling such jobs.    activity for purposes of                more particular businesses, but
    (iv) For purposes of                determining whether the activity        where other businesses might also
determining whether a job is held       qualifies under this paragraph,         benefit from the assisted activity,
by or made available to a low- or       except:                                 the requirement may be met by
moderate-income person, the                 (A) In certain cases such as        aggregating only the jobs created
person may be presumed to be a          where CDBG funds are used to            or retained by those businesses
low- or moderate-income person          acquire, develop or improve a real      for which the facility/improvement
if:                                     property (e.g., a business              is principally undertaken, provided
    (A) He/she resides within a         incubator or an industrial park)        that the cost (in CDBG funds) for
census tract (or block numbering        the requirement may be met by           the facility/improvement is less
area) that either:                      measuring jobs in the aggregate         than $10,000 per permanent full-
    (1) Meets the requirements of       for all the businesses which locate     time equivalent job to be created
paragraph (a)(4)(v) of this             on the property, provided such          or retained by those businesses.
section; or                             businesses are not otherwise               (2) In any case where the cost
    (2) Has at least 70 % of its        assisted by CDBG funds.                 per job to be created or retained
residents who are low- and                  (B) Where CDBG funds are            (as determined under paragraph
moderate-income persons; or             used to pay for the staff and           (a)(4)(vi)(F)(1) of this section) is
    (B) The assisted business is        overhead costs of an entity             $10,000 or more, the requirement
located within a census tract (or       making loans to businesses              must be met by aggregating the
block numbering area) that meets        exclusively from non-CDBG funds,        jobs created or retained as a
the requirements of paragraph           this requirement may be met by          result of the public facility or
(a)(4)(v) of this section and the       aggregating the jobs created by         improvement by all businesses in
job under consideration is to be        all of the businesses receiving         the service area of the
located within that census tract.       loans during each program year.         facility/improvement. This
    (v) A census tract (or block            (C) Where CDBG funds are            aggregation must include
numbering area) qualifies for the       used by a recipient or subrecipient     businesses which, as a result of
presumptions permitted under            to provide technical assistance to      the public facility/improvement,
paragraphs (a)(4)(iv)(A)(1) and         businesses, this requirement may        locate or expand in the service
(B) of this section if it is either     be met by aggregating the jobs          area of the facility/improvement
part of a Federally-designated          created or retained by all of the       between the date the recipient
Empowerment Zone or Enterprise          businesses receiving technical          identifies the activity in its action
Community or meets the following        assistance during each program          plan under Part 91 of this title and
criteria:                               year.                                   the date one year after the
    (A) It has a poverty rate of at         (D) Where CDBG funds are            physical completion of the
least 20 % as determined by the         used for activities meeting the         facility/improvement. In addition,
most recently available decennial       criteria listed at Sec.                 the assisted activity must comply
census information;                     570.209(b)(2)(v), this                  with the public benefit standards
                                        requirement may be met by               at Sec. 570.209(b).



                                                        15
   (b) Activities that aid in the      address prevention or elimination       shall be treated as a “change of
prevention or elimination of slums     of slums or blight in an urban          use'' under Sec. 570.505.
or blight. Activities meeting one or   renewal area if the activity is:            (2) Where the assisted activity
more of the following criteria, in         (i) Located within an urban         is relocation assistance that the
the absence of substantial             renewal project area or                 recipient is required to provide,
evidence to the contrary, will be      Neighborhood Development                such relocation assistance shall be
considered to aid in the prevention    Program (NDP) action area; i.e.,        considered to address the same
or elimination of slums or blight:     an area in which funded activities      national objective as is addressed
   (1) Activities to address slums     were authorized under an urban          by the displacing activity. Where
or blight on an area basis. An         renewal Loan and Grant                  the relocation assistance is
activity will be considered to         Agreement or an annual                  voluntary on the part of the
address prevention or elimination      NDP Funding Agreement, pursuant         grantee the recipient may qualify
of slums or blight in an area if:      to title I of the Housing Act of        the assistance either on the basis
   (i) The area, delineated by the     1949; and                               of the national objective
recipient, meets a definition of a         (ii) Necessary to complete the      addressed by the displacing
slum, blighted, deteriorated or        urban renewal plan, as then in          activity or on the basis that the
deteriorating area under State or      effect, including initial land          recipients of the relocation
local law;                             redevelopment permitted by the          assistance are low and moderate
   (ii) Throughout the area there      plan.                                   income persons.
is a substantial number of                 Note: Despite the restrictions in       (3) In any case where the
deteriorated or deteriorating          (b) (1) and (2) of this section, any    activity undertaken for the
buildings or the public                rehabilitation activity which           purpose of creating or retaining
improvements are in a general          benefits low and moderate income        jobs is a public improvement and
state of deterioration;                persons pursuant to paragraph           the area served is primarily
   (iii) Documentation is              (a)(3) of this section can be           residential, the activity must meet
maintained by the recipient on the     undertaken without regard to the        the requirements of paragraph
boundaries of the area and the         area in which it is located or the      (a)(1) of this section as well as
condition which qualified the area     extent or nature of rehabilitation      those of paragraph (a)(4) of this
at the time of its designation; and    assisted.                               section in order to qualify as
   (iv) The assisted activity              (c) Activities designed to meet     benefiting low and moderate
addresses one or more of the           community development needs             income persons.
conditions which contributed to        having a particular urgency. In the         (4) CDBG funds expended for
the deterioration of the area.         absence of substantial evidence to      planning and administrative costs
Rehabilitation of residential          the contrary, an activity will be       under Sec. 570.205 and Sec.
buildings carried out in an area       considered to address this              570.206 will be considered to
meeting the above requirements         objective if the recipient certifies    address the national objectives.
will be considered to address the      that the activity is designed to            (5) Where the grantee has
area's deterioration only where        alleviate existing conditions which     elected to prepare an area
each such building rehabilitated is    pose a serious and immediate            revitalization strategy pursuant to
considered substandard under           threat to the health or welfare of      the authority of Sec. 91.215(e) of
local definition before                the community which are of              this title and HUD has approved
rehabilitation, and all deficiencies   recent origin or which recently         the strategy, the grantee may also
making a building substandard          became urgent, that the recipient       elect the following options:
have been eliminated if less           is unable to finance the activity on        (i) Activities undertaken
critical work on the building is       its own, and that other sources of      pursuant to the strategy for the
undertaken. At a minimum, the          funding are not available. A            purpose of creating or retaining
local definition for this purpose      condition will generally be             jobs may, at the option of the
must be such that buildings that it    considered to be of recent origin if    grantee, be considered to meet
would render substandard would         it developed or became critical         the requirements of this
also fail to meet the housing          within 18 months preceding the          paragraph under the criteria at
quality standards for the Section 8    certification by the recipient.         paragraph (a)(1)(vii) of this
Housing Assistance Payments                (d) Additional criteria. (1)        section in lieu of the criteria at
Program-Existing Housing (24 CFR       Where the assisted activity is          paragraph (a)(4) of this section;
882.109).                              acquisition of real property, a         and
   (2) Activities to address slums     preliminary determination of                (ii) All housing activities in the
or blight on a spot basis.             whether the activity addresses a        area for which, pursuant to the
Acquisition, clearance, relocation,    national objective may be based         strategy, CDBG assistance is
historic preservation and building     on the planned use of the property      obligated during the program year
rehabilitation activities that         after acquisition. A final              may be considered to be a single
eliminate specific conditions of       determination shall be based on         structure for purposes of applying
blight or physical decay on a spot     the actual use of the property,         the criteria at paragraph (a)(3) of
basis not located in a slum or         excluding any short-term,               this section.
blighted area will meet this           temporary use. Where the                    (6) Where CDBG-assisted
objective. Under this criterion,       acquisition is for the purpose of       activities are carried out by a
rehabilitation is limited to the       clearance that will eliminate           Community Development Financial
extent necessary to eliminate          specific conditions of blight or        Institution whose charter limits its
specific conditions detrimental to     physical decay, the clearance           investment area to a primarily
public health and safety.              activity shall be considered the        residential area consisting of at
   (3) Activities to address slums     actual use of the property.             least 51 % low- and moderate-
or blight in an urban renewal area.    However, any subsequent use or          income persons, the grantee may
An activity will be considered to      disposition of the cleared property     also elect the following options:



                                                       16
    (i) Activities carried out by the    evaluating projects costs and           be recognized for this purpose and
Community Development Financial          financial requirements are not.         the minimum level of each that
Institution for the purpose of              (a) Guidelines and objectives        must be obtained for the amount
creating or retaining jobs may, at       for evaluating project costs and        of CDBG funds used. Unlike the
the option of the grantee, be            financial requirements. HUD has         guidelines for project costs and
considered to meet the                   developed guidelines that are           financial requirements covered
requirements of this paragraph           designed to provide the recipient       under paragraph (a) of this
under the criteria at paragraph          with a framework for financially        section, the use of the standards
(a)(1)(vii) of this section in lieu of   underwriting and selecting CDBG-        for public benefit is mandatory.
the criteria at paragraph (a)(4) of      assisted economic development           Certain public facilities and
this section; and                        projects that are financially viable    improvements eligible under Sec.
    (ii) All housing activities for      and will make the most effective        570.201(c) of the regulations,
which the Community                      use of the CDBG funds. These            which are undertaken for
Development Financial Institution        guidelines, also referred to as the     economic development purposes,
obligates CDBG assistance during         underwriting guidelines, are            are also subject to these
the program year may be                  published as appendix A to this         standards, as specified in Sec.
considered to be a single structure      part. The use of the underwriting       570.208(a)(4)(vi)(F)(2).
for purposes of applying the             guidelines published by HUD is not          (1) Standards for activities in
criteria at paragraph (a)(3) of this     mandatory. However, grantees            the aggregate. Activities covered
section.                                 electing not to use these               by these guidelines must, in the
    (7) Where an activity meeting        guidelines would be expected to         aggregate, either:
the criteria at Sec.                     conduct basic financial                     (i) Create or retain at least one
570.209(b)(2)(v) may also meet           underwriting prior to the provision     full-time equivalent, permanent
the requirements of either               of CDBG financial assistance to a       job per $35,000 of CDBG funds
paragraph (d)(5)(i) or (d)(6)(i) of      for-profit business. Where              used; or
this section, the grantee may elect      appropriate, HUD's underwriting             (ii) Provide goods or services to
to qualify the activity under either     guidelines recognize that different     residents of an area, such that the
the area benefit criteria at             levels of review are appropriate to     number of low- and moderate-
paragraph (a)(1)(vii) of this            take into account differences in        income persons residing in the
section or the job aggregation           the size and scope of a proposed        areas served by the assisted
criteria at paragraph (a)(4)(vi)(D)      project, and in the case of a           businesses amounts to at least
of this section, but not both.           microenterprise or other small          one low- and moderate-income
Where an activity may meet the           business to take into account the       person per $350 of CDBG funds
job aggregation criteria at both         differences in the capacity and         used.
paragraphs (a)(4)(vi)(D) and (E)         level of sophistication among               (2) Applying the aggregate
of this section, the grantee may         businesses of differing sizes.          standards. (i) A metropolitan city
elect to qualify the activity under      Recipients are encouraged, when         or an urban county shall apply the
either criterion, but not both.          they develop their own programs         aggregate standards under
                                         and underwriting criteria, to also      paragraph (b)(1) of this section to
Sec. 570.209 Guidelines for              take these factors into account.        all applicable activities for which
evaluating and selecting                 The objectives of the underwriting      CDBG funds are first obligated
economic development                     guidelines are to ensure:               within each single CDBG program
projects.                                   (1) That project costs are           year, without regard to the source
                                         reasonable;                             year of the funds used for the
    The following guidelines are            (2) That all sources of project      activities. A grantee under the
provided to assist the recipient to      financing are committed;                HUD-Administered Small Cities or
evaluate and select activities to be        (3) That to the extent               Insular Areas CDBG programs
carried out for economic                 practicable, CDBG funds are not         shall apply the aggregate
development purposes.                    substituted for non-Federal             standards under paragraph (b)(1)
Specifically, these guidelines are       financial support;                      of this section to all funds
applicable to activities that are           (4) That the project is              obligated for applicable activities
eligible for CDBG assistance under       financially feasible;                   from a given grant; program
Sec. 570.203. These guidelines              (5) That to the extent               income obligated for applicable
also apply to activities carried out     practicable, the return on the          activities will, for these purposes,
under the authority of Sec.              owner's equity investment will not      be aggregated with the most
570.204 that would otherwise be          be unreasonably high; and               recent open grant. For any time
eligible under Sec. 570.203, were           (6) That to the extent               period in which a community has
it not for the involvement of a          practicable, CDBG funds are             no open HUD-Administered or
Community-Based Development              disbursed on a pro rata basis with      Insular Areas grants, the
Organization (CBDO). (This would         other finances provided to the          aggregate standards shall be
include activities where a CBDO          project.                                applied to all applicable activities
makes loans to for-profit                   (b) Standards for evaluating         for which program income is
businesses.) These guidelines are        public benefit. The grantee is          obligated during that period.
composed of two components:              responsible for making sure that            (ii) The grantee shall apply the
guidelines for evaluating project        at least a minimum level of public      aggregate standards to the
costs and financial requirements;        benefit is obtained from the            number of jobs to be
and standards for evaluating             expenditure of CDBG funds under         created/retained, or to the
public benefit. The standards for        the categories of eligibility           number of persons residing in the
evaluating public benefit are            governed by these guidelines. The       area served (as applicable), as
mandatory, but the guidelines for        standards set forth below identify      determined at the time funds are
                                         the types of public benefit that will   obligated to activities.



                                                         17
    (iii) Where an activity is          neighborhood that has at least 70      previous CDBG assistance
expected both to create or retain       % of its residents who are low-        provided by the recipient.
jobs and to provide goods or            and moderate-income;                       (4) Applying the individual
services to residents of an area,           (J) Provides employment            activity standards. (i) Where an
the grantee may elect to count the      opportunities that are an integral     activity is expected both to create
activity under either the jobs          component of a project designed        or retain jobs and to provide
standard or the area residents          to promote spatial                     goods or services to residents of
standard, but not both.                 deconcentration of low- and            an area, it will be disqualified only
    (iv) Where CDBG assistance for      moderate-income and minority           if the amount of CDBG assistance
an activity is limited to job           persons;                               exceeds both of the amounts in
training and placement and/or               (K) With prior HUD approval,       paragraph (b)(3)(i) of this section.
other employment support                provides substantial benefit to            (ii) The individual activity
services, the jobs assisted with        low-income persons through other       standards in paragraph (b)(3)(i)
CDBG funds shall be considered to       innovative approaches;                 of this section shall be applied to
be created or retained jobs for the         (L) Provides services to the       the number of jobs to be created
purposes of applying the                residents of an area pursuant to a     or retained, or to the number of
aggregate standards.                    strategy approved by HUD under         persons residing in the area
    (v) Any activity subject to these   the provisions of Sec. 91.215(e) of    served (as applicable), as
guidelines that meets one or more       this title;                            determined at the time funds are
of the following criteria may, at           (M) Creates or retains jobs        obligated to activities.
the grantee's option, be excluded       through businesses assisted in an          (iii) Where CDBG assistance for
from the aggregate standards            area pursuant to a strategy            an activity is limited to job
described in paragraph (b)(1) of        approved by HUD under the              training and placement and/or
this section:                           provisions of Sec. 91.215(e) of        other employment support
    (A) Provides jobs exclusively for   this title.                            services, the jobs assisted with
unemployed persons or                       (3) Standards for individual       CDBG funds shall be considered to
participants in one or more of the      activities. Any activity subject to    be created or retained jobs for the
following programs:                     these guidelines which falls into      purposes of applying the individual
    (1) Jobs Training Partnership       one or more of the following           activity standards in paragraph
Act (JTPA);                             categories will be considered by       (b)(3)(i) of this section.
    (2) Jobs Opportunities for Basic    HUD to provide insufficient public         (c) Amendments to economic
Skills (JOBS); or                       benefit, and therefore may under       development projects after review
    (3) Aid to Families with            no circumstances be assisted with      determinations. If, after the
Dependent Children (AFDC);              CDBG funds:                            grantee enters into a contract to
    (B) Provides jobs                       (i) The amount of CDBG             provide assistance to a project,
predominantly for residents of          assistance exceeds either of the       the scope or financial elements of
Public and Indian Housing units;        following, as applicable:              the project change to the extent
    (C) Provides jobs                       (A) $50,000 per full-time          that a significant contract
predominantly for homeless              equivalent, permanent job created      amendment is appropriate, the
persons;                                or retained; or                        project should be reevaluated
    (D) Provides jobs                       (B) $1,000 per low- and            under these and the recipient's
predominantly for low-skilled, low-     moderate-income person to which        guidelines. (This would include, for
and moderate-income persons,            goods or services are provided by      example, situations where the
where the business agrees to            the activity.                          business requests a change in the
provide clear opportunities for             (ii) The activity consists of or   amount or terms of assistance
promotion and economic                  includes any of the following:         being provided, or an extension to
advancement, such as through the            (A) General promotion of the       the loan payment period required
provision of training;                  community as a whole (as               in the contract.) If a reevaluation
    (E) Provides jobs predominantly     opposed to the promotion of            of the project indicates that the
for persons residing within a           specific areas and programs);          financial elements and public
census tract (or block numbering            (B) Assistance to professional     benefit to be derived have also
area) that has at least 20 % of its     sports teams;                          substantially changed, then the
residents who are in poverty;               (C) Assistance to privately        recipient should make appropriate
    (F) Provides assistance to          owned recreational facilities that     adjustments in the amount, type,
business(es) that operate(s)            serve a predominantly higher-          terms or conditions of CDBG
within a census tract (or block         income clientele, where the            assistance which has been offered,
numbering area) that has at least       recreational benefit to users or       to reflect the impact of the
20 % of its residents who are in        members clearly outweighs              substantial change. (For example,
poverty;                                employment or other benefits to        if a change in the project elements
    (G) Stabilizes or revitalizes a     low- and moderate-income               results in a substantial reduction
neighborhood that has at least 70       persons;                               of the total project costs, it may
% of its residents who are low-             (D) Acquisition of land for        be appropriate for the recipient to
and moderate-income;                    which the specific proposed use        reduce the amount of total CDBG
    (H) Provides assistance to a        has not yet been identified; and       assistance.) If the amount of
Community Development Financial             (E) Assistance to a for-profit     CDBG assistance provided to the
Institution that serve an area that     business while that business or        project is increased, the amended
is predominantly low- and               any other business owned by the        project must still comply with the
moderate-income persons;                same person(s) or entity(ies) is       public benefit standards under
    (I) Provides assistance to a        the subject of unresolved findings     paragraph (b) of this section.
Community-Based Development             of noncompliance relating to               (d) Documentation. The
Organization serving a                                                         grantee must maintain sufficient



                                                        18
records to demonstrate the level            (viii) [Reserved]                      (i) Any income received in a
of public benefit, based on the             (ix) Interest earned on program     single program year by the
above standards, that is actually       income pending its disposition;         recipient and all its subrecipients if
achieved upon completion of the         and                                     the total amount of such income
CDBG-assisted economic                      (x) Funds collected through         does not exceed $25,000; and
development activity(ies) and how       special assessments made against           (ii) Amounts generated by
that compares to the level of such      properties owned and occupied by        activities that are financed by a
benefit anticipated when the            households not of low and               loan guaranteed under section
CDBG assistance was obligated. If       moderate income, where the              108 of the Act and meet one or
the grantee's actual results show       assessments are used to recover         more of the public benefit criteria
a pattern of substantial variation      all or part of the CDBG portion of      specified at Sec. 570.209(b)(2)(v)
from anticipated results, the           a public improvement.                   or are carried out in conjunction
grantee is expected to take all             (2) Program income does not         with a grant under section 108(q)
actions reasonably within its           include income earned (except for       in an area determined by HUD to
control to improve the accuracy of      interest described in Sec.              meet the eligibility requirements
its projections. If the actual          570.513) on grant advances from         for designation as an Urban
results demonstrate that the            the U.S. Treasury. The following        Empowerment Zone pursuant to
recipient has failed the public         items of income earned on grant         24 CFR part 597, subpart B. Such
benefit standards, HUD may              advances must be remitted to            exclusion shall not apply if CDBG
require the recipient to meet more      HUD for transmittal to the U.S.         funds are used to repay the
stringent standards in future years     Treasury, and will not be               guaranteed loan. When such a
as appropriate.                         reallocated under section 106(c)        guaranteed loan is partially repaid
                                        or (d) of the Act:                      with CDBG funds, the amount
Subpart J--Grant                            (i) Interest earned from the        generated shall be prorated to
Administration                          investment of the initial proceeds      reflect the percentage of CDBG
                                        of a grant advance by the U.S.          funds used. Amounts generated
Sec. 570.500 Definitions.               Treasury;                               by activities financed with loans
                                            (ii) Interest earned on loans or    guaranteed under section 108
  Source: 53 FR 8058, Mar. 11,          other forms of assistance provided      which are not defined as program
1988, unless otherwise noted.           with CDBG funds that are used for       income shall be treated as
                                        activities determined by HUD            miscellaneous revenue and shall
   For the purposes of this             either to be ineligible or to fail to   not be subject to any of the
subpart, the following terms shall      meet a national objective in            requirements of this part, except
apply:                                  accordance with the requirements        that the use of such funds shall be
   (a) Program income means             of subpart C of this part, or that      limited to activities that are
gross income received by the            fail substantially to meet any          located in a revitalization strategy
recipient or a subrecipient directly    other requirement of this part;         area and implement a HUD
generated from the use of CDBG          and                                     approved area revitalization
funds, except as provided in                (iii) Interest earned on the        strategy pursuant to Sec.
paragraph (a)(4) of this section.       investment of amounts                   91.215(e) of this title. However,
   (1) Program income includes,         reimbursed to the CDBG program          such treatment shall not affect the
but is not limited to, the following:   account prior to the use of the         right of the Secretary to require
   (i) Proceeds from the                reimbursed funds for eligible           the Section 108 borrower to
disposition by sale or long-term        purposes.                               pledge such amounts as security
lease of real property purchased            (3) The calculation of the          for the guaranteed loan. The
or improved with CDBG funds;            amount of program income for the        determination whether such
   (ii) Proceeds from the               recipient's CDBG program as a           amounts shall constitute program
disposition of equipment                whole (i.e., comprising activities      income shall be governed by the
purchased with CDBG funds;              carried out by a grantee and its        provisions of the contract required
   (iii) Gross income from the use      subrecipients) shall exclude            at Sec. 570.705(b)(1).
or rental of real or personal           payments made by subrecipients             (5) Examples of other receipts
property acquired by the recipient      of principal and/or interest on         that are not considered program
or by a subrecipient with CDBG          CDBG-funded loans received from         income are proceeds from fund
funds, less costs incidental to         grantees if such payments are           raising activities carried out by
generation of the income;               made using program income               subrecipients receiving CDBG
   (iv) Gross income from the use       received by the subrecipient. (By       assistance (the costs of
or rental of real property, owned       making such payments, the               fundraising are generally
by the recipient or by a                subrecipient shall be deemed to         unallowable under the applicable
subrecipient, that was constructed      have transferred program income         OMB circulars referenced in 24
or improved with CDBG funds, less       to the grantee.) The amount of          CFR 84.27), funds collected
costs incidental to generation of       program income derived from this        through special assessments used
the income;                             calculation shall be used for           to recover the non-CDBG portion
   (v) Payments of principal and        reporting purposes, for purposes        of a public improvement, and
interest on loans made using            of applying the requirement under       proceeds from the disposition of
CDBG funds, except as provided in       Sec. 570.504(b)(2)(iii), and in         real property acquired or
paragraph (a)(3) of this section;       determining limitations on              improved with CDBG funds
   (vi) Proceeds from the sale of       planning and administration and         when the disposition occurs after
loans made with CDBG funds;             public services activities to be paid   the applicable time period
   (vii) Proceeds from sale of          for with CDBG funds.                    specified in Sec. 570.503(b)(8) for
obligations secured by loans made           (4) Program income does not         subrecipient-controlled property,
with CDBG funds;                        include:



                                                        19
or in Sec. 570.505 for recipient-       responsible for determining the             (11) Section 85.35,
controlled property.                    adequacy of performance under           “Subawards to debarred and
   (b) Revolving fund means a           subrecipient agreements and             suspended parties'';
separate fund (with a set of            procurement contracts, and for              (12) Section 85.36,
accounts that are independent of        taking appropriate action when          “Procurement,'' except paragraph
other program accounts)                 performance problems arise, such        (a);
established for the purpose of          as the actions described in Sec.            (13) Section 85.37,
carrying out specific activities        570.910. Where a unit of general        Subgrants'';
that, in turn, generate payments        local government is participating           (14) Section 85.40, “Monitoring
to the fund for use in carrying out     with, or as part of, an urban           and reporting program
the same activities. Each revolving     county, or as part of a                 performance,'' except paragraphs
loan fund's cash balance must be        metropolitan city, the recipient is     (b) through (d) and paragraph (f);
held in an interest-bearing             responsible for applying to the             (15) Section 85.41, “Financial
account, and any interest paid on       unit of general local government        reporting,'' except paragraphs (a),
CDBG funds held in this account         the same requirements as are            (b), and (e);
shall be considered interest            applicable to subrecipients, except         (16) Section 85.42, “Retention
earned on grant advances and            that the five-year period identified    and access requirements for
must be remitted to HUD for             under Sec. 570.503(b)(8)(i) shall       records,'' except that the period
transmittal to the U.S. Treasury        begin with the date that the unit       shall be four years;
no less frequently than annually.       of general local government is no           (17) Section 85.43,
(Interest paid by borrowers on          longer considered by HUD to be a        “Enforcement'';
eligible loans made from the            part of the metropolitan city or            (18) Section 85.44,
revolving loan fund shall be            urban county, as applicable,            “Termination for convenience'';
program income and treated              instead of the date that the                (19) Section 85.51 “Later
accordingly.)                           subrecipient agreement expires.         disallowances and adjustments''
   (c) Subrecipient means a public                                              and
or private nonprofit agency,            Sec. 570.502 Applicability of               (20) Section 85.52, “Collection
authority, or organization, or a        uniform administrative                  of amounts due.''
for-profit entity authorized under      requirements.                               (b) Subrecipients, except
Sec. 570.201(o), receiving CDBG                                                 subrecipients that are
funds from the recipient or                 (a) Recipients and subrecipients    governmental entities, shall
another subrecipient to undertake       that are governmental entities          comply with the requirements and
activities eligible for such            (including public agencies) shall       standards of OMB Circular No. A-
assistance under subpart C of this      comply with the requirements and        122, “Cost Principles for Non-
part. The term excludes an entity       standards of OMB Circular No. A-        profit Organizations,'' or OMB
receiving CDBG funds from the           87, “Cost Principles for State,         Circular No. A-21, “Cost Principles
recipient under the authority of        Local, and Indian Tribal                for Educational Institutions,'' as
Sec. 570.204, unless the grantee        Governments''; OMB Circular A-          applicable, and OMB Circular A-
explicitly designates it as a           128, “Audits of State and Local         133, “Audits of Institutions of
subrecipient. The term includes a       Governments'' (implemented at           Higher Education and Other
public agency designated by a unit      24 CFR part 44); and with the           Nonprofit Institutions'' (as set
of general local government to          following sections of 24 CFR part       forth in 24 CFR part 45). Audits
receive a loan guarantee under          85 “Uniform Administrative              shall be conducted annually. Such
subpart M of this part, but does        Requirements for Grants and             subrecipients shall also comply
not include contractors providing       Cooperative Agreements to State         with the following provisions of
supplies, equipment, construction,      and Local Governments'' or the          the Uniform Administrative
or services subject to the              related CDBG provision, as              requirements of OMB Circular A-
procurement requirements in 24          specified in this paragraph:            110 (implemented at 24 CFR part
CFR 85.36 or 84.40, as applicable.          (1) Section 85.3, “Definitions'';   84, “Uniform Administrative
                                            (2) Section 85.6, “Exceptions'';    Requirements for Grants and
Sec. 570.501 Responsibility                 (3) Section 85.12, “Special         Agreements With Institutions of
for grant administration.               grant or subgrant conditions for        Higher Education, Hospitals and
                                        `high-risk' grantees'';                 Other Non-Profit Organizations'')
   (a) One or more public                   (4) Section 85.20, “Standards       or the related CDBG provision, as
agencies, including existing local      for financial management                specified in this paragraph:
public agencies, may be                 systems,'' except paragraph (a);            (1) Subpart A—“General'';
designated by the chief executive           (5) Section 85.21, “Payment,''          (2) Subpart B—“Pre-Award
officer of the recipient to             except as modified by Sec.              Requirements,'' except for Sec.
undertake activities assisted by        570.513;                                84.12, “Forms for Applying for
this part. A public agency so               (6) Section 85.22, “Allowable       Federal Assistance'';
designated shall be subject to the      costs'';                                    (3) Subpart C—“Post-Award
same requirements as are                    (7) Section 85.26, “Non-federal     Requirements,'' except for:
applicable to subrecipients.            audits'';                                   (i) Section 84.22, “Payment
   (b) The recipient is responsible         (8) Section 85.32,                  Requirements.'' Grantees shall
for ensuring that CDBG funds are        “Equipment,'' except in all cases in    follow the standards of Sec. Sec.
used in accordance with all             which the equipment is sold, the        85.20(b)(7) and 85.21 in making
program requirements. The use of        proceeds shall be program               payments to subrecipients;
designated public agencies,             income;                                     (ii) Section 84.23, “Cost
subrecipients, or contractors does          (9) Section 85.33, “Supplies'';     Sharing and Matching'';
not relieve the recipient of this           (10) Section 85.34,                     (iii) Section 84.24, “Program
responsibility. The recipient is also   “Copyrights'';                          Income.'' In lieu of Sec. 84.24,



                                                        20
CDBG subrecipients shall follow         shall include provisions concerning        (7) Reversion of assets. The
Sec. 570.504;                           the following items:                   agreement shall specify that upon
   (iv) Section 84.25, “Revision of         (1) Statement of work. The         its expiration the subrecipient
Budget and Program Plans'';             agreement shall include a              shall transfer to the recipient any
   (v) Section 84.32, “Real             description of the work to be          CDBG funds on hand at the time
Property.'' In lieu of Sec. 84.32,      performed, a schedule for              of expiration and any accounts
CDBG subrecipients shall follow         completing the work, and a             receivable attributable to the use
Sec. 570.505;                           budget. These items shall be in        of CDBG funds. It shall also
   (vi) Section 84.34(g),               sufficient detail to provide a sound   include provisions designed to
“Equipment.'' In lieu of the            basis for the recipient effectively    ensure that any real property
disposition provisions of Sec.          to monitor performance under the       under the subrecipient's control
84.34(g), the following applies:        agreement.                             that was acquired or improved in
   (A) In all cases in which                (2) Records and reports. The       whole or in part with CDBG funds
equipment is sold, the proceeds         recipient shall specify in the         (including CDBG funds provided to
shall be program income (prorated       agreement the particular records       the subrecipient in the form of a
to reflect the extent to which          the subrecipient must maintain         loan) in excess of $25,000 is
CDBG funds were used to acquire         and the particular reports the         either:
the equipment); and                     subrecipient must submit in order          (i) Used to meet one of the
   (B) Equipment not needed by          to assist the recipient in meeting     national objectives in Sec.
the subrecipient for CDBG               its recordkeeping and reporting        570.208 (formerly Sec. 570.901)
activities shall be transferred to      requirements.                          until five years after expiration of
the recipient for the CDBG                  (3) Program income. The            the agreement, or for such longer
program or shall be retained after      agreement shall include the            period of time as determined to be
compensating the recipient;             program income requirements set        appropriate by the recipient; or
   (vii) Section 84.51 (b), (c), (d),   forth in Sec. 570.504(c). The              (ii) Not used in accordance with
(e), (f), (g), and (h), “Monitoring     agreement shall also specify that,     paragraph (b)(7)(i) of this section,
and Reporting Program                   at the end of the program year,        in which event the subrecipient
Performance'';                          the grantee may require                shall pay to the recipient an
   (viii) Section 84.52, “Financial     remittance of all or part of any       amount equal to the current
Reporting'';                            program income balances                market value of the property less
   (ix) Section 84.53(b),               (including investments thereof)        any portion of the value
“Retention and access                   held by the subrecipient (except       attributable to expenditures of
requirements for records.'' Section     those needed for immediate cash        non-CDBG funds for the
84.53(b) applies with the following     needs, cash balances of a              acquisition of, or improvement to,
exceptions:                             revolving loan fund, cash balances     the property. The payment is
   (A) The retention period             from a lump sum drawdown, or           program income to the recipient.
referenced in Sec. 84.53(b)             cash or investments held for           (No payment is required after the
pertaining to individual CDBG           section 108 security needs).           period of time specified in
activities shall be four years; and         (4) Uniform administrative         paragraph (b)(7)(i) of this
   (B) The retention period starts      requirements. The agreement            section.)
from the date of submission of the      shall require the subrecipient to
annual performance and                  comply with applicable uniform         Sec. 570.504 Program income.
evaluation report, as prescribed in     administrative requirements, as
24 CFR 91.520, in which the             described in Sec. 570.502.                (a) Recording program income.
specific activity is reported on for        (5) Other program                  The receipt and expenditure of
the final time rather than from the     requirements. The agreement            program income as defined in Sec.
date of submission of the final         shall require the subrecipient to      570.500(a) shall be recorded as
expenditure report for the award;       carry out each activity in             part of the financial transactions
   (x) Section 84.61,                   compliance with all Federal laws       of the grant program.
“Termination.'' In lieu of the          and regulations described in              (b) Disposition of program
provisions of Sec. 84.61, CDBG          subpart K of these regulations,        income received by recipients. (1)
subrecipients shall comply with         except that:                           Program income received before
Sec. 570.503(b)(7); and                     (i) The subrecipient does not      grant closeout may be retained by
   (4) Subpart D—“After-the-            assume the recipient's                 the recipient if the income is
Award Requirements,'' except for        environmental responsibilities         treated as additional CDBG funds
Sec. 84.71, “Closeout                   described at Sec. 570.604; and         subject to all applicable
Procedures.''                               (ii) The subrecipient does not     requirements governing the use of
                                        assume the recipient's                 CDBG funds.
Sec. 570.503 Agreements with            responsibility for initiating the         (2) If the recipient chooses to
subrecipients.                          review process under the               retain program income, that
   (a) Before disbursing any CDBG       provisions of 24 CFR part 52.          program income shall be disposed
funds to a subrecipient, the                (6) Suspension and                 of as follows:
recipient shall sign a written          termination. The agreement shall          (i) Program income in the form
agreement with the subrecipient.        specify that, in accordance with 24    of repayments to, or interest
The agreement shall remain in           CFR 85.43, suspension or               earned on, a revolving fund as
effect during any period that the       termination may occur if the           defined in Sec. 570.500(b) shall
subrecipient has control over           subrecipient materially fails to       be substantially disbursed from
CDBG funds, including program           comply with any term of the            the fund before additional cash
income.                                 award, and that the award may be       withdrawals are made from the
   (b) At a minimum, the written        terminated for convenience in          U.S. Treasury for the same
agreement with the subrecipient         accordance with 24 CFR 85.44.          activity. (This rule does not



                                                        21
prevent a lump sum disbursement           (c) Disposition of program              (a) A recipient may not change
to finance the rehabilitation of       income received by subrecipients.      the use or planned use of any
privately owned properties as          The written agreement between          such property (including the
provided for in Sec. 570.513.)         the recipient and the subrecipient,    beneficiaries of such use) from
   (ii) Substantially all other        as required by Sec. 570.503, shall     that for which the acquisition or
program income shall be                specify whether program income         improvement was made unless
disbursed for eligible activities      received is to be returned to the      the recipient provides affected
before additional cash withdrawals     recipient or retained by the           citizens with reasonable notice of,
are made from the U.S. Treasury.       subrecipient. Where program            and opportunity to comment on,
   (iii) At the end of each program    income is to be retained by the        any proposed change, and either:
year, the aggregate amount of          subrecipient, the agreement shall          (1) The new use of such
program income cash balances           specify the activities that will be    property qualifies as meeting one
and any investment thereof             undertaken with the program            of the national objectives in Sec.
(except those needed for               income and that all provisions of      570.208 (formerly Sec. 570.901)
immediate cash needs, cash             the written agreement shall            and is not a building for the
balances of a revolving loan fund,     apply to the specified activities.     general conduct of government;
cash balances from a lump-sum          When the subrecipient retains          or
drawdown, or cash or investments       program income, transfers of               (2) The requirements in
held for section 108 loan              grant funds by the recipient to the    paragraph (b) of this section are
guarantee security needs) that, as     subrecipient shall be adjusted         met.
of the last day of                     according to the principles                (b) If the recipient determines,
the program year, exceeds one-         described in paragraphs (b)(2) (i)     after consultation with affected
twelfth of the most recent grant       and (ii) of this section. Any          citizens, that it is appropriate to
made pursuant to Sec. 570.304          program income on hand when            change the use of the property to
shall be remitted to HUD as soon       the agreement expires, or              a use which does not qualify under
as practicable thereafter, to be       received after the agreement's         paragraph (a)(1) of this section, it
placed in the recipient's line of      expiration, shall be paid to the       may retain or dispose of the
credit. This provision applies to      recipient as required by Sec.          property for the changed use if
program income cash balances           570.503(b)(8).                         the recipient's CDBG program is
and investments thereof held by           (d) Disposition of certain          reimbursed in the amount of the
the grantee and its subrecipients.     program income received by             current fair market value of the
(This provision shall be applied for   urban counties. Program income         property, less any portion of the
the first time at the end of the       derived from urban county              value attributable to expenditures
program year for which Federal         program activities undertaken by       of non-CDBG funds for acquisition
Fiscal Year 1996 funds are             or within the jurisdiction of a unit   of, and improvements
provided.)                             of general local government that       to, the property.
   (3) Program income on hand at       thereafter terminates its                  (c) If the change of use occurs
the time of closeout shall continue    participation in the urban county      after closeout, the provisions
to be subject to the eligibility       shall continue to be program           governing income from the
requirements in subpart C and all      income of the urban county. The        disposition of the real property in
other applicable provisions of this    urban county may transfer the          Sec. 570.504(b)(4) or (5), as
part until it is expended.             program income to the unit of          applicable, shall apply to the use
   (4) Unless otherwise provided       general local government, upon its     of funds reimbursed.
in any grant closeout agreement,       termination of urban county                (d) Following the
and subject to the requirements of     participation, provided that the       reimbursement of the CDBG
paragraph (b)(5) of this section,      unit of general local government       program in accordance with
income received after closeout         has become an entitlement              paragraph (b) of this section, the
shall not be governed by the           grantee and agrees to use the          property no longer will be subject
provisions of this part, except        program income in its own CDBG         to any CDBG requirements.
that, if at the time of closeout the   entitlement program.
recipient has another ongoing                                                 Sec. 570.506 Records to be
CDBG grant received directly from      Sec. 570.505 Use of real               maintained.
HUD, funds received after closeout     property.
shall be treated as program               The standards described in this         Each recipient shall establish
income of the ongoing grant            section apply to real property         and maintain sufficient records to
program.                               within the recipient's control which   enable the Secretary to determine
   (5) If the recipient does not       was acquired or improved in whole      whether the recipient has met the
have another ongoing grant             or in part using CDBG funds in         requirements of this part. At a
received directly from HUD at the      excess of $25,000. These               minimum, the following records
time of closeout, income received      standards shall apply from the         are needed:
after closeout from the disposition    date CDBG funds are first spent            (a) Records providing a full
of real property or from loans         for the property until five years      description of each activity
outstanding at the time of             after closeout of an entitlement       assisted (or being assisted) with
closeout shall not be governed by      recipient's participation in           CDBG funds, including its location
the provisions of this part, except    the entitlement CDBG program or,       (if the activity has a geographical
that such income shall be used for     with respect to other recipients,      locus), the amount of CDBG funds
activities that meet one of the        until five years after the closeout    budgeted, obligated and expended
national objectives in Sec.            of the grant from which the            for the activity, and the provision
570.901 and the eligibility            assistance to the property was         in subpart C under which it is
requirements described in section      provided.                              eligible.
105 of the Act.



                                                       22
    (b) Records demonstrating that           (i) Documentation establishing          (vii) For any homebuyer
each activity undertaken meets          that the facility or service is          assistance activity qualifying
one of the criteria set forth in Sec.   designed for the particular needs        under Sec. 570.201(e),
570.208. (Where information on          of or used exclusively by senior         570.201(n), or 570.204,
income by family size is required,      citizens, adults meeting the             identification of the applicable
the recipient may substitute            Bureau of the Census' Current            eligibility paragraph and evidence
evidence establishing that the          Population Reports definition of         that the activity meets the
person assisted qualifies under         “severely disabled,'' persons living     eligibility criteria for that
another program having income           with AIDS, battered spouses,             provision; for any such activity
qualification criteria at least as      abused children, the homeless,           qualifying under Sec. 570.208(a),
restrictive as that used in the         illiterate adults, or migrant farm       the size and income of each
definitions of “low and moderate        workers, for which the regulations       homebuyer's household; and
income person'' and “low and            provide a presumption concerning             (viii) For a Sec. 570.201(k)
moderate income household'' (as         the extent to which low- and             housing services activity,
applicable) at Sec. 570.3, such as      moderate-income persons benefit;         identification of the HOME
Job Training Partnership Act            or                                       project(s) or assistance that the
(JTPA) and welfare programs; or              (ii) Documentation describing       housing services activity supports,
the recipient may substitute            how the nature and, if applicable,       and evidence that project(s) or
evidence that the assisted person       the location of the facility or          assistance meet the HOME
is homeless; or the recipient may       service establishes that it is used      program income targeting
substitute a copy of a verifiable       predominantly by low and                 requirements at 24 CFR 92.252 or
certification from the assisted         moderate income persons; or              92.254.
person that his or her family                (iii) Data showing the size and         (5) For each activity
income does not exceed the              annual income of the family of           determined to benefit low and
applicable income limit established     each person receiving the benefit.       moderate-income persons based
in accordance with Sec. 570.3;               (4) For each activity carried out   on the creation of jobs, the
or the recipient may substitute a       for the purpose of providing or          recipient shall provide the
notice that the assisted person is      improving housing which is               documentation described in either
a referral from a state, county or      determined to benefit low and            paragraph (b)(5)(i) or (ii) of this
local employment agency or other        moderate income persons:                 section.
entity that agrees to refer                  (i) A copy of a written                 (i) Where the recipient chooses
individuals it determines to be low     agreement with each landlord or          to document that at least 51 % of
and moderate income persons             developer receiving CDBG                 the jobs will be available to low
based on HUD's criteria and             assistance indicating the total          and moderate-income persons,
agrees to maintain documentation        number of dwelling units in each         documentation for each assisted
supporting these determinations.)       multifamily structure assisted and       business shall include:
Such records shall include the          the number of those units which              (A) A copy of a written
following information:                  will be occupied by low and              agreement containing:
    (1) For each activity               moderate income households after             (1) A commitment by the
determined to benefit low and           assistance;                              business that it will make at least
moderate-income persons, the                 (ii) The total cost of the          51 % of the jobs available to low
income limits applied and the           activity, including both CDBG and        and moderate income persons and
point in time when the benefit was      non-CDBG funds.                          will provide training for any of
determined.                                  (iii) For each unit occupied by a   those jobs requiring special skills
    (2) For each activity               low and moderate income                  or education;
determined to benefit low and           household, the size and income of            (2) A listing by job title of the
moderate-income persons based           the household;                           permanent jobs to be created
on the area served by the activity:          (iv) For rental housing only:       indicating which jobs will be
    (i) The boundaries of the                (A) The rent charged (or to be      available to low and moderate
service area;                           charged) after assistance for each       income persons, which jobs
    (ii) The income characteristics     dwelling unit in each structure          require special skills or education,
of families and unrelated               assisted; and                            and which jobs are part-time, if
individuals in the service area;             (B) Such information as             any; and
and                                     necessary to show the                        (3) A description of actions to
    (iii) If the percent of low and     affordability of units occupied (or      be taken by the recipient and
moderate income persons in the          to be occupied) by low and               business to ensure that low and
service area is less than 51 %,         moderate income households               moderate income persons receive
data showing that the area              pursuant to criteria established         first consideration for those jobs;
qualifies under the exception           and made public by the recipient;        and
criteria set forth at Sec.                   (v) For each property acquired          (B) A listing by job title of the
570.208(a)(1)(ii).                      on which there are no structures,        permanent jobs filled, and which
    (3) For each activity               evidence of commitments                  jobs of those were available to low
determined to benefit low and           ensuring that the criteria in Sec.       and moderate income persons,
moderate income persons because         570.208(a)(3) will be met when           and a description of how first
the activity involves a facility or     the structures are built;                consideration was given to such
service designed for use by a                (vi) Where applicable, records      persons for those jobs. The
limited clientele consisting            demonstrating that the activity          description shall include what
exclusively or predominantly of         qualifies under the special              hiring process was used; which
low and moderate income                 conditions at Sec.                       low and moderate-income persons
persons:                                570.208(a)(3)(i);                        were interviewed for a particular




                                                         23
job; and which low and moderate         a listing of each job which has            (iii) Details and scope of CDBG
income persons were hired.              turned over to date, indicating         assisted rehabilitation, by
    (ii) Where the recipient chooses    which of those jobs were either         structure.
to document that at least 51 % of       taken by, or available to, low and         (10) For each activity
the jobs will be held by low and        moderate income persons. For            determined to aid in the
moderate income persons,                jobs made available, a description      prevention or elimination of slums
documentation for each assisted         of how first consideration was          or blight based on the elimination
business shall include:                 given to such persons for               of specific conditions of blight or
    (A) A copy of a written             those jobs shall also be included in    physical decay not located in a
agreement containing:                   the record.                             slum or blighted area:
    (1) A commitment by the                 (7) For purposes of                    (i) A description of the specific
business that at least 51 % of the      documenting, pursuant to                condition of blight or physical
jobs, on a full-time equivalent         paragraph (b)(5)(i)(B),                 decay treated; and
basis, will be held by low and          (b)(5)(ii)(C), (b)(6)(iii) or              (ii) For rehabilitation carried out
moderate income persons; and            (b)(6)(v) of this section, that the     under this category, a description
    (2) A listing by job title of the   person for whom a job was either        of the specific conditions
permanent jobs to be created,           filled by or made available to a        detrimental to public health and
identifying which are part-time, if     low- or moderate-income person          safety that were identified and the
any;                                    based upon the census tract             details and scope of the CDBG
    (B) A listing by job title of the   where the person resides or in          assisted rehabilitation by
permanent jobs filled and which         which the business is located, the      structure.
jobs were initially held by low and     recipient, in lieu of maintaining          (11) For each activity
moderate income persons; and            records showing the person's            determined to aid in the
    (C) For each such low and           family size and income, may             prevention or elimination of slums
moderate income person hired,           substitute records showing either       or blight based on addressing
the size and annual income of the       the person's address at the time        slums or blight in an urban
person's family prior to the person     the determination of income             renewal area, a copy of the Urban
being hired for the job.                status was made or the address of       Renewal Plan, as in effect at the
    (6) For each activity               the business providing the job, as      time the activity is carried out,
determined to benefit low and           applicable, the census tract in         including maps and supporting
moderate-income persons based           which that address was located,         documentation.
on the retention of jobs:               the percent of persons residing in         (12) For each activity
    (i) Evidence that in the absence    that tract who either                   determined to meet a community
of CDBG assistance jobs would be        are in poverty or who are low- and      development need having a
lost;                                   moderate-income, as applicable,         particular urgency:
    (ii) For each business assisted,    the data source used for                   (i) Documentation concerning
a listing by job title of permanent     determining the percentage, and a       the nature and degree of
jobs retained, indicating which of      description of the pervasive            seriousness of the condition
those jobs are part-time and            poverty and general distress in         requiring assistance;
(where it is known) which are held      the census tract in sufficient detail      (ii) Evidence that the recipient
by low and moderate income              to demonstrate how the census           certified that the CDBG activity
persons at the time the CDBG            tract met the criteria in Sec.          was designed to address the
assistance is provided. Where           570.208(a)(4)(v), as applicable.        urgent need;
applicable, identification of any of        (8) For each activity                  (iii) Information on the timing
the retained jobs (other than           determined to aid in the                of the development of the serious
those known to be held by low           prevention or elimination of slums      condition; and
and moderate income persons)            or blight based on addressing one          (iv) Evidence confirming that
which are projected to become           or more of the conditions which         other financial resources to
available to low and moderate           qualified an area as a slum or          alleviate the need were not
income persons through job              blighted area:                          available.
turnover within two years of the            (i) The boundaries of the area;        (c) Records that demonstrate
time CDBG assistance is provided.       and                                     that the recipient has made the
Information upon which the job              (ii) A description of the           determinations required as a
turnover projections were based         conditions that qualified the area      condition of eligibility of certain
shall also be included in the           at the time of its designation in       activities, as prescribed in Sec.
record;                                 sufficient detail to demonstrate        Sec. 570.201(f), 570.201(i)(2),
    (iii) For each retained job         how the area met the criteria in        570.201(p), 570.201(q),
claimed to be held by a low and         Sec. 570.208(b)(1).                     570.202(b)(3), 570.206(f),
moderate-income person,                     (9) For each residential            570.209, and 570.309.
information on the size and annual      rehabilitation activity determined         (d) Records which demonstrate
income of the person's family;          to aid in the prevention or             compliance with Sec. 570.505
    (iv) For jobs claimed to be         elimination of slums or blight in a     regarding any change of use of
available to low and moderate           slum or blighted area:                  real property acquired or
income persons based on job                 (i) The local definition of         improved with CDBG assistance.
turnover, a description covering        “substandard'';                            (e) Records that demonstrate
the items required for “available           (ii) A pre-rehabilitation           compliance with the citizen
to'' jobs in paragraph (b)(5) of        inspection report describing the        participation requirements
this section; and                       deficiencies in each structure to be    prescribed in 24 CFR part 91,
    (v) Where jobs were claimed to      rehabilitated; and                      subpart B, for entitlement
be available to low and moderate                                                recipients, or in 24 CFR part 91,
income persons through turnover,



                                                        24
subpart C, for HUD-administered        which implements section 3 of the         (i) Agreements and other
small cities recipients.               Housing Development Act of 1968,       records related to lump sum
   (f) Records that demonstrate        as amended (12 U.S.C. 1701U)           disbursements to private financial
compliance with the requirements       relative to the hiring and training    institutions for financing
in Sec. 570.606 regarding              of low and moderate income             rehabilitation as prescribed in Sec.
acquisition, displacement,             persons and the use of local           570.513; and
relocation, and replacement            businesses.                               (j) Records required to be
housing.                                   (6) Data indicating the            maintained in accordance with
   (g) Fair housing and equal          racial/ethnic character of each        other applicable laws and
opportunity records containing:        business entity receiving a            regulations set forth in subpart K
   (1) Documentation of the            contract or subcontract of $25,000     of this part.
analysis of impediments and the        or more paid, or to be paid, with
actions the recipient has carried      CDBG funds, data indicating which      Sec. 570.507 Reports.
out with its housing and               of those entities are women's
community development and              business enterprises as defined in         (a) Performance and evaluation
other resources to remedy or           Executive Order 12138, the             report--(1) Entitlement grant
ameliorate any impediments to          amount of the contract or              recipients and HUD-administered
fair housing choice in the             subcontract, and documentation of      small cities recipients in Hawaii.
recipient's community.                 recipient's affirmative steps to       The annual performance and
   (2) Data on the extent to which     assure that minority business and      evaluation report shall be
each racial and ethnic group and       women's business enterprises           submitted in accordance with 24
single-headed households (by           have an equal opportunity to           CFR part 91.
gender of household head) have         obtain or compete for contracts            (2) HUD-administered Small
applied for, participated in, or       and subcontracts as sources of         Cities recipients in New York, and
benefited from, any program or         supplies, equipment, construction      Hawaii recipients for pre-FY 1995
activity funded in whole or in part    and services. Such affirmative         grants--(i) Content. Each
with CDBG funds. Such                  steps may include, but are not         performance and evaluation report
information shall be used only as      limited to, technical assistance       must contain completed copies of
a basis for further investigation as   open to all businesses but             all forms and narratives prescribed
to compliance with                     designed to enhance opportunities      by HUD, including a summary of
nondiscrimination requirements.        for these enterprises and special      the citizen comments received on
No recipient is required to attain     outreach efforts to inform them of     the report.
or maintain any particular             contract opportunities. Such steps         (ii) Timing. The performance
statistical measure by race,           shall not include preferring any       and evaluation report on each
ethnicity, or gender in covered        business in the award of any           grant shall be submitted:
programs.                              contract or subcontract solely or in       (A) No later than October 31
   (3) Data on employment in           part on the basis of race or           for all grants executed before April
each of the recipient's operating      gender. (7) Documentation of           1 of the same calendar year. The
units funded in whole or in part       the affirmative action measures        first report should cover the
with CDBG funds, with such data        the recipient has taken to             period from the execution of the
maintained in the categories           overcome prior discrimination,         grant until September 30. Reports
prescribed on the Equal                where the courts or HUD have           on grants made after March 31 of
Employment Opportunity                 found that the recipient has           a calendar year will be due
Commission's EEO-4 form; and           previously discriminated against       October 31 of the following
documentation of any actions           persons on the ground of race,         calendar year, and the reports will
undertaken to assure equal             color, national origin or sex in       cover the period of time from the
employment opportunities to all        administering a program or             execution of the grant until
persons regardless of race, color,     activity funded in whole or in part    September 30 of the calendar
national origin, sex or handicap in    with CDBG funds.                       year following grant execution.
operating units funded in whole or         (h) Financial records, in          After the initial submission, the
in part under this part.               accordance with the applicable         performance and evaluation report
   (4) Data indicating the race and    requirements listed in Sec.            will be submitted annually on
ethnicity of households (and           570.502, including source              October 31 until completion of the
gender of single heads of              documentation for entities not         activities funded under the grant;
households) displaced as a result      subject to parts 84 and 85 of this         (B) Hawaii grantees will submit
of CDBG funded activities,             title. Grantees shall maintain         their small cities performance and
together with the address and          evidence to support how the            evaluation report for each pre-FY
census tract of the housing units      CDBG funds provided to such            1995 grant no later than 90 days
to which each displaced household      entities are expended. Such            after the completion of their most
relocated. Such information shall      documentation must include, to         recent program year. After the
be used only as a basis for further    the extent applicable, invoices,       initial submission, the
investigation as to compliance         schedules containing comparisons       performance and evaluation report
with nondiscrimination                 of budgeted amounts and actual         will be submitted annually until
requirements. No recipient is          expenditures, construction             completion of the activities funded
required to attain or maintain any     progress schedules signed by           under the grant; and
particular statistical measure by      appropriate parties (e.g., general         (C) No later than 90 days after
race, ethnicity, or gender in          contractor and/or a project            the criteria for grant closeout, as
covered programs.                      architect), and/or other               described in Sec. 570.509(a),
   (5) Documentation of actions        documentation appropriate to the       have been met.
undertaken to meet the                 nature of the activity.                    (iii) Citizen comments on the
requirements of Sec. 570.607(b)                                               report. Each recipient shall make



                                                       25
copies of the performance and           owned properties) which are                (2) Identification of any unused
evaluation report available to its      financed by means of escrow             grant funds to be canceled by
citizens in sufficient time to permit   accounts, loan guarantees, or           HUD;
the citizens to comment on the          similar mechanisms, the work to            (3) Identification of any
report before its submission to         be assisted with CDBG funds (but        program income on deposit in
HUD. Each recipient may                 excluding program income) has           financial institutions at the time
determine the specific manner and       actually been completed.                the closeout agreement is signed:
times the report will be made               (3) Other responsibilities of the      (4) Description of the
available to citizens consistent        recipient under the grant               recipient's responsibility after
with the preceding sentence.            agreement and applicable laws           closeout for:
    (b) Equal employment                and regulations appear to have             (i) Compliance with all program
opportunity reports. Recipients of      been carried out satisfactorily or      requirements, certifications and
entitlement grants or HUD-              there is no further Federal interest    assurances in using program
administered small cities grants        in keeping the grant agreement          income on deposit at the time the
shall submit to HUD each year a         open for the purpose of securing        closeout agreement is signed and
report (HUD/EEO-4) on recipient         performance.                            in using any other remaining
employment containing data as of            (b) Closeout actions. (1) Within    CDBG funds available for closeout
June 30.                                90 days of the date it is               costs and contingent liabilities;
    (c) Minority business enterprise    determined that the criteria for           (ii) Use of real property
reports. Recipients of entitlement      closeout have been met, the             assisted with CDBG funds in
grants, HUD-administered small          recipient shall submit to HUD a         accordance with the principles
cities grants or Urban                  copy of the final performance and       described in Sec. 570.505;
Development Action Grants shall         evaluation report described in 24          (iii) Compliance with
submit to HUD, by April 30, a           CFR part 91. If an acceptable           requirements governing program
report on contracts and                 report is not submitted, HUD may        income received subsequent to
subcontract activity during the         conduct an audit of the recipient’s     grant closeout, as described in
first half of the fiscal year and by    grant activities.                       Sec. 570.504(b)(4) and (5); and
October 31 a report on such                 (2) Based on the information           (iv) Ensuring that flood
activity during the second half of      provided in the performance             insurance coverage for affected
the year.                               report and other relevant               property owners is maintained for
    (d) Other reports. Recipients       information, HUD, in consultation       the mandatory period;
may be required to submit such          with the recipient, will prepare a         (5) Other provisions
other reports and information as        closeout agreement in accordance        appropriate to any special
HUD determines are necessary to         with paragraph (c) of this section.     circumstances of the grant
carry out its responsibilities under        (3) HUD will cancel any unused      closeout, in modification of or in
the Act or other applicable laws.       portion of the awarded grant, as        addition to the obligations in
                                        shown in the signed grant               paragraphs (c)(1) through (4) of
Sec. 570.508 Public access to           closeout agreement. Any unused          this section. The agreement shall
program records.                        grant funds disbursed from the          authorize monitoring by HUD, and
                                        U.S. Treasury that are in the           shall provide that findings of
    Notwithstanding 24 CFR              possession of the recipient shall       noncompliance may be taken into
85.42(f), recipients shall provide      be refunded to HUD.                     account by HUD, as unsatisfactory
citizens with reasonable access to          (4) Any costs paid with CDBG        performance of the recipient, in
records regarding the past use of       funds that were not audited             the consideration of any future
CDBG funds, consistent with             previously shall be subject to          grant award under this part.
applicable State and local laws         coverage in the recipient's next           (d) Status of consolidated plan
regarding privacy and obligations       single audit performed in               after closeout. Unless otherwise
of confidentiality.                     accordance with 24 CFR part 44.         provided in a closeout agreement,
                                        The recipient may be required to        the Consolidated Plan will remain
Sec. 570.509 Grant closeout             repay HUD any disallowed costs          in effect after closeout until the
procedures.                             based on the results of the audit,      expiration of the program year
                                        or on additional HUD reviews            covered by the last approved
   (a) Criteria for closeout. A         provided for in the closeout            consolidated plan.
grant will be closed out when HUD       agreement.                                 (e) Termination of grant for
determines, in consultation with            (c) Closeout agreement. Any         convenience. Grant assistance
the recipient, that the following       obligations remaining as of the         provided under this part may be
criteria have been met:                 date of the closeout shall be           terminated for convenience in
   (1) All costs to be paid with        covered by the terms of a closeout      whole or in part before the
CDBG funds have been incurred,          agreement. The HUD field office in      completion of the assisted
with the exception of closeout          consultation with the recipient         activities, in accordance with the
costs (e.g., audit costs) and costs     shall prepare the agreement. The        provisions of 24 CFR 85.44. The
resulting from contingent liabilities   agreement shall identify the grant      recipient shall not incur new
described in the closeout               being closed out, and include           obligations for the terminated
agreement pursuant to paragraph         provisions with respect to the          portions after the effective date,
(c) of this section. Contingent         following:                              and shall cancel as many
liabilities include, but are not            (1) Identification of any           outstanding obligations as
limited to, third-party claims          closeout costs or contingent            possible. HUD shall allow full
against the recipient, as well as       liabilities subject to payment with     credit to the recipient for those
related administrative costs.           CDBG funds after the closeout           portions of obligations which could
   (2) With respect to activities       agreement is signed;                    not be canceled and which had
(such as rehabilitation of privately                                            been properly incurred by the



                                                        26
recipient in carrying out the              (2) The activities to be carried     the same structure, if any, e.g., a
activities before the termination.      out by the city with the funds          store front below a dwelling unit).
The closeout policies contained in      being transferred;                         (2) An escrow account shall not
this section shall apply in such           (3) The county's responsibility      be used unless the contract
cases, except where the approved        for all expenditures and                between the property owner and
grant is terminated in its entirety.    unliquidated obligations associated     the contractor selected to do the
Responsibility for the                  with the activities before the time     rehabilitation work specifically
environmental review to be              of transfer, including a statement      provides that payment to the
performed under 24 CFR part 50          that responsibility for all audit and   contractor shall be made through
or 24 CFR part 58, as applicable,       monitoring findings associated          an escrow account maintained by
shall be determined as part of the      with those expenditures and             the recipient, by a subrecipient as
closeout process.                       obligations shall remain with the       defined in Sec. 570.500(c), by a
   (f) Termination for cause. In        county;                                 public agency designated under
cases in which the Secretary               (4) The responsibility of the        Sec. 570.501(a), or by an agent
terminates the recipient's grant        metropolitan city for all other         under a procurement contact
under the authority of subpart O        audit and monitoring findings;          governed by the requirements of
of this part, or under the terms of        (5) How program income (if           24 CFR 85.36. No deposit to the
the grant agreement, the closeout       any) from the activities specified      escrow account shall be made
policies contained in this section      shall be divided between the            until after the contract has been
shall apply, except where the           metropolitan city and the urban         executed between the property
approved grant is cancelled in its      county; and                             owner and the rehabilitation
entirety. The provisions in 24 CFR         (6) Such other provisions as         contractor.
85.43(c) on the effects of              may be required by HUD.                    (3) All funds withdrawn under
termination shall also apply. HUD          (b) Upon receipt of a request        this section shall be deposited into
shall determine whether an              for the transfer of funds from an       one interest earning account with
environmental assessment or             urban county to a metropolitan          a financial institution. Separate
finding of inapplicability is           city and a copy of the executed         bank accounts shall not be
required, and if such review is         agreement, HUD, in consultation         established for individual loans
required, HUD shall perform it in       with the Department of the              and grants.
accordance with 24 CFR part 50.         Treasury, shall establish a date           (4) The amount of funds
                                        upon which the funds shall be           deposited into an escrow account
Sec. 570.510 Transferring               transferred from the letter of          shall be limited to the amount
projects from urban counties            credit of the urban county to the       expected to be disbursed within
to metropolitan cities.                 letter of credit of the metropolitan    10 working days from the date of
                                        city, and shall take all necessary      deposit. If the escrow account, for
    Section 106(c)(3) of the Act        actions to effect the requested         whatever reason, at any time
authorizes the Secretary to             transfer of funds.                      contains funds exceeding 10 days
transfer unobligated grant funds           (c) HUD shall notify the             cash needs, the grantee
from an urban county to a new           metropolitan city and urban             immediately shall transfer the
metropolitan city, provided: the        county of any special audit and         excess funds to its program
city was an included unit of            monitoring rules that apply to the      account. In the program account,
general local government in the         transferred funds when the date of      the excess funds shall be treated
urban county immediately before         the transfer is communicated to         as funds erroneously drawn in
its qualification as a metropolitan     the city and the county.                accordance with the requirements
city; the funds to be transferred                                               of U.S. Treasury Financial Manual,
were received by the county             Sec. 570.511 Use of escrow              paragraph 6-2075.30.
before the qualification of the city    accounts for rehabilitation of             (5) Funds deposited into an
as a metropolitan city; the funds       privately owned residential             escrow account shall be used only
to be transferred had been              property.                               to pay the actual costs of
programmed by the urban county                                                  rehabilitation incurred by the
for use in the city before such            (a) Limitations. A recipient may     owner under the contract with a
qualification; and the city and         withdraw funds from its letter of       private contractor. Other eligible
county agree to transfer                credit for immediate deposit into       costs related to the rehabilitation
responsibility for the                  an escrow account for use in            loan or grant, e.g., the recipient's
administration of the funds being       funding loans and grants for the        administrative costs under Sec.
transferred from the county's           rehabilitation of privately owned       570.206 or rehabilitation services
letter of credit to the city's letter   residential property under Sec.         costs under Sec. 570.202(b)(9),
of credit. The following rules apply    570.202(a)(1). The following            are not permissible uses of
to the transfer of responsibility for   additional limitations apply to the     escrowed funds. Such other
an activity from an urban county        use of escrow accounts for              eligible rehabilitation costs shall
to the new metropolitan city.           residential rehabilitation loans and    be paid under normal CDBG
    (a) The urban county and the        grants closed after September 7,        payment procedures (e.g., from
metropolitan city must execute a        1990:                                   withdrawals of grant funds under
legally binding agreement which            (1) The use of escrow accounts       the recipient's letter of credit with
shall specify:                          under this section is limited to        the Treasury).
    (1) The amount of funds to be       loans and grants for the                   (b) Interest. Interest earned on
transferred from the urban              rehabilitation of primarily             escrow accounts established in
county's letter of credit to the        residential properties containing       accordance with this section, less
metropolitan city's letter of credit;   no more than four dwelling units        any service charges for the
                                        (and accessory neighborhood-            account, shall be remitted to HUD
                                        scale non-residential space within      at least quarterly but not more



                                                        27
frequently than monthly. Interest           (3) The recipient's rehabilitation   occur within 180 days of the
earned on escrow accounts is not        program administrative costs and         receipt of the deposit. (Where
required to be remitted to HUD to       the administrative costs of the          CDBG funds are used as a
the extent the interest is              financial institution may not be         guarantee, the funds that must be
attributable to the investment of       funded through lump sum                  substantially disbursed are the
program income.                         drawdown. Such costs must be             guaranteed funds.) For a recipient
   (c) Remedies for                     paid from periodic letter of credit      with an agreement specifying two
noncompliance. If HUD determines        withdrawals in accordance with           years to undertake activities, the
that a recipient has failed to use      standard procedures or from              disbursement of 25 % of the fund
an escrow account in accordance         program income, other than               (deposit plus any interest earned)
with this section, HUD may, in          program income generated by the          within 180 days will be regarded
addition to imposing any other          lump sum distribution.                   as meeting this requirement. If a
sanctions provided for under this           (b) Standards to be met. The         recipient with an agreement
part, require the recipient to          following standards shall apply to       specifying two years to undertake
discontinue the use of escrow           all lump sum drawdowns of CDBG           activities determines that it has
accounts, in whole or in part.          funds for rehabilitation:                had substantial disbursement from
                                            (1) Eligible rehabilitation          the fund within the 180 days
Section 570.512 {Reserved}              activities. The rehabilitation fund      although it had not met this 25 %
                                        shall be used to finance the             threshold, the justification for the
Sec. 570.513 Lump sum                   rehabilitation of privately owned        recipient's determination shall be
drawdown for financing of               properties eligible under the            included in the program file.
property rehabilitation                 general policies in Sec. 570.200         Should use of deposited funds not
activities.                             and the specific provisions of           start within 45 days, or substantial
                                        either Sec. 570.202, including the       disbursement from such fund not
   Subject to the conditions            acquisition of properties for            occur within 180 days, the
prescribed in this section,             rehabilitation, or Sec. 570.203.         recipient may be required by HUD
recipients may draw funds from              (2) Requirements for                 to return all or part of the
the letter of credit in a lump sum      agreement. The recipient shall           deposited funds to the recipient's
to establish a rehabilitation fund in   execute a written agreement with         letter of credit.
one or more private financial           one or more private financial               (5) Program activity. Recipients
institutions for the purpose of         institutions for the operation of        shall review the level of program
financing the rehabilitation of         the rehabilitation fund. The             activity on a yearly basis. Where
privately owned properties. The         agreement shall specify the              activity is substantially below that
fund may be used in conjunction         obligations and responsibilities of      anticipated, program funds shall
with various rehabilitation             the parties, the terms and               be returned to the recipient's
financing techniques, including         conditions on which CDBG funds           letter of credit.
loans, interest subsidies, loan         are to be deposited and used or             (6) Termination of agreement.
guarantees, loan reserves, or such      returned, the anticipated level of       In the case of substantial failure
other uses as may be approved by        rehabilitation activities by the         by a private financial institution to
HUD consistent with the objectives      financial institution, the rate of       comply with the terms of a lump
of this section. The fund may also      interest and other benefits to be        sum drawdown agreement, the
be used for making grants, but          provided by the financial                recipient shall terminate its
only for the purpose of leveraging      institution in return for the lump       agreement, provide written
non-CDBG funds for the                  sum deposit, and such other              justification for the action,
rehabilitation of the same              terms as are necessary for               withdraw all unobligated deposited
property.                               compliance with the provisions of        funds from the private financial
   (a) Limitation on drawdown of        this section. Upon execution of the      institution, and return the funds to
grant funds. (1) The funds that a       agreement, a copy must be                the recipient's letter of credit.
recipient deposits to a                 provided to the HUD field office for        (7) Return of unused deposits.
rehabilitation fund shall not           its record and use in monitoring.        At the end of the period specified
exceed the grant amount that the        Any modifications made during the        in the agreement for undertaking
recipient reasonably expects will       term of the agreement must also          activities, all unobligated
be required, together with              be provided to HUD.                      deposited funds shall be returned
anticipated program income from             (3) Period to undertake              to the recipient's letter of credit
interest and loan repayments, for       activities. The agreement must           unless the recipient enters into a
the rehabilitation activities during    provide that the rehabilitation          new agreement conforming to the
the period specified in the             fund may only be used for                requirements of this section. In
agreement to undertake activities,      authorized activities during a           addition, the recipient shall
based on either:                        period of no more than two years.        reserve the right to withdraw any
   (i) Prior level of rehabilitation    The lump sum deposit shall be            unobligated deposited funds
activity; or                            made only after the agreement is         required by HUD in the exercise of
   (ii) Rehabilitation staffing and     fully executed.                          corrective or remedial actions
management capacity during the              (4) Time limit on use of             authorized under Sec. 570.910(b),
period specified in the agreement       deposited funds. Use of the              Sec. 570.911, Sec. 570.912 or
to undertake activities.                deposited funds for rehabilitation       Sec. 570.913.
   (2) No grant funds may be            financing assistance must start             (8) Rehabilitation loans made
deposited under this section solely     (e.g., first loan must be made,          with non-CDBG funds. If the
for the purpose of investment,          subsidized or guaranteed) within         deposited funds or program
notwithstanding that the interest       45 days of the deposit. In               income derived from deposited
or other income is to be used for       addition, substantial                    funds are used to subsidize or
the rehabilitation activities.          disbursements from the fund must         guarantee repayment of



                                                         28
rehabilitation loans made with           such deposits are program income            (b) This subpart also sets forth
non-CDBG funds, or to provide a          and, during the period of the            certain additional program
supplemental loan or grant to the        agreement, shall be used for             requirements that the Secretary
borrower of the non-CDBG funds,          rehabilitation activities under the      has determined to be applicable to
the rehabilitation activities are        provisions of this section.              grants provided under the Act as a
considered to                                (d) Outstanding findings.            matter of administrative
be CDBG-assisted activities              Notwithstanding any other                discretion.
subject to the requirements              provision of this section, no               (c) In addition to grants made
applicable to such activities,           recipient shall enter into a new         pursuant to section 106(b) and
except that repayment of non-            agreement during any period of           106(d)(2)(B) of the Act (subparts
CDBG funds shall not be treated          time in which an audit or                D and F, respectively), the
as program income.                       monitoring finding on a previous         requirements of this subpart K are
    (9) Provision of consideration.      lump sum drawdown agreement              applicable to grants made
In consideration for the lump sum        remains unresolved.                      pursuant to sections 107 and 119
deposit by the recipient in a                (e) Prior notification. The          of the Act (subparts E and G,
private financial institution, the       recipient shall provide the HUD          respectively), and to loans
deposit must result in appropriate       field office with written notification   guaranteed pursuant to subpart
benefits in support of the               of the amount of funds to be             M.
recipient's local rehabilitation         distributed to a private financial
program. Minimum requirements            institution before distribution          Sec. 570.601 Public Law 88-
for such benefits are:                   under the provisions of this             352 and Public Law 90-284;
    (i) Grantees shall require the       section.                                 affirmatively furthering fair
financial institution to pay interest        (f) Recordkeeping                    housing; Executive Order
on the lump sum deposit.                 requirements. The recipient shall        11063.
    (A) The interest rate paid by        maintain in its files a copy of the
the financial institution shall be no    written agreement and related                (a) The following requirements
more than three points below the         documents establishing                   apply according to sections 104(b)
rate on one-year Treasury                conformance with this section and        and 107 of the Act:
obligations at constant maturity.        concerning performance by a                  (1) Public Law 88-352, which is
    (B) When an agreement sets a         financial institution in accordance      title VI of the Civil Rights Act of
fixed interest rate for the entire       with the agreement.                      1964 (42 U.S.C. 2000d et seq.),
term of the agreement, the rate                                                   and implementing regulations in
should be based on the rate at the       SUBPART K – Other Program                24 CFR part 1.
time the agreement is executed.          Requirements                                 (2) Public Law 90-284, which is
    (C) The agreement may                Sec. 570.600 General.                    the Fair Housing Act (42 U.S.C.
provide for an interest rate that                                                 3601-3620). In accordance with
would fluctuate periodically during         (a) This subpart K enumerates         the Fair Housing Act, the
the term of the agreement, but at        laws that the Secretary will treat       Secretary requires that grantees
no time shall the rate be                as applicable to grants made             administer all programs and
established at more than three           under section 106 of the Act,            activities related to housing and
points below the rate on one-year        other than grants to States made         community development in a
Treasury obligations at constant         pursuant to section 106(d) of the        manner to affirmatively further
maturity.                                Act, for purposes of the                 the policies of the Fair Housing
    (ii) In addition to the payment      Secretary's determinations under         Act. Furthermore, in accordance
of interest, at least one of the         section 104(e)(1) of the Act,            with section 104(b)(2) of the Act,
following benefits must be               including statutes expressly made        for each community receiving a
provided by the financial                applicable by the Act and certain        grant under subpart D of this part,
institution:                             other statutes and Executive             the certification that the grantee
    (A) Leverage of the deposited        Orders for which the Secretary           will affirmatively further fair
funds so that the financial              has enforcement responsibility.          housing shall specifically require
institution commits private funds        This subpart K applies to grants         the grantee to assume the
for loans in the rehabilitation          made under the Insular Areas             responsibility of fair housing
program in an amount                     Program in Sec. 570.405, with the        planning by conducting an
substantially in excess of the           exception of Sec. 570.612. The           analysis to identify impediments
amount of the lump sum deposit;          absence of mention herein of any         to fair housing choice within its
    (B) Commitment of private            other statute for which the              jurisdiction, taking appropriate
funds by the financial institution       Secretary does not have direct           actions to overcome the effects of
for rehabilitation loans at below        enforcement responsibility is not        any impediments identified
market interest rates, at higher         intended to be taken as an               through that analysis, and
than normal risk, or with longer         indication that, in the Secretary's      maintaining records reflecting the
than normal repayment periods;           opinion, such statute or Executive       analysis and actions in this regard.
or                                       Order is not applicable to activities        (b) Executive Order 11063, as
    (C) Provision of administrative      assisted under the Act. For laws         amended by Executive Order
services in support of the               that the Secretary will treat as         12259 (3 CFR, 1959-1963 Comp.,
rehabilitation program by the            applicable to grants made to             p. 652; 3 CFR, 1980 Comp., p.
participating financial institution at   States under section 106(d) of the       307) (Equal Opportunity in
no cost or at lower than actual          Act for purposes of the                  Housing), and implementing
cost.                                    determination required to be             regulations in 24 CFR part 107,
    (c) Program income. Interest         made by the Secretary pursuant           also apply.
earned on lump sum deposits and          to section 104(e)(2) of the Act,
payments on loans made from              see Sec. 570.487.



                                                          29
Sec. 570.602 Section 109 of                                                  loan guarantee funds under this
the Act.                                 Notwithstanding the date of         part that are later provided or
                                      HUD approval of the recipient's        granted.
   Section 109 of the Act requires    application (or, in the case of           (B) After notice by the property
that no person in the United          grants made under subpart D of         owner to move permanently from
States shall on the grounds of        this part or HUD-administered          the property, if the move occurs
race, color, national origin,         small cities recipients in Hawaii,     after the date of the submission of
religion, or sex be excluded from     the date of submission of the          a request for financial assistance
participation in, be denied the       grantee's consolidated plan, in        by the property owner (or person
benefits of, or be subjected to       accordance with 24 CFR part 91),       in control of the site) that is later
discrimination under any program      section 202(a) of the Flood            approved for the requested
or activity receiving Federal         Disaster Protection Act of 1973        activity.
financial assistance made             (42 U.S.C. 4106) and the                  (C) Before the date described in
available pursuant to the Act.        regulations in 44 CFR parts 59         paragraph (b)(2)(i)(A) or (B) of
Section 109 also directs that the     through 79 apply to funds              this section, if either HUD or the
prohibitions against discrimination   provided under this part 570.          grantee (or State, as applicable)
on the basis of age under the Age                                            determines that the displacement
Discrimination Act and the            Sec. 570.606 Displacement,             directly resulted from acquisition,
prohibitions against discrimination   relocation, acquisition, and           rehabilitation, or demolition for
on the basis of disability under      replacement of housing.                the requested activity.
Section 504 shall apply to                                                      (D) After the “initiation of
programs or activities receiving         (a) General policy for              negotiations'' if the person is the
Federal financial                     minimizing displacement.               tenant-occupant of a dwelling unit
assistance under Title I programs.    Consistent with the other goals        and any one of the following three
The policies and procedures           and objectives of this part,           situations occurs:
necessary to ensure enforcement       grantees (or States or state              (1) The tenant has not been
of section 109 are codified in 24     recipients, as applicable) shall       provided with a reasonable
CFR part 6.                           assure that they have taken all        opportunity to lease and occupy a
                                      reasonable steps to minimize the       suitable decent, safe, and sanitary
Sec. 570.603 Labor standards.         displacement of persons (families,     dwelling in the same
                                      individuals, businesses, nonprofit     building/complex upon the
   (a) Section 110(a) of the Act      organizations, and farms) as a         completion of the project,
contains labor standards that         result of activities assisted under    including a monthly rent that does
apply to nonvolunteer labor           this part.                             not exceed the greater of the
financed in whole or in part with        (b) Relocation assistance for       tenant's monthly rent and
assistance received under the Act.    displaced persons at URA levels.       estimated average utility costs
In accordance with section 110(a)     (1) A displaced person shall be        before the initiation of
of the Act, the Contract Work         provided with relocation               negotiations or 30 % of the
Hours and Safety Standards Act        assistance at the levels described     household's average monthly
(40 U.S.C. 327 et seq.) also          in, and in accordance with the         gross income; or
applies. However, these               requirements of 49 CFR part 24,           (2) The tenant is required to
requirements apply to the             which contains the government-         relocate temporarily for the
rehabilitation of                     wide regulations implementing the      activity but the tenant is not
residential property only if such     Uniform Relocation Assistance and      offered payment for all reasonable
property contains not less than 8     Real Property Acquisition Policies     out-of-pocket expenses incurred
units.                                Act of 1970 (URA) (42 U.S.C.           in connection with the temporary
   (b) The regulations in 24 CFR      4601-4655).                            relocation, including the cost of
part 70 apply to the use of              (2) Displaced person. (i) For       moving to and from the temporary
volunteers.                           purposes of paragraph (b) of this      location and any increased
                                      section, the term “displaced           housing costs, or other conditions
Sec. 570.604 Environmental            person'' means any person              of the temporary relocation are
standards.                            (family, individual, business,         not reasonable; and the tenant
                                      nonprofit organization, or farm)       does not return to the
   For purposes of section 104(g)     that moves from real property, or      building/complex; or
of the Act, the regulations in 24     moves his or her personal                 (3) The tenant is required to
CFR part 58 specify the other         property from real property,           move to another unit in the
provisions of law which further the   permanently and involuntarily, as      building/complex, but is not
purposes of the National              a direct result of rehabilitation,     offered reimbursement for all
Environmental Policy Act of 1969,     demolition, or acquisition for an      reasonable out-of-pocket
and the procedures by which           activity assisted under this part. A   expenses incurred in connection
grantees must fulfill their           permanent, involuntary move for        with the move.
environmental responsibilities. In    an assisted activity includes a           (ii) Notwithstanding the
certain cases, grantees assume        permanent move from real               provisions of paragraph (b)(2)(i)
these environmental review,           property that is made:                 of this section, the term “displaced
decisionmaking, and action               (A) After notice by the grantee     person-'' does not include:
responsibilities by execution of      (or the state recipient, if               (A) A person who is evicted for
grant agreements with the             applicable) to move permanently        cause based upon serious or
Secretary.                            from the property, if the move         repeated violations of material
                                      occurs after the initial official      terms of the lease or occupancy
Sec. 570.605 National Flood           submission to HUD (or the State,       agreement. To exclude a person
Insurance Program.                    as applicable) for grant, loan, or     on this basis, the grantee (or



                                                      30
State or state recipient, as            or local law, the grantee (or state     Sec. 570.607 Employment and
applicable) must determine that         recipient, as applicable) shall         contracting opportunities.
the eviction was not undertaken         provide such assistance only upon
for the purpose of evading the          the basis of a written                     To the extent that they are
obligation to provide relocation        determination that the assistance       otherwise applicable, grantees
assistance under this section;          is appropriate (see, e.g., 24 CFR       shall comply with:
   (B) A person who moves into          570.201(i), as applicable). The            (a) Executive Order 11246, as
the property after the date of the      grantee (or state recipient, as         amended by Executive Orders
notice described in paragraph           applicable) must adopt a written        11375, 11478, 12086, and 12107
(b)(2)(i)(A) or (B) of this section,    policy available to the public that     (3 CFR 1964-1965 Comp. p. 339;
but who received a written notice       describes the relocation assistance     3 CFR, 1966-1970 Comp., p. 684;
of the expected displacement            that the grantee (or state              3 CFR, 1966-1970., p. 803; 3
before occupancy.                       recipient, as applicable) has           CFR, 1978 Comp., p. 230; 3
   (C) A person who is not              elected to provide and that             CFR, 1978 Comp., p. 264 (Equal
displaced as described in 49 CFR        provides for equal relocation           Employment Opportunity), and
24.2(g)(2).                             assistance within each class of         Executive Order 13279 (Equal
   (D) A person who the grantee         displaced persons.                      Protection of the Laws for Faith-
(or State, as applicable)                   (e) Acquisition of real property.   Based and Community
determines is not displaced as a        The acquisition of real property for    Organizations), 67 FR 77141, 3
direct result of the acquisition,       an assisted activity is subject to      CFR, 2002 Comp., p. 258; and the
rehabilitation, or demolition for an    49 CFR Part 24, Subpart B.              implementing regulations at 41
assisted activity. To exclude a             (f) Appeals. If a person            CFR chapter 60; and
person on this basis, HUD must          disagrees with the determination           (b) Section 3 of the Housing
concur in that determination.           of the grantee (or the state            and Urban Development Act of
   (iii) A grantee (or State or state   recipient, as applicable)               1968 (12 U.S.C. 1701u) and
recipient, as applicable) may, at       concerning the person's eligibility     implementing regulations at 24
any time, request HUD to                for, or the amount of, a relocation     CFR part 135.
determine whether a person is a         payment under this section, the
displaced person under this             person may file a written appeal of     Sec. 570.608 Lead-based
section.                                that determination with the             paint.
   (3) Initiation of negotiations.      grantee (or state recipient, as
For purposes of determining the         applicable). The appeal                    The Lead-Based Paint Poisoning
type of replacement housing             procedures to be followed are           Prevention Act (42 U.S.C. 4821-
assistance to be provided under         described in 49 CFR 24.10. In           4846), the Residential Lead-Based
paragraph (b) of this section, if       addition, a low- or moderate-           Paint Hazard Reduction Act of
the displacement is the direct          income household that has been          1992 (42 U.S.C. 4851-4856), and
result of privately undertaken          displaced from a dwelling may file      implementing regulations at part
rehabilitation, demolition, or          a written request for review of the     35, subparts A, B, J, K, and R of
acquisition of real property, the       grantee's decision to the HUD           this part apply to activities under
term “initiation of negotiations''      Field Office. For purposes of the       this program.
means the execution of the grant        State CDBG program, a low- or
or loan agreement between the           moderate-income household may           Sec. 570.609 Use of debarred,
grantee (or State or state              file a written request for review of    suspended or ineligible
recipient, as applicable) and the       the state recipient's decision with     contractors or subrecipients.
person owning or controlling the        the State.
real property.                              (g) Responsibility of grantee or       The requirements set forth in
   (c) Residential antidisplacement     State. (1) The grantee (or State, if    24 CFR part 5 apply to this
and relocation assistance plan.         applicable) is responsible for          program.
The grantee shall comply with the       ensuring compliance with the
requirements of 24 CFR Part 42,         requirements of this section,
Subpart B.                              notwithstanding any third party's       Sec. 570.610 Uniform
   (d) Optional relocation              contractual obligation to the           administrative requirements
assistance. Under section               grantee to comply with the              and cost principles.
105(a)(11) of the Act, the grantee      provisions of this section. For
may provide (or the State may           purposes of the State CDBG                 The recipient, its agencies or
permit the state recipient to           program, the State shall require        instrumentalities, and
provide, as applicable) relocation      state recipients to certify that they   subrecipients shall comply with
payments and other relocation           will comply with the requirements       the policies, guidelines, and
assistance to persons displaced by      of this section.                        requirements of 24 CFR part 85
activities that are not subject to          (2) The cost of assistance          and OMB Circulars A-87, A-110
paragraph (b) or (c) of this            required under this section may         (implemented at 24 CFR part 84),
section. The grantee may also           be paid from local public funds,        A-122, A-133 (implemented at 24
provide (or the State may also          funds provided under this part, or      CFR part 45), and A-1282
permit the state recipient to           funds available from other              (implemented at 24 CFR part 44),
provide, as applicable) relocation      sources.                                as applicable, as
assistance to persons receiving             (3) The grantee (or State and       they relate to the acceptance and
assistance under paragraphs (b)         state recipient, as applicable)         use of Federal funds under this
or (c) of this section at levels in     must maintain records in sufficient     part. The applicable sections of 24
excess of those required by these       detail to demonstrate compliance        CFR parts 84 and 85 are set forth
paragraphs. Unless such                 with the provisions of this section.    at Sec. 570.502.
assistance is provided under State



                                                        31
--------------------------------------   to any person who is an                 her functions or responsibilities, or
-------------------------------------    employee, agent, consultant,            the decisionmaking process with
                                         officer, or elected official or         respect to the specific assisted
  2
    See footnote 1 at Sec.               appointed official of the recipient,    activity in question;
570.200(a)(5).                           or of any designated public                (v) Whether the interest or
                                         agencies, or of subrecipients that      benefit was present before the
Sec. 570.611 Conflict of                 are receiving funds under this          affected person was in a position
interest.                                part.                                   as described in paragraph (b) of
                                            (d) Exceptions. Upon the             this section;
    (a) Applicability. (1) In the        written request of the recipient,          (vi) Whether undue hardship
procurement of supplies,                 HUD may grant an exception to           will result either to the recipient or
equipment, construction, and             the provisions of paragraph (b) of      the person affected when weighed
services by recipients and by            this section on a case-by-case          against the public interest served
subrecipients, the conflict of           basis when it has satisfactorily        by avoiding the prohibited conflict;
interest provisions in 24 CFR            met the threshold requirements of       and
85.36 and 24 CFR 84.42,                  (d)(1) of this section, taking into        (vii) Any other relevant
respectively, shall apply.               account the cumulative effects of       considerations.
    (2) In all cases not governed by     paragraph (d)(2) of this section.
24 CFR 85.36 and 84.42, the                 (1) Threshold requirements.          Sec. 570.612 Executive Order
provisions of this section shall         HUD will consider an exception          12372.
apply. Such cases include the            only after the recipient has
acquisition and disposition of real      provided the following                      (a) General. Executive Order
property and the provision of            documentation:                          12372, Intergovernmental Review
assistance by the recipient or by           (i) A disclosure of the nature of    of Federal Programs, and the
its subrecipients to individuals,        the conflict, accompanied by an         Department's implementing
businesses, and other private            assurance that there has been           regulations at 24 CFR part 52,
entities under eligible activities       public disclosure of the conflict       allow each State to establish its
that authorize such assistance           and a description of how the            own process for review and
(e.g., rehabilitation, preservation,     public disclosure was made; and         comment on proposed Federal
and other improvements of private           (ii) An opinion of the recipient's   financial assistance programs.
properties or facilities pursuant to     attorney that the interest for              (b) Applicability. Executive
Sec. 570.202; or grants, loans,          which the exception is sought           Order 12372 applies to the CDBG
and other assistance to                  would not violate State or local        Entitlement program and the
businesses, individuals, and other       law.                                    UDAG program. The Executive
private entities pursuant to Sec.           (2) Factors to be considered for     Order applies to all activities
570.203, 570.204, 570.455, or            exceptions. In determining              proposed to be assisted under
570.703(i)).                             whether to grant a requested            UDAG, but it applies to the
    (b) Conflicts prohibited. The        exception after the recipient has       Entitlement program only where a
general rule is that no persons          satisfactorily met the                  grantee proposes to use funds for
described in paragraph (c) of this       requirements of paragraph (d)(1)        the planning or construction
section who exercise or have             of this section, HUD shall conclude     (reconstruction or installation) of
exercised any functions or               that such an exception will serve       water or
responsibilities with respect to         to further the purposes of the Act      sewer facilities. Such facilities
CDBG activities assisted under this      and the effective and efficient         include storm sewers as well as all
part, or who are in a position to        administration of the recipient's       sanitary sewers, but do not
participate in a decisionmaking          program or project, taking into         include water and sewer lines
process or gain inside information       account the cumulative effect of        connecting a structure to the lines
with regard to such activities, may      the following factors, as               in the public right-of-way or
obtain a financial interest or           applicable:                             easement. It is the responsibility
benefit from a CDBG-assisted                (i) Whether the exception            of the grantee to initiate the
activity, or have a financial            would provide a significant cost        Executive Order review process if
interest in any contract,                benefit or an essential degree of       it proposes to use its CDBG or
subcontract, or agreement with           expertise to the program or             UDAG funds for activities subject
respect to a CDBG-assisted               project that would otherwise not        to review.
activity, or with respect to the         be available;
proceeds of the CDBG-assisted               (ii) Whether an opportunity was      Sec. 570.613 Eligibility
activity,                                provided for open competitive           restrictions for certain
either for themselves or those           bidding or negotiation;                 resident aliens.
with whom they have business or             (iii) Whether the person
immediate family ties, during their      affected is a member of a group or          (a) Restriction. Certain newly
tenure or for one year thereafter.       class of low- or moderate-income        legalized aliens, as described in 24
For the UDAG program, the above          persons intended to be the              CFR part 49, are not eligible to
restrictions shall apply to all          beneficiaries of the assisted           apply for benefits under covered
activities that are a part of the        activity, and the exception will        activities funded by the programs
UDAG project, and shall cover any        permit such person to receive           listed in paragraph (e) of this
such financial interest or benefit       generally the same interests or         section. “Benefits'' under this
during, or at any time after, such       benefits as are being made              section means financial
person's tenure.                         available or provided to the group      assistance, public services, jobs
    (c) Persons covered. The             or class;                               and access to new or rehabilitated
conflict of interest provisions of          (iv) Whether the affected            housing and other facilities made
paragraph (b) of this section apply      person has withdrawn from his or        available under covered activities



                                                         32
funded by programs listed in            constructed, or altered with funds     guidelines would be expected to
paragraph (e) of this section.          allocated or reallocated under this    ensure that the state or units of
“Benefits'' do not include              part after December 11, 1995,          general local government conduct
relocation services and payments        and that meets the definition of       basic financial underwriting prior
to which displacees are entitled by     “residential structure'' as defined    to the provision of CDBG financial
law.                                    in 24 CFR 40.2 or the definition of    assistance to a for-profit business.
   (b) Covered activities. “Covered     “building'' as defined in 41 CFR           II. Where appropriate, HUD's
activities'' under this section         101-19.602(a) is subject to the        underwriting guidelines recognize
means activities meeting the            requirements of the Architectural      that different levels of review are
requirements of Sec. 570.208(a)         Barriers Act of 1968 (42 U.S.C.        appropriate to take into account
that either:                            4151-4157) and shall comply with       differences in the size and scope
   (1) Have income eligibility          the Uniform Federal Accessibility      of a proposed project, and in the
requirements limiting the benefits      Standards (appendix A to 24 CFR        case of a microenterprise or other
exclusively to low and moderate         part 40 for residential structures,    small business to take into
income persons; or                      and appendix A to 41 CFR part          account the differences in the
   (2) Are targeted geographically      101-19, subpart 101-19.6, for          capacity and level of sophistication
or otherwise to primarily benefit       general type buildings).               among businesses of differing
low and moderate income persons            (b) The Americans with              sizes.
(excluding activities serving the       Disabilities Act (42 U.S.C. 12131;         III. Recipients are encouraged,
public at large, such as sewers,        47 U.S.C. 155, 201, 218 and 225)       when they develop their own
roads, sidewalks, and parks), and       (ADA) provides comprehensive           programs and underwriting
that provide benefits to persons        civil rights to individuals with       criteria, to also take these factors
on the basis of an application.         disabilities in the areas of           into account. For example, a
   (c) Limitation on coverage. The      employment, public                     recipient administering a program
restrictions under this section         accommodations, State and local        providing only technical assistance
apply only to applicants for new        government services, and               to small businesses might choose
benefits not being received by          telecommunications. It further         to apply underwriting guidelines to
covered resident aliens as of the       provides that discrimination           the technical assistance program
effective date of this section.         includes a failure to design and       as a whole, rather than
   (d) Compliance. Compliance           construct facilities for first         to each instance of assistance to a
can be accomplished by obtaining        occupancy no later than January        business. Given the nature and
certification as provided in 24 CFR     26, 1993, that are readily             dollar value of such a program, a
49.20.                                  accessible to and usable by            recipient might choose to limit its
   (e) Programs affected. (1) The       individuals with disabilities.         evaluation to factors such as the
Community Development Block             Further, the ADA requires the          extent of need for this type of
Grant program for small cities,         removal of architectural barriers      assistance by the target group of
administered under subpart F of         and communication barriers that        businesses and the extent to
part 570 of this title until closeout   are structural in nature in existing   which this type of assistance is
of the recipient's grant.               facilities, where such removal is      already available.
   (2) The Community                    readily achievable--that is, easily        IV. The objectives of the
Development Block Grant program         accomplishable and able to be          underwriting guidelines are to
for entitlement grants,                 carried out without much difficulty    ensure:
administered under subpart D of         or expense.                                (1) That project costs are
part 570 of this title.                                                        reasonable;
   (3) The Community                    Appendix A to Part 570--                   (2) That all sources of project
Development Block Grant program         Guidelines and Objectives for          financing are committed;
for States, administered under          Evaluating Project Costs and               (3) That to the extent
subpart I of part 570 of this title     Financial Requirements                 practicable, CDBG funds are not
until closeout of the unit of                                                  substituted for non-Federal
general local government's grant           I. Guidelines and Objectives for    financial support;
by the State.                           Evaluating Project Costs and               (4) That the project is
   (4) The Urban Development            Financial Requirements. HUD has        financially feasible;
Action Grants program,                  developed the following guidelines         (5) That to the extent
administered under subpart G of         that are designed to provide the       practicable, the return on the
part 570 of this title until closeout   recipient with a framework for         owner's equity investment will not
of the recipient's grant.               financially underwriting and           be unreasonably high; and
                                        selecting CDBG-assisted economic           (6) That to the extent
Sec. 570.614 Architectural              development projects which are         practicable, CDBG funds are
Barriers Act and the Americans          financially viable and will make       disbursed on a pro rata basis with
with Disabilities Act.                  the most effective use of the          other finances provided to the
                                        CDBG funds. The use of these           project.
   (a) The Architectural Barriers       underwriting guidelines as                 i. Project costs are reasonable.
Act of 1968 (42 U.S.C. 4151-            published by HUD is not                i. Reviewing costs for
4157) requires certain Federal and      mandatory. However, grantees           reasonableness is important. It
Federally funded buildings and          electing not to use these              will help the recipient avoid
other facilities to be designed,        underwriting guidelines would be       providing either too much or too
constructed, or altered in              expected to conduct basic financial    little CDBG assistance for the
accordance with standards that          underwriting prior to the provision    proposed project. Therefore, it is
insure accessibility to, and use by,    of CDBG financial assistance to a      suggested that the grantee obtain
physically handicapped people. A        for-profit business. States electing   a breakdown of all project costs
building or facility designed,          not to use these underwriting          and that each cost element



                                                        33
making up the project be reviewed      project to ensure that, to the             the community to serve the low-
for reasonableness. The amount of      extent practicable, CDBG funds             or moderate-income entrepreneur.
time and resources the recipient       will not be used to substantially             4. Financial feasibility of the
expends evaluating the                 reduce the amount of non-Federal           project. i. The public benefit a
reasonableness of a cost element       financial support for the activity.        grantee expects to derive from the
should be commensurate with its        This will help the recipient to            CDBG assisted project (the
cost. For example, it would be         make the most efficient                    subject of separate regulatory
appropriate for an experienced         use of its CDBG funds for                  standards) will not materialize if
reviewer looking at a cost element     economic development. To reach             the project is not financially
of less than $10,000 to judge the      this determination, the recipient's        feasible. To determine if there is a
reasonableness of that cost based      reviewer would conduct a financial         reasonable chance for the
upon his or her knowledge and          underwriting analysis of the               project's success, the recipient
common sense. For a cost               project, including reviews of              should evaluate the financial
element in excess of $10,000, it       appropriate projections of                 viability of the project. A project
would be more appropriate for the      revenues, expenses, debt service           would be considered financially
reviewer to compare the cost           and returns on equity investments          viable if all of the assumptions
element with a third party, fair-      in the project. The extent of this         about the project's market share,
market price quotation for that        review should be appropriate for           sales levels, growth potential,
cost element. A reviewer to help       the size and complexity of the             projections of revenue, project
determine the reasonableness of        project and should use industry            expenses and debt service
cost elements below $10,000            standards for similar projects,            (including repayment of the CDBG
when the reviewer evaluates            taking into account the unique             assistance if appropriate) were
projects infrequently or if the        factors of the project such as risk        determined to be realistic and met
reviewer is less experienced in        and location.                              the project's break-even point
cost estimations may also use              ii. Because of the high cost of        (which is generally the point at
third-party price quotations. If a     underwriting and processing                which all revenues are equal to all
recipient does not use third-party     loans, many private financial              expenses). Generally speaking, an
price quotations to verify cost        lenders do not finance commercial          economic development project
elements, then the recipient would     projects that are less than                that does not reach this break-
need to conduct its own cost           $100,000. A recipient should               even point over time is not
analysis using appropriate cost        familiarize itself with the lending        financially feasible. The following
estimating manuals or services.        practices of the financial                 should be noted in this regard:
   ii. The recipient should pay        institutions in its community. If             A. some projects make
particular attention to any cost       the project's total cost is one that       provisions for a negative cash flow
element of the project that will be    would normally fall within the             in the early years of the project
carried out through a non-arms-        range that financial institutions          while space is being leased up or
length transaction. A non-arms-        participate, then the recipient            sales volume built up, but the
length transaction occurs when         should normally determine the              project's projections should take
the entity implementing the CDBG       following:                                 these factors into account and
assisted activity procures goods or        A. Private debt financing--            provide sources of financing for
services from itself or from           whether or not the participating           such negative cash flow; and
another party with whom there is       private, for-profit business (or              B. it is expected that a
a financial interest or family         other entity having an equity              financially viable project will also
relationship. If abused, non-arms-     interest) has applied for private          project sufficient revenues to
length transactions misrepresent       debt financing from a commercial           provide a reasonable return on
the true cost of the project.          lending institution and whether            equity investment. The recipient
   2. Commitment of all project        that institution has completed all         should carefully examine any
sources of financing. The recipient    of its financial underwriting and          project that is not economically
should review all projected            loan approval actions resulting in         able to provide a reasonable
sources of financing necessary to      either a firm commitment of its            return on equity investment.
carry out the economic                 funds or a decision not to                 Under such circumstances, a
development project. This is to        participate in the project; and            business may be overstating its
ensure that time and effort is not         B. Equity participation--whether       real equity investment (actual
wasted on assessing a proposal         or not the degree of equity                costs of the project may be
that is not able to proceed. To the    participation is reasonable given          overstated as well), or it may be
extent practicable, prior to the       general industry standards for             overstating some of the project's
commitment of CDBG funds to the        rates of return on equity for              operating expenses
project, the recipient should verify   similar projects with similar risks        in the expectation that the
that: sufficient sources of funds      and given the financial capacity of        difference will be taken out as
have been identified to finance the    the entrepreneur(s) to make                profits, or the business may be
project; all participating parties     additional financial investments.          overly pessimistic in its market
providing those funds have                 iii. If the recipient is assisting a   share and revenue projections and
affirmed their intention to make       microenterprise owned by a low-            has downplayed its profits.
the funds available; and the           or moderate-income person(s), in              ii. In addition to the financial
participating parties have the         conducting its review under this           underwriting reviews carried out
financial capacity to provide the      paragraph, the recipient might             earlier, the recipient should
funds.                                 only need to determine that non-           evaluate the experience and
   3. Avoid substitution of CDBG       Federal sources of financing are           capacity of the assisted business
funds for non-Federal financial        not available (at terms                    owners to manage an assisted
support. i. The recipient should       appropriate for such financing) in         business to achieve the
review the economic development                                                   projections. Based upon its



                                                         34
analysis of these factors, the
recipient should identify those
elements, if any, that pose the
greatest risks contributing to the
project's lack of financial
feasibility.
   5. Return on equity investment.
To the extent practicable, the
CDBG assisted activity should
provide not more than a
reasonable return on investment
to the owner of the assisted
activity. This will help ensure that
the grantee is able to maximize
the use of its CDBG funds for its
economic development objectives.
However, care should also be
taken to avoid the situation where
the owner is likely to receive too
small a return on his/her
investment, so that his/her
motivation remains high to pursue
the business with vigor. The
amount, type and terms of the
CDBG assistance should be
adjusted to allow the owner a
reasonable return on his/her
investment given industry rates of
return for that investment, local
conditions and the risk of the
project.
   6. Disbursement of CDBG funds
on a pro rata basis. To the extent
practicable, CDBG funds used to
finance economic development
activities should be disbursed on a
pro rata basis with other funding
sources. Recipients should be
guided by the principle of not
placing CDBG funds at
significantly greater risk than non-
CDBG funds. This will help avoid
the situation where it is learned
that a problem has developed that
will block the completion of the
project, even though all or most of
the CDBG funds going in to the
project have already been
expended. When this happens, a
recipient may be put in a position
of having to provide additional
financing to complete the project
or watch the potential loss of its
funds if the project cannot be
completed. When the recipient
determines that it is not
practicable to disburse CDBG
funds
on a pro rata basis, the recipient
should consider taking other steps
to safeguard CDBG funds in the
event of a default, such as
insisting on securitizing assets of
the project.




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