[Title 24 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2018 Edition]
[From the U.S. Government Publishing Office]
[[Page i]]
Title 24
Housing and Urban Development
________________________
Parts 500 to 699
Revised as of April 1, 2017
Containing a codification of documents of general
applicability and future effect
As of April 1, 2017
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
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[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 24:
SUBTITLE B--Regulations Relating to Housing and Urban
Development (Continued)
Chapter V--Office of Assistant Secretary for
Community Planning and Development, Department of
Housing and Urban Development 5
Chapter VI--Office of Assistant Secretary for
Community Planning and Development, Department of
Housing and Urban Development [Reserved]
Finding Aids:
Table of CFR Titles and Chapters........................ 339
Alphabetical List of Agencies Appearing in the CFR...... 359
List of CFR Sections Affected........................... 369
[[Page iv]]
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 24 CFR 500.1 refers
to title 24, part 500,
section 1.
----------------------------
[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
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Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
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[[Page vi]]
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[[Page vii]]
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Oliver A. Potts,
Director,
Office of the Federal Register.
April 1, 2017.
[[Page ix]]
THIS TITLE
Title 24--Housing and Urban Development is composed of five volumes.
The first four volumes containing parts 0-199, parts 200-499, parts 500-
699, parts 700-1699, represent the regulations of the Department of
Housing and Urban Development. The fifth volume, containing part 1700 to
end, continues with regulations of the Department of Housing and Urban
Development and also includes regulations of the Board of Directors of
the Hope for Homeowners Program, and the Neighborhood Reinvestment
Corporation. The contents of these volumes represent all current
regulations codified under this title of the CFR as of April 1, 2017.
For this volume, Michele Bugenhagen was Chief Editor. The Code of
Federal Regulations publication program is under the direction of John
Hyrum Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 24--HOUSING AND URBAN DEVELOPMENT
(This book contains parts 500 to 699)
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SUBTITLE B--Regulations Relating to Housing and Urban Development
(Continued)
Part
chapter v--Office of Assistant Secretary for Community
Planning and Development, Department of Housing and Urban
Development............................................... 510
chapter vi--Office of Assistant Secretary for Community Planning and
Development, Department of Housing and Urban Development [Reserved]
[[Page 3]]
Subtitle B--Regulations Relating to Housing and Urban Development
(Continued)
[[Page 5]]
CHAPTER V--OFFICE OF ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND
DEVELOPMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
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SUBCHAPTER A--GENERAL
Part Page
500 Expiring programs--savings clause........... 7
SUBCHAPTER B--SLUM CLEARANCE AND URBAN RENEWAL
510 Section 312 Rehabilitation Loan Program..... 8
SUBCHAPTER C--COMMUNITY FACILITIES
570 Community development block grants.......... 9
573 Loan guarantee recovery fund................ 159
574 Housing opportunities for persons with AIDS. 164
576 Emergency Solutions Grants Program.......... 181
578 Continuum of Care Program................... 219
581 Use of Federal real property to assist the
homeless................................ 267
582 Shelter Plus Care........................... 276
583 Supportive Housing Program.................. 293
586 Revitalizing base closure communities and
community assistance--community
redevelopment and homeless assistance... 312
594 John Heinz Neighborhood Development Program. 321
599 Renewal communities......................... 324
[[Page 7]]
SUBCHAPTER A_GENERAL
PART 500_EXPIRING PROGRAMS_SAVINGS CLAUSE--Table of Contents
Authority: 42 U.S.C. 3535(d).
Source: 79 FR 58195, Sept. 2, 2014, unless otherwise noted.
Sec. 500.1 Expiring programs--Savings clause.
No new grants or grant agreements are being made under the programs
listed in this section. Existing grants or grant agreements making
designation under these programs continue to be governed by the
regulations in effect as they existed immediately before October 2, 2014
(see 24 CFR parts 500 to 699, revised as of April 1, 2014):
24 CFR Part 511 Rental Rehabilitation Grant Program (42 U.S.C. 1437o)
24 CFR Part 572 HOPE for Homeownership of Single Family Homes (HOPE 3)
(42 U.S.C. 12891)
24 CFR Part 585 Youthbuild (42 U.S.C. 8011)
24 CFR Part 590 Urban homesteading (12 U.S.C. 1706e)
24 CFR Part 597 Urban empowerment zones and enterprise communities
(Round one designations) (26 U.S.C. 1391)
24 CFR Part 598 Urban empowerment zones; Round two and three
designations (26 U.S.C. 1391)
[[Page 8]]
SUBCHAPTER B_SLUM CLEARANCE AND URBAN RENEWAL
PART 510_SECTION 312 REHABILITATION LOAN PROGRAM--Table of Contents
Authority: 42 U.S.C. 1452b and 3535(d).
Source: 79 FR 51895, Sept. 2, 2014, unless otherwise noted.
Redesignated at 79 FR 51895, Sept. 2, 2014.
Sec. 510.1 Multi-family property loans.
(a) In cases in which a corporation is a borrower on a section 312
loan, the Assistant Secretary for CPD or his designee may require an
officer of the corporation or a principal stockholder to personally
guarantee the section 312 loan or to cosign the loan note as a borrower,
where necessary to make the finding of acceptable risk required for
assumption of the loan.
(b) All partners of any partnership which is a borrower on a section
312 loan shall be personally liable for repayment of the section 312
loan. Limited partners shall assume personal liability by co-signing the
loan note as a borrower or by personally guaranteeing the loan.
(c) Any personal guarantee or endorsement shall not relieve the
partnership or corporate borrower from securing the section 312 loan by
a mortgage or deed of trust on the property to be rehabilitated.
[44 FR 21751, Apr. 11, 1979, as amended at 44 FR 47513, Aug. 13, 1979;
44 FR 55562, Sept. 27, 1979. Redesignated and amended at 61 FR 7061,
Feb. 23, 1996]
[[Page 9]]
SUBCHAPTER C_COMMUNITY FACILITIES
PART 570_COMMUNITY DEVELOPMENT BLOCK GRANTS--Table of Contents
Subpart A_General Provisions
Sec.
570.1 Purpose and primary objective.
570.3 Definitions.
570.4 Allocation of funds.
570.5 Waivers.
Subpart B [Reserved]
Subpart C_Eligible Activities
570.200 General policies.
570.201 Basic eligible activities.
570.202 Eligible rehabilitation and preservation activities.
570.203 Special economic development activities.
570.204 Special activities by Community-Based Development Organizations
(CBDOs).
570.205 Eligible planning, urban environmental design and policy-
planning-management-capacity building activities.
570.206 Program administrative costs.
570.207 Ineligible activities.
570.208 Criteria for national objectives.
570.209 Guidelines for evaluating and selecting economic development
projects.
570.210 Prohibition on use of assistance for employment relocation
activities.
Subpart D_Entitlement Grants
570.300 General.
570.301 Activity locations and float-funding.
570.302 Submission requirements.
570.303 Certifications.
570.304 Making of grants.
570.307 Urban counties.
570.308 Joint requests.
570.309 Restriction on location of activities.
Subpart E_Special Purpose Grants
570.400 General.
570.401 Community adjustment and economic diversification planning
assistance.
570.402 Technical assistance awards.
570.403 New Communities.
570.404 Historically Black colleges and universities program.
570.405 The insular areas.
570.406 Formula miscalculation grants.
570.410 Special Projects Program.
570.411 Joint Community Development Program.
570.415 Community Development Work Study Program.
570.416 Hispanic-serving institutions work study program.
Subpart F_Small Cities, Non-Entitlement CDBG Grants in Hawaii and
Insular Areas Programs
570.420 General.
570.421 New York Small Cities Program design.
570.422-4.25 [Reserved]
570.426 Program income.
570.427 Program amendments.
570.428 [Reserved]
570.429 Hawaii general and grant requirements.
570.431 Citizen participation.
570.440 Application requirements for insular area grants funded under
section 106.
570.441 Citizen participation--insular areas.
570.442 Reallocations-Insular Areas.
Subpart G_Urban Development Action Grants
570.450 Purpose.
570.456 Ineligible activities and limitations on eligible activities.
570.457 Displacement, relocation, acquisition, and replacement of
housing.
570.461 Post-preliminary approval requirements; lead-based paint.
570.463 Project amendments and revisions.
570.464 Project closeout.
570.465 Applicability of rules and regulations.
570.466 Additional application submission requirements for Pockets of
Poverty--employment opportunities.
Subpart H [Reserved]
Subpart I_State Community Development Block Grant Program
570.480 General.
570.481 Definitions.
570.482 Eligible activities.
570.483 Criteria for national objectives.
570.484 Overall benefit to low and moderate income persons.
570.485 Making of grants.
570.486 Local government requirements.
570.487 Other applicable laws and related program requirements.
570.488 Displacement, relocation, acquisition, and replacement of
housing.
570.489 Program administrative requirements.
570.490 Recordkeeping requirements.
570.491 Performance and evaluation report.
570.492 State's reviews and audits.
570.493 HUD's reviews and audits.
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570.494 Timely distribution of funds by states.
570.495 Reviews and audits response.
570.496 Remedies for noncompliance; opportunity for hearing.
570.497 Condition of State election to administer State CDBG Program.
Subpart J_Grant Administration
570.500 Definitions.
570.501 Responsibility for grant administration.
570.502 Applicability of uniform administrative requirements.
570.503 Agreements with subrecipients.
570.504 Program income.
570.505 Use of real property.
570.506 Records to be maintained.
570.507 Reports.
570.508 Public access to program records.
570.509 Grant closeout procedures.
570.510 Transferring projects from urban counties to metropolitan
cities.
570.511 Use of escrow accounts for rehabilitation of privately owned
residential property.
570.512 [Reserved]
570.513 Lump sum drawdown for financing of property rehabilitation
activities.
Subpart K_Other Program Requirements
570.600 General.
570.601 Public Law 88-352 and Public Law 90-284; affirmatively
furthering fair housing; Executive Order 11063.
570.602 Section 109 of the Act.
570.603 Labor standards.
570.604 Environmental standards.
570.605 National Flood Insurance Program.
570.606 Displacement, relocation, acquisition, and replacement of
housing.
570.607 Employment and contracting opportunities.
570.608 Lead-based paint.
570.609 Use of debarred, suspended or ineligible contractors or
subrecipients.
570.610 Uniform administrative requirements, cost principles, and audit
requirements (or Federal awards).
570.611 Conflict of interest.
570.612 Executive Order 12372.
570.613 Eligibility restrictions for certain resident aliens.
570.614 Architectural Barriers Act and the Americans with Disabilities
Act.
570.615 Housing counseling.
Subpart L [Reserved]
Subpart M_Loan Guarantees
570.700 Purpose.
570.701 Definitions.
570.702 Eligible applicants.
570.703 Eligible activities.
570.704 Application requirements.
570.705 Loan requirements.
570.706 Federal guarantee; subrogation.
570.707 Applicability of rules and regulations.
570.708 Sanctions.
570.709 Allocation of loan guarantee assistance.
570.710 State responsibilities.
570.711 State borrowers; additional requirements and application
procedures.
570.712 Collection of fees; procedure to determine amount of the fee.
Subpart N_Urban Renewal Provisions
570.800 Urban renewal regulations.
Subpart O_Performance Reviews
570.900 General.
570.901 Review for compliance with the primary and national objectives
and other program requirements.
570.902 Review to determine if CDBG funded activities are being carried
out in a timely manner.
570.903 Review to determine if the recipient is meeting its
consolidated plan responsibilities.
570.904 Equal opportunity and fair housing review criteria.
570.905 Review of continuing capacity to carry out CDBG funded
activities in a timely manner.
570.906 Review of urban counties.
570.907-570.909 [Reserved]
570.910 Corrective and remedial actions.
570.911 Reduction, withdrawal, or adjustment of a grant or other
appropriate action.
570.912 Nondiscrimination compliance.
570.913 Other remedies for noncompliance.
Appendix A to Part 570--Guidelines and Objectives for Evaluating Project
Costs and Financial Requirements
Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and 5301-
5320.
Source: 40 FR 24693, June 9, 1975, unless otherwise noted.
Subpart A_General Provisions
Source: 53 FR 34437, Sept. 6, 1988, unless otherwise noted.
Sec. 570.1 Purpose and primary objective.
(a) This part describes policies and procedures applicable to the
following programs authorized under title I of the Housing and Community
Development Act of 1974, as amended:
(1) Entitlement grants program (subpart D);
[[Page 11]]
(2) Nonentitlement Funds: HUD-administered Small Cities and Insular
Area programs (subpart F);
(3) State program: State-administered CDBG nonentitlement funds
(subpart I);
(4) Special Purpose Grants (subpart E);
(5) Urban Development Action Grant program (subpart G); and
(6) Loan Guarantees (subpart M).
(b) Subparts A, C, J, K, and O apply to all programs in paragraph
(a) except as modified or limited under the provisions of these subparts
or the applicable program regulations. In the application of the
subparts to Special Purpose Grants or the Urban Development Action Grant
program, the reference to funds in the form of grants in the term ``CDBG
funds'', as defined in Sec. 570.3, shall mean the grant funds under
those programs. The subparts do not apply to the State program (subpart
I) except to the extent expressly referred to.
(c) The primary objective of the programs authorized under title I
of the Housing and Community Development Act of 1974, as amended, is
described in section 101(c) of the Act (42 U.S.C. 5301(c)).
[53 FR 34437, Sept. 6, 1988, as amended at 56 FR 56126, Oct. 31, 1991;
61 FR 11475, Mar. 20, 1996; 69 FR 32778, June 10, 2004]
Sec. 570.3 Definitions.
The terms Affirmatively Furthering Fair Housing, Assessment of Fair
Housing or AFH, HUD, and Secretary are defined in 24 CFR part 5. All of
the following definitions in this section that rely on data from the
United States Bureau of the Census shall rely upon the data available
from the latest decennial census or the American Community Survey.
Act means title I of the Housing and Community Development Act of
1974 as amended (42 U.S.C. 5301 et seq.).
Age of housing means the number of year-round housing units, as
further defined in section 102(a)(11) of the Act.
Applicant means a State or unit of general local government that
makes application pursuant to the provisions of subpart E, F, G or M.
Buildings for the general conduct of government shall have the
meaning provided in section 102(a)(21) of the Act.
CDBG funds means Community Development Block Grant funds, including
funds received in the form of grants under subpart D, F, or Sec. 570.405
of this part, funds awarded under section 108(q) of the Housing and
Community Development Act of 1974, loans guaranteed under subpart M of
this part, urban renewal surplus grant funds, and program income as
defined in Sec. 570.500(a).
Chief executive officer of a State or unit of general local
government means the elected official or the legally designated
official, who has the primary responsibility for the conduct of that
entity's governmental affairs. Examples of the ``chief executive
officer'' of a unit of general local government are: the elected mayor
of a municipality; the elected county executive of a county; the
chairperson of a county commission or board in a county that has no
elected county executive; and the official designated pursuant to law by
the governing body of a unit of general local government.
City means the following:
(1) For purposes of Entitlement Community Development Block Grant
and Urban Development Action Grant eligibility:
(i) Any unit of general local government that is classified as a
municipality by the United States Bureau of the Census, or
(ii) Any other unit of general local government that is a town or
township and that, in the determination of the Secretary:
(A) Possesses powers and performs functions comparable to those
associated with municipalities;
(B) Is closely settled (except that the Secretary may reduce or
waive this requirement on a case by case basis for the purposes of the
Action Grant program); and
(C) Contains within its boundaries no incorporated places as defined
by the United States Bureau of the Census that have not entered into
cooperation agreements with the town or township for a period covering
at least 3 years to undertake or assist in the undertaking of essential
community development and housing assistance activities. The
determination of eligibility of a town or township to qualify as a city
will be
[[Page 12]]
based on information available from the United States Bureau of the
Census and information provided by the town or township and its included
units of general local government.
(2) For purposes of Urban Development Action Grant eligibility only,
Guam, the Virgin Islands, American Samoa, the Commonwealth of the
Northern Mariana Islands, the counties of Kauai, Maui, and Hawaii in the
State of Hawaii, and Indian tribes that are eligible recipients under
the State and Local Government Fiscal Assistance Act of 1972 and located
on reservations in Oklahoma as determined by the Secretary of the
Interior or in Alaskan Native Villages.
Community Development Financial Institution has the same meaning as
used in the Community Development Banking and Financial Institutions Act
of 1994 (12 U.S.C. 4701 note).
Consolidated plan. The plan prepared in accordance with 24 CFR part
91, which describes needs, resources, priorities and proposed activities
to be undertaken with respect to HUD programs, including the CDBG
program. An approved consolidated plan means a consolidated plan that
has been approved by HUD in accordance with 24 CFR part 91.
Discretionary grant means a grant made from the various Special
Purpose Grants in accordance with subpart E of this part.
Entitlement amount means the amount of funds which a metropolitan
city or urban county is entitled to receive under the Entitlement grant
program, as determined by formula set forth in section 106 of the Act
Extent of growth lag shall have the meaning provided in section
102(a)(12) of the Act.
Extent of housing overcrowding shall have the meaning provided in
section 102(a)(10) of the Act.
Extent of poverty means the number of persons whose incomes are
below the poverty level based on data compiled and published by the
United States Bureau of the Census available from the latest census
referable to the same point or period in time and the latest reports
from the Office of Management and Budget. For purposes of this part, the
Secretary has determined that it is neither feasible nor appropriate to
make adjustments at this time in the computations of ``extent of
poverty'' for regional or area variations in income and cost of living.
Family refers to the definition of ``family'' in 24 CFR 5.403.
Household means all persons occupying a housing unit. The occupants
may be a family, as defined in 24 CFR 5.403; two or more families living
together; or any other group of related or unrelated persons who share
living arrangements, regardless of actual or perceived, sexual
orientation, gender identity, or marital status.
Income. For the purpose of determining whether a family or household
is low- and moderate-income under subpart C of this part, grantees may
select any of the three definitions listed below for each activity,
except that integrally related activities of the same type and
qualifying under the same paragraph of Sec. 570.208(a) shall use the
same definition of income. The option to choose a definition does not
apply to activities that qualify under Sec. 570.208(a)(1) (Area benefit
activities), except when the recipient carries out a survey under
Sec. 570.208(a)(1)(vi). Activities qualifying under Sec. 570.208(a)(1)
generally must use the area income data supplied to recipients by HUD.
The three definitions are as follows:
(1)(i) ``Annual income'' as defined under the Section 8 Housing
Assistance Payments program at 24 CFR 813.106 (except that if the CDBG
assistance being provided is homeowner rehabilitation under
Sec. 570.202, the value of the homeowner's primary residence may be
excluded from any calculation of Net Family Assets); or
(ii) Annual income as reported under the Census long-form for the
most recent available decennial Census. This definition includes:
(A) Wages, salaries, tips, commissions, etc.;
(B) Self-employment income from own nonfarm business, including
proprietorships and partnerships;
(C) Farm self-employment income;
(D) Interest, dividends, net rental income, or income from estates
or trusts;
(E) Social Security or railroad retirement;
[[Page 13]]
(F) Supplemental Security Income, Aid to Families with Dependent
Children, or other public assistance or public welfare programs;
(G) Retirement, survivor, or disability pensions; and
(H) Any other sources of income received regularly, including
Veterans' (VA) payments, unemployment compensation, and alimony; or
(iii) Adjusted gross income as defined for purposes of reporting
under Internal Revenue Service (IRS) Form 1040 for individual Federal
annual income tax purposes.
(2) Estimate the annual income of a family or household by
projecting the prevailing rate of income of each person at the time
assistance is provided for the individual, family, or household (as
applicable). Estimated annual income shall include income from all
family or household members, as applicable. Income or asset enhancement
derived from the CDBG-assisted activity shall not be considered in
calculating estimated annual income.
Insular area shall have the meaning provided in section 102(a)(24)
of the Act.
Low- and moderate-income household means a household having an
income equal to or less than the Section 8 low-income limit established
by HUD.
Low- and moderate-income person means a member of a family having an
income equal to or less than the Section 8 low-income limit established
by HUD. Unrelated individuals will be considered as one-person families
for this purpose.
Low-income household means a household having an income equal to or
less than the Section 8 very low-income limit established by HUD.
Low-income person means a member of a family that has an income
equal to or less than the Section 8 very low-income limit established by
HUD. Unrelated individuals shall be considered as one-person families
for this purpose.
Metropolitan area shall have the meaning provided in section
102(a)(3) of the Act.
Metropolitan city shall have the meaning provided in section
102(a)(4) of the Act except that the term ``central city'' is replaced
by ``principal city.''
Microenterprise shall have the meaning provided in section
102(a)(22) of the Act.
Moderate-income household means a household having an income equal
to or less than the Section 8 low-income limit and greater than the
Section 8 very low-income limit, established by HUD.
Moderate-income person means a member of a family that has an income
equal to or less than the Section 8 low-income limit and greater than
the Section 8 very low-income limit, established by HUD. Unrelated
individuals shall be considered as one-person families for this purpose.
Nonentitlement amount means the amount of funds which is allocated
for use in a State's nonentitlement areas as determined by formula set
forth in section 106 of the Act.
Nonentitlement area shall have the meaning provided in section
102(a)(7) of the Act.
Origin year means the specific Federal fiscal year during which the
annual grant funds were appropriated.
Population means the total resident population based on data
compiled and published by the United States Bureau of the Census
available from the latest census or which has been upgraded by the
Bureau to reflect the changes resulting from the Boundary and Annexation
Survey, new incorporations and consolidations of governments pursuant to
Sec. 570.4, and which reflects, where applicable, changes resulting from
the Bureau's latest population determination through its estimating
technique using natural changes (birth and death) and net migration, and
is referable to the same point or period in time.
Small business means a business that meets the criteria set forth in
section 3(a) of the Small Business Act (15 U.S.C. 631, 636, 637).
State shall have the meaning provided in section 102(a)(2) of the
Act.
Unit of general local government shall have the meaning provided in
section 102(a)(1) of the Act.
Urban county shall have the meaning provided in section 102(a)(6) of
the Act. For the purposes of this definition, HUD will determine whether
the county's combined population contains the
[[Page 14]]
required percentage of low- and moderate-income persons by identifying
the number of persons that resided in applicable areas and units of
general local government based on data from the most recent decennial
census, and using income limits that would have applied for the year in
which that census was taken.
Urban Development Action Grant (UDAG) means a grant made by the
Secretary pursuant to section 119 of the Act and subpart G of this part.
[53 FR 34437, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at
56 FR 56126, Oct. 31, 1991; 60 FR 1915, 1943, Jan. 5, 1995; 60 FR 56909,
Nov. 9, 1995; 61 FR 5209, Feb. 9, 1996; 61 FR 11475, Mar. 20, 1996; 61
FR 18674, Apr. 29, 1996; 68 FR 69582, Dec. 12, 2003; 69 FR 32778, June
10, 2004; 77 FR 5675, Feb. 3, 2012; 80 FR 42366, July 16, 2015; 80 FR
69870, Nov. 12, 2015]
Sec. 570.4 Allocation of funds.
(a) The determination of eligibility of units of general local
government to receive entitlement grants, the entitlement amounts, the
allocation of appropriated funds to States for use in nonentitlement
areas, the reallocation of funds, the allocation of appropriated funds
to insular areas, and the allocation of appropriated funds for
discretionary grants under the Secretary's Fund shall be governed by the
policies and procedures described in sections 106 and 107 of the Act, as
appropriate.
(b) The definitions in Sec. 570.3 shall govern in applying the
policies and procedures described in sections 106 and 107 of the Act.
(c) In determining eligibility for entitlement and in allocating
funds under section 106 of the Act for any federal fiscal year, HUD will
recognize corporate status and geographical boundaries and the status of
metropolitan areas and principal cities effective as of July 1 preceding
such federal fiscal year, subject to the following limitations:
(1) With respect to corporate status as certified by the applicable
State and available for processing by the Census Bureau as of such date;
(2) With respect to boundary changes or annexations, as are used by
the Census Bureau in preparing population estimates for all general
purpose governmental units and are available for processing by the
Census Bureau as of such date, except that any such boundary changes or
annexations which result in the population of a unit of general local
government reaching or exceeding 50,000 shall be recognized for this
purpose whether or not such changes are used by the Census Bureau in
preparing such population estimates; and
(3) With respect to the status of Metropolitan Statistical Areas and
principal cities, as officially designated by the Office of Management
and Budget as of such date.
(d) In determining whether a county qualifies as an urban county,
and in computing entitlement amounts for urban counties, the demographic
values of population, poverty, housing overcrowding, and age of housing
of any Indian tribes located within the county shall be excluded. In
allocating amounts to States for use in nonentitlement areas, the
demographic values of population, poverty, housing overcrowding and age
of housing of all Indian tribes located in all nonentitled areas shall
be excluded. It is recognized that all such data on Indian tribes are
not generally available from the United States Bureau of the Census and
that missing portions of data will have to be estimated. In
accomplishing any such estimates the Secretary may use such other
related information available from reputable sources as may seem
appropriate, regardless of the data's point or period of time and shall
use the best judgement possible in adjusting such data to reflect the
same point or period of time as the overall data from which the Indian
tribes are being deducted, so that such deduction shall not create an
imbalance with those overall data.
(e) Amounts remaining after closeout of a grant which are required
to be returned to HUD under the provisions of Sec. 570.509, Grant
closeout procedures, shall be considered as funds available for
reallocation unless the appropriation under which the funds were
provided to the Department has lapsed.
[53 FR 34437, Sept. 6, 1988, as amended at 68 FR 69582, Dec. 12, 2003;
69 FR 32778, June 10, 2004]
[[Page 15]]
Sec. 570.5 Waivers.
HUD's authority for the waiver of regulations and for the suspension
of requirements to address damage in a Presidentially declared disaster
area is described in 24 CFR part 5 and in section 122 of the Act,
respectively.
[61 FR 11476, Mar. 20, 1996]
Subpart B [Reserved]
Subpart C_Eligible Activities
Source: 53 FR 34439, Sept. 6, 1988, unless otherwise noted.
Sec. 570.200 General policies.
(a) Determination of eligibility. An activity may be assisted in
whole or in part with CDBG funds only if all of the following
requirements are met:
(1) Compliance with section 105 of the Act. Each activity must meet
the eligibility requirements of section 105 of the Act as further
defined in this subpart.
(2) Compliance with national objectives. Grant recipients under the
Entitlement and HUD-administered Small Cities programs and recipients of
insular area funds under section 106 of the Act must certify that their
projected use of funds has been developed so as to give maximum feasible
priority to activities which will carry out one of the national
objectives of benefit to low- and moderate-income families or aid in the
prevention or elimination of slums or blight. The projected use of funds
may also include activities that the recipient certifies are designed to
meet other community development needs having a particular urgency
because existing conditions pose a serious and immediate threat to the
health or welfare of the community where other financial resources are
not available to meet such needs. Consistent with the foregoing, each
recipient under the Entitlement or HUD-administered Small Cities
programs, and each recipient of insular area funds under section 106 of
the Act must ensure and maintain evidence that each of its activities
assisted with CDBG funds meets one of the three national objectives as
contained in its certification. Criteria for determining whether an
activity addresses one or more of these objectives are found in
Sec. 570.208.
(3) Compliance with the primary objective. The primary objective of
the Act is described in section 101(c) of the Act. Consistent with this
objective, entitlement recipients, non-entitlement CDBG grantees in
Hawaii, and recipients of insular area funds under section 106 of the
Act must ensure that, over a period of time specified in their
certification not to exceed three years, not less than 70 percent of the
aggregate of CDBG fund expenditures shall be for activities meeting the
criteria under Sec. 570.208(a) or under Sec. 570.208(d)(5) or (6) for
benefiting low- and moderate-income persons. For grants under section
107 of the Act, insular area recipients must meet this requirement for
each separate grant. See Sec. 570.420(d)(3) for additional discussion of
the primary objective requirement for insular areas funded under section
106 of the Act. The requirements for the HUD-administered Small Cities
program in New York are at Sec. 570.420(d)(2). In determining the
percentage of funds expended for such activities:
(i) Cost of administration and planning eligible under Sec. 570.205
and Sec. 570.206 will be assumed to benefit low and moderate income
persons in the same proportion as the remainder of the CDBG funds and,
accordingly shall be excluded from the calculation;
(ii) Funds deducted by HUD for repayment of urban renewal temporary
loans pursuant to Sec. 570.802(b) shall be excluded;
(iii) Funds expended for the repayment of loans guaranteed under the
provisions of subpart M of this part (including repayment of the portion
of a loan used to pay any issuance, servicing, underwriting, or other
costs as may be incurred under Sec. 570.705(g)) shall also be excluded;
(iv) Funds expended for the acquisition, new construction or
rehabilitation of property for housing that qualifies under
Sec. 570.208(a)(3) shall be counted for this purpose but shall be
limited to an amount determined by multiplying the total cost (including
CDBG and non-CDBG costs) of the acquisition, construction or
rehabilitation by the percent of units in such housing to
[[Page 16]]
be occupied by low and moderate income persons.
(v) Funds expended for any other activities qualifying under
Sec. 570.208(a) shall be counted for this purpose in their entirety.
(4) Compliance with environmental review procedures. The
environmental review procedures set forth at 24 CFR part 58 must be
completed for each activity (or project as defined in 24 CFR part 58),
as applicable.
(5) Cost principles. Costs incurred, whether charged on a direct or
an indirect basis, must be in conformance with 2 CFR part 200, subpart
E. All items of cost listed in 2 CFR part 200, subpart E, that require
prior Federal agency approval are allowable without prior approval of
HUD to the extent they comply with the general policies and principles
stated in 2 CFR part 200, subpart E and are otherwise eligible under
this subpart C, except for the following:
(i) Depreciation methods for fixed assets shall not be changed
without the approval of the Federal cognizant agency.
(ii) Fines penalties, damages, and other settlements are unallowable
costs to the CDBG program.
(iii) Costs of housing (e.g., depreciation, maintenance, utilities,
furnishings, rent), housing allowances and personal living expenses
(goods or services for personal use) regardless of whether reported as
taxable income to the employees (2 CFR 200.445);
(iv) Organization costs (2 CFR 200.455); and
(v) Pre-award costs are limited to those authorized under paragraph
(h) of this section.
(b) Special policies governing facilities. The following special
policies apply to:
(1) Facilities containing both eligible and ineligible uses. A
public facility otherwise eligible for assistance under the CDBG program
may be provided with CDBG funds even if it is part of a multiple use
building containing ineligible uses, if:
(i) The facility which is otherwise eligible and proposed for
assistance will occupy a designated and discrete area within the larger
facility; and
(ii) The recipient can determine the costs attributable to the
facility proposed for assistance as separate and distinct from the
overall costs of the multiple-use building and/or facility.
Allowable costs are limited to those attributable to the eligible
portion of the building or facility.
(2) Fees for use of facilities. Reasonable fees may be charged for
the use of the facilities assisted with CDBG funds, but charges such as
excessive membership fees, which will have the effect of precluding low
and moderate income persons from using the facilities, are not
permitted.
(c) Special assessments under the CDBG program. The following
policies relate to special assessments under the CDBG program:
(1) Definition of special assessment. The term ``special
assessment'' means the recovery of the capital costs of a public
improvement, such as streets, water or sewer lines, curbs, and gutters,
through a fee or charge levied or filed as a lien against a parcel of
real estate as a direct result of benefit derived from the installation
of a public improvement, or a one-time charge made as a condition of
access to a public improvement. This term does not relate to taxes, or
the establishment of the value of real estate for the purpose of levying
real estate, property, or ad valorem taxes, and does not include
periodic charges based on the use of a public improvement, such as water
or sewer user charges, even if such charges include the recovery of all
or some portion of the capital costs of the public improvement.
(2) Special assessments to recover capital costs. Where CDBG funds
are used to pay all or part of the cost of a public improvement, special
assessments may be imposed as follows:
(i) Special assessments to recover the CDBG funds may be made only
against properties owned and occupied by persons not of low and moderate
income. Such assessments constitute program income.
(ii) Special assessments to recover the non-CDBG portion may be made
provided that CDBG funds are used to pay the special assessment in
behalf of all properties owned and occupied by low and moderate income
persons; except that CDBG funds need not be used
[[Page 17]]
to pay the special assessments in behalf of properties owned and
occupied by moderate income persons if the grant recipient certifies
that it does not have sufficient CDBG funds to pay the assessments in
behalf of all of the low and moderate income owner-occupant persons.
Funds collected through such special assessments are not program income.
(3) Public improvements not initially assisted with CDBG funds. The
payment of special assessments with CDBG funds constitutes CDBG
assistance to the public improvement. Therefore, CDBG funds may be used
to pay special assessments provided:
(i) The installation of the public improvements was carried out in
compliance with requirements applicable to activities assisted under
this part including environmental, citizen participation and Davis-Bacon
requirements;
(ii) The installation of the public improvement meets a criterion
for national objectives in Sec. 570.208(a)(1), (b), or (c); and
(iii) The requirements of Sec. 570.200(c)(2)(ii) are met.
(d) Consultant activities. Consulting services are eligible for
assistance under this part for professional assistance in program
planning, development of community development objectives, and other
general professional guidance relating to program execution. The use of
consultants is governed by the following:
(1) Employer-employee type of relationship. No person providing
consultant services in an employer-employee type of relationship shall
receive more than a reasonable rate of compensation for personal
services paid with CDBG funds. In no event, however, shall such
compensation exceed the equivalent of the daily rate paid for Level IV
of the Executive Schedule. Such services shall be evidenced by written
agreements between the parties which detail the responsibilities,
standards, and compensation.
(2) Independent contractor relationship. Consultant services
provided under an independent contractor relationship are governed by
the procurement requirements in 2 CFR part 200, subpart D, and are not
subject to the compensation limitation of Level IV of the Executive
Schedule.
(e) Recipient determinations required as a condition of eligibility.
In several instances under this subpart, the eligibility of an activity
depends on a special local determination. Recipients shall maintain
documentation of all such determinations. A written determination is
required for any activity carried out under the authority of
Secs. 570.201(f), 570.201(i)(2), 570.201(p), 570.201(q), 570.202(b)(3),
570.206(f), 570.209, 570.210, and 570.309.
(f) Means of carrying out eligible activities. (1) Activities
eligible under this subpart, other than those authorized under
Sec. 570.204(a), may be undertaken, subject to local law:
(i) By the recipient through:
(A) Its employees, or
(B) Procurement contracts governed by the requirements of 2 CFR part
200, subpart D; or
(ii) Through loans or grants under agreements with subrecipients, as
defined at Sec. 570.500(c); or
(iii) By one or more public agencies, including existing local
public agencies, that are designated by the chief executive officer of
the recipient.
(2) Activities made eligible under Sec. 570.204(a) may only be
undertaken by entities specified in that section.
(g) Limitation on planning and administrative costs--(1) Origin year
grant expenditure test. For origin year 2015 grants and subsequent
grants, no more than 20 percent of any origin year grant shall be
expended for planning and program administrative costs, as defined in
Secs. 570.205 and 570.206, respectively. Expenditures of program income
for planning and program administrative costs are excluded from this
calculation.
(2) Program year obligation test. For all grants and recipients
subject to subpart D, the amount of CDBG funds obligated during each
program year for planning plus administrative costs, as defined in
Secs. 570.205 and 570.206, respectively, shall be limited to an amount
no greater than 20 percent of the sum of the grant made for that program
year (if any) plus the program income received by the recipient and its
subrecipients (if any) during that program year. For origin year 2015
grants and
[[Page 18]]
subsequent grants, recipients must apply this test consistent with
paragraph (g)(1) of this section.
(3) Funds from a grant of any origin year may be used to pay
planning and program administrative costs associated with any grant of
any origin year.
(h) Reimbursement for pre-award costs. The effective date of the
grant agreement is the program year start date or the date that the
consolidated plan is received by HUD, whichever is later. For a Section
108 loan guarantee, the effective date of the grant agreement is the
date of HUD execution of the grant agreement amendment for the
particular loan guarantee commitment.
(1) Prior to the effective date of the grant agreement, a recipient
may incur costs or may authorize a subrecipient to incur costs, and then
after the effective date of the grant agreement pay for those costs
using its CDBG funds, provided that:
(i) The activity for which the costs are being incurred is included,
prior to the costs being incurred, in a consolidated plan action plan,
an amended consolidated plan action plan, or an application under
subpart M of this part, except that a new entitlement grantee preparing
to receive its first allocation of CDBG funds may incur costs necessary
to develop its consolidated plan and undertake other administrative
actions necessary to receive its first grant, prior to the costs being
included in its consolidated plan;
(ii) Citizens are advised of the extent to which these pre-award
costs will affect future grants;
(iii) The costs and activities funded are in compliance with the
requirements of this part and with the Environmental Review Procedures
stated in 24 CFR part 58;
(iv) The activity for which payment is being made complies with the
statutory and regulatory provisions in effect at the time the costs are
paid for with CDBG funds;
(v) CDBG payment will be made during a time no longer than the next
two program years following the effective date of the grant agreement or
amendment in which the activity is first included; and
(vi) The total amount of pre-award costs to be paid during any
program year pursuant to this provision is no more than the greater of
25 percent of the amount of the grant made for that year or $300,000.
(2) Upon the written request of the recipient, HUD may authorize
payment of pre-award costs for activities that do not meet the criteria
at paragraph (h)(1)(v) or (h)(1)(vi) of this section, if HUD determines,
in writing, that there is good cause for granting an exception upon
consideration of the following factors, as applicable:
(i) Whether granting the authority would result in a significant
contribution to the goals and purposes of the CDBG program;
(ii) Whether failure to grant the authority would result in undue
hardship to the recipient or beneficiaries of the activity;
(iii) Whether granting the authority would not result in a violation
of a statutory provision or any other regulatory provision;
(iv) Whether circumstances are clearly beyond the recipient's
control; or
(v) Any other relevant considerations.
(i) Urban Development Action Grant. Grant assistance may be provided
with Urban Development Action Grant funds, subject to the provisions of
subpart G, for:
(1) Activities eligible for assistance under this subpart; and
(2) Notwithstanding the provisions of Sec. 570.207, such other
activities as the Secretary may determine to be consistent with the
purposes of the Urban Development Action Grant program.
(j) Equal participation of faith-based organizations. The HUD
program requirements in Sec. 5.109 of this title apply to the CDBG
program, including the requirements regarding disposition and change in
use of real property by a faith-based organization.
(k) Any unexpended CDBG origin year grant funds in the United States
Treasury account on September 30 of the fifth Federal fiscal year after
the end of the origin year grant's period of availability for obligation
by HUD will
[[Page 19]]
be canceled. HUD may require an earlier expenditure and draw down
deadline under a grant agreement.
[53 FR 34439, Sept. 6, 1988, as amended at 54 FR 47031, Nov. 8, 1989; 57
FR 27119, June 17, 1992; 60 FR 1943, Jan. 5, 1995; 60 FR 17445, Apr. 6,
1995; 60 FR 56910, Nov. 9, 1995; 61 FR 11476, Mar. 20, 1996; 61 FR
18674, Apr. 29, 1996; 65 FR 70215, Nov. 21, 2000; 68 FR 56404, Sept. 30,
2003; 69 FR 32778, June 10, 2004; 70 FR 76369, Dec. 23, 2005; 72 FR
46370, Aug. 17, 2007; 80 FR 67633, Nov. 3, 2015; 80 FR 69870, Nov. 12,
2015; 80 FR 75936, Dec. 7, 2015; 81 FR 19418, Apr. 4, 2016]
Sec. 570.201 Basic eligible activities.
CDBG funds may be used for the following activities:
(a) Acquisition. Acquisition in whole or in part by the recipient,
or other public or private nonprofit entity, by purchase, long-term
lease, donation, or otherwise, of real property (including air rights,
water rights, rights-of-way, easements, and other interests therein) for
any public purpose, subject to the limitations of Sec. 570.207.
(b) Disposition. Disposition, through sale, lease, donation, or
otherwise, of any real property acquired with CDBG funds or its
retention for public purposes, including reasonable costs of temporarily
managing such property or property acquired under urban renewal,
provided that the proceeds from any such disposition shall be program
income subject to the requirements set forth in Sec. 570.504.
(c) Public facilities and improvements. Acquisition, construction,
reconstruction, rehabilitation or installation of public facilities and
improvements, except as provided in Sec. 570.207(a), carried out by the
recipient or other public or private nonprofit entities. (However,
activities under this paragraph may be directed to the removal of
material and architectural barriers that restrict the mobility and
accessibility of elderly or severely disabled persons to public
facilities and improvements, including those provided for in
Sec. 570.207(a)(1).) In undertaking such activities, design features and
improvements which promote energy efficiency may be included. Such
activities may also include the execution of architectural design
features, and similar treatments intended to enhance the aesthetic
quality of facilities and improvements receiving CDBG assistance, such
as decorative pavements, railings, sculptures, pools of water and
fountains, and other works of art. Facilities designed for use in
providing shelter for persons having special needs are considered public
facilities and not subject to the prohibition of new housing
construction described in Sec. 570.207(b)(3). Such facilities include
shelters for the homeless; convalescent homes; hospitals, nursing homes;
battered spouse shelters; halfway houses for run-away children, drug
offenders or parolees; group homes for mentally retarded persons and
temporary housing for disaster victims. In certain cases, nonprofit
entities and subrecipients including those specified in Sec. 570.204 may
acquire title to public facilities. When such facilities are owned by
nonprofit entities or subrecipients, they shall be operated so as to be
open for use by the general public during all normal hours of operation.
Public facilities and improvements eligible for assistance under this
paragraph are subject to the policies in Sec. 570.200(b).
(d) Clearance and remediation activities. Clearance, demolition, and
removal of buildings and improvements, including movement of structures
to other sites and remediation of known or suspected environmental
contamination. Demolition of HUD-assisted or HUD-owned housing units may
be undertaken only with the prior approval of HUD. Remediation may
include project-specific environmental assessment costs not otherwise
eligible under Sec. 570.205.
(e) Public services. Provision of public services (including labor,
supplies, and materials) including but not limited to those concerned
with employment, crime prevention, child care, health, drug abuse,
education, fair housing counseling, energy conservation, welfare (but
excluding the provision of income payments identified under
Sec. 570.207(b)(4)), homebuyer downpayment assistance, or recreational
needs. If housing counseling, as defined in 24 CFR 5.100, is provided,
it must be carried out in accordance with 24 CFR 5.111. To be eligible
for CDBG assistance, a public service must be either a new service or a
quantifiable increase in the level of an existing service above that
which has been provided by or on
[[Page 20]]
behalf of the unit of general local government (through funds raised by
the unit or received by the unit from the State in which it is located)
in the 12 calendar months before the submission of the action plan. (An
exception to this requirement may be made if HUD determines that any
decrease in the level of a service was the result of events not within
the control of the unit of general local government.) The amount of CDBG
funds used for public services shall not exceed paragraphs (e) (1) or
(2) of this section, as applicable:
(1) The amount of CDBG funds used for public services shall not
exceed 15 percent of each grant, except that for entitlement grants made
under subpart D of this part, nonentitlement CDBG grants in Hawaii, and
for recipients of insular area funds under section 106 of the Act, the
amount shall not exceed 15 percent of the grant plus 15 percent of
program income, as defined in Sec. 570.500(a). For entitlement grants
under subpart D of this part, nonentitlement CDBG grants in Hawaii, and
for recipients of insular area funds under section 106 of the Act,
compliance is based on limiting the amount of CDBG funds obligated for
public service activities in each program year to an amount no greater
than 15 percent of the entitlement grant made for that program year plus
15 percent of the program income received during the grantee's
immediately preceding program year.
(2) A recipient which obligated more CDBG funds for public services
than 15 percent of its grant funded from origin year 1982 or 1983
appropriations (excluding program income and any assistance received
under Public Law 98-8), may obligate more CDBG funds than allowable
under paragraph (e)(1) of this section, so long as the total amount
obligated in any program year does not exceed:
(i) For an entitlement grantee, 15% of the program income it
received during the preceding program year; plus
(ii) A portion of the grant received for the program year which is
the highest of the following amounts:
(A) The amount determined by applying the percentage of the grant it
obligated for public services in the 1982 program year against the grant
for its current program year;
(B) The amount determined by applying the percentage of the grant it
obligated for public services in the 1983 program year against the grant
for its current program year;
(C) The amount of funds it obligated for public services in the 1982
program year; or,
(D) The amount of funds it obligated for public services in the 1983
program year.
(f) Interim assistance. (1) The following activities may be
undertaken on an interim basis in areas exhibiting objectively
determinable signs of physical deterioration where the recipient has
determined that immediate action is necessary to arrest the
deterioration and that permanent improvements will be carried out as
soon as practicable:
(i) The repairing of streets, sidewalks, parks, playgrounds,
publicly owned utilities, and public buildings; and
(ii) The execution of special garbage, trash, and debris removal,
including neighborhood cleanup campaigns, but not the regular curbside
collection of garbage or trash in an area.
(2) In order to alleviate emergency conditions threatening the
public health and safety in areas where the chief executive officer of
the recipient determines that such an emergency condition exists and
requires immediate resolution, CDBG funds may be used for:
(i) The activities specified in paragraph (f)(1) of this section,
except for the repair of parks and playgrounds;
(ii) The clearance of streets, including snow removal and similar
activities, and
(iii) The improvement of private properties.
(3) All activities authorized under paragraph (f)(2) of this section
are limited to the extent necessary to alleviate emergency conditions.
(g) Payment of non-Federal share. Payment of the non-Federal share
required in connection with a Federal grant-in-aid program undertaken as
part of CDBG activities, provided, that such payment shall be limited to
activities otherwise eligible and in compliance
[[Page 21]]
with applicable requirements under this subpart.
(h) Urban renewal completion. Payment of the cost of completing an
urban renewal project funded under title I of the Housing Act of 1949 as
amended. Further information regarding the eligibility of such costs is
set forth in Sec. 570.801.
(i) Relocation. Relocation payments and other assistance for
permanently and temporarily relocated individuals families, businesses,
nonprofit organizations, and farm operations where the assistance is (1)
required under the provisions of Sec. 570.606 (b) or (c); or (2)
determined by the grantee to be appropriate under the provisions of
Sec. 570.606(d).
(j) Loss of rental income. Payments to housing owners for losses of
rental income incurred in holding, for temporary periods, housing units
to be used for the relocation of individuals and families displaced by
program activities assisted under this part.
(k) Housing services. Housing services, as provided in section
105(a)(21) of the Act (42 U.S.C. 5305(a)(21)). If housing counseling, as
defined in 24 CFR 5.100, is provided, it must be carried out in
accordance with 24 CFR 5.111.
(l) Privately owned utilities. CDBG funds may be used to acquire,
construct, reconstruct, rehabilitate, or install the distribution lines
and facilities of privately owned utilities, including the placing
underground of new or existing distribution facilities and lines.
(m) Construction of housing. CDBG funds may be used for the
construction of housing assisted under section 17 of the United States
Housing Act of 1937.
(n) Homeownership assistance. CDBG funds may be used to provide
direct homeownership assistance to low- or moderate-income households in
accordance with section 105(a) of the Act.
(o)(1) The provision of assistance either through the recipient
directly or through public and private organizations, agencies, and
other subrecipients (including nonprofit and for-profit subrecipients)
to facilitate economic development by:
(i) Providing credit, including, but not limited to, grants, loans,
loan guarantees, and other forms of financial support, for the
establishment, stabilization, and expansion of microenterprises;
(ii) Providing technical assistance, advice, and business support
services to owners of microenterprises and persons developing
microenterprises; and
(iii) Providing general support, including, but not limited to, peer
support programs, counseling, child care, transportation, and other
similar services, to owners of microenterprises and persons developing
microenterprises.
(2) Services provided this paragraph (o) shall not be subject to the
restrictions on public services contained in paragraph (e) of this
section.
(3) For purposes of this paragraph (o), ``persons developing
microenterprises'' means such persons who have expressed interest and
who are, or after an initial screening process are expected to be,
actively working toward developing businesses, each of which is expected
to be a microenterprise at the time it is formed.
(4) Assistance under this paragraph (o) may also include training,
technical assistance, or other support services to increase the capacity
of the recipient or subrecipient to carry out the activities under this
paragraph (o).
(p) Technical assistance. Provision of technical assistance to
public or nonprofit entities to increase the capacity of such entities
to carry out eligible neighborhood revitalization or economic
development activities. (The recipient must determine, prior to the
provision of the assistance, that the activity for which it is
attempting to build capacity would be eligible for assistance under this
subpart C, and that the national objective claimed by the grantee for
this assistance can reasonably be expected to be met once the entity has
received the technical assistance and undertakes the activity.) Capacity
building for private or public entities (including grantees) for other
purposes may be eligible under Sec. 570.205.
(q) Assistance to institutions of higher education. Provision of
assistance by the recipient to institutions of higher education when the
grantee determines
[[Page 22]]
that such an institution has demonstrated a capacity to carry out
eligible activities under this subpart C.
[53 FR 34439, Sept. 6, 1988, as amended at 53 FR 31239, Aug. 17, 1988;
55 FR 29308, July 18, 1990; 57 FR 27119, June 17, 1992; 60 FR 1943, Jan.
5, 1995; 60 FR 56911, Nov. 9, 1995; 61 FR 18674, Apr. 29, 1996; 65 FR
70215, Nov. 21, 2000; 67 FR 47213, July 17, 2002; 71 FR 30034, May 24,
2006; 80 FR 69870, Nov. 12, 2015; 81 FR 90659, Dec. 14, 2016]
Sec. 570.202 Eligible rehabilitation and preservation activities.
(a) Types of buildings and improvements eligible for rehabilitation
assistance. CDBG funds may be used to finance the rehabilitation of:
(1) Privately owned buildings and improvements for residential
purposes; improvements to a single-family residential property which is
also used as a place of business, which are required in order to operate
the business, need not be considered to be rehabilitation of a
commercial or industrial building, if the improvements also provide
general benefit to the residential occupants of the building;
(2) Low-income public housing and other publicly owned residential
buildings and improvements;
(3) Publicly or privately owned commercial or industrial buildings,
except that the rehabilitation of such buildings owned by a private for-
profit business is limited to improvement to the exterior of the
building, abatement of asbestos hazards, lead-based paint hazard
evaluation and reduction, and the correction of code violations;
(4) Nonprofit-owned nonresidential buildings and improvements not
eligible under Sec. 570.201(c); and
(5) Manufactured housing when such housing constitutes part of the
community's permanent housing stock.
(b) Types of assistance. CDBG funds may be used to finance the
following types of rehabilitation activities, and related costs, either
singly, or in combination, through the use of grants, loans, loan
guarantees, interest supplements, or other means for buildings and
improvements described in paragraph (a) of this section, except that
rehabilitation of commercial or industrial buildings is limited as
described in paragraph (a)(3) of this section.
(1) Assistance to private individuals and entities, including profit
making and nonprofit organizations, to acquire for the purpose of
rehabilitation, and to rehabilitate properties, for use or resale for
residential purposes;
(2) Labor, materials, and other costs of rehabilitation of
properties, including repair directed toward an accumulation of deferred
maintenance, replacement of principal fixtures and components of
existing structures, installation of security devices, including smoke
detectors and dead bolt locks, and renovation through alterations,
additions to, or enhancement of existing structures and improvements,
abatement of asbestos hazards (and other contaminants) in buildings and
improvements that may be undertaken singly, or in combination;
(3) Loans for refinancing existing indebtedness secured by a
property being rehabilitated with CDBG funds if such financing is
determined by the recipient to be necessary or appropriate to achieve
the locality's community development objectives;
(4) Improvements to increase the efficient use of energy in
structures through such means as installation of storm windows and
doors, siding, wall and attic insulation, and conversion, modification,
or replacement of heating and cooling equipment, including the use of
solar energy equipment;
(5) Improvements to increase the efficient use of water through such
means as water savings faucets and shower heads and repair of water
leaks;
(6) Connection of residential structures to water distribution lines
or local sewer collection lines;
(7) For rehabilitation carried out with CDBG funds, costs of:
(i) Initial homeowner warranty premiums;
(ii) Hazard insurance premiums, except where assistance is provided
in the form of a grant; and
(iii) Flood insurance premiums for properties covered by the Flood
Disaster Protection Act of 1973, pursuant to Sec. 570.605.
(8) Costs of acquiring tools to be lent to owners, tenants, and
others who will use such tools to carry out rehabilitation;
[[Page 23]]
(9) Rehabilitation services, such as rehabilitation counseling,
energy auditing, preparation of work specifications, loan processing,
inspections, and other services related to assisting owners, tenants,
contractors, and other entities, participating or seeking to participate
in rehabilitation activities authorized under this section, under
section 312 of the Housing Act of 1964, as amended, under section 810 of
the Act, or under section 17 of the United States Housing Act of 1937;
(10) Assistance for the rehabilitation of housing under section 17
of the United States Housing Act of 1937; and
(11) Improvements designed to remove material and architectural
barriers that restrict the mobility and accessibility of elderly or
severely disabled persons to buildings and improvements eligible for
assistance under paragraph (a) of this section.
(c) Code enforcement. Costs incurred for inspection for code
violations and enforcement of codes (e.g., salaries and related expenses
of code enforcement inspectors and legal proceedings, but not including
the cost of correcting the violations) in deteriorating or deteriorated
areas when such enforcement together with public or private
improvements, rehabilitation, or services to be provided may be expected
to arrest the decline of the area.
(d) Historic preservation. CDBG funds may be used for the
rehabilitation, preservation or restoration of historic properties,
whether publicly or privately owned. Historic properties are those sites
or structures that are either listed in or eligible to be listed in the
National Register of Historic Places, listed in a State or local
inventory of historic places, or designated as a State or local landmark
or historic district by appropriate law or ordinance. Historic
preservation, however, is not authorized for buildings for the general
conduct of government.
(e) Renovation of closed buildings. CDBG funds may be used to
renovate closed buildings, such as closed school buildings, for use as
an eligible public facility or to rehabilitate such buildings for
housing.
(f) Lead-based paint activities. Lead-based paint activities
pursuant to Sec. 570.608.
(g) Broadband infrastructure. Any substantial rehabilitation, as
substantial rehabilitation is defined by 24 CFR 5.100, of a building
with more than 4 rental units, for which CDBG funds are first obligated
by the recipient on or after April 19, 2017, must include installation
of broadband infrastructure, as this term is also defined in 24 CFR
5.100, except where the recipient determines and, in accordance with
Sec. 570.506, documents the determination that:
(1) The location of the substantial rehabilitation makes
installation of broadband infrastructure infeasible;
(2) The cost of installing broadband infrastructure would result in
a fundamental alteration in the nature of its program or activity or in
an undue financial burden; or
(3) The structure of the housing to be substantially rehabilitated
makes installation of broadband infrastructure infeasible.
[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at
60 FR 1944, Jan. 5, 1995; 60 FR 56911, Nov. 9, 1995; 64 FR 50225, Sept.
15, 1999; 71 FR 30035, May 24, 2006; 82 FR 92636, Dec. 20, 2016]
Sec. 570.203 Special economic development activities.
A recipient may use CDBG funds for special economic development
activities in addition to other activities authorized in this subpart
that may be carried out as part of an economic development project.
Guidelines for selecting activities to assist under this paragraph are
provided at Sec. 570.209. The recipient must ensure that the appropriate
level of public benefit will be derived pursuant to those guidelines
before obligating funds under this authority. Special activities
authorized under this section do not include assistance for the
construction of new housing. Activities eligible under this section may
include costs associated with project-specific assessment or remediation
of known or suspected environmental contamination. Special economic
development activities include:
(a) The acquisition, construction, reconstruction, rehabilitation or
installation of commercial or industrial buildings, structures, and
other real property equipment and improvements,
[[Page 24]]
including railroad spurs or similar extensions. Such activities may be
carried out by the recipient or public or private nonprofit
subrecipients.
(b) The provision of assistance to a private for-profit business,
including, but not limited to, grants, loans, loan guarantees, interest
supplements, technical assistance, and other forms of support, for any
activity where the assistance is appropriate to carry out an economic
development project, excluding those described as ineligible in
Sec. 570.207(a). In selecting businesses to assist under this authority,
the recipient shall minimize, to the extent practicable, displacement of
existing businesses and jobs in neighborhoods.
(c) Economic development services in connection with activities
eligible under this section, including, but not limited to, outreach
efforts to market available forms of assistance; screening of
applicants; reviewing and underwriting applications for assistance;
preparation of all necessary agreements; management of assisted
activities; and the screening, referral, and placement of applicants for
employment opportunities generated by CDBG-eligible economic development
activities, including the costs of providing necessary training for
persons filling those positions.
[53 FR 34439, Sept. 6, 1988, as amended at 60 FR 1944, Jan. 5, 1995; 71
FR 30035, May 24, 2006]
Sec. 570.204 Special activities by Community-Based Development
Organizations (CBDOs).
(a) Eligible activities. The recipient may provide CDBG funds as
grants or loans to any CBDO qualified under this section to carry out a
neighborhood revitalization, community economic development, or energy
conservation project. The funded project activities may include those
listed as eligible under this subpart, and, except as described in
paragraph (b) of this section, activities not otherwise listed as
eligible under this subpart. For purposes of qualifying as a project
under paragraphs (a)(1), (a)(2), and (a)(3) of this section, the funded
activity or activities may be considered either alone or in concert with
other project activities either being carried out or for which funding
has been committed. For purposes of this section:
(1) Neighborhood revitalization project includes activities of
sufficient size and scope to have an impact on the decline of a
geographic location within the jurisdiction of a unit of general local
government (but not the entire jurisdiction) designated in comprehensive
plans, ordinances, or other local documents as a neighborhood, village,
or similar geographical designation; or the entire jurisdiction of a
unit of general local government which is under 25,000 population;
(2) Community economic development project includes activities that
increase economic opportunity, principally for persons of low- and
moderate-income, or that stimulate or retain businesses or permanent
jobs, including projects that include one or more such activities that
are clearly needed to address a lack of affordable housing accessible to
existing or planned jobs and those activities specified at 24 CFR
91.1(a)(1)(iii); activities under this paragraph may include costs
associated with project-specific assessment or remediation of known or
suspected environmental contamination;
(3) Energy conservation project includes activities that address
energy conservation, principally for the benefit of the residents of the
recipient's jurisdiction; and
(4) To carry out a project means that the CBDO undertakes the funded
activities directly or through contract with an entity other than the
grantee, or through the provision of financial assistance for activities
in which it retains a direct and controlling involvement and
responsibilities.
(5) Any new construction or substantial rehabilitation, as
substantial rehabilitation is defined by 24 CFR 5.100, of a building
with more than 4 rental units, for which CDBG funds are first obligated
by the recipient on or after April 19, 2017, must include installation
of broadband infrastructure, as this term is also defined in 24 CFR
5.100, except where the recipient determines and, in accordance with
Sec. 570.506, documents the determination that:
(i) The location of the new construction or substantial
rehabilitation
[[Page 25]]
makes installation of broadband infrastructure infeasible;
(ii) The cost of installing broadband infrastructure would result in
a fundamental alteration in the nature of its program or activity or in
an undue financial burden; or
(iii) The structure of the housing to be substantially rehabilitated
makes installation of broadband infrastructure infeasible.
(b) Ineligible activities. Notwithstanding that CBDOs may carry out
activities that are not otherwise eligible under this subpart, this
section does not authorize:
(1) Carrying out an activity described as ineligible in
Sec. 570.207(a);
(2) Carrying out public services that do not meet the requirements
of Sec. 570.201(e), except that:
(i) Services carried out under this section that are specifically
designed to increase economic opportunities through job training and
placement and other employment support services, including, but not
limited to, peer support programs, counseling, child care,
transportation, and other similar services; and
(ii) Services of any type carried out under this section pursuant to
a strategy approved by HUD under the provisions of 24 CFR 91.215(e)
shall not be subject to the limitations in Sec. 570.201(e)(1) or (2), as
applicable;
(3) Providing assistance to activities that would otherwise be
eligible under Sec. 570.203 that do not meet the requirements of
Sec. 570.209; or
(4) Carrying out an activity that would otherwise be eligible under
Sec. 570.205 or Sec. 570.206, but that would result in the recipient's
exceeding the spending limitation in Sec. 570.200(g).
(c) Eligible CBDOs. (1) A CBDO qualifying under this section is an
organization which has the following characteristics:
(i) Is an association or corporation organized under State or local
law to engage in community development activities (which may include
housing and economic development activities) primarily within an
identified geographic area of operation within the jurisdiction of the
recipient, or in the case of an urban county, the jurisdiction of the
county; and
(ii) Has as its primary purpose the improvement of the physical,
economic or social environment of its geographic area of operation by
addressing one or more critical problems of the area, with particular
attention to the needs of persons of low and moderate income; and
(iii) May be either non-profit or for-profit, provided any monetary
profits to its shareholders or members must be only incidental to its
operations; and
(iv) Maintains at least 51 percent of its governing body's
membership for low- and moderate-income residents of its geographic area
of operation, owners or senior officers of private establishments and
other institutions located in and serving its geographic area of
operation, or representatives of low- and moderate-income neighborhood
organizations located in its geographic area of operation; and
(v) Is not an agency or instrumentality of the recipient and does
not permit more than one-third of the membership of its governing body
to be appointed by, or to consist of, elected or other public officials
or employees or officials of an ineligible entity (even though such
persons may be otherwise qualified under paragraph (c)(1)(iv) of this
section); and
(vi) Except as otherwise authorized in paragraph (c)(1)(v) of this
section, requires the members of its governing body to be nominated and
approved by the general membership of the organization, or by its
permanent governing body; and
(vii) Is not subject to requirements under which its assets revert
to the recipient upon dissolution; and
(viii) Is free to contract for goods and services from vendors of
its own choosing.
(2) A CBDO that does not meet the criteria in paragraph (c)(1) of
this section may also qualify as an eligible entity under this section
if it meets one of the following requirements:
(i) Is an entity organized pursuant to section 301(d) of the Small
Business Investment Act of 1958 (15 U.S.C. 681(d)), including those
which are profit making; or
(ii) Is an SBA approved Section 501 State Development Company or
Section 502 Local Development Company,
[[Page 26]]
or an SBA Certified Section 503 Company under the Small Business
Investment Act of 1958, as amended; or
(iii) Is a Community Housing Development Organization (CHDO) under
24 CFR 92.2, designated as a CHDO by the HOME Investment Partnerships
program participating jurisdiction, with a geographic area of operation
of no more than one neighborhood, and has received HOME funds under 24
CFR 92.300 or is expected to receive HOME funds as described in and
documented in accordance with 24 CFR 92.300(e).
(3) A CBDO that does not qualify under paragraph (c)(1) or (2) of
this section may also be determined to qualify as an eligible entity
under this section if the recipient demonstrates to the satisfaction of
HUD, through the provision of information regarding the organization's
charter and by-laws, that the organization is sufficiently similar in
purpose, function, and scope to those entities qualifying under
paragraph (c)(1) or (2) of this section.
[60 FR 1944, Jan. 5, 1995, as amended at 71 FR 30035, May 24, 2006; 81
FR 92636, Dec. 20, 2016]
Sec. 570.205 Eligible planning, urban environmental design and
policy-planning-management-capacity building activities.
(a) Planning activities which consist of all costs of data
gathering, studies, analysis, and preparation of plans and the
identification of actions that will implement such plans, including, but
not limited to:
(1) Comprehensive plans;
(2) Community development plans;
(3) Functional plans, in areas such as:
(i) Housing, including the development of a consolidated plan;
(ii) Land use and urban environmental design;
(iii) Economic development;
(iv) Open space and recreation;
(v) Energy use and conservation;
(vi) Floodplain and wetlands management in accordance with the
requirements of Executive Orders 11988 and 11990;
(vii) Transportation;
(viii) Utilities; and
(ix) Historic preservation.
(4) Other plans and studies such as:
(i) Small area and neighborhood plans;
(ii) Capital improvements programs;
(iii) Individual project plans (but excluding engineering and design
costs related to a specific activity which are eligible as part of the
cost of such activity under Secs. 570.201-570.204);
(iv) The reasonable costs of general environmental, urban
environmental design and historic preservation studies; and general
environmental assessment- and remediation-oriented planning related to
properties with known or suspected environmental contamination. However,
costs necessary to comply with 24 CFR part 58, including project
specific environmental assessments and clearances for activities
eligible for assistance under this part, are eligible as part of the
cost of such activities under Secs. 570.201-570.204. Costs for such
specific assessments and clearances may also be incurred under this
paragraph but would then be considered planning costs for the purposes
of Sec. 570.200(g);
(v) Strategies and action programs to implement plans, including the
development of codes, ordinances and regulations;
(vi) Support of clearinghouse functions, such as those specified in
Executive Order 12372; and
(vii) Assessment of Fair Housing.
(viii) Developing an inventory of properties with known or suspected
environmental contamination.
(5) [Reserved]
(6) Policy--planning--management--capacity building activities which
will enable the recipient to:
(1) Determine its needs;
(2) Set long-term goals and short-term objectives, including those
related to urban environmental design;
(3) Devise programs and activities to meet these goals and
objectives;
(4) Evaluate the progress of such programs and activities in
accomplishing these goals and objectives; and
(5) Carry out management, coordination and monitoring of activities
necessary for effective planning implementation, but excluding the costs
necessary to implement such plans.
[53 FR 34439, Sept. 6, 1988, as amended at 56 FR 56127, Oct. 31, 1991;
60 FR 1915, Jan. 5, 1995; 71 FR 30035, May 24, 2006; 80 FR 42366, July
16, 2015]
[[Page 27]]
Sec. 570.206 Program administrative costs.
Payment of reasonable program administrative costs and carrying
charges related to the planning and execution of community development
activities assisted in whole or in part with funds provided under this
part and, where applicable, housing activities (described in paragraph
(g) of this section) covered in the recipient's housing assistance plan.
This does not include staff and overhead costs directly related to
carrying out activities eligible under Sec. 570.201 through
Sec. 570.204, since those costs are eligible as part of such activities.
(a) General management, oversight and coordination. Reasonable costs
of overall program management, coordination, monitoring, and evaluation.
Such costs include, but are not necessarily limited to, necessary
expenditures for the following:
(1) Salaries, wages, and related costs of the recipient's staff, the
staff of local public agencies, or other staff engaged in program
administration. In charging costs to this category the recipient may
either include the entire salary, wages, and related costs allocable to
the program of each person whose primary responsibilities with regard to
the program involve program administration assignments, or the pro rata
share of the salary, wages, and related costs of each person whose job
includes any program administration assignments. The recipient may use
only one of these methods during the program year. Program
administration includes the following types of assignments:
(i) Providing local officials and citizens with information about
the program;
(ii) Preparing program budgets and schedules, and amendments
thereto;
(iii) Developing systems for assuring compliance with program
requirements;
(iv) Developing interagency agreements and agreements with
subrecipients and contractors to carry out program activities;
(v) Monitoring program activities for progress and compliance with
program requirements;
(vi) Preparing reports and other documents related to the program
for submission to HUD;
(vii) Coordinating the resolution of audit and monitoring findings;
(viii) Evaluating program results against stated objectives; and
(ix) Managing or supervising persons whose primary responsibilities
with regard to the program include such assignments as those described
in paragraph (a)(1)(i) through (viii) of this section.
(2) Travel costs incurred for official business in carrying out the
program;
(3) Administrative services performed under third party contracts or
agreements, including such services as general legal services,
accounting services, and audit services; and
(4) Other costs for goods and services required for administration
of the program, including such goods and services as rental or purchase
of equipment, insurance, utilities, office supplies, and rental and
maintenance (but not purchase) of office space.
(b) Public information. The provisions of information and other
resources to residents and citizen organizations participating in the
planning, implementation, or assessment of activities being assisted
with CDBG funds.
(c) Fair housing activities. Provision of fair housing services
designed to further the fair housing objectives of the Fair Housing Act
(42 U.S.C. 3601-20) by making all persons, without regard to race,
color, religion, sex, national origin, familial status or handicap,
aware of the range of housing opportunities available to them; other
fair housing enforcement, education, and outreach activities; and other
activities designed to further the housing objective of avoiding undue
concentrations of assisted persons in areas containing a high proportion
of low and moderate income persons.
(d) [Reserved]
(e) Indirect costs. Indirect costs may be charged to the CDBG
program under a cost allocation plan prepared in accordance with 2 CFR
part 200, subpart E.
(f) Submission of applications for federal programs. Preparation of
documents required for submission to HUD to receive funds under the CDBG
and
[[Page 28]]
UDAG programs. In addition, CDBG funds may be used to prepare
applications for other Federal programs where the recipient determines
that such activities are necessary or appropriate to achieve its
community development objectives.
(g) Administrative expenses to facilitate housing. CDBG funds may be
used for necessary administrative expenses in planning or obtaining
financing for housing as follows: for entitlement recipients, assistance
authorized by this paragraph is limited to units which are identified in
the recipient's HUD approved housing assistance plan; for HUD-
administered small cities recipients, assistance authorized by the
paragraph is limited to facilitating the purchase or occupancy of
existing units which are to be occupied by low and moderate income
households, or the construction of rental or owner units where at least
20 percent of the units in each project will be occupied at affordable
rents/costs by low and moderate income persons. Examples of eligible
actions are as follows:
(1) The cost of conducting preliminary surveys and analysis of
market needs;
(2) Site and utility plans, narrative descriptions of the proposed
construction, preliminary cost estimates, urban design documentation,
and ``sketch drawings,'' but excluding architectural, engineering, and
other details ordinarily required for construction purposes, such as
structural, electrical, plumbing, and mechanical details;
(3) Reasonable costs associated with development of applications for
mortgage and insured loan commitments, including commitment fees, and of
applications and proposals under the Section 8 Housing Assistance
Payments Program pursuant to 24 CFR parts 880-883;
(4) Fees associated with processing of applications for mortgage or
insured loan commitments under programs including those administered by
HUD, Farmers Home Administration (FmHA), Federal National Mortgage
Association (FNMA), and the Government National Mortgage Association
(GNMA);
(5) The cost of issuance and administration of mortgage revenue
bonds used to finance the acquisition, rehabilitation or construction of
housing, but excluding costs associated with the payment or guarantee of
the principal or interest on such bonds; and
(6) Special outreach activities which result in greater landlord
participation in Section 8 Housing Assistance Payments Program-Existing
Housing or similar programs for low and moderate income persons.
(h) Section 17 of the United States Housing Act of 1937. Reasonable
costs equivalent to those described in paragraphs (a), (b), (e) and (f)
of this section for overall program management of the Rental
Rehabilitation and Housing Development programs authorized under section
17 of the United States Housing Act of 1937, whether or not such
activities are otherwise assisted with funds provided under this part.
(i) Whether or not such activities are otherwise assisted by funds
provided under this part, reasonable costs equivalent to those described
in paragraphs (a), (b), (e), and (f) of this section for overall program
management of:
(1) A Federally designated Empowerment Zone or Enterprise Community;
and
(2) The HOME program under title II of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12701 note).
[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at
54 FR 37411, Sept. 8, 1989; 60 FR 56912, Nov. 9, 1995; 69 FR 32778, June
10, 2004; 80 FR 69870, Nov. 12, 2015; 80 FR 75937, Dec. 7, 2015]
Sec. 570.207 Ineligible activities.
The general rule is that any activity that is not authorized under
the provisions of Secs. 570.201-570.206 is ineligible to be assisted
with CDBG funds. This section identifies specific activities that are
ineligible and provides guidance in determining the eligibility of other
activities frequently associated with housing and community development.
(a) The following activities may not be assisted with CDBG funds:
(1) Buildings or portions thereof, used for the general conduct of
government as defined at Sec. 570.3(d) cannot be assisted
[[Page 29]]
with CDBG funds. This does not include, however, the removal of
architectural barriers under Sec. 570.201(c) involving any such
building. Also, where acquisition of real property includes an existing
improvement which is to be used in the provision of a building for the
general conduct of government, the portion of the acquisition cost
attributable to the land is eligible, provided such acquisition meets a
national objective described in Sec. 570.208.
(2) General government expenses. Except as otherwise specifically
authorized in this subpart or under 2 CFR part 200, subpart E, expenses
required to carry out the regular responsibilities of the unit of
general local government are not eligible for assistance under this
part.
(3) Political activities. CDBG funds shall not be used to finance
the use of facilities or equipment for political purposes or to engage
in other partisan political activities, such as candidate forums, voter
transportation, or voter registration. However, a facility originally
assisted with CDBG funds may be used on an incidental basis to hold
political meetings, candidate forums, or voter registration campaigns,
provided that all parties and organizations have access to the facility
on an equal basis, and are assessed equal rent or use charges, if any.
(b) The following activities may not be assisted with CDBG funds
unless authorized under provisions of Sec. 570.203 or as otherwise
specifically noted herein or when carried out by an entity under the
provisions of Sec. 570.204.
(1) Purchase of equipment. The purchase of equipment with CDBG funds
is generally ineligible.
(i) Construction equipment. The purchase of construction equipment
is ineligible, but compensation for the use of such equipment through
leasing or depreciation pursuant to 2 CFR part 200, subpart E, as
applicable for an otherwise eligible activity is an eligible use of CDBG
funds. However, the purchase of construction equipment for use as part
of a solid waste disposal facility is eligible under Sec. 570.201(c).
(ii) Fire protection equipment. Fire protection equipment is
considered for this purpose to be an integral part of a public facility
and thus, purchase of such equipment would be eligible under
Sec. 570.201(c).
(iii) Furnishings and personal property. The purchase of equipment,
fixtures, motor vehicles, furnishings, or other personal property not an
integral structural fixture is generally ineligible. CDBG funds may be
used, however, to purchase or to pay depreciation in accordance with 2
CFR part 200, subpart E, for such items when necessary for use by a
recipient or its subrecipients in the administration of activities
assisted with CDBG funds, or when eligible as fire fighting equipment,
or when such items constitute all or part of a public service pursuant
to Sec. 570.201(e).
(2) Operating and maintenance expenses. The general rule is that any
expense associated with repairing, operating or maintaining public
facilities, improvements and services is ineligible. Specific exceptions
to this general rule are operating and maintenance expenses associated
with public service activities, interim assistance, and office space for
program staff employed in carrying out the CDBG program. For example,
the use of CDBG funds to pay the allocable costs of operating and
maintaining a facility used in providing a public service would be
eligible under Sec. 570.201(e), even if no other costs of providing such
a service are assisted with such funds. Examples of ineligible operating
and maintenance expenses are:
(i) Maintenance and repair of publicly owned streets, parks,
playgrounds, water and sewer facilities, neighborhood facilities, senior
centers, centers for persons with a disabilities, parking and other
public facilities and improvements. Examples of maintenance and repair
activities for which CDBG funds may not be used include the filling of
pot holes in streets, repairing of cracks in sidewalks, the mowing of
recreational areas, and the replacement of expended street light bulbs;
and
(ii) Payment of salaries for staff, utility costs and similar
expenses necessary for the operation of public works and facilities.
(3) New housing construction. For the purpose of this paragraph,
activities in support of the development of low or
[[Page 30]]
moderate income housing including clearance, site assemblage, provision
of site improvements and provision of public improvements and certain
housing pre-construction costs set forth in Sec. 570.206(g), are not
considered as activities to subsidize or assist new residential
construction. CDBG funds may not be used for the construction of new
permanent residential structures or for any program to subsidize or
assist such new construction, except:
(i) As provided under the last resort housing provisions set forth
in 24 CFR part 42;
(ii) As authorized under Sec. 570.201(m) or (n);
(iii) When carried out by an entity pursuant to Sec. 570.204(a);
(4) Income payments. The general rule is that CDBG funds may not be
used for income payments. For purposes of the CDBG program, ``income
payments'' means a series of subsistence-type grant payments made to an
individual or family for items such as food, clothing, housing (rent or
mortgage), or utilities, but excludes emergency grant payments made over
a period of up to three consecutive months to the provider of such items
or services on behalf of an individual or family.
[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at
60 FR 1945, Jan. 5, 1995; 60 FR 56912, Nov. 9, 1995; 65 FR 70215, Nov.
21, 2000; 80 FR 75937, Dec. 7, 2015]
Sec. 570.208 Criteria for national objectives.
The following criteria shall be used to determine whether a CDBG-
assisted activity complies with one or more of the national objectives
as required under Sec. 570.200(a)(2):
(a) Activities benefiting low- and moderate-income persons.
Activities meeting the criteria in paragraph (a) (1), (2), (3), or (4)
of this section as applicable, will be considered to benefit low and
moderate income persons unless there is substantial evidence to the
contrary. In assessing any such evidence, the full range of direct
effects of the assisted activity will be considered. (The recipient
shall appropriately ensure that activities that meet these criteria do
not benefit moderate income persons to the exclusion of low income
persons.)
(1) Area benefit activities. (i) An activity, the benefits of which
are available to all the residents in a particular area, where at least
51 percent of the residents are low and moderate income persons. Such an
area need not be coterminous with census tracts or other officially
recognized boundaries but must be the entire area served by the
activity. An activity that serves an area that is not primarily
residential in character shall not qualify under this criterion.
(ii) For metropolitan cities and urban counties, an activity that
would otherwise qualify under Sec. 570.208(a)(1)(i), except that the
area served contains less than 51 percent low- and moderate-income
residents, will also be considered to meet the objective of benefiting
low- and moderate-income persons where the proportion of such persons in
the area is within the highest quartile of all areas in the recipient's
jurisdiction in terms of the degree of concentration of such persons.
This exception is inapplicable to non-entitlement CDBG grants in Hawaii.
In applying this exception, HUD will determine the lowest proportion a
recipient may use to qualify an area for this purpose, as follows:
(A) All census block groups in the recipient's jurisdiction shall be
rank ordered from the block group of highest proportion of low and
moderate income persons to the block group with the lowest. For urban
counties, the rank ordering shall cover the entire area constituting the
urban county and shall not be done separately for each participating
unit of general local government.
(B) In any case where the total number of a recipient's block groups
does not divide evenly by four, the block group which would be
fractionally divided between the highest and second quartiles shall be
considered to be part of the highest quartile.
(C) The proportion of low and moderate income persons in the last
census block group in the highest quartile shall be identified. Any
service area located within the recipient's jurisdiction and having a
proportion of low and moderate income persons at or above this level
shall be considered to be within the highest quartile.
[[Page 31]]
(D) If block group data are not available for the entire
jurisdiction, other data acceptable to the Secretary may be used in the
above calculations.
(iii) An activity to develop, establish, and operate for up to two
years after the establishment of, a uniform emergency telephone number
system serving an area having less than the percentage of low- and
moderate-income residents required under paragraph (a)(1)(i) of this
section or (as applicable) paragraph (a)(1)(ii) of this section,
provided the recipient obtains prior HUD approval. To obtain such
approval, the recipient must:
(A) Demonstrate that the system will contribute significantly to the
safety of the residents of the area. The request for approval must
include a list of the emergency services that will participate in the
emergency telephone number system;
(B) Submit information that serves as a basis for HUD to determine
whether at least 51 percent of the use of the system will be by low- and
moderate-income persons. As available, the recipient must provide
information that identifies the total number of calls actually received
over the preceding 12-month period for each of the emergency services to
be covered by the emergency telephone number system and relates those
calls to the geographic segment (expressed as nearly as possible in
terms of census tracts, block numbering areas, block groups, or
combinations thereof that are contained within the segment) of the
service area from which the calls were generated. In analyzing this data
to meet the requirements of this section, HUD will assume that the
distribution of income among the callers generally reflects the income
characteristics of the general population residing in the same
geographic area where the callers reside. If HUD can conclude that the
users have primarily consisted of low- and moderate-income persons, no
further submission is needed by the recipient. If a recipient plans to
make other submissions for this purpose, it may request that HUD review
its planned methodology before expending the effort to acquire the
information it expects to use to make its case;
(C) Demonstrate that other Federal funds received by the recipient
are insufficient or unavailable for a uniform emergency telephone number
system. For this purpose, the recipient must submit a statement
explaining whether the lack of funds is due to the insufficiency of the
amount of the available funds, restrictions on the use of such funds, or
the prior commitment of funds by the recipient for other purposes; and
(D) Demonstrate that the percentage of the total costs of the system
paid for by CDBG funds does not exceed the percentage of low- and
moderate-income persons in the service area of the system. For this
purpose, the recipient must include a description of the boundaries of
the service area of the emergency telephone number system, the census
divisions that fall within the boundaries of the service area (census
tracts or block numbering areas), the total number of persons and the
total number of low- and moderate-income persons within each census
division, the percentage of low- and moderate-income persons within the
service area, and the total cost of the system.
(iv) An activity for which the assistance to a public improvement
that provides benefits to all the residents of an area is limited to
paying special assessments (as defined in Sec. 570.200(c)) levied
against residential properties owned and occupied by persons of low and
moderate income.
(v) For purposes of determining qualification under this criterion,
activities of the same type that serve different areas will be
considered separately on the basis of their individual service area.
(vi) In determining whether there is a sufficiently large percentage
of low- and moderate-income persons residing in the area served by an
activity to qualify under paragraph (a)(1) (i), (ii), or (vii) of this
section, the most recently available decennial census information must
be used to the fullest extent feasible, together with the section 8
income limits that would have applied at the time the income information
was collected by the Census Bureau. Recipients that believe that the
census data does not reflect current
[[Page 32]]
relative income levels in an area, or where census boundaries do not
coincide sufficiently well with the service area of an activity, may
conduct (or have conducted) a current survey of the residents of the
area to determine the percent of such persons that are low and moderate
income. HUD will accept information obtained through such surveys, to be
used in lieu of the decennial census data, where it determines that the
survey was conducted in such a manner that the results meet standards of
statistical reliability that are comparable to that of the decennial
census data for areas of similar size. Where there is substantial
evidence that provides a clear basis to believe that the use of the
decennial census data would substantially overstate the proportion of
persons residing there that are low and moderate income, HUD may require
that the recipient rebut such evidence in order to demonstrate
compliance with section 105(c)(2) of the Act.
(vii) Activities meeting the requirements of paragraph (d)(5)(i) of
this section may be considered to qualify under this paragraph, provided
that the area covered by the strategy is either a Federally-designated
Empowerment Zone or Enterprise Community or primarily residential and
contains a percentage of low- and moderate-income residents that is no
less than the percentage computed by HUD pursuant to paragraph
(a)(1)(ii) of this section or 70 percent, whichever is less, but in no
event less than 51 percent. Activities meeting the requirements of
paragraph (d)(6)(i) of this section may also be considered to qualify
under paragraph (a)(1) of this section.
(2) Limited clientele activities. (i) An activity which benefits a
limited clientele, at least 51 percent of whom are low- or moderate-
income persons. (The following kinds of activities may not qualify under
paragraph (a)(2) of this section: activities, the benefits of which are
available to all the residents of an area; activities involving the
acquisition, construction or rehabilitation of property for housing; or
activities where the benefit to low- and moderate-income persons to be
considered is the creation or retention of jobs, except as provided in
paragraph (a)(2)(iv) of this section.) To qualify under paragraph (a)(2)
of this section, the activity must meet one of the following tests:
(A) Benefit a clientele who are generally presumed to be principally
low and moderate income persons. Activities that exclusively serve a
group of persons in any one or a combination of the following categories
may be presumed to benefit persons, 51 percent of whom are low- and
moderate-income: abused children, battered spouses, elderly persons,
adults meeting the Bureau of the Census' Current Population Reports
definition of ``severely disabled,'' homeless persons, illiterate
adults, persons living with AIDS, and migrant farm workers; or
(B) Require information on family size and income so that it is
evident that at least 51 percent of the clientele are persons whose
family income does not exceed the low and moderate income limit; or
(C) Have income eligibility requirements which limit the activity
exclusively to low and moderate income persons; or
(D) Be of such nature and be in such location that it may be
concluded that the activity's clientele will primarily be low and
moderate income persons.
(ii) An activity that serves to remove material or architectural
barriers to the mobility or accessibility of elderly persons or of
adults meeting the Bureau of the Census' Current Population Reports
definition of ``severely disabled'' will be presumed to qualify under
this criterion if it is restricted, to the extent practicable, to the
removal of such barriers by assisting:
(A) The reconstruction of a public facility or improvement, or
portion thereof, that does not qualify under paragraph (a)(1) of this
section;
(B) The rehabilitation of a privately owned nonresidential building
or improvement that does not qualify under paragraph (a)(1) or (4) of
this section; or
(C) The rehabilitation of the common areas of a residential
structure that contains more than one dwelling unit and that does not
qualify under paragraph (a)(3) of this section.
(iii) A microenterprise assistance activity carried out in
accordance with
[[Page 33]]
the provisions of Sec. 570.201(o) with respect to those owners of
microenterprises and persons developing microenterprises assisted under
the activity during each program year who are low- and moderate-income
persons. For purposes of this paragraph, persons determined to be low
and moderate income may be presumed to continue to qualify as such for
up to a three-year period.
(iv) An activity designed to provide job training and placement and/
or other employment support services, including, but not limited to,
peer support programs, counseling, child care, transportation, and other
similar services, in which the percentage of low- and moderate-income
persons assisted is less than 51 percent may qualify under this
paragraph in the following limited circumstance:
(A) In such cases where such training or provision of supportive
services assists business(es), the only use of CDBG assistance for the
project is to provide the job training and/or supportive services; and
(B) The proportion of the total cost of the project borne by CDBG
funds is no greater than the proportion of the total number of persons
assisted who are low or moderate income.
(3) Housing activities. An eligible activity carried out for the
purpose of providing or improving permanent residential structures
which, upon completion, will be occupied by low- and moderate-income
households. This would include, but not necessarily be limited to, the
acquisition or rehabilitation of property by the recipient, a
subrecipient, a developer, an individual homebuyer, or an individual
homeowner; conversion of nonresidential structures; and new housing
construction. If the structure contains two dwelling units, at least one
must be so occupied, and if the structure contains more than two
dwelling units, at least 51 percent of the units must be so occupied.
Where two or more rental buildings being assisted are or will be located
on the same or contiguous properties, and the buildings will be under
common ownership and management, the grouped buildings may be considered
for this purpose as a single structure. Where housing activities being
assisted meet the requirements of paragraph Sec. 570.208 (d)(5)(ii) or
(d)(6)(ii) of this section, all such housing may also be considered for
this purpose as a single structure. For rental housing, occupancy by low
and moderate income households must be at affordable rents to qualify
under this criterion. The recipient shall adopt and make public its
standards for determining ``affordable rents'' for this purpose. The
following shall also qualify under this criterion:
(i) When less than 51 percent of the units in a structure will be
occupied by low and moderate income households, CDBG assistance may be
provided in the following limited circumstances:
(A) The assistance is for an eligible activity to reduce the
development cost of the new construction of a multifamily, non-elderly
rental housing project;
(B) Not less than 20 percent of the units will be occupied by low
and moderate income households at affordable rents; and
(C) The proportion of the total cost of developing the project to be
borne by CDBG funds is no greater than the proportion of units in the
project that will be occupied by low and moderate income households.
(ii) When CDBG funds are used to assist rehabilitation eligible
under Sec. 570.202(b)(9) or (10) in direct support of the recipient's
Rental Rehabilitation program authorized under 24 CFR part 511, such
funds shall be considered to benefit low and moderate income persons
where not less than 51 percent of the units assisted, or to be assisted,
by the recipient's Rental Rehabilitation program overall are for low and
moderate income persons.
(iii) When CDBG funds are used for housing services eligible under
Sec. 570.201(k), such funds shall be considered to benefit low- and
moderate-income persons if the housing units for which the services are
provided are HOME-assisted and the requirements at 24 CFR 92.252 or
92.254 are met.
(4) Job creation or retention activities. An activity designed to
create or retain permanent jobs where at least 51 percent of the jobs,
computed on a full time equivalent basis, involve the employment of low-
and moderate-income
[[Page 34]]
persons. To qualify under this paragraph, the activity must meet the
following criteria:
(i) For an activity that creates jobs, the recipient must document
that at least 51 percent of the jobs will be held by, or will be
available to, low- and moderate-income persons.
(ii) For an activity that retains jobs, the recipient must document
that the jobs would actually be lost without the CDBG assistance and
that either or both of the following conditions apply with respect to at
least 51 percent of the jobs at the time the CDBG assistance is
provided:
(A) The job is known to be held by a low- or moderate-income person;
or
(B) The job can reasonably be expected to turn over within the
following two years and that steps will be taken to ensure that it will
be filled by, or made available to, a low- or moderate-income person
upon turnover.
(iii) Jobs that are not held or filled by a low- or moderate-income
person may be considered to be available to low- and moderate-income
persons for these purposes only if:
(A) Special skills that can only be acquired with substantial
training or work experience or education beyond high school are not a
prerequisite to fill such jobs, or the business agrees to hire
unqualified persons and provide training; and
(B) The recipient and the assisted business take actions to ensure
that low- and moderate-income persons receive first consideration for
filling such jobs.
(iv) For purposes of determining whether a job is held by or made
available to a low- or moderate-income person, the person may be
presumed to be a low- or moderate-income person if:
(A) He/she resides within a census tract (or block numbering area)
that either:
(1) Meets the requirements of paragraph (a)(4)(v) of this section;
or
(2) Has at least 70 percent of its residents who are low- and
moderate-income persons; or
(B) The assisted business is located within a census tract (or block
numbering area) that meets the requirements of paragraph (a)(4)(v) of
this section and the job under consideration is to be located within
that census tract.
(v) A census tract (or block numbering area) qualifies for the
presumptions permitted under paragraphs (a)(4)(iv)(A)(1) and (B) of this
section if it is either part of a Federally-designated Empowerment Zone
or Enterprise Community or meets the following criteria:
(A) It has a poverty rate of at least 20 percent as determined by
the most recently available decennial census information;
(B) It does not include any portion of a central business district,
as this term is used in the most recent Census of Retail Trade, unless
the tract has a poverty rate of at least 30 percent as determined by the
most recently available decennial census information; and
(C) It evidences pervasive poverty and general distress by meeting
at least one of the following standards:
(1) All block groups in the census tract have poverty rates of at
least 20 percent;
(2) The specific activity being undertaken is located in a block
group that has a poverty rate of at least 20 percent; or
(3) Upon the written request of the recipient, HUD determines that
the census tract exhibits other objectively determinable signs of
general distress such as high incidence of crime, narcotics use,
homelessness, abandoned housing, and deteriorated infrastructure or
substantial population decline.
(vi) As a general rule, each assisted business shall be considered
to be a separate activity for purposes of determining whether the
activity qualifies under this paragraph, except:
(A) In certain cases such as where CDBG funds are used to acquire,
develop or improve a real property (e.g., a business incubator or an
industrial park) the requirement may be met by measuring jobs in the
aggregate for all the businesses which locate on the property, provided
such businesses are not otherwise assisted by CDBG funds.
(B) Where CDBG funds are used to pay for the staff and overhead
costs of an entity making loans to businesses exclusively from non-CDBG
funds, this requirement may be met by aggregating the jobs created by
all of the
[[Page 35]]
businesses receiving loans during each program year.
(C) Where CDBG funds are used by a recipient or subrecipient to
provide technical assistance to businesses, this requirement may be met
by aggregating the jobs created or retained by all of the businesses
receiving technical assistance during each program year.
(D) Where CDBG funds are used for activities meeting the criteria
listed at Sec. 570.209(b)(2)(v), this requirement may be met by
aggregating the jobs created or retained by all businesses for which
CDBG assistance is obligated for such activities during the program
year, except as provided at paragraph (d)(7) of this section.
(E) Where CDBG funds are used by a Community Development Financial
Institution to carry out activities for the purpose of creating or
retaining jobs, this requirement may be met by aggregating the jobs
created or retained by all businesses for which CDBG assistance is
obligated for such activities during the program year, except as
provided at paragraph (d)(7) of this section.
(F) Where CDBG funds are used for public facilities or improvements
which will result in the creation or retention of jobs by more than one
business, this requirement may be met by aggregating the jobs created or
retained by all such businesses as a result of the public facility or
improvement.
(1) Where the public facility or improvement is undertaken
principally for the benefit of one or more particular businesses, but
where other businesses might also benefit from the assisted activity,
the requirement may be met by aggregating only the jobs created or
retained by those businesses for which the facility/improvement is
principally undertaken, provided that the cost (in CDBG funds) for the
facility/improvement is less than $10,000 per permanent full-time
equivalent job to be created or retained by those businesses.
(2) In any case where the cost per job to be created or retained (as
determined under paragraph (a)(4)(vi)(F)(1) of this section) is $10,000
or more, the requirement must be met by aggregating the jobs created or
retained as a result of the public facility or improvement by all
businesses in the service area of the facility/improvement. This
aggregation must include businesses which, as a result of the public
facility/improvement, locate or expand in the service area of the
facility/improvement between the date the recipient identifies the
activity in its action plan under part 91 of this title and the date one
year after the physical completion of the facility/improvement. In
addition, the assisted activity must comply with the public benefit
standards at Sec. 570.209(b).
(b) Activities which aid in the prevention or elimination of slums
or blight. Activities meeting one or more of the following criteria, in
the absence of substantial evidence to the contrary, will be considered
to aid in the prevention or elimination of slums or blight:
(1) Activities to address slums or blight on an area basis. An
activity will be considered to address prevention or elimination of
slums or blight in an area if:
(i) The area, delineated by the recipient, meets a definition of a
slum, blighted, deteriorated or deteriorating area under State or local
law;
(ii) The area also meets the conditions in either paragraph (A) or
(B):
(A) At least 25 percent of properties throughout the area experience
one or more of the following conditions:
(1) Physical deterioration of buildings or improvements;
(2) Abandonment of properties;
(3) Chronic high occupancy turnover rates or chronic high vacancy
rates in commercial or industrial buildings;
(4) Significant declines in property values or abnormally low
property values relative to other areas in the community; or
(5) Known or suspected environmental contamination.
(B) The public improvements throughout the area are in a general
state of deterioration.
(iii) Documentation is to be maintained by the recipient on the
boundaries of the area and the conditions and standards used that
qualified the area at the time of its designation. The recipient shall
establish definitions of the conditions listed at
[[Page 36]]
Sec. 570.208(b)(1)(ii)(A), and maintain records to substantiate how the
area met the slums or blighted criteria. The designation of an area as
slum or blighted under this section is required to be redetermined every
10 years for continued qualification. Documentation must be retained
pursuant to the recordkeeping requirements contained at Sec. 570.506
(b)(8)(ii).
(iv) The assisted activity addresses one or more of the conditions
which contributed to the deterioration of the area. Rehabilitation of
residential buildings carried out in an area meeting the above
requirements will be considered to address the area's deterioration only
where each such building rehabilitated is considered substandard under
local definition before rehabilitation, and all deficiencies making a
building substandard have been eliminated if less critical work on the
building is undertaken. At a minimum, the local definition for this
purpose must be such that buildings that it would render substandard
would also fail to meet the housing quality standards for the Section 8
Housing Assistance Payments Program-Existing Housing (24 CFR 882.109).
(2) Activities to address slums or blight on a spot basis. The
following activities may be undertaken on a spot basis to eliminate
specific conditions of blight, physical decay, or environmental
contamination that are not located in a slum or blighted area:
acquisition; clearance; relocation; historic preservation; remediation
of environmentally contaminated properties; or rehabilitation of
buildings or improvements. However, rehabilitation must be limited to
eliminating those conditions that are detrimental to public health and
safety. If acquisition or relocation is undertaken, it must be a
precursor to another eligible activity (funded with CDBG or other
resources) that directly eliminates the specific conditions of blight or
physical decay, or environmental contamination.
(3) Activities to address slums or blight in an urban renewal area.
An activity will be considered to address prevention or elimination of
slums or blight in an urban renewal area if the activity is:
(i) Located within an urban renewal project area or Neighborhood
Development Program (NDP) action area; i.e., an area in which funded
activities were authorized under an urban renewal Loan and Grant
Agreement or an annual NDP Funding Agreement, pursuant to title I of the
Housing Act of 1949; and
(ii) Necessary to complete the urban renewal plan, as then in
effect, including initial land redevelopment permitted by the plan.
Note: Despite the restrictions in (b) (1) and (2) of this section,
any rehabilitation activity which benefits low and moderate income
persons pursuant to paragraph (a)(3) of this section can be undertaken
without regard to the area in which it is located or the extent or
nature of rehabilitation assisted.
(c) Activities designed to meet community development needs having a
particular urgency. In the absence of substantial evidence to the
contrary, an activity will be considered to address this objective if
the recipient certifies that the activity is designed to alleviate
existing conditions which pose a serious and immediate threat to the
health or welfare of the community which are of recent origin or which
recently became urgent, that the recipient is unable to finance the
activity on its own, and that other sources of funding are not
available. A condition will generally be considered to be of recent
origin if it developed or became critical within 18 months preceding the
certification by the recipient.
(d) Additional criteria. (1) Where the assisted activity is
acquisition of real property, a preliminary determination of whether the
activity addresses a national objective may be based on the planned use
of the property after acquisition. A final determination shall be based
on the actual use of the property, excluding any short-term, temporary
use. Where the acquisition is for the purpose of clearance which will
eliminate specific conditions of blight or physical decay, the clearance
activity shall be considered the actual use of the property. However,
any subsequent use or disposition of the cleared property shall be
treated as a ``change of use'' under Sec. 570.505.
(2) Where the assisted activity is relocation assistance that the
recipient is required to provide, such relocation
[[Page 37]]
assistance shall be considered to address the same national objective as
is addressed by the displacing activity. Where the relocation assistance
is voluntary on the part of the grantee the recipient may qualify the
assistance either on the basis of the national objective addressed by
the displacing activity or on the basis that the recipients of the
relocation assistance are low and moderate income persons.
(3) In any case where the activity undertaken for the purpose of
creating or retaining jobs is a public improvement and the area served
is primarily residential, the activity must meet the requirements of
paragraph (a)(1) of this section as well as those of paragraph (a)(4) of
this section in order to qualify as benefiting low and moderate income
persons.
(4) CDBG funds expended for planning and administrative costs under
Sec. 570.205 and Sec. 570.206 will be considered to address the national
objectives.
(5) Where the grantee has elected to prepare an area revitalization
strategy pursuant to the authority of Sec. 91.215(e) of this title and
HUD has approved the strategy, the grantee may also elect the following
options:
(i) Activities undertaken pursuant to the strategy for the purpose
of creating or retaining jobs may, at the option of the grantee, be
considered to meet the requirements of this paragraph under the criteria
at paragraph (a)(1)(vii) of this section in lieu of the criteria at
paragraph (a)(4) of this section; and
(ii) All housing activities in the area for which, pursuant to the
strategy, CDBG assistance is obligated during the program year may be
considered to be a single structure for purposes of applying the
criteria at paragraph (a)(3) of this section.
(6) Where CDBG-assisted activities are carried out by a Community
Development Financial Institution whose charter limits its investment
area to a primarily residential area consisting of at least 51 percent
low- and moderate-income persons, the grantee may also elect the
following options:
(i) Activities carried out by the Community Development Financial
Institution for the purpose of creating or retaining jobs may, at the
option of the grantee, be considered to meet the requirements of this
paragraph under the criteria at paragraph (a)(1)(vii) of this section in
lieu of the criteria at paragraph (a)(4) of this section; and
(ii) All housing activities for which the Community Development
Financial Institution obligates CDBG assistance during the program year
may be considered to be a single structure for purposes of applying the
criteria at paragraph (a)(3) of this section.
(7) Where an activity meeting the criteria at Sec. 570.209(b)(2)(v)
may also meet the requirements of either paragraph (d)(5)(i) or
(d)(6)(i) of this section, the grantee may elect to qualify the activity
under either the area benefit criteria at paragraph (a)(1)(vii) of this
section or the job aggregation criteria at paragraph (a)(4)(vi)(D) of
this section, but not both. Where an activity may meet the job
aggregation criteria at both paragraphs (a)(4)(vi)(D) and (E) of this
section, the grantee may elect to qualify the activity under either
criterion, but not both.
[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at
60 FR 1945, Jan. 5, 1995; 60 FR 17445, Apr. 6, 1995; 60 FR 56912, Nov.
9, 1995; 61 FR 18674, Apr. 29, 1996; 71 FR 30035, May 24, 2006; 72 FR
46370, Aug. 17, 2007]
Sec. 570.209 Guidelines for evaluating and selecting economic
development projects.
The following guidelines are provided to assist the recipient to
evaluate and select activities to be carried out for economic
development purposes. Specifically, these guidelines are applicable to
activities that are eligible for CDBG assistance under Sec. 570.203.
These guidelines also apply to activities carried out under the
authority of Sec. 570.204 that would otherwise be eligible under
Sec. 570.203, were it not for the involvement of a Community-Based
Development Organization (CBDO). (This would include activities where a
CBDO makes loans to for-profit businesses.) These guidelines are
composed of two components: guidelines for evaluating project costs and
financial requirements; and standards for evaluating public benefit. The
standards for evaluating public benefit are mandatory, but the
guidelines for evaluating projects costs and financial requirements are
not.
[[Page 38]]
(a) Guidelines and objectives for evaluating project costs and
financial requirements. HUD has developed guidelines that are designed
to provide the recipient with a framework for financially underwriting
and selecting CDBG-assisted economic development projects which are
financially viable and will make the most effective use of the CDBG
funds. These guidelines, also referred to as the underwriting
guidelines, are published as appendix A to this part. The use of the
underwriting guidelines published by HUD is not mandatory. However,
grantees electing not to use these guidelines would be expected to
conduct basic financial underwriting prior to the provision of CDBG
financial assistance to a for-profit business. Where appropriate, HUD's
underwriting guidelines recognize that different levels of review are
appropriate to take into account differences in the size and scope of a
proposed project, and in the case of a microenterprise or other small
business to take into account the differences in the capacity and level
of sophistication among businesses of differing sizes. Recipients are
encouraged, when they develop their own programs and underwriting
criteria, to also take these factors into account. The objectives of the
underwriting guidelines are to ensure:
(1) That project costs are reasonable;
(2) That all sources of project financing are committed;
(3) That to the extent practicable, CDBG funds are not substituted
for non-Federal financial support;
(4) That the project is financially feasible;
(5) That to the extent practicable, the return on the owner's equity
investment will not be unreasonably high; and
(6) That to the extent practicable, CDBG funds are disbursed on a
pro rata basis with other finances provided to the project.
(b) Standards for evaluating public benefit. The grantee is
responsible for making sure that at least a minimum level of public
benefit is obtained from the expenditure of CDBG funds under the
categories of eligibility governed by these guidelines. The standards
set forth below identify the types of public benefit that will be
recognized for this purpose and the minimum level of each that must be
obtained for the amount of CDBG funds used. Unlike the guidelines for
project costs and financial requirements covered under paragraph (a) of
this section, the use of the standards for public benefit is mandatory.
Certain public facilities and improvements eligible under
Sec. 570.201(c) of the regulations, which are undertaken for economic
development purposes, are also subject to these standards, as specified
in Sec. 570.208(a)(4)(vi)(F)(2).
(1) Standards for activities in the aggregate. Activities covered by
these guidelines must, in the aggregate, either:
(i) Create or retain at least one full-time equivalent, permanent
job per $35,000 of CDBG funds used; or
(ii) Provide goods or services to residents of an area, such that
the number of low- and moderate-income persons residing in the areas
served by the assisted businesses amounts to at least one low- and
moderate-income person per $350 of CDBG funds used.
(2) Applying the aggregate standards. (i) A metropolitan city, an
urban county, a non-entitlement CDBG grantee in Hawaii, or an Insular
Area shall apply the aggregate standards under paragraph (b)(1) of this
section to all applicable activities for which CDBG funds are first
obligated within each single CDBG program year, without regard to the
source year of the funds used for the activities. For Insular Areas, the
preceding sentence applies to grants received in program years after
Fiscal Year 2004. A grantee under the HUD-administered Small Cities
Program, or Insular Areas CDBG grants prior to Fiscal Year 2005, shall
apply the aggregate standards under paragraph (b)(1) of this section to
all funds obligated for applicable activities from a given grant;
program income obligated for applicable activities will, for these
purposes, be aggregated with the most recent open grant. For any time
period in which a community has no open HUD-administered or Insular
Areas grants, the aggregate standards shall be applied to all applicable
activities for which program income is obligated during that period.
(ii) The grantee shall apply the aggregate standards to the number
of jobs to be created/retained, or to the
[[Page 39]]
number of persons residing in the area served (as applicable), as
determined at the time funds are obligated to activities.
(iii) Where an activity is expected both to create or retain jobs
and to provide goods or services to residents of an area, the grantee
may elect to count the activity under either the jobs standard or the
area residents standard, but not both.
(iv) Where CDBG assistance for an activity is limited to job
training and placement and/or other employment support services, the
jobs assisted with CDBG funds shall be considered to be created or
retained jobs for the purposes of applying the aggregate standards.
(v) Any activity subject to these guidelines which meets one or more
of the following criteria may, at the grantee's option, be excluded from
the aggregate standards described in paragraph (b)(1) of this section:
(A) Provides jobs exclusively for unemployed persons or participants
in one or more of the following programs:
(1) Jobs Training Partnership Act (JTPA);
(2) Jobs Opportunities for Basic Skills (JOBS); or
(3) Aid to Families with Dependent Children (AFDC);
(B) Provides jobs predominantly for residents of Public and Indian
Housing units;
(C) Provides jobs predominantly for homeless persons;
(D) Provides jobs predominantly for low-skilled, low- and moderate-
income persons, where the business agrees to provide clear opportunities
for promotion and economic advancement, such as through the provision of
training;
(E) Provides jobs predominantly for persons residing within a census
tract (or block numbering area) that has at least 20 percent of its
residents who are in poverty;
(F) Provides assistance to business(es) that operate(s) within a
census tract (or block numbering area) that has at least 20 percent of
its residents who are in poverty;
(G) Stabilizes or revitalizes a neighborhood that has at least 70
percent of its residents who are low- and moderate-income;
(H) Provides assistance to a Community Development Financial
Institution that serve an area that is predominantly low- and moderate-
income persons;
(I) Provides assistance to a Community-Based Development
Organization serving a neighborhood that has at least 70 percent of its
residents who are low- and moderate-income;
(J) Provides employment opportunities that are an integral component
of a project designed to promote spatial deconcentration of low- and
moderate-income and minority persons;
(K) With prior HUD approval, provides substantial benefit to low-
income persons through other innovative approaches;
(L) Provides services to the residents of an area pursuant to a
strategy approved by HUD under the provisions of Sec. 91.215(e) of this
title;
(M) Creates or retains jobs through businesses assisted in an area
pursuant to a strategy approved by HUD under the provisions of
Sec. 91.215(e) of this title.
(N) Directly involves the economic development or redevelopment of
environmentally contaminated properties.
(3) Standards for individual activities. Any activity subject to
these guidelines which falls into one or more of the following
categories will be considered by HUD to provide insufficient public
benefit, and therefore may under no circumstances be assisted with CDBG
funds:
(i) The amount of CDBG assistance exceeds either of the following,
as applicable:
(A) $50,000 per full-time equivalent, permanent job created or
retained; or
(B) $1,000 per low- and moderate-income person to which goods or
services are provided by the activity.
(ii) The activity consists of or includes any of the following:
(A) General promotion of the community as a whole (as opposed to the
promotion of specific areas and programs);
(B) Assistance to professional sports teams;
(C) Assistance to privately-owned recreational facilities that serve
a predominantly higher-income clientele, where the recreational benefit
to users
[[Page 40]]
or members clearly outweighs employment or other benefits to low- and
moderate-income persons;
(D) Acquisition of land for which the specific proposed use has not
yet been identified; and
(E) Assistance to a for-profit business while that business or any
other business owned by the same person(s) or entity(ies) is the subject
of unresolved findings of noncompliance relating to previous CDBG
assistance provided by the recipient.
(4) Applying the individual activity standards. (i) Where an
activity is expected both to create or retain jobs and to provide goods
or services to residents of an area, it will be disqualified only if the
amount of CDBG assistance exceeds both of the amounts in paragraph
(b)(3)(i) of this section.
(ii) The individual activity standards in paragraph (b)(3)(i) of
this section shall be applied to the number of jobs to be created or
retained, or to the number of persons residing in the area served (as
applicable), as determined at the time funds are obligated to
activities.
(iii) Where CDBG assistance for an activity is limited to job
training and placement and/or other employment support services, the
jobs assisted with CDBG funds shall be considered to be created or
retained jobs for the purposes of applying the individual activity
standards in paragraph (b)(3)(i) of this section.
(c) Amendments to economic development projects after review
determinations. If, after the grantee enters into a contract to provide
assistance to a project, the scope or financial elements of the project
change to the extent that a significant contract amendment is
appropriate, the project should be reevaluated under these and the
recipient's guidelines. (This would include, for example, situations
where the business requests a change in the amount or terms of
assistance being provided, or an extension to the loan payment period
required in the contract.) If a reevaluation of the project indicates
that the financial elements and public benefit to be derived have also
substantially changed, then the recipient should make appropriate
adjustments in the amount, type, terms or conditions of CDBG assistance
which has been offered, to reflect the impact of the substantial change.
(For example, if a change in the project elements results in a
substantial reduction of the total project costs, it may be appropriate
for the recipient to reduce the amount of total CDBG assistance.) If the
amount of CDBG assistance provided to the project is increased, the
amended project must still comply with the public benefit standards
under paragraph (b) of this section.
(d) Documentation. The grantee must maintain sufficient records to
demonstrate the level of public benefit, based on the above standards,
that is actually achieved upon completion of the CDBG-assisted economic
development activity(ies) and how that compares to the level of such
benefit anticipated when the CDBG assistance was obligated. If the
grantee's actual results show a pattern of substantial variation from
anticipated results, the grantee is expected to take all actions
reasonably within its control to improve the accuracy of its
projections. If the actual results demonstrate that the recipient has
failed the public benefit standards, HUD may require the recipient to
meet more stringent standards in future years as appropriate.
[60 FR 1947, Jan. 5, 1995, as amended at 60 FR 17445, Apr. 6, 1995; 71
FR 30035, May 24, 2006; 72 FR 12535, Mar. 15, 2007; 72 FR 46370, Aug.
17, 2007]
Sec. 570.210 Prohibition on use of assistance for employment
relocation activities.
(a) Prohibition. CDBG funds may not be used to directly assist a
business, including a business expansion, in the relocation of a plant,
facility, or operation from one LMA to another LMA if the relocation is
likely to result in a significant loss of jobs in the LMA from which the
relocation occurs.
(b) Definitions. The following definitions apply to this section:
(1) Directly assist. Directly assist means the provision of CDBG
funds for activities pursuant to:
(i) Sec. 570.203(b); or
(ii) Secs. 570.201(a)-(d), 570.201(l), 570.203(a), or Sec. 570.204
when the grantee,
[[Page 41]]
subrecipient, or, in the case of an activity carried out pursuant to
Sec. 570.204, a Community Based Development Organization (CDBO) enters
into an agreement with a business to undertake one or more of these
activities as a condition of the business relocating a facility, plant,
or operation to the grantee's LMA. Provision of public facilities and
indirect assistance that will provide benefit to multiple businesses
does not fall under the definition of ``directly assist,'' unless it
includes the provision of infrastructure to aid a specific business that
is the subject of an agreement with the specific assisted business.
(2) Labor market area (LMA). For metropolitan areas, an LMA is an
area defined as such by the BLS. An LMA is an economically integrated
geographic area within which individuals can live and find employment
within a reasonable distance or can readily change employment without
changing their place of residence. In addition, LMAs are nonoverlapping
and geographically exhaustive. For metropolitan areas, grantees must use
employment data, as defined by the BLS, for the LMA in which the
affected business is currently located and from which current jobs may
be lost. For non-metropolitan areas, an LMA is either an area defined by
the BLS as an LMA, or a state may choose to combine non-metropolitan
LMAs. States are required to define or reaffirm prior definitions of
their LMAs on an annual basis and retain records to substantiate such
areas prior to any business relocation that would be impacted by this
rule. Metropolitan LMAs cannot be combined, nor can a non-metropolitan
LMA be combined with a metropolitan LMA. For the HUD-administered Small
Cities Program, each of the three participating counties in Hawaii will
be considered to be its own LMA. Recipients of Fiscal Year 1999 Small
Cities Program funding in New York will follow the requirements for
State CDBG recipients.
(3) Operation. A business operation includes, but is not limited to,
any equipment, employment opportunity, production capacity or product
line of the business.
(4) Significant loss of jobs. (i) A loss of jobs is significant if:
The number of jobs to be lost in the LMA in which the affected business
is currently located is equal to or greater than one-tenth of one
percent of the total number of persons in the labor force of that LMA;
or in all cases, a loss of 500 or more jobs. Notwithstanding the
aforementioned, a loss of 25 jobs or fewer does not constitute a
significant loss of jobs.
(ii) A job is considered to be lost due to the provision of CDBG
assistance if the job is relocated within three years of the provision
of assistance to the business; or the time period within which jobs are
to be created as specified by the agreement between the business and the
recipient if it is longer than three years.
(c) Written agreement. Before directly assisting a business with
CDBG funds, the recipient, subrecipient, or a CDBO (in the case of an
activity carried out pursuant to Sec. 570.204) shall sign a written
agreement with the assisted business. The written agreement shall
include:
(1) Statement. A statement from the assisted business as to whether
the assisted activity will result in the relocation of any industrial or
commercial plant, facility, or operation from one LMA to another, and,
if so, the number of jobs that will be relocated from each LMA;
(2) Required information. If the assistance will not result in a
relocation covered by this section, a certification from the assisted
business that neither it, nor any of its subsidiaries, has plans to
relocate jobs at the time the agreement is signed that would result in a
significant job loss as defined in this rule; and
(3) Reimbursement of assistance. The agreement shall provide for
reimbursement of any assistance provided to, or expended on behalf of,
the business in the event that assistance results in a relocation
prohibited under this section.
(d) Assistance not covered by this section. This section does not
apply to:
(1) Relocation assistance. Relocation assistance required by the
Uniform Assistance and Real Property Acquisition Policies Act of 1970,
(URA) (42 U.S.C. 4601-4655);
[[Page 42]]
(2) Microenterprises. Assistance to microenterprises as defined by
Section 102(a)(22) of the Housing and Community Development Act of 1974;
and
(3) Arms-length transactions. Assistance to a business that
purchases business equipment, inventory, or other physical assets in an
arms-length transaction, including the assets of an existing business,
provided that the purchase does not result in the relocation of the
sellers' business operation (including customer base or list, goodwill,
product lines, or trade names) from one LMA to another LMA and does not
produce a significant loss of jobs in the LMA from which the relocation
occurs.
[70 FR 76369, Dec. 23, 2005]
Subpart D_Entitlement Grants
Source: 53 FR 34449, Sept. 6, 1988, unless otherwise noted.
Sec. 570.300 General.
This subpart describes the policies and procedures governing the
making of community development block grants to entitlement communities
and to non-entitlement counties in the State of Hawaii. The policies and
procedures set forth in subparts A, C, J, K, and O of this part also
apply to entitlement grantees and to non-entitlement grantees in the
State of Hawaii. Sections 570.307 and 570.308 of this subpart do not
apply to the Hawaii non-entitlement grantees.
[72 FR 46370, Aug. 17, 2007]
Sec. 570.301 Activity locations and float-funding.
The consolidated plan, action plan, and amendment submission
requirements referred to in this section are those in 24 CFR part 91.
(a) For activities for which the grantee has not yet decided on a
specific location, such as when the grantee is allocating an amount of
funds to be used for making loans or grants to businesses or for
residential rehabilitation, the description in the action plan or any
amendment shall identify who may apply for the assistance, the process
by which the grantee expects to select who will receive the assistance
(including selection criteria), and how much and under what terms the
assistance will be provided, or in the case of a planned public facility
or improvement, how it expects to determine its location.
(b) Float-funded activities and guarantees. A recipient may use
undisbursed funds in the line of credit and its CDBG program account
that are budgeted in statements or action plans for one or more other
activities that do not need the funds immediately, subject to the
limitations described below. Such funds shall be referred to as the
``float'' for purposes of this section and the action plan. Each
activity carried out using the float must meet all of the same
requirements that apply to CDBG-assisted activities generally, and must
be expected to produce program income in an amount at least equal to the
amount of the float so used. Whenever the recipient proposes to fund an
activity with the float, it must include the activity in its action plan
or amend the action plan for the current program year. For purposes of
this section, an activity that uses such funds will be called a ``float-
funded activity.''
(1) Each float-funded activity must be individually listed and
described as such in the action plan.
(2)(i) The expected time period between obligation of assistance for
a float-funded activity and receipt of program income in an amount at
least equal to the full amount drawn from the float to fund the activity
may not exceed 2.5 years. An activity from which program income
sufficient to recover the full amount of the float assistance is
expected to be generated more than 2.5 years after obligation may not be
funded from the float, but may be included in an action plan if it is
funded from CDBG funds other than the float (e.g., grant funds or
proceeds from an approved Section 108 loan guarantee).
(ii) Any extension of the repayment period for a float-funded
activity shall be considered to be a new float-funded activity for these
purposes and may be implemented by the grantee only if the extension is
made subject to the same limitations and requirements as apply to a new
float-funded activity.
[[Page 43]]
(3) Unlike other projected program income, the full amount of income
expected to be generated by a float-funded activity must be shown as a
source of program income in the action plan containing the activity,
whether or not some or all of the income is expected to be received in a
future program year (in accordance with 24 CFR 91.220(g)(1)(ii)(D)).
(4) The recipient must also clearly declare in the action plan that
identifies the float-funded activity the recipient's commitment to
undertake one of the following options:
(i) Amend or delete activities in an amount equal to any default or
failure to produce sufficient income in a timely manner. If the
recipient makes this choice, it must include a description of the
process it will use to select the activities to be amended or deleted
and how it will involve citizens in that process; and it must amend the
applicable statement(s) or action plan(s) showing those amendments or
deletions promptly upon determining that the float-funded activity will
not generate sufficient or timely program income;
(ii) Obtain an irrevocable line of credit from a commercial lender
for the full amount of the float-funded activity and describe the lender
and terms of such line of credit in the action plan that identifies the
float-funded activity. To qualify for this purpose, such line of credit
must be unconditionally available to the recipient in the amount of any
shortfall within 30 days of the date that the float-funded activity
fails to generate the projected amount of program income on schedule;
(iii) Transfer general local government funds in the full amount of
any default or shortfall to the CDBG line of credit within 30 days of
the float-funded activity's failure to generate the projected amount of
the program income on schedule; or
(iv) A method approved in writing by HUD for securing timely return
of the amount of the float funding. Such method must ensure that funds
are available to meet any default or shortfall within 30 days of the
float-funded activity's failure to generate the projected amount of the
program income on schedule.
(5) When preparing an action plan for a year in which program income
is expected to be received from a float-funded activity, and such
program income has been shown in a prior statement or action plan, the
current action plan shall identify the expected income and explain that
the planned use of the income has already been described in prior
statements or action plans, and shall identify the statements or action
plans in which such descriptions may be found.
[60 FR 56913, Nov. 9, 1995]
Sec. 570.302 Submission requirements.
In order to receive its annual CDBG entitlement grant, a grantee
must submit a consolidated plan in accordance with 24 CFR part 91. That
part includes requirements for the content of the consolidated plan, for
the process of developing the consolidated plan, including citizen
participation provisions, for the submission date, for HUD approval, and
for the amendment process.
(Approved by the Office of Management and Budget under control number
2506-0117)
[60 FR 1915, Jan. 5, 1995]
Sec. 570.303 Certifications.
The jurisdiction must make the certifications that are set forth in
24 CFR part 91 as part of the consolidated plan.
(Approved by the Office of Management and Budget under control number
2506-0117)
[60 FR 1915, Jan. 5, 1995]
Sec. 570.304 Making of grants.
(a) Approval of grant. HUD will approve a grant if the
jurisdiction's submissions have been made and approved in accordance
with 24 CFR part 91, and the certifications required therein are
satisfactory to the Secretary. The certifications will be satisfactory
to the Secretary for this purpose unless the Secretary has determined
pursuant to subpart O of this part that the grantee has not complied
with the requirements of this part, has failed to carry out its
consolidated plan as provided under Sec. 570.903, or has determined that
there is evidence, not directly involving the grantee's past performance
[[Page 44]]
under this program, that tends to challenge in a substantial manner the
grantee's certification of future performance. If the Secretary makes
any such determination, however, further assurances may be required to
be submitted by the grantee as the Secretary may deem warranted or
necessary to find the grantee's certification satisfactory.
(b) Grant agreement. The grant will be made by means of a grant
agreement executed by both HUD and the grantee.
(c) Grant amount. The Secretary will make a grant in the full
entitlement amount, generally within the last 30 days of the grantee's
current program year, unless:
(1) Either the consolidated plan is not received by August 16 of the
federal fiscal year for which funds are appropriated or the consolidated
plan is not approved under 24 CFR part 91, subpart F--in which case, the
grantee will forfeit the entire entitlement amount; or
(2) The grantee's performance does not meet the performance
requirements or criteria prescribed in subpart O and the grant amount is
reduced.
[53 FR 34449, Sept. 6, 1988, as amended at 60 FR 1915, Jan. 5, 1995; 60
FR 16379, Mar. 30, 1995; 60 FR 56913, Nov. 9, 1995]
Sec. 570.307 Urban counties.
(a) Determination of qualification. The Secretary will determine the
qualifications of counties to receive entitlements as urban counties
upon receipt of qualification documentation from counties at such time,
and in such manner and form as prescribed by HUD. The Secretary shall
determine eligibility and applicable portions of each eligible county
for purposes of fund allocation under section 106 of the Act on the
basis of information available from the U.S. Bureau of the Census with
respect to population and other pertinent demographic characteristics,
and based on information provided by the county and its included units
of general local government.
(b) Qualification as an urban county. (1) A county will qualify as
an urban county if such county meets the definition at Sec. 570.3(3). As
necessitated by this definition, the Secretary shall determine which
counties have authority to carry out essential community development and
housing assistance activities in their included units of general local
government without the consent of the local governing body and which
counties must execute cooperation agreements with such units to include
them in the urban county for qualification and grant calculation
purposes.
(2) At the time of urban county qualification, HUD may refuse to
recognize the cooperation agreement of a unit of general local
government in an urban county where, based on past performance and other
available information, there is substantial evidence that such unit does
not cooperate in the implementation of the essential community
development or housing assistance activities or where legal impediments
to such implementation exist, or where participation by a unit of
general local government in noncompliance with the applicable law in
subpart K would constitute noncompliance by the urban county. In such a
case, the unit of general local government will not be permitted to
participate in the urban county, and its population or other needs
characteristics will not be considered in the determination of whether
the county qualifies as an urban county or in determining the amount of
funds to which the urban county may be entitled. HUD will not take this
action unless the unit of general local government and the county have
been given an opportunity to challenge HUD's determination and to
informally consult with HUD concerning the proposed action.
(c) Essential activities. For purposes of this section, the term
``essential community development and housing assistance activities''
means community renewal and lower income housing activities,
specifically urban renewal and publicly assisted housing. In determining
whether a county has the required powers, the Secretary will consider
both its authority and, where applicable, the authority of its
designated agency or agencies.
(d) Period of qualification. (1) The qualification by HUD of an
urban county shall remain effective for three successive Federal fiscal
years regardless of changes in its population during that period, except
as provided under
[[Page 45]]
paragraph (f) of this section and except as provided under Sec. 570.3(3)
where the period of qualification shall be two successive Federal fiscal
years.
(2) During the period of qualification, no included unit of general
local government may withdraw from nor be removed from the urban county
for HUD's grant computation purposes.
(3) If some portion of an urban county's unincorporated area becomes
incorporated during the urban county qualification period, the newly
incorporated unit of general local government shall not be excluded from
the urban county nor shall it be eligible for a separate grant under
subpart D, F, or I until the end of the urban county's current
qualification period, unless the urban county fails to receive a grant
for any year during that qualification period.
(e) Grant ineligibility of included units of general local
government. (1) An included unit of general local government cannot
become eligible for an entitlement grant as a metropolitan city during
the period of qualification of the urban county (even if it becomes a
principal city of a metropolitan area or its population surpasses 50,000
during that period). Rather, such a unit of general local government
shall continue to be included as part of the urban county for the
remainder of the urban county's qualification period, and no separate
grant amount shall be calculated for the included unit.
(2) An included unit of general local government which is part of an
urban county shall be ineligible to apply for grants under subpart F, or
to be a recipient of assistance under subpart I, during the entire
period of urban county qualification.
(f) Failure of an urban county to receive a grant. Failure of an
urban county to receive a grant during any year shall terminate the
existing qualification of that urban county, and that county shall
requalify as an urban county before receiving an entitlement grant in
any successive Federal fiscal year. Such termination shall release units
of general local government included in the urban county, in subsequent
years, from the prohibition to receive grants under paragraphs (d)(3),
(e)(1) and (e)(2) of this section. For this purpose an urban county
shall be deemed to have received a grant upon having satisfied the
requirements of sections 104 (a), (b), (c), and (d) of the Act, without
regard to adjustments which may be made to this grant amount under
section 104(e) or 111 of the Act.
(g) Notifications of the opportunity to be excluded. Any county
seeking to qualify for an entitlement grant as an urban county for any
Federal fiscal year shall notify each unit of general local government
which is located, in whole or in part, within the county and which would
otherwise be included in the urban county, but which is eligible to
elect to have its population excluded from that of the urban county,
that it has the opportunity to make such an election, and that such an
election, or the failure to make such an election, shall be effective
for the period for which the county qualifies as an urban county. These
notifications shall be made by a date specified by HUD. A unit of
general local government which elects to be excluded from participation
as a part of the urban county shall notify the county and HUD in writing
by a date specified by HUD. Such a unit of government may subsequently
elect to participate in the urban county for the remaining one or two
year period by notifying HUD and the county, in writing, of such
election by a date specified by HUD.
[53 FR 34449, Sept. 6, 1988, as amended at 56 FR 56127, Oct. 31, 1991;
68 FR 69582, Dec. 12, 2003]
Sec. 570.308 Joint requests.
(a) Joint requests and cooperation agreements. (1) Any urban county
and any metropolitan city located, in whole or in part, within that
county may submit a joint request to HUD to approve the inclusion of the
metropolitan city as a part of the urban county for purposes of planning
and implementing a joint community development and housing program. Such
a joint request shall only be considered if submitted at the time the
county is seeking a three year qualification or requalification as an
urban county. Such a joint request shall, upon approval by HUD, remain
effective for the period for which the county is qualified
[[Page 46]]
as an urban county. An urban county may be joined by more than one
metropolitan city, but a metropolitan city located in more than one
urban county may only be included in one urban county for any program
year. A joint request shall be deemed approved by HUD unless HUD
notifies the city and the county of its disapproval and the reasons
therefore within 30 days of receipt of the request by HUD.
(2) Each metropolitan city and urban county submitting a joint
request shall submit an executed cooperation agreement to undertake or
to assist in the undertaking of essential community development and
housing assistance activities, as defined in Sec. 570.307(c).
(b) Joint grant amount. The grant amount for a joint recipient shall
be the sum of the amounts authorized for the individual entitlement
grantees, as described in section 106 of the Act. The urban county shall
be the grant recipient.
(c) Effect of inclusion. Upon urban county qualification and HUD
approval of the joint request and cooperation agreement, the
metropolitan city shall be considered a part of the urban county for
purposes of program planning and implementation for the period of the
urban county qualification, and shall be treated the same as any other
unit of general local government which is part of the urban county.
(d) Submission requirements. In requesting a grant under this part,
the urban county shall make a single submission which meets the
submission requirements of 24 CFR part 91 and covers all members of the
joint recipient.
[53 FR 34449, Sept. 6, 1988, as amended at 60 FR 1915, Jan. 5, 1995]
Sec. 570.309 Restriction on location of activities.
CDBG funds may assist an activity outside the jurisdiction of the
grantee only if the grantee determines that such an activity is
necessary to further the purposes of the Act and the recipient's
community development objectives, and that reasonable benefits from the
activity will accrue to residents within the jurisdiction of the
grantee. The grantee shall document the basis for such determination
prior to providing CDBG funds for the activity.
[60 FR 56914, Nov. 9, 1995]
Subpart E_Special Purpose Grants
Sec. 570.400 General.
(a) Applicability. The policies and procedures set forth in subparts
A, C, J, K, and O of this part shall apply to this subpart, except to
the extent that they are specifically modified or augmented by the
contents of this subpart, including specified exemptions described
herein. The HUD Environmental Review Procedures contained in 24 CFR part
58 also apply to this subpart, unless otherwise specifically provided
herein.
(b) Data. Wherever data are used in this subpart for selecting
applicants for assistance or for determining grant amounts, the source
of such data shall be the most recent information available from the
U.S. Bureau of the Census which is referable to the same point or period
of time.
(c) Review of applications for discretionary assistance--(1) Review
components. An application for assistance under this subpart shall be
reviewed by HUD to ensure that:
(i) The application is postmarked or received on or before any final
date established by HUD;
(ii) The application is complete;
(iii) Required certifications have been included in the application;
and
(iv) The application meets the specific program requirements listed
in the Federal Register Notice published in connection with a
competition for funding, and any other specific requirements listed
under this subpart for each of the programs.
(2) Timing and review. HUD is not required by the Act to review and
approve an application for assistance or a contract proposal within any
specified time period. However, HUD will attempt to complete its review
of any application/proposal within 75 days.
(3) Notification to applicant/proposer. HUD will notify the
applicant/proposer in writing that the applicant/proposal has been
approved, partially approved,
[[Page 47]]
or disapproved. If an application/proposal is partially approved or
disapproved, the applicant/proposer will be informed of the basis for
HUD's decision. HUD may make conditional approvals under
Sec. 570.304(d).
(d) Program amendments. (1) Recipients shall request prior written
HUD approval for all program amendments involving changes in the scope
or the location of approved activities.
(2) Any program amendments, whether or not they require HUD
approval, must be fully documented in the recipient's records.
(e) Performance reports. Any performance report required of a
discretionary assistance recipient shall be submitted in the form
specified in this subpart, in the award document, or (if the report
relates to a specific competition for an assistance award) in a form
specified in a Notice published in the Federal Register.
(f) Performance reviews and findings. HUD may review the recipient's
performance in carrying out the activities for which assistance is
provided in a timely manner and in accordance with its approved
application, all applicable requirements of this part and the terms of
the assistance agreement. Findings of performance deficiencies may be
cause for appropriate corrective and remedial actions under
Sec. 570.910.
(g) Funding sanctions. Following notice and opportunity for informal
consultation, HUD may withhold, reduce or terminate the assistance where
any corrective or remedial actions taken under Sec. 570.910 fail to
remedy a recipient's performance deficiencies, and the deficiencies are
sufficiently substantial, in the judgment of HUD, to warrant sanctions.
(h) Publication of availability of funds. HUD will publish by Notice
in the Federal Register each year the amount of funds available for the
special purpose grants authorized by each section under this subpart.
[50 FR 37525, Sept. 16, 1985, as amended at 56 FR 18968, Apr. 24, 1991]
Sec. 570.401 Community adjustment and economic diversification
planning assistance.
(a) General--(1) Purpose. The purpose of this program is to assist
units of general local government in nonentitlement areas to undertake
the planning of community adjustments and economic diversification
activities, in response to physical, social, economic or governmental
impacts on the communities generated by the actions of the Department of
Defense (DoD) defined in paragraph (a)(2) of this section.
(2) Impacts. Funding under this section is available only to
communities affected by one or more of the following DoD-related
impacts:
(i) The proposed or actual establishment, realignment, or closure of
a military installation;
(ii) The cancellation or termination of a DoD contract or the
failure to proceed with an approved major weapon system program;
(iii) A publicly announced planned major reduction in DoD spending
that would directly and adversely affect a unit of general local
government and result in the loss of 1,000 or more full-time DoD and
contractor employee positions over a five-year period in the unit of
general local government and the surrounding area; or
(iv) The Secretary of HUD (in consultation with the Secretary of
DoD) determines that an action described in paragraphs (a)(2)(i)-(iii)
of this section is likely to have a direct and significant adverse
consequence on the unit of general local government.
(3) Form of awards. Planning assistance will be awarded in the form
of grants.
(4) Program administration. HUD will publish in the Federal Register
early in each fiscal year the amount of funds to be available for that
fiscal year for awards under this section. HUD will accept applications
throughout the fiscal year, and will review and consider for funding
each application according to the threshold and qualifying factors in
paragraphs (f) and (g) of this section.
(b) Definitions. In addition to the definitions in Sec. 570.3 of
this part, the following definitions apply to this section:
[[Page 48]]
(1) Adjustment planning. Generally, developing plans and proposals
in direct response to contraction or expansion of the local economy, or
changes in the physical development or the social conditions of the
community, resulting from a DoD-generated impact. Typically, this
planning includes one or more of the following tasks: Collecting,
updating, and analyzing data; identifying problems; formulating
solutions; proposing long- and short-term policies; recommending public-
and private-sector actions to implement community adjustments and
economic diversification activities; securing citizen involvement; and
coordinating with Federal, State, and local entities with respect to the
DoD-related impacts.
(2) Community adjustment. Any proposed action to change the
physical, economic, or social infrastructure within the jurisdiction or
surrounding area, directly and appropriately in response to the DoD-
generated impact.
(3) Contract. (i) Any defense contract in an amount not less than $5
million (without regard to the date on which the contract was awarded);
and
(ii) Any subcontract that is entered into in connection with a
contract (without regard to the effective date of the subcontract) and
involves not less than $500,000.
(4) Defense facility. Any private facility producing goods or
services pursuant to a defense contract.
(5) DoD. The Department of Defense.
(6) Economic diversification activities. Any public or private
sector actions to change the local mix of industrial, commercial, and
service sectors, or the mix of business ventures within a sector, that
are intended to mitigate decline in the local economy resulting from
DoD-generated impacts or, in the case of expansion of a military
installation or a defense facility, that are intended to respond to new
economic growth spawned by that expansion.
(7) Military installation. Any camp, post, station, base, yard, or
other jurisdiction of a military department that is located within any
of the several States, the District of Columbia, the Commonwealth of
Puerto Rico, or Guam.
(8) Realignment. Any action that both reduces and relocates
functions and civilian personnel positions, but does not include a
reduction in force resulting from workload adjustments, reduced
personnel or funding levels, or skill imbalances.
(9) Section 107 means section 107 of the Housing and Community
Development Act of 1974, 42 U.S.C. 5307. Section 107(b)(6) was added by
section 801 of the Housing and Community Development Act of 1992 (Pub.
L. 102-550, approved October 28, 1992).
(10) Section 2391(b). The Department of Defense adjustment planning
program as set out in 10 U.S.C. 2391(b).
(11) Small Cities CDBG Program. The Community Development Block
Grant program for nonentitlement areas in which the States have elected
not to administer available program funds. The regulations governing
this program are set out in subpart F of this part.
(12) Surrounding area. The labor market area as defined by the
Bureau of Labor Statistics that:
(i) Includes all or part of the applicant's jurisdictions; and
(ii) Includes additional areas outside the jurisdiction.
(c) Eligible applicants. Any unit of general local government,
excluding units of general government that are entitlement cities or are
included in an urban county, and which does not include Indian Tribes.
(d) Eligible activities. Activities eligible for adjustment planning
assistance include, generally:
(1) Initial assessments and quick studies of physical, social,
economic, and fiscal impacts on the community;
(2) Preliminary identification of potential public and private
sector actions needed for the community to initiate its response;
(3) If timely, modification of the applicant's current comprehensive
plan or any functional plan, such as for housing, including shelter for
the homeless, or for transportation or other physical infrastructure;
(4) If timely, modification of the applicant's current economic
plans and programs, such as for business development, job training, or
industrial or commercial development;
[[Page 49]]
(5) Preparation for and conduct of initial community outreach
activities to begin involving local citizens and the private sector in
planning for adjustment and diversification;
(6) Environmental reviews related to DoD-related impacts;
(7) Initial identification of and coordination with Federal, State
and local entities that may be expected to assist in the community's
adjustment and economic development; and with State-designated
enterprise zones, and Federal empowerment zones and enterprise
communities when selected and announced.
(8) Any other planning activity that may enable the community to
organize itself, establish a start-up capacity to plan, propose specific
plans and programs, coordinate with appropriate public or private
entities, or qualify more quickly for the more substantial planning
assistance available from DoD.
(e) Ineligible activities. Activities ineligible for adjustment
planning assistance are:
(1) Base re-use planning.
(2) Site planning, architectural and engineering studies,
feasibility and cost analyses and similar planning for specific projects
to implement community adjustment or economic diversification, unless as
last resort funding for those applicants which are unable to obtain
planning assistance from other sources.
(3) Planning by communities which are encroaching on military
installations.
(4) Demonstration planning activities intended to evolve new
planning techniques for impacted communities.
(5) Any planning activity proposed to supplement or replace planning
that has been or is being assisted by the DoD Sec. 2391(b) adjustment
planning program.
(6) Any other planning activity the purpose of which is not
demonstrably in direct response to a DOD-related impact triggered by one
or more of the four criteria specified in paragraph (a)(2) of this
section.
(f) Threshold requirements. No application will qualify for funding
unless it meets the following requirements:
(1) Verification by HUD that the applicant is a unit of general
government in a nonentitlement area.
(2) Verification by HUD and DoD that a triggering event described in
paragraph (a)(2) of this section has occurred or will occur.
(3) With respect to communities affected by the 49 base closings and
28 realignments listed by the 1991 Base Closure and Realignment
Commission, verification by DoD that it has provided no prior funding
and that the applicant may benefit from start-up planning assistance
from HUD.
(4) Determination by HUD that the proposed planning activities are
eligible.
(5) Determination by HUD that the submission requirements in
paragraph (h) of this section have been satisfied.
(g) Qualifying factors. HUD will make funding decisions on qualified
applications on the basis of the factors listed below, in the order of
such applications received, while program funds remain available. HUD
will also request and consider advise from DoD's Office of Economic
Assistance concerning the relative merits of each application.
(1) The adequacy of the applicant's initial assessment of actual or
probable impacts on the community and the surrounding area;
(2) The adequacy and appropriateness of the start-up planning
envisioned by the applicant in response to the impacts;
(3) The type, extent, and adequacy of coordination that the
applicant has achieved, or plans to achieve, in order to undertake
planning for community adjustment and economic diversification.
(4) The cost-effectiveness of the proposed budget to carry out the
planning work envisioned by the applicant;
(5) The capability of the organization the applicant proposes to do
the planning;
(6) The credentials and experience of the key staff the applicant
proposes to do the planning;
(7) The presence of significant private sector impact, as measured
by the extent to which the DoD-generated impact is projected to decrease
or increase the employment base by 10% or more;
[[Page 50]]
(8) The presence of significant public sector impact, as measured by
the extent to which the DoD-generated impact is projected to decrease or
increase the applicant's capital and operating budgets for the next
fiscal year by 10% or more;
(9) The degree of urgency, to the extent that a suddenly announced
action, e.g. a plant closing, is officially scheduled to occur within a
year of the date of application.
(h) Submission requirements. Applicants may submit applications at
any time to: Director, Office of Technical Assistance, room 7214, 451
Seventh Street, SW., Washington, DC 20410. Each application (an original
and three copies) shall include the following:
(1) The Standard Form SF-424 as a face sheet, signed and dated by a
person authorized to represent and contractually or otherwise commit the
applicant;
(2) A concise title and brief abstract of the proposed planning
work, including the total cost;
(3) A narrative that:
(i) Documents one or more of the triggering events described in
paragraph (a)(2) of this section that qualifies the applicant to apply
for planning assistance for community adjustments and economic
diversification;
(ii) Provides an initial assessment of actual or probable impacts on
the applicant community and the surrounding area;
(iii) Provides an initial assessment of the type and extent of
start-up planning envisioned by the applicant in response to the DoD-
generated impact; and
(iv) Describes the measures by which the applicant has already
coordinated, or plans to coordinate, with the DoD Office of Economic
Assistance, the Economic Development Administration of the Department of
Commerce, the Department of Labor, any military department, or any other
appropriate Federal agency; appropriate State agencies, specifically
including the agency administering the Small Cities CDBG Program;
appropriate State-designated enterprise zones; appropriate Federal
empowerment zones and enterprise communities, when selected and
announced; appropriate other units of general local government in the
nonentitlement area; appropriate businesses, corporations, and defense
facilities concerned with impacts on the applicant community; and
homeless nonprofit organizations, with respect to title V of the Stewart
B. McKinney Act (42 U.S.C. 11411-11412), requiring the Federal property
be considered for use in assisting the homeless.
(4) A Statement of Work describing the specific project tasks
proposed to be undertaken in order to plan for community adjustment and
economic diversification activities;
(5) A proposed budget showing the estimated costs and person-days of
effort for each task, by cost categories, with supporting documentation
of costs and a justification of the person-days of effort;
(6) A description of the qualifications of the proposed technical
staff, including their names and resumes;
(7) A work plan that describes the schedule for accomplishing the
tasks described in the Statement of Work, the time needed to do each
task, and the elapsed time needed for all the tasks; and
(8) Other materials, as prescribed in the application kit; these
materials will include required certifications dealing with: Drug-Free
Workplace Requirements; Disclosure Regarding Payments to Influence
Certain Federal Transactions; and Prohibition Regarding Excessive Force.
(i) Approval procedures--(1) Acceptance. HUD's acceptance of an
application meeting the threshold requirements of paragraph (f) does not
assure a commitment to provide funding or to provide the full amount
requested. HUD may elect to negotiate both proposed tasks and budgets in
order to promote more cost-effective planning.
(2) Notification. HUD will provide notification about whether a
project will be funded, rejected, or held for further consideration by
HUD and DoD.
(3) Form of award. HUD will award funds in the form of grants.
(4) Administration. Project administration will be governed by the
terms of individual awards and by the following provisions of this part:
(i) Subpart A, Sec. 570.5;
[[Page 51]]
(ii) Subpart E, Secs. 570.400(d), (e), (f), and (g);
(iii) Subpart J, Secs. 570.500(c), 570.501, 570.502, 570.503, and
570.509;
(iv) Subpart K, Secs. 570.601, 570.602, 570.609, 570.610, and
570.611.
The environmental review requirements of 24 CFR part 58 do not apply.
(Approved by the Office of Management and Budget under control number
2535-0084)
[59 FR 15016, Mar. 30, 1994]
Sec. 570.402 Technical assistance awards.
(a) General. (1) The purpose of the Community Development Technical
Assistance Program is to increase the effectiveness with which States,
units of general local government, and Indian tribes plan, develop, and
administer assistance under title I and section 810 of the Act. Title I
programs are the Entitlement Program (24 CFR part 570, subpart D); the
section 108 Loan Guarantee Program (24 CFR part 570, subpart M); the
Urban Development Action Grant Program (24 CFR part 570, subpart G); the
HUD-administered Small Cities Program (24 CFR part 570, subpart F); the
State-administered Program for Non-Entitlement Communities (24 CFR part
570, subpart I); the grants for Indian Tribes program (24 CFR part 571);
and the Special Purpose Grants for Insular Areas, Community Development
Work Study and Historically Black Colleges and Universities (24 CFR part
570, subpart E).
(2) Funding under this section is awarded for the provision of
technical expertise in planning, managing or carrying out such programs
including the activities being or to be assisted thereunder and other
actions being or to be undertaken for the purpose of the program, such
as increasing the effectiveness of public service and other activities
in addressing identified needs, meeting applicable program requirements
(e.g., citizen participation, nondiscrimination, 2 CFR part 200,
increasing program management or capacity building skills, attracting
business or industry to CDBG assisted economic development sites or
projects, assisting eligible CDBG subrecipients such as neighborhood
nonprofits or small cities in how to obtain CDBG funding from cities and
States. The provision of technical expertise in other areas which may
have some tangential benefit or effect on a program is insufficient to
qualify for funding.
(3) Awards may be made pursuant to HUD solicitations for assistance
applications or procurement contract proposals issued in the form of a
publicly available document which invites the submission of applications
or proposals within a prescribed period of time. HUD may also enter into
agreements with other Federal agencies for awarding the technical
assistance funds:
(i) Where the Secretary determines that such funding procedures will
achieve a particular technical assistance objective more effectively and
the criteria for making the awards will be consistent with this section,
or
(ii) The transfer of funds to the other Federal agency for use under
the terms of the agreement is specifically authorized by law. The
Department will not accept or fund unsolicited proposals.
(b) Definitions. (1) Areawide planning organization (APO) means an
organization authorized by law or local agreement to undertake planning
and other activities for a metropolitan or non-metropolitan area.
(2) Technical assistance means the facilitating of skills and
knowledge in planning, developing and administering activities under
title I and section 810 of the Act in entities that may need but do not
possess such skills and knowledge, and includes assessing programs and
activities under title I.
(c) Eligible applicants. Eligible applicants for award of technical
assistance funding are:
(1) States, units of general local government, APOs, and Indian
Tribes; and
(2) Public and private non-profit or for-profit groups, including
educational institutions, qualified to provide technical assistance to
assist such governmental units to carry out the title I or Urban
Homesteading programs. An applicant group must be designated as a
technical assistance provider to a unit of government's title I program
or Urban Homesteading program by the chief executive officer of each
unit to be assisted, unless the assistance is limited to conferences/
workshops attended by more than one unit of government.
[[Page 52]]
(d) Eligible activities. Activities eligible for technical
assistance funding include:
(1) The provision of technical or advisory services;
(2) The design and operation of training projects, such as
workshops, seminars, or conferences;
(3) The development and distribution of technical materials and
information; and
(4) Other methods of demonstrating and making available skills,
information and knowledge to assist States, units of general local
government, or Indian Tribes in planning, developing, administering or
assessing assistance under title I and Urban Homesteading programs in
which they are participating or seeking to participate.
(e) Ineligible activities. Activities for which costs are ineligible
under this section include:
(1) In the case of technical assistance for States, the cost of
carrying out the administration of the State CDBG program for non-
entitlement communities;
(2) The cost of carrying out the activities authorized under the
title I and Urban Homesteading programs, such as the provision of public
services, construction, rehabilitation, planning and administration, for
which the technical assistance is to be provided;
(3) The cost of acquiring or developing the specialized skills or
knowledge to be provided by a group funded under this section;
(4) Research activities;
(5) The cost of identifying units of governments needing assistance
(except that the cost of selecting recipients of technical assistance
under the provisions of paragraph (k) is eligible); or
(6) Activities designed primarily to benefit HUD, or to assist HUD
in carrying out the Department's responsibilities; such as research,
policy analysis of proposed legislation, training or travel of HUD
staff, or development and review of reports to the Congress.
(f) Criteria for competitive selection. In determining whether to
fund competitive applications or proposals under this section, the
Department will use the following criteria:
(1) For solicited assistance applications. The Department will use
two types of criteria for reviewing and selecting competitive assistance
applications solicited by HUD:
(i) Evaluation criteria: These criteria will be used to rank
applications according to weights which may vary with each competition:
(A) Probable effectiveness of the application in meeting needs of
localities and accomplishing project objectives;
(B) Soundness and cost-effectiveness of the proposed approach;
(C) Capacity of the applicant to carry out the proposed activities
in a timely and effective fashion;
(D) The extent to which the results may be transferable or
applicable to other title I or Urban Homesteading program participants.
(ii) Program policy criteria: These factors may be used by the
selecting official to select a range of projects that would best serve
program objectives for a particular competition:
(A) Geographic distribution;
(B) Diversity of types and sizes of applicant entities; and
(C) Diversity of methods, approaches, or kinds of projects.
The Department will publish a Notice of Fund Availability (NOFA) in the
Federal Register for each competition indicating the objective of the
technical assistance, the amount of funding available, the application
procedures, including the eligible applicants and activities to be
funded, any special conditions applicable to the solicitation, including
any requirements for a matching share or for commitments for CDBG or
other title I funding to carry out eligible activities for which the
technical assistance is to be provided, the maximum points to be awarded
each evaluation criterion for the purpose of ranking applications, and
any special factors to be considered in assigning the points to each
evaluation criterion. The Notice will also indicate which program policy
factors will be used, the impact of those factors on the selection
process, the justification for their use and, if appropriate, the
relative priority of each program policy factor.
(2) For competitive procurement contract bids/proposals. The
Department's
[[Page 53]]
criteria for review and selection of solicited bids/proposals for
procurement contracts will be described in its public announcement of
the availability of an Invitation for Bids (IFB) or a Request for
Proposals (RFP). The public notice, solicitation and award of
procurement contracts, when used to acquire technical assistance, shall
be procured in accordance with the Federal Acquisition Regulation (48
CFR chapter 1) and the HUD Acquisition Regulation (48 CFR chapter 24).
(g) Submission procedures. Solicited assistance applications shall
be submitted in accordance with the time and place and content
requirements described in the Department's NOFA. Solicited bids/
proposals for procurement contracts shall be submitted in accordance
with the requirements in the IFB or RFP.
(h) Approval procedures--(1) Acceptance. HUD's acceptance of an
application or proposal for review does not imply a commitment to
provide funding.
(2) Notification. HUD will provide notification of whether a project
will be funded or rejected.
(3) Form of award. (i) HUD will award technical assistance funds as
a grant, cooperative agreement or procurement contract, consistent with
this section, the Federal Grant and Cooperative Agreement Act of 1977,
31 U.S.C. 6301-6308, the HUD Acquisition Regulation, and the Federal
Acquisition Regulation.
(ii) When HUD's primary purpose is the transfer of technical
assistance to assist the recipients in support of the title I or Section
810 programs, an assistance instrument (grant or cooperative agreement)
will be used. A grant instrument will be used when substantial Federal
involvement is not anticipated. A cooperative agreement will be used
when substantial Federal involvement is anticipated. When a cooperative
agreement is selected, the agreement will specify the nature of HUD's
anticipated involvement in the project.
(iii) A contract will be used when HUD's primary purpose is to
obtain a provider of technical assistance to act on the Department's
behalf. In such cases the Department will define the specific tasks to
be performed. However, nothing in this section shall preclude the
Department from awarding a procurement contract in any other case when
it is determined to be in the Department's best interests.
(4) Administration. Project administration will be governed by the
terms of individual awards and relevant regulations. As a general rule,
proposals will be funded to operate for one to two years, and periodic
and final reports will be required.
(i) Environmental and intergovernmental review. The requirements for
Environmental Reviews and Intergovernmental Reviews do not apply to
technical assistance awards.
(j) Selection of recipients of technical assistance. Where under the
terms of the funding award the recipient of the funding is to select the
recipients of the technical assistance to be provided, the funding
recipient shall publish, and publicly make available to potential
technical assistance recipients, the availability of such assistance and
the specific criteria to be used for the selection of the recipients to
be assisted. Selected recipients must be entities participating or
planning to participate in the title I or Urban Homesteading programs or
activities for which the technical assistance is to be provided.
(Approved by the Office of Management and Budget under control numbers
2535-0085 and 2535-0084)
[56 FR 41938, Aug. 26, 1991, as amended at 80 FR 75937, Dec. 7, 2015]
Sec. 570.403 New Communities.
The regulations for New Communities grants in this section, that
were effective immediately before April 19, 1996, will continue to
govern the rights and obligations of recipients and HUD with respect to
grants under the New Communities program.
[61 FR 11476, Mar. 20, 1996]
Sec. 570.404 Historically Black colleges and universities program.
(a) General. Grants under this section will be awarded to
historically Black colleges and universities to expand their role and
effectiveness in addressing community development needs, including
neighborhood revitalization,
[[Page 54]]
housing and economic development in their localities, consistent with
the purposes of title I of the Housing and Community Development Act of
1974.
(b) Eligible applicants. Only historically Black colleges and
universities (as determined by the Department of Education in accordance
with that Department's responsibilities under Executive Order 12677,
dated April 28, 1989) are eligible to submit applications.
(c) Eligible activities. Activities that may be funded under this
section are those eligible under Secs. 570.201 through 570.207, provided
that any activity which is required by State or local law to be carried
out by a governmental entity may not be funded under this section.
Notwithstanding the provisions of Secs. 570.200(g), grants under this
section are not subject to the 20 percent limitation on planning and
program administration costs, as defined in Secs. 570.205 and 570.206,
respectively.
(d) Applications. Applications will only be accepted from eligible
applicants in response to a Request for Applications (RFA) which will be
issued either concurrently with or after the publication of a Notice of
Funding Availability (NOFA) published in the Federal Register. The NOFA
will describe any special objectives sought to be achieved by the
funding to be provided, including any limitations on the type of
activities to be funded to achieve the objectives, points to be awarded
to each of the selection criteria listed in paragraph (e) of this
section, and any special factors to be evaluated in assigning points
under the selection factors to achieve the stated objectives. The NOFA
will also state the deadline for the submission of applications, the
total funding available for the competition, and the maximum amount of
individual grants. The NOFA will include further information and
instructions for the submission of acceptable applications to HUD.
(e) Selection criteria. Each application submitted under this
section will be evaluated by HUD using the following criteria:
(1) The extent to which the applicant addresses the objectives
published in the NOFA and the RFA.
(2) The extent to which the applicant demonstrates to HUD that the
proposed activities will have a substantial impact in achieving the
stated objectives.
(3) The special needs of the applicant or locality to be met in
carrying out the proposed activities, particularly with respect to
benefiting low- and moderate-income persons.
(4) The feasibility of the proposed activities, i.e., their
technical and financial feasibility, for achieving the stated
objectives, including local support for activities proposed to be
carried out in the locality and any matching funds proposed to be
provided from other sources.
(5) The capability of the applicant to carry out satisfactorily the
proposed activities in a timely fashion, including satisfactory
performance in carrying out any previous HUD-assisted projects or
activities.
(6) In the case of proposals/projects of approximately equal merit,
HUD retains the right to exercise discretion in selecting projects in a
manner that would best serve the program objectives, with consideration
given to the needs of localities, types of activities proposed, an
equitable geographical distribution, and program balance.
(f) Certifications. (1) Certifications required to be submitted by
applicants shall be as prescribed in the RFA packages.
(2) In the absence of independent evidence which tends to challenge
in a substantial manner the certifications made by the applicant, the
required certifications will be accepted by HUD. If independent evidence
is available to HUD, however, HUD may require further information or
assurances to be submitted in order to determine whether the applicant's
certifications are satisfactory.
(g) Multiyear funding commitments. (1) HUD may make funding
commitments of up to five years, subject to the availability of
appropriations. In determining the number of years for which a
commitment will be made, HUD will consider the nature of the activities
proposed, the capability of the recipient to carry out the proposed
activities, and year-by-year funding requirements.
(2) Awards will be made on the basis of a 12-month period of
performance.
[[Page 55]]
Once a recipient has been selected for a multi-year award, that
recipient would not be required to compete in a competition for the
subsequent funding years covered by the multi-year funding commitment.
Recipients performing satisfactorily will be invited to submit
applications for subsequent funding years in accordance with
requirements outlined in the Notice of Funding Availability and Request
for Grant Application. Subject to the availability of appropriations,
subsequent-year funding will be determined by the following:
(i) The recipient has submitted all reports required for the
previous year or years in a timely, complete and satisfactory manner in
accordance with the terms and conditions of the grant.
(ii) The recipient has submitted sufficient evidence to demonstrate
successful completion of the tasks and deliverables of the grant. A
determination of satisfactory performance will be made by HUD based upon
evidence of task completions provided by the recipient, along with data
from client feedback and site evaluations.
(iii) The recipient has submitted the next annual application.
(iv) The subsequent year's application is consistent with that
described in the original application.
(3) Recipients participating in multi-year funding projects are not
eligible to apply for additional grants for the same project or activity
subject area for which they are receiving funds. Recipients are,
however, eligible to compete for grants for other project or activity
areas.
(h) Selection and notification. The HUD decision to approve,
disapprove or conditionally approve an application shall be communicated
in writing to the applicant.
(i) Environmental and intergovernmental review. The requirements for
Intergovernmental Reviews do not apply to HBCU awards. HUD will conduct
an environmental review in accordance with 24 CFR part 50 before giving
its approval to a proposal.
[56 FR 18968, Apr. 24, 1991]
Sec. 570.405 The insular areas.
(a) Eligible applicants. Eligible applicants are Guam, the Virgin
Islands, American Samoa, the Trust Territory of the Pacific Islands, and
the Commonwealth of the Northern Mariana Islands.
(b) Threshold requirements. HUD shall review each grantee's progress
on outstanding grants made under this section based on the grantee's
performance report, the timeliness of close-outs and compliance with
fund management requirements and pertinent regulations, taking into
consideration the size of the grant and the degree and complexity of the
program. If HUD determines upon such review that the applicant does not
have the capacity effectively to administer a new grant, or a portion of
a new grant, in addition to grants currently under administration, the
applicant shall not be invited to submit an application for the current
year's funding.
(c) Previous audit findings and outstanding monetary obligations.
HUD shall not accept for review an application from an applicant that
has either an outstanding audit finding for any HUD program, or an
outstanding monetary obligation to HUD that is in arrears, or for which
a repayment schedule has not been established and agreed to. The Field
Office manager may waive this restriction if he or she finds that the
applicant has made a good faith effort to clear the audit. In no
instance, however, shall a waiver be provided when funds are due HUD,
unless a satisfactory arrangement for repayment of the debt has been
made and payments are current.
(d) Criteria for funding. The Secretary shall establish, for each
fiscal year, an amount for which eligible applicants may apply. Grant
amounts will be based on population of the applicant and its performance
in previous years. In determining performance, HUD will consider program
achievements and the applicant's effectiveness in using program funds.
Effectiveness in using program funds shall be measured by reviewing
audit, monitoring and performance reports.
(e) Application and performance reporting. Application and
performance reporting requirements are as follows:
(1) Applicants must submit applications within 90 days of the
notification of the grant amount from HUD.
[[Page 56]]
(2) Applicants shall prepare and publish or post a proposed
application in accordance with the citizen participation requirements of
paragraph (h) of this section.
(3) Applicants shall submit to HUD a final application containing
its community development objectives and activities. This application
shall be submitted to the appropriate HUD office, together with the
required certifications, in a form prescribed by HUD.
(4) Grant recipients must submit to HUD an annual performance report
on progress achieved on previously funded grants. Grant recipients must
submit the report at a time and in a format determined by HUD. The
report should be made available to citizens in accordance with the
requirements of paragraph (h)(1)(iv) of this section.
(f) Costs incurred by the applicant. (1) Notwithstanding any other
provision of this part, HUD will not reimburse or recognize any costs
incurred by an applicant before submission of the application to HUD.
(2) Normally, HUD will not reimburse or recognize costs incurred
before HUD approval of the application for funding. However, under
unusual circumstances, the Field office manager may consider and
conditionally approve written requests to recognize and reimburse costs
that will be incurred after submission of the application but before it
is approved where failure to do so would impose undue or unreasonable
hardship on the applicant. Conditional approvals will be made only
before the costs are incurred and where the conditions for release of
funds have been met in accordance with 24 CFR 58.22, and with the
understanding that HUD has no obligation whatsoever to approve the
application or to reimburse the applicant should the application be
disapproved.
(g) Criteria for conditional approval. HUD may approve a grant
subject to specified conditions. In any such case, the obligation and
utilization of funds may be restricted. The reasons for the conditional
approval and the actions necessary to remove the conditions shall be
specified. Failure of the applicant to satisfy the conditions may result
in a termination of the grant. A conditional approval may be granted
under any of the following circumstances:
(1) When local environmental reviews under 24 CFR part 58 have not
yet been completed;
(2) To ensure that actual provision of other resources required to
complete the proposed activities will be available within a reasonable
period of time;
(3) To ensure that a project can be completed within its estimated
costs;
(4) Where the grantee is required to satisfy an outstanding debt due
to HUD under a payment plan executed between the grantee and the
Department;
(5) Pending resolution of problems related to specific projects or
the capability of the grantee to obtain resources needed to carry out,
operate or maintain the project; or
(6) Pending approval of site and neighborhood standards for proposed
housing projects.
(h) Citizen participation. (1) The applicant shall provide for
appropriate citizen participation in the application and amendment
process. The applicant must, at least, do each of the following:
(i) Furnish citizens with information concerning the amount of funds
available for community development and housing activities and the range
of activities that may be undertaken, including the estimated amount
proposed to be used for activities that will benefit persons of low and
moderate income, and the plans of the grantee for minimizing
displacement of persons as a result of activities assisted with such
funds and to assist persons actually displaced;
(ii) Hold one or more public hearings (scheduled at convenient times
and places) to obtain the views of citizens on community development and
housing needs;
(iii) Develop and publish or post the community development
statement in such a manner as to afford affected citizens an opportunity
to examine its contents and to submit comments;
(iv) Afford citizens an opportunity to review and comment on the
applicant's performance under any community development block grant.
(2) Before submitting the application to HUD, the applicant shall
certify that it has:
[[Page 57]]
(i) Met the requirements of paragraph (h)(1) of this section;
(ii) Considered any comments and views expressed by citizens; and
(iii) If appropriate, modified the application accordingly and made
the modified application available to citizens.
[50 FR 37526, Sept. 16, 1985, as amended at 60 FR 56914, Nov. 9, 1995;
61 FR 32269, June 21, 1996]
Effective Date Note: At 61 FR 32269, June 21, 1996,
Sec. 570.405(e)(4) was revised. This section contains information
collection and recordkeeping requirements and will not become effective
until approval has been given by the Office of Management and Budget.
Sec. 570.406 Formula miscalculation grants.
(a) General. Grants under this section will be made to States and
units of general local government determined by the Secretary to have
received insufficient amounts under section 106 of the Act as a result
of a miscalculation of its share of funds under such section.
(b) Application. Since the grant is to correct a technical error in
the formula amount which should have been awarded under section 106, no
application is required.
(c) Use of funds. The use of funds shall be subject to the
requirements, certifications and Final Statement otherwise applicable to
the grantee's section 106 grant funds provided for the fiscal year in
which the grant under this section is made.
(d) Unavailability of funds. If sufficient funds are not available
to make the grant in the fiscal year in which the Secretary makes the
determination required in paragraph (a) of this section, the grant will
be made, subject to the availability of appropriations for this subpart,
in the next fiscal year.
[56 FR 41940, Aug. 26, 1991]
Sec. 570.410 Special Projects Program.
(a) Program objectives. The Community Development Special Projects
Program enables HUD to award grants to States and units of general local
government, subject to availability of funds, for special projects that
address community development activities or techniques consistent with
the purposes of title I of the Housing and Community Development Act of
1974, as amended.
(b) Eligible applicants. Only States and units of general local
government (as defined in Sec. 570.3) are eligible to submit proposals
or applications for Special Projects grants. Proposals or applications
may be submitted by eligible applicants on behalf of themselves, on
behalf of other eligible applicants, or jointly by more than one
eligible applicant.
(c) Eligible activities. (1) Project activities that may be funded
under this section are those eligible under 24 CFR part 570--Community
Development Block Grants, subpart C--Eligible Activities. No more than
twenty (20) percent of the funds awarded under this section may be used
for overall program administration or planning activities eligible under
Secs. 570.205 and 570.206.
(2) The amount of funds awarded to a unit of general local
government under this section that may be used for public service
activities is limited. The applicant may use whichever of the following
methods of calculation yields the highest amount:
(i) Fifteen percent of the special projects grant;
(ii) An amount equal to 15 percent of the sum of special project
grant funds plus grant funds received for the same origin year under the
Entitlement or State program, less the amount of the Entitlement or
State program grant funds which will be used for other public service
activities; or
(iii) In the case of an applicant that is an Entitlement grantee
subject to the exception in Sec. 570.201(e)(2), an amount equal to the
amount of the Entitlement grant funds received for the same origin year
that may be used for public service activities, less the amount of the
Entitlement grant funds which will be used for other public service
activities.
(d) Proposals. Eligible applicants may submit unsolicited proposals.
HUD may ask proposers to submit additional information if necessary for
evaluation. There is no HUD commitment to fund any unsolicited proposal
regardless of its merit. If HUD elects to fund a proposal, it will
request that the proposer submit a formal application.
[[Page 58]]
(1) Three (3) copies of a proposal must be sent to the address
stated in (3), below. Each proposal submitted pursuant to this section
shall be evaluated by HUD using the following criteria:
(i) The extent to which the proposal satisfies purposes of this
title and addresses a special community development need.
(ii) The eligibility of proposed activities.
(iii) The feasibility of the project; i.e., its technical and
financial feasibility for achieving the goals stated in the proposal.
(iv) The capacity of the proposer to carry out satisfactorily the
proposed project activities.
(2) If the proposal is submitted jointly by, or on behalf of, more
than one eligible applicant, the proposal must:
(i) Contain a cooperation agreement signed by the Chief Executive
Officer of each participating jurisdiction which specifies concurrence
with the purpose and intent of the proposal and intent to comply with
grant requirements;
(ii) Address problems faced by all jurisdictions listed in the
proposal; and,
(iii) Be submitted by the lead jurisdiction. The lead jurisdiction
shall be responsible for overall coordination and administration of the
project.
(3) Unsolicited proposals may be submitted any time during the year.
However, if there are no funds available for such proposals, they will
be returned without review. Proposals shall contain a Standard Form 424
signed by the Chief Executive Officer of the State or unit of general
local government. They shall be sent to: Department of Housing and Urban
Development, Office of Community Planning and Development, 451 Seventh
Street, SW., Washington, DC 20410, Attention: Director, Office of
Program Policy Development, CPP.
(e) Applications. Applications are accepted only from eligible
applicants in response to letters of solicitations, or to competition
announcements published in Notices in the Federal Register. Submission
requirements and criteria to be used by HUD to evaluate solicited
applications and instructions regarding their submission shall be stated
in each Notice or letter.
(f) Certifications. Applications shall contain the certifications
required by 24 CFR 570.303, except that regarding citizen participation:
The applicant must certify that citizens likely to be affected by the
project, particularly low- and moderate-income persons, have been
provided an opportunity to comment on the proposal or application. If
the application is submitted jointly, or on behalf of more than one
jurisdiction, each jurisdiction shall submit the required
certifications.
(g) Selection and notification. The HUD decision to approve,
disapprove or conditionally approve a proposal or application shall be
communicated in writing to the applicant.
[47 FR 30054, July 12, 1982, as amended at 54 FR 31672, Aug. 1, 1989; 55
FR 29309, July 18, 1990; 56 FR 56127, Oct. 31, 1991; 80 FR 69870, Nov.
12, 2015]
Sec. 570.411 Joint Community Development Program.
(a) General. Grants under this section will be awarded to
institutions of higher education or to States and local governments
applying jointly with institutions of higher education. Institutions of
higher education must demonstrate the capacity to carry out activities
under title I of the Housing and Community Development Act of 1974. For
ease of reference, this program may be called the Joint CD Program.
(b) Definitions.
Demonstrated capacity to carry out eligible activities under title I
means recent satisfactory activity by the institution of higher
education's staff designated to work on the program, including
subcontractors and consultants firmly committed to work on the proposed
activities, in title I programs or similar programs without the need for
oversight by a State or unit of general local government.
Institution of higher education means a college or university
granting 4-year degrees and accredited by a national or regional
accrediting agency recognized by the U.S. Department of Education.
(c) Eligible applicants. Institutions of higher education or States
and units of general local government jointly with institutions of
higher education may apply. Institutions of higher education with
demonstrated capacity to carry
[[Page 59]]
out eligible activities under title I may apply on their own, without
the joint participation of a State or unit of general local government.
States or unit of general local governments must file jointly with an
institution of higher education. For these approved joint applications,
the grant will be made to the State or unit of general local government
and the institution of higher education jointly. If an eligible
applicant is an institution of higher education, it will not be funded
more than once for the same kinds of activities. These grantees may not
receive funding under a subsequent NOFA if it has the same program
objectives as the one under which the grantee previously received
funding. However, a State or unit of general local government is
eligible to apply if it files jointly with a different institution of
higher education in each NOFA cycle. HUD may further limit the type of
eligible applicant to be funded. Any such limitations will be contained
in the Notice of Funding Availability described below in paragraph (h)
of this section.
(d) Role of participants in joint applications. An institution of
higher education and a State or unit of general local government may
carry out eligible activities approved in joint applications. Where
there are joint applicants, the grant will be made to both and both will
be responsible for oversight, compliance, and performance. The
application will have to clearly delineate the role of each applicant in
the joint application. Any funding sanctions or other remedial actions
by HUD for noncompliance or nonperformance, whether by the State or unit
of general local government or by the institution of higher education,
shall be taken against both grantees.
(e) Eligible activities. Activities that may be funded under this
section are those eligible under 24 CFR part 570--Community Development
Block Grants, subpart C--Eligible Activities. These activities may be
designed to assist residents of colonias, as defined in section 916(d)
of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 5306
note), to improve living conditions and standards within colonias. HUD
may limit the activities to be funded. Any such limitations will be
contained in the Notice of Funding Availability described in paragraph
(h) of this section.
(f) Applications. Applications will only be accepted from eligible
applicants in response to a publication of a Notice of Funding
Availability (NOFA) published by HUD in the Federal Register.
(g) Local approval. (1) Where an institution of higher education is
the applicant, each unit of general local government that is an
entitlement jurisdiction where an activity is to take place must approve
the activity and certify that the activity is consistent with its
Consolidated Plan.
(2) Where a State is the joint applicant and it proposes to carry
out an activity within the jurisdiction of one or more units of general
local government, then each such unit must approve the activity and
state that the activity is consistent with its Consolidated Plan.
(3) These approvals and findings must accompany each application and
may take the form of a letter by the chief executive officer of each
unit of general local government affected or a resolution of the
legislative body of each such unit of general local government.
(h) NOFA contents. The NOFA will describe any special objectives
sought to be achieved by the funding to be provided, including any
limitations on the type of activities to be funded to achieve the
objectives, any limitations on the type of eligible applicants, and
points to be awarded to each of the selection criteria and any special
factors to be evaluated in assigning points under the selection criteria
to achieve the stated objectives. The NOFA will also state the deadline
for the submission of applications, the total funding available for the
competition, the period of performance and the maximum and minimum
amount of individual grants. The NOFA will also state which of the
various possible levels of competition HUD will use: national and/or
regional or entitlement areas vs. non-entitlement areas; and States or
units
[[Page 60]]
of general local government vs. institutions of higher education vs.
institutions of higher education with a demonstrated capacity. The NOFA
will include further information and instructions for the submission of
acceptable applications to HUD.
(i) Selection criteria. Each application submitted under this
section will be evaluated by HUD using the following criteria:
(1) The extent to which the applicant addresses the objectives
published in the NOFA and demonstrates how the proposed activities will
have a substantial impact in achieving the objectives.
(2) The extent of the needs to be addressed by the proposed
activities, particularly with respect to benefiting low- and moderate-
income persons and residents of colonias, where applicable.
(3) The feasibility of the proposed activities, i.e., their
technical and financial feasibility, for achieving the stated
objectives.
(4) The capability of the applicant to carry out satisfactorily the
proposed activities in a timely fashion, including satisfactory
performance in carrying out any previous HUD-assisted projects or
activities.
(5) The extent of commitment to fair housing and equal opportunity,
as indicated by such factors as previous HUD monitoring/compliance
activity, actions to promote minority- and women-owned business
enterprise, affirmatively furthering fair housing issues, and
nondiscriminatory delivery of services.
(j) Selection discretion. HUD retains the right to exercise
discretion in selecting projects in a manner that would best serve the
program objectives, with consideration given to the needs of States and
units of general local government and institutions of higher education,
types of activities proposed, an equitable geographical distribution,
and program balance. The NOFA will state whether HUD will use this
discretion in any specific competition.
(k) Certifications. (1) Certifications, including those indicating
that applicants have adhered to all civil rights requirements under
subpart K of this part and the Americans with Disabilities Act of 1990,
required to be submitted by applicants shall be as prescribed in the
NOFA.
(2) In the absence of independent evidence which tends to challenge
in a substantial manner the certifications made by the applicant, the
required certifications will be accepted by HUD. However, if independent
evidence is available, HUD may require further information or assurances
to be submitted in order to determine whether the applicant's
certifications are satisfactory.
(l) Consolidated plan. An applicant that proposes any housing
activities as part of its application will be required to submit a
certification that these activities are consistent with the Consolidated
Plan of the jurisdiction to be served.
(m) Citizen participation. The citizen participation requirements of
Secs. 570.301, 570.431, 570.485(c) and 570.486(a) are modified to
require the following: The applicant must certify that citizens likely
to be affected by the project regardless of race, color, creed, sex,
national origin, familial status, or handicap, particularly low- and
moderate-income persons, have been provided an opportunity to comment on
the proposal or application.
(n) Environmental and Intergovernmental Review. The requirements for
Intergovernmental Reviews do not apply to these awards. When required,
an environmental review in accordance with 24 CFR part 58 must be
carried out by the State or unit of general local government when it is
the applicant. HUD will conduct any required environmental review when
an institution of higher education is the applicant.
(Approved by the Office of Management and Budget under control number
2535-0084)
[60 FR 15837, Mar. 27, 1995]
Sec. 570.415 Community Development Work Study Program.
(a) Applicability and objectives. HUD makes grants under CDWSP to
institutions of higher education, either directly or through areawide
planning organizations or States, for the purpose of providing
assistance to economically disadvantaged and minority students who
participate in a work study program while enrolled in full-time graduate
programs in community
[[Page 61]]
and economic development, community planning, and community management.
The primary objectives of the program are to attract economically
disadvantaged and minority students to careers in community and economic
development, community planning, and community management, and to
provide a cadre of well-qualified professionals to plan, implement and
administer local community development programs.
(b) Definitions. The following definitions apply to CDWSP:
Applicant means an institution of higher education, a State, or an
areawide planning organization that submits an application for
assistance under CDWSP.
Areawide planning organization (APO) means an organization
authorized by law or by interlocal agreement to undertake planning and
other activities for a metropolitan or nonmetropolitan area. For an
organization operating in a nonmetropolitan area to be considered an
APO, its jurisdiction must cover at least one county.
CDWSP means the Community Development Work Study Program.
Community building means community and economic development,
community planning, community management, land use and housing
activities.
Community building academic program or academic program means a
graduate degree program whose purpose and focus is to educate students
in community building. ``Community building academic program'' or
``academic program'' includes but is not limited to graduate degree
programs in community and economic development, community planning,
community management, public administration, public policy, urban
economics, urban management, and urban planning. ``Community building
academic program'' or ``academic program'' excludes social and
humanistic fields such as law, economics (except for urban economics),
education and history. ``Community building academic program'' or
``academic program'' excludes joint degree programs except where both
joint degree fields have the purpose and focus of educating students in
community building.
Economically disadvantaged and minority students means students who
satisfy all applicable guidelines established at the participating
institution of higher education to measure financial need for academic
scholarship or loan assistance, including, but not limited to, students
who are Black, American Indian/Alaskan Native, Hispanic, or Asian/
Pacific Island, and including students with disabilities.
Institution of higher education means a public or private
educational institution that offers a community building academic
program and that is accredited by an accrediting agency or association
recognized by the Secretary of Education under 34 CFR part 602.
Recipient means an approved applicant that executes a grant
agreement with HUD.
Student means a student enrolled in an eligible full-time academic
program. He/she must be a first-year student in a two-year graduate
program. Students enrolled in Ph.D. programs are ineligible.
Student with disabilities means a student who meets the definition
of ``person with disabilities'' in the Americans with Disabilities Act
of 1990.
(c) Assistance provided--(1) Types of assistance available. HUD
provides funding in the form of grants to recipients who make assistance
available to eligible students. Grants are provided to cover the costs
of student assistance and for an administrative allowance.
(i) Student assistance. Grants are made to recipients to cover the
costs of assistance provided to eligible students in the form of student
stipends, tuition support, and additional support.
(A) Student stipend. The amount of the student stipend is based upon
the prevailing hourly rate for initial entry positions in community
building and the number of hours worked by the student at the work
placement assignment, except that the hourly rate used should be
sufficiently high to allow a student to earn the full stipend without
working over 20 hours per week during the school year and 40 hours per
week during the summer. The amount of the stipend the student receives
may not exceed the actual amount earned, up to $9,000 per year.
[[Page 62]]
(B) Tuition support and additional support. The amount of support
for tuition, fees, books, and travel related to the academic program,
workplace assignment or conferences may not exceed actual costs incurred
or $5,000 per year, whichever is higher. The conferences are limited to
those dealing with community building, sponsored by professional
organizations.
(ii) Administrative allowance. HUD provides an allowance to
recipients to cover the administrative costs of the program. The
administrative allowance is $1,000 per year for each student
participating in the program.
(2) Number of students assisted. The minimum number of students that
may be assisted is three students per participating institution of
higher education. If an APO or State receives assistance for a program
that is conducted by two or more institutions of higher education, each
participating institution must have a minimum of three students in the
program. The maximum number of students that may be assisted under CDWSP
is five students per participating institution of higher education.
(d) Recipient eligibility and responsibilities--(1) Recipient
eligibility. (i) The following organizations are eligible to apply for
assistance under the program:
(A) Institutions of higher education. Institutions of higher
education offering a community building academic program are eligible
for assistance under CDWSP.
(B) Areawide planning organizations and States. An APO or a State
may apply for assistance for a program to be conducted by two or more
institutions of higher education. Institutions participating in an APO
program must be located within the particular area that is served by the
APO and is identified by the State law or interlocal agreement creating
the APO. Institutions of higher education participating in a State
program must be located within the State.
(ii) To be eligible in future funding competitions for CDWSP,
recipients are required to maintain a 50-percent rate of graduation from
a CDWSP-funded academic program.
(iii) If an institution of higher education that submits an
individual application is also included in the application of an APO or
State, then the separate individual application of the institution of
higher education will be disregarded. Additionally, if an institution of
higher education is included in the application of both an APO and a
State, then the references to the institution in the application of the
State will be stricken. The State's application will then be ineligible
if fewer than two institutions of higher education remain as
participants in the State's application.
(2) Recipient responsibilities. (i) The recipient is responsible for
the administration of the program, for compliance with all program
requirements, and for the coordination of program activities carried out
by the work placement agencies and (if the recipient is an APO or
State), by the participating institutions of higher education. The
recipient must:
(A) Recruit and select students for participation in CDWSP. The
recipient shall establish recruitment procedures that identify
economically disadvantaged and minority students pursuing careers in
community building, and make such students aware of the availability of
assistance opportunities. Students must be selected before the beginning
of the semester for which funding has been provided.
(B) Recruit and select work placement agencies, and negotiate and
execute agreements covering each work placement assignment.
(C) Refer participating students to work placement agencies and
assist students in the selection of work placement assignments.
(D) Assign sufficient staff to administer and supervise the program
on a day-to-day basis, and, where the recipient is an APO or State, to
monitor the activities of the work study coordinating committee.
(E) Encourage participating students to obtain employment for a
minimum of two years after graduation with a unit of State or local
government, Indian tribe or nonprofit organization engaged in community
building.
[[Page 63]]
(F) Maintain records by racial and ethnic categories for each
economically disadvantaged student enrolled in the CDWSP.
(G) Keep records and make such reports as HUD may require.
(H) Comply with all other applicable Federal requirements.
(ii) If the recipient is an APO or State, the recipient must also:
(A) Establish a committee to coordinate activities between program
participants, to advise the recipient on policy matters, to assist the
recipient in ranking and selection of participating students, and to
review disputes concerning compliance with program agreements and
performance. The committee shall be chaired by a representative of the
recipient, and shall include representatives of the participating
institutions of higher education, work placement agencies, students, and
HUD.
(B) Allocate the assistance awarded under the program to the
participating institutions of higher education. APOs and States may not
make fractional awards to institutions. (E.g., awards to institutions
must assist a fixed number of students and not, for example, 6.5
students.)
(e) Institutions of higher education. Institutions of higher
education participating in a program are responsible for providing its
educational component. Where the recipient is an APO or State, the
institution of higher education shall assist the APO or State in the
administration and operation of the program. Responsibilities include
assisting the recipient in the selection of students by determining the
eligibility of students for the academic program, and by making the
analysis of students under the financial need guidelines established by
the institution. All institutions of higher education must comply with
other applicable Federal requirements.
(f) Work placement agencies eligibility and responsibilities--(1)
Eligibility. To be eligible to participate in the CDWSP, the work
placement agencies must be involved in community building and must be an
agency of a State or unit of local government, an APO, an Indian tribe,
or a nonprofit organization.
(2) Responsibilities. Work placement agencies must:
(i) Provide practical experience and training in community building.
(ii) Consult with the institution of higher education (and the APO
or State, where an APO or State is the recipient) to ensure that the
student's work placement assignment provides the requisite experience
and training to meet the required number of work hours specified in the
student work placement agreement.
(iii) Provide a sufficient number of work placement assignments to
provide participating students with a wide choice of work experience.
(iv) Require each student to devote 12-20 hours per week during the
regular school year, or 35-40 hours a week during the summer, to the
work placement assignment. Work placement agencies may provide
flexibility in the work period, if such a schedule is consistent with
the requirements of the student's academic program. However, a
participating student may receive stipend payment only during the period
that the student is placed with the work placement agency.
(v) Comply with all other applicable Federal requirements.
(vi) Maintain such records as HUD may require.
(g) Student eligibility and responsibilities. Students apply
directly to recipients receiving grants under CDWSP. Students shall be
selected in accordance with the following eligibility requirements and
selection procedures.
(1) Eligibility. To be eligible for CDWSP, the student:
(i) Must satisfy all applicable guidelines established at the
participating institution of higher education to measure financial need
for academic scholarship or loan assistance.
(ii) Must be a full-time student enrolled in the first year of
graduate study in a community building academic program at the
participating institution of higher education. Individuals enrolled in
doctoral programs are ineligible.
(iii) Must demonstrate an ability to maintain a satisfactory level
of performance in the community building academic program and in work
placement assignments, and to comply with
[[Page 64]]
the professional standards set by the recipient and the work placement
agencies.
(iv) May not have previously participated in CDWSP.
(v) Must provide appropriate written evidence that he or she is
lawfully admitted for permanent residence in the United States, if the
individual is not a citizen.
(2) Selection. In selecting among eligible students, the recipient
must consider the extent to which each student has demonstrated:
(i) Financial need under the applicable financial need guidelines
established at the institution of higher education;
(ii) An interest in, and commitment to, a professional career in
community building;
(iii) The ability satisfactorily to complete academic and work
placement responsibilities under CDWSP.
(3) Student responsibilities. Participating students must:
(i) Enroll in a two-year program. A student's academic and work
placement responsibilities include: Full-time enrollment in an approved
academic program; maintenance of a satisfactory level of performance in
the community building academic program and in work placement
assignments; and compliance with the professional conduct standards set
by the recipient and the work placement agency. A satisfactory level of
academic performance consists of maintaining a B average. A student's
participation in CDWSP shall be terminated for failure to meet these
responsibilities and standards. If a student's participation is
terminated, the student is ineligible for further CDWSP assistance.
(ii) Agree to make a good-faith effort to obtain employment in
community building with a unit of State or local government, an Indian
tribe, or a nonprofit organization. The term of employment should be for
at least two consecutive years following graduation from the academic
program. If the student does not obtain such employment, the student is
not required to repay the assistance received.
(h) Notice of fund availability. HUD will solicit grant applications
from institutions of higher education, APO's and States by publishing a
notice of fund availability in the Federal Register. The notice will:
(1) Explain how application packages (requests for grant
applications) providing specific application requirements and guidance
may be obtained;
(2) Specify the place for filing completed applications, and the
date by which the applications must be physically received at that
location;
(3) State the amount of funding available under the notice;
(4) Provide other appropriate program information and guidance.
(i) Recipient selection process. The selection process for
applications under CDWSP consists of a threshold review, ranking of
eligible applications and final selection.
(1) Threshold. To be eligible for ranking, applicants must meet each
of the following threshold requirements:
(i) The application must be filed in the application form prescribed
by HUD, and within the required time periods;
(ii) The applicant must demonstrate that it is eligible to
participate;
(iii) The applicant must demonstrate that each institution of higher
education participating in the program as a recipient has the required
academic programs and faculty to carry out its activities under CDWSP.
Each work placement agency must have the required staff and community
building work study program to carry out its activities under CDWSP.
(2) Rating. All applications that meet the threshold requirements
for applicant eligibility will be rated based on the following selection
criteria:
(i) Quality of academic program. The quality of the academic program
offered by the institution of higher education, including without
limitation the:
(A) Quality of course offerings;
(B) Appropriateness of course offerings for preparing students for
careers in community building; and
(C) Qualifications of faculty and percentage of their time devoted
to teaching and research in community building.
[[Page 65]]
(ii) Rates of graduation. The rates of graduation of students
previously enrolled in a community building academic program at the
institution of higher education, specifically including (where
applicable) graduation rates from any previously funded CDWSP academic
programs or similar programs.
(iii) Extent of financial commitment. The commitment and ability of
the institution of higher education to assure that CDWSP students will
receive sufficient financial assistance (including loans, where
necessary) above and beyond the CDWSP funding to complete their academic
program in a timely manner and without working in excess of 20 hours per
week during the school year.
(iv) Quality of work placement assignments. The extent to which the
participating students will receive a sufficient number and variety of
work placement assignments, the assignments will provide practical and
useful experience to students participating in the program, and the
assignments will further the participating students' preparation for
professional careers in community building.
(v) Likelihood of fostering students' permanent employment in
community building. The extent to which the proposed program will lead
participating students directly and immediately to permanent employment
in community building, as indicated by, without limitation:
(A) The past success of the institution of higher education in
placing its graduates (particularly CDWSP-funded and similar program
graduates where applicable) in permanent employment in community
building; and
(B) The amount of faculty and staff time and institutional resources
devoted to assisting students (particularly students in CDWSP-funded and
similar programs where applicable) in finding permanent employment in
community building.
(vi) Effectiveness of program administration. The degree to which an
applicant will be able effectively to coordinate and administer the
program. HUD will allocate the maximum points available under this
criterion equally among the following considerations set forth in
paragraphs (i)(2)(vi) (A), (B), and (C) of this section, except that the
maximum points available under this criterion will be allocated equally
between the considerations set forth in paragraphs (i)(2)(vi) (A) and
(B) of this section only where the applicant has not previously
administered a CDWSP-funded program.
(A) The strength and clarity of the applicant's plan for placing
CDWSP students on rotating work placement assignments and monitoring
CDWSP students' progress both academically and in their work placement
assignments;
(B) The degree to which the individual who will coordinate and
administer the program has clear responsibility, ample available time,
and sufficient authority to do so; and
(C) The effectiveness of the applicant's prior coordination and
administration of a CDWSP-funded program, where applicable (including
the timeliness and completeness of the applicant's compliance with CDWSP
reporting requirements).
(vii) Commitment to meeting economically disadvantaged and minority
students' needs. The applicant's commitment to meeting the needs of
economically disadvantaged and minority students as demonstrated by
policies and plans regarding, and past effort and success in,
recruiting, enrolling and financially assisting economically
disadvantaged and minority students. If the applicant is an APO or
State, then HUD will consider the demonstrated commitment of each
institution of higher education on whose behalf the APO or State is
applying; HUD will then also consider the demonstrated commitment of the
APO or State to recruit and hire economically disadvantaged and minority
students.
(3) Final selection. Eligible applications will be considered for
selection in their rank order. HUD may make awards out of rank order to
achieve geographic diversity, and may provide assistance to support a
number of students that is less than the number requested under
applications in order to provide assistance to as many highly ranked
applications as possible.
(j) Agreements--(1) Grant agreement. The responsibilities of the
recipient
[[Page 66]]
under CDWSP will be incorporated in a grant agreement executed by HUD
and the recipient.
(2) Student agreement. The recipient and each participating student
must execute a written agreement incorporating their mutual
responsibilities under CDWSP. The agreement must be executed before the
student can be enrolled in the program. A student's participation in
CDWSP shall be terminated for failure to meet the responsibilities and
standards in the agreement.
(3) Work placement assignment agreement. The institution of higher
education, the APO or state (if an APO or State is the grant recipient),
the participating student, and the work placement agency must execute a
written agreement covering each work placement assignment. The agreement
must address the responsibilities of each of the parties, the
educational objectives, the nature of supervision, the standards of
evaluation, and the student's time commitments under the work placement
assignment.
(4) APO (or state) and institution of higher education. Where the
recipient is an APO (or a State), the recipient and each participating
institution of higher education must execute a written agreement
incorporating their mutual responsibilities under CDWSP.
(k) Grant administration--(1) Initial obligation of funds. When HUD
selects an application for funding, and notifies the recipient, HUD will
obligate funds to cover the amount of the approved grant. The initial
obligation of funds will provide for student grants for two years.
(2) Disbursement. Recipients will receive grant payments by direct
deposit on a reimbursement basis. If that is not possible, grant
payments will be made by U.S. Treasury checks.
(3) Deobligation and recipient repayment. (i) HUD may deobligate
amounts for grants if proposed activities are not begun or completed
within a reasonable time after selection.
(ii) If a student's participation in CDWSP is terminated before the
completion of the two-year term of the student's program, the recipient
may substitute another student to complete the two-year term of a
student whose participation has terminated. The substituted student must
have a sufficient number of academic credits to complete the degree
program within the remaining portion of the terminated student's two-
year term. With respect to any CDWSP grant, there is no requirement,
regardless of the date of grant award, for students who are terminated
from the CDWSP to repay tuition and additional assistance or for the
grant recipient to repay such funds to HUD. Funds must still be
otherwise expended consistent with CDWSP regulations and the grant
agreement, or repayment may be required under paragraph (k)(3)(iii) of
this section.
(iii) Consistent with 2 CFR part 200, HUD, in the grant agreement,
will set forth in detail other circumstances under which funds may be
deobligated, recipients may be liable for repayment, or other sanctions
may be imposed.
(l) Other Federal requirements--(1) Handicap provision. Recipients
must provide a statement certifying that no otherwise qualified
handicapped person shall, solely by reason of handicap, be excluded from
participation in, be denied the benefits of, or otherwise be subjected
to discrimination under the CDWSP.
(2) Nondiscrimination. The recipient must adhere to the following
nondiscrimination provisions: The requirements of title VIII of the
Civil Rights Act of 1968, 42 U.S.C. 3600-20 (Fair Housing Act) and
implementing regulations issued at subchapter A of title 24 of the Code
of Federal Regulations; title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d-4) (Nondiscrimination in Federally Assisted Programs) and
implementing regulations issued at 24 CFR part 1; section 504 of the
Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations
at 24 CFR part 8; Executive Order 11063 and implementing regulations at
24 CFR part 107; and the Age Discrimination Act of 1975 and implementing
regulations at 24 CFR part 146.
[54 FR 27131, June 27, 1989, as amended at 61 FR 36458, July 10, 1996;
63 FR 31869, June 10, 1998; 80 FR 75937, Dec. 7, 2015]
[[Page 67]]
Sec. 570.416 Hispanic-serving institutions work study program.
(a) Applicability and objectives. HUD makes grants under the
Hispanic-serving Institutions Work Study Program (HSI-WSP) to public and
private non-profit Hispanic-serving Institutions (HSI's) of higher
education for the purpose of providing assistance to economically
disadvantaged and minority students who participate in a work study
program while enrolled in full-time community college programs in
community building, and to provide entry to pre-professional careers in
these fields.
(b) Definitions. The following definitions apply to HSI-WSP:
Applicant means a public or private non-profit Hispanic-serving
institution of higher education that offers only two-year degree
programs, including at least one community building academic degree
program, and that applies for funding under HSI-WSP.
Community building means community and economic development,
community planning, community management, public policy, urban
economics, urban management, urban planning, land use planning, housing,
and related fields. Related fields include, but are not limited to,
administration of justice, child development, and human services.
Community building academic program or academic program means an
undergraduate associate degree program whose purpose and focus is to
educate students in community building. The terms ``community building
academic program'' or ``academic program'' refer to the types of
academic programs encompassed in the statutory phrase ``community or
economic development, community planning or community management.'' For
purposes of HSI-WSP, such programs include, but are not limited to,
associate degree programs in community and economic development,
community planning, community management, public administration, public
policy, urban economics, urban management, urban planning, land use
planning, housing, and related fields of study. Related fields of study
that promote community building, such as administration of justice,
child development, and human services are eligible, while fields such as
natural sciences, computer sciences, mathematics, accounting,
electronics, engineering, and the humanities (such as English or
history) would not be eligible. A transfer program (i.e., one that leads
to transfer to a four-year institution of higher education for the
student's junior year) in a community building academic discipline is
eligible only if the student is required to declare his/her major in
this discipline while at the community college.
Community building field means any of the fields of study eligible
under a community building academic program.
Economically disadvantaged and minority students means students who
satisfy all the applicable guidelines established at the participating
institution of higher education to measure financial need for academic
scholarship or loan assistance, including, but not limited to, students
with disabilities and students who are Black, American Indian/Alaska
Native, Hispanic, Asian/Pacific Islanders, where such students satisfy
the financial needs guidelines defined above.
Hispanic-serving institution is an institution of higher education
that certifies to the satisfaction of the Secretary that it meets the
criteria set out at 20 U.S.C. 1059c(b)(1), including the following: An
institution that has an enrollment of undergraduate full-time students
that is at least 25 percent Hispanic; in which not less than 50 percent
of the Hispanic students are low-income individuals (i.e., their
families' taxable income for the preceding year did not exceed 150
percent of the poverty level) who are first generation college students;
and in which another 25 percent are either low-income individuals or
first generation college students.
HSI-WSP or HSI-WSP program means the Hispanic-serving Institutions
Work Study program.
Institution of higher education means a public or private
educational institution that offers two-year associate degrees in a
community building academic program and that is accredited by an
accrediting agency or association recognized by the Secretary of
Education. Institutions offering BOTH
[[Page 68]]
four-year and two-year degrees are not eligible for HSI-WSP.
Recipient means an approved applicant that executes a grant
agreement with HUD.
Student means a person attending the institution of higher education
on a full-time basis, as defined by that institution and pursuing an
eligible community building degree. Students must have attained no more
than half of the credits required for their degree at the time they
first receive assistance under HSI-WSP.
Student with disabilities means a student who meets the definition
of a ``person with disabilities'' in the Americans with Disabilities Act
of 1990.
(c) Assistance provided--(1) Types of assistance available. HUD
provides funding in the form of grants to recipients who make assistance
available to eligible students. Grants are provided to cover the costs
of student assistance and for an administrative allowance.
(2) Maximum amount of assistance. The maximum amount that can be
provided to a student is $13,200 a year, including $1,000 for an
administrative allowance, subject to the 20% limitation described at
570.416(c)(4) below. HUD will not set maximums on how much should be
spent to each eligible expenditure, other than for administrative costs.
The institution must be able to document that the amounts paid are
customary for that institution and that it has actually paid that amount
to the students. If a student is receiving a Pell grant, he/she may not
receive funding for the same educational support through HSI-WSP.
However, HSI-WSP can substitute for all or part of the Pell grant.
(3) Student assistance. Grants are provided in the form of student
stipends, tuition support, and additional support.
(i) Student stipend. The amount of the student stipend should be
based on the hourly rate for initial entry positions in the community
building field and the number of hours worked by the student at the work
placement assignment. The stipend should be sufficiently high to allow
the student to earn the full stipend, as determined by the recipient,
without working over 20 hours per week during the school year and 40
hours per week during the summer.
(ii) Tuition support. The amount of tuition support may not exceed
the tuition and required fees charged at the participating institution
of higher education.
(iii) Additional support. The recipient may provide additional
support for books, tutoring, and travel related to the academic program
or work placement assignment. Costs associated with reasonable
accommodations for students with disabilities including, but not limited
to, interpreters for the deaf/hard of hearing, special equipment, and
braille materials are eligible under this category.
(4) Administrative allowance. HUD provides an allowance to
recipients to cover the administrative costs of the program. The
administrative allowance is $1,000 per year for each student
participating in the program; however, no more than 20 percent of the
grant may be used for planning and program administrative costs.
(5) Number of students assisted. The minimum number of students that
may be assisted is three students per participating institution of
higher education. The maximum number of students that may be assisted is
ten students per participating institution of higher education; however,
a lower maximum or higher minimum may be established for a particular
funding round by the NOFA announcing the availability of the funds.
(d) Recipient eligibility and responsibilities--(1) Recipient
eligibility. Public or private Hispanic-serving institutions of higher
education offering only undergraduate two-year degrees, including
degrees in at least one community building academic program, are
eligible for assistance under HSI-WSP. HSIs that offer BOTH two-year and
four-year degrees are not eligible for HSI-WSP assistance.
(2) Recipient responsibilities. The recipient is responsible for
administering the program, for compliance with all program requirements,
and for coordination of program activities carried out by the work
placement agencies. The recipient must:
[[Page 69]]
(i) Recruit students for participation in HSI-WSP. The recipient
shall establish recruitment procedures that identify eligible
economically disadvantaged and minority students pursuing careers in
community building, and make them aware of the availability of
assistance opportunities. While the program is restricted to HSIs, the
recipient may neither restrict the program to any particular minority
group or groups, nor provide any preferential treatment in the selection
process based on race or ethnicity. Only economically disadvantaged
students, as defined herein, may be assisted.
(ii) Select students for participation in HSI-WSP. In selecting
among the eligible students, the recipient must consider the extent to
which each student has demonstrated financial need under the applicable
guidelines established at the institution of higher education; an
interest in, and commitment to, a career in community building; and the
ability to satisfactorily complete the academic and work placement
responsibilities under HSI-WSP. Students must be selected before the
beginning of the semester for which funding is being provided. If a
student's participation terminates, the student may not be replaced; the
grant will be reduced by the amount of unused funds allotted for that
student.
(iii) Provide the educational component for participating students.
(iv) Recruit and select work placement agencies, and negotiate and
execute an agreement covering each work placement assignment.
(v) Refer participating students to work placement agencies and
assist students in the selection of work placement assignments.
(vi) Assign sufficient staff to administer and supervise the program
on a day-to-day basis.
(vii) Encourage participating students to either: obtain post-
graduation employment with a unit of State or local government, an
areawide planning organization (APO), Indian tribe or nonprofit
organization engaged in community building; or transfer to a four-year
institution of higher education to obtain a bachelor's degree in a
community building academic discipline.
(viii) Maintain records by racial and ethnic categories for each
economically disadvantaged and minority student participating in HSI-
WSP.
(ix) Keep records and make such reports as HUD may require.
(x) Comply with all other applicable Federal requirements.
(e) Work placement agencies eligibility and responsibilities--(1)
Eligibility. To be eligible to participate in HSI-WSP, the work
placement agency must be an agency of a State or local government, an
APO, an Indian tribe, or a private nonprofit organization involved in
community building activities. A work placement site that is part of the
institution of higher education (e.g., a child care center) can only be
an eligible site if the services provided by that site are offered to
people in the broader community outside the institution.
(2) Responsibilities. Work placement agencies must:
(i) Provide practical experience and training in the community
building field to participating students through work placement
assignments.
(ii) Consult with the institution of higher education to ensure that
the student's work placement assignment provides the requisite
experience and training to meet the required number of work hours
specified in the student work placement agreement.
(iii) Provide a sufficient number and variety of work assignments to
provide participating students with a wide choice of work experience.
(iv) Require each student to devote 12-20 hours per week during the
regular school year, and 35-40 hours a week during the summer, to the
work placement assignment. Work placement agencies may provide
flexibility in the work period, if such a schedule is consistent with
the requirements of the student's academic program. However, a
participating student may receive a stipend payment only during the
period when the student is placed with the work placement agency.
(v) Comply with all other applicable Federal requirements.
(vi) Maintain such records as HUD may require.
(f) Student eligibility and responsibilities. Students apply
directly to recipients receiving grants under HSI-WSP.
[[Page 70]]
(1) Eligibility. To be eligible for HSI-WSP, the student:
(i) Must satisfy all applicable guidelines established at the
participating institution of higher education to measure financial need
for academic scholarship or loan assistance.
(ii) Must be a full-time student enrolled in a community building
associate degree program at the participating institution of higher
education. The student must have attained no more than 50 percent of the
credits required for his/her degree at the time the student first
receives assistance under this program.
(iii) Must demonstrate an ability to maintain a satisfactory level
of performance in community building academic program (i.e., maintain a
B average, as defined by the institution) and in work placement
assignments, and comply with the professional standards set by the
recipient and the work placement agencies.
(iv) May not have previously participated in HSI-WSP.
(2) Student responsibilities. Participating students must:
(i) Enroll or be enrolled in a two-year community building associate
degree program. A student's academic and work placement responsibilities
include: Full-time enrollment in an approved academic program;
maintenance of a satisfactory level of performance in the community
building academic program and in work placement assignments; and
compliance with the professional conduct standards set by the recipient
and by the work placement agency. A satisfactory level of academic
performance consists of maintaining a B average, as defined by the
institution. A student's participation in HSI-WSP shall be terminated
for failure to meet these responsibilities and standards. If the
student's participation is terminated, the student is ineligible for
further HSI-WSP assistance.
(ii) Devote 12-20 hours per week during the regular school year, and
35-40 hours a week during the summer, to the work placement assignment.
Work placement agencies may provide flexibility in the work period, if
such a schedule is consistent with the requirements of the student's
academic program. However, a participating student may receive a stipend
payment only during the period when the student is placed with the work
placement agency.
(iii) Agree to make a good-faith effort to either: obtain employment
in community building with a unit of State or local government, an APO,
an Indian tribe, or a non-profit organization; or to transfer to a four-
year institution of higher education to obtain a bachelor's degree in a
community building academic discipline. However, if the student does not
obtain such employment or transfer to a four-year institution, the
student is not required to repay the assistance received.
(g) Notice of funding availability. HUD will solicit grant
applications from eligible institutions of higher education by
publishing a notice of funding availability in the Federal Register. The
notice will:
(1) Explain how application kits providing specific application
requirements and guidance may be obtained;
(2) Specify the place for filing completed applications, and the
date by which applications must be physically received at that location;
(3) State the amount of funding available under the notice, which
may include funds recaptured from previously awarded grants;
(4) Provide other appropriate program information and guidance.
(h) Agreements--(1) Grant agreement. The responsibilities of the
recipient under HSI-WSP will be incorporated in a grant agreement
executed by HUD and the recipient.
(2) Student agreement. The recipient and each participating student
must execute a written agreement incorporating their mutual
responsibilities under HSI-WSP. The agreement must be executed before
the student can be enrolled in the program. The Recipient shall
terminate a student's participation in HSI-WSP for failure to meet the
responsibilities and standards in the agreement.
(3) Work placement assignment agreement. The recipient, the student,
and the work placement agency must execute a written agreement covering
each work placement assignment. The
[[Page 71]]
agreement must address the responsibilities of each of the parties, the
educational objectives, the nature of the supervision, the standards of
evaluation, and the student's time commitments under the work placement
assignment.
(i) Grant administration--(1) Initial obligation of funds. When HUD
selects an application for funding, HUD will obligate funds to cover the
amount of the approved grant. The term of the award will be for two
calendar years, unless subsequently altered by HUD at its discretion for
good cause.
(2) Disbursement. Recipients will receive grant payments by direct
deposit on a reimbursement basis. If that is not possible, grant
payments will be made by U.S. Treasury checks.
(3) Deobligation. HUD may deobligate amounts for grants if proposed
activities are not begun or completed within a reasonable period of time
after selection.
(j) Other Federal requirements--(1) Applicability of part 570. HSI-
WSP shall be subject to the policies and procedures set forth in
subparts A, K, and O of 24 CFR part 570, as applicable, except as
modified or limited under the provisions of this Notice. The provisions
of subparts C and J of part 570 shall not apply to HSI-WSP.
(2) Uniform administrative requirements. Recipients under HSI-WSP
shall comply with the requirements and standards of 2 CFR part 200,
``Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards.'' Audits in accordance with 2 CFR part
200, subpart F, shall be conducted annually.
[62 FR 17493, Apr. 9, 1997, as amended at 63 FR 9683, Feb. 25, 1998; 80
FR 75937, Dec. 7, 2015]
Subpart F_Small Cities, Non-Entitlement CDBG Grants in Hawaii and
Insular Areas Programs
Source: 62 FR 62914, Nov. 25, 1997, unless otherwise noted.
Sec. 570.420 General.
(a) Administration of Non-entitlement CDBG funds in New York by HUD
or Insular Areas--(1) Small cities. The Act permits each state to elect
to administer all aspects of the CDBG program annual fund allocation for
the non-entitlement areas within its jurisdiction. All states except
Hawaii have elected to administer the CDBG program for non-entitlement
areas within their jurisdiction. This section is applicable only to
active HUD-administered small cities grants in New York. The
requirements for the non-entitlement CDBG grants in Hawaii are set forth
in Sec. 570.429 of this subpart. States that elected to administer the
program after the close of Fiscal Year 1984 cannot return administration
of the program to HUD. A decision by a state to discontinue
administration of the program would result in the loss of CDBG funds for
non-entitlement areas in that state and the reallocation of those funds
to all states in the succeeding fiscal year.
(2) Insular areas. Title V of Public Law 108-186 amended the Act to
move the insular areas funding authorization from sections 107(a) and
(b) to section 106(a). This revision identified a specific portion of
the CDBG allocation for insular areas that is separate from the
distribution for special purpose grants, as well as from the Entitlement
and State formula distribution. The insular areas of Guam, the Northern
Mariana Islands, the Virgin Islands, and American Samoa are permitted to
administer all aspects of their Community Development Block Grant (CDBG)
program under section 106 of the Act in accordance with their final
statement as further described at Sec. 570.440.
(b) Scope and applicability. (1) This subpart describes the policies
and procedures of the Small Cities program that apply to non-entitlement
areas in states where HUD administers the CDBG program. HUD currently
administers the Small Cities program in only two states--New York (for
grants prior to FY 2000) and Hawaii (for non-entitlement CDBG grants in
Hawaii). The Small Cities portion of this subpart addresses the
requirements for New York Small Cities grants in Secs. 570.421, 570.426,
570.427, and 570.431. Section 570.429 identifies special procedures
applicable to Hawaii.
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(2) This subpart also describes the policies and procedures
governing community development block grants to insular areas under
section 106 of the Act. Sections 570.440 and 570.441 identify procedures
applicable to the Insular Areas program under section 106 of the Act.
Fund reservations for insular areas under section 107 of the Act shall
remain governed by the policies and procedures described in section
107(a)(1)(A) of the Act and Secs. 570.400 and 570.405 of this part.
(3) The policies and procedures set forth in the following
identified subparts of this part apply to the HUD-administered Small
Cities and Insular Areas programs, except as modified or limited under
the provisions thereof or this subpart:
(i) Subpart A--General Provisions;
(ii) Subpart C--Eligible Activities;
(iii) Subpart J--Grant Administration;
(iv) Subpart K--Other Program Requirements;
(v) Subpart M--Loan Guarantees; and
(vi) Subpart O--Performance Reviews.
(c) Abbreviated consolidated plan. Applications for the HUD-
administered Small Cities Program and the Insular Areas program under
section 106 of the Act that contain housing activities must include a
certification that the proposed housing activities are consistent with
the applicant's consolidated plan as described at 24 CFR part 91.
(d) National and primary objectives. (1) Each activity funded
through the Small Cities program and the Insular Areas program under
section 106 of the Act must meet one of the following national
objectives as defined under the criteria in Sec. 570.208:
(i) Benefit low- and moderate-income families;
(ii) Aid in the prevention or elimination of slums or blight; or
(iii) Be an activity that the grantee certifies is designed to meet
other community development needs having a particular urgency because
existing conditions pose a serious and immediate threat to the health or
welfare of the community and other financial resources are not available
to meet such needs.
(2) In addition to the objectives described in paragraph (e)(1) of
this section, with respect to grants made through the Small Cities
program, not less than 70 percent of the total of grant funds from each
grant and Section 108 loan guarantee funds received under subpart M of
this part within a fiscal year must be expended for activities which
benefit low- and moderate-income persons under the criteria of
Sec. 570.208(a) or of Sec. 570.208(d)(5) or (6). In the case of
multiyear plans in New York State approved in response to NOFAs
published prior to calendar year 1997, not less than 70 percent of the
total funding for grants approved pursuant to a multiyear plan for a
time period of up to three years must be expended for activities which
benefit low- and moderate-income persons. Thus, 70 percent of the grant
for year 1 of a multiyear plan approved in response to NOFAs published
prior to calendar year 1997 must meet the 70 percent requirement, 70
percent of the combined grants from years 1 and 2 must meet the
requirement, and 70 percent of the combined grants from years 1, 2, and
3 must meet the requirement. In determining the percentage of funds
expended for such activity, the provisions of Sec. 570.200(a)(3)(i),
(iii), (iv), and (v) shall apply.
(3) In addition to the objectives described in paragraph (e)(1) of
this section, grants made through the Insular Areas program shall also
comply with the primary objective of 70 percent benefit to low- and
moderate-income persons. Insular area recipients must meet this
requirement for each separate grant under section 107 of the Act. For
grants made under section 106 of the Act, insular area recipients must
ensure that over a period of time specified in their certifications not
to exceed three years, not less than 70 percent of the aggregate of CDBG
fund expenditures shall be for low- and moderate-income activities
meeting the criteria under Sec. 570.208(a) or under Sec. 570.208(d)(5)
or (6). See also Sec. 570.200(a)(3) for further discussion of the
primary objective.
(e) Allocation of funds--The allocation of appropriated funds for
insular areas under section 106 of the Act shall be
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governed by the policies and procedures described in section 106(a)(2)
of the Act and Secs. 570.440, 570.441, and 570.442 of this subpart. The
annual appropriations described in this section shall be distributed to
insular areas on the basis of the ratio of the population of each
insular area to the population of all insular areas.
[69 FR 32779, June 10, 2004, as amended at 72 FR 46370, Aug. 17, 2007]
Sec. 570.421 New York Small Cities Program design.
(a) Selection system--(1) Competitive applications. Each competitive
application will be rated and scored against at least the following
factors:
(i) Need-absolute number of persons in poverty as further explained
in the NOFA;
(ii) Need-percent of persons in poverty as further explained in the
NOFA;
(iii) Program Impact; and
(iv) Fair Housing and Equal Opportunity, which may include the
applicant's Section 3 plan and implementation efforts with respect to
actions to affirmatively further fair housing. The NOFA described in
paragraph (b) of this section will contain a more detailed description
of these factors, and the relative weight that each factor will be
given.
(2) In addition HUD reserves the right to establish minimal
thresholds for selection factors and otherwise select grants in
accordance with Sec. 570.425 and the applicable NOFA.
(3) Imminent threats to public health and safety. The criteria for
these grants are described in Sec. 570.424.
(4) Repayment of Section 108 loans. The criteria for these grants
are described in Sec. 570.432.
(5) Economic development grants. HUD intends to use the Section 108
loan guarantee program to the maximum extent feasible to fund economic
development projects in the nonentitlement areas of New York. In the
event that there are not enough Section 108 loan guarantee funds
available to fund viable economic development projects, if a project
needs a grant in addition to a loan guarantee to make it viable, or if
the project does not meet the requirements of the Section 108 program
but is eligible for a grant under this subpart, HUD may fund Economic
Development applications as they are determined to be fundable in a
specific amount by HUD up to the sum set aside for economic development
projects in a notice of funding availability, notwithstanding paragraph
(g) of this section. HUD also has the option in a NOFA of funding
economic development activities on a competitive basis, as a competitive
application as described in paragraph (a)(1) of this section. In order
for an applicant to receive Small Cities grant funds on a noncompetitive
basis, the field office must determine that the economic development
project will have a substantial impact on the needs identified by the
applicant.
(b) Notice of funding availability. HUD will issue one or more
Notice(s) of Funding Availability (NOFA) each fiscal year which will
indicate the amount of funds available, the annual grant limits per
grantee, type of grants available, the application requirements, and the
rating factors that will be used for those grants which are competitive.
A NOFA may set forth, subject to the requirements of this subpart,
additional selection criteria for all grants.
(c) Eligible applicants. (1) Eligible applicants in New York are
units of general local government, excluding: Metropolitan cities, urban
counties, units of general local government which are participating in
urban counties or metropolitan cities, even if only part of the
participating unit of government is located in the urban county or
metropolitan city. Indian tribes are also ineligible for assistance
under this subpart. An application may be submitted individually or
jointly by eligible applicants.
(2) Counties, cities, towns, and villages may apply and receive
funding for separate projects to be done in the same jurisdiction. Only
one grant will be made under each funding round for the same type of
project to be located within the jurisdiction of a unit of general local
government (e.g., both the county and village cannot receive funding for
a sewer system to be located in the same village, but the county can
receive funding for a sewer system that is located in the same village
as a rehabilitation project for which the village
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receives funding). The NOFA will contain additional information on
applicant eligibility.
(3) Counties may apply on behalf of units of general local
government located within their jurisdiction when the unit of general
local government has authorized the county to apply. At the time that
the county submits its application for funding, it must submit a
resolution by the governing body of the unit of local government that
authorizes the county to submit an application on behalf of the unit of
general local government. The county will be considered the grantee and
will be responsible for executing all grant documents. The county is
responsible for ensuring compliance with all laws, regulations, and
Executive Orders applicable to the CDBG Program. HUD will deal
exclusively with the county with respect to issues of program
administration and performance, including remedial actions. The unit of
general local government will be considered the grantee for the purpose
of determining grant limits. The unit of general local government's
statistics will be used for purposes of the selection factors referred
to in Sec. 570.421(a).
(d) Public service activities cap. Public service activities may be
funded up to a maximum of fifteen (15) percent of a State's
nonentitlement allocation for any fiscal year. HUD may award a grant to
a unit of general local government for public service activities with up
to 100 percent of the funds intended for public service activities. HUD
will apply the 15 percent statewide cap to public service activities by
funding public service activities in the highest rated applications in
each NOFA until the cap is reached.
(e) Activities outside an applicant's boundaries. An applicant may
conduct eligible CDBG activities outside its boundaries. These
activities must be demonstrated to be appropriate to meeting the
applicant's needs and objectives, and must be consistent with State and
local law. This provision includes using funds provided under this
subpart in a metropolitan city or an urban county.
(f) Multiyear plans. HUD will not make any new multiyear commitments
for NOFAs published in calendar year 1997 or later. HUD will continue to
honor the terms of the multiyear plans that were approved under the
provisions of NOFAs published prior to calendar year 1997.
(g) Maximum grant amount. The maximum grant amount that will be
awarded to a single unit of general local government in response to the
annual Small Cities NOFA published in calendar year 1997 or later is
$400,000, except that counties may apply for up to $600,000 in HUD-
administered Small Cities funds. HUD may specify lower grant limits in
the NOFA, which may include different limits for different types of
grants available or different types of applicants. This paragraph (g)
does not apply to multiyear plans that were approved under the
provisions of NOFAs published prior to calendar year 1997, nor does it
apply to grants awarded in connection with paragraphs (a)(3) through
(a)(5) of this section. The maximum limits in this paragraph (g) apply
to grants for economic development projects awarded under NOFAs in which
there is no set-aside of funds for such projects.
Secs. 570.422-425 [Reserved]
Sec. 570.426 Program income.
(a) The provisions of Sec. 570.504(b) apply to all program income
generated by a specific grant and received prior to grant closeout.
(b) If the unit of general local government has another ongoing CDBG
grant at the time of closeout, the program income will be considered to
be program income of the ongoing grant. The grantee can choose which
grant to credit the program income to if it has multiple open CDBG
grants.
(c) If the unit of general local government has no open ongoing CDBG
grant at the time of closeout, program income of the unit of general
local government or its subrecipients which amounts to less than $25,000
per year will not be considered to be program income unless needed to
repay a Section 108 guaranteed loan. When more than $25,000 of program
income is generated from one or more closed out grants in a year after
closeout, the entire amount of the program income is subject to the
requirements of this
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part. This will be a subject of the closeout agreement described in
Sec. 570.509(c).
Sec. 570.427 Program amendments.
(a) HUD approval of certain program amendments. Grantees shall
request prior HUD approval for all program amendments involving new
activities or alteration of existing activities that will significantly
change the scope, location, or objectives of the approved activities or
beneficiaries. Approval is subject to the amended activities meeting the
requirements of this part and being able to be completed promptly.
(b) Documentation of program amendments. Any program amendments that
do not require HUD approval must be fully documented in the grantee's
records.
(c) Citizen participation requirements. Whenever an amendment
requires HUD approval, the requirements for citizen participation in
Sec. 570.431 must be met.
[62 FR 62914, Nov. 25, 1997, as amended at 72 FR 46370, Aug. 17, 2007]
Sec. 570.428 [Reserved]
Sec. 570.429 Hawaii general and grant requirements.
(a) General. This section applies to non-entitlement CDBG grants in
Hawaii. The non-entitlement counties in the State of Hawaii will be
treated as entitlement grantees except for the calculation of
allocations, and the source of their funding, which will be from section
106(d) of the Act.
(b) Scope and applicability. Except as modified or limited under the
provisions thereof or this subpart, the policies and procedures outlined
in subparts A, C, D, J, K, and O of this part apply to non-entitlement
CDBG grants in Hawaii.
(c) Grant amounts. (1) For each eligible unit of general local
government, a formula grant amount will be determined which bears the
same ratio to the total amount available for the nonentitlement area of
the State as the weighted average of the ratios between:
(i) The population of that eligible unit of general local government
and the population of all eligible units of general local government in
the nonentitlement areas of the State;
(ii) The extent of poverty in that eligible unit of general local
government and the extent of poverty in all the eligible units of
general local government in the nonentitlement areas of the State; and
(iii) The extent of housing overcrowding in that eligible unit of
general local government and the extent of housing overcrowding in all
the eligible units of general local government in the nonentitlement
areas of the State.
(2) In determining the average of the ratios under this paragraph
(c), the ratio involving the extent of poverty shall be counted twice
and each of the other ratios shall be counted once. (0.25 + 0.50 + 0.25
= 1.00).
(d) Reallocation. (1) Any amounts that become available as a result
of any reductions under subpart O of this part shall be reallocated in
the same or future fiscal year to any remaining eligible applicants on a
pro rata basis.
(2) Any formula grant amounts reserved for an applicant that chooses
not to submit an application shall be reallocated to any remaining
eligible applicants on a pro rata basis.
(3) No amounts shall be reallocated under paragraph (d) of this
section in any fiscal year to any applicant whose grant amount was
reduced under subpart O of this part.
(Approved by the Office of Management and Budget under control number
2506-0060)
[62 FR 62914, Nov. 25, 1997, as amended at 72 FR 46371, Aug. 17, 2007]
Sec. 570.431 Citizen participation.
(a) General. An applicant that is located in a nonentitlement area
of a State that has not elected to distribute funds shall comply with
the citizen participation requirements described in this section,
including requirements for the preparation of the proposed application
and the final application. The requirements for citizen participation do
not restrict the responsibility or authority of the applicant for the
development and execution of its community development program.
(b) Citizen participation plan. The applicant must develop and
follow a detailed citizen participation plan and must make the plan
public. The plan must be completed and available before
[[Page 76]]
the application for assistance is submitted to HUD, and the applicant
must certify that it is following the plan. The plan must set forth the
applicant's policies and procedures for:
(1) Giving citizens timely notice of local meetings and reasonable
and timely access to local meetings, information, and records relating
to the grantee's proposed and actual use of CDBG funds including, but
not limited to:
(i) The amount of CDBG funds expected to be made available for the
coming year, including the grant and anticipated program income;
(ii) The range of activities that may be undertaken with those
funds;
(iii) The estimated amount of those funds proposed to be used for
activities that will benefit low- and moderate-income persons;
(iv) The proposed CDBG activities likely to result in displacement
and the applicant's plans, consistent with the policies developed under
Sec. 570.606(b), for minimizing displacement of persons as a result of
its proposed activities; and
(v) The types and levels of assistance the applicant plans to make
available (or to require others to make available) to persons displaced
by CDBG-funded activities, even if the applicant expects no displacement
to occur;
(2) Providing technical assistance to groups representative of
persons of low- and moderate-income that request assistance in
developing proposals. The level and type of assistance to be provided is
at the discretion of the applicant. The assistance need not include the
provision of funds to the groups;
(3) Holding a minimum of two public hearings, for the purpose of
obtaining citizens' views and formulating or responding to proposals and
questions. Each public hearing must be conducted at a different stage of
the CDBG program. Together, the hearings must address community
development and housing needs, development of proposed activities and
review of program performance. There must be reasonable notice of the
hearings and the hearings must be held at times and accessible locations
convenient to potential or actual beneficiaries, with reasonable
accommodations including material in accessible formats for persons with
disabilities. The applicant must specify in its plan how it will meet
the requirement for hearings at times and locations convenient to
potential or actual beneficiaries;
(4) Meeting the needs of non-English speaking residents in the case
of public hearings where a significant number of non-English speaking
residents can reasonably be expected to participate;
(5) Responding to citizen complaints and grievances, including the
procedures that citizens must follow when submitting complaints and
grievances. The applicant's policies and procedures must provide for
timely written answers to written complaints and grievances within 15
working days of the receipt of the complaint, where practicable; and
(6) Encouraging citizen participation, particularly by low- and
moderate-income persons who reside in slum or blighted areas, and in
other areas in which CDBG funds are proposed to be used.
(c) Publication of proposed application. (1) The applicant shall
publish a proposed application consisting of the proposed community
development activities and community development objectives in order to
afford affected citizens an opportunity to:
(i) Examine the application's contents to determine the degree to
which they may be affected;
(ii) Submit comments on the proposed application; and
(iii) Submit comments on the performance of the applicant.
(2) The requirement for publishing in paragraph (c)(1) of this
section may be met by publishing a summary of the proposed application
in one or more newspapers of general circulation, and by making copies
of the proposed application available at libraries, government offices,
and public places. The summary must describe the contents and purpose of
the proposed application, and must include a list of the locations where
copies of the entire proposed application may be examined.
(d) Preparation of a final application. An applicant must prepare a
final application. In the preparation of the final application, the
applicant shall consider comments and views received
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related to the proposed application and may, if appropriate, modify the
final application. The final application shall be made available to the
public and shall include the community development objectives and
projected use of funds, and the community development activities.
(e) New York grantee amendments. To assure citizen participation on
program amendments to final applications that require HUD approval under
Sec. 570.427, the grantee shall:
(1) Furnish citizens information concerning the amendment;
(2) Hold one or more public hearings to obtain the views of citizens
on the proposed amendment;
(3) Develop and publish the proposed amendment in such a manner as
to afford affected citizens an opportunity to examine the contents, and
to submit comments on the proposed amendment;
(4) Consider any comments and views expressed by citizens on the
proposed amendment and, if the grantee finds it appropriate, modify the
final amendment accordingly; and
(5) Make the final amendment to the community development program
available to the public before its submission to HUD.
Sec. 570.440 Application requirements for insular area grants funded
under section 106.
(a) Applicability. The requirements of this section apply to insular
grants funded under section 106 of the Act. An insular area jurisdiction
may choose to prepare program statements following either:
(1) The abbreviated consolidated plan procedures described in this
subpart and in 24 CFR 91.235; or
(2) The complete consolidated plan procedures applicable to local
governments, discussed at 24 CFR 91.200 through 91.230.
(b) Proposed statement. An insular area jurisdiction shall prepare
and publish a proposed statement and comply with the citizen
participation requirements described in Sec. 570.441, if it submits an
abbreviated consolidated plan under 24 CFR 91.235. The jurisdiction
shall follow the citizen participation requirements of 24 CFR 91.105 and
91.100 (with the exception of Sec. 91.100(a)(4)), if it submits a
complete consolidated plan.
(c) Final statement. The insular area jurisdiction shall submit to
HUD a final statement describing its community development objectives
and activities. The statement also must include a priority nonhousing
community development plan in accordance with 24 CFR 91.235. This final
statement shall be submitted, together with the required certifications,
to the appropriate field office in a form prescribed by HUD.
(d) Submission requirement. Each insular area jurisdiction shall
submit its final statement to HUD no later than 45 days before the start
of its program year. Each jurisdiction may choose the start date for the
annual period of its program year that most closely fits its own needs.
HUD may grant an extension of the submission deadline for good cause.
(e) Certifications. The insular area jurisdiction's final statement
must be accompanied by appropriate certifications as further described
under 24 CFR 91.225. The jurisdiction should submit all general
certifications, as well as all program certifications for each program
from which it receives funding, if it submits a complete consolidated
plan. For insular area jurisdictions receiving CDBG funds under an
abbreviated consolidated plan, these certifications shall include at a
minimum:
(1) The following general certifications described at Sec. 91.225(a)
of this title: Affirmatively furthering fair housing; anti-displacement
and relocation plan; drug-free workplace; anti-lobbying; authority of
jurisdiction; consistency with plan; acquisition and relocation; and
Section 3.
(2) The following CDBG certifications described at Sec. 91.225(b) of
this title: Citizen participation; community development plan; following
a plan; use of funds; excessive force; compliance with anti-
discrimination laws; compliance with lead-based paint procedures; and
compliance with laws.
(f) HUD action on final statement. Following the review of the
statement, HUD will promptly notify each jurisdiction of the action
taken with regard to its statement. HUD will approve a grant if the
jurisdiction's submissions
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have been made and approved in accordance with 24 CFR part 91, and if
the certifications required in such submissions are satisfactory to HUD.
The certifications will be satisfactory to HUD for this purpose, unless
HUD determines pursuant to subpart O of this part that the jurisdiction
has not complied with the requirements of this part, has failed to carry
out its consolidated plan (or abbreviated consolidated plan) as provided
under Sec. 570.903, or has determined that there is evidence, not
directly involving the jurisdiction's past performance under this
program, that tends to challenge in a substantial manner the
jurisdiction's certification of future performance. If HUD makes any
such determination, however, further assurances may be required to be
submitted by the jurisdiction as HUD may deem warranted or necessary to
find the jurisdiction's certification satisfactory.
(g) Reimbursement for pre-award costs. Insular area jurisdictions
may request reimbursement for pre-award costs in accordance with
Sec. 570.200(h).
(h) Float funding. An insular area jurisdiction may use undisbursed
funds in the line of credit and its CDBG program account that are
budgeted in final statements or action plans for one or more activities
that do not need the funds immediately, subject to the limitations
described in Sec. 570.301(b).
(i) Program amendments. (1) The insular area jurisdiction's citizen
participation plan (see Sec. 570.441) must specify the criteria the
jurisdiction will use for determining what changes in the jurisdiction's
planned or actual activities will constitute a substantial amendment to
its final statement. It must include changes in the use of CDBG funds
from one eligible activity to another among the changes that qualify as
a substantial amendment.
(2) The citizen participation plan must provide citizens with
reasonable notice and an opportunity to comment on substantial
amendments. The citizen participation plan must state how reasonable
notice and an opportunity to comment will be given, as well as provide a
period of not less than 30 days to receive comments on the substantial
amendment before the amendment is implemented.
(3) The citizen participation plan shall require the jurisdiction to
consider comments or views of citizens received in writing, or orally at
public hearings, if any, in preparing the substantial amendment of its
statement. A summary of comments or views not accepted and the reasons
for non-acceptance shall be attached to the substantial amendment.
(4) Any program amendment, regardless of whether it is considered to
be substantial, must be fully documented in the jurisdiction's records.
(j) Performance reports. Each insular area jurisdiction must submit
annual performance reports in accordance with 24 CFR 91.520.
[69 FR 32780, June 10, 2004]
Sec. 570.441 Citizen participation--insular areas.
(a) General. An insular area jurisdiction submitting an abbreviated
consolidated plan under 24 CFR 91.235 shall comply with the citizen
participation requirements described in this section. An insular area
jurisdiction submitting a complete consolidated plan in accordance with
24 CFR 91.200 through 91.230 shall follow the citizen participation
requirements of Sec. 91.100 and Sec. 91.105, except for
Sec. 91.100(a)(4). For funding under section 106 of the Act, these
requirements are applicable to all aspects of the Insular Areas program,
including the preparation of the proposed statement and final statements
as described in Sec. 570.440. The requirements for citizen participation
do not restrict the responsibility or authority of the jurisdiction for
the development and execution of its community development program.
(b) Citizen participation plan. The insular area jurisdiction must
develop and follow a detailed citizen participation plan and must make
the plan public. The plan must be completed and available before the AFH
and statement for assistance is submitted to HUD, and the jurisdiction
must certify that it is following the plan. The plan must set forth the
jurisdiction's policies and procedures for:
(1) Giving citizens timely notice of local meetings and reasonable
and
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timely access to local meetings consistent with accessibility and
reasonable accommodation requirements in accordance with section 504 of
the Rehabilitation Act of 1973 and the regulations at 24 CFR part 8, and
the Americans with Disabilities Act and the regulations at 28 CFR parts
35 and 36, as applicable, as well as information and records relating to
the grantee's proposed and actual use of CDBG funds including, but not
limited to:
(i) The amount of CDBG funds expected to be made available for the
coming year, including the grant and anticipated program income;
(ii) The range of activities that may be undertaken with those
funds;
(iii) The estimated amount of those funds proposed to be used for
activities that will benefit low- and moderate-income persons;
(iv) The proposed CDBG activities likely to result in displacement
and the jurisdiction's plans, consistent with the policies developed
under Sec. 570.606(b), for minimizing displacement of persons as a
result of its proposed activities; and
(v) The types and levels of assistance the jurisdiction plans to
make available (or to require others to make available) to persons
displaced by CDBG-funded activities, even if the jurisdiction expects no
displacement to occur;
(2) Providing technical assistance to groups that are representative
of persons of low- and moderate-income that request assistance in
commenting on the AFH and developing proposals. The level and type of
assistance to be provided is at the discretion of the jurisdiction. The
assistance need not include the provision of funds to the groups;
(3) Holding a minimum of two public hearings for the purpose of
obtaining residents' views and formulating or responding to proposals
and questions. Each public hearing must be conducted at a different
stage of the CDBG program year. Together, the hearings must address
affirmatively furthering fair housing, community development and housing
needs, development of proposed activities, proposed strategies and
actions for affirmatively furthering fair housing consistent with the
AFH, and a review of program performance. There must be reasonable
notice of the hearings, and the hearings must be held at times and
accessible locations convenient to potential or actual beneficiaries,
with reasonable accommodations, including materials in accessible
formats, for persons with disabilities. The jurisdiction must specify in
its citizen participation plan how it will meet the requirement for
hearings at times and accessible locations convenient to potential or
actual beneficiaries;
(4) Assessing its language needs, identifying any need for
translation of notices and other vital documents and, in the case of
public hearings, meeting the needs of non-English speaking residents
where a significant number of non-English speaking residents can
reasonably be expected to participate. At a minimum, the citizen
participation plan shall require the jurisdiction to make reasonable
efforts to provide language assistance to ensure meaningful access to
participation by non-English speaking persons;
(5) Responding to citizen complaints and grievances, including the
procedures that citizens must follow when submitting complaints and
grievances. The jurisdiction's policies and procedures must provide for
timely written answers to written complaints and grievances within 15
working days after the receipt of the complaint, where practicable; and
(6) Encouraging citizen participation, particularly by low- and
moderate-income persons who reside in areas in which CDBG funds are
proposed to be used.
(c) Publication of proposed AFH and proposed statement. (1) The
insular area jurisdiction shall publish a proposed AFH and a proposed
statement consisting of the proposed community development activities
and community development objectives (as applicable) in order to afford
affected residents an opportunity to:
(i) Examine the document's contents to determine the degree to which
they may be affected;
(ii) Submit comments on the proposed document; and
(iii) Submit comments on the performance of the jurisdiction.
[[Page 80]]
(2) The requirement for publishing in paragraph (c)(1) of this
section may be met by publishing a summary of the proposed document in
one or more newspapers of general circulation and by making copies of
the proposed document available on the Internet, on the grantee's
official government Web site, and as well at libraries, government
offices, and public places. The summary must describe the contents and
purpose of the proposed document and must include a list of the
locations where copies of the entire proposed document may be examined.
(d) Preparation of the AFH and final statement. An insular area
jurisdiction must prepare an AFH and a final statement. In the
preparation of the AFH and final statement, the jurisdiction shall
consider comments and views received relating to the proposed document
and may, if appropriate, modify the final document. The final AFH and
final statement shall be made available to the public. The final
statement shall include the community development objectives, projected
use of funds, and the community development activities.
(e) Program amendments. To assure citizen participation on program
amendments to final statements and any revision to the AFH, the insular
area grantee shall:
(1) Furnish its residents with information concerning the amendment
to the consolidated plan or any revision to the AFH (as applicable);
(2) Hold one or more public hearings to obtain the views of
residents on the proposed amendment to the consolidated plan or revision
to the AFH;
(3) Develop and publish the proposed amendment to the consolidated
plan or any revision to the AFH in such a manner as to afford affected
residents an opportunity to examine the contents, and to submit comments
on the proposed amendment to the consolidated plan or revision to the
AFH, as applicable;
(4) Consider any comments and views expressed by residents on the
proposed amendment to the consolidated plan or revision to the AFH, and,
if the grantee finds it appropriate, make modifications accordingly; and
(5) Make the final amendment to the community development program or
revision to the AFH available to the public before its submission to
HUD.
(f) Performance reports. (1) The citizen participation plan must
provide citizens with reasonable notice and an opportunity to comment on
performance reports. The citizen participation plan must state how
reasonable notice and an opportunity to comment will be given. The
citizen participation plan must provide a period of not less than 15
days to receive comments on the performance report before it is to be
submitted to HUD.
(2) The citizen participation plan shall require the jurisdiction to
consider comments or views of citizens received in writing or orally at
public hearings in preparing the performance report. A summary of these
comments or views shall be attached to the performance report.
(g) Application for loan guarantees. Insular area jurisdictions
intending to apply for the Section 108 Loan Guarantee program must
ensure that they follow the applicable presubmission and citizen
participation requirements of Sec. 570.704.
[69 FR 32780, June 10, 2004, as amended at 80 FR 42366, July 16, 2015]
Sec. 570.442 Reallocations-Insular Areas.
(a) Any Insular Area funds that become available as a result of
reductions under subpart O of this part, shall be reallocated in the
same or future fiscal year to any remaining eligible Insular Area
grantees pro rata according to population.
(b) Any Insular Area grant funds for a fiscal year reserved for an
applicant that chooses not to submit a final statement in accordance
with Sec. 570.440 to receive such funds, shall be reallocated in the
same or future fiscal year to any remaining eligible Insular Area
grantees pro rata according to population.
(c) No amounts shall be reallocated under this section in any fiscal
year to any applicant whose grant amount in such fiscal year was reduced
under subpart O of this part or who did not submit a final statement in
accordance with Sec. 570.440 for that fiscal year.
(d) Insular Area grantees receiving additional funds under this
section will be evaluated for timeliness under
[[Page 81]]
Sec. 570.902 based upon the original grant amount plus the additional
funds received. Accordingly, references in Sec. 570.902 to an Insular
Area's grant amount for its current program year include such additional
funds, and references to unexpended or undisbursed funds include such
additional funds.
[72 FR 12536, Mar. 15, 2007]
Subpart G_Urban Development Action Grants
Source: 47 FR 7983, Feb. 23, 1982, unless otherwise noted.
Sec. 570.450 Purpose.
The purpose of urban development action grants is to assist cities
and urban counties that are experiencing severe economic distress to
help stimulate economic development activity needed to aid in economic
recovery. This subpart G contains those regulations that are essential
for the continued operation of this grant program.
[61 FR 11476, Mar. 20, 1996]
Sec. 570.456 Ineligible activities and limitations on eligible activities.
(a) Large cities and urban counties may not use assistance under
this subpart for planning the project or developing the application.
However, they may use entitlement community development block grant
funds for this purpose, provided that the UDAG project meets the
eligibility test of this part. Any small city which submits a project
application which is selected for preliminary approval and for which
legally binding grant agreement and for which a release of funds
pursuant to 24 CFR part 58 has been issued may devote up to three (3)
percent of the approved amount of its action grant to defray its actual
costs in planning the project and preparing its application.
(b) Assistance under this subpart may not be used for public
services as described in Sec. 570.201(e).
(c)(1) No assistance may be provided under this subpart for
speculative projects intended to facilitate the relocation of industrial
or commercial plants or facilities from one area to another. The
provisions of this paragraph (c)(1) shall not apply to a relocation of
any such plant or facility within a metropolitan area.
(i) HUD will presume that a proposed project which includes
speculative commercial or industrial space is intended to facilitate the
relocation of a plant or facility from one area to another, if it is
demonstrated to HUD's satisfaction that:
(A) The proposed project is reasonably proximate (i.e., within 50
miles) to an area from which there has been a significant current
pattern of movement, to areas reasonably proximate, of jobs of the
category for which such space is appropriate; and
(B) There is a likelihood of continuation of the pattern, based on
measurable comparisons between the area from which the movement has been
occurring and the area of the proposed project in terms of tax rates,
energy costs, and similar relevant factors.
(ii) The restrictions established in this paragraph (c)(1) shall not
apply if the Secretary determines that the relocation does not
significantly and adversely affect the employment or economic base of
the area from which the industrial or commercial plant or facility is to
be relocated. However, the Secretary will not be required to make a
determination whether there is a significant and adverse effect. If such
a determination is undertaken, the Secretary will presume that there is
a significant and adverse effect where the significant pattern of job
movement and the likelihood of continuation of such a pattern has been
from a distressed community.
(iii) The presumptions established in accordance with this paragraph
(c)(1) are rebuttable by the applicant. However, the burden of
overcoming the presumptions will be on the applicant.
(iv) The presumptions established in this paragraph (c)(1) will not
apply if the speculative space contained in a commercial or industrial
plant or facility included in a project constitutes a lesser percentage
of the total space contained in that plant or facility than the
threshold amounts specified below:
------------------------------------------------------------------------
Size of plant or facility Amount of speculative space
------------------------------------------------------------------------
0 to 50,000 sq. ft........................ 10 percent.
50,001 to 250,000 sq. ft.................. 5,000 sq. ft. or 8 percent,
whichever is greater.
[[Page 82]]
250,001 to 1,000,000 sq. ft............... 20,000 sq. ft. or 5 percent,
whichever is greater.
1,000,001 or more sq. ft.................. 50,000 sq. ft. or 3 percent,
whichever is greater.
------------------------------------------------------------------------
(2) Projects with identified intended occupants. No assistance may
be provided or utilized under this subpart for any project with
identified intended occupants that is likely to facilitate:
(i) A relocation of any operation of an industrial or commercial
plant or facility or other business establishment from any UDAG eligible
jurisdiction; or
(ii) An expansion of any operation of an industrial or commercial
plant or facility or other business establishment that results in a
substantial reduction of any such operation in any UDAG eligible
jurisdiction. The provisions of this paragraph (c)(2) shall not apply to
a relocation of an operation or to an expansion of an operation within a
metropolitan area. The provisions of this paragraph (c)(2) shall apply
only to projects that do not have speculative space, or to projects that
include both identified intended occupant space and speculative space.
(iii) Significant and adverse effect. The restrictions established
in this paragraph (c)(2) shall not apply if the Secretary determines
that the relocation or expansion does not significantly and adversely
affect the employment or economic base of the UDAG eligible jurisdiction
from which the relocation or expansion occurs. However, the Secretary
will not be required to make a determination whether there is a
significant and adverse effect. If such a determination is undertaken,
among the factors which the Secretary will consider are:
(A) Whether it is reasonable to anticipate that there will be a
significant net loss of jobs in the plant or facility being abandoned;
and
(B) Whether an equivalent productive use will be made of the plant
or facility being abandoned by the relocating or expanding operation,
thus creating no deterioration of economic base.
(3) Within 90 days following notice of intent to withhold, deny or
cancel assistance under paragraph (c) (1) or (2) of this section, the
applicant may appeal in writing to the Secretary the withholding, denial
or cancellation of assistance. The applicant will be notified and given
an opportunity within a prescribed time for an informal consultation
regarding the action.
(4) Assistance for individuals adversely affected by prohibited
relocations. (i) Any amount withdrawn by, recaptured by, or paid to the
Secretary because of a violation (or a settlement of an alleged
violation) of this section (or any regulation issued or contractual
provision entered into to carry out this section) by a project with
identified intended occupants will be made available by the Secretary as
a grant to the UDAG eligible jurisdiction from which the operation of an
industrial or commercial plant or facility or other business
establishment was relocated, or in which the operation was reduced.
(ii)(A) Any amount made available under this paragraph shall be used
by the grantee to assist individuals who were employed by the operation
involved before the relocation or reduction and whose employment or
terms of employment were adversely affected by the relocation or
reduction. The assistance shall include job training, job retraining,
and job placement.
(B) If any amount made available to a grantee under this paragraph
(c)(4) is more than is required to provide the assistance described in
paragraph (c)(4)(ii)(A) of this section, the grantee shall use the
excess amount to carry out community development activities eligible
under section 105(a) of the Housing and Community Development Act of
1974.
(iii)(A) The provisions of this paragraph (c)(4) shall be applicable
to any amount withdrawn by, recaptured by, or paid to the Secretary
under this section, including any amount withdrawn, recaptured, or paid
before the effective date of this paragraph.
(B) Grants may be made under this paragraph (c)(4) only to the
extent of amounts provided in appropriation Acts.
(5) For purposes of this section, the following definitions apply:
[[Page 83]]
(i) ``Operation'' means any plant, equipment, facility, substantial
number of positions, substantial employment opportunities, production
capacity, or product line.
(ii) ``Metropolitan area'' means a metropolitan area as defined in
Sec. 570.3 and which consists of either a freestanding metropolitan area
or a primary metropolitan statistical area where both primary and
consolidated areas exist.
(iii) ``Likely'' means probably or reasonably to be expected, as
determined by firm evidence such as resolutions of a corporation to
close a plant or facility, notifications of closure to collective
bargaining units, correspondence and notifications of corporate
officials relative to a closure, and supportive evidence, such as
newspaper articles and notices to employees regarding closure of a plant
or facility. Consultant studies and marketing studies may be submitted
as supportive evidence, but by themselves are not firm evidence.
(iv) ``UDAG eligible jurisdiction'' means a distressed community, a
Pocket of Poverty, a Pocket of Poverty community, or an identifiable
community described in section 119(p) of the Housing and Community
Development Act of 1974.
(6) Notwithstanding any other provision of this subpart, nothing in
this subpart may be construed to permit an inference or conclusion that
the policy of the urban development action grant program is to
facilitate the relocation of businesses from one area to another.
[47 FR 7983, Feb. 23, 1982, as amended at 53 FR 33028, Aug. 29, 1988; 54
FR 21169, May 16, 1989; 56 FR 56128, Oct. 31, 1991]
Sec. 570.457 Displacement, relocation, acquisition, and replacement
of housing.
The displacement, relocation, acquisition, and replacement of
housing requirements of Sec. 570.606 apply to applicants under this
subpart G.
[55 FR 29309, July 18, 1990]
Sec. 570.461 Post-preliminary approval requirements; lead-based paint.
The recipient may receive preliminary approval prior to the
accomplishment of lead-based paint activities conducted pursuant to part
35, subparts A, B, J, K, and R of this title, but no funds will be
released until such actions are complete and evidence of compliance is
submitted to HUD.
[64 FR 50225, Sept. 15, 1999]
Sec. 570.463 Project amendments and revisions.
(a) Pre-approval revisions to the application. Applicants must
submit to the HUD Area Office and to Central Office all revisions to the
application. A revision is considered significant if it alters the
scope, location, or scale of the project or changes the beneficiaries'
population.
The applicant must hold at least one public hearing prior to making a
significant revision to the application.
(b) Post preliminary approval amendments. Applicants receiving
preliminary approval must submit to the HUD Central Office, a request
for approval of any significant amendment. A copy of the request must
also be submitted to the Area Office. A significant amendment involves
new activities or alterations thereof which will change the scope,
location, scale, or beneficiaries of such activities or which, as a
result of a number of smaller changes, add up to an amount that exceeds
ten percent of the grant. HUD approval of amendments may be granted to
those requests which meet all of the following criteria:
(1) New or significantly altered activities must meet the criteria
for selection applicable at the time of receipt of the program
amendment.
(2) The recipient must have complied with all requirements of this
subpart.
(3) The recipient may make amendments other than those requiring
prior HUD approval as defined in paragraph (b) of this section but each
recipient must notify both the Area and Central Offices of such changes.
[47 FR 7983, Feb. 23, 1982, as amended at 61 FR 11476, Mar. 20, 1996]
Sec. 570.464 Project closeout.
HUD will advise the recipient to initiate closeout procedures when
HUD determines, in consultation with the recipient, that there are not
impediments to closeout. Closeout shall be
[[Page 84]]
carried out in accordance with Sec. 570.509 and applicable HUD
guidelines.
[53 FR 8058, Mar. 11, 1988]
Sec. 570.465 Applicability of rules and regulations.
The provisions of subparts A, B, C, J, K, and O of this part 570
shall apply to this subpart except to the extent that they are modified
or augmented by this subpart.
Sec. 570.466 Additional application submission requirements for Pockets
of Poverty--employment opportunities.
Applicants for Action Grants under the Pockets of Poverty provision
must describe the number and, to the extent possible, the types of new
jobs (construction and permanent) that will be provided to the low- and
moderate-income residents of the Pocket of Poverty as a direct result of
the proposed project. If the application calls for job training programs
(such as those related to the CETA program) or job recruiting services
for the pocket's residents, then such proposed activities must be
clearly and fully explained. HUD requires applicants to ensure that at
least 75 percent of whatever permanent jobs initially result from the
project are provided to low- and moderate-income persons and that at
least 51 percent of whatever permanent jobs initially result from the
project are provided to low- and moderate-income residents from the
pocket. HUD encourages applicants to ensure that at least 20 percent of
all permanent jobs are filled by persons from the pocket qualified to
participate in the CETA program on a continuous basis. HUD requires all
applicants to continuously use best efforts to ensure that at least 75
percent of all permanent jobs resulting from any Action Grant-assisted
project are provided to low- and moderate-income persons and that at
least 51 percent of all permanent jobs resulting from any Action Grant-
assisted project are provided to low- and moderate-income residents from
the pocket. The application should clearly describe how the applicant
intends to meet initial and continuous job requirements. Private
participating parties must meet these employment requirements in the
aggregate. To enable the private participants to do so, lease agreements
executed by a private participating party shall include:
(a) Provisions requiring lessees to follow hiring practices that the
private participating party has determined will enable it to meet these
requirements in the aggregate; and
(b) Provisions that will enable the private participating party to
declare a default under the lease agreement if the lessees do not follow
such practices.
[61 FR 11476, Mar. 20, 1996]
Subpart H [Reserved]
Subpart I_State Community Development Block Grant Program
Source: 57 FR 53397, Nov. 9, 1992, unless otherwise noted.
Sec. 570.480 General.
(a) This subpart describes policies and procedures applicable to
states that have permanently elected to receive Community Development
Block Grant (CDBG) funds for distribution to units of general local
government in the state's nonentitlement areas under the Housing and
Community Development Act of 1974, as amended (the Act). Other subparts
of part 570 are not applicable to the State CDBG program, except as
expressly provided otherwise. Regulations of part 570 outside of this
subpart that apply to the State CDBG program include Secs. 570.200(j)
and 570.606.
(b) HUD's authority for the waiver of regulations and for the
suspension of requirements to address damage in a Presidentially-
declared disaster area is described in 24 CFR part 5 and in section 122
of the Act, respectively.
(c) In exercising the Secretary's obligation and responsibility to
review a state's performance, the Secretary will give maximum feasible
deference to the state's interpretation of the statutory requirements
and the requirements of this regulation, provided that these
interpretations are not plainly inconsistent with the Act and the
Secretary's obligation to enforce compliance with the intent of the
Congress as
[[Page 85]]
declared in the Act. The Secretary will not determine that a state has
failed to carry out its certifications in compliance with requirements
of the Act (and this regulation) unless the Secretary finds that
procedures and requirements adopted by the state are insufficient to
afford reasonable assurance that activities undertaken by units of
general local government were not plainly inappropriate to meeting the
primary objectives of the Act, this regulation, and the state's
community development objectives.
(d) Administrative action taken by the Secretary that is not
explicitly and fully part of this regulation shall only apply to a
specific case or issue at a specific time, and shall not be generally
applicable to the state-administered CDBG program.
(e) Religious organizations are eligible to participate under the
State CDBG Program as provided in Sec. 570.200(j).
(f) In administering the CDBG program, a state may impose additional
or more restrictive provisions on units of general local government
participating in the state's program, provided that such provisions are
not inconsistent with the Act or other statutory or regulatory
provisions that are applicable to the State CDBG program.
(g) States shall make CDBG program grants only to units of general
local government. This restriction does not limit a state's authority to
make payments to other parties for state administrative expenses and
technical assistance activities authorized in section 106(d) of the Act.
(h) Any unexpended CDBG origin year grant funds in the United States
Treasury account on September 30 of the fifth Federal fiscal year after
the end of the origin year grant's period of availability for obligation
by HUD will be canceled. HUD may require an earlier expenditure and draw
down deadline under a grant agreement.
[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 11477, Mar. 20, 1996; 61
FR 54921, Oct. 22, 1996; 69 FR 41718, July 9, 2004; 77 FR 24142, Apr.
23, 2012; 80 FR 69870, Nov. 12, 2015]
Sec. 570.481 Definitions.
(a) Except for terms defined in applicable statutes or this subpart,
the Secretary will defer to a state's definitions, provided that these
definitions are explicit, reasonable and not plainly inconsistent with
the Act. As used in this subpart, the following terms shall have the
meaning indicated:
(1) Act means title I of the Housing and Community Development Act
of 1974 (42 U.S.C. 5301 et seq.).
(2) CDBG funds means Community Development Block Grant funds, in the
form of grants under this subpart including any reimbursements, program
income, and loans guaranteed under section 108 of the Act.
(3) Origin year means the specific Federal fiscal year during which
the annual grant funds were appropriated.
(b) [Reserved]
[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 5209, Feb. 9, 1996; 74
FR 36389, July 22, 2009; 80 FR 69871, Nov. 12, 2015]
Sec. 570.482 Eligible activities.
(a) General. The choice of activities on which block grant funds are
expended represents the determination by state and local participants,
developed in accordance with the state's program design and procedures,
as to which approach or approaches will best serve these interests. The
eligible activities are listed at section 105(a) of the Act.
(b) Special assessments under the CDBG program. The following
policies relate to special assessments under the CDBG program:
(1) Public improvements initially assisted with CDBG funds. Where
CDBG funds are used to pay all or part of the cost of a public
improvement, special assessments may be imposed as follows:
(i) Special assessments to recover the CDBG funds may be made only
against properties owned and occupied by persons not of low and moderate
income. These assessments constitute program income.
(ii) Special assessments to recover the non-CDBG portion may be
made, provided that CDBG funds are used to pay the special assessment in
behalf of all properties owned and occupied by low and moderate income
persons; except that CDBG funds need not be used to pay the special
assessments in behalf of properties owned and occupied
[[Page 86]]
by moderate income persons if, when permitted by the state, the unit of
general local government certifies that it does not have sufficient CDBG
funds to pay the assessments in behalf of all of the low and moderate
income owner-occupant persons. Funds collected through such special
assessments are not program income.
(2) Public improvements not initially assisted with CDBG funds. CDBG
funds may be used to pay special assessments levied against property
when this form of assessment is used to recover the capital cost of
eligible public improvements initially financed solely from sources
other than CDBG funds. The payment of special assessments with CDBG
funds constitutes CDBG assistance to the public improvement. Therefore,
CDBG funds may be used to pay special assessments, provided that:
(i) The installation of the public improvements was carried out in
compliance with requirements applicable to activities assisted under
this subpart, including labor, environmental and citizen participation
requirements;
(ii) The installation of the public improvement meets a criterion
for national objectives. (See Sec. 570.483(b)(1), (c), and (d).)
(iii) The requirements of Sec. 570.482(b)(1)(ii) are met.
(c) Special eligibility provisions. (1) Microenterprise development
activities eligible under section 105(a)(23) of the Housing and
Community Development Act of 1974, as amended (42 U.S.C. 5301 et seq.)
(the Act) may be carried out either through the recipient directly or
through public and private organizations, agencies, and other
subrecipients (including nonprofit and for-profit subrecipients).
(2) Provision of public services. The following activities shall not
be subject to the restrictions on public services under section
105(a)(8) of the Act:
(i) Support services provided under section 105(a)(23) of the Act,
and paragraph (c) of this section;
(ii) Services carried out under the provisions of section 105(a)(15)
of the Act, that are specifically designed to increase economic
opportunities through job training and placement and other employment
support services, including, but not limited to, peer support programs,
counseling, child care, transportation, and other similar services; and
(iii) Services of any type carried out under the provisions of
section 105(a)(15) of the Act pursuant to a strategy approved by a state
under the provisions of Sec. 91.315(e)(2) of this title.
(3) Environmental cleanup and economic development or redevelopment
of contaminated properties. Remediation of known or suspected
environmental contamination may be undertaken under the authority of
section 205 of Public Law 105-276 and section 105(a)(4) of the Act.
Economic development activities carried out under sections 105(a)(14),
(a)(15), or (a)(17) of the Act may include costs associated with
project-specific assessment or remediation of known or suspected
environmental contamination.
(4) Housing counseling, as defined in 24 CFR 5.100, that is funded
with or provided in connection with CDBG funds must be carried out in
accordance with 24 CFR 5.111.
(5) Broadband infrastructure in housing. Any new construction or
substantial rehabilitation, as substantial rehabilitation is defined by
24 CFR 5.100, of a building with more than 4 rental units, for which
CDBG funds are first obligated by the State's grant recipient on or
after July 18, 2017, must include installation of broadband
infrastructure, as this term is also defined in 24 CFR 5.100, except
where the State or the State's grant recipient determines and documents
the determination that:
(i) The location of the new construction or substantial
rehabilitation makes installation of broadband infrastructure
infeasible;
(ii) The cost of installing broadband infrastructure would result in
a fundamental alteration in the nature of its program or activity or in
an undue financial burden; or
(iii) The structure of the housing to be substantially rehabilitated
makes installation of broadband infrastructure infeasible.
(d) [Reserved]
(e) Guidelines and objectives for evaluating project costs and
financial requirements--(1) Applicability. The following guidelines,
also referred to as the underwriting guidelines, are provided to
[[Page 87]]
assist the recipient to evaluate and select activities to be carried out
for economic development purposes. Specifically, these guidelines are
applicable to activities that are eligible for CDBG assistance under
section 105(a)(17) of the Act, economic development activities eligible
under section 105(a)(14) of the Act, and activities that are part of a
community economic development project eligible under section 105(a)(15)
of the Act. The use of the underwriting guidelines published by HUD is
not mandatory. However, states electing not to use these guidelines
would be expected to ensure that the state or units of general local
government conduct basic financial underwriting prior to the provision
of CDBG financial assistance to a for-profit business.
(2) Objectives. The underwriting guidelines are designed to provide
the recipient with a framework for financially underwriting and
selecting CDBG-assisted economic development projects which are
financially viable and will make the most effective use of the CDBG
funds. Where appropriate, HUD's underwriting guidelines recognize that
different levels of review are appropriate to take into account
differences in the size and scope of a proposed project, and in the case
of a microenterprise or other small business to take into account the
differences in the capacity and level of sophistication among businesses
of differing sizes. Recipients are encouraged, when they develop their
own programs and underwriting criteria, to also take these factors into
account. These underwriting guidelines are published as appendix A to
this part. The objectives of the underwriting guidelines are to ensure:
(i) That project costs are reasonable;
(ii) That all sources of project financing are committed;
(iii) That to the extent practicable, CDBG funds are not substituted
for non-Federal financial support;
(iv) That the project is financially feasible;
(v) That to the extent practicable, the return on the owner's equity
investment will not be unreasonably high; and
(vi) That to the extent practicable, CDBG funds are disbursed on a
pro rata basis with other finances provided to the project.
(f) Standards for evaluating public benefit--(1) Purpose and
applicability. The grantee is responsible for making sure that at least
a minimum level of public benefit is obtained from the expenditure of
CDBG funds under the categories of eligibility governed by these
standards. The standards set forth below identify the types of public
benefit that will be recognized for this purpose and the minimum level
of each that must be obtained for the amount of CDBG funds used. These
standards are applicable to activities that are eligible for CDBG
assistance under section 105(a)(17) of the Act, economic development
activities eligible under section 105(a)(14) of the Act, and activities
that are part of a community economic development project eligible under
section 105(a)(15) of the Act. Certain public facilities and
improvements eligible under section 105(a)(2) of the Act, which are
undertaken for economic development purposes, are also subject to these
standards, as specified in Sec. 570.483(b)(4)(vi)(F)(2). Unlike the
guidelines for project costs and financial requirements covered under
paragraph (a) of this section, the use of the standards for public
benefit is mandatory.
(2) Standards for activities in the aggregate. Activities covered by
these standards must, in the aggregate, either:
(i) Create or retain at least one full-time equivalent, permanent
job per $35,000 of CDBG funds used; or
(ii) Provide goods or services to residents of an area, such that
the number of low- and moderate-income persons residing in the areas
served by the assisted businesses amounts to at least one low- and
moderate-income person per $350 of CDBG funds used.
(3) Applying the aggregate standards. (i) A state shall apply the
aggregate standards under paragraph (e)(2) of this section to all funds
distributed for applicable activities from each annual grant. This
includes the amount of the annual grant, any funds reallocated by HUD to
the state, any program income distributed by the state and any
guaranteed loan funds made under the provisions of subpart M of this
part covered in the method of distribution in
[[Page 88]]
the final statement for a given annual grant year.
(ii) The grantee shall apply the aggregate standards to the number
of jobs to be created/retained, or to the number of persons residing in
the area served (as applicable), as determined at the time funds are
obligated to activities.
(iii) Where an activity is expected both to create or retain jobs
and to provide goods or services to residents of an area, the grantee
may elect to count the activity under either the jobs standard or the
area residents standard, but not both.
(iv) Where CDBG assistance for an activity is limited to job
training and placement and/or other employment support services, the
jobs assisted with CDBG funds shall be considered to be created or
retained jobs for the purposes of applying the aggregate standards.
(v) Any activity subject to these standards which meets one or more
of the following criteria may, at the grantee's option, be excluded from
the aggregate standards described in paragraph (f)(2) of this section:
(A) Provides jobs exclusively for unemployed persons or participants
in one or more of the following programs:
(1) Jobs Training Partnership Act (JTPA);
(2) Jobs Opportunities for Basic Skills (JOBS); or
(3) Aid to Families with Dependent Children (AFDC);
(B) Provides jobs predominantly for residents of Public and Indian
Housing units;
(C) Provides jobs predominantly for homeless persons;
(D) Provides jobs predominantly for low-skilled, low- and moderate-
income persons, where the business agrees to provide clear opportunities
for promotion and economic advancement, such as through the provision of
training;
(E) Provides jobs predominantly for persons residing within a census
tract (or block numbering area) that has at least 20 percent of its
residents who are in poverty;
(F) Provides assistance to business(es) that operate(s) within a
census tract (or block numbering area) that has at least 20 percent of
its residents who are in poverty;
(G) Stabilizes or revitalizes a neighborhood income that has at
least 70 percent of its residents who are low- and moderate-income;
(H) Provides assistance to a Community Development Financial
Institution (as defined in the Community Development Banking and
Financial Institutions Act of 1994, (12 U.S.C. 4701 note)) serving an
area that has at least 70 percent of its residents who are low- and
moderate-income;
(I) Provides assistance to an organization eligible to carry out
activities under section 105(a)(15) of the Act serving an area that has
at least 70 percent of its residents who are low- and moderate-income;
(J) Provides employment opportunities that are an integral component
of a project designed to promote spatial deconcentration of low- and
moderate-income and minority persons;
(K) With prior HUD approval, provides substantial benefit to low-
income persons through other innovative approaches;
(L) Provides services to the residents of an area pursuant to a
strategy approved by the State under the provisions of Sec. 91.315(e)(2)
of this title;
(M) Creates or retains jobs through businesses assisted in an area
pursuant to a strategy approved by the State under the provisions of
Sec. 91.315(e)(2) of this title.
(N) Directly involves the economic development or redevelopment of
environmentally contaminated properties.
(4) Standards for individual activities. Any activity subject to
these standards which falls into one or more of the following categories
will be considered by HUD to provide insufficient public benefit, and
therefore may under no circumstances be assisted with CDBG funds:
(i) The amount of CDBG assistance exceeds either of the following,
as applicable:
(A) $50,000 per full-time equivalent, permanent job created or
retained; or
(B) $1,000 per low- and moderate-income person to which goods or
services are provided by the activity.
(ii) The activity consists of or includes any of the following:
[[Page 89]]
(A) General promotion of the community as a whole (as opposed to the
promotion of specific areas and programs);
(B) Assistance to professional sports teams;
(C) Assistance to privately-owned recreational facilities that serve
a predominantly higher-income clientele, where the recreational benefit
to users or members clearly outweighs employment or other benefits to
low- and moderate-income persons;
(D) Acquisition of land for which the specific proposed use has not
yet been identified; and
(E) Assistance to a for-profit business while that business or any
other business owned by the same person(s) or entity(ies) is the subject
of unresolved findings of noncompliance relating to previous CDBG
assistance provided by the recipient.
(5) Applying the individual activity standards. (i) Where an
activity is expected both to create or retain jobs and to provide goods
or services to residents of an area, it will be disqualified only if the
amount of CDBG assistance exceeds both of the amounts in paragraph
(f)(4)(i) of this section.
(ii) The individual activity tests in paragraph (f)(4)(i) of this
section shall be applied to the number of jobs to be created or
retained, or to the number of persons residing in the area served (as
applicable), as determined at the time funds are obligated to
activities.
(iii) Where CDBG assistance for an activity is limited to job
training and placement and/or other employment support services, the
jobs assisted with CDBG funds shall be considered to be created or
retained jobs for the purposes of applying the individual activity
standards in paragraph (f)(4)(i) of this section.
(6) Documentation. The state and its grant recipients must maintain
sufficient records to demonstrate the level of public benefit, based on
the above standards, that is actually achieved upon completion of the
CDBG-assisted economic development activity(ies) and how that compares
to the level of such benefit anticipated when the CDBG assistance was
obligated. If a state grant recipient's actual results show a pattern of
substantial variation from anticipated results, the state and its
recipient are expected to take those actions reasonably within their
respective control to improve the accuracy of the projections. If the
actual results demonstrate that the state has failed the public benefit
standards, HUD may require the state to meet more stringent standards in
future years as appropriate.
(g) Amendments to economic development projects after review
determinations. If, after the grantee enters into a contract to provide
assistance to a project, the scope or financial elements of the project
change to the extent that a significant contract amendment is
appropriate, the project should be reevaluated under these and the
recipient's guidelines. (This would include, for example, situations
where the business requests a change in the amount or terms of
assistance being provided, or an extension to the loan payment period
required in the contract.) If a reevaluation of the project indicates
that the financial elements and public benefit to be derived have also
substantially changed, then the recipient should make appropriate
adjustments in the amount, type, terms or conditions of CDBG assistance
which has been offered, to reflect the impact of the substantial change.
(For example, if a change in the project elements results in a
substantial reduction of the total project costs, it may be appropriate
for the recipient to reduce the amount of total CDBG assistance.) If the
amount of CDBG assistance provided to the project is increased, the
amended project must still comply with the public benefit standards
under paragraph (f) of this section.
(h) Prohibition on use of assistance for employment relocation
activities--(1) Prohibition. CDBG funds may not be used to directly
assist a business, including a business expansion, in the relocation of
a plant, facility, or operation from one labor market area (LMA) to
another LMA if the relocation is likely to result in a significant loss
of jobs in the LMA from which the relocation occurs.
(2) Definitions. The following definitions apply to the section:
(i) Directly assist. Directly assist means the provision of CDBG
funds to a business pursuant to section
[[Page 90]]
105(a)(15) or (17) of the Housing and Community Development Act of 1974
(42 U.S.C. 5301 et seq). Direct assistance also includes assistance
under section 105(a)(1), (2), (4), (7), and (14) of the Housing and
Community Development Act of 1974, when the state's grantee,
subrecipient, or nonprofit entity eligible under section 105(a)(15)
enters into an agreement with a business to undertake one or more of
these activities as a condition of the business relocating a facility,
plant, or operation to the LMA. Provision of public facilities and
indirect assistance that will provide benefit to multiple businesses
does not fall under the definition of ``directly assist,'' unless it
includes the provision of infrastructure to aid a specific business that
is the subject of an agreement with the specific assisted business.
(ii) Labor market area (LMA). For metropolitan areas, an LMA is an
area defined as such by the U.S. Bureau of Labor Statistics (BLS). An
LMA is an economically integrated geographic area within which
individuals can live and find employment within a reasonable distance or
can readily change employment without changing their place of residence.
In addition, LMAs are nonoverlapping and geographically exhaustive. For
metropolitan areas, grantees must use employment data, as defined by the
BLS, for the LMA in which the affected business is currently located and
from which current jobs may be lost. For non-metropolitan areas,
grantees must use employment data, as defined by the BLS, for the LMA in
which the assisted business is currently located and from which current
jobs may be lost. For non-metropolitan areas, a LMA is either an area
defined by the BLS as an LMA, or a state may choose to combine non-
metropolitan LMAs. States are required to define or reaffirm prior
definitions of their LMAs on an annual basis and retain records to
substantiate such areas prior to any business relocation that would be
impacted by this rule. Metropolitan LMAs cannot be combined, nor can a
non-metropolitan LMA be combined with a metropolitan LMA. For the
Insular Areas, each jurisdiction will be considered to be an LMA. For
the HUD-administered Small Cities Program, each of the three
participating counties in Hawaii will be considered to be its own LMA.
Recipients of Fiscal Year 1999 Small Cities Program funding in New York
will follow the requirements for State CDBG recipients.
(iii) Operation. A business operation includes, but is not limited
to, any equipment, employment opportunity, production capacity, or
product line of the business.
(iv) Significant loss of jobs. (A) A loss of jobs is significant if:
The number of jobs to be lost in the LMA in which the affected business
is currently located is equal to or greater than one-tenth of one
percent of the total number of persons in the labor force of that LMA;
or in all cases, a loss of 500 or more jobs. Notwithstanding the
aforementioned, a loss of 25 jobs or fewer does not constitute a
significant loss of jobs.
(B) A job is considered to be lost due to the provision of CDBG
assistance if the job is relocated within three years from the date the
assistance is provided to the business or the time period within which
jobs are to be created as specified by the agreement among the business,
the recipient, and the state (as applicable) if it is longer than three
years.
(3) Written agreement. Before directly assisting a business with
CDBG funds, the recipient, subrecipient, or (in the case of any activity
carried out pursuant to 105(a)(15)) nonprofit entity shall sign a
written agreement with the assisted business. The written agreement
shall include:
(i) Statement. A statement from the assisted business as to whether
the assisted activity will result in the relocation of any industrial or
commercial plant, facility, or operation from one LMA to another and, if
so, the number of jobs that will be relocated from each LMA;
(ii) Required certification. If the assistance will not result in a
relocation covered by this section, a certification from the assisted
business that neither it, nor any of its subsidiaries, has plans to
relocate jobs at the time the agreement is signed that would result in a
significant job loss as defined in this rule; and
[[Page 91]]
(iii) Reimbursement of assistance. The agreement shall provide for
reimbursement to the recipient of any assistance provided to, or
expended on behalf of, the business in the event that assistance results
in a relocation prohibited under this section.
(4) Assistance not covered by this paragraph. This paragraph does
not apply to:
(i) Relocation assistance. Relocation assistance required by the
Uniform Assistance and Real Property Acquisition Policies Act of 1970
(URA), (42 U.S.C. 4601-4655); optional relocation assistance under
section 105(a)(11), as implemented at 570.606(d);
(ii) Microenterprises. Assistance to microenterprises as defined by
section 102(a)(22) of the Housing and Community Development Act of 1974;
and
(iii) Arms-length transactions. Assistance to a business that
purchases business equipment, inventory, or other physical assets in an
arms-length transaction, including the assets of an existing business,
provided that the purchase does not result in the relocation of the
sellers' business operation (including customer base or list, goodwill,
product lines, or trade names) from one LMA to another LMA and does not
produce a significant loss of jobs in the LMA from which the relocation
occurs.
[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1949, Jan. 5, 1995; 61
FR 54921, Oct. 22, 1996; 70 FR 76370, Dec. 23, 2005; 71 FR 30035, May
24, 2006; 81 FR 90659, Dec. 14, 2016; 81 FR 92636, Dec. 20, 2016]
Sec. 570.483 Criteria for national objectives.
(a) General. The following criteria shall be used to determine
whether a CDBG assisted activity complies with one or more of the
national objectives as required to section 104(b)(3) of the Act. (HUD is
willing to consider a waiver of these requirements in accordance with
Sec. 570.480(b)).
(b) Activities benefiting low and moderate income persons. An
activity will be considered to address the objective of benefiting low
and moderate income persons if it meets one of the criteria in paragraph
(b) of this section, unless there is substantial evidence to the
contrary. In assessing any such evidence, the full range of direct
effects of the assisted activity will be considered. The activities,
when taken as a whole, must not benefit moderate income persons to the
exclusion of low income persons:
(1) Area benefit activities. (i) An activity, the benefits of which
are available to all the residents in a particular area, where at least
51 percent of the residents are low and moderate income persons. Such an
area need not be coterminous with census tracts or other officially
recognized boundaries but must be the entire area served by the
activity. Units of general local government may, at the discretion of
the state, use either HUD-provided data comparing census data with
appropriate low and moderate income levels or survey data that is
methodologically sound. An activity that serves an area that is not
primarily residential in character shall not qualify under this
criterion.
(ii) An activity, where the assistance is to a public improvement
that provides benefits to all the residents of an area, that is limited
to paying special assessments levied against residential properties
owned and occupied by persons of low and moderate income.
(iii)(A) An activity to develop, establish and operate (not to
exceed two years after establishment), a uniform emergency telephone
number system serving an area having less than 51 percent of low and
moderate income residents, when the system has not been made operational
before the receipt of CDBG funds, provided a prior written determination
is obtained from HUD. HUD's determination will be based upon
certifications by the State that:
(1) The system will contribute significantly to the safety of the
residents of the area. The unit of general local government must provide
the state a list of jurisdictions and unincorporated areas to be served
by the system and a list of the emergency services that will participate
in the emergency telephone number system;
(2) At least 51 percent of the use of the system will be by low and
moderate income persons. The state's certification may be based upon
information which identifies the total number of
[[Page 92]]
calls actually received over the preceding twelve-month period for each
of the emergency services to be covered by the emergency telephone
number system and relates those calls to the geographic segment
(expressed as nearly as possible in terms of census tracts, enumeration
districts, block groups, or combinations thereof that are contained
within the segment) of the service area from which the calls were
generated. In analyzing this data to meet the requirements of this
section, the state will assume that the distribution of income among
callers generally reflects the income characteristics of the general
population residing in the same geographic area where the callers
reside. Alternatively, the state's certification may be based upon other
data, agreed to by HUD and the state, which shows that over the
preceding twelve-month period the users of all the services to be
included in the emergency telephone number system consisted of at least
51 percent low and moderate income persons.
(3) Other federal funds received by the unit of general local
government are insufficient or unavailable for a uniform emergency
telephone number system. The unit of general local government must
submit a statement explaining whether the problem is caused by the
insufficiency of the amount of such funds, the restrictions on the use
of such funds, or the prior commitment of such funds for other purposes
by the unit of general local government.
(4) The percentage of the total costs of the system paid for by CDBG
funds does not exceed the percentage of low and moderate income persons
in the service area of the system. The unit of general local government
must include a description of the boundaries of the service area of the
system; the census tracts or enumeration districts within the
boundaries; the total number of persons and the total number of low and
moderate income persons in each census tract or enumeration district,
and the percentage of low and moderate income persons in the service
area; and the total cost of the system.
(B) The certifications of the state must be submitted along with a
brief statement describing the factual basis upon which the
certifications were made.
(iv) Activities meeting the requirements of paragraph (e)(4)(i) of
this section may be considered to qualify under paragraph (b)(1) of this
section.
(v) HUD will consider activities meeting the requirements of
paragraph (e)(5)(i) of this section to qualify under paragraph (b)(1) of
this section, provided that the area covered by the strategy meets one
of the following criteria:
(A) The area is in a Federally-designated Empowerment Zone or
Enterprise Community;
(B) The area is primarily residential and contains a percentage of
low and moderate income residents that is no less than 70 percent;
(C) All of the census tracts (or block numbering areas) in the area
have poverty rates of at least 20 percent, at least 90 percent of the
census tracts (or block numbering areas) in the area have poverty rates
of at least 25 percent, and the area is primarily residential. (If only
part of a census tract or block numbering area is included in a strategy
area, the poverty rate shall be computed for those block groups (or any
part thereof) which are included in the strategy area.)
(D) Upon request by the State, HUD may grant exceptions to the 70
percent low and moderate income or 25 percent poverty minimum thresholds
on a case-by-case basis. In no case, however, may a strategy area have
both a percentage of low and moderate income residents less than 51
percent and a poverty rate less than 20 percent.
(2) Limited clientele activities. (i) An activity which benefits a
limited clientele, at least 51 percent of whom are low and moderate
income persons. The following kinds of activities may not qualify under
paragraph (b)(2) of this section:
(A) Activities, the benefits of which are available to all the
residents of an area;
(B) Activities involving the acquisition, construction or
rehabilitation of property for housing; or
(C) Activities where the benefit to low- and moderate-income persons
to
[[Page 93]]
be considered is the creation or retention of jobs, except as provided
in paragraph (b)(2)(v) of this section.
(ii) To qualify under paragraph (b)(2) of this section, the activity
must meet one or the following tests:
(A) It must benefit a clientele who are generally presumed to be
principally low and moderate income persons. Activities that exclusively
serve a group of persons in any one or a combination of the following
categories may be presumed to benefit persons, 51 percent of whom are
low and moderate income: abused children, battered spouses, elderly
persons, adults meeting the Bureau of the Census' Current Population
Reports definition of ``severely disabled,'' homeless persons,
illiterate adults, persons living with AIDS, and migrant farm workers;
or
(B) It must require information on family size and income so that it
is evident that at least 51 percent of the clientele are persons whose
family income does not exceed the low and moderate income limit; or
(C) It must have income eligibility requirements which limit the
activity exclusively to low and moderate income persons; or
(D) It must be of such a nature, and be in such a location, that it
may be concluded that the activity's clientele will primarily be low and
moderate income persons.
(iii) An activity that serves to remove material or architectural
barriers to the mobility or accessibility of elderly persons or of
adults meeting the Bureau of the Census' Current Population Reports
definition of ``severely disabled'' will be presumed to qualify under
this criterion if it is restricted, to the extent practicable, to the
removal of such barriers by assisting:
(A) The reconstruction of a public facility or improvement, or
portion thereof, that does not qualify under Sec. 570.483(b)(1);
(B) The rehabilitation of a privately owned nonresidential building
or improvement that does not qualify under Sec. 570.483(b) (1) or (4);
or
(C) The rehabilitation of the common areas of a residential
structure that contains more than one dwelling unit and that does not
qualify under Sec. 570.483(b)(3).
(iv) A microenterprise assistance activity (carried out in
accordance with the provisions of section 105(a)(23) of the Act or
Sec. 570.482(c) and limited to microenterprises) with respect to those
owners of microenterprises and persons developing microenterprises
assisted under the activity who are low- and moderate-income persons.
For purposes of this paragraph, persons determined to be low and
moderate income may be presumed to continue to qualify as such for up to
a three-year period.
(v) An activity designed to provide job training and placement and/
or other employment support services, including, but not limited to,
peer support programs, counseling, child care, transportation, and other
similar services, in which the percentage of low- and moderate-income
persons assisted is less than 51 percent may qualify under this
paragraph in the following limited circumstances:
(A) In such cases where such training or provision of supportive
services is an integrally-related component of a larger project, the
only use of CDBG assistance for the project is to provide the job
training and/or supportive services; and
(B) The proportion of the total cost of the project borne by CDBG
funds is no greater than the proportion of the total number of persons
assisted who are low or moderate income.
(3) Housing activities. An eligible activity carried out for the
purpose of providing or improving permanent residential structures that,
upon completion, will be occupied by low and moderate income households.
This would include, but not necessarily be limited to, the acquisition
or rehabilitation of property by the unit of general local government, a
subrecipient, an entity eligible to receive assistance under section
105(a)(15) of the Act, a developer, an individual homebuyer, or an
individual homeowner; conversion of nonresidential structures; and new
housing construction. If the structure contains two dwelling units, at
least one must be so occupied, and if the structure contains more than
two dwelling units, at least 51 percent of the units must be so
occupied. If two or more rental buildings being assisted are or will be
located on the same or contiguous
[[Page 94]]
properties, and the buildings will be under common ownership and
management, the grouped buildings may be considered for this purpose as
a single structure. If housing activities being assisted meet the
requirements of paragraph (e)(4)(ii) or (e)(5)(ii) of this section, all
such housing may also be considered for this purpose as a single
structure. For rental housing, occupancy by low and moderate income
households must be at affordable rents to qualify under this criterion.
The unit of general local government shall adopt and make public its
standards for determining ``affordable rents'' for this purpose. The
following shall also qualify under this criterion:
(i) When less than 51 percent of the units in a structure will be
occupied by low and moderate income households, CDBG assistance may be
provided in the following limited circumstances:
(A) The assistance is for an eligible activity to reduce the
development cost of the new construction of a multifamily, non-elderly
rental housing project; and
(B) Not less than 20 percent of the units will be occupied by low
and moderate income households at affordable rents; and
(C) The proportion of the total cost of developing the project to be
borne by CDBG funds is no greater than the proportion of units in the
project that will be occupied by low and moderate income households.
(ii) Where CDBG funds are used to assist rehabilitation delivery
services or in direct support of the unit of general local government's
Rental Rehabilitation Program authorized under 24 CFR part 511, the
funds shall be considered to benefit low and moderate income persons
where not less than 51 percent of the units assisted, or to be assisted,
by the Rental Rehabilitation Program overall are for low and moderate
income persons.
(iii) When CDBG funds are used for housing services eligible under
section 105(a)(21) of the Act, such funds shall be considered to benefit
low and moderate income persons if the housing units for which the
services are provided are HOME-assisted and the requirements of
Sec. 92.252 or Sec. 92.254 of this title are met.
(4) Job creation or retention activities. (i) An activity designed
to create permanent jobs where at least 51 percent of the jobs, computed
on a full time equivalent basis, involve the employment of low and
moderate income persons. For an activity that creates jobs, the unit of
general local government must document that at least 51 percent of the
jobs will be held by, or will be made available to low and moderate
income persons.
(ii) For an activity that retains jobs, the unit of general local
government must document that the jobs would actually be lost without
the CDBG assistance and that either or both of the following conditions
apply with respect to at least 51 percent of the jobs at the time the
CDBG assistance is provided: The job is known to be held by a low or
moderate income person; or the job can reasonably be expected to turn
over within the following two years and that it will be filled by, or
that steps will be taken to ensure that it is made available to, a low
or moderate income person upon turnover.
(iii) Jobs will be considered to be available to low and moderate
income persons for these purposes only if:
(A) Special skills that can only be acquired with substantial
training or work experience or education beyond high school are not a
prerequisite to fill such jobs, or the business agrees to hire
unqualified persons and provide training; and
(B) The unit of general local government and the assisted business
take actions to ensure that low and moderate income persons receive
first consideration for filling such jobs.
(iv) For purposes of determining whether a job is held by or made
available to a low- or moderate-income person, the person may be
presumed to be a low- or moderate-income person if:
(A) He/she resides within a census tract (or block numbering area)
that either:
(1) Meets the requirements of paragraph (b)(4)(v) of this section;
or
(2) Has at least 70 percent of its residents who are low- and
moderate-income persons; or
[[Page 95]]
(B) The assisted business is located within a census tract (or block
numbering area) that meets the requirements of paragraph (b)(4)(v) of
this section and the job under consideration is to be located within
that census tract.
(v) A census tract (or block numbering area) qualifies for the
presumptions permitted under paragraphs (b)(4)(iv) (A)(1) and (B) of
this section if it is either part of a Federally-designated Empowerment
Zone or Enterprise Community or meets the following criteria:
(A) It has a poverty rate of at least 20 percent as determined by
the most recently available decennial census information;
(B) It does not include any portion of a central business district,
as this term is used in the most recent Census of Retail Trade, unless
the tract has a poverty rate of at least 30 percent as determined by the
most recently available decennial census information; and
(C) It evidences pervasive poverty and general distress by meeting
at least one of the following standards:
(1) All block groups in the census tract have poverty rates of at
least 20 percent;
(2) The specific activity being undertaken is located in a block
group that has a poverty rate of at least 20 percent; or
(3) Upon the written request of the recipient, HUD determines that
the census tract exhibits other objectively determinable signs of
general distress such as high incidence of crime, narcotics use,
homelessness, abandoned housing, and deteriorated infrastructure or
substantial population decline.
(vi) As a general rule, each assisted business shall be considered
to be a separate activity for purposes of determining whether the
activity qualifies under this paragraph, except:
(A) In certain cases such as where CDBG funds are used to acquire,
develop or improve a real property (e.g., a business incubator or an
industrial park) the requirement may be met by measuring jobs in the
aggregate for all the businesses that locate on the property, provided
the businesses are not otherwise assisted by CDBG funds.
(B) Where CDBG funds are used to pay for the staff and overhead
costs of an entity specified in section 105(a)(15) of the Act making
loans to businesses exclusively from non-CDBG funds, this requirement
may be met by aggregating the jobs created by all of the businesses
receiving loans during any one-year period.
(C) Where CDBG funds are used by a recipient or subrecipient to
provide technical assistance to businesses, this requirement may be met
by aggregating the jobs created or retained by all of the businesses
receiving technical assistance during any one-year period.
(D) Where CDBG funds are used for activities meeting the criteria
listed at Sec. 570.482(f)(3)(v), this requirement may be met by
aggregating the jobs created or retained by all businesses for which
CDBG assistance is obligated for such activities during any one-year
period, except as provided at paragraph (e)(6) of this section.
(E) Where CDBG funds are used by a Community Development Financial
Institution to carry out activities for the purpose of creating or
retaining jobs, this requirement may be met by aggregating the jobs
created or retained by all businesses for which CDBG assistance is
obligated for such activities during any one-year period, except as
provided at paragraph (e)(6) of this section.
(F) Where CDBG funds are used for public facilities or improvements
which will result in the creation or retention of jobs by more than one
business, this requirement may be met by aggregating the jobs created or
retained by all such businesses as a result of the public facility or
improvement.
(1) Where the public facility or improvement is undertaken
principally for the benefit of one or more particular businesses, but
where other businesses might also benefit from the assisted activity,
the requirement may be met by aggregating only the jobs created or
retained by those businesses for which the facility/improvement is
principally undertaken, provided that the cost (in CDBG funds) for the
facility/improvement is less than $10,000 per permanent full-time
equivalent job to be created or retained by those businesses.
[[Page 96]]
(2) In any case where the cost per job to be created or retained (as
determined under paragraph (b)(4)(vi)(F)(1) of this section) is $10,000
or more, the requirement must be met by aggregating the jobs created or
retained as a result of the public facility or improvement by all
businesses in the service area of the facility/improvement. This
aggregation must include businesses which, as a result of the public
facility/improvement, locate or expand in the service area of the public
facility/improvement between the date the state awards the CDBG funds to
the recipient and the date one year after the physical completion of the
public facility/improvement. In addition, the assisted activity must
comply with the public benefit standards at Sec. 570.482(f).
(5) Planning-only activities. An activity involving planning (when
such activity is the only activity for which the grant to the unit of
general local government is given, or if the planning activity is
unrelated to any other activity assisted by the grant) if it can be
documented that at least 51 percent of the persons who would benefit
from implementation of the plan are low and moderate income persons. Any
such planning activity for an area or a community composed of persons of
whom at least 51 percent are low and moderate income shall be considered
to meet this national objective.
(c) Activities which aid in the prevention or elimination of slums
or blight. Activities meeting one or more of the following criteria, in
the absence of substantial evidence to the contrary, will be considered
to aid in the prevention or elimination of slums or blight:
(1) Activities to address slums or blight on an area basis. An
activity will be considered to address prevention or elimination of
slums or blight in an area if the state can determine that:
(i) The area, delineated by the unit of general local government,
meets a definition of a slum, blighted, deteriorated or deteriorating
area under state or local law;
(ii) The area also meets the conditions in either paragraph
(c)(1)(ii)(A) or(c)(1)(ii)(B) of this section.
(A) At least 25 percent of properties throughout the area experience
one or more of the following conditions:
(1) Physical deterioration of buildings or improvements;
(2) Abandonment of properties;
(3) Chronic high occupancy turnover rates or chronic high vacancy
rates in commercial or industrial buildings;
(4) Significant declines in property values or abnormally low
property values relative to other areas in the community; or
(5) Known or suspected environmental contamination.
(B) The public improvements throughout the area are in a general
state of deterioration.
(iii) The assisted activity addresses one or more of the conditions
which contributed to the deterioration of the area. Rehabilitation of
residential buildings carried out in an area meeting the above
requirements will be considered to address the area's deterioration only
where each such building rehabilitated is considered substandard before
rehabilitation, and all deficiencies making a building substandard have
been eliminated if less critical work on the building is also
undertaken. The State shall ensure that the unit of general local
government has developed minimum standards for building quality which
may take into account local conditions.
(iv) The state keeps records sufficient to document its findings
that a project meets the national objective of prevention or elimination
of slums and blight. The state must establish definitions of the
conditions listed at Sec. 570.483(c)(1)(ii)(A) and maintain records to
substantiate how the area met the slums or blighted criteria. The
designation of an area as slum or blighted under this section is
required to be redetermined every 10 years for continued qualification.
Documentation must be retained pursuant to the recordkeeping
requirements contained at Sec. 570.490.
(2) Activities to address slums or blight on a spot basis. The
following activities can be undertaken on a spot basis to eliminate
specific conditions of blight, physical decay, or environmental
contamination that are not located in a slum or blighted area:
Acquisition; clearance; relocation; historic preservation; remediation
of environmentally contaminated properties; or
[[Page 97]]
rehabilitation of buildings or improvements. However, rehabilitation
must be limited to eliminating those conditions that are detrimental to
public health and safety. If acquisition or relocation is undertaken, it
must be a precursor to another eligible activity (funded with CDBG or
other resources) that directly eliminates the specific conditions of
blight or physical decay, or environmental contamination.
(3) Planning only activities. An activity involving planning (when
the activity is the only activity for which the grant to the unit of
general local government is given, or the planning activity is unrelated
to any other activity assisted by the grant) if the plans are for a slum
or blighted area, or if all elements of the planning are necessary for
and related to an activity which, if funded, would meet one of the other
criteria of elimination of slums or blight.
(d) Activities designed to meet community development needs having a
particular urgency. In the absence of substantial evidence to the
contrary, an activity will be considered to address this objective if
the unit of general local government certifies, and the state
determines, that the activity is designed to alleviate existing
conditions which pose a serious and immediate threat to the health or
welfare of the community which are of recent origin or which recently
became urgent, that the unit of general local government is unable to
finance the activity on its own, and that other sources of funding are
not available. A condition will generally be considered to be of recent
origin if it developed or became urgent within 18 months preceding the
certification by the unit of general local government.
(e) Additional criteria. (1) In any case where the activity
undertaken is a public improvement and the activity is clearly designed
to serve a primarily residential area, the activity must meet the
requirements of paragraph (b)(1) of this section whether or not the
requirements of paragraph (b)(4) of this section are met in order to
qualify as benefiting low and moderate income persons.
(2) Where the assisted activity is acquisition of real property, a
preliminary determination of whether the activity addresses a national
objective may be based on the planned use of the property after
acquisition. A final determination shall be based on the actual use of
the property, excluding any short-term, temporary use. Where the
acquisition is for the purpose of clearance which will eliminate
specific conditions of blight or physical decay, the clearance activity
shall be considered the actual use of the property. However, any
subsequent use or disposition of the cleared property shall be treated
as a ``change of use'' under Sec. 570.489(j).
(3) Where the assisted activity is relocation assistance that the
unit of general local government is required to provide, the relocation
assistance shall be considered to address the same national objective as
is addressed by the displacing activity. Where the relocation assistance
is voluntary, the unit of general local government may qualify the
assistance either on the basis of the national objective addressed by
the displacing activity or, if the relocation assistance is to low and
moderate income persons, on the basis of the national objective of
benefiting low and moderate income persons.
(4) Where CDBG-assisted activities are carried out by a Community
Development Financial Institution whose charter limits its investment
area to a primarily residential area consisting of at least 51 percent
low- and moderate-income persons, the unit of general local government
may also elect the following options:
(i) Activities carried out by the Community Development Financial
Institution for the purpose of creating or retaining jobs may, at the
option of the unit of general local government, be considered to meet
the requirements of this paragraph under the criteria at paragraph
(b)(1)(iv) of this section in lieu of the criteria at paragraph (b)(4)
of this section; and
(ii) All housing activities for which the Community Development
Financial Institution obligates CDBG assistance during any one-year
period may be considered to be a single structure for purposes of
applying the criteria at paragraph (b)(3) of this section.
[[Page 98]]
(5) If the unit of general local government has elected to prepare a
community revitalization strategy pursuant to the authority of
Sec. 91.315(e)(2) of this title, and the State has approved the
strategy, the unit of general local government may also elect the
following options:
(i) Activities undertaken pursuant to the strategy for the purpose
of creating or retaining jobs may, at the option of the grantee, be
considered to meet the requirements of paragraph (b) of this section
under the criteria at Sec. 570.483(b)(1)(v) instead of the criteria at
Sec. 570.483(b)(4); and
(ii) All housing activities in the area undertaken pursuant to the
strategy may be considered to be a single structure for purposes of
applying the criteria at paragraph (b)(3) of this section.
(6) If an activity meeting the criteria in Sec. 570.482(f)(3)(v)
also meets the requirements of either paragraph (e)(4)(i) or (e)(5)(i)
of this section, the unit of general local government may elect to
qualify the activity either under the area benefit criteria at paragraph
(b)(1)(iv) or (v) of this section or under the job aggregation criteria
at paragraph (b)(4)(vi)(D) of this section, but not under both. Where an
activity may meet the job aggregation criteria at both paragraphs
(b)(4)(vi)(D) and (E) of this section, the unit of general local
government may elect to qualify the activity under either criterion, but
not both.
(f) Planning and administrative costs. CDBG funds expended for
eligible planning and administrative costs by units of general local
government in conjunction with other CDBG assisted activities will be
considered to address the national objectives.
[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1951, Jan. 5, 1995; 60
FR 17445, Apr. 6, 1995; 61 FR 54921, Oct. 22, 1996; 71 FR 30036, May 24,
2006]
Sec. 570.484 Overall benefit to low and moderate income persons.
(a) General. The State must certify that, in the aggregate, not less
than 70 percent of the CDBG funds received by the state during a period
specified by the state, not to exceed three years, will be used for
activities that benefit persons of low and moderate income. The period
selected and certified to by the state shall be designated by fiscal
year of annual grants, and shall be for one, two or three consecutive
annual grants. The period shall be in effect until all included funds
are expended. No CDBG funds may be included in more than one period
selected, and all CDBG funds received must be included in a selected
period.
(b) Computation of 70 percent benefit. Determination that a state
has carried out its certification under paragraph (a) of this section
requires evidence that not less than 70 percent of the aggregate of the
designated annual grant(s), any funds reallocated by HUD to the state,
any distributed program income and any guaranteed loan funds under the
provisions of subpart M of this part covered in the method of
distribution in the final statement or statements for the designated
annual grant year or years have been expended for activities meeting
criteria as provided in Sec. 570.483(b) for activities benefiting low
and moderate income persons. In calculating the percentage of funds
expended for such activities:
(1) All CDBG funds included in the period selected and certified to
by the state shall be accounted for, except for funds used by the State,
or by the units of general local government, for program administration,
or for planning activities other than those which must meet a national
objective under Sec. 570.483 (b)(5) or (c)(3).
(2) Any funds expended by a state for the purpose of repayment of
loans guaranteed under the provisions of subpart M of this part shall be
excepted from inclusion in this calculation.
(3) Except as provided in paragraph (b)(4) of this section, CDBG
funds expended for an eligible activity meeting the criteria for
activities benefiting low and moderate income persons shall count in
their entirety towards meeting the 70 percent benefit to persons of low
and moderate income requirement.
(4) Funds expended for the acquisition, new construction or
rehabilitation of property for housing that qualifies under
Sec. 570.483(b)(3) shall be counted for this purpose, but shall be
limited to an amount determined by multiplying the total cost (including
CDBG
[[Page 99]]
and non-CDBG costs) of the acquisition, construction or rehabilitation
by the percent of units in such housing to be occupied by low and
moderate income persons, except that the amount counted shall not exceed
the amount of CDBG funds provided.
Sec. 570.485 Making of grants.
(a) Required submissions. In order to receive its annual CDBG grant
under this subpart, a State must submit a consolidated plan in
accordance with 24 CFR part 91. That part includes requirements for the
content of the consolidated plan, for the process of developing the
plan, including citizen participation provisions, for the submission
date, for HUD approval, and for the amendment process.
(b) Failure to make submission. The state's failure to make the
submission required by paragraph (a) of this section within the
prescribed deadline constitutes the state's election not to receive and
distribute amounts allocated for its nonentitlement areas for the
applicable fiscal year. Funds will be either:
(1) Administered by HUD pursuant to subpart F of this part if the
state has not administered the program in any previous fiscal year; or
(2) Reallocated to all states in the succeeding fiscal year
according to the formula of section 106(d) of the Act, if the state
administered the program in any previous year.
(c) Approval of grant. HUD will approve a grant if the State's
submissions have been made and approved in accordance with 24 CFR part
91, and the certifications required therein are satisfactory to the
Secretary. The certifications will be satisfactory to the Secretary for
this purpose unless the Secretary has determined pursuant to
Sec. 570.493 that the State has not complied with the requirements of
this subpart, or has determined that there is evidence, not directly
involving the State's past performance under this program, that tends to
challenge in a substantial manner the State's certification of future
performance. If the Secretary makes any such determination, however, the
State may be required to submit further assurances as the Secretary may
deem warranted or necessary to find the grantee's certification
satisfactory.
(d) Specific conditions.--HUD may impose additional specific award
conditions on States in accordance with 2 CFR 200.207.
[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1916, Jan. 5, 1995; 61
FR 54922, Oct. 22, 1996; 80 FR 69871, Nov. 12, 2015]
Sec. 570.486 Local government requirements.
(a) Citizen participation requirements of a unit of general local
government. Each unit of general local government shall meet the
following requirements as required by the state at Sec. 91.115(e) of
this title.
(1) Provide for and encourage citizen participation, particularly by
low and moderate income persons who reside in slum or blighted areas and
areas in which CDBG funds are proposed to be used;
(2) Ensure that residents will be given reasonable and timely access
to local meetings, consistent with accessibility and reasonable
accommodation requirements in accordance with section 504 of the
Rehabilitation Act of 1973 and the regulations at 24 CFR part 8, and the
Americans with Disabilities Act and the regulations at 28 CFR parts 35
and 36, as applicable, as well as information and records relating to
the unit of local government's proposed and actual use of CDBG funds;
(3) Furnish citizens information, including but not limited to:
(i) The amount of CDBG funds expected to be made available for the
current fiscal year (including the grant and anticipated program
income);
(ii) The range of activities that may be undertaken with the CDBG
funds;
(iii) The estimated amount of the CDBG funds proposed to be used for
activities that will meet the national objective of benefit to low and
moderate income persons; and
(iv) The proposed CDBG activities likely to result in displacement
and the unit of general local government's antidisplacement and
relocation plans required under Sec. 570.488.
(4) Provide technical assistance to groups that are representative
of persons of low- and moderate-income that
[[Page 100]]
request assistance in developing proposals (including proposed
strategies and actions to affirmatively further fair housing) in
accordance with the procedures developed by the State. Such assistance
need not include providing funds to such groups;
(5) Provide for a minimum of two public hearings, each at a
different stage of the program, for the purpose of obtaining residents'
views and responding to proposals and questions. Together the hearings
must cover community development and housing needs (including
affirmatively furthering fair housing), development of proposed
activities, and a review of program performance. The public hearings to
cover community development and housing needs must be held before
submission of an application to the State. There must be reasonable
notice of the hearings and they must be held at times and accessible
locations convenient to potential or actual beneficiaries, with
accommodations for persons with disabilities. Public hearings shall be
conducted in a manner to meet the needs of non-English speaking
residents where a significant number of non-English speaking residents
can reasonably be expected to participate;
(6) Provide citizens with reasonable advance notice of, and
opportunity to comment on, proposed activities in an application to the
state and, for grants already made, activities which are proposed to be
added, deleted or substantially changed from the unit of general local
government's application to the state. Substantially changed means
changes made in terms of purpose, scope, location or beneficiaries as
defined by criteria established by the state.
(7) Provide citizens the address, phone number, and times for
submitting complaints and grievances, and provide timely written answers
to written complaints and grievances, within 15 working days where
practicable.
(b) Activities serving beneficiaries outside the jurisdiction of the
unit of general local government. Any activity carried out by a
recipient of State CDBG program funds must significantly benefit
residents of the jurisdiction of the grant recipient, and the unit of
general local government must determine that the activity is meeting its
needs in accordance with section 106(d)(2)(D) of the Act. For an
activity to significantly benefit residents of the recipient
jurisdiction, the CDBG funds expended by the unit of general local
government must not be unreasonably disproportionate to the benefits to
its residents.
(c) Activities located in Entitlement jurisdictions. Any activity
carried out by a recipient of State CDBG program funds in entitlement
jurisdictions must significantly benefit residents of the jurisdiction
of the grant recipient, and the State CDBG recipient must determine that
the activity is meeting its needs in accordance with section
106(d)(2)(D) of the Act. For an activity to significantly benefit
residents of the recipient jurisdiction, the CDBG funds expended by the
unit of general local government must not be unreasonably
disproportionate to the benefits to its residents. In addition, the
grant cannot be used to provide a significant benefit to the entitlement
jurisdiction unless the entitlement grantee provides a meaningful
contribution to the project.
[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 54922, Oct. 22, 1996; 77
FR 24143, Apr. 23, 2012; 80 FR 42367, July 16, 2015]
Sec. 570.487 Other applicable laws and related program requirements.
(a) General. Certain statutes are expressly made applicable to
activities assisted under the Act by the Act itself, while other laws
not referred to in the Act may be applicable to such activities by their
own terms. Certain statutes or executive orders that may be applicable
to activities assisted under the Act by their own terms are administered
or enforced by governmental officials, departments or agencies other
than HUD. Paragraphs (d) and (c) of this section contain two of the
requirements expressly made applicable to CDBG activities by the Act
itself.
(b) Affirmatively furthering fair housing. The Act requires the
State to certify to the satisfaction of HUD that it will affirmatively
further fair housing. The Act also requires each unit of general local
government to certify that it will affirmatively further fair housing.
The certification that the State will
[[Page 101]]
affirmatively further fair housing shall specifically require the State
to assume the responsibility of fair housing planning by:
(1) Taking meaningful actions to further the goals identified in an
AFH conducted in accordance with the requirements of 24 CFR5.150 through
5.180;
(2) Taking no action that is materially inconsistent with its
obligation to affirmatively further fair housing; and
(3) Assuring that units of local government funded by the State
comply with their certifications to affirmatively further fair housing.
(c) Lead-Based Paint Poisoning Prevention Act. States shall devise,
adopt and carry out procedures with respect to CDBG assistance that
fulfill the objectives and requirements of the Lead-Based Paint
Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-
Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and
implementing regulations at part 35, subparts A, B, J, K, and R of this
title.
(d) States shall comply with section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u) and the implementing
regulations in 24 CFR part 135. Section 3 requires that employment and
other economic opportunities arising in connection with housing
rehabilitation, housing construction, or other public construction
projects shall, to the greatest extent feasible, and consistent with
existing Federal, State, and local laws and regulations, be given to
low- and very low-income persons.
(e) Architectural Barriers Act and the Americans with Disabilities
Act. The Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157)
requires certain Federal and Federally-funded buildings and other
facilities to be designed, constructed, or altered in accordance with
standards that ensure accessibility to, and use by, physically
handicapped people. A building or facility designed, constructed, or
altered with funds allocated or reallocated under this subpart after
November 21, 1996 and that meets the definition of residential structure
as defined in 24 CFR 40.2, or the definition of building as defined in
41 CFR 101-19.602(a), is subject to the requirements of the
Architectural Barriers Act of 1968 and shall comply with the Uniform
Federal Accessibility Standards. For general type buildings, these
standards are in appendix A to 41 CFR part 101-19.6. For residential
structures, these standards are available from the Department of Housing
and Urban Development, Office of Fair Housing and Equal Opportunity,
Disability Rights Division, Room 5240, 451 Seventh Street, SW,
Washington, DC 20410; telephone (202) 708-2333 (voice) or (202) 708-1734
(TTY) (these are not toll-free numbers).
[57 FR 53397, Nov. 9, 1992, as amended at 59 FR 33894, June 30, 1994; 60
FR 1916, Jan. 5, 1995; 61 FR 54922, Oct. 22, 1996; 64 FR 50225, Sept.
15, 1999; 80 FR 42367, July 16, 2015]
Sec. 570.488 Displacement, relocation, acquisition, and replacement
of housing.
The requirements for States and state recipients with regard to the
displacement, relocation, acquisition, and replacement of housing are in
Sec. 570.606 and 24 CFR part 42.
[61 FR 11477, Mar. 20, 1996]
Sec. 570.489 Program administrative requirements.
(a) Administrative and planning costs.--(1) State administrative and
technical assistance costs. (i) The State is responsible for the
administration of all CDBG funds. The State may use CDBG funds not to
exceed $100,000, plus 50 percent of administrative expenses incurred in
excess of $100,000. Amounts of CDBG funds used to pay administrative
expenses in excess of $100,000 shall not, subject to paragraph
(a)(1)(iii) of this section, exceed the sum of 3 percent of the State's
annual grant; 3 percent of program income received by units of general
local government during each program year, regardless of the origin year
in which the State grant funds that generate the program income were
appropriated (whether retained by units of general local government or
paid to the State); and 3 percent of funds reallocated by HUD to the
State.
(ii) To pay the costs of providing technical assistance to local
governments and nonprofit program recipients, a State may, subject to
paragraph (a)(1)(iii) of this section, use CDBG funds received on or
after January 23,
[[Page 102]]
2004, in an amount not to exceed the sum of 3 percent of its annual
grant; 3 percent of program income received by units of general local
government during each program year, regardless of the origin year in
which the State grant funds that generate the program income were
appropriated (whether retained by units of general local government or
paid to the State); and 3 percent of funds reallocated by HUD to the
State during each program year.
(iii) The amount of CDBG funds used to pay the sum of administrative
costs in excess of $100,000 paid pursuant to paragraph (a)(1)(i) of this
section and technical assistance costs paid pursuant to paragraph
(a)(1)(ii) of this section must not exceed the sum of 3 percent of the
State's annual grant; 3 percent of program income received by units of
general local government during each program year, regardless of the
origin year in which the State grant funds that generate the program
income were appropriated (whether retained by the unit of general local
government or paid to the State); and 3 percent of funds reallocated by
HUD to the State.
(iv) In calculating the amount of CDBG funds that may be used to pay
State administrative expenses prior to January 23, 2004, the State may
include in the calculation the following elements only to the extent
that they are within the following time limitations:
(A) $100,000 per annual grant beginning with FY 1984 allocations;
(B) Two percent of the sum of a State's annual grant and funds
reallocated by HUD to the State within a program year, without
limitation based on when such amounts were received;
(C) Two percent of program income returned by units of general local
government to States after August 21, 1985; and
(D) Two percent of program income received and retained by units of
general local government after February 11, 1991.
(v) In regard to its administrative costs, for grants before origin
year 2015, the State has the option of selecting its approach for
demonstrating compliance with the requirements of paragraph (a)(1) of
this section. For grants beginning with origin year 2015 grants and
subsequent grants, the State must use the approach in paragraph
(a)(1)(v)(A) of this section. Any State whose matching cost
contributions toward State administrative expense matching requirements
are in arrears must bring matching cost contributions up to the level of
CDBG funds expended for such costs. A State grant may not be closed out
if the State's matching cost contribution is not at least equal to the
amount of CDBG funds in excess of $100,000 expended for administration.
The two approaches for demonstrating compliance with this paragraph
(a)(1) are:
(A) Year-to-year tracking and limitation on drawdown of funds. The
State will calculate the maximum allowable amount of CDBG funds that may
be used for State administrative expenses from the sum of each origin
year grant, program income received during that associated program year
and reallocations by HUD to the State during that associated program
year. The State will draw down amounts of those funds only upon its own
expenditure of an equal or greater amount of matching funds from its own
resources after the expenditure of the initial $100,000 for State
administrative expenses. The State will be considered to be in
compliance with the applicable requirements if the actual amount of CDBG
funds spent on State administrative expenses does not exceed the maximum
allowable amount, and if the amount of matching funds that the State has
expended for that grant year is equal to or greater than the amount of
CDBG funds in excess of $100,000 spent during that same grant year.
Under this approach, the State must demonstrate that it has paid from
its own funds at least 50 percent of its administrative expenses in
excess of $100,000 by the closeout of each grant.
(B) Cumulative accounting of administrative costs incurred by the
State since its assumption of the CDBG program for grants before origin
year 2015. Under this approach, the State will identify, for each grant
it has received, the CDBG funds eligible to be used for State
administrative expenses, as well as the minimum amount of matching funds
[[Page 103]]
that the State is required to contribute. The amounts will then be
aggregated for all grants received. The State must keep records
demonstrating the actual amount of CDBG funds from each grant received
that was used for State administrative expenses, as well as matching
amounts that were contributed by the State. The State will be considered
to be in compliance with the applicable requirements if the aggregate of
the actual amounts of CDBG funds spent on State administrative expenses
does not exceed the aggregate maximum allowable amount and if the
aggregate amount of matching funds that the State has expended is equal
to or greater than the aggregate amount of CDBG funds in excess of
$100,000 (for each annual grant within the subject period) spent on
administrative expenses during its 3- to 5-year Consolidated Planning
period. If the State grant for any grant year within the 3- to 5-year
period has been closed out, the aggregate amount of CDBG funds spent on
State administrative expenses, the aggregate maximum allowable amount,
the aggregate matching funds expended, and the aggregate amount of CDBG
funds in excess of $100,000 (for each annual grant within the subject
period) will be reduced by amounts attributable to the grant year for
which the State grant has been closed out.
(2) The State may not charge fees of any entity for processing or
considering any application for CDBG funds, or for carrying out its
responsibilities under this subpart.
(3)(i) Administrative costs are those described at
Sec. 570.489(a)(1) for States and, for units of general local
government, are those described at sections 105(a)(12) and (a)(13) of
the Act.
(ii) The combined expenditures by the State and its funded units of
general local government for planning, management, and administrative
costs shall not exceed 20 percent of the aggregate amount of the origin
year grant, any origin year grant funds reallocated by HUD to the State,
and the amount of any program income received during the program year.
(iii) For origin year 2015 grants and subsequent grants, no more
than 20 percent of any annual grant (excluding program income) shall be
expended by the State and its funded units of general local government
for planning, management, and administrative costs. In addition, the
combined expenditures by the States and its unit of general local
government for planning, management, and administrative costs shall not
exceed 20 percent of any origin year grant funds reallocated by HUD to
the State.
(iv) Funds from a grant of any origin year may be used to pay
planning and program administrative costs associated with any grant of
any origin year.
(b) Reimbursement of pre-agreement costs. The State may permit, in
accordance with such procedures as the State may establish, a unit of
general local government to incur costs for CDBG activities before the
establishment of a formal grant relationship between the State and the
unit of general local government and to charge these pre-agreement costs
to the grant, provided that the activities are eligible and undertaken
in accordance with the requirements of this part and 24 CFR part 58. A
State may incur costs prior to entering into a grant agreement with HUD
and charge those pre-agreement costs to the grant, provided that the
activities are eligible and are undertaken in accordance with the
requirements of this part, part 58 of this title, and the citizen
participation requirements of part 91 of this title.
(c) Federal grant payments. The State's requests for payment, and
the Federal Government's payments upon such requests, must comply with
31 CFR part 205. The State must use procedures to minimize the time
elapsing between the transfer of grant funds and disbursement of funds
by the State to units of general local government. States must also have
procedures in place, and units of general local government must use
these procedures to minimize the time elapsing between the transfer of
funds by the State and disbursement for CDBG activities.
(d) Fiscal controls and accounting procedures. (1) A State shall
have fiscal and administrative requirements for expending and accounting
for all funds received under this subpart. These requirements must be
available for Federal inspection and must:
[[Page 104]]
(i) Be sufficiently specific to ensure that funds received under
this subpart are used in compliance with all applicable statutory and
regulatory provisions and the terms and conditions of the award:
(ii) Ensure that funds received under this subpart are only spent
for reasonable and necessary costs of operating programs under this
subpart; and
(iii) Ensure that funds received under this subpart are not used for
general expenses required to carry out other responsibilities of State
and local governments.
(2) A State may satisfy this requirement by:
(i) Using fiscal and administrative requirements applicable to the
use of its own funds;
(ii) Adopting new fiscal and administrative requirements; or
(iii) Applying the provisions in 2 CFR part 200.
(A) A State that opts to satisfy this requirement for fiscal
controls and administrative procedures by applying the provisions of 2
CFR part 200 must comply with the requirements therein.
(B) A State that opts to satisfy this requirement for fiscal
controls and administrative procedures by applying the provisions of 2
CFR part 200 must also ensure that recipients of the State's CDBG funds
comply with 2 CFR part 200.
(e) Program income. (1) For the purposes of this subpart, ``program
income'' is defined as gross income received by a State, a unit of
general local government, or a subgrantee of the unit of general local
government that was generated from the use of CDBG funds, regardless of
when the CDBG funds were appropriated and whether the activity has been
closed out, except as provided in paragraph (e)(2) of this section. When
income is generated by an activity that is only partially assisted with
CDBG funds, the income must be prorated to reflect the percentage of
CDBG funds used (e.g., a single loan supported by CDBG funds and other
funds; or a single parcel of land purchased with CDBG funds and other
funds). Program income includes, but is not limited to, the following:
(i) Proceeds from the disposition by sale or long-term lease of real
property purchased or improved with CDBG funds, except as provided in
paragraph (e)(2)(v) of this section;
(ii) Proceeds from the disposition of equipment purchased with CDBG
funds;
(iii) Gross income from the use or rental of real or personal
property acquired by the unit of general local government or subgrantee
of the unit of general local government with CDBG funds, less the costs
incidental to the generation of the income;
(iv) Gross income from the use or rental of real property, owned by
the unit of general local government or other entity carrying out a CDBG
activity that was constructed or improved with CDBG funds, less the
costs incidental to the generation of the income;
(v) Payments of principal and interest on loans made using CDBG
funds, except as provided in paragraph (e)(2)(iii) of this section;
(vi) Proceeds from the sale of loans made with CDBG funds, less
reasonable legal and other costs incurred in the course of such sale
that are not otherwise eligible costs under sections 105(a)(13) or
106(d)(3)(A) of the Act;
(vii) Proceeds from the sale of obligations secured by loans made
with CDBG funds, less reasonable legal and other costs incurred in the
course of such sale that are not otherwise eligible costs under sections
105(a)(13) or 106(d)(3)(A) of the Act;
(viii) Interest earned on funds held in a revolving fund account;
(ix) Interest earned on program income pending disposition of the
income;
(x) Funds collected through special assessments made against
nonresidential properties and properties owned and occupied by
households not of low and moderate income, if the special assessments
are used to recover all or part of the CDBG portion of a public
improvement; and
(xi) Gross income paid to a unit of general local government or
subgrantee of the unit of general local government from the ownership
interest in a for-profit entity acquired in return for the provision of
CDBG assistance.
[[Page 105]]
(2) ``Program income'' does not include the following:
(i) The total amount of funds, which does not exceed $35,000
received in a single year from activities, other than revolving loan
funds that is retained by a unit of general local government and its
subgrantees (all funds received from revolving loan funds are considered
program income, regardless of amount);
(ii) Amounts generated by activities eligible under section
105(a)(15) of the Act and carried out by an entity under the authority
of section 105(a)(15) of the Act;
(iii) Payments of principal and interest made by a subgrantee
carrying out a CDBG activity for a unit of general local government,
toward a loan from the local government to the subgrantee, to the extent
that program income received by the subgrantee is used for such
payments;
(iv) The following classes of interest, which must be remitted to
HUD for transmittal to the Department of the Treasury, and will not be
reallocated under section 106(c) or (d) of the Act:
(A) Interest income from loans or other forms of assistance provided
with CDBG funds that are used for activities determined by HUD to be not
eligible under Sec. 570.482 or section 105(a) of the Act, to fail to
meet a national objective in accordance with the requirements of
Sec. 570.483, or to fail substantially to meet any other requirement of
this subpart or the Act;
(B) Interest income from deposits of amounts reimbursed to a State's
CDBG program account prior to the state's disbursement of the reimbursed
funds for eligible purposes; and
(C) Interest income received by units of general local government on
deposits of grant funds before disbursement of the funds for activities,
except that the unit of general local government may keep interest
payments of up to $100 per year for administrative expenses otherwise
permitted to be paid with CDBG funds.
(v) Proceeds from the sale of real property purchased or improved
with CDBG funds, if the proceeds are received more than 5 years after
expiration of the grant agreement between the State and the unit of
general local government.
(3) The State may permit the unit of general local government which
receives or will receive program income to retain it, subject to the
requirements of paragraph (e)(3)(ii) of this section, or may require the
unit of general local government to pay the program income to the State.
The State, however, must permit the unit of general local government to
retain the program income if it will be used to continue the activity
from which it was derived. The State will determine when an activity is
being continued.
(i) Program income paid to the State. Except as described in
paragraph (e)(3)(ii)(A) of this section, the State may require the unit
of general local government that receives or will receive program income
to return the program income to the State. Program income that is paid
to the State is treated as additional CDBG funds subject to the
requirements of this subpart. Except for program income retained and
used by the State for administrative costs or technical assistance under
paragraph (a) of this section, program income paid to the State must be
distributed to units of general local government in accordance with the
method of distribution in the action plan under 24 CFR 91.320(k)(1)(i)
that is in effect at the time the program income is distributed. To the
maximum extent feasible, the State must distribute program income before
it makes additional withdrawals from the United States Treasury, except
as provided in paragraph (f) of this section.
(ii) Program income retained by a unit of general local government.
A State may permit a unit of general local government that receives or
will receive program income to retain it. Alternatively, a State may
require that the unit of general local government pay any such income to
the State unless the exception in paragraph (e)(3)(ii)(A) of this
section applies.
(A) A State must permit the unit of general local government to
retain the program income if the program income will be used to continue
the activity from which it was derived. A State will determine when an
activity is being
[[Page 106]]
continued. In making such a determination, a State may consider whether
the unit of general local government is or will be unable to comply with
the requirements of paragraph (e)(3)(ii)(B) of this section or other
requirements of this part, and the extent to which the program income is
unlikely to be applied to continue the activity within the reasonably
near future. When a State determines that the program income will be
applied to continue the activity from which it was derived, but the
amount of program income held by the unit of general local government
exceeds projected cash needs for the reasonably near future, the State
may require the local government to return all or part of the program
income to the State until such time as it is needed by the unit of
general local government. When a State determines that a unit of local
government is not likely to apply any significant amount of program
income to continue the activity within a reasonable amount of time, or
that it is not likely to apply the program income in accordance with
applicable requirements, the State may require the unit of general local
government to return all of the program income to the State for
disbursement to other units of local government. A State that intends to
require units of general local government to return program income in
accordance with this paragraph must describe its approach in the State's
action plan required under 24 CFR 91.320 of this title or in a
substantial amendment if the State intends to implement this option
after the action plan is submitted to and approved by HUD.
(B) Program income that is received and retained by the unit of
general local government is treated as additional CDBG funds and is
subject to all applicable requirements of this subpart, regardless of
whether the activity that generated the program income has been closed
out. If the grant between the State and the unit of general local
government that generated the program income is still open when it is
generated, program income permitted to be retained will be considered
part of the unit of general local government's grant that generated the
program income. If the grant between the State and the unit of general
local government is closed out, program income permitted to be retained
will be considered to be part of the unit of general local government's
most recently awarded open grant. If the unit of general local
government has no open grants with the State, the program income
retained by the unit of general local government will be counted as part
of the State's program year in which the program income was received. A
State must employ one or more of the following methods to ensure that
units of general local government comply with applicable program income
requirements:
(1) Maintaining contractual relationships with units of general
local government for the duration of the existence of the program
income;
(2) Closing out the underlying activity, but requiring as a
condition of closeout that the unit of general local government obtain
advance State approval of either a unit of general local government's
plan for the use of program income or of each use of program income by
grant recipients via regularly occurring reports and requests for
approval;
(3) Closing out the underlying activity, but requiring as a
condition of closeout that the unit of general local government report
to the State when new program income is received; or
(4) With prior HUD approval, other approaches that demonstrate that
the State will ensure compliance with the requirements of this subpart
by units of general local government.
(iii) Transfer of program income to Entitlement program. A unit of
general local government that becomes eligible to be an Entitlement
grantee may request the State's approval to transfer State CDBG grant-
generated program income to the unit of general local government's
Entitlement program. A State may approve the transfer, provided that the
unit of general local government:
(A) Has officially elected to participate in the Entitlement grant
program;
(B) Agrees to use such program income in accordance with Entitlement
program requirements; and
[[Page 107]]
(C) Has set up Integrated Disbursement Information System (IDIS)
access and agrees to enter receipt of program income into IDIS.
(iv) Transfer of program income of grantees losing Entitlement
status. Upon entry into the State CDBG program, a unit of general local
government that has lost or relinquished its Entitlement status must,
with respect to program income that a unit of general local government
would otherwise be permitted to retain, either:
(A) Retain program income generated under Entitlement grants and
continue to comply with Entitlement program requirements for program
income; or
(B) Retain the program income and transfer it to the State CDBG
program, in which case the unit of general local government must comply
with the State's rules for program income and the requirements of this
paragraph (e).
(4) The State must report on the receipt and use of all program
income (whether retained by units of general local government or paid to
the State) in its annual performance and evaluation report.
(f) Revolving funds. (1) The State may permit units of general local
government to establish revolving funds to carry out specific,
identified activities. A revolving fund, for this purpose, is a separate
fund (with a set of accounts that are independent of other program
accounts) established to carry out specific activities which, in turn,
generate payments to the fund for use in carrying out such activities.
These payments to the revolving fund are program income and must be
substantially disbursed from the revolving fund before additional grant
funds are drawn from the Treasury for revolving fund activities. Such
program income is not required to be disbursed for non-revolving fund
activities.
(2) The State may establish one or more State revolving funds to
distribute grants to units of general local government throughout a
State or a region of the State to carry out specific, identified
activities. A revolving fund, for this purpose, is a separate fund (with
a set of accounts that are independent of other program accounts)
established to fund grants to units of general local government to carry
out specific activities which, in turn, generate payments to the fund
for additional grants to units of general local government to carry out
such activities. Program income in the revolving fund must be disbursed
from the fund before additional grant funds are drawn from the Treasury
for payments to units of general local government which could be funded
from the revolving fund.
(3) A revolving fund established by either the State or unit of
general local government shall not be directly funded or capitalized
with grant funds.
(g) Procurement. When procuring property or services to be paid for
in whole or in part with CDBG funds, the State shall follow its
procurement policies and procedures. The State shall establish
requirements for procurement policies and procedures for units of
general local government, based on full and open competition. Methods of
procurement (e.g., small purchase, sealed bids/formal advertising,
competitive proposals, and noncompetitive proposals) and their
applicability shall be specified by the State. Cost plus a percentage of
cost and percentage of construction costs methods of contracting shall
not be used. The policies and procedures shall also include standards of
conduct governing employees engaged in the award or administration of
contracts. (Other conflicts of interest are covered by Sec. 570.489(h).)
The State shall ensure that all purchase orders and contracts include
any clauses required by Federal statutes, Executive orders, and
implementing regulations. The State shall make subrecipient and
contractor determinations in accordance with the standards in 2 CFR
200.330.
(h) Conflict of interest--(1) Applicability. (i) In the procurement
of supplies, equipment, construction, and services by the States, units
of local general governments, and subrecipients, the conflict of
interest provisions in paragraph (g) of this section shall apply.
(ii) In all cases not governed by paragraph (g) of this section,
this paragraph (h) shall apply. Such cases include the acquisition and
disposition of real property and the provision of assistance with CDBG
funds by the unit
[[Page 108]]
of general local government or its subrecipients, to individuals,
businesses and other private entities.
(2) Conflicts prohibited. Except for eligible administrative or
personnel costs, the general rule is that no persons described in
paragraph (h)(3) of this section who exercise or have exercised any
functions or responsibilities with respect to CDBG activities assisted
under this subpart or who are in a position to participate in a
decisionmaking process or gain inside information with regard to such
activities, may obtain a financial interest or benefit from the
activity, or have an interest or benefit from the activity, or have an
interest in any contract, subcontract or agreement with respect thereto,
or the proceeds thereunder, either for themselves or those with whom
they have family or business ties, during their tenure or for one year
thereafter.
(3) Persons covered. The conflict of interest provisions for
paragraph (h)(2) of this section apply to any person who is an employee,
agent, consultant, officer, or elected official or appointed official of
the State, or of a unit of general local government, or of any
designated public agencies, or subrecipients which are receiving CDBG
funds.
(4) Exceptions: Thresholds requirements. Upon written request by the
State, an exception to the provisions of paragraph (h)(2) of this
section involving an employee, agent, consultant, officer, or elected
official or appointed official of the State may be granted by HUD on a
case-by-case basis. In all other cases, the State may grant such an
exception upon written request of the unit of general local government
provided the State shall fully document its determination in compliance
with all requirements of paragraph (h)(4) of this section including the
State's position with respect to each factor at paragraph (h)(5) of this
section and such documentation shall be available for review by the
public and by HUD. An exception may be granted after it is determined
that such an exception will serve to further the purpose of the Act and
the effective and efficient administration of the program or project of
the State or unit of general local government as appropriate. An
exception may be considered only after the State or unit of general
local government, as appropriate, has provided the following:
(i) A disclosure of the nature of the conflict, accompanied by an
assurance that there has been public disclosure of the conflict and a
description of how the public disclosure was made; and
(ii) An opinion of the attorney for the State or the unit of general
local government, as appropriate, that the interest for which the
exception is sought would not violate State or local law.
(5) Factors to be considered for exceptions. In determining whether
to grant a requested exception after the requirements of paragraph
(h)(4) of this section have been satisfactorily met, the cumulative
effect of the following factors, where applicable, shall be considered:
(i) Whether the exception would provide a significant cost benefit
or an essential degree of expertise to the program or project which
would otherwise not be available;
(ii) Whether an opportunity was provided for open competitive
bidding or negotiation;
(iii) Whether the person affected is a member of a group or class of
low or moderate income persons intended to be the beneficiaries of the
assisted activity, and the exception will permit such person to receive
generally the same interests or benefits as are being made available or
provided to the group or class;
(iv) Whether the affected person has withdrawn from his or her
functions or responsibilities, or the decisionmaking process with
respect to the specific assisted activity in question;
(v) Whether the interest or benefit was present before the affected
person was in a position as described in paragraph (h)(3) of this
section;
(vi) Whether undue hardship will result either to the State or the
unit of general local government or the person affected when weighed
against the public interest served by avoiding the prohibited conflict;
and
(vii) Any other relevant considerations.
[[Page 109]]
(i) Closeout of grants to units of general local government. The
State shall establish requirements for timely closeout of grants to
units of general local government and shall take action to ensure the
timely closeout of such grants.
(j) Change of use of real property. The standards described in this
section apply to real property within the unit of general local
government's control (including activities undertaken by subrecipients)
which was acquired or improved in whole or in part using CDBG funds in
excess of the threshold for small purchase procurement (2 CFR 200.88).
These standards shall apply from the date CDBG funds are first spent for
the property until five years after closeout of the unit of general
local government's grant.
(1) A unit of general local governments may not change the use or
planned use of any such property (including the beneficiaries of such
use) from that for which the acquisition or improvement was made, unless
the unit of general local government provides affected citizens with
reasonable notice of and opportunity to comment on any proposed change,
and either:
(i) The new use of the property qualifies as meeting one of the
national objectives and is not a building for the general conduct of
government; or
(ii) The requirements in paragraph (j)(2) of this section are met.
(2) If the unit of general local government determines, after
consultation with affected citizens, that it is appropriate to change
the use of the property to a use which does not qualify under paragraph
(j)(1) of this section, it may retain or dispose of the property for the
changed use if the unit of general local government's CDBG program is
reimbursed or the State's CDBG program is reimbursed, at the discretion
of the State. The reimbursement shall be in the amount of the current
fair market value of the property, less any portion of the value
attributable to expenditures of non-CDBG funds for acquisition of, and
improvements to, the property, except that if the change in use occurs
after grant closeout but within 5 years of such closeout, the unit of
general local government shall make the reimbursement to the State's
CDBG program account.
(3) Following the reimbursement of the CDBG program in accordance
with paragraph (j)(2) of this section, the property no longer will be
subject to any CDBG requirements.
(k) Accountability for real and personal property. The State shall
establish and implement requirements, consistent with State law and the
purposes and requirements of this subpart (including paragraph (j) of
this section) governing the use, management, and disposition of real and
personal property acquired with CDBG funds.
(l) Debarment and suspension. The requirements in 2 CFR part 2424
are applicable. CDBG funds may not be provided to excluded or
disqualified persons.
(m) Subrecipient monitoring and management. The provisions of 2 CFR
200.330 through 200.332 are applicable.
(n) Audits. Notwithstanding any other provision of this title,
audits of a State and units of general local government shall be
conducted in accordance with 2 CFR part 200, subpart F, which implements
the Single Audit Act. States shall develop and administer an audits
management system to ensure that audits of units of general local
government are conducted in accordance with 2 CFR part 200, subpart F.
(o) Grant Closeout.--HUD will close grants to States in accordance
with the grant closeout requirements of 2 CFR 200.343.
(p) Cost principles and prior approval. A State must ensure that
costs incurred by the State and by its recipients are in conformance
with 2 CFR part 200, subpart E. All cost items described in 2 CFR part
200, subpart E, that require Federal agency approval are allowable
without prior approval of HUD, to the extent that they otherwise comply
with the requirements of 2 CFR part 200, subpart E, and are otherwise
eligible, except for the following:
(1) Depreciation methods for fixed assets shall not be changed
without the express approval of the cognizant Federal agency (2 CFR
200.436).
(2) Fines, penalties, damages, and other settlements are unallowable
costs to the CDBG program (2 CFR 200.441).
[[Page 110]]
(3) Costs of housing (e.g., depreciation, maintenance, utilities,
furnishings, rent), housing allowances, and personal living expenses
(goods or services for personal use) regardless of whether reported as
taxable income to the employees (2 CFR 200.445).
(4) Organization costs (2 CFR 200.455).
[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1952, Jan. 5, 1995; 61
FR 54922, Oct. 22, 1996; 67 FR 15112, Mar. 29, 2002; 72 FR 73496, Dec.
27, 2007; 77 FR 24143, Apr. 23, 2012; 80 FR 69871, Nov. 12, 2015; 80 FR
71936, Nov. 18, 2015; 80 FR 75937, Dec. 7, 2015]
Sec. 570.490 Recordkeeping requirements.
(a) State records. (1) The State shall establish and maintain such
records as may be necessary to facilitate review and audit by HUD of the
State's administration of CDBG funds under Sec. 570.493. The content of
records maintained by the State shall be as jointly agreed upon by HUD
and the States and sufficient to enable HUD to make the determinations
described at Sec. 570.493. For fair housing and equal opportunity
purposes, and as applicable, such records shall include documentation
related to the State's AFH, as described in 24 CFR part 5, subpart A
(Sec. 5.168). The records shall also permit audit of the States in
accordance with 2 CFR 200, subpart F.
(2) The state shall keep records to document its funding decisions
reached under the method of distribution described in 24 CFR
91.320(j)(1), including all the criteria used to select applications
from local governments for funding and the relative importance of the
criteria (if applicable), regardless of the organizational level at
which final funding decisions are made, so that they can be reviewed by
HUD, the Inspector General, the Government Accountability Office, and
citizens pursuant to the requirements of Sec. 570.490(c).
(3) Integrated Disbursement and Information System (IDIS). The state
shall make entries into IDIS in a form prescribed by HUD to accurately
capture the state's accomplishment and funding data, including program
income, for each program year. It is recommended that the state enter
IDIS data on a quarterly basis and it is required to be entered
annually.
(b) Unit of general local government's record. The State shall
establish recordkeeping requirements for units of general local
government receiving CDBG funds that are sufficient to facilitate
reviews and audits of such units of general local government under
Secs. 570.492 and 570.493. For fair housing and equal opportunity
purposes, and as applicable, such records shall include documentation
related to the State's AFH as described in 24 CFR part 5, subpart A
(Sec. 5.168).
(c) Access to records. (1) Representatives of HUD, the Inspector
General, and the General Accounting Office shall have access to all
books, accounts, records, reports, files, and other papers, or property
pertaining to the administration, receipt and use of CDBG funds and
necessary to facilitate such reviews and audits.
(2) The State shall provide citizens with reasonable access to
records regarding the past use of CDBG funds and ensure that units of
general local government provide citizens with reasonable access to
records regarding the past use of CDBG funds consistent with State or
local requirements concerning the privacy of personal records.
(d) Record retention. Records of the State and units of general
local government, including supporting documentation, shall be retained
for the greater of three years from closeout of the grant to the state,
or the period required by other applicable laws and regulations as
described in Sec. 570.487 and Sec. 570.488.
[57 FR 53397, Nov. 9, 1992, as amended at 71 FR 6971, Feb. 9, 2006; 77
FR 24146, Apr. 23, 2012; 80 FR 42367, July 16, 2015; 80 FR 75937, Dec.
7, 2015]
Sec. 570.491 Performance and evaluation report.
The annual performance and evaluation report shall be submitted in
accordance with 24 CFR part 91.
(Approved by the Office of Management and Budget under control number
2506-0117)
[60 FR 1916, Jan. 5, 1995]
Sec. 570.492 State's reviews and audits.
(a) The state shall make reviews and audits including on-site
reviews, of units of general local government as
[[Page 111]]
may be necessary or appropriate to meet the requirements of section
104(e)(2) of the Act.
(b) In the case of noncompliance with these requirements, the State
shall take such actions as may be appropriate to prevent a continuance
of the deficiency, mitigate any adverse effects or consequences and
prevent a recurrence. The state shall establish remedies for units of
general local government noncompliance.
Sec. 570.493 HUD's reviews and audits.
(a) General. At least on an annual basis, HUD shall make such
reviews and audits as may be necessary or appropriate to determine:
(1) Whether the state has distributed CDBG funds to units of general
local government in a timely manner in conformance to the method of
distribution described in its action plan under part 91 of this title;
(2) Whether the state has carried out its certifications in
compliance with the requirements of the Act and this subpart and other
applicable laws; and
(3) Whether the state has made reviews and audits of the units of
general local government required by Sec. 570.492.
(b) Information considered. In conducting performance reviews and
audits, HUD will rely primarily on information obtained from the state's
performance report, records maintained by the state, findings from on-
site monitoring, audit reports, and the status of the state's unexpended
grant funds. HUD may also consider relevant information on the state's
performance gained from other sources, including litigation, citizens'
comments, and other information provided by the state. A State's failure
to maintain records in accordance with Sec. 570.490 may result in a
finding that the State has failed to meet the applicable requirement to
which the record pertains.
[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 54922, Oct. 22, 1996]
Sec. 570.494 Timely distribution of funds by states.
(a) States are encouraged to adopt and achieve a goal of obligating
and announcing 95 percent of funds to units of general local government
within 12 months of the state signing its grant agreement with HUD.
(b) HUD will review each state to determine if the state has
distributed CDBG funds in a timely manner. The state's distribution of
CDBG funds is timely if:
(1) All of the state's annual grant (excluding state administration)
has been obligated and announced to units of general local government
within 15 months of the state signing its grant agreement with HUD; and
(2) Recaptured funds and program income received by the state are
expeditiously obligated and announced to units of general local
government.
(c) HUD may collect necessary information from states to determine
whether CDBG funds have been distributed in a timely manner.
Sec. 570.495 Reviews and audits response.
(a) If HUD's review and audit under Sec. 570.493 results in a
negative determination, or if HUD otherwise determines that a state or
unit of general local government has failed to comply with any
requirement of this subpart, the state will be given an opportunity to
contest the finding and will be requested to submit a plan for
corrective action. If the state is unsuccessful in contesting the
validity of the finding to the satisfaction of HUD, or if the state's
plan for corrective action is not satisfactory to HUD, HUD may take one
or more of the following actions to prevent a continuation of the
deficiency; mitigate, to the extent possible, the adverse effects or
consequence of the deficiency; or prevent a recurrence of the
deficiency:
(1) Issue a letter of warning that advises the State of the
deficiency and puts the state on notice that additional action will be
taken if the deficiency is not corrected or is repeated;
(2) Advise the state that additional information or assurances will
be required before acceptance of one or more of the certifications
required for the succeeding year grant;
(3) Advise the state to suspend or terminate disbursement of funds
for a deficient activity or grant;
(4) Advise the state to reimburse its grant in any amounts
improperly expended;
[[Page 112]]
(5) Change the method of payment to the state from an advance basis
to a reimbursement basis;
(6) Based on the state's current failure to comply with a
requirement of this subpart which will affect the use of the succeeding
year grant, condition the use of the succeeding fiscal years grant funds
upon appropriate corrective action by the state. When the use of funds
is conditioned, HUD shall specify the reasons for the conditions and the
actions necessary to satisfy the conditions.
(b)(1) Whenever HUD determines that a state or unit of general local
government which is a recipient of CDBG funds has failed to comply with
section 109 of the Act (nondiscrimination requirements), HUD shall
notify the governor of the State or chief executive officer of the unit
of general local government of the noncompliance and shall request the
governor or the chief executive officer to secure compliance. If within
a reasonable time, not to exceed sixty days, the governor or chief
executive officer fails or refuses to secure compliance, HUD may take
the following action:
(i) Refer the matter to the Attorney General with a recommendation
that an appropriate civil action be instituted;
(ii) Exercise the powers and functions provided by title VI of the
Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-7);
(iii) Exercise the powers and functions provided for in
Sec. 570.496; or
(iv) Take such other action as may be provided by law.
(2) When a matter is referred to the Attorney General pursuant to
paragraph (b)(1)(i) of this section, or whenever HUD has reason to
believe that a State or unit of general local government is engaged in a
pattern or practice in violation of the provisions of section 109 of the
Act, the Attorney General may bring a civil action in any appropriate
United States district court for such relief as may be appropriate,
including injunctive relief.
Sec. 570.496 Remedies for noncompliance; opportunity for hearing.
(a) General. Action pursuant to this section will be taken only
after at least one of the corrective or remedial actions specified in
Sec. 570.495 has been taken, and only then if the State or unit of
general local government has not made an appropriate or timely response.
(b) Remedies. (1) If HUD finds after reasonable notice and
opportunity for hearing that a State or unit of general local government
has failed to comply with any provision of this subpart, until HUD is
satisfied that there is no longer failure to comply, HUD shall:
(i) Terminate payments to the state;
(ii) Reduce payments for current or future grants to the state by an
amount equal to the amount of CDBG funds distributed or used without
compliance with the requirements of this subpart;
(iii) Limit the availability of payments to the state to activities
not affected by the failure to comply or to activities designed to
overcome the failure to comply;
(iv) Based on the state's failure to comply with a requirement of
this subpart (other than the state's current failure to comply which
will affect the use of the succeeding year grant), condition the use of
the grant funds upon appropriate corrective action by the state
specified by HUD; or
(v) With respect to a CDBG grant awarded by the state to a unit of
general local government, withhold, reduce, or withdraw the grant,
require the state to withhold, reduce, or withdraw the grant, or take
other action as appropriate, except that CDBG funds expended on eligible
activities shall not be recaptured or deducted from future CDBG grants
to such unit of general local government.
(2) HUD may on due notice suspend payments at any time after the
issuance of a notice of opportunity for hearing pursuant to paragraph
(d) of this section, pending such hearing and a final decision, to the
extent HUD determines such action necessary to prevent a continuation of
the noncompliance.
(c) In lieu of, or in addition to, the action authorized by
paragraph (b) of this section, if HUD has reason to believe that the
state or unit of general local government has failed to comply
substantially with any provision of this subpart, HUD may:
[[Page 113]]
(1) Refer the matter to the Attorney General of the United States
with a recommendation that an appropriate civil action be instituted;
and
(2) Upon such a referral, the Attorney General may bring a civil
action in any United States district court having venue thereof for such
relief as may be appropriate, including an action to recover the amount
of the CDBG funds which was not expended in accordance with this
subpart, or for mandatory or injunctive relief.
(d) Proceedings. When HUD proposes to take action pursuant to this
section, the respondent in the proceedings will be the state. At the
option of HUD, a unit of general local government may also be a
respondent. These procedures are to be followed before imposition of a
sanction described in paragraph (b)(1) of this section:
(1) Notice of opportunity for hearing. HUD shall notify the
respondent in writing of the proposed action and of the opportunity for
a hearing. The notice shall be sent to the respondent by first class
mail and shall provide notice:
(i) In a manner which is adequate to allow the respondent to prepare
its response, the basis upon which HUD determined that the respondent
failed to comply with a provision of this subpart;
(ii) That the hearing procedures are governed by these rules;
(iii) That the respondent has 14 days from receipt of the notice
within which to provide a written request for a hearing to the Docket
Clerk, Office of Administrative Law Judges, and the address and
telephone number of the Docket Clerk;
(iv) Of the action which HUD proposes to take and that the authority
for this action is Sec. 570.496 of this subpart;
(v) That if the respondent fails to request a hearing within the
time specified, HUD's determination that the respondent failed to comply
with a provision of this subpart shall be final and HUD may proceed to
take the proposed action.
(2) Initiation of hearing. The respondent shall be allowed 14 days
from receipt of the notice within which to notify HUD in writing of its
request for a hearing. If no request is received within the time
specified, HUD's determination that the respondent failed to comply with
a provision of this subpart shall be final and HUD may proceed to take
the proposed action.
(3) Administrative Law Judge. Proceedings conducted under these
rules shall be presided over by an Administrative Law Judge (ALJ),
appointed as provided by section 11 of the Administrative Procedure Act
(5 U.S.C. 3105). The case shall be referred to the ALJ by HUD at the
time a hearing is requested. The ALJ shall promptly notify the parties
of the time and place at which the hearing will be held. The ALJ shall
conduct a fair and impartial hearing and take all action necessary to
avoid delay in the disposition of proceedings and to maintain order. The
ALJ shall have all powers necessary to those ends, including but not
limited to the power:
(i) To administer oaths and affirmations;
(ii) To issue subpoenas as authorized by law;
(iii) To rule upon offers of proof and receive relevant evidence;
(iv) To order or limit discovery before the hearing as the interests
of justice may require;
(v) To regulate the course of the hearing and the conduct of the
parties and their counsel;
(vi) To hold conferences for the settlement or simplification of the
issues by consent of the parties;
(vii) To consider and rule upon all procedural and other motions
appropriate in adjudicative proceedings; and
(viii) To make and file initial determinations.
(4) Ex parte communications. An ex parte communication is any
communication with an ALJ, direct or indirect, oral or written,
concerning the merits or procedures of any pending proceeding which is
made by a party in the absence of any other party. Ex parte
communications are prohibited except where the purpose and content of
the communication have been disclosed in advance or simultaneously to
all parties, or the communication is a request for information
concerning the status of the case. Any ALJ who receives an ex parte
communication
[[Page 114]]
which the ALJ knows or has reason to believe is unauthorized shall
promptly place the communication, or its substance, in all files and
shall furnish copies to all parties. Unauthorized ex parte
communications shall not be taken into consideration in deciding any
matter in issue.
(5) The hearing. All parties shall have the right to be represented
at the hearing by counsel. The ALJ shall conduct the proceedings in an
expeditious manner while allowing the parties to present all oral and
written evidence which tends to support their respective positions, but
the ALJ shall exclude irrelevant, immaterial or unduly repetitious
evidence. HUD has the burden of proof in showing by a preponderance of
evidence that the respondent failed to comply with a provision of this
subpart. Each party shall be allowed to cross-examine adverse witnesses
and to rebut and comment upon evidence presented by the other party.
Hearings shall be open to the public. So far as the orderly conduct of
the hearing permits, interested persons other than the parties may
appear and participate in the hearing.
(6) Transcripts. Hearings shall be recorded and transcribed only by
a reporter under the supervision of the ALJ. The original transcript
shall be a part of the record and shall constitute the sole official
transcript. Respondents and the public, at their own expense, shall
obtain copies of the transcript.
(7) The ALJ's decisions. At the conclusion of the hearing, the ALJ
shall give the parties a reasonable opportunity to submit proposed
findings and conclusions and supporting reasons therefor. Generally,
within 60 days after the conclusion of the hearing, the ALJ shall
prepare a written decision which includes a Statement of findings and
conclusions, and the reasons or basis therefor, on all the material
issues of fact, law or discretion presented on the record and the
appropriate sanction or denial thereof. The decision shall be based on
consideration of the whole record or those parts thereof cited by a
party and supported by and in accordance with the reliable, probative,
and substantial evidence. A copy of the decision shall be furnished to
the parties immediately by first class mail and shall include a notice
that any requests for review by the Secretary must be made in writing to
the Secretary within 30 days of the receipt of the decision.
(8) Record. The transcript of testimony and exhibits, together with
the decision of the ALJ and all papers and requests filed in the
proceeding, constitutes the exclusive record for decision and, on
payment of its reasonable cost, shall be made available to the parties.
After reaching the initial decision, the ALJ shall certify to the
complete record and forward the record to the Secretary.
(9) Review by the Secretary. The decision by the ALJ shall
constitute the final decision of HUD unless, within 30 days after the
receipt of the decision, either the respondent or the Assistant
Secretary for Community Planning and Development files an exception and
request for review by the Secretary. The excepting party must transmit
simultaneously to the Secretary and the other party the request for
review and the bases of the party's exceptions to the findings of the
ALJ. The other party shall be allowed 30 days from receipt of the
exception to provide the Secretary and the excepting party with a
written reply. The Secretary shall then review the record of the case,
including the exceptions and the reply. On the basis of such review, the
Secretary shall issue a written determination, including a Statement of
the rationale therefor, affirming, modifying or revoking the decision of
the ALJ. The Secretary's decision shall be made and transmitted to the
parties within 60 days after the decision of the ALJ was furnished to
the parties.
(10) Judicial review. The respondent may seek judicial review of
HUD's decision pursuant to section 111(c) of the Act.
[74 FR 4636, Jan. 26, 2009]
Sec. 570.497 Condition of State election to administer State
CDBG Program.
Pursuant to section 106(d)(2)(A)(i) of the Act, a State has the
right to elect, in such manner and at such time as the Secretary may
prescribe, to administer funds allocated under subpart A of this part
for use in nonentitlement areas of the State. After January 26, 1995,
any
[[Page 115]]
State which elects to administer the allocation of CDBG funds for use in
nonentitlement areas of the State in any year must, in addition to all
other requirements of this subpart, submit a pledge by the State in
accordance with section 108(d)(2) of the Act, and in a form acceptable
to HUD, of any future CDBG grants it may receive under subpart A and
this subpart. Such pledge shall be for the purpose of assuring repayment
of any debt obligations (as defined in Sec. 570.701), in accordance with
their terms, that HUD may have guaranteed in the respective State on
behalf of any nonentitlement public entity (as defined in Sec. 570.701)
or its designated public agency prior to the State's election.
[59 FR 66604, Dec. 27, 1994]
Subpart J_Grant Administration
Source: 53 FR 8058, Mar. 11, 1988, unless otherwise noted.
Sec. 570.500 Definitions.
For the purposes of this subpart, the following terms shall apply:
(a) Program income means gross income received by the recipient or a
subrecipient directly generated from the use of CDBG funds, except as
provided in paragraph (a)(4) of this section.
(1) Program income includes, but is not limited to, the following:
(i) Proceeds from the disposition by sale or long-term lease of real
property purchased or improved with CDBG funds;
(ii) Proceeds from the disposition of equipment purchased with CDBG
funds;
(iii) Gross income from the use or rental of real or personal
property acquired by the recipient or by a subrecipient with CDBG funds,
less costs incidental to generation of the income;
(iv) Gross income from the use or rental of real property, owned by
the recipient or by a subrecipient, that was constructed or improved
with CDBG funds, less costs incidental to generation of the income;
(v) Payments of principal and interest on loans made using CDBG
funds, except as provided in paragraph (a)(3) of this section;
(vi) Proceeds from the sale of loans made with CDBG funds;
(vii) Proceeds from sale of obligations secured by loans made with
CDBG funds;
(viii) [Reserved]
(ix) Interest earned on program income pending its disposition; and
(x) Funds collected through special assessments made against
properties owned and occupied by households not of low and moderate
income, where the assessments are used to recover all or part of the
CDBG portion of a public improvement.
(2) Program income does not include income earned (except for
interest described in Sec. 570.513) on grant advances from the U.S.
Treasury. The following items of income earned on grant advances must be
remitted to HUD for transmittal to the U.S. Treasury, and will not be
reallocated under section 106(c) or (d) of the Act:
(i) Interest earned from the investment of the initial proceeds of a
grant advance by the U.S. Treasury;
(ii) Interest earned on loans or other forms of assistance provided
with CDBG funds that are used for activities determined by HUD either to
be ineligible or to fail to meet a national objective in accordance with
the requirements of subpart C of this part, or that fail substantially
to meet any other requirement of this part; and
(iii) Interest earned on the investment of amounts reimbursed to the
CDBG program account prior to the use of the reimbursed funds for
eligible purposes.
(3) The calculation of the amount of program income for the
recipient's CDBG program as a whole (i.e., comprising activities carried
out by a grantee and its subrecipients) shall exclude payments made by
subrecipients of principal and/or interest on CDBG-funded loans received
from grantees if such payments are made using program income received by
the subrecipient. (By making such payments, the subrecipient shall be
deemed to have transferred program income to the grantee.) The amount of
program income derived from this calculation shall be used for reporting
purposes, for purposes of applying the requirement
[[Page 116]]
under Sec. 570.504(b)(2)(iii), and in determining limitations on
planning and administration and public services activities to be paid
for with CDBG funds.
(4) Program income does not include:
(i) Any income received in a single program year by the recipient
and all its subrecipients if the total amount of such income does not
exceed $25,000; and
(ii) Amounts generated by activities that are financed by a loan
guaranteed under section 108 of the Act and meet one or more of the
public benefit criteria specified at Sec. 570.209(b)(2)(v) or are
carried out in conjunction with a grant under section 108(q) in an area
determined by HUD to meet the eligibility requirements for designation
as an Urban Empowerment Zone pursuant to 24 CFR part 597, subpart B.
Such exclusion shall not apply if CDBG funds are used to repay the
guaranteed loan. When such a guaranteed loan is partially repaid with
CDBG funds, the amount generated shall be prorated to reflect the
percentage of CDBG funds used. Amounts generated by activities financed
with loans guaranteed under section 108 which are not defined as program
income shall be treated as miscellaneous revenue and shall not be
subject to any of the requirements of this part, except that the use of
such funds shall be limited to activities that are located in a
revitalization strategy area and implement a HUD approved area
revitalization strategy pursuant to Sec. 91.215(e) of this title.
However, such treatment shall not affect the right of the Secretary to
require the section 108 borrower to pledge such amounts as security for
the guaranteed loan. The determination whether such amounts shall
constitute program income shall be governed by the provisions of the
contract required at Sec. 570.705(b)(1).
(5) Examples of other receipts that are not considered program
income are proceeds from fund raising activities carried out by
subrecipients receiving CDBG assistance (the costs of fundraising are
generally unallowable under the applicable OMB circulars referenced in
24 CFR 84.27), funds collected through special assessments used to
recover the non-CDBG portion of a public improvement, and proceeds from
the disposition of real property acquired or improved with CDBG funds
when the disposition occurs after the applicable time period specified
in Sec. 570.503(b)(8) for subrecipient-controlled property, or in
Sec. 570.505 for recipient-controlled property.
(b) Revolving fund means a separate fund (with a set of accounts
that are independent of other program accounts) established for the
purpose of carrying out specific activities which, in turn, generate
payments to the fund for use in carrying out the same activities. Each
revolving loan fund's cash balance must be held in an interest-bearing
account, and any interest paid on CDBG funds held in this account shall
be considered interest earned on grant advances and must be remitted to
HUD for transmittal to the U.S. Treasury no less frequently than
annually. (Interest paid by borrowers on eligible loans made from the
revolving loan fund shall be program income and treated accordingly.)
(c) Subrecipient means a public or private nonprofit agency,
authority, or organization, or a for-profit entity authorized under
Sec. 570.201(o), receiving CDBG funds from the recipient or another
subrecipient to undertake activities eligible for such assistance under
subpart C of this part. The term excludes an entity receiving CDBG funds
from the recipient under the authority of Sec. 570.204, unless the
grantee explicitly designates it as a subrecipient. The term includes a
public agency designated by a unit of general local government to
receive a loan guarantee under subpart M of this part, but does not
include contractors providing supplies, equipment, construction, or
services subject to the procurement requirements in 2 CFR part 200,
subpart D.
[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 27120, June 17, 1992; 60
FR 1952, Jan. 5, 1995; 60 FR 17445, Apr. 6, 1995; 60 FR 56914, Nov. 9,
1995; 80 FR 75937, Dec. 7, 2015]
Sec. 570.501 Responsibility for grant administration.
(a) One or more public agencies, including existing local public
agencies, may be designated by the chief executive officer of the
recipient to undertake activities assisted by this part. A public agency
so designated shall be
[[Page 117]]
subject to the same requirements as are applicable to subrecipients.
(b) The recipient is responsible for ensuring that CDBG funds are
used in accordance with all program requirements. The use of designated
public agencies, subrecipients, or contractors does not relieve the
recipient of this responsibility. The recipient is also responsible for
determining the adequacy of performance under subrecipient agreements
and procurement contracts, and for taking appropriate action when
performance problems arise, such as the actions described in
Sec. 570.910. Where a unit of general local government is participating
with, or as part of, an urban county, or as part of a metropolitan city,
the recipient is responsible for applying to the unit of general local
government the same requirements as are applicable to subrecipients,
except that the five-year period identified under Sec. 570.503(b)(8)(i)
shall begin with the date that the unit of general local government is
no longer considered by HUD to be a part of the metropolitan city or
urban county, as applicable, instead of the date that the subrecipient
agreement expires.
[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 27120, June 17, 1992]
Sec. 570.502 Applicability of uniform administrative requirements.
(a) Grantees and subrecipients shall comply with 2 CFR part 200,
``Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards'', except that:
(1) Section 200.305 ``Payment'' is modified for lump sum drawdown
for financing of property rehabilitation activities, in accordance with
Sec. 570.513.
(2) Section 200.306 ``Cost sharing or matching'' does not apply.
(3) Section 200.307 ``Program income'' does not apply. Program
income is governed by Sec. 570.504.
(4) Section 200.308 ``Revisions of budget and program plans'' does
not apply.
(5) Section 200.311 ``Real property'' does not apply, except as
provided in Sec. 570.200(j). Real property is governed by Sec. 570.505.
(6) Section 200.313 ``Equipment'' applies, except that when the
equipment is sold, the proceeds shall be program income. Equipment not
needed by the subrecipient for CDBG activities shall be transferred to
the recipient for the CDBG program or shall be retained after
compensating the recipient.
(7) Section 200.333 ``Retention requirements for records'' applies
except that:
(i) For recipients:
(A) The period shall be 4 years from the date of execution of the
closeout agreement for a grant, as further described in this part;
(B) Records for individual activities subject to the reversion of
assets provisions at Sec. 570.503(b)(7) or the change of use provisions
at Sec. 570.505 must be maintained for 3 years after those provisions no
longer apply to the activity;
(C) Records for individual activities for which there are
outstanding loan balances, other receivables, or contingent liabilities
must be retained for 3 years after the receivables or liabilities have
been satisfied.
(ii) For subrecipients:
(A) The retention period for individual CDBG activities shall be the
longer of 3 years after the expiration or termination of the
subrecipient agreement under Sec. 570.503, or 3 years after the
submission of the annual performance and evaluation report, as
prescribed in Sec. 91.520 of this title, in which the specific activity
is reported on for the final time;
(B) Records for individual activities subject to the reversion of
assets provisions at Sec. 570.503(b)(7) or change of use provisions at
Sec. 570.505 must be maintained for as long as those provisions continue
to apply to the activity; and
(C) Records for individual activities for which there are
outstanding loan balances, other receivables, or contingent liabilities
must be retained until such receivables or liabilities have been
satisfied.
(8) Section 200.343 ``Closeout'' applies to closeout of
subrecipients.
(b) [Reserved]
[80 FR 75937, Dec. 7, 2015]
Sec. 570.503 Agreements with subrecipients.
(a) Before disbursing any CDBG funds to a subrecipient, the
recipient shall sign a written agreement with the subrecipient. The
agreement shall remain
[[Page 118]]
in effect during any period that the subrecipient has control over CDBG
funds, including program income.
(b) At a minimum, the written agreement with the subrecipient shall
include provisions concerning the following items:
(1) Statement of work. The agreement shall include a description of
the work to be performed, a schedule for completing the work, and a
budget. These items shall be in sufficient detail to provide a sound
basis for the recipient effectively to monitor performance under the
agreement.
(2) Records and reports. The recipient shall specify in the
agreement the particular records the subrecipient must maintain and the
particular reports the subrecipient must submit in order to assist the
recipient in meeting its recordkeeping and reporting requirements.
(3) Program income. The agreement shall include the program income
requirements set forth in Sec. 570.504(c). The agreement shall also
specify that, at the end of the program year, the grantee may require
remittance of all or part of any program income balances (including
investments thereof) held by the subrecipient (except those needed for
immediate cash needs, cash balances of a revolving loan fund, cash
balances from a lump sum drawdown, or cash or investments held for
section 108 security needs).
(4) Uniform requirements. The agreement shall require the
subrecipient to comply with applicable uniform requirements, as
described in Sec. 570.502.
(5) Other program requirements. The agreement shall require the
subrecipient to carry out each activity in compliance with all Federal
laws and regulations described in subpart K of these regulations, except
that:
(i) The subrecipient does not assume the recipient's environmental
responsibilities described at Sec. 570.604; and
(ii) The subrecipient does not assume the recipient's responsibility
for initiating the review process under the provisions of 24 CFR part
52.
(6) Suspension and termination. The agreement shall set forth
remedies for noncompliance and provisions on termination in accordance
with 2 CFR part 200, subpart D.
(7) Reversion of assets. The agreement shall specify that upon its
expiration the subrecipient shall transfer to the recipient any CDBG
funds on hand at the time of expiration and any accounts receivable
attributable to the use of CDBG funds. It shall also include provisions
designed to ensure that any real property under the subrecipient's
control that was acquired or improved in whole or in part with CDBG
funds (including CDBG funds provided to the subrecipient in the form of
a loan) in excess of $25,000 is either:
(i) Used to meet one of the national objectives in Sec. 570.208
(formerly Sec. 570.901) until five years after expiration of the
agreement, or for such longer period of time as determined to be
appropriate by the recipient; or
(ii) Not used in accordance with paragraph (b)(7)(i) of this
section, in which event the subrecipient shall pay to the recipient an
amount equal to the current market value of the property less any
portion of the value attributable to expenditures of non-CDBG funds for
the acquisition of, or improvement to, the property. The payment is
program income to the recipient. (No payment is required after the
period of time specified in paragraph (b)(7)(i) of this section.)
[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988; 57
FR 27120, June 17, 1992; 60 FR 56915, Nov. 9, 1995; 68 FR 56405, Sept.
30, 2003; 80 FR 69873, Nov. 12, 2015; 80 FR 75938, Dec. 7, 2015]
Sec. 570.504 Program income.
(a) Recording program income. The receipt and expenditure of program
income as defined in Sec. 570.500(a) shall be recorded as part of the
financial transactions of the grant program.
(b) Disposition of program income received by recipients. (1)
Program income received before grant closeout may be retained by the
recipient if the income is treated as additional CDBG funds subject to
all applicable requirements governing the use of CDBG funds.
(2) If the recipient chooses to retain program income, that program
income shall be disposed of as follows:
(i) Program income in the form of repayments to, or interest earned
on, a revolving fund as defined in Sec. 570.500(b) shall be
substantially disbursed from
[[Page 119]]
the fund before additional cash withdrawals are made from the U.S.
Treasury for the same activity. (This rule does not prevent a lump sum
disbursement to finance the rehabilitation of privately owned properties
as provided for in Sec. 570.513.)
(ii) Substantially all other program income shall be disbursed for
eligible activities before additional cash withdrawals are made from the
U.S. Treasury.
(iii) At the end of each program year, the aggregate amount of
program income cash balances and any investment thereof (except those
needed for immediate cash needs, cash balances of a revolving loan fund,
cash balances from a lump-sum drawdown, or cash or investments held for
section 108 loan guarantee security needs) that, as of the last day of
the program year, exceeds one-twelfth of the most recent grant made
pursuant to Sec. 570.304 shall be remitted to HUD as soon as practicable
thereafter, to be placed in the recipient's line of credit. This
provision applies to program income cash balances and investments
thereof held by the grantee and its subrecipients. (This provision shall
be applied for the first time at the end of the program year for which
Federal Fiscal Year 1996 funds are provided.)
(3) Program income on hand at the time of closeout shall continue to
be subject to the eligibility requirements in subpart C and all other
applicable provisions of this part until it is expended.
(4) Unless otherwise provided in any grant closeout agreement, and
subject to the requirements of paragraph (b)(5) of this section, income
received after closeout shall not be governed by the provisions of this
part, except that, if at the time of closeout the recipient has another
ongoing CDBG grant received directly from HUD, funds received after
closeout shall be treated as program income of the ongoing grant
program.
(5) If the recipient does not have another ongoing grant received
directly from HUD at the time of closeout, income received after
closeout from the disposition of real property or from loans outstanding
at the time of closeout shall not be governed by the provisions of this
part, except that such income shall be used for activities that meet one
of the national objectives in Sec. 570.901 and the eligibility
requirements described in section 105 of the Act.
(c) Disposition of program income received by subrecipients. The
written agreement between the recipient and the subrecipient, as
required by Sec. 570.503, shall specify whether program income received
is to be returned to the recipient or retained by the subrecipient.
Where program income is to be retained by the subrecipient, the
agreement shall specify the activities that will be undertaken with the
program income and that all provisions of the written agreement shall
apply to the specified activities. When the subrecipient retains program
income, transfers of grant funds by the recipient to the subrecipient
shall be adjusted according to the principles described in paragraphs
(b)(2) (i) and (ii) of this section. Any program income on hand when the
agreement expires, or received after the agreement's expiration, shall
be paid to the recipient as required by Sec. 570.503(b)(8).
(d) Disposition of certain program income received by urban
counties. Program income derived from urban county program activities
undertaken by or within the jurisdiction of a unit of general local
government which thereafter terminates its participation in the urban
county shall continue to be program income of the urban county. The
urban county may transfer the program income to the unit of general
local government, upon its termination of urban county participation,
provided that the unit of general local government has become an
entitlement grantee and agrees to use the program income in its own CDBG
entitlement program.
(e)(1) Transfer of program income to Entitlement program. A unit of
general local government that becomes eligible to be an Entitlement
grantee may request the state's approval to transfer State CDBG grant-
generated program income to the unit of general local government's
Entitlement program. A state may approve the transfer, provided that the
unit of general local government:
[[Page 120]]
(i) Has officially elected to participate in the Entitlement grant
program;
(ii) Agrees to use such program income in accordance with
Entitlement program requirements; and
(iii) Has set up Integrated Disbursement and Information System
(IDIS) access and agrees to enter receipt of program income into IDIS.
(2) Transfer of program income of grantees losing Entitlement
status. Upon entry into the State CDBG program, a unit of general local
government that has lost or relinquished its Entitlement status must,
with respect to program income that a unit of general local government
would otherwise be permitted to retain, either:
(i) Retain the program income generated under Entitlement grants and
continue to comply with Entitlement program requirements for program
income; or
(ii) Retain the program income and transfer it to the State CDBG
program, in which case the unit of general local government must comply
with the state's rules for program income and the requirements of
Sec. 570.489(e).
[53 FR 8058, Mar. 11, 1988, as amended at 60 FR 56915, Nov. 9, 1995; 77
FR 24146, Apr. 23, 2012]
Sec. 570.505 Use of real property.
The standards described in this section apply to real property
within the recipient's control which was acquired or improved in whole
or in part using CDBG funds in excess of $25,000. These standards shall
apply from the date CDBG funds are first spent for the property until
five years after closeout of an entitlement recipient's participation in
the entitlement CDBG program or, with respect to other recipients, until
five years after the closeout of the grant from which the assistance to
the property was provided.
(a) A recipient may not change the use or planned use of any such
property (including the beneficiaries of such use) from that for which
the acquisition or improvement was made unless the recipient provides
affected citizens with reasonable notice of, and opportunity to comment
on, any proposed change, and either:
(1) The new use of such property qualifies as meeting one of the
national objectives in Sec. 570.208 (formerly Sec. 570.901) and is not a
building for the general conduct of government; or
(2) The requirements in paragraph (b) of this section are met.
(b) If the recipient determines, after consultation with affected
citizens, that it is appropriate to change the use of the property to a
use which does not qualify under paragraph (a)(1) of this section, it
may retain or dispose of the property for the changed use if the
recipient's CDBG program is reimbursed in the amount of the current fair
market value of the property, less any portion of the value attributable
to expenditures of non-CDBG funds for acquisition of, and improvements
to, the property.
(c) If the change of use occurs after closeout, the provisions
governing income from the disposition of the real property in
Sec. 570.504(b)(4) or (5), as applicable, shall apply to the use of
funds reimbursed.
(d) Following the reimbursement of the CDBG program in accordance
with paragraph (b) of this section, the property no longer will be
subject to any CDBG requirements.
[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988]
Sec. 570.506 Records to be maintained.
Each recipient shall establish and maintain sufficient records to
enable the Secretary to determine whether the recipient has met the
requirements of this part. At a minimum, the following records are
needed:
(a) Records providing a full description of each activity assisted
(or being assisted) with CDBG funds, including its location (if the
activity has a geographical locus), the amount of CDBG funds budgeted,
obligated and expended for the activity, and the provision in subpart C
under which it is eligible.
(b) Records demonstrating that each activity undertaken meets one of
the criteria set forth in Sec. 570.208. (Where information on income by
family size is required, the recipient may substitute evidence
establishing that the person assisted qualifies under another program
having income qualification criteria at least as restrictive as that
used in the definitions of ``low and moderate income person'' and ``low
and
[[Page 121]]
moderate income household'' (as applicable) at Sec. 570.3, such as Job
Training Partnership Act (JTPA) and welfare programs; or the recipient
may substitute evidence that the assisted person is homeless; or the
recipient may substitute a copy of a verifiable certification from the
assisted person that his or her family income does not exceed the
applicable income limit established in accordance with Sec. 570.3; or
the recipient may substitute a notice that the assisted person is a
referral from a state, county or local employment agency or other entity
that agrees to refer individuals it determines to be low and moderate
income persons based on HUD's criteria and agrees to maintain
documentation supporting these determinations.) Such records shall
include the following information:
(1) For each activity determined to benefit low and moderate income
persons, the income limits applied and the point in time when the
benefit was determined.
(2) For each activity determined to benefit low and moderate income
persons based on the area served by the activity:
(i) The boundaries of the service area;
(ii) The income characteristics of families and unrelated
individuals in the service area; and
(iii) If the percent of low and moderate income persons in the
service area is less than 51 percent, data showing that the area
qualifies under the exception criteria set forth at
Sec. 570.208(a)(1)(ii).
(3) For each activity determined to benefit low and moderate income
persons because the activity involves a facility or service designed for
use by a limited clientele consisting exclusively or predominantly of
low and moderate income persons:
(i) Documentation establishing that the facility or service is
designed for the particular needs of or used exclusively by senior
citizens, adults meeting the Bureau of the Census' Current Population
Reports definition of ``severely disabled,'' persons living with AIDS,
battered spouses, abused children, the homeless, illiterate adults, or
migrant farm workers, for which the regulations provide a presumption
concerning the extent to which low- and moderate-income persons benefit;
or
(ii) Documentation describing how the nature and, if applicable, the
location of the facility or service establishes that it is used
predominantly by low and moderate income persons; or
(iii) Data showing the size and annual income of the family of each
person receiving the benefit.
(4) For each activity carried out for the purpose of providing or
improving housing which is determined to benefit low and moderate income
persons:
(i) A copy of a written agreement with each landlord or developer
receiving CDBG assistance indicating the total number of dwelling units
in each multifamily structure assisted and the number of those units
which will be occupied by low and moderate income households after
assistance;
(ii) The total cost of the activity, including both CDBG and non-
CDBG funds.
(iii) For each unit occupied by a low and moderate income household,
the size and income of the household;
(iv) For rental housing only:
(A) The rent charged (or to be charged) after assistance for each
dwelling unit in each structure assisted; and
(B) Such information as necessary to show the affordability of units
occupied (or to be occupied) by low and moderate income households
pursuant to criteria established and made public by the recipient;
(v) For each property acquired on which there are no structures,
evidence of commitments ensuring that the criteria in Sec. 570.208(a)(3)
will be met when the structures are built;
(vi) Where applicable, records demonstrating that the activity
qualifies under the special conditions at Sec. 570.208(a)(3)(i);
(vii) For any homebuyer assistance activity qualifying under
Sec. 570.201(e), 570.201(n), or 570.204, identification of the
applicable eligibility paragraph and evidence that the activity meets
the eligibility criteria for that provision; for any such activity
qualifying under Sec. 570.208(a), the size and income of each
homebuyer's household; and
(viii) For a Sec. 570.201(k) housing services activity,
identification of the
[[Page 122]]
HOME project(s) or assistance that the housing services activity
supports, and evidence that project(s) or assistance meet the HOME
program income targeting requirements at 24 CFR 92.252 or 92.254.
(5) For each activity determined to benefit low and moderate income
persons based on the creation of jobs, the recipient shall provide the
documentation described in either paragraph (b)(5)(i) or (ii) of this
section.
(i) Where the recipient chooses to document that at least 51 percent
of the jobs will be available to low and moderate income persons,
documentation for each assisted business shall include:
(A) A copy of a written agreement containing:
(1) A commitment by the business that it will make at least 51
percent of the jobs available to low and moderate income persons and
will provide training for any of those jobs requiring special skills or
education;
(2) A listing by job title of the permanent jobs to be created
indicating which jobs will be available to low and moderate income
persons, which jobs require special skills or education, and which jobs
are part-time, if any; and
(3) A description of actions to be taken by the recipient and
business to ensure that low and moderate income persons receive first
consideration for those jobs; and
(B) A listing by job title of the permanent jobs filled, and which
jobs of those were available to low and moderate income persons, and a
description of how first consideration was given to such persons for
those jobs. The description shall include what hiring process was used;
which low and moderate income persons were interviewed for a particular
job; and which low and moderate income persons were hired.
(ii) Where the recipient chooses to document that at least 51
percent of the jobs will be held by low and moderate income persons,
documentation for each assisted business shall include:
(A) A copy of a written agreement containing:
(1) A commitment by the business that at least 51 percent of the
jobs, on a full-time equivalent basis, will be held by low and moderate
income persons; and
(2) A listing by job title of the permanent jobs to be created,
identifying which are part-time, if any;
(B) A listing by job title of the permanent jobs filled and which
jobs were initially held by low and moderate income persons; and
(C) For each such low and moderate income person hired, the size and
annual income of the person's family prior to the person being hired for
the job.
(6) For each activity determined to benefit low and moderate income
persons based on the retention of jobs:
(i) Evidence that in the absence of CDBG assistance jobs would be
lost;
(ii) For each business assisted, a listing by job title of permanent
jobs retained, indicating which of those jobs are part-time and (where
it is known) which are held by low and moderate income persons at the
time the CDBG assistance is provided. Where applicable, identification
of any of the retained jobs (other than those known to be held by low
and moderate income persons) which are projected to become available to
low and moderate income persons through job turnover within two years of
the time CDBG assistance is provided. Information upon which the job
turnover projections were based shall also be included in the record;
(iii) For each retained job claimed to be held by a low and moderate
income person, information on the size and annual income of the person's
family;
(iv) For jobs claimed to be available to low and moderate income
persons based on job turnover, a description covering the items required
for ``available to'' jobs in paragraph (b)(5) of this section; and
(v) Where jobs were claimed to be available to low and moderate
income persons through turnover, a listing of each job which has turned
over to date, indicating which of those jobs were either taken by, or
available to, low and moderate income persons. For jobs made available,
a description of how first consideration was given to such persons for
those jobs shall also be included in the record.
(7) For purposes of documenting, pursuant to paragraph (b)(5)(i)(B),
[[Page 123]]
(b)(5)(ii)(C), (b)(6)(iii) or (b)(6)(v) of this section, that the person
for whom a job was either filled by or made available to a low- or
moderate-income person based upon the census tract where the person
resides or in which the business is located, the recipient, in lieu of
maintaining records showing the person's family size and income, may
substitute records showing either the person's address at the time the
determination of income status was made or the address of the business
providing the job, as applicable, the census tract in which that address
was located, the percent of persons residing in that tract who either
are in poverty or who are low- and moderate-income, as applicable, the
data source used for determining the percentage, and a description of
the pervasive poverty and general distress in the census tract in
sufficient detail to demonstrate how the census tract met the criteria
in Sec. 570.208(a)(4)(v), as applicable.
(8) For each activity determined to aid in the prevention or
elimination of slums or blight based on addressing one or more of the
conditions which qualified an area as a slum or blighted area:
(i) The boundaries of the area; and
(ii) A description of the conditions which qualified the area at the
time of its designation in sufficient detail to demonstrate how the area
met the criteria in Sec. 570.208(b)(1).
(9) For each residential rehabilitation activity determined to aid
in the prevention or elimination of slums or blight in a slum or
blighted area:
(i) The local definition of ``substandard'';
(ii) A pre-rehabilitation inspection report describing the
deficiencies in each structure to be rehabilitated; and
(iii) Details and scope of CDBG assisted rehabilitation, by
structure.
(10) For each activity determined to aid in the prevention or
elimination of slums or blight based on the elimination of specific
conditions of blight or physical decay not located in a slum or blighted
area:
(i) A description of the specific condition of blight or physical
decay treated; and
(ii) For rehabilitation carried out under this category, a
description of the specific conditions detrimental to public health and
safety which were identified and the details and scope of the CDBG
assisted rehabilitation by structure.
(11) For each activity determined to aid in the prevention or
elimination of slums or blight based on addressing slums or blight in an
urban renewal area, a copy of the Urban Renewal Plan, as in effect at
the time the activity is carried out, including maps and supporting
documentation.
(12) For each activity determined to meet a community development
need having a particular urgency:
(i) Documentation concerning the nature and degree of seriousness of
the condition requiring assistance;
(ii) Evidence that the recipient certified that the CDBG activity
was designed to address the urgent need;
(iii) Information on the timing of the development of the serious
condition; and
(iv) Evidence confirming that other financial resources to alleviate
the need were not available.
(c)(1) Records that demonstrate that the recipient has made the
determinations required as a condition of eligibility of certain
activities, as prescribed in Secs. 570.201(f), 570.201(i)(2),
570.201(p), 570.201(q), 570.202(b)(3), 570.206(f), 570.209, 570.210, and
570.309.
(2) Where applicable, records which either demonstrate compliance
with the requirements of Sec. 570.202(g) or Sec. 570.204(a)(5) or
document the State's or State's grant recipient's basis for an exception
to the requirements of those paragraphs.
(d) Records which demonstrate compliance with Sec. 570.503(b)(7) or
Sec. 570.505 regarding any change of use of real property acquired or
improved with CDBG assistance.
(e) Records that demonstrate compliance with the citizen
participation requirements prescribed in 24 CFR part 91, subpart B, for
entitlement recipients, or in 24 CFR part 91, subpart C, for HUD-
administered small cities recipients.
(f) Records which demonstrate compliance with the requirements in
Sec. 570.606 regarding acquisition, displacement, relocation, and
replacement housing.
[[Page 124]]
(g) Fair housing and equal opportunity records containing:
(1) Documentation related to the recipient's AFH, as described in 24
CFR part 5, subpart A (Sec. 5.168).
(2) Data on the extent to which each racial and ethnic group and
single-headed households (by gender of household head) have applied for,
participated in, or benefited from, any program or activity funded in
whole or in part with CDBG funds. Such information shall be used only as
a basis for further investigation as to compliance with
nondiscrimination requirements. No recipient is required to attain or
maintain any particular statistical measure by race, ethnicity, or
gender in covered programs.
(3) Data on employment in each of the recipient's operating units
funded in whole or in part with CDBG funds, with such data maintained in
the categories prescribed on the Equal Employment Opportunity
Commission's EEO-4 form; and documentation of any actions undertaken to
assure equal employment opportunities to all persons regardless of race,
color, national origin, sex or handicap in operating units funded in
whole or in part under this part.
(4) Data indicating the race and ethnicity of households (and gender
of single heads of households) displaced as a result of CDBG funded
activities, together with the address and census tract of the housing
units to which each displaced household relocated. Such information
shall be used only as a basis for further investigation as to compliance
with nondiscrimination requirements. No recipient is required to attain
or maintain any particular statistical measure by race, ethnicity, or
gender in covered programs.
(5) Documentation of actions undertaken to meet the requirements of
Sec. 570.607(b) which implements section 3 of the Housing Development
Act of 1968, as amended (12 U.S.C. 1701U) relative to the hiring and
training of low and moderate income persons and the use of local
businesses.
(6) Data indicating the racial/ethnic character of each business
entity receiving a contract or subcontract of $25,000 or more paid, or
to be paid, with CDBG funds, data indicating which of those entities are
women's business enterprises as defined in Executive Order 12138, the
amount of the contract or subcontract, and documentation of recipient's
affirmative steps to assure that minority business and women's business
enterprises have an equal opportunity to obtain or compete for contracts
and subcontracts as sources of supplies, equipment, construction and
services. Such affirmative steps may include, but are not limited to,
technical assistance open to all businesses but designed to enhance
opportunities for these enterprises and special outreach efforts to
inform them of contract opportunities. Such steps shall not include
preferring any business in the award of any contract or subcontract
solely or in part on the basis of race or gender.
(7) Documentation of the affirmative action measures the recipient
has taken to overcome prior discrimination, where the courts or HUD have
found that the recipient has previously discriminated against persons on
the ground of race, color, national origin or sex in administering a
program or activity funded in whole or in part with CDBG funds.
(h) Financial records, in accordance with the applicable
requirements listed in Sec. 570.502, including source documentation for
entities not subject to 2 CFR part 200. Grantees shall maintain evidence
to support how the CDBG funds provided to such entities are expended.
Such documentation must include, to the extent applicable, invoices,
schedules containing comparisons of budgeted amounts and actual
expenditures, construction progress schedules signed by appropriate
parties (e.g., general contractor and/or a project architect), and/or
other documentation appropriate to the nature of the activity. Grantee
records pertaining to obligations, expenditures, and drawdowns must be
able to relate financial transactions to either a specific origin year
grant or to program income received during a specific program year.
(i) Agreements and other records related to lump sum disbursements
to private financial institutions for financing rehabilitation as
prescribed in Sec. 570.513; and
[[Page 125]]
(j) Records required to be maintained in accordance with other
applicable laws and regulations set forth in subpart K of this part.
(Approved by the Office of Management and Budget under control number
2506-0077)
[53 FR 34454, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at
60 FR 1916, 1953, Jan. 5, 1995; 60 FR 56915, Nov. 9, 1995; 61 FR 18674,
Apr. 29, 1996; 64 FR 38813, July 19, 1999; 70 FR 76370, Dec. 23, 2005;
80 FR 42368, July 16, 2015; 80 FR 69873, Nov. 12, 2015; 81 FR 92637,
Dec. 20, 2016]
Sec. 570.507 Reports.
(a) Performance and evaluation report--(1) Entitlement grant
recipients and HUD-administered small cities recipients in Hawaii. The
annual performance and evaluation report shall be submitted in
accordance with 24 CFR part 91.
(2) HUD-administered Small Cities recipients in New York, and Hawaii
recipients for pre-FY 1995 grants--(i) Content. Each performance and
evaluation report must contain completed copies of all forms and
narratives prescribed by HUD, including a summary of the citizen
comments received on the report.
(ii) Timing. The performance and evaluation report on each grant
shall be submitted:
(A) No later than October 31 for all grants executed before April 1
of the same calendar year. The first report should cover the period from
the execution of the grant until September 30. Reports on grants made
after March 31 of a calendar year will be due October 31 of the
following calendar year, and the reports will cover the period of time
from the execution of the grant until September 30 of the calendar year
following grant execution. After the initial submission, the performance
and evaluation report will be submitted annually on October 31 until
completion of the activities funded under the grant;
(B) Hawaii grantees will submit their small cities performance and
evaluation report for each pre-FY 1995 grant no later than 90 days after
the completion of their most recent program year. After the initial
submission, the performance and evaluation report will be submitted
annually until completion of the activities funded under the grant; and
(C) No later than 90 days after the criteria for grant closeout, as
described in Sec. 570.509(a), have been met.
(iii) Citizen comments on the report. Each recipient shall make
copies of the performance and evaluation report available to its
citizens in sufficient time to permit the citizens to comment on the
report before its submission to HUD. Each recipient may determine the
specific manner and times the report will be made available to citizens
consistent with the preceding sentence.
(b) Equal employment opportunity reports. Recipients of entitlement
grants or HUD-administered small cities grants shall submit to HUD each
year a report (HUD/EEO-4) on recipient employment containing data as of
June 30.
(c) Minority business enterprise reports. Recipients of entitlement
grants, HUD-administered small cities grants or Urban Development Action
Grants shall submit to HUD, by April 30, a report on contracts and
subcontract activity during the first half of the fiscal year and by
October 31 a report on such activity during the second half of the year.
(d) Other reports. Recipients may be required to submit such other
reports and information as HUD determines are necessary to carry out its
responsibilities under the Act or other applicable laws.
(Approved by the Office of Management and Budget under control numbers
2506-0077 for paragraph (a) and 2529-0008 for paragraph (b) and 2506-
0066 for paragraph (c))
[53 FR 34456, Sept. 6, 1988, as amended at 60 FR 1916, Jan. 5, 1995; 61
FR 32269, June 21, 1996]
Sec. 570.508 Public access to program records.
Notwithstanding 2 CFR 200.337, recipients shall provide citizens
with reasonable access to records regarding the past use of CDBG funds,
consistent with applicable State and local laws regarding privacy and
obligations of confidentiality.
[53 FR 8058, Mar. 11, 1988, as amended at 80 FR 75938, Dec. 7, 2015]
[[Page 126]]
Sec. 570.509 Grant closeout procedures.
(a) Criteria for closeout. HUD may make grant closeout
determinations for individual grants or multiple grants simultaneously.
A grant will be closed out when HUD determines, in consultation with the
recipient, that the following criteria have been met:
(1) All costs to be paid with CDBG funds from a given origin year's
grant have been expended and drawn down, with the exception of closeout
costs (e.g., audit costs) and costs resulting from contingent
liabilities described in the closeout agreement pursuant to paragraph
(c) of this section. Contingent liabilities include, but are not limited
to, third-party claims against the recipient, as well as related
administrative costs.
(2) All activities for which funds were expended from the origin
year grant are physically completed, are eligible, have met a national
objective under Sec. 570.208, and the grantee has reported on all
accomplishments resulting from the activity.
(3) A final performance and expenditure report for completed
activities has been submitted to HUD pursuant to 24 CFR 91.520, and HUD
has determined the plan is satisfactory.
(4) All program income received by the grantee during the grantee
program year associated with the origin year grant has been expended, or
identified in a more recent program year's Action Plan, pursuant to 24
CFR 91.220(l).
(5) For origin year 2015 grants and subsequent grants, the grantee
has expended no more than 20 percent of the origin year grant for
planning and program administrative costs, under Sec. 570.200(g)(1).
(6) Other responsibilities of the recipient under the grant
agreement and applicable laws and regulations appear to have been
carried out satisfactorily or there is no further Federal interest in
keeping the grant agreement open for the purpose of securing
performance.
(b) Closeout actions.
(1) Based on the information provided in the performance report and
other relevant information, HUD, in consultation with the recipient,
will prepare a closeout agreement in accordance with paragraph (c) of
this section.
(2) HUD will cancel any unused portion of the awarded grant, as
shown in the signed grant closeout agreement. Any unused grant funds
disbursed from the U.S. Treasury which are in the possession of the
recipient shall be refunded to HUD. Any funds which have exceeded the
statutory time limit on the use of funds will be recaptured by the U.S.
Treasury pursuant to 24 CFR 570.200(k).
(3) Any costs paid with CDBG funds which were not audited previously
shall be subject to coverage in the recipient's next single audit
performed in accordance with HUD regulations implementing the Single
Audit Act requirements at 2 CFR part 200. The recipient may be required
to repay HUD any disallowed costs based on the results of the audit, or
on additional HUD reviews provided for in the closeout agreement.
(c) Closeout agreement. Any obligations remaining as of the date of
the closeout shall be covered by the terms of a closeout agreement. The
agreement shall be prepared by the HUD field office in consultation with
the recipient. The agreement shall identify the grant being closed out,
and include provisions with respect to the following:
(1) Identification of any closeout costs or contingent liabilities
subject to payment with CDBG funds after the closeout agreement is
signed;
(2) Identification of any unused grant funds to be canceled by HUD;
(3) Description of the recipient's responsibility after closeout
for:
(i) Compliance with all program requirements, certifications, and
assurances in using any remaining CDBG funds available for closeout
costs and contingent liabilities;
(ii) Use of real property assisted with CDBG funds in accordance
with the principles described in Secs. 570.503(b)(7) and 570.505;
(iii) Compliance with requirements governing future program income
or receivables generated from activities funded from the origin year
grant, as described in Sec. 570.504(b)(4) and (5);
(iv) Ensuring that flood insurance coverage for affected property
owners
[[Page 127]]
is maintained for the mandatory period; and
(4) Other provisions appropriate to any special circumstances of the
grant closeout, in modification of or in addition to the obligations in
paragraphs (c)(1) through (4) of this section. The agreement shall
authorize monitoring by HUD, and shall provide that findings of
noncompliance may be taken into account by HUD, as unsatisfactory
performance of the recipient, in the consideration of any future grant
award under this part.
(d) Status of consolidated plan after closeout. Unless otherwise
provided in a closeout agreement, the Consolidated Plan will remain in
effect after closeout until the expiration of the program year covered
by the last approved consolidated plan.
(e) Termination of grant for convenience. Grant assistance provided
under this part may be terminated for convenience in whole or in part
before the completion of the assisted activities, in accordance with the
provisions of 2 CFR 200.339. The recipient shall not incur new
obligations for the terminated portions after the effective date, and
shall cancel as many outstanding obligations as possible. HUD shall
allow full credit to the recipient for those portions of obligations
which could not be canceled and which had been properly incurred by the
recipient in carrying out the activities before the termination. The
closeout policies contained in this section shall apply in such cases,
except where the approved grant is terminated in its entirety.
Responsibility for the environmental review to be performed under 24 CFR
part 50 or 24 CFR part 58, as applicable, shall be determined as part of
the closeout process.
(f) Termination for cause. In cases in which the Secretary
terminates the recipient's grant under the authority of subpart O of
this part, or under the terms of the grant agreement, the closeout
policies contained in this section shall apply, except where the
approved grant is cancelled in its entirety. The provisions in 2 CFR
200.342) on the effects of termination shall also apply. HUD shall
determine whether an environmental assessment or finding of
inapplicability is required, and if such review is required, HUD shall
perform it in accordance with 24 CFR part 50.
[53 FR 8058, Mar. 11, 1988, as amended at 56 FR 56128, Oct. 31, 1991; 60
FR 1916, Jan. 5, 1995; 60 FR 16379, Mar. 30, 1995; 80 FR 69873, Nov. 12,
2015; 80 FR 75938, Dec. 7, 2015]
Sec. 570.510 Transferring projects from urban counties to metropolitan
cities.
Section 106(c)(3) of the Act authorizes the Secretary to transfer
unobligated grant funds from an urban county to a new metropolitan city,
provided: the city was an included unit of general local government in
the urban county immediately before its qualification as a metropolitan
city; the funds to be transferred were received by the county before the
qualification of the city as a metropolitan city; the funds to be
transferred had been programmed by the urban county for use in the city
before such qualification; and the city and county agree to transfer
responsibility for the administration of the funds being transferred
from the county's letter of credit to the city's letter of credit. The
following rules apply to the transfer of responsibility for an activity
from an urban county to the new metropolitan city.
(a) The urban county and the metropolitan city must execute a
legally binding agreement which shall specify:
(1) The amount of funds to be transferred from the urban county's
letter of credit to the metropolitan city's letter of credit;
(2) The activities to be carried out by the city with the funds
being transferred;
(3) The county's responsibility for all expenditures and
unliquidated obligations associated with the activities before the time
of transfer, including a statement that responsibility for all audit and
monitoring findings associated with those expenditures and obligations
shall remain with the county;
(4) The responsibility of the metropolitan city for all other audit
and monitoring findings;
(5) How program income (if any) from the activities specified shall
be divided between the metropolitan city and the urban county; and
(6) Such other provisions as may be required by HUD.
[[Page 128]]
(b) Upon receipt of a request for the transfer of funds from an
urban county to a metropolitan city and a copy of the executed
agreement, HUD, in consultation with the Department of the Treasury,
shall establish a date upon which the funds shall be transferred from
the letter of credit of the urban county to the letter of credit of the
metropolitan city, and shall take all necessary actions to effect the
requested transfer of funds.
(c) HUD shall notify the metropolitan city and urban county of any
special audit and monitoring rules which apply to the transferred funds
when the date of the transfer is communicated to the city and the
county.
Sec. 570.511 Use of escrow accounts for rehabilitation of privately
owned residential property.
(a) Limitations. A recipient may withdraw funds from its letter of
credit for immediate deposit into an escrow account for use in funding
loans and grants for the rehabilitation of privately owned residential
property under Sec. 570.202(a)(1). The following additional limitations
apply to the use of escrow accounts for residential rehabilitation loans
and grants closed after September 7, 1990:
(1) The use of escrow accounts under this section is limited to
loans and grants for the rehabilitation of primarily residential
properties containing no more than four dwelling units (and accessory
neighborhood-scale non-residential space within the same structure, if
any, e.g., a store front below a dwelling unit).
(2) An escrow account shall not be used unless the contract between
the property owner and the contractor selected to do the rehabilitation
work specifically provides that payment to the contractor shall be made
through an escrow account maintained by the recipient, by a subrecipient
as defined in Sec. 570.500(c), by a public agency designated under
Sec. 570.501(a), or by an agent under a procurement contact governed by
the requirements of 2 CFR part 200, subpart D. No deposit to the escrow
account shall be made until after the contract has been executed between
the property owner and the rehabilitation contractor.
(3) All funds withdrawn under this section shall be deposited into
one interest earning account with a financial institution. Separate bank
accounts shall not be established for individual loans and grants.
(4) The amount of funds deposited into an escrow account shall be
limited to the amount expected to be disbursed within 10 working days
from the date of deposit. If the escrow account, for whatever reason, at
any time contains funds exceeding 10 days cash needs, the grantee
immediately shall transfer the excess funds to its program account. In
the program account, the excess funds shall be treated as funds
erroneously drawn in accordance with the requirements of U.S. Treasury
Financial Manual, paragraph 6-2075.30.
(5) Funds deposited into an escrow account shall be used only to pay
the actual costs of rehabilitation incurred by the owner under the
contract with a private contractor. Other eligible costs related to the
rehabilitation loan or grant, e.g., the recipient's administrative costs
under Sec. 570.206 or rehabilitation services costs under
Sec. 570.202(b)(9), are not permissible uses of escrowed funds. Such
other eligible rehabilitation costs shall be paid under normal CDBG
payment procedures (e.g., from withdrawals of grant funds under the
recipient's letter of credit with the Treasury).
(b) Interest. Interest earned on escrow accounts established in
accordance with this section, less any service charges for the account,
shall be remitted to HUD at least quarterly but not more frequently than
monthly. Interest earned on escrow accounts is not required to be
remitted to HUD to the extent the interest is attributable to the
investment of program income.
(c) Remedies for noncompliance. If HUD determines that a recipient
has failed to use an escrow account in accordance with this section, HUD
may, in addition to imposing any other sanctions provided for under this
part, require the recipient to discontinue the use of escrow accounts,
in whole or in part.
[55 FR 32369, Aug. 8, 1990, as amended at 80 FR 75938, Dec. 7, 2015]
[[Page 129]]
Sec. 570.512 [Reserved]
Sec. 570.513 Lump sum drawdown for financing of property
rehabilitation activities.
Subject to the conditions prescribed in this section, recipients may
draw funds from the letter of credit in a lump sum to establish a
rehabilitation fund in one or more private financial institutions for
the purpose of financing the rehabilitation of privately owned
properties. The fund may be used in conjunction with various
rehabilitation financing techniques, including loans, interest
subsidies, loan guarantees, loan reserves, or such other uses as may be
approved by HUD consistent with the objectives of this section. The fund
may also be used for making grants, but only for the purpose of
leveraging non-CDBG funds for the rehabilitation of the same property.
(a) Limitation on drawdown of grant funds. (1) The funds that a
recipient deposits to a rehabilitation fund shall not exceed the grant
amount that the recipient reasonably expects will be required, together
with anticipated program income from interest and loan repayments, for
the rehabilitation activities during the period specified in the
agreement to undertake activities, based on either:
(i) Prior level of rehabilitation activity; or
(ii) Rehabilitation staffing and management capacity during the
period specified in the agreement to undertake activities.
(2) No grant funds may be deposited under this section solely for
the purpose of investment, notwithstanding that the interest or other
income is to be used for the rehabilitation activities.
(3) The recipient's rehabilitation program administrative costs and
the administrative costs of the financial institution may not be funded
through lump sum drawdown. Such costs must be paid from periodic letter
of credit withdrawals in accordance with standard procedures or from
program income, other than program income generated by the lump sum
distribution.
(b) Standards to be met. The following standards shall apply to all
lump sum drawdowns of CDBG funds for rehabilitation:
(1) Eligible rehabilitation activities. The rehabilitation fund
shall be used to finance the rehabilitation of privately owned
properties eligible under the general policies in Sec. 570.200 and the
specific provisions of either Sec. 570.202, including the acquisition of
properties for rehabilitation, or Sec. 570.203.
(2) Requirements for agreement. The recipient shall execute a
written agreement with one or more private financial institutions for
the operation of the rehabilitation fund. The agreement shall specify
the obligations and responsibilities of the parties, the terms and
conditions on which CDBG funds are to be deposited and used or returned,
the anticipated level of rehabilitation activities by the financial
institution, the rate of interest and other benefits to be provided by
the financial institution in return for the lump sum deposit, and such
other terms as are necessary for compliance with the provisions of this
section. Upon execution of the agreement, a copy must be provided to the
HUD field office for its record and use in monitoring. Any modifications
made during the term of the agreement must also be provided to HUD.
(3) Period to undertake activities. The agreement must provide that
the rehabilitation fund may only be used for authorized activities
during a period of no more than two years. The lump sum deposit shall be
made only after the agreement is fully executed.
(4) Time limit on use of deposited funds. Use of the deposited funds
for rehabilitation financing assistance must start (e.g., first loan
must be made, subsidized or guaranteed) within 45 days of the deposit.
In addition, substantial disbursements from the fund must occur within
180 days of the receipt of the deposit. (Where CDBG funds are used as a
guarantee, the funds that must be substantially disbursed are the
guaranteed funds.) For a recipient with an agreement specifying two
years to undertake activities, the disbursement of 25 percent of the
fund (deposit plus any interest earned) within 180 days
[[Page 130]]
will be regarded as meeting this requirement. If a recipient with an
agreement specifying two years to undertake activities determines that
it has had substantial disbursement from the fund within the 180 days
although it had not met this 25 percent threshold, the justification for
the recipient's determination shall be included in the program file.
Should use of deposited funds not start within 45 days, or substantial
disbursement from such fund not occur within 180 days, the recipient may
be required by HUD to return all or part of the deposited funds to the
recipient's letter of credit.
(5) Program activity. Recipients shall review the level of program
activity on a yearly basis. Where activity is substantially below that
anticipated, program funds shall be returned to the recipient's letter
of credit.
(6) Termination of agreement. In the case of substantial failure by
a private financial institution to comply with the terms of a lump sum
drawdown agreement, the recipient shall terminate its agreement, provide
written justification for the action, withdraw all unobligated deposited
funds from the private financial institution, and return the funds to
the recipient's letter of credit.
(7) Return of unused deposits. At the end of the period specified in
the agreement for undertaking activities, all unobligated deposited
funds shall be returned to the recipient's letter of credit unless the
recipient enters into a new agreement conforming to the requirements of
this section. Any program income which will be governed by a new
agreement must be identified in the current program year Action Plan,
pursuant to 24 CFR 91.220(l). In addition, the recipient shall reserve
the right to withdraw any unobligated deposited funds required by HUD in
the exercise of corrective or remedial actions authorized under
Sec. 570.910(b), Sec. 570.911, Sec. 570.912 or Sec. 570.913.
(8) Rehabilitation loans made with non-CDBG funds. If the deposited
funds or program income derived from deposited funds are used to
subsidize or guarantee repayment of rehabilitation loans made with non-
CDBG funds, or to provide a supplemental loan or grant to the borrower
of the non-CDBG funds, the rehabilitation activities are considered to
be CDBG-assisted activities subject to the requirements applicable to
such activities, except that repayment of non-CDBG funds shall not be
treated as program income.
(9) Provision of consideration. In consideration for the lump sum
deposit by the recipient in a private financial institution, the deposit
must result in appropriate benefits in support of the recipient's local
rehabilitation program. Minimum requirements for such benefits are:
(i) Grantees shall require the financial institution to pay interest
on the lump sum deposit.
(A) The interest rate paid by the financial institution shall be no
more than three points below the rate on one year Treasury obligations
at constant maturity.
(B) When an agreement sets a fixed interest rate for the entire term
of the agreement, the rate should be based on the rate at the time the
agreement is excuted.
(C) The agreement may provide for an interest rate that would
fluctuate periodically during the term of the agreement, but at no time
shall the rate be established at more than three points below the rate
on one year Treasury obligations at constant maturity.
(ii) In addition to the payment of interest, at least one of the
following benefits must be provided by the financial institution:
(A) Leverage of the deposited funds so that the financial
institution commits private funds for loans in the rehabilitation
program in an amount substantially in excess of the amount of the lump
sum deposit;
(B) Commitment of private funds by the financial institution for
rehabilitation loans at below market interest rates, at higher than
normal risk, or with longer than normal repayment periods; or
(C) Provision of administrative services in support of the
rehabilitation program by the participating financial institution at no
cost or at lower than actual cost.
(c) Program income. Interest earned on lump sum deposits and
payments on
[[Page 131]]
loans made from such deposits are program income and, during the period
of the agreement, shall be used for rehabilitation activities under the
provisions of this section.
(d) Outstanding findings. Notwithstanding any other provision of
this section, no recipient shall enter into a new agreement during any
period of time in which an audit or monitoring finding on a previous
lump sum drawdown agreement remains unresolved.
(e) Prior notification. The recipient shall provide the HUD field
office with written notification of the amount of funds to be
distributed to a private financial institution before distribution under
the provisions of this section.
(f) Recordkeeping requirements. The recipient shall maintain in its
files a copy of the written agreement and related documents establishing
conformance with this section and concerning performance by a financial
institution in accordance with the agreement.
[53 FR 8058, Mar. 11, 1988, as amended at 80 FR 69873, Nov. 12, 2015]
Subpart K_Other Program Requirements
Source: 53 FR 34456, Sept. 6, 1988, unless otherwise noted.
Sec. 570.600 General.
(a) This subpart K enumerates laws that the Secretary will treat as
applicable to grants made under section 106 of the Act, other than
grants to states made pursuant to section 106(d) of the Act, for
purposes of the Secretary's determinations under section 104(e)(1) of
the Act, including statutes expressly made applicable by the Act and
certain other statutes and Executive Orders for which the Secretary has
enforcement responsibility. This subpart K applies to grants made under
the Insular Areas Program in Sec. 570.405 and Sec. 570.440 with the
exception of Sec. 570.612. The absence of mention herein of any other
statute for which the Secretary does not have direct enforcement
responsibility is not intended to be taken as an indication that, in the
Secretary's opinion, such statute or Executive Order is not applicable
to activities assisted under the Act. For laws that the Secretary will
treat as applicable to grants made to states under section 106(d) of the
Act for purposes of the determination required to be made by the
Secretary pursuant to section 104(e)(2) of the Act, see Sec. 570.487.
(b) This subpart also sets forth certain additional program
requirements which the Secretary has determined to be applicable to
grants provided under the Act as a matter of administrative discretion.
(c) In addition to grants made pursuant to section 106(b) and
106(d)(2)(B) of the Act (subparts D and F, respectively), the
requirements of this subpart K are applicable to grants made pursuant to
sections 107 and 119 of the Act (subparts E and G, respectively), and to
loans guaranteed pursuant to subpart M.
[53 FR 34456, Sept. 6, 1988, as amended at 61 FR 11477, Mar. 20, 1996;
72 FR 12536, Mar. 15, 2007]
Sec. 570.601 Public Law 88-352 and Public Law 90-284; affirmatively
furthering fair housing; Executive Order 11063.
(a) The following requirements apply according to sections 104(b)
and 107 of the Act:
(1) Public Law 88-352, which is title VI of the Civil Rights Act of
1964 (42 U.S.C. 2000d et seq.), and implementing regulations in 24 CFR
part 1.
(2) Public Law 90-284, which is the Fair Housing Act (42 U.S.C.
3601-3620). In accordance with the Fair Housing Act, the Secretary
requires that grantees administer all programs and activities related to
housing and urban development in a manner to affirmatively further the
policies of the Fair Housing Act. Furthermore, in accordance with
section 104(b)(2) of the Act, for each community receiving a grant under
subpart D of this part, the certification that the grantee will
affirmatively further fair housing shall specifically require the
grantee to take meaningful actions to further the goals identified in
the grantee's AFH conducted in accordance with the requirements of 24
CFR 5.150 through 5.180 and take no action that is materially
inconsistent with its obligation to affirmatively further fair housing.
[[Page 132]]
(b) Executive Order 11063, as amended by Executive Order 12259 (3
CFR, 1959-1963 Comp., p. 652; 3 CFR, 1980 Comp., p. 307) (Equal
Opportunity in Housing), and implementing regulations in 24 CFR part
107, also apply.
[61 FR 11477, Mar. 20, 1996, as amended at 80 FR 42368, July 16, 2015]
Sec. 570.602 Section 109 of the Act.
Section 109 of the Act requires that no person in the United States
shall on the grounds of race, color, national origin, religion, or sex
be excluded from participation in, be denied the benefits of, or be
subjected to discrimination under any program or activity receiving
Federal financial assistance made available pursuant to the Act. Section
109 also directs that the prohibitions against discrimination on the
basis of age under the Age Discrimination Act and the prohibitions
against discrimination on the basis of disability under Section 504
shall apply to programs or activities receiving Federal financial
assistance under Title I programs. The policies and procedures necessary
to ensure enforcement of section 109 are codified in 24 CFR part 6.
[64 FR 3802, Jan. 25, 1999]
Sec. 570.603 Labor standards.
(a) Section 110(a) of the Act contains labor standards that apply to
nonvolunteer labor financed in whole or in part with assistance received
under the Act. In accordance with section 110(a) of the Act, the
Contract Work Hours and Safety Standards Act (40 U.S.C. 327 et seq.)
also applies. However, these requirements apply to the rehabilitation of
residential property only if such property contains not less than 8
units.
(b) The regulations in 24 CFR part 70 apply to the use of
volunteers.
[61 FR 11477, Mar. 20, 1996]
Sec. 570.604 Environmental standards.
For purposes of section 104(g) of the Act, the regulations in 24 CFR
part 58 specify the other provisions of law which further the purposes
of the National Environmental Policy Act of 1969, and the procedures by
which grantees must fulfill their environmental responsibilities. In
certain cases, grantees assume these environmental review,
decisionmaking, and action responsibilities by execution of grant
agreements with the Secretary.
[61 FR 11477, Mar. 20, 1996]
Sec. 570.605 National Flood Insurance Program.
Notwithstanding the date of HUD approval of the recipient's
application (or, in the case of grants made under subpart D of this part
or HUD-administered small cities recipients in Hawaii, the date of
submission of the grantee's consolidated plan, in accordance with 24 CFR
part 91), section 202(a) of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4106) and the regulations in 44 CFR parts 59 through 79 apply
to funds provided under this part 570.
[61 FR 11477, Mar. 20, 1996]
Sec. 570.606 Displacement, relocation, acquisition, and replacement
of housing.
(a) General policy for minimizing displacement. Consistent with the
other goals and objectives of this part, grantees (or States or state
recipients, as applicable) shall assure that they have taken all
reasonable steps to minimize the displacement of persons (families,
individuals, businesses, nonprofit organizations, and farms) as a result
of activities assisted under this part.
(b) Relocation assistance for displaced persons at URA levels. (1) A
displaced person shall be provided with relocation assistance at the
levels described in, and in accordance with the requirements of 49 CFR
part 24, which contains the government-wide regulations implementing the
Uniform Relocation Assistance and Real Property Acquisition Policies Act
of 1970 (URA) (42 U.S.C. 4601-4655).
(2) Displaced person. (i) For purposes of paragraph (b) of this
section, the term ``displaced person'' means any person (family,
individual, business, nonprofit organization, or farm) that moves from
real property, or moves his or her personal property from real property,
permanently and involuntarily, as a direct result of rehabilitation,
demolition, or acquisition for an
[[Page 133]]
activity assisted under this part. A permanent, involuntary move for an
assisted activity includes a permanent move from real property that is
made:
(A) After notice by the grantee (or the state recipient, if
applicable) to move permanently from the property, if the move occurs
after the initial official submission to HUD (or the State, as
applicable) for grant, loan, or loan guarantee funds under this part
that are later provided or granted.
(B) After notice by the property owner to move permanently from the
property, if the move occurs after the date of the submission of a
request for financial assistance by the property owner (or person in
control of the site) that is later approved for the requested activity.
(C) Before the date described in paragraph (b)(2)(i)(A) or (B) of
this section, if either HUD or the grantee (or State, as applicable)
determines that the displacement directly resulted from acquisition,
rehabilitation, or demolition for the requested activity.
(D) After the ``initiation of negotiations'' if the person is the
tenant-occupant of a dwelling unit and any one of the following three
situations occurs:
(1) The tenant has not been provided with a reasonable opportunity
to lease and occupy a suitable decent, safe, and sanitary dwelling in
the same building/complex upon the completion of the project, including
a monthly rent that does not exceed the greater of the tenant's monthly
rent and estimated average utility costs before the initiation of
negotiations or 30 percent of the household's average monthly gross
income; or
(2) The tenant is required to relocate temporarily for the activity
but the tenant is not offered payment for all reasonable out-of-pocket
expenses incurred in connection with the temporary relocation, including
the cost of moving to and from the temporary location and any increased
housing costs, or other conditions of the temporary relocation are not
reasonable; and the tenant does not return to the building/complex; or
(3) The tenant is required to move to another unit in the building/
complex, but is not offered reimbursement for all reasonable out-of-
pocket expenses incurred in connection with the move.
(ii) Notwithstanding the provisions of paragraph (b)(2)(i) of this
section, the term ``displaced person-'' does not include:
(A) A person who is evicted for cause based upon serious or repeated
violations of material terms of the lease or occupancy agreement. To
exclude a person on this basis, the grantee (or State or state
recipient, as applicable) must determine that the eviction was not
undertaken for the purpose of evading the obligation to provide
relocation assistance under this section;
(B) A person who moves into the property after the date of the
notice described in paragraph (b)(2)(i)(A) or (B) of this section, but
who received a written notice of the expected displacement before
occupancy.
(C) A person who is not displaced as described in 49 CFR 24.2(g)(2).
(D) A person who the grantee (or State, as applicable) determines is
not displaced as a direct result of the acquisition, rehabilitation, or
demolition for an assisted activity. To exclude a person on this basis,
HUD must concur in that determination.
(iii) A grantee (or State or state recipient, as applicable) may, at
any time, request HUD to determine whether a person is a displaced
person under this section.
(3) Initiation of negotiations. For purposes of determining the type
of replacement housing assistance to be provided under paragraph (b) of
this section, if the displacement is the direct result of privately
undertaken rehabilitation, demolition, or acquisition of real property,
the term ``initiation of negotiations'' means the execution of the grant
or loan agreement between the grantee (or State or state recipient, as
applicable) and the person owning or controlling the real property.
(c) Residential antidisplacement and relocation assistance plan. The
grantee shall comply with the requirements of 24 CFR part 42, subpart B.
(d) Optional relocation assistance. Under section 105(a)(11) of the
Act, the grantee may provide (or the State may permit the state
recipient to provide, as applicable) relocation payments and other
relocation assistance to persons
[[Page 134]]
displaced by activities that are not subject to paragraph (b) or (c) of
this section. The grantee may also provide (or the State may also permit
the state recipient to provide, as applicable) relocation assistance to
persons receiving assistance under paragraphs (b) or (c) of this section
at levels in excess of those required by these paragraphs. Unless such
assistance is provided under State or local law, the grantee (or state
recipient, as applicable) shall provide such assistance only upon the
basis of a written determination that the assistance is appropriate
(see, e.g., 24 CFR 570.201(i), as applicable). The grantee (or state
recipient, as applicable) must adopt a written policy available to the
public that describes the relocation assistance that the grantee (or
state recipient, as applicable) has elected to provide and that provides
for equal relocation assistance within each class of displaced persons.
(e) Acquisition of real property. The acquisition of real property
for an assisted activity is subject to 49 CFR part 24, subpart B.
(f) Appeals. If a person disagrees with the determination of the
grantee (or the state recipient, as applicable) concerning the person's
eligibility for, or the amount of, a relocation payment under this
section, the person may file a written appeal of that determination with
the grantee (or state recipient, as applicable). The appeal procedures
to be followed are described in 49 CFR 24.10. In addition, a low- or
moderate-income household that has been displaced from a dwelling may
file a written request for review of the grantee's decision to the HUD
Field Office. For purposes of the State CDBG program, a low- or
moderate-income household may file a written request for review of the
state recipient's decision with the State.
(g) Responsibility of grantee or State. (1) The grantee (or State,
if applicable) is responsible for ensuring compliance with the
requirements of this section, notwithstanding any third party's
contractual obligation to the grantee to comply with the provisions of
this section. For purposes of the State CDBG program, the State shall
require state recipients to certify that they will comply with the
requirements of this section.
(2) The cost of assistance required under this section may be paid
from local public funds, funds provided under this part, or funds
available from other sources.
(3) The grantee (or State and state recipient, as applicable) must
maintain records in sufficient detail to demonstrate compliance with the
provisions of this section.
(Approved by the Office of Management and Budget under OMB control
number 2506-0102)
[61 FR 11477, Mar. 20, 1996, as amended at 61 FR 51760, Oct. 3, 1996]
Sec. 570.607 Employment and contracting opportunities.
To the extent that they are otherwise applicable, grantees shall
comply with:
(a) Executive Order 11246, as amended by Executive Orders 11375,
11478, 12086, and 12107 (3 CFR 1964-1965 Comp. p. 339; 3 CFR, 1966-1970
Comp., p. 684; 3 CFR, 1966-1970., p. 803; 3 CFR, 1978 Comp., p. 230; 3
CFR, 1978 Comp., p. 264 (Equal Employment Opportunity), and Executive
Order 13279 (Equal Protection of the Laws for Faith-Based and Community
Organizations), 67 FR 77141, 3 CFR, 2002 Comp., p. 258; and the
implementing regulations at 41 CFR chapter 60; and
(b) Section 3 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701u) and implementing regulations at 24 CFR part 135.
[68 FR 56405, Sept. 30, 2003]
Sec. 570.608 Lead-based paint.
The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846),
the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C.
4851-4856), and implementing regulations at part 35, subparts A, B, J,
K, and R of this part apply to activities under this program.
[64 FR 50226, Sept. 15, 1999]
Sec. 570.609 Use of debarred, suspended or ineligible contractors or
subrecipients.
The requirements set forth in 24 CFR part 5 apply to this program.
[61 FR 5209, Feb. 9, 1996]
[[Page 135]]
Sec. 570.610 Uniform administrative requirements, cost principles,
and audit requirements for Federal awards.
The recipient, its agencies or instrumentalities, and subrecipients
shall comply with 2 CFR part 200, ``Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards'', as set
forth at Sec. 570.502.
[80 FR 75938, Dec. 7, 2015]
Sec. 570.611 Conflict of interest.
(a) Applicability. (1) In the procurement of supplies, equipment,
construction, and services by recipients and by subrecipients, the
conflict of interest provisions in 2 CFR 200.317 and 200.318 shall
apply.
(2) In all cases not governed by 2 CFR 200.317 and 200.318, the
provisions of this section shall apply. Such cases include the
acquisition and disposition of real property and the provision of
assistance by the recipient or by its subrecipients to individuals,
businesses, and other private entities under eligible activities that
authorize such assistance (e.g., rehabilitation, preservation, and other
improvements of private properties or facilities pursuant to
Sec. 570.202; or grants, loans, and other assistance to businesses,
individuals, and other private entities pursuant to Sec. 570.203,
570.204, 570.455, or 570.703(i)).
(b) Conflicts prohibited. The general rule is that no persons
described in paragraph (c) of this section who exercise or have
exercised any functions or responsibilities with respect to CDBG
activities assisted under this part, or who are in a position to
participate in a decisionmaking process or gain inside information with
regard to such activities, may obtain a financial interest or benefit
from a CDBG-assisted activity, or have a financial interest in any
contract, subcontract, or agreement with respect to a CDBG-assisted
activity, or with respect to the proceeds of the CDBG-assisted activity,
either for themselves or those with whom they have business or immediate
family ties, during their tenure or for one year thereafter. For the
UDAG program, the above restrictions shall apply to all activities that
are a part of the UDAG project, and shall cover any such financial
interest or benefit during, or at any time after, such person's tenure.
(c) Persons covered. The conflict of interest provisions of
paragraph (b) of this section apply to any person who is an employee,
agent, consultant, officer, or elected official or appointed official of
the recipient, or of any designated public agencies, or of subrecipients
that are receiving funds under this part.
(d) Exceptions. Upon the written request of the recipient, HUD may
grant an exception to the provisions of paragraph (b) of this section on
a case-by-case basis when it has satisfactorily met the threshold
requirements of (d)(1) of this section, taking into account the
cumulative effects of paragraph (d)(2) of this section.
(1) Threshold requirements. HUD will consider an exception only
after the recipient has provided the following documentation:
(i) A disclosure of the nature of the conflict, accompanied by an
assurance that there has been public disclosure of the conflict and a
description of how the public disclosure was made; and
(ii) An opinion of the recipient's attorney that the interest for
which the exception is sought would not violate State or local law.
(2) Factors to be considered for exceptions. In determining whether
to grant a requested exception after the recipient has satisfactorily
met the requirements of paragraph (d)(1) of this section, HUD shall
conclude that such an exception will serve to further the purposes of
the Act and the effective and efficient administration of the
recipient's program or project, taking into account the cumulative
effect of the following factors, as applicable:
(i) Whether the exception would provide a significant cost benefit
or an essential degree of expertise to the program or project that would
otherwise not be available;
(ii) Whether an opportunity was provided for open competitive
bidding or negotiation;
(iii) Whether the person affected is a member of a group or class of
low- or moderate-income persons intended to be the beneficiaries of the
assisted activity, and the exception will permit
[[Page 136]]
such person to receive generally the same interests or benefits as are
being made available or provided to the group or class;
(iv) Whether the affected person has withdrawn from his or her
functions or responsibilities, or the decisionmaking process with
respect to the specific assisted activity in question;
(v) Whether the interest or benefit was present before the affected
person was in a position as described in paragraph (b) of this section;
(vi) Whether undue hardship will result either to the recipient or
the person affected when weighed against the public interest served by
avoiding the prohibited conflict; and
(vii) Any other relevant considerations.
[60 FR 56916, Nov. 9, 1995, as amended at 80 FR 75938, Dec. 7, 2015]
Sec. 570.612 Executive Order 12372.
(a) General. Executive Order 12372, Intergovernmental Review of
Federal Programs, and the Department's implementing regulations at 24
CFR part 52, allow each State to establish its own process for review
and comment on proposed Federal financial assistance programs.
(b) Applicability. Executive Order 12372 applies to the CDBG
Entitlement program and the UDAG program. The Executive Order applies to
all activities proposed to be assisted under UDAG, but it applies to the
Entitlement program only where a grantee proposes to use funds for the
planning or construction (reconstruction or installation) of water or
sewer facilities. Such facilities include storm sewers as well as all
sanitary sewers, but do not include water and sewer lines connecting a
structure to the lines in the public right-of-way or easement. It is the
responsibility of the grantee to initiate the Executive Order review
process if it proposes to use its CDBG or UDAG funds for activities
subject to review.
Sec. 570.613 Eligibility restrictions for certain resident aliens.
(a) Restriction. Certain newly legalized aliens, as described in 24
CFR part 49, are not eligible to apply for benefits under covered
activities funded by the programs listed in paragraph (e) of this
section. ``Benefits'' under this section means financial assistance,
public services, jobs and access to new or rehabilitated housing and
other facilities made available under covered activities funded by
programs listed in paragraph (e) of this section. ``Benefits'' do not
include relocation services and payments to which displacees are
entitled by law.
(b) Covered activities. ``Covered activities'' under this section
means activities meeting the requirements of Sec. 570.208(a) that
either:
(1) Have income eligibility requirements limiting the benefits
exclusively to low and moderate income persons; or
(2) Are targeted geographically or otherwise to primarily benefit
low and moderate income persons (excluding activities serving the public
at large, such as sewers, roads, sidewalks, and parks), and that provide
benefits to persons on the basis of an application.
(c) Limitation on coverage. The restrictions under this section
apply only to applicants for new benefits not being received by covered
resident aliens as of the effective date of this section.
(d) Compliance. Compliance can be accomplished by obtaining
certification as provided in 24 CFR 49.20.
(e) Programs affected. (1) The Community Development Block Grant
program for small cities, administered under subpart F of part 570 of
this title until closeout of the recipient's grant.
(2) The Community Development Block Grant program for entitlement
grants, administered under subpart D of part 570 of this title.
(3) The Community Development Block Grant program for States,
administered under subpart I of part 570 of this title until closeout of
the unit of general local government's grant by the State.
(4) The Urban Development Action Grants program, administered under
subpart G of part 570 of this title until closeout of the recipient's
grant.
[55 FR 18494, May 2, 1990]
[[Page 137]]
Sec. 570.614 Architectural Barriers Act and the Americans with
Disabilities Act.
(a) The Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157)
requires certain Federal and Federally funded buildings and other
facilities to be designed, constructed, or altered in accordance with
standards that insure accessibility to, and use by, physically
handicapped people. A building or facility designed, constructed, or
altered with funds allocated or reallocated under this part after
December 11, 1995, and that meets the definition of ``residential
structure'' as defined in 24 CFR 40.2 or the definition of ``building''
as defined in 41 CFR 101-19.602(a) is subject to the requirements of the
Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157) and shall
comply with the Uniform Federal Accessibility Standards (appendix A to
24 CFR part 40 for residential structures, and appendix A to 41 CFR part
101-19, subpart 101-19.6, for general type buildings).
(b) The Americans with Disabilities Act (42 U.S.C. 12131; 47 U.S.C.
155, 201, 218 and 225) (ADA) provides comprehensive civil rights to
individuals with disabilities in the areas of employment, public
accommodations, State and local government services, and
telecommunications. It further provides that discrimination includes a
failure to design and construct facilities for first occupancy no later
than January 26, 1993, that are readily accessible to and usable by
individuals with disabilities. Further, the ADA requires the removal of
architectural barriers and communication barriers that are structural in
nature in existing facilities, where such removal is readily
achievable--that is, easily accomplishable and able to be carried out
without much difficulty or expense.
[60 FR 56917, Nov. 9, 1995]
Sec. 570.615 Housing counseling.
Housing counseling, as defined in 24 CFR 5.100, that is funded with
or provided in connection with CDBG funds must be carried out in
accordance with 24 CFR 5.111.
[81 FR 90659, Dec. 14, 2016]
Subpart L [Reserved]
Subpart M_Loan Guarantees
Source: 59 FR 66604, Dec. 27, 1994, unless otherwise noted.
Sec. 570.700 Purpose.
This subpart contains requirements governing the guarantee under
section 108 of the Act of debt obligations as defined in Sec. 570.701.
Sec. 570.701 Definitions.
Borrower means the public entity or its designated public agency or
the State that issues debt obligations under this subpart.
Credit subsidy cost means the estimated long-term cost to the
Federal Government of a Section 108 loan guarantee or a modification
thereof, calculated on a net present value basis, excluding
administrative costs and any incidental effects on governmental receipts
or outlays.
Debt obligation means a promissory note or other obligation issued
by a public entity or its designated public agency or by a State and
guaranteed by HUD under this subpart, or a trust certificate or other
obligation offered by HUD or by a trust or other offeror approved for
purposes of this subpart by HUD, which is guaranteed by HUD under this
subpart and is based on and backed by a trust or pool composed of notes
or other obligations issued by public entities or their designated
public agencies or by States and guaranteed or eligible for guarantee by
HUD under this subpart.
Designated public agency means a public agency designated by a
public entity to issue debt obligations as borrower under this subpart.
Entitlement public entity means a metropolitan city or an urban
county receiving a grant under subpart D of this part.
Guaranteed loan funds means the proceeds payable to the borrower
from the issuance of debt obligations under this subpart and includes
funds received by a nonentitlement public entity from a State under
Sec. 570.711.
Nonentitlement public entity means any unit of general local
government in a nonentitlement area.
[[Page 138]]
Public entity shall have the meaning provided for the term
``Eligible public entity'' in section 108(o) of the Act.
State-assisted public entity means a unit of general local
government in a nonentitlement area which is assisted by a State as
required in Sec. 570.704(b)(9) and Sec. 570.705(b)(2) or pursuant to
Sec. 570.711.
[59 FR 66604, Dec. 27, 1994, as amended at 61 FR 11481, Mar. 20, 1996;
74 FR 36389, July 22, 2009; 80 FR 67633, Nov. 3, 2015]
Sec. 570.702 Eligible applicants.
The following public entities may apply for loan guarantee
assistance under this subpart.
(a) Entitlement public entities.
(b) Nonentitlement public entities that are assisted in the
submission of applications by States that administer the CDBG program
(under subpart I of this part). Such assistance shall consist, at a
minimum, of the certifications required under Sec. 570.704(b)(9) (and
actions pursuant thereto).
(c) Nonentitlement public entities eligible to apply for grant
assistance under subpart F of this part.
Sec. 570.703 Eligible activities.
Guaranteed loan funds may be used for the following activities,
provided such activities meet the requirements of Sec. 570.200. However,
guaranteed loan funds may not be used to reimburse the CDBG program
account or line of credit for costs incurred by the public entity or
designated public agency and paid with CDBG grant funds or program
income.
(a) Acquisition of improved or unimproved real property in fee or by
long-term lease, including acquisition for economic development
purposes.
(b) Rehabilitation of real property owned or acquired by the public
entity or its designated public agency.
(c) Payment of interest on obligations guaranteed under this
subpart.
(d) Relocation payments and other relocation assistance for
individuals, families, businesses, nonprofit organizations, and farm
operations who must relocate permanently or temporarily as a result of
an activity financed with guaranteed loan funds, where the assistance
is:
(1) Required under the provisions of Sec. 570.606(b) or (c); or
(2) Determined by the public entity to be appropriate under the
provisions of Sec. 570.606(d).
(e) Clearance, demolition, and removal, including movement of
structures to other sites and remediation of properties with known or
suspected environmental contamination, of buildings and improvements on
real property acquired or rehabilitated pursuant to paragraphs (a) and
(b) of this section. Remediation may include project-specific
environmental assessment costs not otherwise eligible under
Sec. 570.205.
(f) Site preparation, including construction, reconstruction,
installation of public and other site improvements, utilities or
facilities (other than buildings), or remediation of properties
(remediation can include project-specific environmental assessment costs
not otherwise eligible under Sec. 570.205) with known or suspected
environmental contamination, which is:
(1) Related to the redevelopment or use of the real property
acquired or rehabilitated pursuant to paragraphs (a) and (b) of this
section, or
(2) For an economic development purpose.
(g) Payment of issuance, underwriting, servicing, trust
administration and other costs associated with private sector financing
of debt obligations under this subpart.
(h) Housing rehabilitation eligible under Sec. 570.202.
(i) The following economic development activities:
(1) Activities eligible under Sec. 570.203; and
(2) Community economic development projects eligible under
Sec. 570.204.
(j) Construction of housing by non-profit organizations for
homeownership under section 17(d) of the United States Housing Act of
1937 (Housing Development Grants Program, 24 CFR part 850).
(k) A debt service reserve to be used in accordance with
requirements specified in the contract entered into pursuant to
Sec. 570.705(b)(1).
(l) Acquisition, construction, reconstruction, rehabilitation or
historic preservation, or installation of public
[[Page 139]]
facilities (except for buildings for the general conduct of government)
to the extent eligible under Sec. 570.201(c), including public streets,
sidewalks, other site improvements and public utilities, and remediation
of known or suspected environmental contamination in conjunction with
these activities. Remediation may include project-specific environmental
assessment costs not otherwise eligible under Sec. 570.205.
(m) In the case of applications by public entities which are, or
which contain, ``colonias'' as defined in section 916 of the Cranston-
Gonzalez National Affordable Housing Act (42 U.S.C. 5306 note), as
amended by section 810 of the Housing and Community Development Act of
1992, acquisition, construction, reconstruction, rehabilitation or
installation of public works and site or other improvements which serve
the colonia.
(n) Payment of fees charged by HUD pursuant to Sec. 570.712.
[59 FR 66604, Dec. 27, 1994, as amended at 61 FR 11481, Mar. 20, 1996;
71 FR 30036, May 24, 2006; 80 FR 67633, Nov. 3, 2015; 81 FR 1121, Jan.
11, 2016]
Sec. 570.704 Application requirements.
(a) Presubmission and citizen participation requirements. (1) Before
submission of an application for loan guarantee assistance to HUD, the
public entity must:
(i) Develop a proposed application that includes the following
items:
(A) The community development objectives the public entity proposes
to pursue with the guaranteed loan funds.
(B) The activities the public entity proposes to carry out with the
guaranteed loan funds. Each activity must be described in sufficient
detail, including the specific provision of Sec. 570.703 under which it
is eligible and the national objective to be met, amount of guaranteed
loan funds expected to be used, and location, to allow citizens to
determine the degree to which they will be affected. The proposed
application must indicate which activities are expected to generate
program income. The application must also describe where citizens may
obtain additional information about proposed activities.
(C) A description of the pledge of grants required under
Sec. 570.705(b)(2). In the case of applications by State-assisted public
entities, the description shall note that pledges of grants will be made
by the State and by the public entity.
(D) A description of any CDBG funds, including guaranteed loan funds
and grant funds, that will be used to pay fees required under
Sec. 570.705(g). The description must include an estimate of the amount
of CBDG funds that will be used for this purpose. If the applicant will
use grant funds to pay required fees, it must include this planned use
of grant funds in its consolidated plan.
(ii) Fulfill the applicable requirements in its citizen
participation plan developed in accordance with Sec. 570.704(a)(2).
(iii) Publish community-wide its proposed application so as to
afford affected citizens an opportunity to examine the application's
contents and to provide comments on the proposed application.
(iv) Prepare its final application. Once the public entity has held
the public hearing and published the proposed application as required by
paragraphs (a)(1)(ii) and (iii) of this section, respectively, the
public entity must consider any such comments and views received and, if
the public entity deems appropriate, modify the proposed application.
Upon completion, the public entity must make the final application
available to the public. The final application must describe each
activity in sufficient detail to permit a clear understanding of the
nature of each activity, as well as identify the specific provision of
Sec. 570.703 under which it is eligible, the national objective to be
met, and the amount of guaranteed loan funds to be used. The final
application must also indicate which activities are expected to generate
program income.
(v) If an application for loan guarantee assistance is to be
submitted by an entitlement or nonentitlement public entity
simultaneously with the public entity's submission for its grant, the
public entity shall include and identify in its proposed and final
consolidated plan the activities to be undertaken with the guaranteed
loan funds, the national objective to be met by each of these
activities, the amount of any program income expected to be
[[Page 140]]
received during the program year, and the amount of guaranteed loan
funds to be used. The public entity shall also include in the
consolidated plan a description of the pledge of grants, as required
under Sec. 570.705(b)(2), and the use of grant funds to pay for any fees
required under Sec. 570.705(g). In such cases the proposed and final
application requirements of paragraphs (a)(1)(i), (iii), and (iv) of
this section will be deemed to have been met.
(2) Citizen participation plan. The public entity must develop and
follow a detailed citizen participation plan and make the plan public.
The plan must be completed and available before the application is
submitted to HUD. The plan may be the citizen plan required for the
consolidated plan, modified to include guaranteed loan funds. The public
entity is not required to hold a separate public hearing for its
consolidated plan and for the guaranteed loan funds to obtain citizens'
views on community development and housing needs. The plan must set
forth the public entity's policies and procedures for:
(i) Giving citizens timely notice of local meetings and reasonable
and timely access to local meetings, information, and records relating
to the public entity's proposed and actual use of guaranteed loan funds,
including, but not limited to:
(A) The amount of guaranteed loan funds expected to be made
available for the coming year, including program income anticipated to
be generated by the activities carried out with guaranteed loan funds;
(B) The range of activities that may be undertaken with guaranteed
loan funds;
(C) The estimated amount of guaranteed loan funds (including program
income derived therefrom) proposed to be used for activities that will
benefit low and moderate income persons;
(D) The proposed activities likely to result in displacement and the
public entity's plans, consistent with the policies developed under
Sec. 570.606 for minimizing displacement of persons as a result of its
proposed activities.
(ii) Providing technical assistance to groups representative of
persons of low and moderate income that request assistance in developing
proposals. The level and type of assistance to be provided is at the
discretion of the public entity. Such assistance need not include the
provision of funds to such groups.
(iii) Holding a minimum of two public hearings, each at a different
stage of the public entity's program, for the purpose of obtaining the
views of citizens and formulating or responding to proposals and
questions. Together the hearings must address community development and
housing needs, development of proposed activities and review of program
performance. At least one of these hearings must be held before
submission of the application to obtain the views of citizens on
community development and housing needs. Reasonable notice of the
hearing must be provided and the hearing must be held at times and
locations convenient to potential or actual beneficiaries, with
accommodation for the handicapped. The public entity must specify in its
plan how it will meet the requirement for a hearing at times and
locations convenient to potential or actual beneficiaries.
(iv) Meeting the needs of non-English speaking residents in the case
of public hearings where a significant number of non-English speaking
residents can reasonably be expected to participate.
(v) Providing affected citizens with reasonable advance notice of,
and opportunity to comment on, proposed activities not previously
included in an application and activities which are proposed to be
deleted or substantially changed in terms of purpose, scope, location,
or beneficiaries. The criteria the public entity will use to determine
what constitutes a substantial change for this purpose must be described
in the citizen participation plan.
(vi) Responding to citizens' complaints and grievances, including
the procedures that citizens must follow when submitting complaints and
grievances. The public entity's policies and procedures must provide for
timely written answers to written complaints and grievances within 15
working days of the receipt of the complaint, where practicable.
(vii) Encouraging citizen participation, particularly by low and
moderate income persons who reside in slum or
[[Page 141]]
blighted areas, and other areas in which guaranteed loan funds are
proposed to be used.
(b) Submission requirements. An application for loan guarantee
assistance may be submitted at any time. The application (or
consolidated plan) shall be submitted to the appropriate HUD Office and
shall be accompanied by the following:
(1) A description of how each of the activities to be carried out
with the guaranteed loan funds meets one of the criteria in
Sec. 570.208.
(2) A schedule for repayment of the loan which identifies the
sources of repayment, together with a statement identifying the entity
that will act as borrower and issue the debt obligations.
(3) A certification providing assurance that the public entity
possesses the legal authority to make the pledge of grants required
under Sec. 570.705(b)(2).
(4) A certification providing assurance that the public entity has
made efforts to obtain financing for activities described in the
application without the use of the loan guarantee, the public entity
will maintain documentation of such efforts for the term of the loan
guarantee, and the public entity cannot complete such financing
consistent with the timely execution of the program plans without such
guarantee.
(5)-(6) [Reserved]
(7) The anti-lobbying statement required under 24 CFR part 87
(appendix A).
(8) Certifications by the public entity that:
(i) It possesses the legal authority to submit the application for
assistance under this subpart and to use the guaranteed loan funds in
accordance with the requirements of this subpart.
(ii) Its governing body has duly adopted or passed as an official
act a resolution, motion or similar official action:
(A) Authorizing the person identified as the official representative
of the public entity to submit the application and amendments thereto
and all understandings and assurances contained therein, and directing
and authorizing the person identified as the official representative of
the public entity to act in connection with the application to provide
such additional information as may be required; and
(B) Authorizing such official representative to execute such
documents as may be required in order to implement the application and
issue debt obligations pursuant thereto (provided that the authorization
required by this paragraph (B) may be given by the local governing body
after submission of the application but prior to execution of the
contract required by Sec. 570.705(b);
(iii) Before submission of its application to HUD, the public entity
has:
(A) Furnished citizens with information required by
Sec. 570.704(a)(2)(i);
(B) Held at least one public hearing to obtain the views of citizens
on community development and housing needs; and
(C) Prepared its application in accordance with
Sec. 570.704(a)(1)(iv) and made the application available to the public.
(iv) It is following a detailed citizen participation plan which
meets the requirements described in Sec. 570.704(a)(2).
(v) The public entity will affirmatively further fair housing, and
the guaranteed loan funds will be administered in compliance with:
(A) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et
seq.); and
(B) The Fair Housing Act (42 U.S.C. 3601-3619).
(vi)(A) (For entitlement public entities only.) In the aggregate, at
least 70 percent of all CDBG funds, as defined at Sec. 570.3, to be
expended during the one, two, or three consecutive years specified by
the public entity for its CDBG program will be for activities which
benefit low and moderate income persons, as described in criteria at
Sec. 570.208(a).
(B) (For nonentitlement public entities eligible under subpart F of
this part only.) It will comply with primary and national objectives
requirements, as applicable under subpart F of this part.
(vii) It will comply with the requirements governing displacement,
relocation, real property acquisition, and the replacement of low and
moderate income housing described in Sec. 570.606.
[[Page 142]]
(viii) It will comply with the requirements of Sec. 570.200(c)(2)
with regard to the use of special assessments to recover the capital
costs of activities assisted with guaranteed loan funds.
(ix) (Where applicable, the public entity may also include the
following additional certification.) It lacks sufficient resources from
funds provided under this subpart or program income to allow it to
comply with the provisions of Sec. 570.200(c)(2), and it must therefore
assess properties owned and occupied by moderate income persons, to
recover the guaranteed loan funded portion of the capital cost without
paying such assessments in their behalf from guaranteed loan funds.
(x) It will comply with the other provisions of the Act and with
other applicable laws.
(9) In the case of an application submitted by a State-assisted
public entity, certifications by the State that:
(i) It agrees to make the pledge of grants required under
Sec. 570.705(b)(2).
(ii) It possesses the legal authority to make such pledge.
(iii) At least 70 percent of the aggregate use of CDBG grant funds
received by the State, guaranteed loan funds, and program income during
the one, two, or three consecutive years specified by the State for its
CDBG program will be for activities that benefit low and moderate income
persons.
(iv) It agrees to assume the responsibilities described in
Sec. 570.710.
(c) HUD review and approval of applications. (1) HUD will normally
accept the certifications submitted with the application. HUD may,
however, consider relevant information which challenges the
certifications and require additional information or assurances from the
public entity or State as warranted by such information.
(2) [Reserved]
(3) HUD may disapprove an application, or may approve loan guarantee
assistance for an amount less than requested, for any of the following
reasons:
(i) HUD determines that the guarantee constitutes an unacceptable
financial risk. Factors that will be considered in assessing financial
risk shall include, but not be limited to, the following:
(A) The length of the proposed repayment period;
(B) The ratio of expected annual debt service requirements to
expected annual grant amount;
(C) The likelihood that the public entity or State will continue to
receive grant assistance under this part during the proposed repayment
period;
(D) The public entity's or State's ability to furnish adequate
security pursuant to Sec. 570.705(b), and
(E) The amount of program income the proposed activities are
reasonably estimated to contribute toward repayment of the guaranteed
loan.
(ii) The requested loan amount exceeds any of the limitations
specified under Sec. 570.705(a).
(iii) Funds are not available in the amount requested.
(iv) The performance of the public entity, its designated public
agency or State under this part is unacceptable.
(v) Activities to be undertaken with the guaranteed loan funds are
not eligible under Sec. 570.703.
(vi) Activities to be undertaken with the guaranteed loan funds do
not meet the criteria in Sec. 570.208 for compliance with one of the
national objectives of the Act.
(4) HUD will notify the public entity or State in writing that the
loan guarantee request has either been approved, reduced, or
disapproved. If the request is reduced or disapproved, the public entity
or State shall be informed of the specific reasons for reduction or
disapproval. If the request is reduced or disapproved, the public entity
shall be informed of the specific reasons for reduction or disapproval.
If the request is approved, HUD shall issue an offer of commitment to
guarantee debt obligations of the borrower identified in the application
subject to compliance with this part, including the requirements under
Sec. 570.705(b), (d), (g) and (h) for securing and issuing debt
obligations, the conditions for release of funds described in paragraph
(d) of this section, and such other conditions as HUD may specify in the
commitment documents in a particular case.
(5) Amendments. If the public entity or State wishes to carry out or
assist in an activity not previously described in its application or to
substantially
[[Page 143]]
change the purpose, scope, location, or beneficiaries of an activity,
the amendment must be approved by HUD. Amendments by State-assisted
public entities must also be approved by the State. The public entity
shall follow the citizen participation requirements for amendments in
Sec. 570.704(a)(2).
(d) Environmental review. The public entity shall comply with HUD
environmental review procedures (24 CFR part 58) for the release of
funds for each project carried out with loan guarantee assistance. These
procedures set forth the regulations, policies, responsibilities and
procedures governing the carrying out of environmental review
responsibilities of public entities. All public entities, including
nonentitlement public entities, shall submit the request for release of
funds and related certification for each project to be assisted with
guaranteed loan funds to the appropriate HUD Field Office.
(e) Displacement, relocation, acquisition, and replacement of
housing. The public entity (or the designated public agency) shall
comply with the displacement, relocation, acquisition, and replacement
of low/moderate-income housing requirements in Sec. 570.606 in
connection with any activity financed in whole or in part with
guaranteed loan funds.
[59 FR 66604, Dec. 27, 1994, as amended at 60 FR 1917, Jan. 5, 1995; 61
FR 11481, Mar. 20, 1996; 69 FR 32781, June 10, 2004; 72 FR 73496, Dec.
27, 2008; 74 FR 36389, July 22, 2009; 80 FR 67633, Nov. 3, 2015]
Sec. 570.705 Loan requirements.
(a) Limitations on commitments. (1) If loan guarantee commitments
have been issued in any fiscal year in an aggregate amount equal to 50
percent of the amount approved in an appropriation act for that fiscal
year, HUD may limit the amount of commitments any one public entity may
receive during such fiscal year as follows (except that HUD will not
decrease commitments already issued):
(i) The amount any one entitlement public entity may receive may be
limited to $35,000,000.
(ii) The amount any one nonentitlement public entity may receive may
be limited to $7,000,000.
(iii) The amount any one public entity may receive may be limited to
such amount as is necessary to allow HUD to give priority to
applications containing activities to be carried out in areas designated
as empowerment zones/enterprise communities by the Federal Government or
by any State.
(2) In addition to the limitations specified in paragraph (a)(1) of
this section, the following limitations shall apply.
(i) Entitlement public entities. No commitment to guarantee shall be
made if the total unpaid balance of debt obligations guaranteed under
this subpart (excluding any amount defeased under the contract entered
into under Sec. 570.705(b)(1)) on behalf of the public entity would
thereby exceed an amount equal to five times the amount of the most
recent grant made pursuant to Sec. 570.304 to the public entity.
(ii) States and State-assisted public entities. No commitment to
guarantee shall be made if the total unpaid balance of debt obligations
guaranteed under this subpart (excluding any amount defeased under the
contract entered into under Sec. 570.705(b)(1)) on behalf of the State
and all State-assisted public entities in the State would thereby exceed
an amount equal to five times the amount of the most recent grant
received by such State under subpart I.
(iii) Nonentitlement public entities eligible under subpart F of
this part. No commitment to guarantee shall be made with respect to a
nonentitlement public entity in an insular area or the State of Hawaii
if the total unpaid balance of debt obligations guaranteed under this
subpart (excluding any amount defeased under the contract entered into
under Sec. 570.705(b)(1)) on behalf of the public entity would thereby
exceed an amount equal to five times the amount of the most recent grant
made pursuant to Sec. 570.429 or Sec. 570.440 (as applicable) to the
public entity.
(A) The most recent grant approved for the public entity pursuant to
subpart F of this part,
(B) The average of the most recent three grants approved for the
public entity pursuant to subpart F of this part, excluding any grant in
the same fiscal year as the commitment, or
[[Page 144]]
(C) The average amount of grants made under subpart F of this part
to units of general local government in New York State in the previous
fiscal year.
(b) Security requirements. To assure the repayment of debt
obligations and the charges incurred under paragraph (g) of this section
and as a condition for receiving loan guarantee assistance, the public
entity (and State and designated public agency, as applicable) shall:
(1) Enter into a contract for loan guarantee assistance with HUD, in
a form acceptable to HUD, including provisions for repayment of debt
obligations guaranteed hereunder;
(2) Pledge all grants made or for which the public entity or State
may become eligible under this part; and
(3) Furnish, at the discretion of HUD, such other security as may be
deemed appropriate by HUD in making such guarantees. Other security
shall be required for all loans with repayment periods of ten years or
longer. Such other security shall be specified in the contract entered
into pursuant to Sec. 570.705(b)(1). Examples of other security HUD may
require are:
(i) Program income as defined in Sec. 570.500(a);
(ii) Liens on real and personal property;
(iii) Debt service reserves; and
(iv) Increments in local tax receipts generated by activities
carried out with the guaranteed loan funds.
(c) Use of grants for loan repayment, issuance, underwriting,
servicing, and other costs. Notwithstanding any other provision of this
part:
(1) Community Development Block Grants allocated pursuant to section
106 of the Act (including program income derived therefrom) may be used
for:
(i) Paying principal and interest due (including such issuance,
servicing, underwriting, or other costs as may be incurred under
paragraph (g) of this section) on the debt obligations guaranteed under
this subpart;
(ii) Defeasing such debt obligations; and
(iii) Establishing debt service reserves as additional security
pursuant to paragraph (b)(3) of this section.
(2) HUD may apply grants pledged pursuant to paragraph (b)(2) of
this section to any amounts due under the debt obligations, the payment
of costs incurred under paragraph (g) of this section, or to the
purchase or defeasance of such debt obligations, in accordance with the
terms of the contract required by paragraph (b)(l) of this section.
(d) Debt obligations. Debt obligations guaranteed under this subpart
shall be in the form and denominations prescribed by HUD. Such debt
obligations may be issued and sold only under such terms and conditions
as may be prescribed by HUD. HUD may prescribe the terms and conditions
of debt obligations, or of their issuance and sale, by regulation or by
contractual arrangements authorized by section 108(r)(4) of the Act and
paragraph (h) of this section. Unless specifically provided otherwise in
the contract for loan guarantee assistance required under paragraph (b)
of this section, debt obligations shall not constitute general
obligations of any public entity or State secured by its full faith and
credit.
(e) Taxable obligations. Interest earned on debt obligations under
this subpart shall be subject to Federal taxation as provided in section
108(j) of the Act.
(f) Loan repayment period. The term of debt obligations under this
subpart shall not exceed twenty years.
(g) Issuance, underwriting, servicing, and other costs. (1) Each
public entity or its designated public agency and each State issuing
debt obligations under this subpart must pay the issuance, underwriting,
servicing, trust administration, and other costs associated with the
private sector financing of the debt obligations.
(2) Each public entity or its designated public agency and each
state issuing debt obligations under this subpart must pay any and all
fees charged by HUD pursuant to Sec. 570.712.
(h) Contracting with respect to issuance and sale of debt
obligations; effect of other laws. No State or local law, and no Federal
law, shall preclude or limit HUD's exercise of:
(1) The power to contract with respect to public offerings and other
sales of debt obligations under this
[[Page 145]]
subpart upon such terms and conditions as HUD deems appropriate;
(2) The right to enforce any such contract by any means deemed
appropriate by HUD;
(3) Any ownership rights of HUD, as applicable, in debt obligations
under this subpart.
[59 FR 66604, Dec. 27, 1994, as amended at 69 FR 32782, June 10, 2004;
74 FR 36389, July 22, 2009; 80 FR 67633, Nov. 3, 2015]
Sec. 570.706 Federal guarantee; subrogation.
Section 108(f) of the Act provides for the incontestability of
guarantees by HUD under subpart M of this part in the hands of a holder
of such guaranteed obligations. If HUD pays a claim under a guarantee
made under section 108 of the Act, HUD shall be fully subrogated for all
the rights of the holder of the guaranteed debt obligation with respect
to such obligation.
[61 FR 11481, Mar. 20, 1996]
Sec. 570.707 Applicability of rules and regulations.
(a) Entitlement public entities. The provisions of subparts A, C, J,
K and O of this part applicable to entitlement grants shall apply
equally to guaranteed loan funds and other CDBG funds, except to the
extent they are specifically modified or augmented by the provisions of
this subpart.
(b) State-assisted public entities. The provisions of subpart I of
this part, and the requirements the State imposes on units of general
local government receiving Community Development Block Grants or program
income to the extent applicable, shall apply equally to guaranteed loan
funds and Community Development Block Grants (including program income
derived therefrom) administered by the State under the CDBG program,
except to the extent they are specifically modified or augmented by the
provisions of this subpart.
(c) Nonentitlement public entities eligible under subpart F of this
part. The provisions of subpart F of this part shall apply equally to
guaranteed loan funds and other CDBG funds, except to the extent they
are specifically modified or augmented by the provisions of this
subpart.
Sec. 570.708 Sanctions.
(a) Non-State assisted public entities. The performance review
procedures described in subpart O of this part apply to all public
entities receiving guaranteed loan funds other than State-assisted
public entities. Performance deficiencies in the use of guaranteed loan
funds made available to such public entities (or program income derived
therefrom) or violations of the contract entered into pursuant to
Sec. 570.705(b)(1) may result in the imposition of a sanction authorized
pursuant to Sec. 570.900(b)(7) against pledged CDBG grants. In addition,
upon a finding by HUD that the public entity has failed to comply
substantially with any provision of the Act with respect to either the
pledged grants or the guaranteed loan funds or program income, HUD may
take action against the pledged grants as provided in Sec. 570.913 and/
or may take action as provided in the contract for loan guarantee
assistance.
(b) State-assisted public entities. Performance deficiencies in the
use of guaranteed loan funds (or program income derived therefrom) or
violations of the contract entered into pursuant to Sec. 570.705(b)(1)
may result in an action authorized pursuant to Sec. 570.495 or
Sec. 570.496. In addition, upon a finding by HUD that the State or
public entity has failed to comply substantially with any provision of
the Act with respect to the pledged CDBG nonentitlement funds, the
guaranteed loan funds, or program income, HUD may take action against
the pledged funds as provided in Sec. 570.496 and/or may take action as
provided in the contract.
Sec. 570.709 Allocation of loan guarantee assistance.
Of the amount approved in any appropriation act for guarantees under
this subpart in any fiscal year, 70 percent shall be allocated for
entitlement public entities and 30 percent shall be allocated for States
and nonentitlement public entities. HUD need not comply with these
percentage requirements in any fiscal year to the extent that there is
an absence of applications approvable under this subpart from
entitlement public entities or from
[[Page 146]]
States and nonentitlement public entities.
[74 FR 36389, July 22, 2009]
Sec. 570.710 State responsibilities.
The State is responsible for choosing public entities that it will
assist under this subpart. States are free to develop procedures and
requirements for determining which activities will be assisted, subject
to the requirements of this subpart. Upon approval by HUD of an
application from a State or a State-assisted public entity, the State
will be principally responsible, subject to HUD oversight under subpart
I of this part, for ensuring compliance with all applicable requirements
governing the use of the guaranteed loan funds. Notwithstanding the
State's responsibilities described in this section, HUD may take any
action necessary for ensuring compliance with requirements affecting the
security interests of HUD with respect to the guaranteed loan.
[59 FR 66604, Dec. 27, 1994, as amended at 74 FR 36389, July 22, 2009]
Sec. 570.711 State borrowers; additional requirements and application
procedures.
This section contains additional requirements and alternative
application procedures for guarantees of debt obligations under section
108 of the Act pursuant to the additional authority provided in
paragraph (a) of section 222 of the Transportation, Housing and Urban
Development, and Related Agencies Appropriations Act, 2009, Public Law
111-8; 123 Stat. 524 at 976 (Division I of the Omnibus Appropriations
Act, 2009) (``section 222'' and the ``2009 Appropriations Act''). If any
other federal law or laws are enacted after March 11, 2009, the effect
of which with respect to loan guarantee authority provided in an
appropriations act is equivalent to the effect of section 222 with
respect to the loan guarantee authority provided in the 2009
Appropriations Act, the additional requirements and alternative
application procedures in this section shall also apply to guarantees of
debt obligations under section 108 of the act, pursuant to the
additional authority provided in such other federal law or laws.
(a) Applications by States. Notwithstanding Sec. 570.702 and
Sec. 570.704, states that administer the CDBG program (under subpart I
of this part) may apply for loan guarantee assistance under this
subpart, and such application shall consist of the following:
(1) A copy of the State's CDBG method of distribution in the action
plan most recently submitted or amended pursuant to 24 CFR part 91. In
addition to the requirements of 24 CFR part 91, such method of
distribution must note the approximate amount of section 108 guaranteed
obligations issued by the State and all nonentitlement public entities
that are outstanding at the time of such submission or amendment,
identify the maximum amount of guaranteed loan funds for which the State
will apply during the period covered by the action plan, describe the
pledge of grants required under Sec. 570.705(b)(2), and identify the
nonentitlement public entities in the State that may be assisted with
such guaranteed loan funds (to satisfy this requirement, the method of
distribution may identify one or more specific nonentitlement public
entities that may be assisted, or may indicate that all or a specified
subset of the nonentitlement public entities in the State may be
assisted and describe how applications will be selected for assistance).
(2) Either:
(i) A description of each activity to be carried out with the
guaranteed loan funds, including the specific provision of Sec. 570.703
under which the activity is eligible and how the activity meets one of
the criteria in Sec. 570.208; or
(ii) An indication of the type or types of activities to be
assisted, the provisions of Sec. 570.703 under which such activities are
eligible, and the criteria in Sec. 570.208 intended to be met, in which
case HUD shall require that the description referred to in paragraph
(a)(2)(i) of this section be submitted to and approved by HUD before the
State disburses guaranteed loan funds to a public entity for the
activity.
(3) A schedule for repayment of the loan which identifies the
sources of repayment.
(b) Distribution to Local Governments. Proceeds payable to a State
from the
[[Page 147]]
issuance of debt obligations under this subpart may be used only for:
(1) Loans and grants to the nonentitlement public entities
identified in the State's approved application for activities eligible
under Sec. 570.703; and
(2) The uses specified in paragraphs (c), (g), and (k) of
Sec. 570.703.
(c) Certification of need. Prior to approving a nonentitlement
public entity's application for assistance, the State shall obtain a
certification from such public entity conforming to Sec. 570.704(b)(4).
(d) Local government citizen participation requirements. The
presubmission and citizen participation requirements in Sec. 570.704(a)
and the third sentence of Sec. 570.704(c)(5) shall not apply with
respect to nonentitlement public entities' applications to a State for
assistance under this section. Nonentitlement public entities shall
comply with the provisions of Sec. 570.486(a) with respect to such
applications and such assistance.
(e) Environmental review; displacement, relocation, acquisition, and
replacement of housing. Nonentitlement public entities assisted by a
State under this section shall comply with Sec. 570.704(d) and (e).
[74 FR 36389, July 22, 2009]
Sec. 570.712 Collection of fees; procedure to determine amount of
the fee.
This section contains additional procedures for guarantees of debt
obligations under section 108 when HUD is required or authorized to
collect fees to pay the credit subsidy costs of the loan guarantee
program.
(a) Collection of fees. HUD may collect fees from borrowers for the
purpose of paying the credit subsidy cost of the loan guarantee. Each
public entity or its designated public agency and each State issuing
debt obligations under this subpart is responsible for the payment of
any and all fees charged pursuant to this section. The fees are payable
from the grant allocated to the issuer pursuant to the Act (including
program income derived therefrom) or from other sources, but are only
payable from guaranteed loan funds if the fee is deducted from the
disbursement of guaranteed loan funds.
(b) Amount and determination of fee. (1) HUD shall calculate the
amount of the fee as a percentage of the principal amount of the
guaranteed loan as provided by this section, based on a determination
that the fees when collected will reduce the credit subsidy cost to the
amount established by applicable appropriation acts. The amount of the
fee payable by the public entity or State shall be based on the date of
the loan guarantee commitment and shall be determined by applying the
percentages announced by Federal Register notice to guaranteed loan
disbursements as they occur or periodically to outstanding principal
balances, or both.
(2) HUD shall publish in the Federal Register the fees required
under paragraph (a) of this section, announcing the fee to be applied,
the effective date of the fee, and any other necessary information
regarding payment of the fee and, if necessary, provide a 30-day public
comment period for the purpose of inviting comment on the proposed fee
before adopting changes to the assumptions underlying the fee
calculation or if the fee structure itself raises new considerations for
Borrowers. HUD will publish a second Federal Register notice, if
necessary, after consideration of public comments.
[80 FR 67633, Nov. 3, 2015]
Subpart N_Urban Renewal Provisions
Source: 41 FR 20524, May 18, 1976, unless otherwise noted.
Sec. 570.800 Urban renewal regulations.
The regulations governing urban renewal projects and neighborhood
development programs in subpart N of this part, that were effective
immediately before April 19, 1996, will continue to govern the rights
and obligations of recipients and HUD with respect to such projects and
programs.
[61 FR 11481, Mar. 20, 1996]
Subpart O_Performance Reviews
Source: 53 FR 34466, Sept. 6, 1988, unless otherwise noted.
[[Page 148]]
Sec. 570.900 General.
(a) Performance review authorities--(1) Entitlement, Insular Areas,
and HUD-administered Small Cities performance reviews. Section 104(e)(1)
of the Act requires that the Secretary shall, at least on an annual
basis, make such reviews and audits as may be necessary or appropriate
to determine whether the recipient has carried out its activities in a
timely manner, whether the recipient has carried out those activities
and its certifications in accordance with the requirements and the
primary objectives of the Act and with other applicable laws, and
whether the recipient has a continuing capacity to carry out those
activities in a timely manner.
(2) Urban Development Action Grant (UDAG) performance reviews.
Section 119(g) of the Act requires the Secretary, at least on an annual
basis, to make such reviews and audits of recipients of Urban
Development Action Grants as necessary to determine whether the
recipient's progress in carrying out the approved activities is
substantially in accordance with the recipient's approved plans and
timetables.
(b) Performance review procedures. This paragraph describes the
review procedures the Department will use in conducting the performance
reviews required by sections 104(e) and 119(g) of the Act:
(1) The Department will determine the performance of each
entitlement, Insular Areas, and HUD-administered small cities recipient
in accordance with section 104(e)(1) of the Act by reviewing for
compliance with the requirements described in Sec. 570.901 and by
applying the performance criteria described in Secs. 570.902 and 570.903
relative to carrying out activities in a timely manner. The review
criteria in Sec. 570.904 will be used to assist in determining if the
recipient's program is being carried out in compliance with civil rights
requirements.
(2) The Department will review UDAG projects and activities to
determine whether such projects and activities are being carried out
substantially in accordance with the recipient's approved plans and
schedules. The Department will also review to determine if the recipient
has carried out its UDAG program in accordance with all other
requirements of the Grant Agreement and with all applicable requirements
of this part.
(3) In conducting performance reviews, HUD will primarily rely on
information obtained from the recipient's performance report, records
maintained, findings from monitoring, grantee and subrecipient audits,
audits and surveys conducted by the HUD Inspector General, and financial
data regarding the amount of funds remaining in the line of credit plus
program income. HUD may also consider relevant information pertaining to
a recipient's performance gained from other sources, including
litigation, citizen comments, and other information provided by or
concerning the recipient. A recipient's failure to maintain records in
the prescribed manner may result in a finding that the recipient has
failed to meet the applicable requirement to which the record pertains.
(4) If HUD determines that a recipient has not met a civil rights
review criterion in Sec. 570.904, the recipient will be provided an
opportunity to demonstrate that it has nonetheless met the applicable
civil rights requirement.
(5) If HUD finds that a recipient has failed to comply with a
program requirement or has failed to meet a performance criterion in
Sec. 570.902 or Sec. 570.903, HUD will give the recipient an opportunity
to provide additional information concerning the finding.
(6) If, after considering any additional information submitted by a
recipient, HUD determines to uphold the finding, HUD may advise the
recipient to undertake appropriate corrective or remedial actions as
specified in Sec. 570.910. HUD will consider the recipient's capacity as
described in Sec. 570.905 prior to selecting the corrective or remedial
actions.
(7) If the recipient fails to undertake appropriate corrective or
remedial actions which resolve the deficiency to the satisfaction of the
Secretary, the Secretary may impose a sanction pursuant to Sec. 570.911,
570,912, or 570.913, as applicable.
[53 FR 34466, Sept. 6, 1988, as amended at 60 FR 56917, Nov. 9, 1995; 72
FR 12536, Mar. 15, 2007]
[[Page 149]]
Sec. 570.901 Review for compliance with the primary and national
objectives and other program requirements.
HUD will review each entitlement, Insular Areas, and HUD-
administered small cities recipient's program to determine if the
recipient has carried out its activities and certifications in
compliance with:
(a) The requirement described at Sec. 570.200(a)(3) that, consistent
with the primary objective of the Act, not less than 70 percent of the
aggregate amount of CDBG funds received by the recipient shall be used
over the period specified in its certification for activities that
benefit low and moderate income persons;
(b) The requirement described at Sec. 570.200(a)(2) that each CDBG
assisted activity meets the criteria for one or more of the national
objectives described at Sec. 570.208;
(c) All other activity eligibility requirements defined in subpart C
of this part;
(d) For entitlement grants and non-entitlement CDBG grants in
Hawaii, the submission requirements of 24 CFR part 91 and the
displacement policy requirements at Sec. 570.606;
(e) For HUD-administered Small Cities grants in New York, the
citizen participation requirements at Sec. 570.431, the amendment
requirements at Sec. 570.427, and the displacement policy requirements
of Sec. 570.606;
(f) For Insular Areas Program grants only, the application and
amendment requirements at Sec. 570.440, the citizen participation
requirements at Sec. 570.441, the displacement policy requirements of
Sec. 570.606, and the lead-based paint requirements of 24 CFR 35.940;
(g) The grant administration requirements described in subpart J;
(h) Other applicable laws and program requirements described in
subpart K; and
(i) Where applicable, the requirements pertaining to loan guarantees
(subpart M) and urban renewal completions (subpart N).
[53 FR 34466, Sept. 6, 1988, as amended at 60 FR 1917, Jan. 5, 1995; 60
FR 56917, Nov. 9, 1995; 72 FR 12536, Mar. 15, 2007; 72 FR 46371, Aug.
17, 2007]
Sec. 570.902 Review to determine if CDBG-funded activities are being
carried out in a timely manner.
HUD will review the performance of each entitlement, HUD-
administered small cities, and Insular Areas recipient to determine
whether each recipient is carrying out its CDBG-assisted activities in a
timely manner.
(a) Entitlement recipients and Non-entitlement CDBG grantees in
Hawaii. (1) Before the funding of the next annual grant and absent
contrary evidence satisfactory to HUD, HUD will consider an entitlement
recipient or a non-entitlement CDBG grantee in Hawaii to be failing to
carry out its CDBG activities in a timely manner if:
(i) Sixty days prior to the end of the grantee's current program
year, the amount of entitlement grant funds available to the recipient
under grant agreements but undisbursed by the U.S. Treasury is more than
1.5 times the entitlement grant amount for its current program year; and
(ii) The grantee fails to demonstrate to HUD's satisfaction that the
lack of timeliness has resulted from factors beyond the grantee's
reasonable control.
(2) Notwithstanding that the amount of funds in the line of credit
indicates that the recipient is carrying out its activities in a timely
manner pursuant to paragraph (a)(1) of this section, HUD may determine
that the recipient is not carrying out its activities in a timely manner
if:
(i) The amount of CDBG program income the recipient has on hand 60
days prior to the end of its current program year, together with the
amount of funds in its CDBG line of credit, exceeds 1.5 times the
entitlement grant amount for its current program year; and
(ii) The grantee fails to demonstrate to HUD's satisfaction that the
lack of timeliness has resulted from factors beyond the grantee's
reasonable control.
(3) In determining the appropriate corrective action to take with
respect to a HUD determination that a recipient is not carrying out its
activities in a timely manner pursuant to paragraphs (a)(1) or (a)(2) of
this section, HUD will consider the likelihood that
[[Page 150]]
the recipient will expend a sufficient amount of funds over the next
program year to reduce the amount of unexpended funds to a level that
will fall within the standard described in paragraph (a)(1) of this
section when HUD next measures the grantee's timeliness performance. For
these purposes, HUD will take into account the extent to which funds on
hand have been obligated by the recipient and its subrecipients for
specific activities at the time the finding is made and other relevant
information.
(b) HUD-administered Small Cities program in New York. The
Department will, absent substantial evidence to the contrary, deem a
HUD-administered Small Cities recipient in New York to be carrying out
its CDBG-funded activities in a timely manner if the schedule for
carrying out its activities, as contained in the approved application
(including any subsequent amendment(s)), is being substantially met.
(c) Insular Areas recipients. (1) Before the funding of the next
annual grant and absent contrary evidence satisfactory to HUD, HUD will
consider an Insular Areas recipient to be failing to carry out its CDBG
activities in a timely manner if:
(i) Sixty days prior to the end of the grantee's current program
year, the amount of Insular Area grant funds available to the recipient
under grant agreements but undisbursed by the U.S. Treasury is more than
2.0 times the Insular Area's grant amount for its current program year;
and
(ii) The grantee fails to demonstrate to HUD's satisfaction that the
lack of timeliness has resulted from factors beyond the grantee's
reasonable control.
(2) Notwithstanding that the amount of funds in the line of credit
indicates that the Insular Area recipient is carrying out its activities
in a timely manner pursuant to paragraph (c)(1) of this section, HUD may
determine that the recipient is not carrying out its activities in a
timely manner if:
(i) The amount of CDBG program income the recipient has on hand 60
days prior to the end of its current program year, together with the
amount of funds in its CDBG line of credit, exceeds 2.0 times the
Insular Area's grant amount for its current program year; and
(ii) The grantee fails to demonstrate to HUD's satisfaction that the
lack of timeliness has resulted from factors beyond the grantee's
reasonable control.
(3) In determining the appropriate corrective action to take with
respect to a HUD determination that a recipient is not carrying out its
activities in a timely manner pursuant to paragraphs (c)(1) or (c)(2) of
this section, HUD will consider the likelihood that the recipient will
expend a sufficient amount of funds over the next program year to reduce
the amount of unexpended funds to a level that will fall within the
standards described in paragraphs (c)(1) and (2) of this section when
HUD next measures the grantee's timeliness performance. For these
purposes, HUD will take into account the extent to which funds on hand
have been obligated by the recipient and its sub-recipients for specific
activities at the time the finding is made and other relevant
information.
(4) If a recipient is determined to be untimely pursuant to
paragraphs (c)(1) or (c)(2) of this section in one year, and the
recipient is again determined to be untimely in the following year, HUD
may reduce the recipient's next grant by 100 percent of the amount in
excess of twice the Insular Area's most recent CDBG grant, unless HUD
determines that the untimeliness resulted from factors outside of the
grantee's reasonable control.
(5) The first review under paragraphs (c)(1) and (c)(2) of this
section will take place 60 days prior to the conclusion of the Fiscal
Year 2006 program year.
[53 FR 34466, Sept. 6, 1988, as amended at 60 FR 56917, Nov. 9, 1995; 72
FR 12536, Mar. 15, 2007; 72 FR 46371, Aug. 17, 2007]
Sec. 570.903 Review to determine if the recipient is meeting its
consolidated plan responsibilities.
The consolidated plan, action plan, and amendment submission
requirements referred to in this section are in 24 CFR part 91. For the
purpose of this section, the term consolidated plan includes an
abbreviated consolidated plan that is submitted pursuant to 24 CFR
91.235.
[[Page 151]]
(a) Review timing and purpose. HUD will review the consolidated plan
performance of each entitlement, Insular Areas, and Hawaii HUD-
administered Small Cities grant recipient prior to acceptance of a grant
recipient's annual certification under 24 CFR 91.225(b)(3) to determine
whether the recipient followed its HUD-approved consolidated plan for
the most recently completed program year, and whether activities
assisted with CDBG funds during that period were consistent with that
consolidated plan, except that grantees are not bound by the
consolidated plan with respect to the use or distribution of CDBG funds
to meet non-housing community development needs.
(b) Following a consolidated plan. The recipient will be considered
to be following its consolidated plan if it has taken all of the planned
actions described in its action plan. This includes, but is not limited
to:
(1) Pursuing all resources that the grantee indicated it would
pursue;
(2) Providing certifications of consistency, when requested to do so
by applicants for HUD programs for which the grantee indicated that it
would support application by other entities, in a fair and impartial
manner; and
(3) Not hindering implementation of the consolidated plan by action
or willful inaction.
(c) Disapproval. If HUD determines that a recipient has not met the
criteria outlined in paragraph (b) of this section, HUD will notify the
recipient and provide the recipient up to 45 days to demonstrate to the
satisfaction of the Secretary that it has followed its consolidated
plan. HUD will consider all relevant circumstances and the recipient's
actions and lack of actions affecting the provision of assistance
covered by the consolidated plan within its jurisdiction. Failure to so
demonstrate in a timely manner will be cause for HUD to find that the
recipient has failed to meet its certification. A complete and specific
response by the recipient shall describe:
(1) Any factors beyond the control of the recipient that prevented
it from following its consolidated plan, and any actions the recipient
has taken or plans to take to alleviate such factors; and
(2) Actions taken by the recipient, if any, beyond those described
in the consolidated plan performance report to facilitate following the
consolidated plan, including the effects of such actions.
(d) New York HUD-administered Small Cities. New York HUD-
administered grantees shall follow the provisions of paragraph (b) of
this section for their abbreviated or full consolidated plan to the
extent that the provisions of paragraph (b) of this section are
applicable. If the grantee does not comply with the requirements of
paragraph (b) of this section, and does not provide HUD with an
acceptable explanation, HUD may decide, in accordance with the
requirements of the notice of fund availability, that the grantee does
not meet threshold requirements to apply for a new small cities grant.
[60 FR 56918, Nov. 9, 1995, as amended at 72 FR 12537, Mar. 15, 2007]
Sec. 570.904 Equal opportunity and fair housing review criteria.
(a) General. (1) Where the criteria in this section are met, the
Department will presume that the recipient has carried out its CDBG-
funded program in accordance with civil rights certifications and civil
rights requirements of the Act relating to equal employment opportunity,
equal opportunity in services, benefits and participation, and is
affirmatively furthering fair housing unless:
(i) There is evidence which shows, or from which it is reasonable to
infer, that the recipient, motivated by considerations of race, color,
religion where applicable, sex, national origin, age or handicap, has
treated some persons less favorably than others, or
(ii) There is evidence that a policy, practice, standard or method
of administration, although neutral on its face, operates to deny or
affect adversely in a significantly disparate way the provision of
employment or services, benefits or participation to persons of a
particular race, color, religion where applicable, sex, national origin,
age or handicap, or fair housing to persons of a particular race, color,
religion, sex, or national origin, or
[[Page 152]]
(iii) Where the Secretary required a further assurance pursuant to
Sec. 570.304 in order to accept the recipient's prior civil rights
certification, the recipient has failed to meet any such assurance.
(2) In such instances, or where the review criteria in this section
are not met, the recipient will be afforded an opportunity to present
evidence that it has not failed to carry out the civil rights
certifications and fair housing requirements of the Act. The Secretary's
determination of whether there has been compliance with the applicable
requirements will be made based on a review of the recipient's
performance, evidence submitted by the recipient, and all other
available evidence. The Department may also initiate separate compliance
reviews under title VI of the Civil Rights Act of 1964 or section 109 of
the Act.
(b) Review for equal opportunity. Title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d et seq.), and implementing regulations in 24
CFR part 1, together with section 109 of the Act (see Sec. 570.602),
prohibit discrimination in any program or activity funded in whole or in
part with funds made available under this part.
(1) Review for equal employment opportunity. The Department will
presume that a recipient's hiring and employment practices have been
carried out in compliance with its equal opportunity certifications and
requirements of the Act. This presumption may be rebutted where, based
on the totality of circumstances, there has been a deprivation of
employment, promotion, or training opportunities by a recipient to any
person within the meaning of section 109. The extent to which persons of
a particular race, gender, or ethnic background are represented in the
workforce may in certain circumstances be considered, together with
complaints, performance reviews, and other information.
(2) Review of equal opportunity in services, benefits and
participation. The Department will presume a recipient is carrying out
its programs and activities in accordance with the civil rights
certifications and requirements of the Act. This presumption may be
rebutted where, based on the totality of circumstances, there has been a
deprivation of services, benefits, or participation in any program or
activity funded in whole or in part with block grant funds by a
recipient to any person within the meaning of section 109. The extent to
which persons of a particular race, gender, or ethnic background
participate in a program or activity may in certain circumstances be
considered, together with complaints, performance reviews, and other
information.
(c) Review for fair housing--(1) General. See the requirements in
the Fair Housing Act (42 U.S.C. 3601-20), as well as Sec. 570.601(a).
(2) Affirmatively furthering fair housing. HUD will review a
recipient's performance to determine if it has administered all programs
and activities related to housing and urban development in accordance
with Sec. 570.601(a)(2), which sets forth the grantee's responsibility
to affirmatively further fair housing.
(d) Actions to use minority and women's business firms. The
Department will review a recipient's performance to determine if it has
administered its activities funded with assistance under this part in a
manner to encourage use of minority and women's business enterprises
described in Executive Orders 11625, 12432 and 12138, and 2 CFR 200.321.
In making this review, the Department will determine if the grantee has
taken actions required under 2 CFR 200.321, and will review the
effectiveness of those actions in accomplishing the objectives of 2 CFR
200.321 and the Executive Orders. No recipient is required by this part
to attain or maintain any particular statistical level of participation
in its contracting activities by race, ethnicity, or gender of the
contractor's owners or managers.
[53 FR 34466, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at
54 FR 37411, Sept. 9, 1989; 60 FR 1917, Jan. 5, 1995; 61 FR 11482, Mar.
20, 1996; 80 FR 42368, July 16, 2015; 80 FR 75938, Dec. 7, 2015]
Sec. 570.905 Review of continuing capacity to carry out CDBG funded
activities in a timely manner.
If HUD determines that the recipient has not carried out its CDBG
activities and certifications in accordance with the requirements and
criteria described
[[Page 153]]
in Sec. 570.901 or 570.902, HUD will undertake a further review to
determine whether or not the recipient has the continuing capacity to
carry out its activities in a timely manner. In making the
determination, the Department will consider the nature and extent of the
recipient's performance deficiencies, types of corrective actions the
recipient has undertaken and the success or likely success of such
actions.
Sec. 570.906 Review of urban counties.
In reviewing the performance of an urban county, HUD will hold the
county accountable for the actions or failures to act of any of the
units of general local government participating in the urban county.
Where the Department finds that a participating unit of government has
failed to cooperate with the county to undertake or assist in
undertaking an essential community development or assisted housing
activity and that such failure results, or is likely to result, in a
failure of the urban county to meet any requirement of the program or
other applicable laws, the Department may prohibit the county's use of
funds made available under this part for that unit of government. HUD
will also consider any such failure to cooperate in its review of a
future cooperation agreement between the county and such included unit
of government described at Sec. 570.307(b)(2).
Secs. 570.907-570.909 [Reserved]
Sec. 570.910 Corrective and remedial actions.
(a) General. Consistent with the procedures described in
Sec. 570.900(b), the Secretary may take one or more of the actions
described in paragraph (b) of this section. Such actions shall be
designed to prevent a continuation of the performance deficiency;
mitigate, to the extent possible, the adverse effects or consequences of
the deficiency; and prevent a recurrence of the deficiency.
(b) Actions authorized. The following lists the actions that HUD may
take in response to a deficiency identified during the review of a
recipient's performance:
(1) Issue a letter of warning advising the recipient of the
deficiency and putting the recipient on notice that additional action
will be taken if the deficiency is not corrected or is repeated;
(2) Recommend, or request the recipient to submit, proposals for
corrective actions, including the correction or removal of the causes of
the deficiency, through such actions as:
(i) Preparing and following a schedule of actions for carrying out
the affected CDBG activities, consisting of schedules, timetables and
milestones necessary to implement the affected CDBG activities;
(ii) Establishing and following a management plan which assigns
responsibilities for carrying out the actions identified in paragraph
(b)(2)(i) of this section;
(iii) For entitlement and Insular Areas recipients, canceling or
revising affected activities that are no longer feasible to implement
due to the deficiency and re-programming funds from such affected
activities to other eligible activities (pursuant to the citizen
participation requirements in 24 CFR part 91); or
(iv) Other actions which will serve to prevent a continuation of the
deficiency, mitigate (to the extent possible) the adverse effects or
consequences of the deficiency, and prevent a recurrence of the
deficiency;
(3) Advise the recipient that a certification will no longer be
acceptable and that additional assurances will be required;
(4) Advise the recipient to suspend disbursement of funds for the
deficient activity;
(5) Advise the recipient to reimburse its program account or letter
of credit in any amounts improperly expended and reprogram the use of
the funds in accordance with applicable requirements;
(6) Change the method of payment to the recipient from a letter of
credit basis to a reimbursement basis;
(7) In the case of claims payable to HUD or the U.S. Treasury,
institute collection procedures pursuant to subpart B of 24 CFR part 17;
and
(8) In the case of an entitlement or Insular Areas recipient,
condition the use of funds from a succeeding fiscal year's allocation
upon appropriate corrective action by the recipient. The
[[Page 154]]
failure of the recipient to undertake the actions specified in the
condition may result in a reduction, pursuant to Sec. 570.911, of the
entitlement or Insular Areas recipient's annual grant by up to the
amount conditionally granted.
[53 FR 34466, Sept. 6, 1988, as amended at 60 FR 1917, Jan. 5, 1995; 72
FR 12537, Mar. 15, 2007]
Sec. 570.911 Reduction, withdrawal, or adjustment of a grant or other
appropriate action.
(a) Opportunity for an informal consultation. Prior to a reduction,
withdrawal, or adjustment of a grant or other appropriate action, taken
pursuant to paragraph (b), (c), or (d) of this section, the recipient
shall be notified of such proposed action and given an opportunity
within a prescribed time period for an informal consultation.
(b) Entitlement grants, Non-entitlement CDBG grants in Hawaii, and
Insular Areas grants. Consistent with the procedures described in
Sec. 570.900(b), the Secretary may make a reduction in the entitlement,
non-entitlement CDBG grants in Hawaii, or Insular Areas grant amount
either for the succeeding program year or, if the grant had been
conditioned, up to the amount that had been conditioned. The amount of
the reduction shall be based on the severity of the deficiency and may
be for the entire grant amount.
(c) HUD-administered small cities grants. Consistent with the
procedures described in Sec. 570.900(b), the Secretary may adjust,
reduce or withdraw the grant or take other actions as appropriate,
except that funds already expended on eligible approved activities shall
not be recaptured or deducted from future grants.
(d) Urban Development Action Grants. Consistent with the procedures
described in Sec. 570.900(b), the Secretary may adjust, reduce or
withdraw the grant or take other actions as appropriate, except that
funds already expended on eligible approved activities shall not be
recaptured or deducted from future grants made to the recipient.
[61 FR 11481, Mar. 20, 1996, as amended at 72 FR 12537, Mar. 15, 2007;
72 FR 46371, Aug. 17, 2007]
Sec. 570.912 Nondiscrimination compliance.
(a) Whenever the Secretary determines that a unit of general local
government which is a recipient of assistance under this part has failed
to comply with Sec. 570.602, the Secretary shall notify the governor of
such State or chief executive officer of such unit of general local
government of the noncompliance and shall request the governor or the
chief executive officer to secure compliance. If within a reasonable
period of time, not to exceed sixty days, the governor or chief
executive officer fails or refuses to secure compliance, the Secretary
is authorized to:
(1) Refer the matter to the Attorney General with a recommendation
that an appropriate civil action be instituted;
(2) Exercise the powers and functions provided by title VI of the
Civil Rights Act of 1964 (42 U.S.C. 2000d);
(3) Exercise the powers and functions provided for in Sec. 570.913;
or
(4) Take such other action as may be provided by law.
(b) When a matter is referred to the Attorney General pursuant to
paragraph (a)(1) of this section, or whenever the Secretary has reason
to believe that a State or a unit of general local government is engaged
in a pattern or practice in violation of the provisions of Sec. 570.602,
the Attorney General may bring a civil action in any appropriate United
States district court for such relief as may be appropriate, including
injunctive relief.
Sec. 570.913 Other remedies for noncompliance.
(a) Action to enforce compliance. When the Secretary acts to enforce
the civil rights provisions of Section 109, as described in Sec. 570.602
and 24 CFR part 6, the procedures described in 24 CFR parts 6 and 180
apply. If the Secretary finds, after reasonable notice and opportunity
for hearing, that a recipient has failed to comply substantially with
any other provisions of this part, the provisions of this section apply.
The Secretary, until he/she is satisfied that there is no longer any
such failure to comply, shall:
(1) Terminate payments to the recipient;
[[Page 155]]
(2) Reduce payments to the recipient by an amount equal to the
amount of such payments which were not expended in accordance with this
part; or
(3) Limit the availability of payments to programs or activities not
affected by such failure to comply.
Provided, however, that the Secretary may on due notice suspend
payments at any time after the issuance of a notice of opportunity for
hearing pursuant to paragraph (c)(1) of this section, pending such
hearing and a final decision, to the extent the Secretary determines
such action necessary to preclude the further expenditure of funds for
activities affected by such failure to comply.
(b) In lieu of, or in addition to, any action authorized by
paragraph (a) of this section, the Secretary may, if he/she has reason
to believe that a recipient has failed to comply substantially with any
provision of this part;
(1) Refer the matter to the Attorney General of the United States
with a recommendation that an appropriate civil action be instituted;
and
(2) Upon such a referral, the Attorney General may bring a civil
action in any United States district court having venue thereof for such
relief as may be appropriate, including an action to recover the amount
of the assistance furnished under this part which was not expended in
accordance with it, or for mandatory or injunctive relief;
(c) Proceedings. When the Secretary proposes to take action pursuant
to this section, the respondent is the unit of general local government
or State receiving assistance under this part. These procedures are to
be followed prior to imposition of a sanction described in paragraph (a)
of this section:
(1) Notice of opportunity for hearing: The Secretary shall notify
the respondent in writing of the proposed action and of the opportunity
for a hearing. The notice shall:
(i) Specify, in a manner which is adequate to allow the respondent
to prepare its response, allegations with respect to a failure to comply
substantially with a provision of this part;
(ii) State that the hearing procedures are governed by these rules;
(iii) State that a hearing may be requested within 10 days from
receipt of the notice and the name, address and telephone number of the
person to whom any request for hearing is to be addressed:
(iv) Specify the action which the Secretary proposes to take and
that the authority for this action is section 111(a) of the Act;
(v) State that if the respondent fails to request a hearing within
the time specified a decision by default will be rendered against the
respondent; and
(vi) Be sent to the respondent by certified mail, return receipt
requested.
(2) Initiation of hearing. The respondent shall be allowed at least
10 days from receipt of the notice within which to notify HUD of its
request for a hearing. If no request is received within the time
specified, the Secretary may proceed to make a finding on the issue of
compliance with this part and to take the proposed action.
(3) Administrative Law Judge. Proceedings conducted under these
rules shall be presided over by an Administrative Law Judge (ALJ),
appointed as provided by section 11 of the Administrative Procedures Act
(5 U.S.C. 3105). The case shall be referred to the ALJ by the Secretary
at the time a hearing is requested. The ALJ shall promptly notify the
parties of the time and place at which the hearing will be held. The ALJ
shall conduct a fair and impartial hearing and take all action necessary
to avoid delay in the disposition of proceedings and to maintain order.
The ALJ shall have all powers necessary to those ends, including but not
limited to the power to:
(i) Administer oaths and affirmations;
(ii) Issue subpoenas as authorized by law;
(iii) Rule upon offers of proof and receive relevant evidence;
(iv) Order or limit discovery prior to the hearing as the interests
of justice may require;
(v) Regulate the course of the hearing and the conduct of the
parties and their counsel;
(vi) Hold conferences for the settlement or simplification of the
issues by consent of the parties;
(vii) Consider and rule upon all procedural and other motions
appropriate in adjudicative proceedings; and
[[Page 156]]
(viii) Make and file initial determinations.
(4) Ex parte communications. An ex parte communication is any
communication with an ALJ, direct or indirect, oral or written,
concerning the merits or procedures of any pending proceeding which is
made by a party in the absence of any other party. Ex parte
communications are prohibited except where the purpose and content of
the communication have been disclosed in advance or simultaneously to
all parties, or the communication is a request for information
concerning the status of the case. Any ALJ who receives an ex parte
communication which the ALJ knows or has reason to believe is
unauthorized shall promptly place the communication, or its substance,
in all files and shall furnish copies to all parties. Unauthorized ex
parte communications shall not be taken into consideration in deciding
any matter in issue.
(5) The hearing. All parties shall have the right to be represented
at the hearing by counsel. The ALJ shall conduct the proceedings in an
expeditious manner while allowing the parties to present all oral and
written evidence which tends to support their respective positions, but
the ALJ shall exclude irrelevant, immaterial or unduly repetitious
evidence. The Department has the burden of proof in showing by a
preponderance of the evidence that the respondent failed to comply
substantially with a provision of this part. Each party shall be allowed
to cross-examine adverse witnesses and to rebut and comment upon
evidence presented by the other party. Hearings shall be open to the
public. So far as the orderly conduct of the hearing permits, interested
persons other than the parties may appear and participate in the
hearing.
(6) Transcripts. Hearing shall be recorded and transcribed only by a
reporter under the supervision of the ALJ. The orginal transcript shall
be a part of the record and shall constitute the sole official
transcript. Respondents and the public, at their own expense, may obtain
copies of the transcript.
(7) The ALJ's decision. At the conclusion of the hearing, the ALJ
shall give the parties a reasonable opportunity to submit proposed
findings and conclusions and supporting reasons therefor. Within 25 days
after the conclusion of the hearing, the ALJ shall prepare a written
decision which includes a statement of findings and conclusions, and the
reasons or basis therefor, on all the material issues of fact, law or
discretion presented on the record and the appropriate sanction or
denial thereof. The decision shall be based on consideration of the
whole record or those parts thereof cited by a party and supported by
and in accordance with the reliable, probative, and substantial
evidence. A copy of the decision shall be furnished to the parties
immediately by certified mail, return receipt requested, and shall
include a notice that any requests for review by the Secretary must be
made in writing to the Secretary within 30 days of the receipt of the
decision.
(8) The record. The transcript of testimony and exhibits, together
with the decision of the ALJ and all papers and requests filed in the
proceeding, constitutes the exclusive record for decision and, on
payment of its reasonable cost, shall be made available to the parties.
After reaching his/her initial decision, the ALJ shall certify to the
complete record and forward the record to the Secretary.
(9) Review by the Secretary. The decision by the ALJ shall
constitute the final decision of the Secretary unless, within 30 days
after the receipt of the decision, either the respondent or the
Assistant Secretary for Community Planning and Development files an
exception and request for review by the Secretary. The excepting party
must transmit simultaneously to the Secretary and the other party the
request for review and the basis of the party's exceptions to the
findings of the ALJ. The other party shall be allowed 30 days from
receipt of the exception to provide the Secretary and the excepting
party with a written reply. The Secretary shall then review the record
of the case, including the exceptions and the reply. On the basis of
such review, the Secretary shall issue a written determination,
including a statement of the reasons or basis therefor, affirming,
modifying or revoking the
[[Page 157]]
decision of the ALJ. The Secretary's decision shall be made and
transmitted to the parties within 80 days after the decision of the ALJ
was furnished to the parties.
(10) Judicial review. The respondent may seek judicial review of the
Secretary's decision pursuant to section 111(c) of the Act.
[53 FR 34466, Sept. 6, 1988, as amended at 64 FR 3802, Jan. 25, 1999]
Sec. Appendix A to Part 570--Guidelines and Objectives for Evaluating
Project Costs and Financial Requirements
I. Guidelines and Objectives for Evaluating Project Costs and
Financial Requirements. HUD has developed the following guidelines that
are designed to provide the recipient with a framework for financially
underwriting and selecting CDBG-assisted economic development projects
which are financially viable and will make the most effective use of the
CDBG funds. The use of these underwriting guidelines as published by HUD
is not mandatory. However, grantees electing not to use these
underwriting guidelines would be expected to conduct basic financial
underwriting prior to the provision of CDBG financial assistance to a
for-profit business. States electing not to use these underwriting
guidelines would be expected to ensure that the state or units of
general local government conduct basic financial underwriting prior to
the provision of CDBG financial assistance to a for-profit business.
II. Where appropriate, HUD's underwriting guidelines recognize that
different levels of review are appropriate to take into account
differences in the size and scope of a proposed project, and in the case
of a microenterprise or other small business to take into account the
differences in the capacity and level of sophistication among businesses
of differing sizes.
III. Recipients are encouraged, when they develop their own programs
and underwriting criteria, to also take these factors into account. For
example, a recipient administering a program providing only technical
assistance to small businesses might choose to apply underwriting
guidelines to the technical assistance program as a whole, rather than
to each instance of assistance to a business. Given the nature and
dollar value of such a program, a recipient might choose to limit its
evaluation to factors such as the extent of need for this type of
assistance by the target group of businesses and the extent to which
this type of assistance is already available.
IV. The objectives of the underwriting guidelines are to ensure:
(1) that project costs are reasonable;
(2) that all sources of project financing are committed;
(3) that to the extent practicable, CDBG funds are not substituted
for non-Federal financial support;
(4) that the project is financially feasible;
(5) that to the extent practicable, the return on the owner's equity
investment will not be unreasonably high; and
(6) that to the extent practicable, CDBG funds are disbursed on a
pro rata basis with other finances provided to the project.
i. Project costs are reasonable. i. Reviewing costs for
reasonableness is important. It will help the recipient avoid providing
either too much or too little CDBG assistance for the proposed project.
Therefore, it is suggested that the grantee obtain a breakdown of all
project costs and that each cost element making up the project be
reviewed for reasonableness. The amount of time and resources the
recipient expends evaluating the reasonableness of a cost element should
be commensurate with its cost. For example, it would be appropriate for
an experienced reviewer looking at a cost element of less than $10,000
to judge the reasonableness of that cost based upon his or her knowledge
and common sense. For a cost element in excess of $10,000, it would be
more appropriate for the reviewer to compare the cost element with a
third-party, fair-market price quotation for that cost element. Third-
party price quotations may also be used by a reviewer to help determine
the reasonableness of cost elements below $10,000 when the reviewer
evaluates projects infrequently or if the reviewer is less experienced
in cost estimations. If a recipient does not use third-party price
quotations to verify cost elements, then the recipient would need to
conduct its own cost analysis using appropriate cost estimating manuals
or services.
ii. The recipient should pay particular attention to any cost
element of the project that will be carried out through a non-arms-
length transaction. A non-arms-length transaction occurs when the entity
implementing the CDBG assisted activity procures goods or services from
itself or from another party with whom there is a financial interest or
family relationship. If abused, non-arms-length transactions
misrepresent the true cost of the project.
2. Commitment of all project sources of financing. The recipient
should review all projected sources of financing necessary to carry out
the economic development project. This is to ensure that time and effort
is not wasted on assessing a proposal that is not able to proceed. To
the extent practicable, prior to the commitment of CDBG funds to the
project, the recipient should verify that: sufficient sources of funds
have been identified to finance the project; all participating parties
[[Page 158]]
providing those funds have affirmed their intention to make the funds
available; and the participating parties have the financial capacity to
provide the funds.
3. Avoid substitution of CDBG funds for non-Federal financial
support. i. The recipient should review the economic development project
to ensure that, to the extent practicable, CDBG funds will not be used
to substantially reduce the amount of non-Federal financial support for
the activity. This will help the recipient to make the most efficient
use of its CDBG funds for economic development. To reach this
determination, the recipient's reviewer would conduct a financial
underwriting analysis of the project, including reviews of appropriate
projections of revenues, expenses, debt service and returns on equity
investments in the project. The extent of this review should be
appropriate for the size and complexity of the project and should use
industry standards for similar projects, taking into account the unique
factors of the project such as risk and location.
ii. Because of the high cost of underwriting and processing loans,
many private financial lenders do not finance commercial projects that
are less than $100,000. A recipient should familiarize itself with the
lending practices of the financial institutions in its community. If the
project's total cost is one that would normally fall within the range
that financial institutions participate, then the recipient should
normally determine the following:
A. Private debt financing--whether or not the participating private,
for-profit business (or other entity having an equity interest) has
applied for private debt financing from a commercial lending institution
and whether that institution has completed all of its financial
underwriting and loan approval actions resulting in either a firm
commitment of its funds or a decision not to participate in the project;
and
B. Equity participation--whether or not the degree of equity
participation is reasonable given general industry standards for rates
of return on equity for similar projects with similar risks and given
the financial capacity of the entrepreneur(s) to make additional
financial investments.
iii. If the recipient is assisting a microenterprise owned by a low-
or moderate-income person(s), in conducting its review under this
paragraph, the recipient might only need to determine that non-Federal
sources of financing are not available (at terms appropriate for such
financing) in the community to serve the low- or moderate-income
entrepreneur.
4. Financial feasibility of the project. i. The public benefit a
grantee expects to derive from the CDBG assisted project (the subject of
separate regulatory standards) will not materialize if the project is
not financially feasible. To determine if there is a reasonable chance
for the project's success, the recipient should evaluate the financial
viability of the project. A project would be considered financially
viable if all of the assumptions about the project's market share, sales
levels, growth potential, projections of revenue, project expenses and
debt service (including repayment of the CDBG assistance if appropriate)
were determined to be realistic and met the project's break-even point
(which is generally the point at which all revenues are equal to all
expenses). Generally speaking, an economic development project that does
not reach this break-even point over time is not financially feasible.
The following should be noted in this regard:
A. some projects make provisions for a negative cash flow in the
early years of the project while space is being leased up or sales
volume built up, but the project's projections should take these factors
into account and provide sources of financing for such negative cash
flow; and
B. it is expected that a financially viable project will also
project sufficient revenues to provide a reasonable return on equity
investment. The recipient should carefully examine any project that is
not economically able to provide a reasonable return on equity
investment. Under such circumstances, a business may be overstating its
real equity investment (actual costs of the project may be overstated as
well), or it may be overstating some of the project's operating expenses
in the expectation that the difference will be taken out as profits, or
the business may be overly pessimistic in its market share and revenue
projections and has downplayed its profits.
ii. In addition to the financial underwriting reviews carried out
earlier, the recipient should evaluate the experience and capacity of
the assisted business owners to manage an assisted business to achieve
the projections. Based upon its 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.
[[Page 159]]
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 is not able to 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.
[60 FR 1953, Jan. 5, 1995]
PART 573_LOAN GUARANTEE RECOVERY FUND--Table of Contents
Sec.
573.1 Authority and purpose.
573.2 Definitions.
573.3 Eligible activities.
573.4 Loan term.
573.5 Underwriting standards and availability of loan guarantee
assistance.
573.6 Submission requirements.
573.7 Loan guarantee agreement.
573.8 Environmental procedures and standards.
573.9 Other requirements.
573.10 Fees for guaranteed loans.
573.11 Record access and recordkeeping.
Authority: Pub. L. 104-155, 110 Stat. 1392, 18 U.S.C. 241 note; 42
U.S.C. 3535(d).
Source: 61 FR 47405, Sept. 6, 1996, unless otherwise noted.
Sec. 573.1 Authority and purpose.
Section 4 of the Church Arson Prevention Act of 1996 (Pub. L. 104-
155, approved July 3, 1996) authorizes HUD to guarantee loans made by
financial institutions to certain nonprofit organizations to finance
activities designed to remedy the damage and destruction to real and
personal property caused by acts of arson or terrorism. This part
establishes the general procedures and requirements that apply to HUD's
guarantee of these loans.
Sec. 573.2 Definitions.
The following definitions are only applicable to loan guarantees
under this part, and are not criminal definitions.
Act means ``The Church Arson Prevention Act of 1996'' (Pub. L. 104-
155, approved July 3, 1996).
Arson means a fire or explosion causing damage to (or destruction
of) real or personal property that a Qualified Certification Official
determines, or reasonably believes, to be deliberately set.
Borrower means an organization described in section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, whose property has been
damaged or destroyed as a result of an act of arson or terrorism and
that incurs a debt obligation to a financial institution for the purpose
of carrying out activities eligible under his part.
Financial Institution means a lender which may be a bank, trust
company, savings and loan association, credit union, mortgage company,
or other issuer regulated by the Federal Deposit Insurance Corporation,
the Office of Thrift Supervision, the Credit Union Administration, or
the U.S. Comptroller of the Currency. A Financial Institution may also
be a Pension Fund.
Guarantee means an obligation of the United States Government
guaranteeing payment of the outstanding principal loan amount, in whole
or in part, plus interest thereon, on a debt obligation of the Borrower
to a Financial Institution upon failure of the Borrower to repay the
debt.
Guaranteed Loan Funds means funds received by the borrower from the
Financial Institution to finance eligible activities under this part,
the repayment of which is guaranteed by HUD.
Loan Guarantee Agreement means an agreement between a Financial
Institution and the Secretary detailing the rights, responsibilities,
procedures, terms, and conditions under which a loan provided by a
Financial Institution to a Borrower may be guaranteed under section 4 of
the Act.
Qualified Certification Official (QCO)--(1) For the purpose of
certifying an act of arson. A State or local official authorized to
investigate possible acts of arson. For the purposes of this definition,
such an official is authorized to
[[Page 160]]
execute an Official Incident Report or its equivalent and may be an
official or employee of such agencies as the local fire department, the
local police department, or the State Fire Marshall Office or its
equivalent. The term ``Qualified Certification Official'' also includes
HUD, which will consult with the Bureau of Alcohol, Tobacco, and
Firearms of the Department of the Treasury in making its determinations.
(2) For the purpose of certifying an act of terrorism. The Secretary
or his designee, in consultation with the Federal Bureau of
Investigation, shall determine whether an act of violence is a terrorist
act or is reasonably believed to be a terrorist act.
Section 4 Guaranteed Loan means a HUD guaranteed loan made by a
Financial Institution to a Borrower for the purpose of carrying out
eligible activities to address damage or destruction caused by acts of
arson or terrorism.
Terrorism means an act of violence causing damage to (or destruction
of) real or personal property that the Secretary or his designee, in
consultation with the Federal Bureau of Investigation, determines to be,
or reasonably believes to be, a terrorist act, as defined by applicable
Federal law or guidelines.
Sec. 573.3 Eligible activities.
Guaranteed Loan Funds may be used by a Borrower for the following
activities when it is certified in accordance with Sec. 573.6(e) that
the activity is necessary to address damage caused by an act or acts of
arson or terrorism as certified in accordance with Sec. 573.6(f):
(a) Acquisition of improved or unimproved real property in fee or
under long term lease.
(b) Acquisition and installation of personal property.
(c) Rehabilitation of real property owner, acquired, or leased by
the Borrower.
(d) Construction, reconstruction, or replacement of real property
improvement.
(e) Clearance, demolition, and removal, including movement of
structures to other sites, of buildings, fixtures and improvements on
real property.
(f) Site preparation, including construction, reconstruction, or
installation of site improvements, utilities, or facilities, which is
related to the activities described in paragraph (a), (c), or (d) of
this section.
(g) Architectural, engineering, and similar services necessary to
develop plans in connection with activities financed under paragraph
(a), (b), (c), or (d) of this section.
(h) Acquisition, installation and restoration of security systems.
(i) Loans for refinancing existing indebtedness secured by a
property which has been or will be acquired, constructed, rehabilitated
or reconstructed, if such financing is determined to be appropriate to
achieve the objectives of the Act and this part.
(j) Other necessary project costs such as insurance, bonding, legal
fees, appraisals, surveys, relocation, closing costs, etc., paid or
incurred by the Borrower in connection with the completion of the above
activities.
[61 FR 47405, Sept. 6, 1996, as amended at 62 FR 24574, May 6, 1997]
Sec. 573.4 Loan term.
The term of the loan to be guaranteed by HUD under this part may not
exceed 20 years.
Sec. 573.5 Underwriting standards and availability of loan guarantee
assistance.
(a) HUD may, in its discretion, accept the underwriting standards of
the Financial Institution making a loan to a Borrower.
(b) HUD will not make the loan guarantee unless it determines that
the guaranteed loan is an acceptable financial risk under HUD's
generally applicable loan underwriting standards based on the following:
(1) The Borrower's ability to pay debt service; and
(2) The value of the collateral assigned or pledged as security for
the repayment of the loan.
(c) The provision of a loan guarantee to a Financial Institution and
the amount of the guarantee do not depend in any way on the purpose,
function, or identity of the organization to which the Financial
Institution has made, or
[[Page 161]]
intends to make, a Section 4 Guaranteed Loan.
(d) HUD may disapprove a request for loan guarantee assistance based
on the availability of funding.
(e) HUD may decline any Financial Institution's participation if its
underwriting criteria are insufficient to make the guarantee an
acceptable financial risk, or if the proposed interest rates or fees are
unacceptable. HUD expects the proposed interest rates to take into
account the value of the Federal guarantee.
(f) HUD may limit the availability of Guaranteed Loan Funds to
geographic areas having the greatest need, as determined by a needs
analysis of the most current available date conducted by HUD.
(g) Other requirements associated with the underwriting standards
and guidelines shall be contained in the Loan Guarantee Agreement.
Sec. 573.6 Submission requirements.
A Financial Institution seeking a Section 4 Guaranteed Loan must
submit to HUD the following documentation:
(a) A statement that the institution is a Financial Institution as
defined at Sec. 573.2.
(b) A statement that the Borrower is eligible as defined at
Sec. 573.2.
(c) A description of each eligible activity for which the loan is
requested.
(d) A statement of other available funds to be used to finance the
eligible activities (e.g., insurance proceeds).
(e) A certification by the Borrower that the activities to be
assisted resulted from an act of arson or terrorism which is the subject
of the certification described in paragraph (f) of this section.
(f) A certification by a QCO that the damage or destruction to be
remedied by the use of the Guaranteed Loan Funds resulted from an act of
arson or terrorism.
(g) The environmental documentation required by Sec. 573.8.
(h) A narrative of the institution's underwriting standards used in
reviewing the Borrower's loan request.
(i) The interest rate on the loan and fees the lender intends to use
in connection with the loan; and
(j) The percentage of the loan for which a guarantee is requested.
Sec. 573.7 Loan guarantee agreement.
(a) The rights and responsibilities with respect to the guaranteed
loan shall be substantially described in an agreement entered into
between the Financial Institution, as the lender, and the Secretary, as
the guarantor, which agreement shall provide that:
(1) The lender has submitted or will submit a request for loan
guarantee assistance that is accompanied by the Borrower's request for a
loan to carry out eligible activities described in Sec. 573.3;
(2) The lender will require the Borrower to execute a promissory
note promising to repay the guaranteed loan in accordance with the terms
thereof;
(3) The lender will require the Borrower to provide collateral
security, to an extent and in a form, acceptable to HUD;
(4) HUD reserves the right to limit loan guarantees to loans
financing the replacement of damaged property with comparable new
property;
(5) The lender will follow certain claim procedures to be specified
by HUD in connection with any defaults, including appropriate
notification of default as required by HUD;
(6) The lender will follow procedures for payment under the
guarantee whereby the lender will be paid (up to the amount of
guarantee) the amount owed to the lender less any amount recovered from
the underlying collateral security for the loan; and
(7) The lender will act as the fiscal agent for the loan, servicing
the guaranteed loan, maintaining loan documents, and receiving the
Borrower's payments of principal and interest. The Borrower and the
lender may be required to execute a fiscal agency agreement.
(b) In addition, the agreement shall contain other requirements,
terms, and conditions required or approved by HUD.
Sec. 573.8 Environmental procedures and standards.
The environmental review requirements at 24 CFR part 50 are
applicable to this part.
[[Page 162]]
(a) Environmental procedures. Before any lender's submission
requesting a loan guarantee for the acquisition, rehabilitation, or
construction of real property can be selected for a loan guarantee, HUD
shall determine whether any environmental thresholds are exceeded in
accordance with 24 CFR part 50, which implements the National
Environmental Policy Act (NEPA) and the related Federal environmental
laws and authorities listed under 24 CFR 50.4. To assist in complying
with environmental requirements, Borrowers are encouraged to select
sites that are free of environmental hazards and are to provide HUD with
environmental data needed to make a determination of compliance. For
successful Borrowers, the costs for preparing the environmental data are
eligible as project costs.
(1) If HUD determines that one or more of the thresholds are
exceeded, HUD shall conduct a compliance review of the issue and, if
appropriate, establish mitigating measures that the applicant shall
carry out for the property.
(2) The lender's submissions under Sec. 573.6 shall provide HUD
with:
(i) Documentation for environmental threshold review; and
(ii) Any previously issued environmental reviews prepared by local,
State, or other Federal agencies for the proposed property.
(3) In providing the above information, the Borrower is encouraged
to contact the local community development agency to obtain any
previously issued environmental reviews for the proposed property as
well as for other relevant information that can be used in the applicant
documentation for the environmental threshold review.
(4) HUD reserves the right to disqualify any request where one or
more environmental thresholds are exceeded if HUD determines that the
compliance review cannot be satisfactorily completed.
(5) If Guaranteed Loan Funds are requested for acquisition,
rehabilitation, or construction, Borrowers and Financial Institutions
are prohibited from committing or expending State, local, or other funds
to undertake property acquisition, rehabilitation or construction under
this part until HUD issues a letter of commitment notifying the lender
of HUD approval of the loan guarantee.
(b) Environmental thresholds. HUD shall determine whether a NEPA
environmental assessment is required. Also, HUD shall determine whether
the proposed property triggers thresholds for the applicable Federal
environmental laws and authorities listed under 24 CFR 50.4 as follows:
(1) For minor rehabilitation of a building and acquisition of any
property, Federal environmental laws and authorities may apply when the
property is:
(i) Located within designated coastal barrier resources;
(ii) Contaminated by toxic chemicals or radioactive materials;
(iii) Located within a floodplain;
(iv) A building for which flood insurance protection is required;
(v) Located within a runway clear zone at a civil airport or within
a clear zone or accident potential zone at a military airfield; or
(vi) Listed on, or eligible for listing on, the National Register of
Historic Places; located within, or adjacent to, an historic district,
or is a property whose area of potential effects includes a historic
district or property.
(2) For major rehabilitation of a building or for new construction
or rebuilding, and environmental assessment under NEPA is required and,
in addition to paragraph (b)(1)(i) through (vi) of this section, other
Federal environmental laws and authorities may apply when the property:
(i) Affects coastal zone management;
(ii) Is located near hazardous industrial operations handling fuels
or chemicals of an explosive or flammable nature;
(iii) Affects a sole source aquifer;
(iv) Affects endangered species;
(v) Is located within a designated wetland; or
(vi) Is located in a high noise area.
(c) Qualified data sources. The environmental threshold information
provided by applicants mut be from qualified data sources. A qualified
data source means any Federal, State, or local agency with expertise or
experience in environmental protection (e.g.,
[[Page 163]]
the local community development agency; the local planning agency; the
State environmental protection agency; or the State Historic
Preservation Officer) or any other source qualified to provide reliable
information on the particular property.
(d) Definition. Minor rehabilitation means proposed fixing and
repairs:
(1) Whose estimated cost is less than 75 percent of the estimated
cost of replacement after completion;
(2) That does not involve changes in land use from residential to
nonresidential, or from nonresidential to residential; and
(3) In the case of residential properties, that does not increase
density more than 20 percent.
(e) Project consultants. In achieving compliance with these
procedures, Borrower's architectural and engineering consultants shall
consider these environmental factors and provide information in their
plan narratives as to how their construction plans conform with the
above environmental factors. To facilitate HUD's compliance with part
50, the Borrower is required to submit the consultant's information and
plan narrative discussing the pertinent environmental factors under this
section.
Sec. 573.9 Other requirements.
(a) Nondiscrimination and equal opportunity. The nondiscrimination
and equal opportunity requirements described in 24 CFR part 5, subpart A
apply to this part.
(b) 2 CFR part 200. The provisions of 2 CFR part 200 apply to
guaranteed loans under this part.
(c) Lead-based paint. Housing assisted under this part is subject to
the lead-based paint requirements described in part 35, subparts A, B,
E, G, and R of this title.
(d) Labor standards--(1) Davis-Bacon. All laborers and mechanics
employed by contractors or subcontractors in the performance of
construction work financed in whole or in part with Guaranteed Loan
Funds under this part shall be paid wages at rates not less than those
prevailing on similar construction in the locality as determined by the
Secretary of Labor in accordance with the Davis-Bacon Act, as amended
(40 U.S.C. 276a-276a-5). This paragraph shall apply to the
rehabilitation of residential property only if such property contains
not less than 8 units.
(2) Volunteers. The provisions of paragraph (d)(1) of this section
shall not apply to volunteers under the conditions set forth in 24 CFR
part 70. In applying part 70, loan guarantees under this part shall be
treated as a program for which there is a statutory exemption for
volunteers.
(3) Labor standards. Any contract, subcontract, or building loan
agreement executed for a project subject to Davis-Bacon wage rates under
paragraph (d)(1) of this section shall comply with all labor standards
and provisions of 29 CFR parts 1, 3 and 5 that would be applicable to a
loan guarantee program to which Davis-Bacon wage rates are made
applicable by statute.
[61 FR 47405, Sept. 6, 1996, as amended at 64 FR 50226, Sept. 15, 1999;
80 FR 75938, Dec. 7, 2015]
Sec. 573.10 Fees for guaranteed loans.
(a) No fees will be assessed by HUD for its guaranty of a loan under
this part.
(b) The lender may assess the Borrower loan origination fees or
other charges provided that such fees and charges are those charged by
the lender to its other customers for similar transactions, and are no
higher than those charged by the lender for similar transactions.
Sec. 573.11 Record access and recordkeeping.
Records pertaining to the loans made by the Financial Institution
shall be held for the life of the loan. A lender with a Section 4
Guaranteed Loan shall allow HUD, the Comptroller General of the United
States, and their authorized representatives access from time to time to
any documents, papers or files which are pertinent to the guaranteed
loan, and to inspect and make copies of such records which relate to any
Section 4 Loan. Any inspection will be made during the lender's regular
business hours or any other mutually convenient time.
[[Page 164]]
PART 574_HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS--Table of Contents
Subpart A_General
Sec.
574.3 Definitions.
Subpart B_Formula Entitlements
574.100 Eligible applicants.
574.110 Overview of formula allocations.
574.120 Responsibility of applicant to serve EMSA.
574.130 Formula allocations.
574.190 Reallocation of grant amounts.
Subpart C_Competitive Grants
574.200 Amounts available for competitive grants.
574.210 Eligible applicants.
574.240 Application requirements.
574.260 Amendments.
Subpart D_Uses of Grant Funds
574.300 Eligible activities.
574.310 General standards for eligible housing activities.
574.320 Additional standards for rental assistance.
574.330 Additional standards for short-term supported housing.
574.340 Additional standards for community residences.
574.350 Additional standards for broadband infrastructure.
Subpart E_Special Responsibilities of Grantees and Project Sponsors
574.400 Prohibition of substitution of funds.
574.410 Capacity.
574.420 Cooperation.
574.430 Fee prohibitions.
574.440 Confidentiality.
574.450 Financial records.
574.460 Remaining participants following bifurcation of a lease or
eviction as a result of domestic violence, dating violence,
sexual assault, or stalking.
Subpart F_Grant Administration
574.500 Responsibility for grant administration.
574.510 Environmental procedures and standards.
574.520 Performance reports.
574.530 Recordkeeping.
574.540 Deobligation of funds.
Subpart G_Other Federal Requirements
574.600 Cross-reference.
574.603 Nondiscrimination and equal opportunity.
574.604 Protections for victims of domestic violence, dating violence,
sexual assault, and stalking.
574.605 Applicability of uniform administrative requirements, cost
principles, and audit requirements for Federal awards.
574.625 Conflict of interest.
574.630 Displacement, relocation and real property acquisition.
574.635 Lead-based paint.
574.640 Flood insurance protection.
574.645 Coastal barriers.
574.650 Audit.
574.655 Wage rates.
574.660 Housing counseling.
Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and 5301-
5320.
Source: 57 FR 61740, Dec. 28, 1992, unless otherwise noted.
Subpart A_General
Sec. 574.3 Definitions.
The terms Grantee and Secretary are defined in 24 CFR part 5.
Acquired immunodeficiency syndrome (AIDS) or related diseases means
the disease of acquired immunodeficiency syndrome or any conditions
arising from the etiologic agent for acquired immunodeficiency syndrome,
including infection with the human immunodeficiency virus (HIV).
Administrative costs mean costs for general management, oversight,
coordination, evaluation, and reporting on eligible activities. Such
costs do not include costs directly related to carrying out eligible
activities, since those costs are eligible as part of the activity
delivery costs of such activities.
Applicant means a State or city applying for a formula allocation as
described under Sec. 574.100 or a State, unit of general local
government, or a nonprofit organization applying for a competitive grant
as described under Sec. 574.210.
City has the meaning given it in section 102(a) of the Housing and
Community Development Act of 1974 (42 U.S.C. 5302).
Eligible Metropolitan Statistical Area (EMSA) means a metropolitan
statistical area that has a population of more than 500,000 and has more
than 1,500 cumulative cases of AIDS.
Eligible person means a person with acquired immunodeficiency
syndrome
[[Page 165]]
or related diseases who is a low-income individual, as defined in this
section, and the person's family. A person with AIDS or related diseases
or a family member regardless of income is eligible to receive housing
information services, as described in Sec. 574.300(b)(1). Any person
living in proximity to a community residence is eligible to participate
in that residence's community outreach and educational activities
regarding AIDS or related diseases, as provided in Sec. 574.300(b)(9).
Eligible State means a State that has:
(1) More than 1,500 cumulative cases of AIDS in those areas of the
State outside of eligible metropolitan statistical areas that are
eligible to be funded through a qualifying city; and
(2) A consolidated plan prepared, submitted, and approved in
accordance with 24 CFR part 91 that covers the assistance to be provided
under this part. (A State may carry out activities anywhere in the
State, including within an EMSA.)
Family is defined in 24 CFR 5.403 and includes one or more eligible
persons living with another person or persons, regardless of actual or
perceived sexual orientation, gender identity, or marital status, who
are determined to be important to the eligible person or person's care
or well-being, and the surviving member or members of any family
described in this definition who were living in a unit assisted under
the HOPWA program with the person with AIDS at the time of his or her
death.
Low-income individual has the meaning given it in section 853(3) of
the AIDS Housing Opportunity Act (42 U.S.C. 12902).
Metropolitan statistical area has the meaning given it in section
853(5) of the AIDS Housing Opportunity Act (42.U.S.C. 12902).
Nonprofit organization means any nonprofit organization (including a
State or locally chartered, nonprofit organization) that:
(1) Is organized under State or local laws;
(2) Has no part of its net earnings inuring to the benefit of any
member, founder, contributor, or individual;
(3) Has a functioning accounting system that is operated in
accordance with generally accepted accounting principles, or has
designated an entity that will maintain such an accounting system; and
(4) Has among its purposes significant activities related to
providing services or housing to persons with acquired immunodeficiency
syndrome or related diseases.
Non-substantial rehabilitation means rehabilitation that involves
costs that are less than or equal to 75 percent of the value of the
building after rehabilitation.
Population means total resident population based on data compiled by
the U.S. Census and referable to the same point in time.
Project sponsor means any nonprofit organization or governmental
housing agency that receives funds under a contract with the grantee to
carry out eligible activities under this part. The selection of project
sponsors is not subject to the procurement requirements of 2 CFR part
200, subpart D.
Qualifying city means a city that is the most populous unit of
general local government in an eligible metropolitan statistical area
(EMSA) and that has a consolidated plan prepared, submitted, and
approved in accordance with 24 CFR part 91 that covers the assistance to
be provided under this part.
Rehabilitation means the improvement or repair of an existing
structure, or an addition to an existing structure that does not
increase the floor area by more than 100 percent.
State has the meaning given it in section 853(9) of the AIDS Housing
Opportunity Act (42 U.S.C. 12902).
Substantial rehabilitation means rehabilitation that involves costs
in excess of 75 percent of the value of the building after
rehabilitation.
Unit of general local government means any city, town, township,
parish, county, village, or other general purpose political subdivision
of a State; Guam, the Northern Mariana Islands, the Virgin Islands,
American Samoa, the Federated States of Micronesia and Palau, the
Marshall Islands, or a general purpose political subdivision thereof;
and any agency or instrumentality thereof that is established pursuant
to legislation and designated by the chief executive to act on behalf of
the jurisdiction
[[Page 166]]
with regard to provisions of the National Affordable Housing Act.
[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17199, Apr. 11, 1994;
60 FR 1917, Jan. 5, 1995; 61 FR 5209, Feb. 9, 1996; 61 FR 7963, Feb. 29,
1996; 77 FR 5675, Feb. 3, 2012; 80 FR 75938, Dec. 7, 2015]
Subpart B_Formula Entitlements
Sec. 574.100 Eligible applicants.
(a) Eligible States and qualifying cities, as defined in Sec. 574.3,
qualify for formula allocations under HOPWA.
(b) HUD will notify eligible States and qualifying cities of their
formula eligibility and allocation amounts and EMSA service areas
annually.
[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17199, Apr. 11, 1994;
60 FR 1917, Jan. 5, 1995]
Sec. 574.110 Overview of formula allocations.
The formula grants are awarded upon submission and approval of a
consolidated plan, pursuant to 24 CFR part 91, that covers the
assistance to be provided under this part. Certain states and cities
that are the most populous unit of general local government in eligible
metropolitan statistical areas will receive formula allocations based on
their State or metropolitan population and proportionate number of cases
of persons with AIDS. They will receive funds under this part (providing
they comply with 24 CFR part 91) for eligible activities that address
the housing needs of persons with AIDS or related diseases and their
families (see Sec. 574.130(b)).
[61 FR 7963, Feb. 29, 1996]
Sec. 574.120 Responsibility of applicant to serve EMSA.
The EMSA's applicant shall serve eligible persons who live anywhere
within the EMSA, except that housing assistance shall be provided only
in localities within the EMSA that have a consolidated plan prepared,
submitted, and approved in accordance with 24 CFR part 91 that covers
the assistance to be provided under this part. In allocating grant
amounts among eligible activities, the EMSA's applicant shall address
needs of eligible persons who reside within the metropolitan statistical
area, including those not within the jurisdiction of the applicant.
[60 FR 1917, Jan. 5, 1995]
Sec. 574.130 Formula allocations.
(a) Data sources. HUD will allocate funds based on the number of
cases of acquired immunodeficiency syndrome reported to and confirmed by
the Director of the Centers for Disease Control, and on population data
provided by the U.S. Census. The number of cases of acquired
immunodeficiency syndrome used for this purpose shall be the number
reported as of March 31 of the fiscal year immediately preceding the
fiscal year for which the amounts are appropriated and allocated.
(b) Distribution of appropriated funds for entitlement awards. (1)
Seventy-five percent of the funds allocated under the formula is
distributed to qualifying cities and eligible States, as described in
Sec. 574.100, based on each metropolitan statistical area's or State's
proportionate share of the cumulative number of AIDS cases in all
eligible metropolitan statistical areas and eligible States.
(2) The remaining twenty-five percent is allocated among qualifying
cities, but not States, where the per capita incidence of AIDS for the
year, April 1 through March 31, preceding the fiscal year of the
appropriation is higher than the average for all metropolitan
statistical areas with more than 500,000 population. Each qualifying
city's allocation reflects its EMSA's proportionate share of the high
incidence factor among EMSA's with higher than average per capita
incidence of AIDS. The high incidence factor is computed by multiplying
the population of the metropolitan statistical area by the difference
between its twelve-month-per-capita-incidence rate and the average rate
for all metropolitan statistical areas with more than 500,000
population. The EMSA's proportionate share is determined by dividing its
high incidence factor by the sum of the high incidence factors for all
EMSA's with higher than average per capita incidence of AIDS.
(c) Minimum grant. No grant awarded under paragraph (b) of this
section shall be less than $200,000. Therefore, if
[[Page 167]]
the calculations under paragraph (b) of this section would result in any
eligible metropolitan statistical area or eligible State receiving less
than $200,000, the amount allocated to that entity is increased to
$200,000 and allocations to entities in excess of $200,000 are
proportionately reduced by the amount of the increase.
Sec. 574.190 Reallocation of grant amounts.
If an eligible State or qualifying city does not submit a
consolidated plan in a timely fashion, in accordance with 24 CFR part
91, that provides for use of its allocation of funding under this part,
the funds allocated to that jurisdiction will be added to the funds
available for formula allocations to other jurisdictions in the current
fiscal year. Any formula funds that become available as a result of
deobligations or the imposition of sanctions as provided for in
Sec. 574.540 will be added to the funds available for formula
allocations in the next fiscal year.
[57 FR 61740, Dec. 28, 1992, as amended at 60 FR 1918, Jan. 5, 1995]
Subpart C_Competitive Grants
Sec. 574.200 Amounts available for competitive grants.
(a) The Department will set aside 10 percent of the amounts
appropriated under this program to fund on a competitive basis:
(1) Special projects of national significance; and
(2) Other projects submitted by States and localities that do not
qualify for formula grants.
(b) Any competitively awarded funds that become available as a
result of deobligations or the imposition of sanctions, as provided in
Sec. 574.540, will be added to the funds available for competitive
grants in the next fiscal year.
(c) The competitive grants are awarded based on applications, as
described in subpart C of this part, submitted in response to a Notice
of Funding Availability published in the Federal Register. All States
and units of general local government and nonprofit organizations are
eligible to apply for competitive grants to fund projects of national
significance. Only those States and units of general local government
that do not qualify for formula allocations are eligible to apply for
competitive grants to fund other projects.
(d) If HUD makes a procedural error in a funding competition that,
when corrected, would warrant funding of an otherwise eligible
application, HUD will select that application for potential funding when
sufficient funds become available.
[57 FR 61740, Dec. 28, 1992, as amended at 61 FR 7963, Feb. 29, 1996]
Sec. 574.210 Eligible applicants.
(a) All States, units of general local government, and nonprofit
organizations, may apply for grants for projects of national
significance.
(b) Only those States and units of general local government that do
not qualify for formula grants, as described in Sec. 574.100; may apply
for grants for other projects as described in Sec. 574.200(a)(2).
(c) Except for grants for projects of national significance,
nonprofit organizations are not eligible to apply directly to HUD for a
grant but may receive funding as a project sponsor under contract with a
grantee.
Sec. 574.240 Application requirements.
Applications must comply with the provisions of the Department's
Notice of Funding Availability (NOFA) for the fiscal year published in
the Federal Register in accordance with 24 CFR part 12. The rating
criteria, including the point value for each, are described in the NOFA,
including criteria determined by the Secretary.
[61 FR 7963, Feb. 29, 1996]
Sec. 574.260 Amendments.
(a) After an application has been selected for funding, any change
that will significantly alter the scope, location, service area, or
objectives of an activity or the number of eligible persons served must
be justified to HUD and approved by HUD. Whenever any other amendment to
the application is made, the grantee must provide a copy to HUD.
(b) Each amendment request must contain a description of the revised
[[Page 168]]
proposed use of funds. Funds may not be expended for the revised
proposed use of funds until:
(1) HUD accepts the revised proposed use; and
(2) For amendments to acquire, rehabilitate, convert, lease, repair
or construct properties to provide housing, an environmental review of
the revised proposed use of funds has been completed in accordance with
Sec. 574.510.
(Approved by the Office of Management and Budget under control number
2506-0133)
Subpart D_Uses of Grant Funds
Sec. 574.300 Eligible activities.
(a) General. Subject to applicable requirements described in
Secs. 574.310, 574.320, 574.330, and 574.340, HOPWA funds may be used to
assist all forms of housing designed to prevent homelessness including
emergency housing, shared housing arrangements, apartments, single room
occupancy (SRO) dwellings, and community residences. Appropriate
supportive services, as required by Sec. 574.310(a), must be provided as
part of any HOPWA assisted housing, but HOPWA funds may also be used to
provide services independently of any housing activity.
(b) Activities. The following activities may be carried out with
HOPWA funds:
(1) Housing information services including, but not limited to,
counseling, information, and referral services to assist an eligible
person to locate, acquire, finance, and maintain housing. This may also
include fair housing guidance for eligible persons who may encounter
discrimination on the basis of race, color, religion, sex, age, national
origin, familial status, or handicap. Housing counseling, as defined in
Sec. 5.100, that is funded with or provided in connection with HOPWA
funds must be carried out in accordance with Sec. 5.111. When grantees
provide housing services to eligible persons (including persons
undergoing relocation) that are incidental to a larger set of holistic
case management services, these services do not meet the definition of
Housing counseling, as defined in Sec. 5.100, and therefore are not
required to be carried out in accordance with the certification
requirements of Sec. 5.111;
(2) Resource identification to establish, coordinate and develop
housing assistance resources for eligible persons (including conducting
preliminary research and making expenditures necessary to determine the
feasibility of specific housing-related initiatives);
(3) Acquisition, rehabilitation, conversion, lease, and repair of
facilities to provide housing and services;
(4) New construction (for single room occupancy (SRO) dwellings and
community residences only).
(5) Project- or tenant-based rental assistance, including assistance
for shared housing arrangements;
(6) Short-term rent, mortgage, and utility payments to prevent the
homelessness of the tenant or mortgagor of a dwelling;
(7) Supportive services including, but not limited to, health,
mental health, assessment, permanent housing placement, drug and alcohol
abuse treatment and counseling, day care, personal assistance,
nutritional services, intensive care when required, and assistance in
gaining access to local, State, and Federal government benefits and
services, except that health services may only be provided to
individuals with acquired immunodeficiency syndrome or related diseases
and not to family members of these individuals;
(8) Operating costs for housing including maintenance, security,
operation, insurance, utilities, furnishings, equipment, supplies, and
other incidental costs;
(9) Technical assistance in establishing and operating a community
residence, including planning and other pre-development or pre-
construction expenses and including, but not limited to, costs relating
to community outreach and educational activities regarding AIDS or
related diseases for persons residing in proximity to the community
residence;
(10) Administrative expenses:
(i) Each grantee may use not more than 3 percent of the grant amount
for its own administrative costs relating to administering grant amounts
and allocating such amounts to project sponsors; and
(ii) Each project sponsor receiving amounts from grants made under
this
[[Page 169]]
program may use not more than 7 percent of the amounts received for
administrative costs.
(11) For competitive grants only, any other activity proposed by the
applicant and approved by HUD.
(c) Equal participation of faith-based organizations. The HUD
program requirements in Sec. 5.109 of this title apply to the HOPWA
program, including the requirements regarding disposition and change in
use of real property by a faith-based organization.
[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17200, Apr. 11, 1994;
68 FR 56405, Sept. 30, 2003; 80 FR 75938, Dec. 7, 2015; 81 19418, Apr.
4, 2016; 81 FR 90659, Dec. 14, 2016]
Sec. 574.310 General standards for eligible housing activities.
All grantees using grant funds to provide housing must adhere to the
following standards:
(a)(1) General. The grantee shall ensure that qualified service
providers in the area make available appropriate supportive services to
the individuals assisted with housing under this subpart. Supportive
services are described in Sec. 574.300(b)(7). For any individual with
acquired immunodeficiency syndrome or a related disease who requires
more intensive care than can be provided in housing assisted under this
subpart, the grantee shall provide for locating a care provider who can
appropriately care for the individual and for referring the individual
to the care provider.
(2) Payments. The grantee shall ensure that grant funds will not be
used to make payments for health services for any item or service to the
extent that payment has been made, or can reasonably be expected to be
made, with respect to that item or service:
(i) Under any State compensation program, under an insurance policy,
or under any Federal or State health benefits program; or
(ii) By an entity that provides health services on a prepaid basis.
(b) Housing quality standards. All housing assisted under
Sec. 574.300(b) (3), (4), (5), and (8) must meet the applicable housing
quality standards outlined below.
(1) State and local requirements. Each recipient of assistance under
this part must provide safe and sanitary housing that is in compliance
with all applicable State and local housing codes, licensing
requirements, and any other requirements in the jurisdiction in which
the housing is located regarding the condition of the structure and the
operation of the housing.
(2) Habitability standards. Except for such variations as are
proposed by the locality and approved by HUD, recipients must meet the
following requirements:
(i) Structure and materials. The structures must be structurally
sound so as not to pose any threat to the health and safety of the
occupants and so as to protect the residents from hazards.
(ii) Access. The housing must be accessible and capable of being
utilized without unauthorized use of other private properties.
Structures must provide alternate means of egress in case of fire.
(iii) Space and security. Each resident must be afforded adequate
space and security for themselves and their belongings. An acceptable
place to sleep must be provided for each resident.
(iv) Interior air quality. Every room or space must be provided with
natural or mechanical ventilation. Structures must be free of pollutants
in the air at levels that threaten the health of residents.
(v) Water supply. The water supply must be free from contamination
at levels that threaten the health of individuals.
(vi) Thermal environment. The housing must have adequate heating
and/or cooling facilities in proper operating condition.
(vii) Illumination and electricity. The housing must have adequate
natural or artificial illumination to permit normal indoor activities
and to support the health and safety of residents. Sufficient electrical
sources must be provided to permit use of essential electrical appliance
while assuring safety from fire.
(viii) Food preparation and refuse disposal. All food preparation
areas must contain suitable space and equipment to store, prepare, and
serve food in a sanitary manner.
[[Page 170]]
(ix) Sanitary condition. The housing and any equipment must be
maintained in sanitary condition.
(c) Minimum use period for structures. (1) Any building or structure
assisted with amounts under this part must be maintained as a facility
to provide housing or assistance for individuals with acquired
immunodeficiency syndrome or related diseases:
(i) For a period of not less than 10 years, in the case of
assistance provided under an activity eligible under Sec. 574.300(b) (3)
and (4) involving new construction, substantial rehabilitation or
acquisition of a building or structure; or
(ii) For a period of not less than 3 years in the cases involving
non-substantial rehabilitation or repair of a building or structure.
(2) Waiver of minimum use period. HUD may waive the minimum use
period of a building or structure as stipulated in paragraph (c)(1) of
this section if the grantee can demonstrate, to the satisfaction of HUD,
that:
(i) The assisted structure is no longer needed to provide supported
housing or assistance, or the continued operation of the structure for
such purposes is no longer feasible; and
(ii) The structure will be used to benefit individuals or families
whose incomes do not exceed 80 percent of the median income for the
area, as determined by HUD with adjustments for smaller and larger
families, if the Secretary finds that such variations are necessary
because of construction costs or unusually high or low family incomes.
(d) Resident rent payment. Except for persons in short-term
supported housing, each person receiving rental assistance under this
program or residing in any rental housing assisted under this program
must pay as rent, including utilities, an amount which is the higher of:
(1) 30 percent of the family's monthly adjusted income (adjustment
factors include the age of the individual, medical expenses, size of
family and child care expenses and are described in detail in 24 CFR
5.609). The calculation of the family's monthly adjusted income must
include the expense deductions provided in 24 CFR 5.611(a), and for
eligible persons, the calculation of monthly adjusted income also must
include the disallowance of earned income as provided in 24 CFR 5.617,
if applicable;
(2) 10 percent of the family's monthly gross income; or
(3) If the family is receiving payments for welfare assistance from
a public agency and a part of the payments, adjusted in accordance with
the family's actual housing costs, is specifically designated by the
agency to meet the family's housing costs, the portion of the payment
that is designated for housing costs.
(e) Termination of assistance--(1) Surviving family members. With
respect to the surviving member or members of a family who were living
in a unit assisted under the HOPWA program with the person with AIDS at
the time of his or her death, housing assistance and supportive services
under the HOPWA program shall continue for a grace period following the
death of the person with AIDS. The grantee or project sponsor shall
establish a reasonable grace period for continued participation by a
surviving family member, but that period may not exceed one year from
the death of the family member with AIDS. The grantee or project sponsor
shall notify the family of the duration of their grace period and may
assist the family with information on other available housing programs
and with moving expenses.
(2) Violation of requirements-- (i) Basis. Assistance to
participants who reside in housing programs assisted under this part may
be terminated if the participant violates program requirements or
conditions of occupancy, subject to the VAWA protections in 24 CFR
5.2005(b) and 24 CFR 5.2005(c). Grantees must ensure that supportive
services are provided, so that a participant's assistance is terminated
only in the most severe cases.
(ii) Procedure. In terminating assistance to any program participant
for violation of requirements, grantees must provide a formal process
that recognizes the rights of individuals receiving assistance to due
process of law. This process at minimum, must consist of:
[[Page 171]]
(A) Serving the participant with a written notice containing a clear
statement of the reasons for termination;
(B) Permitting the participant to have a review of the decision, in
which the participant is given the opportunity to confront opposing
witnesses, present written objections, and be represented by their own
counsel, before a person other than the person (or a subordinate of that
person) who made or approved the termination decision; and
(C) Providing prompt written notification of the final decision to
the participant.
(Paragraph (c) approved by the Office of Management and Budget under
control number 2506-0133)
[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17200, Apr. 11, 1994;
61 FR 7963, Feb. 29, 1996; 66 FR 6225, Jan. 19, 2001; 81 FR 80806, Nov.
16, 2016]
Sec. 574.320 Additional standards for rental assistance.
(a) If grant funds are used to provide rental assistance, the
following additional standards apply:
(1) Maximum subsidy. The amount of grant funds used to pay monthly
assistance for an eligible person may not exceed the difference between:
(i) The lower of the rent standard or reasonable rent for the unit;
and
(ii) The resident's rent payment calculated under Sec. 574.310(d).
(2) Rent standard. The rent standard shall be established by the
grantee and shall be no more than the published section 8 fair market
rent (FMR) or the HUD-approved community-wide exception rent for the
unit size. However, on a unit by unit basis, the grantee may increase
that amount by up to 10 percent for up to 20 percent of the units
assisted.
(3) Rent reasonableness. The rent charged for a unit must be
reasonable in relation to rents currently being charged for comparable
units in the private unassisted market and must not be in excess of
rents currently being charged by the owner for comparable unassisted
units.
(b) With respect to shared housing arrangements, the rent charged
for an assisted family or individual shall be in relation to the size of
the private space for that assisted family or individual in comparison
to other private space in the shared unit, excluding common space. An
assisted family or individual may be assigned a pro rata portion based
on the ratio derived by dividing the number of bedrooms in their private
space by the number of bedrooms in the unit. Participation in shared
housing arrangements shall be voluntary.
[57 FR 61740, Dec. 28, 1992, as amended at 61 FR 7963, Feb. 29, 1996]
Sec. 574.330 Additional standards for short-term supported housing.
Short-term supported housing includes facilities to provide
temporary shelter to eligible individuals as well as rent, mortgage, and
utilities payments to enable eligible individuals to remain in their own
dwellings. If grant funds are used to provide such short-term supported
housing assistance, the following additional standards apply:
(a) Time limits. (1) A short-term supported housing facility may not
provide residence to any individual for more than 60 days during any six
month period. Rent, mortgage, and utilities payments to prevent the
homelessness of the tenant or mortgagor of a dwelling may not be
provided to such an individual for these costs accruing over a period of
more than 21 weeks in any 52 week period. These limitations do not apply
to rental assistance provided under Sec. 574.300(b)(5).
(2) Waiver of time limitations. HUD may waive, as it determines
appropriate, the limitations of paragraph (a)(1) and will favorably
consider a waiver based on the good faith effort of a project sponsor to
provide permanent housing under subsection (c).
(b) Residency limitations--(1) Residency. A short-term supported
facility may not provide shelter or housing at any single time for more
than 50 families or individuals;
(2) Waiver of residency limitations. HUD may waive, as it determines
appropriate, the limitations of paragraph (b)(1) of this section.
(c) Placement. A short-term supported housing facility assisted
under this part must, to the maximum extent practicable, provide each
individual living in such housing the opportunity
[[Page 172]]
for placement in permanent housing or in a living environment
appropriate to his or her health and social needs.
(d) Assistance to continue independent living. In addition to the
supportive services provided when an individual is relocated to a short-
term supported housing facility, supportive services may be provided to
individuals when they remain in their residence because the residence is
appropriate to the needs of the individual. In the latter case, a rent,
mortgage and utilities payments program assisted under this part shall
provide, when reasonable, supportive services specifically designed to
maintain the individual in such residence.
(e) Case management services. A program assisted under this section
shall provide each assisted individual with an opportunity, if eligible,
to receive case management services from the appropriate social service
agencies.
(Paragraph (b) approved by the Office of Management and Budget under
control number 2506-0133)
[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17200, Apr. 11, 1994]
Sec. 574.340 Additional standards for community residences.
(a) A community residence is a multiunit residence designed for
eligible persons to provide a lower cost residential alternative to
institutional care; to prevent or delay the need for such care; to
provide a permanent or transitional residential setting with appropriate
services to enhance the quality of life for those who are unable to live
independently; and to enable such persons to participate as fully as
possible in community life.
(b) If grant funds are used to provide a community residence, except
for planning and other expenses preliminary to construction or other
physical improvement for a community residence, the grantee must, prior
to the expenditure of such funds, obtain and keep on file the following
certifications:
(1) A services agreement. (i) A certification that the grantee will
itself provide services as required by Sec. 574.310(a) to eligible
persons assisted by the community residence; or
(ii) A certification that the grantee has entered into a written
agreement with a project sponsor or contracted service provider to
provide services as required by Sec. 574.310(a) to eligible persons
assisted by the community residence;
(2) The adequacy of funding. (i) A certification that the grantee
has acquired sufficient funding for these services; or
(ii) A certification that the grantee has on file an analysis of the
service level needed for each community residence, a statement of which
grantee agency, project sponsor, or service provider will provide the
needed services, and a statement of how the services will be funded; and
(3) Capability. (i) A certification that the grantee is qualified to
provide the services; or
(ii) A certification that the project sponsor or the service
provider is qualified to provide the services.
[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17200, Apr. 11, 1994]
Sec. 574.350 Additional standards for broadband infrastructure.
Any new construction or substantial rehabilitation, as substantial
rehabilitation is defined by 24 CFR 574.3, of a building with more than
4 rental units, for which HOPWA funds are first obligated by the grantee
or project sponsor on or after January 19, 2017 must include
installation of broadband infrastructure, as this term is defined in 24
CFR 5.100, except where the grantee or project sponsor determines and,
in accordance with Sec. 574.530, documents the determination that:
(a) The location of the new construction or substantial
rehabilitation makes installation of broadband infrastructure
infeasible;
(b) The cost of installing broadband infrastructure would result in
a fundamental alteration in the nature of its program or activity or in
an undue financial burden; or
(c) The structure of the housing to be substantially rehabilitated
makes installation of broadband infrastructure infeasible.
[81 FR 92637, Dec. 20, 2016]
[[Page 173]]
Subpart E_Special Responsibilities of Grantees and Project Sponsors
Sec. 574.400 Prohibition of substitution of funds.
Amounts received from grants under this part may not be used to
replace other amounts made available or designated by State or local
governments through appropriations for use for the purposes of this
part.
Sec. 574.410 Capacity.
The grantee shall ensure that any project sponsor with which the
grantee contracts to carry out an activity under this part has the
capacity and capability to effectively administer the activity.
Sec. 574.420 Cooperation.
(a) The grantee shall agree, and shall ensure that each project
sponsor agrees, to cooperate and coordinate in providing assistance
under this part with the agencies of the relevant State and local
governments responsible for services in the area served by the grantee
for eligible persons and other public and private organizations and
agencies providing services for such eligible persons.
(b) A grantee that is a State shall obtain the approval of the unit
of general local government in which a project is to be located before
entering into a contract with a project sponsor to carry out an activity
authorized under this part.
(c) A grantee that is a city receiving a formula allocation for an
EMSA shall coordinate with other units of general local government
located within the metropolitan statistical area to address needs within
that area.
Sec. 574.430 Fee prohibitions.
The grantee shall agree, and shall ensure that each project sponsor
agrees, that no fee, except rent, will be charged of any eligible person
for any housing or services provided with amounts from a grant under
this part.
Sec. 574.440 Confidentiality.
The grantee shall agree, and shall ensure that each project sponsor
agrees, to ensure the confidentiality of the name of any individual
assisted under this part and any other information regarding individuals
receiving assistance.
Sec. 574.450 Financial records.
The grantee shall agree, and shall ensure that each project sponsor
agrees, to maintain and make available to HUD for inspection financial
records sufficient, in HUD's determination, to ensure proper accounting
and disbursing of amounts received from a grant under this part.
Sec. 574.460 Remaining participants following bifurcation of a lease
or eviction as a result of domestic violence, dating violence, sexual
assault, or stalking.
When a covered housing provider exercises the option to bifurcate a
lease, as provided in 24 CFR 5.2009(a), in order to evict, remove,
terminate occupancy rights, or terminate assistance to a person with
AIDS or related diseases that receives rental assistance or resides in
rental housing assisted under the HOPWA program for engaging in criminal
activity directly relating to domestic violence, dating violence, sexual
assault or stalking, the covered housing provider shall provide the
remaining persons residing in the unit a reasonable grace period to
establish eligibility to receive HOPWA assistance or find alternative
housing. The grantee or project sponsor shall set the reasonable grace
period, which shall be no less than 90 calendar days, and not more than
one year, from the date of the bifurcation of the lease. Housing
assistance and supportive services under the HOPWA program shall
continue for the remaining persons residing in the unit during the grace
period. The grantee or project sponsor shall notify the remaining
persons residing in the unit of the duration of the reasonable grace
period and may assist them with information on other available housing
programs and with moving expenses.
[81 FR 80806, Nov. 16, 2016]
[[Page 174]]
Subpart F_Grant Administration
Sec. 574.500 Responsibility for grant administration.
(a) General. Grantees are responsible for ensuring that grants are
administered in accordance with the requirements of this part and other
applicable laws. Grantees are responsible for ensuring that their
respective project sponsors carry out activities in compliance with all
applicable requirements.
(b) Grant agreement. The grant agreement will provide that the
grantee agrees, and will ensure that each project sponsor agrees, to:
(1) Operate the program in accordance with the provisions of these
regulations and other applicable HUD regulations;
(2) Conduct an ongoing assessment of the housing assistance and
supportive services required by the participants in the program;
(3) Assure the adequate provision of supportive services to the
participants in the program; and
(4) Comply with such other terms and conditions, including
recordkeeping and reports (which must include racial and ethnic data on
participants) for program monitoring and evaluation purposes, as HUD may
establish for purposes of carrying out the program in an effective and
efficient manner.
(c) Enforcement. HUD will enforce the obligations in the grant
agreement in accordance with the provisions of 2 CFR part 200, subpart
D. A grantee will be provided an opportunity for informal consultation
before HUD will exercise any remedies authorized in 2 CFR 200.338.
[57 FR 61740, Dec. 28, 1992, as amended at 80 FR 75938, Dec. 7, 2015]
Sec. 574.510 Environmental procedures and standards.
(a) Activities under this part are subject to HUD environmental
regulations in part 58 of this title, except that HUD will perform an
environmental review in accordance with part 50 of this title for any
competitive grant for Fiscal Year 2000.
(b) The recipient, its project partners and their contractors may
not acquire, rehabilitate, convert, lease, repair, dispose of, demolish,
or construct property for a project under this part, or commit or expend
HUD or local funds for such eligible activities under this part, until
the responsible entity (as defined in Sec. 58.2 of this title) has
completed the environmental review procedures required by part 58 and
the environmental certification and RROF have been approved (or HUD has
performed an environmental review and the recipient has received HUD
approval of the property). HUD will not release grant funds if the
recipient or any other party commits grant funds (i.e., incurs any costs
or expenditures to be paid or reimbursed with such funds) before the
recipient submits and HUD approves its RROF (where such submission is
required).
(c) For activities under a grant to a nonprofit entity that would
generally be subject to review under part 58, HUD may make a finding in
accordance with Sec. 58.11(d) and may itself perform the environmental
review under the provisions of part 50 of this title if the recipient
nonprofit entity objects in writing to the responsible entity's
performing the review under part 58. Irrespective of whether the
responsible entity in accord with part 58 (or HUD in accord with part
50) performs the environmental review, the recipient shall supply all
available, relevant information necessary for the responsible entity (or
HUD, if applicable) to perform for each property any environmental
review required by this part. The recipient also shall carry out
mitigating measures required by the responsible entity (or HUD, if
applicable) or select alternate eligible property.
[68 FR 56130, Sept. 29, 2003]
Sec. 574.520 Performance reports.
(a) Formula grants. For a formula grant recipient, the performance
reporting requirements are specified in 24 CFR part 91.
(b) Competitive grants. A grantee shall submit to HUD annually a
report describing the use of the amounts received, including the number
of individuals assisted, the types of assistance provided, data on
emergency transfers requested under 24 CFR 5.2005(e), pertaining to
victims of domestic violence, dating violence, sexual assault,
[[Page 175]]
or stalking, including data on the outcomes of such requests, and any
other information that HUD may require. Annual reports are required
until all grant funds are expended.
[60 FR 1918, Jan. 5, 1995, as amended at 81 FR 80806, Nov. 16, 2016]
Sec. 574.530 Recordkeeping.
Each grantee must ensure that records are maintained for a 4-year
period to document compliance with the provisions of this part. Grantees
must maintain the following:
(a) Current and accurate data on the race and ethnicity of program
participants.
(b) Documentation related to the formula grantee's Assessment of
Fair Housing, as described in 24 CFR 5.168.
(c) Data on emergency transfers requested under 24 CFR 5.2005(e),
pertaining to victims of domestic violence, dating violence, sexual
assault, or stalking, including data on the outcomes of such requests.
[80 FR 42368, July 16, 2015, as amended at 81 FR 80806, Nov. 16, 2016]
Sec. 574.540 Deobligation of funds.
HUD may deobligate all or a portion of the amounts approved for
eligible activities if such amounts are not expended in a timely manner,
or the proposed activity for which funding was approved is not provided
in accordance with the approved application or action plan and the
requirements of this regulation. HUD may deobligate any amount of grant
funds that have not been expended within a three-year period from the
date of the signing of the grant agreement. The grant agreement may set
forth other circumstances under which funds may be deobligated or
sanctions imposed.
[61 FR 7963, Feb. 29, 1996]
Subpart G_Other Federal Requirements
Sec. 574.600 Cross-reference.
The Federal requirements set forth in 24 CFR part 5 apply to this
program as specified in this subpart.
[61 FR 5209, Feb. 9, 1996]
Sec. 574.603 Nondiscrimination and equal opportunity.
Within the population eligible for this program, the
nondiscrimination and equal opportunity requirements set forth in 24 CFR
part 5 and the following requirements apply:
(a) Fair housing requirements. (1) Grantees and project sponsors
shall comply with the applicable provisions of the Americans with
Disabilities Act (42 U.S.C. 12101-12213) and implementing regulations at
28 CFR part 35 (States and local government grantees) and part 36
(public accommodations and requirements for certain types of short-term
housing assistance).
(2) Executive Order 11246, as amended by Executive Orders 11375,
11478, 12086, and 12107 (3 CFR, 1964-1965 Comp., p. 339; 3 CFR, 1966-
1970 Comp., p. 684; 3 CFR, 1966-1970 Comp., p. 803; 3 CFR 1978 Comp., p.
230; and 3 CFR, 1978 Comp., p. 264) (Equal Employment Opportunity) does
not apply to this program.
(b) Affirmative outreach. A grantee or project sponsor must adopt
procedures to ensure that all persons who qualify for the assistance,
regardless of their race, color, religion, sex, age, national origin,
familial status, or handicap, know of the availability of the HOPWA
program, including facilities and services accessible to persons with a
handicap, and maintain evidence of implementation of the procedures.
[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 33894, June 30, 1994.
Redesignated and amended at 61 FR 5209, Feb. 9, 1996; 61 FR 7964, Feb.
29, 1996]
Sec. 574.604 Protections for victims of domestic violence, dating
violence, sexual assault, and stalking.
(a) General--(1) Applicability of VAWA requirements. Except as
provided in paragraph (a)(2) of this section, the Violence Against Women
Act (VAWA) requirements set forth in 24 CFR part 5, subpart L
(Protection for Victims of Domestic Violence, Dating Violence, Sexual
Assault, or Stalking), apply to housing assisted with HOPWA grant funds
for acquisition, rehabilitation, conversion, lease, and repair of
facilities to provide housing; new construction; and operating costs, as
provided in Sec. 574.300. The requirements set forth in 24 CFR part 5,
subpart L, also apply
[[Page 176]]
to project-based and tenant-based rental assistance, as provided in
Secs. 574.300 and 574.320, and community residences, as provided in
Sec. 574.340.
(2) Limited applicability of VAWA requirements. The VAWA
requirements set forth in 24 CFR part 5, subpart L do not apply to
short-term supported housing, as provided in Sec. 574.330, except that
no individual may be denied admission to or removed from the short-term
supported housing on the basis or as a direct result of the fact that
the individual is or has been a victim of domestic violence, dating
violence, sexual assault, or stalking, if the individual otherwise
qualifies for admission or occupancy.
(3) The terms ``affiliated individual,'' ``dating violence,''
``domestic violence,'' ``sexual assault,'' and ``stalking'' are defined
in 24 CFR 5.2003.
(b) Covered housing provider. As used in this part, the term,
``covered housing provider,'' which is defined in 24 CFR 5.2003, refers
to the HOPWA grantee, project sponsor, or housing or facility owner, or
manager, as described in this section.
(1)(i) For housing assisted with HOPWA grant funds for acquisition,
rehabilitation, conversion, lease, and repair of facilities to provide
housing; new construction; operating costs; community residences; and
project-based rental assistance, the HOPWA grantee is responsible for
ensuring that each project sponsor undertakes the following actions (or,
if administering the HOPWA assistance directly, the grantee shall
undertake the following actions):
(A) Sets a policy for determining the ``reasonable grace period''
for remaining persons residing in the unit to establish eligibility for
HOPWA assistance or find alternative housing, which period shall be no
less than 90 calendar days nor more than one year from the date of
bifurcation of a lease, consistent with 24 CFR 574.460;
(B) Provides notice of occupancy rights and the certification form
at the times listed in paragraph (d) of this section;
(C) Adopts and administers an emergency transfer plan, as developed
by the grantee in accordance with 24 CFR 5.2005(e) of this section, and
facilitates emergency transfers; and
(D) Maintains the confidentiality of documentation submitted by
tenants requesting emergency transfers and of each tenant's housing
location consistent with Sec. 574.440 and 24 CFR 5.2007(c).
(ii)(A) If a tenant seeks VAWA protections, set forth in 24 CFR part
5, subpart L, the tenant must submit such request through the project
sponsor (or the grantee if the grantee is directly administering HOPWA
assistance). Grantees and project sponsors will work with the housing or
facility owner or manager to facilitate protections on the tenant's
behalf. Project sponsors must follow the documentation specifications in
24 CFR 5.2007, including the confidentiality requirements in 24 CFR
5.2007(c).
(B) The grantee or project sponsor is responsible for ensuring that
the housing or facility owner or manager develops and uses a HOPWA lease
addendum with VAWA protections and is made aware of the option to
bifurcate a lease in accordance with Sec. 574.460 and 24 CFR 5.2009.
(2)(i) For tenant-based rental assistance, the HOPWA grantee is
responsible for ensuring that each project sponsor providing tenant-
based rental assistance undertakes the following actions (or, if
administering the HOPWA assistance directly, the grantee shall undertake
the following actions):
(A) Sets policy for determining the ``reasonable grace period'' for
remaining persons residing in the unit to establish eligibility for
HOPWA assistance or find alternative housing, which period shall be no
less than 90 calendar days and no more than one year from the date of
bifurcation of a lease, consistent with 24 CFR 574.460;
(B) Provides notice of occupancy rights and the certification form
at the times listed in paragraph (d) of this section;
(C) Adopts and administers an emergency transfer plan, as developed
by the grantee in accordance with 24 CFR 5.2005(e) of this section, and
facilitates emergency transfers; and
(D) Maintains the confidentiality of documentation submitted by
tenants requesting emergency transfers and of
[[Page 177]]
each tenant's housing location consistent with Sec. 574.440 and 24 CFR
5.2007(c).
(ii)(A) If a tenant seeks VAWA protections set forth in 24 CFR part
5, subpart L, the tenant must submit such request through the project
sponsor (or the grantee if the grantee is directly administering HOPWA
assistance). The project sponsor will work with the housing owner or
manager to facilitate protections on the tenant's behalf. Project
sponsors must follow the documentation specifications in 24 CFR 5.2007,
including the confidentiality requirements in 24 CFR 5.2007(c). The
project sponsor (or the grantee if the grantee is directly administering
HOPWA assistance) is also responsible for determining on a case-by-case
basis whether to provide new tenant-based rental assistance to a
remaining tenant if lease bifurcation or an emergency transfer results
in division of the household.
(B) The grantee or project sponsor is responsible for ensuring that
the housing owner or manager develops and uses a HOPWA lease addendum
with VAWA protections and is made aware of the option to bifurcate a
lease in accordance with Sec. 574.460 and 24 CFR 5.2009.
(c) Effective date. The core statutory protections of VAWA that
prohibit denial or termination of assistance or eviction because an
applicant or tenant is a victim of domestic violence, dating violence,
sexual assault, or stalking applied upon enactment of VAWA 2013 on March
7, 2013. For formula grants, compliance with the VAWA regulatory
requirements under this section and 24 CFR part 5, subpart L, are
required for any project covered under Sec. 574.604(a) for which the
date of the HOPWA funding commitment is made on or after December 16,
2016. For competitive grants, compliance with the VAWA regulatory
requirements under this section and 24 CFR part 5, subpart L, are
required for awards made on or after December 16, 2016.
(d) Notification requirements. (1) As provided in paragraph (b) of
this section, the grantee is responsible for ensuring that the notice of
occupancy rights and certification form described in 24 CFR 5.2005(a) is
provided to each person receiving project-based or tenant-based rental
assistance under HOPWA or residing in rental housing assisted under the
eligible activities described in Sec. 574.604(a) at the following times:
(i) At the time the person is denied rental assistance or admission
to a HOPWA-assisted unit;
(ii) At the time the person is admitted to a HOPWA-assisted unit or
is provided rental assistance;
(iii) With any notification of eviction from the HOPWA-assisted unit
or notification of termination of rental assistance; and
(iv) During the 12-month period following December 16, 2016, either
during annual recertification or lease renewal, whichever is applicable,
or, if there will be no recertification or lease renewal for a tenant
during the first year after the rule takes effect, through other means.
(2) The grantee is responsible for ensuring that, for each tenant
receiving HOPWA tenant-based rental assistance, the owner or manager of
the tenant's housing unit commits to provide the notice of occupancy
rights and certification form described in 24 CFR 5.2005 with any
notification of eviction that the owner or manager provides to the
tenant during the period for which the tenant is receiving HOPWA tenant-
based rental assistance. This commitment, as well as the confidentiality
requirements under 24 CFR 5.2007(c), must be set forth in the VAWA lease
term/addendum required under paragraph (f) of this section.
(e) Definition of reasonable time. For the purpose of 24 CFR
5.2009(b), the reasonable time to establish eligibility or find
alternative housing following bifurcation of a lease is the reasonable
grace period described in Sec. 574.460.
(f) VAWA lease term/addendum. As provided in paragraph (b) of this
section, the grantee or project sponsor is responsible for ensuring that
the housing or facility owner or manager, as applicable, develops and
uses a VAWA lease term/addendum to incorporate all requirements that
apply to the housing or facility owner or manager under 24 CFR part 5,
subpart L, and this section,
[[Page 178]]
including the prohibited bases for eviction under 24 CFR 5.2005(b), the
provisions regarding construction of lease terms and terms of assistance
under 24 CFR 5.2005(c), and the confidentiality of documentation
submitted by tenants requesting emergency transfers and of each tenant's
housing location consistent with 24 CFR 5.2007(c). The VAWA lease term/
addendum must also provide that the tenant may terminate the lease
without penalty if a determination is made that the tenant has met the
conditions for an emergency transfer under 24 CFR 5.2005(e). The grantee
or project sponsor is responsible for ensuring that the housing or
facility owner, or manager, as applicable, adds the VAWA lease term/
addendum to the leases for all HOPWA-assisted units and the leases for
all eligible persons receiving HOPWA tenant-based rental assistance.
[81 FR 80806, Nov. 16, 2016]
Sec. 574.605 Applicability of uniform administrative requirements, cost
principles, and audit requirements for Federal awards.
The provisions of 2 CFR part 200, ``Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal
Awards'', apply to HOPWA grants.
[80 FR 75938, Dec. 7, 2015]
Sec. 574.625 Conflict of interest.
(a) In addition to the conflict of interest requirements in 2 CFR
200.317 (for recipients and subrecipients that are States) and 2 CFR
200.318 (for recipients and subrecipients that are not States), no
person who is an employee, agent, consultant, officer, or elected or
appointed official of the grantee or project sponsor and who exercises
or has exercised any functions or responsibilities with respect to
assisted activities, or who is in a position to participate in a
decision making process or gain inside information with regard to such
activities, may obtain a financial interest or benefit from the
activity, or have an interest in any contract, subcontract, or agreement
with respect thereto, or the proceeds thereunder, either for himself or
herself or for those with whom he or she has family or business ties,
during his or her tenure or for one year thereafter.
(b) Exceptions: Threshold requirements. Upon the written request of
the recipient, HUD may grant an exception to the provisions of paragraph
(a) of this section when it determines that the exception will serve to
further the purposes of the HOPWA program and the effective and
efficient administration of the recipient's program or project. An
exception may be considered only after the recipient has provided the
following:
(1) A disclosure of the nature of the conflict, accompanied by an
assurance that there has been public disclosure of the conflict and a
description of how the public disclosure was made; and
(2) An opinion of the recipient's attorney that the interest for
which the exception is sought would not violate State or local law.
(c) Factors to be considered for exceptions. In determining whether
to grant a requested exception after the recipient has satisfactorily
met the requirements of paragraph (b) of this section, HUD will consider
the cumulative effect of the following factors, where applicable:
(1) Whether the exception would provide a significant cost benefit
or an essential degree of expertise to the program or project that would
otherwise not be available;
(2) Whether the person affected is a member of a group or class of
eligible persons and the exception will permit such person to receive
generally the same interests or benefits as are being made available or
provided to the group or class;
(3) Whether the affected person has withdrawn from his or her
functions or responsibilities, or the decisionmaking process with
respect to the specific assisted activity in question;
(4) Whether the interest or benefit was present before the affected
person was in a position as described in paragraph (a) of this section;
(5) Whether undue hardship will result either to the recipient or
the person affected when weighed against the public interest served by
avoiding the prohibited conflict; and
[[Page 179]]
(6) Any other relevant considerations.
[57 FR 61740, Dec. 28, 1992, as amended at 80 FR 75938, Dec. 7, 2015]
Sec. 574.630 Displacement, relocation and real property acquisition.
(a) Minimizing displacement. Consistent with the other goals and
objectives of this part, grantees and project sponsors must assure that
they have taken all reasonable steps to minimize the displacement of
persons (families, individuals, businesses, nonprofit organizations, and
farms) as a result of a project assisted under this part.
(b) Relocation assistance for displaced persons. A displaced person
(defined in paragraph (f) of this section) must be provided relocation
assistance at the levels described in, and in accordance with the
requirements of, the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601-4655) and
implementing regulations at 49 CFR part 24.
(c) Real property acquisition requirements. The acquisition of real
property for a project is subject to the URA and the requirements
described in 49 CFR part 24, subpart B.
(d) Appeals. A person who disagrees with the grantee's or project
sponsor's determination concerning whether the person qualifies as a
``displaced person,'' or the amount of relocation assistance for which
the person is eligible, may file a written appeal of that determination
with the grantee. A low-income person who is dissatisfied with the
grantee's determination on his or her appeal may submit a written
request for review of that determination to the HUD Field Office.
(e) Responsibility of grantee. (1) Each grantee shall certify (i.e.,
provide assurance of compliance as required by 49 CFR part 24) that it
will comply with the URA, the regulations at 49 CFR part 24, and the
requirements of this section, and shall ensure such compliance
notwithstanding any third party's contractual obligation to the grantee
to comply with these provisions.
(2) The cost of required relocation assistance is an eligible
project cost in the same manner and to the same extent as other project
costs. Such costs also may be paid for with funds available from other
sources.
(3) The grantee shall maintain records in sufficient detail to
demonstrate compliance with these provisions.
(f) Definition of displaced person. (1) For purposes of this
section, the term ``displaced person'' means a person (family,
individual, business, nonprofit organization, or farm) that moves from
real property, or moves personal property from real property,
permanently, as a direct result of acquisition, rehabilitation, or
demolition for a project assisted under this part. This includes any
permanent, involuntary move for an assisted project including any
permanent move for an assisted project, including any permanent move
from the real property that is made:
(i) After notice by the grantee, project sponsor, or property owner
to move permanently from the property, if the move occurs on or after
the date that the grantee submits to HUD an application for assistance
that is later approved and funded;
(ii) Before the submission of the application to HUD, if the
grantee, project sponsor, or HUD determines that the displacement
resulted directly from acquisition, rehabilitation, or demolition for
the assisted project; or
(iii) By a tenant-occupant of a dwelling unit, if any one of the
following three situations occurs:
(A) The tenant moves after the ``initiation of negotiations'' and
the move occurs before the tenant has been provided written notice
offering him or her the opportunity to lease and occupy a suitable,
decent, safe and sanitary dwelling in the same building/complex, under
reasonable terms and conditions, upon completion of the project. Such
reasonable terms and conditions include a monthly rent and estimated
average monthly utility costs that do not exceed the greater of:
(1) The tenant's monthly rent before the initiation of negotiations
and estimated average utility costs, or
(2) 30 percent of gross household income; or
(B) The tenant is required to relocate temporarily, does not return
to the building/complex and either:
[[Page 180]]
(1) The tenant is not offered payment for all reasonable out-of-
pocket expenses incurred in connection with the temporary relocation, or
(2) Other conditions of the temporary relocation are not reasonable;
or
(C) The tenant is required to move to another unit in the same
building/complex but is not offered reimbursement for all reasonable
out-of-pocket expenses incurred in connection with the move, or other
conditions of the move are not reasonable.
(2) Notwithstanding the provisions of paragraph (f)(1) of this
section, a person does not qualify as a ``displaced person'' (and is not
eligible for relocation assistance under the URA or this section), if:
(i) The person has been evicted for serious or repeated violation of
the terms and conditions of the lease or occupancy agreement, violation
or applicable Federal, State or local law, or other good cause, and HUD
determines that the eviction was not undertaken for the purposes of
evading the obligation to provide relocation assistance;
(ii) The person moved into the property after the submission of the
application and, before signing a lease and commencing occupancy, was
provided written notice of the project, its possible impact on the
person (e.g., the person may be displaced, temporarily relocated, or
suffer a rent increase) and the fact that the person would not qualify
as a ``displaced person'' (or for any assistance provided under this
section), if the project is approved;
(iii) The person is ineligible under 49 CFR 24.2(g)(2); or
(iv) HUD determines that the person was not displaced as a direct
result of acquisition, rehabilitation, or demolition for the project.
(3) The grantee or project sponsor may request, at any time, HUD's
determination of whether a displacement is or would be covered under
this section.
(g) Definition of initiation of negotiations. For purposes of
determining the formula for computing the replacement housing assistance
to be provided to a residential tenant displaced as a direct result of
privately undertaken rehabilitation, demolition, or acquisition of the
real property, the term ``initiation of negotiations'' means the
execution of the agreement between the grantee and the project sponsor.
Sec. 574.635 Lead-based paint.
The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846),
the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C.
4851-4856), and implementing regulations at part 35, subparts A, B, H,
J, K, M, and R of this part apply to activities under this program.
[64 FR 50226, Sept. 15, 1999]
Sec. 574.640 Flood insurance protection.
No property to be assisted under this part may be located in an area
that has been identified by the Federal Emergency Management Agency
(FEMA) as having special flood hazards, unless:
(a)(1) The community in which the area is situated is participating
in the National Flood Insurance Program and the regulations thereunder
(44 CFR parts 59 through 79); or
(2) Less than a year has passed since FEMA notification regarding
such hazards; and
(b) The grantee will ensure that flood insurance on the structure is
obtained in compliance with section 102(a) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4001 et seq.).
Sec. 574.645 Coastal barriers.
In accordance with the Coastal Barrier Resources Act, 16 U.S.C.
3501, no financial assistance under this part may be made available
within the Coastal Barrier Resources System.
Sec. 574.650 Audit.
Grantees and project sponsors are subject to the audit requirements
set forth in 2 CFR part 200, subpart F.
[80 FR 75938, Dec. 7, 2015]
Sec. 574.655 Wage rates.
The provisions of the Davis-Bacon Act (40 U.S.C. 276a-276a-5) do not
apply to this program, except where funds received under this part are
combined with funds from other Federal programs that are subject to the
Act.
[59 FR 17201, Apr. 11, 1994]
[[Page 181]]
Sec. 574.660 Housing counseling.
Housing counseling, as defined in Sec. 5.100, that is funded with or
provided in connection with HOPWA funds must be carried out in
accordance with Sec. 5.111. When grantees provide housing services to
eligible persons (including persons undergoing relocation) that are
incidental to a larger set of holistic case management services, these
services do not meet the definition of housing counseling, as defined in
Sec. 5.100, and therefore are not required to be carried out in
accordance with the certification requirements of Sec. 5.111.
[81 FR 90659, Dec. 14, 2016, as amended at 82 FR 8811, Jan. 31, 2017]
PART 576_EMERGENCY SOLUTIONS GRANTS PROGRAM--Table of Contents
Subpart A_General Provisions
Sec.
576.1 Applicability and purpose.
576.2 Definitions.
576.3 Allocation of funding.
Subpart B_Program Components and Eligible Activities
576.100 General provisions and expenditure limits.
576.101 Street outreach component.
576.102 Emergency shelter component.
576.103 Homelessness prevention component.
576.104 Rapid re-housing assistance component.
576.105 Housing relocation and stabilization services.
576.106 Short-term and medium-term rental assistance.
576.107 HMIS component.
576.108 Administrative activities.
576.109 Indirect costs.
Subpart C_Award and Use of Funds
576.200 Submission requirements and grant approval.
576.201 Matching requirement.
576.202 Means of carrying out grant activities.
576.203 Obligation, expenditure, and payment requirements.
Subpart D_Reallocations
576.300 In general.
576.301 Metropolitan cities and urban counties.
576.302 States.
576.303 Territories.
576.304 Alternative method.
Subpart E_Program Requirements
576.400 Area-wide systems coordination requirements.
576.401 Evaluation of program participant eligibility and needs.
576.402 Terminating assistance.
576.403 Shelter and housing standards.
576.404 Conflicts of interest.
576.405 Homeless participation.
576.406 Equal participation of faith-based organizations.
576.407 Other Federal requirements.
576.408 Displacement, relocation, and acquisition.
576.409 Protection for victims of domestic violence, dating violence,
sexual assault, or stalking.
Subpart F_Grant Administration
576.500 Recordkeeping and reporting requirements.
576.501 Enforcement.
Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 11371 et seq., 42
U.S.C. 3535(d).
Source: 76 FR 75974, Dec. 5, 2011, unless otherwise noted.
Subpart A_General Provisions
Sec. 576.1 Applicability and purpose.
This part implements the Emergency Solutions Grants (ESG) program
authorized by subtitle B of title IV of the McKinney-Vento Homeless
Assistance Act (42 U.S.C. 11371-11378). The program authorizes the
Department of Housing and Urban Development (HUD) to make grants to
States, units of general purpose local government, and territories for
the rehabilitation or conversion of buildings for use as emergency
shelter for the homeless, for the payment of certain expenses related to
operating emergency shelters, for essential services related to
emergency shelters and street outreach for the homeless, and for
homelessness prevention and rapid re-housing assistance.
Sec. 576.2 Definitions.
At risk of homelessness means: (1) An individual or family who:
(i) Has an annual income below 30 percent of median family income
for the area, as determined by HUD;
(ii) Does not have sufficient resources or support networks, e.g.,
family,
[[Page 182]]
friends, faith-based or other social networks, immediately available to
prevent them from moving to an emergency shelter or another place
described in paragraph (1) of the ``homeless'' definition in this
section; and
(iii) Meets one of the following conditions:
(A) Has moved because of economic reasons two or more times during
the 60 days immediately preceding the application for homelessness
prevention assistance;
(B) Is living in the home of another because of economic hardship;
(C) Has been notified in writing that their right to occupy their
current housing or living situation will be terminated within 21 days
after the date of application for assistance;
(D) Lives in a hotel or motel and the cost of the hotel or motel
stay is not paid by charitable organizations or by Federal, State, or
local government programs for low-income individuals;
(E) Lives in a single-room occupancy or efficiency apartment unit in
which there reside more than two persons or lives in a larger housing
unit in which there reside more than 1.5 persons reside per room, as
defined by the U.S. Census Bureau;
(F) Is exiting a publicly funded institution, or system of care
(such as a health-care facility, a mental health facility, foster care
or other youth facility, or correction program or institution); or
(G) Otherwise lives in housing that has characteristics associated
with instability and an increased risk of homelessness, as identified in
the recipient's approved consolidated plan;
(2) A child or youth who does not qualify as ``homeless'' under this
section, but qualifies as ``homeless'' under section 387(3) of the
Runaway and Homeless Youth Act (42 U.S.C. 5732a(3)), section 637(11) of
the Head Start Act (42 U.S.C. 9832(11)), section 41403(6) of the
Violence Against Women Act of 1994 (42 U.S.C. 14043e-2(6)), section
330(h)(5)(A) of the Public Health Service Act (42 U.S.C. 254b(h)(5)(A)),
section 3(m) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(m)),
or section 17(b)(15) of the Child Nutrition Act of 1966 (42 U.S.C.
1786(b)(15)); or
(3) A child or youth who does not qualify as ``homeless'' under this
section, but qualifies as ``homeless'' under section 725(2) of the
McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), and the
parent(s) or guardian(s) of that child or youth if living with her or
him.
Consolidated plan means a plan prepared in accordance with 24 CFR
part 91. An approved consolidated plan means a consolidated plan that
has been approved by HUD in accordance with 24 CFR part 91.
Continuum of Care means the group composed of representatives of
relevant organizations, which generally includes nonprofit homeless
providers; victim service providers; faith-based organizations;
governments; businesses; advocates; public housing agencies; school
districts; social service providers; mental health agencies; hospitals;
universities; affordable housing developers; law enforcement;
organizations that serve homeless and formerly homeless veterans, and
homeless and formerly homeless persons that are organized to plan for
and provide, as necessary, a system of outreach, engagement, and
assessment; emergency shelter; rapid re-housing; transitional housing;
permanent housing; and prevention strategies to address the various
needs of homeless persons and persons at risk of homelessness for a
specific geographic area.
Emergency shelter means any facility, the primary purpose of which
is to provide a temporary shelter for the homeless in general or for
specific populations of the homeless and which does not require
occupants to sign leases or occupancy agreements. Any project funded as
an emergency shelter under a Fiscal Year 2010 Emergency Solutions grant
may continue to be funded under ESG.
Homeless means:
(1) An individual or family who lacks a fixed, regular, and adequate
nighttime residence, meaning:
(i) An individual or family with a primary nighttime residence that
is a public or private place not designed for or ordinarily used as a
regular sleeping
[[Page 183]]
accommodation for human beings, including a car, park, abandoned
building, bus or train station, airport, or camping ground;
(ii) An individual or family living in a supervised publicly or
privately operated shelter designated to provide temporary living
arrangements (including congregate shelters, transitional housing, and
hotels and motels paid for by charitable organizations or by federal,
state, or local government programs for low-income individuals); or
(iii) An individual who is exiting an institution where he or she
resided for 90 days or less and who resided in an emergency shelter or
place not meant for human habitation immediately before entering that
institution;
(2) An individual or family who will imminently lose their primary
nighttime residence, provided that:
(i) The primary nighttime residence will be lost within 14 days of
the date of application for homeless assistance;
(ii) No subsequent residence has been identified; and
(iii) The individual or family lacks the resources or support
networks, e.g., family, friends, faith-based or other social networks,
needed to obtain other permanent housing;
(3) Unaccompanied youth under 25 years of age, or families with
children and youth, who do not otherwise qualify as homeless under this
definition, but who:
(i) Are defined as homeless under section 387 of the Runaway and
Homeless Youth Act (42 U.S.C. 5732a), section 637 of the Head Start Act
(42 U.S.C. 9832), section 41403 of the Violence Against Women Act of
1994 (42 U.S.C. 14043e-2), section 330(h) of the Public Health Service
Act (42 U.S.C. 254b(h)), section 3 of the Food and Nutrition Act of 2008
(7 U.S.C. 2012), section 17(b) of the Child Nutrition Act of 1966 (42
U.S.C. 1786(b)) or section 725 of the McKinney-Vento Homeless Assistance
Act (42 U.S.C. 11434a);
(ii) Have not had a lease, ownership interest, or occupancy
agreement in permanent housing at any time during the 60 days
immediately preceding the date of application for homeless assistance;
(iii) Have experienced persistent instability as measured by two
moves or more during the 60-day period immediately preceding the date of
applying for homeless assistance; and
(iv) Can be expected to continue in such status for an extended
period of time because of chronic disabilities, chronic physical health
or mental health conditions, substance addiction, histories of domestic
violence or childhood abuse (including neglect), the presence of a child
or youth with a disability, or two or more barriers to employment, which
include the lack of a high school degree or General Education
Development (GED), illiteracy, low English proficiency, a history of
incarceration or detention for criminal activity, and a history of
unstable employment; or
(4) Any individual or family who:
(i) Is fleeing, or is attempting to flee, domestic violence, dating
violence, sexual assault, stalking, or other dangerous or life-
threatening conditions that relate to violence against the individual or
a family member, including a child, that has either taken place within
the individual's or family's primary nighttime residence or has made the
individual or family afraid to return to their primary nighttime
residence;
(ii) Has no other residence; and
(iii) Lacks the resources or support networks, e.g., family,
friends, faith-based or other social networks, to obtain other permanent
housing.
Homeless Management Information System (HMIS) means the information
system designated by the Continuum of Care to comply with the HUD's data
collection, management, and reporting standards and used to collect
client-level data and data on the provision of housing and services to
homeless individuals and families and persons at-risk of homelessness.
Metropolitan city means a city that was classified as a metropolitan
city under 42 U.S.C. 5302(a) for the fiscal year immediately preceding
the fiscal year for which ESG funds are made available. This term
includes the District of Columbia.
Private nonprofit organization means a private nonprofit
organization that is a secular or religious organization described in
section 501(c) of the Internal Revenue Code of 1986 and which is exempt
from taxation under subtitle A of
[[Page 184]]
the Code, has an accounting system and a voluntary board, and practices
nondiscrimination in the provision of assistance. A private nonprofit
organization does not include a governmental organization, such as a
public housing agency or housing finance agency.
Program income shall have the meaning provided in 2 CFR 200.80.
Program income includes any amount of a security or utility deposit
returned to the recipient or subrecipient.
Program participant means an individual or family who is assisted
under ESG program.
Program year means the consolidated program year established by the
recipient under 24 CFR part 91.
Recipient means any State, territory, metropolitan city, or urban
county, or in the case of reallocation, any unit of general purpose
local government that is approved by HUD to assume financial
responsibility and enters into a grant agreement with HUD to administer
assistance under this part.
State means each of the several States and the Commonwealth of
Puerto Rico.
Subrecipient means a unit of general purpose local government or
private nonprofit organization to which a recipient makes available ESG
funds.
Territory means each of the following: the Virgin Islands, Guam,
American Samoa, and the Northern Mariana Islands.
Unit of general purpose local government means any city, county,
town, township, parish, village, or other general purpose political
subdivision of a State.
Urban county means a county that was classified as an urban county
under 42 U.S.C. 5302(a) for the fiscal year immediately preceding the
fiscal year for which ESG funds are made available.
Victim service provider means a private nonprofit organization whose
primary mission is to provide services to victims of domestic violence,
dating violence, sexual assault, or stalking. This term includes rape
crisis centers, battered women's shelters, domestic violence
transitional housing programs, and other programs.
[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]
Sec. 576.3 Allocation of funding.
(a) Territories. HUD will set aside for allocation to the
territories up to 0.2 percent, but not less than 0.1 percent, of the
total amount of each appropriation under this part in any fiscal year.
HUD will allocate this set-aside amount to each territory based on its
proportionate share of the total population of all territories and its
rate of compliance with the most recent expenditure deadline under
Sec. 576.203.
(b) States, metropolitan cities, and urban counties. HUD will
allocate the amounts that remain after the set-aside to territories
under paragraph (a) of this section to States, metropolitan cities, and
urban counties, as follows:
(1) HUD will provide that the percentage of the total amount
available for allocation to each State, metropolitan city, or urban
county is equal to the percentage of the total amount available under
section 106 of the Housing and Community Development Act of 1974 for the
prior fiscal year that was allocated to that State, metropolitan city,
or urban county.
(2) Except as otherwise provided by law, if the amount a
metropolitan city or urban county would be allocated under paragraph
(b)(1) is less than 0.05 percent of the total fiscal year appropriation
for ESG, that amount will be added to the allocation for the State in
which the city or county is located.
(c) Notification of allocation amount. HUD will notify each State,
metropolitan city, urban county, and territory that is eligible to
receive an allocation under this section of the amount of its
allocation.
Subpart B_Program Components and Eligible Activities
Sec. 576.100 General provisions and expenditure limits.
(a) ESG funds may be used for five program components: street
outreach, emergency shelter, homelessness prevention, rapid re-housing
assistance, and HMIS; as well as administrative activities. The five
program components and the eligible activities that may be funded under
each are set forth
[[Page 185]]
in Sec. 576.101 through Sec. 576.107. Eligible administrative activities
are set forth in Sec. 576.108.
(b) The total amount of the recipient's fiscal year grant that may
be used for street outreach and emergency shelter activities cannot
exceed the greater of:
(1) 60 percent of the recipient's fiscal year grant; or
(2) The amount of Fiscal Year 2010 grant funds committed for
homeless assistance activities.
(c) The total amount of ESG funds that may be used for
administrative activities cannot exceed 7.5 percent of the recipient's
fiscal year grant.
(d) Subject to the cost principles in 2 CFR part 200, subpart E, and
other requirements in this part, employee compensation and other
overhead costs directly related to carrying out street outreach,
emergency shelter, homelessness prevention, rapid re-housing, and HMIS
are eligible costs of those program components. These costs are not
subject to the expenditure limit in paragraph (c) of this section.
[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]
Sec. 576.101 Street outreach component.
(a) Eligible costs. Subject to the expenditure limit in
Sec. 576.100(b), ESG funds may be used for costs of providing essential
services necessary to reach out to unsheltered homeless people; connect
them with emergency shelter, housing, or critical services; and provide
urgent, nonfacility-based care to unsheltered homeless people who are
unwilling or unable to access emergency shelter, housing, or an
appropriate health facility. For the purposes of this section, the term
``unsheltered homeless people'' means individuals and families who
qualify as homeless under paragraph (1)(i) of the ``homeless''
definition under Sec. 576.2. The eligible costs and requirements for
essential services consist of:
(1) Engagement. The costs of activities to locate, identify, and
build relationships with unsheltered homeless people and engage them for
the purpose of providing immediate support, intervention, and
connections with homeless assistance programs and/or mainstream social
services and housing programs. These activities consist of making an
initial assessment of needs and eligibility; providing crisis
counseling; addressing urgent physical needs, such as providing meals,
blankets, clothes, or toiletries; and actively connecting and providing
information and referrals to programs targeted to homeless people and
mainstream social services and housing programs, including emergency
shelter, transitional housing, community-based services, permanent
supportive housing, and rapid re-housing programs. Eligible costs
include the cell phone costs of outreach workers during the performance
of these activities.
(2) Case management. The cost of assessing housing and service
needs, arranging, coordinating, and monitoring the delivery of
individualized services to meet the needs of the program participant.
Eligible services and activities are as follows: using the centralized
or coordinated assessment system as required under Sec. 576.400(d);
conducting the initial evaluation required under Sec. 576.401(a),
including verifying and documenting eligibility; counseling; developing,
securing and coordinating services; obtaining Federal, State, and local
benefits; monitoring and evaluating program participant progress;
providing information and referrals to other providers; and developing
an individualized housing and service plan, including planning a path to
permanent housing stability.
(3) Emergency health services. (i) Eligible costs are for the direct
outpatient treatment of medical conditions and are provided by licensed
medical professionals operating in community-based settings, including
streets, parks, and other places where unsheltered homeless people are
living.
(ii) ESG funds may be used only for these services to the extent
that other appropriate health services are inaccessible or unavailable
within the area.
(iii) Eligible treatment consists of assessing a program
participant's health problems and developing a treatment plan; assisting
program participants to understand their health needs; providing
directly or assisting program participants to obtain appropriate
[[Page 186]]
emergency medical treatment; and providing medication and follow-up
services.
(4) Emergency mental health services. (i) Eligible costs are the
direct outpatient treatment by licensed professionals of mental health
conditions operating in community-based settings, including streets,
parks, and other places where unsheltered people are living.
(ii) ESG funds may be used only for these services to the extent
that other appropriate mental health services are inaccessible or
unavailable within the community.
(iii) Mental health services are the application of therapeutic
processes to personal, family, situational, or occupational problems in
order to bring about positive resolution of the problem or improved
individual or family functioning or circumstances.
(iv) Eligible treatment consists of crisis interventions, the
prescription of psychotropic medications, explanation about the use and
management of medications, and combinations of therapeutic approaches to
address multiple problems.
(5) Transportation. The transportation costs of travel by outreach
workers, social workers, medical professionals, or other service
providers are eligible, provided that this travel takes place during the
provision of services eligible under this section. The costs of
transporting unsheltered people to emergency shelters or other service
facilities are also eligible. These costs include the following:
(i) The cost of a program participant's travel on public
transportation;
(ii) If service workers use their own vehicles, mileage allowance
for service workers to visit program participants;
(iii) The cost of purchasing or leasing a vehicle for the recipient
or subrecipient in which staff transports program participants and/or
staff serving program participants, and the cost of gas, insurance,
taxes and maintenance for the vehicle; and
(iv) The travel costs of recipient or subrecipient staff to
accompany or assist program participants to use public transportation.
(6) Services for special populations. ESG funds may be used to
provide services for homeless youth, victim services, and services for
people living with HIV/AIDS, so long as the costs of providing these
services are eligible under paragraphs (a)(1) through (a)(5) of this
section. The term victim services means services that assist program
participants who are victims of domestic violence, dating violence,
sexual assault, or stalking, including services offered by rape crisis
centers and domestic violence shelters, and other organizations with a
documented history of effective work concerning domestic violence,
dating violence, sexual assault, or stalking.
(b) Minimum period of use. The recipient or subrecipient must
provide services to homeless individuals and families for at least the
period during which ESG funds are provided.
(c) Maintenance of effort. (1) If the recipient or subrecipient is a
unit of general purpose local government, its ESG funds cannot be used
to replace funds the local government provided for street outreach and
emergency shelter services during the immediately preceding 12-month
period, unless HUD determines that the unit of general purpose local
government is in a severe financial deficit.
(2) Upon the recipient's request, HUD will determine whether the
unit of general purpose local government is in a severe financial
deficit, based on the recipient's demonstration of each of the
following:
(i) The average poverty rate in the unit of general purpose local
government's jurisdiction was equal to or greater than 125 percent of
the average national poverty rate, during the calendar year for which
the most recent data are available, as determined according to
information from the U.S. Census Bureau.
(ii) The average per-capita income in the unit of general purpose
local government's jurisdiction was less than 75 percent of the average
national per-capita income, during the calendar year for which the most
recent data are available, as determined according to information from
the Census Bureau.
(iii) The unit of general purpose local government has a current
annual budget deficit that requires a reduction in
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funding for services for homeless people.
(iv) The unit of general purpose local government has taken all
reasonable steps to prevent a reduction in funding of services for
homeless people. Reasonable steps may include steps to increase revenue
generation, steps to maximize cost savings, or steps to reduce
expenditures in areas other than services for homeless people.
Sec. 576.102 Emergency shelter component.
(a) General. Subject to the expenditure limit in Sec. 576.100(b),
ESG funds may be used for costs of providing essential services to
homeless families and individuals in emergency shelters, renovating
buildings to be used as emergency shelter for homeless families and
individuals, and operating emergency shelters.
(1) Essential services. ESG funds may be used to provide essential
services to individuals and families who are in an emergency shelter, as
follows:
(i) Case management. The cost of assessing, arranging, coordinating,
and monitoring the delivery of individualized services to meet the needs
of the program participant is eligible. Component services and
activities consist of:
(A) Using the centralized or coordinated assessment system as
required under Sec. 576.400(d);
(B) Conducting the initial evaluation required under
Sec. 576.401(a), including verifying and documenting eligibility;
(C) Counseling;
(D) Developing, securing, and coordinating services and obtaining
Federal, State, and local benefits;
(E) Monitoring and evaluating program participant progress;
(F) Providing information and referrals to other providers;
(G) Providing ongoing risk assessment and safety planning with
victims of domestic violence, dating violence, sexual assault, and
stalking; and
(H) Developing an individualized housing and service plan, including
planning a path to permanent housing stability.
(ii) Child care. The costs of child care for program participants,
including providing meals and snacks, and comprehensive and coordinated
sets of appropriate developmental activities, are eligible. The children
must be under the age of 13, unless they are disabled. Disabled children
must be under the age of 18. The child-care center must be licensed by
the jurisdiction in which it operates in order for its costs to be
eligible.
(iii) Education services. When necessary for the program participant
to obtain and maintain housing, the costs of improving knowledge and
basic educational skills are eligible. Services include instruction or
training in consumer education, health education, substance abuse
prevention, literacy, English as a Second Language, and General
Educational Development (GED). Component services or activities are
screening, assessment and testing; individual or group instruction;
tutoring; provision of books, supplies and instructional material;
counseling; and referral to community resources.
(iv) Employment assistance and job training. The costs of employment
assistance and job training programs are eligible, including classroom,
online, and/or computer instruction; on-the-job instruction; and
services that assist individuals in securing employment, acquiring
learning skills, and/or increasing earning potential. The cost of
providing reasonable stipends to program participants in employment
assistance and job training programs is an eligible cost. Learning
skills include those skills that can be used to secure and retain a job,
including the acquisition of vocational licenses and/or certificates.
Services that assist individuals in securing employment consist of
employment screening, assessment, or testing; structured job skills and
job-seeking skills; special training and tutoring, including literacy
training and prevocational training; books and instructional material;
counseling or job coaching; and referral to community resources.
(v) Outpatient health services. Eligible costs are for the direct
outpatient treatment of medical conditions and are provided by licensed
medical professionals. Emergency Solutions Grant (ESG) funds may be used
only for these services to the extent that other appropriate health
services are unavailable
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within the community. Eligible treatment consists of assessing a program
participant's health problems and developing a treatment plan; assisting
program participants to understand their health needs; providing
directly or assisting program participants to obtain appropriate medical
treatment, preventive medical care, and health maintenance services,
including emergency medical services; providing medication and follow-up
services; and providing preventive and noncosmetic dental care.
(vi) Legal services. (A) Eligible costs are the hourly fees for
legal advice and representation by attorneys licensed and in good
standing with the bar association of the State in which the services are
provided, and by person(s) under the supervision of the licensed
attorney, regarding matters that interfere with the program
participant's ability to obtain and retain housing.
(B) Emergency Solutions Grant (ESG) funds may be used only for these
services to the extent that other appropriate legal services are
unavailable or inaccessible within the community.
(C) Eligible subject matters are child support, guardianship,
paternity, emancipation, and legal separation, orders of protection and
other civil remedies for victims of domestic violence, dating violence,
sexual assault, and stalking, appeal of veterans and public benefit
claim denials, and the resolution of outstanding criminal warrants.
(D) Component services or activities may include client intake,
preparation of cases for trial, provision of legal advice,
representation at hearings, and counseling.
(E) Fees based on the actual service performed (i.e., fee for
service) are also eligible, but only if the cost would be less than the
cost of hourly fees. Filing fees and other necessary court costs are
also eligible. If the subrecipient is a legal services provider and
performs the services itself, the eligible costs are the subrecipient's
employees' salaries and other costs necessary to perform the services.
(F) Legal services for immigration and citizenship matters and
issues relating to mortgages are ineligible costs. Retainer fee
arrangements and contingency fee arrangements are ineligible costs.
(vii) Life skills training. The costs of teaching critical life
management skills that may never have been learned or have been lost
during the course of physical or mental illness, domestic violence,
substance use, and homelessness are eligible costs. These services must
be necessary to assist the program participant to function independently
in the community. Component life skills training are budgeting
resources, managing money, managing a household, resolving conflict,
shopping for food and needed items, improving nutrition, using public
transportation, and parenting.
(viii) Mental health services. (A) Eligible costs are the direct
outpatient treatment by licensed professionals of mental health
conditions.
(B) ESG funds may only be used for these services to the extent that
other appropriate mental health services are unavailable or inaccessible
within the community.
(C) Mental health services are the application of therapeutic
processes to personal, family, situational, or occupational problems in
order to bring about positive resolution of the problem or improved
individual or family functioning or circumstances. Problem areas may
include family and marital relationships, parent-child problems, or
symptom management.
(D) Eligible treatment consists of crisis interventions; individual,
family, or group therapy sessions; the prescription of psychotropic
medications or explanations about the use and management of medications;
and combinations of therapeutic approaches to address multiple problems.
(ix) Substance abuse treatment services. (A) Eligible substance
abuse treatment services are designed to prevent, reduce, eliminate, or
deter relapse of substance abuse or addictive behaviors and are provided
by licensed or certified professionals.
(B) ESG funds may only be used for these services to the extent that
other appropriate substance abuse treatment services are unavailable or
inaccessible within the community.
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(C) Eligible treatment consists of client intake and assessment, and
outpatient treatment for up to 30 days. Group and individual counseling
and drug testing are eligible costs. Inpatient detoxification and other
inpatient drug or alcohol treatment are not eligible costs.
(x) Transportation. Eligible costs consist of the transportation
costs of a program participant's travel to and from medical care,
employment, child care, or other eligible essential services facilities.
These costs include the following:
(A) The cost of a program participant's travel on public
transportation;
(B) If service workers use their own vehicles, mileage allowance for
service workers to visit program participants;
(C) The cost of purchasing or leasing a vehicle for the recipient or
subrecipient in which staff transports program participants and/or staff
serving program participants, and the cost of gas, insurance, taxes, and
maintenance for the vehicle; and
(D) The travel costs of recipient or subrecipient staff to accompany
or assist program participants to use public transportation.
(xi) Services for special populations. ESG funds may be used to
provide services for homeless youth, victim services, and services for
people living with HIV/AIDS, so long as the costs of providing these
services are eligible under paragraphs (a)(1)(i) through (a)(1)(x) of
this section. The term victim services means services that assist
program participants who are victims of domestic violence, dating
violence, sexual assault, or stalking, including services offered by
rape crisis centers and domestic violence shelters, and other
organizations with a documented history of effective work concerning
domestic violence, dating violence, sexual assault, or stalking.
(2) Renovation. Eligible costs include labor, materials, tools, and
other costs for renovation (including major rehabilitation of an
emergency shelter or conversion of a building into an emergency
shelter). The emergency shelter must be owned by a government entity or
private nonprofit organization.
(3) Shelter operations. Eligible costs are the costs of maintenance
(including minor or routine repairs), rent, security, fuel, equipment,
insurance, utilities, food, furnishings, and supplies necessary for the
operation of the emergency shelter. Where no appropriate emergency
shelter is available for a homeless family or individual, eligible costs
may also include a hotel or motel voucher for that family or individual.
(4) Assistance required under the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970 (URA). Eligible costs are
the costs of providing URA assistance under Sec. 576.408, including
relocation payments and other assistance to persons displaced by a
project assisted with ESG funds. Persons that receive URA assistance are
not considered ``program participants'' for the purposes of this part,
and relocation payments and other URA assistance are not considered
``rental assistance'' or ``housing relocation and stabilization
services'' for the purposes of this part.
(b) Prohibition against involuntary family separation. The age, of a
child under age 18 must not be used as a basis for denying any family's
admission to an emergency shelter that uses Emergency Solutions Grant
(ESG) funding or services and provides shelter to families with children
under age 18.
(c) Minimum period of use. (1) Renovated buildings. Each building
renovated with ESG funds must be maintained as a shelter for homeless
individuals and families for not less than a period of 3 or 10 years,
depending on the type of renovation and the value of the building. The
``value of the building'' is the reasonable monetary value assigned to
the building, such as the value assigned by an independent real estate
appraiser. The minimum use period must begin on the date the building is
first occupied by a homeless individual or family after the completed
renovation. A minimum period of use of 10 years, required for major
rehabilitation and conversion, must be enforced by a recorded deed or
use restriction.
(i) Major rehabilitation. If the rehabilitation cost of an emergency
shelter exceeds 75 percent of the value of the building before
rehabilitation, the minimum period of use is 10 years.
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(ii) Conversion. If the cost to convert a building into an emergency
shelter exceeds 75 percent of the value of the building after
conversion, the minimum period of use is 10 years.
(iii) Renovation other than major rehabilitation or conversion. In
all other cases where ESG funds are used for renovation, the minimum
period of use is 3 years.
(2) Essential services and shelter operations. Where the recipient
or subrecipient uses ESG funds solely for essential services or shelter
operations, the recipient or subrecipient must provide services or
shelter to homeless individuals and families at least for the period
during which the ESG funds are provided. The recipient or subrecipient
does not need to limit these services or shelter to a particular site or
structure, so long as the site or structure serves the same type of
persons originally served with the assistance (e.g., families with
children, unaccompanied youth, disabled individuals, or victims of
domestic violence) or serves homeless persons in the same area where the
recipient or subrecipient originally provided the services or shelter.
(d) Maintenance of effort. The maintenance of effort requirements
under Sec. 576.101(c), which apply to the use of ESG funds for essential
services related to street outreach, also apply for the use of such
funds for essential services related to emergency shelter.
Sec. 576.103 Homelessness prevention component.
ESG funds may be used to provide housing relocation and
stabilization services and short- and/or medium-term rental assistance
necessary to prevent an individual or family from moving into an
emergency shelter or another place described in paragraph (1) of the
``homeless'' definition in Sec. 576.2. This assistance, referred to as
homelessness prevention, may be provided to individuals and families who
meet the criteria under the ``at risk of homelessness'' definition, or
who meet the criteria in paragraph (2), (3), or (4) of the ``homeless''
definition in Sec. 576.2 and have an annual income below 30 percent of
median family income for the area, as determined by HUD. The costs of
homelessness prevention are only eligible to the extent that the
assistance is necessary to help the program participant regain stability
in the program participant's current permanent housing or move into
other permanent housing and achieve stability in that housing.
Homelessness prevention must be provided in accordance with the housing
relocation and stabilization services requirements in Sec. 576.105, the
short-term and medium-term rental assistance requirements in
Sec. 576.106, and the written standards and procedures established under
Sec. 576.400.
Sec. 576.104 Rapid re-housing assistance component.
ESG funds may be used to provide housing relocation and
stabilization services and short- and/or medium-term rental assistance
as necessary to help a homeless individual or family move as quickly as
possible into permanent housing and achieve stability in that housing.
This assistance, referred to as rapid re-housing assistance, may be
provided to program participants who meet the criteria under paragraph
(1) of the ``homeless'' definition in Sec. 576.2 or who meet the
criteria under paragraph (4) of the ``homeless'' definition and live in
an emergency shelter or other place described in paragraph (1) of the
``homeless'' definition. The rapid re-housing assistance must be
provided in accordance with the housing relocation and stabilization
services requirements in Sec. 576.105, the short- and medium-term rental
assistance requirements in Sec. 576.106, and the written standards and
procedures established under Sec. 576.400.
Sec. 576.105 Housing relocation and stabilization services.
(a) Financial assistance costs. Subject to the general conditions
under Sec. 576.103 and Sec. 576.104, ESG funds may be used to pay
housing owners, utility companies, and other third parties for the
following costs:
(1) Rental application fees. ESG funds may pay for the rental
housing application fee that is charged by the owner to all applicants.
(2) Security deposits. ESG funds may pay for a security deposit that
is equal to no more than 2 months' rent.
[[Page 191]]
(3) Last month's rent. If necessary to obtain housing for a program
participant, the last month's rent may be paid from ESG funds to the
owner of that housing at the time the owner is paid the security deposit
and the first month's rent. This assistance must not exceed one month's
rent and must be included in calculating the program participant's total
rental assistance, which cannot exceed 24 months during any 3-year
period.
(4) Utility deposits. ESG funds may pay for a standard utility
deposit required by the utility company for all customers for the
utilities listed in paragraph (5) of this section.
(5) Utility payments. ESG funds may pay for up to 24 months of
utility payments per program participant, per service, including up to 6
months of utility payments in arrears, per service. A partial payment of
a utility bill counts as one month. This assistance may only be provided
if the program participant or a member of the same household has an
account in his or her name with a utility company or proof of
responsibility to make utility payments. Eligible utility services are
gas, electric, water, and sewage. No program participant shall receive
more than 24 months of utility assistance within any 3-year period.
(6) Moving costs. ESG funds may pay for moving costs, such as truck
rental or hiring a moving company. This assistance may include payment
of temporary storage fees for up to 3 months, provided that the fees are
accrued after the date the program participant begins receiving
assistance under paragraph (b) of this section and before the program
participant moves into permanent housing. Payment of temporary storage
fees in arrears is not eligible.
(7) If a program participant receiving short- or medium-term rental
assistance under Sec. 576.106 meets the conditions for an emergency
transfer under 24 CFR 5.2005(e), ESG funds may be used to pay amounts
owed for breaking a lease to effect an emergency transfer. These costs
are not subject to the 24-month limit on rental assistance under
Sec. 576.106.
(b) Services costs. Subject to the general restrictions under
Sec. 576.103 and Sec. 576.104, ESG funds may be used to pay the costs of
providing the following services:
(1) Housing search and placement. Services or activities necessary
to assist program participants in locating, obtaining, and retaining
suitable permanent housing, include the following:
(i) Assessment of housing barriers, needs, and preferences;
(ii) Development of an action plan for locating housing;
(iii) Housing search;
(iv) Outreach to and negotiation with owners;
(v) Assistance with submitting rental applications and understanding
leases;
(vi) Assessment of housing for compliance with Emergency Solutions
Grant (ESG) requirements for habitability, lead-based paint, and rent
reasonableness;
(vii) Assistance with obtaining utilities and making moving
arrangements; and
(viii) Tenant counseling.
(2) Housing stability case management. ESG funds may be used to pay
cost of assessing, arranging, coordinating, and monitoring the delivery
of individualized services to facilitate housing stability for a program
participant who resides in permanent housing or to assist a program
participant in overcoming immediate barriers to obtaining housing. This
assistance cannot exceed 30 days during the period the program
participant is seeking permanent housing and cannot exceed 24 months
during the period the program participant is living in permanent
housing. Component services and activities consist of:
(A) Using the centralized or coordinated assessment system as
required under Sec. 576.400(d), to evaluate individuals and families
applying for or receiving homelessness prevention or rapid re-housing
assistance;
(B) Conducting the initial evaluation required under
Sec. 576.401(a), including verifying and documenting eligibility, for
individuals and families applying for homelessness prevention or rapid
re-housing assistance;
(C) Counseling;
(D) Developing, securing, and coordinating services and obtaining
Federal, State, and local benefits;
[[Page 192]]
(E) Monitoring and evaluating program participant progress;
(F) Providing information and referrals to other providers;
(G) Developing an individualized housing and service plan, including
planning a path to permanent housing stability; and
(H) Conducting re-evaluations required under Sec. 576.401(b).
(3) Mediation. ESG funds may pay for mediation between the program
participant and the owner or person(s) with whom the program participant
is living, provided that the mediation is necessary to prevent the
program participant from losing permanent housing in which the program
participant currently resides.
(4) Legal services. ESG funds may pay for legal services, as set
forth in Sec. 576.102(a)(1)(vi), except that the eligible subject
matters also include landlord/tenant matters, and the services must be
necessary to resolve a legal problem that prohibits the program
participant from obtaining permanent housing or will likely result in
the program participant losing the permanent housing in which the
program participant currently resides.
(5) Credit repair. ESG funds may pay for credit counseling and other
services necessary to assist program participants with critical skills
related to household budgeting, managing money, accessing a free
personal credit report, and resolving personal credit problems. This
assistance does not include the payment or modification of a debt.
(c) Maximum amounts and periods of assistance. The recipient may set
a maximum dollar amount that a program participant may receive for each
type of financial assistance under paragraph (a) of this section. The
recipient may also set a maximum period for which a program participant
may receive any of the types of assistance or services under this
section. However, except for housing stability case management, the
total period for which any program participant may receive the services
under paragraph (b) of this section must not exceed 24 months during any
3-year period. The limits on the assistance under this section apply to
the total assistance an individual receives, either as an individual or
as part of a family.
(d) Use with other subsidies. Financial assistance under paragraph
(a) of this section cannot be provided to a program participant who is
receiving the same type of assistance through other public sources or to
a program participant who has been provided with replacement housing
payments under the URA, during the period of time covered by the URA
payments.
(e) Housing counseling. Housing counseling, as defined in
Sec. 5.100, that is funded with or provided in connection with ESG funds
must be carried out in accordance with Sec. 5.111. When recipients or
subrecipients provide housing services to eligible persons that are
incidental to a larger set of holistic case management services, these
services do not meet the definition of housing counseling, as defined in
Sec. 5.100, and therefore are not required to be carried out in
accordance with the certification requirements of Sec. 5.111
[76 FR 75974, Dec. 5, 2011,, as amended at 81 FR 80808, Nov. 16, 2016;
81 FR 90659, Dec. 14, 2016]
Sec. 576.106 Short-term and medium-term rental assistance.
(a) General provisions. Subject to the general conditions under
Sec. 576.103 and Sec. 576.104, the recipient or subrecipient may provide
a program participant with up to 24 months of rental assistance during
any 3-year period. This assistance may be short-term rental assistance,
medium-term rental assistance, payment of rental arrears, or any
combination of this assistance.
(1) Short-term rental assistance is assistance for up to 3 months of
rent.
(2) Medium-term rental assistance is assistance for more than 3
months but not more than 24 months of rent.
(3) Payment of rental arrears consists of a one-time payment for up
to 6 months of rent in arrears, including any late fees on those
arrears.
(4) Rental assistance may be tenant-based or project-based, as set
forth in paragraphs (h) and (i) of this section.
(b) Discretion to set caps and conditions. Subject to the
requirements of this section, the recipient may set a maximum amount or
percentage of
[[Page 193]]
rental assistance that a program participant may receive, a maximum
number of months that a program participant may receive rental
assistance, or a maximum number of times that a program participant may
receive rental assistance. The recipient may also require program
participants to share in the costs of rent.
(c) Use with other subsidies. Except for a one-time payment of
rental arrears on the tenant's portion of the rental payment, rental
assistance cannot be provided to a program participant who is receiving
tenant-based rental assistance, or living in a housing unit receiving
project-based rental assistance or operating assistance, through other
public sources. Rental assistance may not be provided to a program
participant who has been provided with replacement housing payments
under the URA during the period of time covered by the URA payments.
(d) Rent restrictions. (1) Rental assistance cannot be provided
unless the rent does not exceed the Fair Market Rent established by HUD,
as provided under 24 CFR part 888, and complies with HUD's standard of
rent reasonableness, as established under 24 CFR 982.507.
(2) For purposes of calculating rent under this section, the rent
shall equal the sum of the total monthly rent for the unit, any fees
required for occupancy under the lease (other than late fees and pet
fees) and, if the tenant pays separately for utilities, the monthly
allowance for utilities (excluding telephone) established by the public
housing authority for the area in which the housing is located.
(e) Rental assistance agreement. The recipient or subrecipient may
make rental assistance payments only to an owner with whom the recipient
or subrecipient has entered into a rental assistance agreement. The
rental assistance agreement must set forth the terms under which rental
assistance will be provided, including the requirements that apply under
this section. The rental assistance agreement must provide that, during
the term of the agreement, the owner must give the recipient or
subrecipient a copy of any notice to the program participant to vacate
the housing unit or any complaint used under State or local law to
commence an eviction action against the program participant. Each rental
assistance agreement that is executed or renewed on or after December
16, 2016 must include all protections that apply to tenants and
applicants under 24 CFR part 5, subpart L, as supplemented by
Sec. 576.409, except for the emergency transfer plan requirements under
24 CFR 5.2005(e) and 576.409(d). If the housing is not assisted under
another ``covered housing program'', as defined in 24 CFR 5.2003, the
agreement may provide that the owner's obligations under 24 CFR part 5,
subpart L (Protection for Victims of Domestic Violence, Dating Violence,
Sexual Assault, or Stalking), expire at the end of the rental assistance
period.
(f) Late payments. The recipient or subrecipient must make timely
payments to each owner in accordance with the rental assistance
agreement. The rental assistance agreement must contain the same payment
due date, grace period, and late payment penalty requirements as the
program participant's lease. The recipient or subrecipient is solely
responsible for paying late payment penalties that it incurs with non-
ESG funds.
(g) Lease. Each program participant receiving rental assistance must
have a legally binding, written lease for the rental unit, unless the
assistance is solely for rental arrears. The lease must be between the
owner and the program participant. Where the assistance is solely for
rental arrears, an oral agreement may be accepted in place of a written
lease, if the agreement gives the program participant an enforceable
leasehold interest under state law and the agreement and rent owed are
sufficiently documented by the owner's financial records, rent ledgers,
or canceled checks. For program participants living in housing with
project-based rental assistance under paragraph (i) of this section, the
lease must have an initial term of 1 year. Each lease executed on or
after December 16, 2016 must include a lease provision or incorporate a
lease addendum that includes all requirements that apply to tenants, the
owner or lease under 24 CFR part 5, subpart L (Protection for Victims of
Domestic
[[Page 194]]
Violence, Dating Violence, Sexual Assault, or Stalking), as supplemented
by 24 CFR 576.409, including the prohibited bases for eviction and
restrictions on construing lease terms under 24 CFR 5.2005(b) and (c).
If the housing is not assisted under another ``covered housing
program,'' as defined in 24 CFR 5.2003, the lease provision or lease
addendum may be written to expire at the end of the rental assistance
period.
(h) Tenant-based rental assistance. (1) A program participant who
receives tenant-based rental assistance may select a housing unit in
which to live and may move to another unit or building and continue to
receive rental assistance, as long as the program participant continues
to meet the program requirements.
(2) The recipient may require that all program participants live
within a particular area for the period in which the rental assistance
is provided.
(3) The rental assistance agreement with the owner must terminate
and no further rental assistance payments under that agreement may be
made if:
(i) The program participant moves out of the housing unit for which
the program participant has a lease;
(ii) The lease terminates and is not renewed; or
(iii) The program participant becomes ineligible to receive ESG
rental assistance.
(i) Project-based rental assistance. If the recipient or
subrecipient identifies a permanent housing unit that meets ESG
requirements and becomes available before a program participant is
identified to lease the unit, the recipient or subrecipient may enter
into a rental assistance agreement with the owner to reserve the unit
and subsidize its rent in accordance with the following requirements:
(1) The rental assistance agreement may cover one or more permanent
housing units in the same building. Each unit covered by the rental
assistance agreement (``assisted unit'') may only be occupied by program
participants, except as provided under paragraph (i)(4) of this section.
(2) The recipient or subrecipient may pay up to 100 percent of the
first month's rent, provided that a program participant signs a lease
and moves into the unit before the end of the month for which the first
month's rent is paid. The rent paid before a program participant moves
into the unit must not exceed the rent to be charged under the program
participant's lease and must be included when determining that program
participant's total rental assistance.
(3) The recipient or subrecipient may make monthly rental assistance
payments only for each whole or partial month an assisted unit is leased
to a program participant. When a program participant moves out of an
assisted unit, the recipient or subrecipient may pay the next month's
rent, i.e., the first month's rent for a new program participant, as
provided in paragraph (i)(2) of this section.
(4) The program participant's lease must not condition the term of
occupancy to the provision of rental assistance payments. If the program
participant is determined ineligible or reaches the maximum number of
months over which rental assistance can be provided, the recipient or
subrecipient must suspend or terminate the rental assistance payments
for the unit. If the payments are suspended, the individual or family
may remain in the assisted unit as permitted under the lease, and the
recipient or subrecipient may resume payments if the individual or
family again becomes eligible and needs further rental assistance. If
the payments are terminated, the rental assistance may be transferred to
another available unit in the same building, provided that the other
unit meets all ESG requirements.
(5) The rental assistance agreement must have an initial term of one
year. When a new program participant moves into an assisted unit, the
term of the rental assistance agreement may be extended to cover the
initial term of the program participant's lease. If the program
participant's lease is renewed, the rental assistance agreement may be
renewed or extended, as needed, up to the maximum number of months for
which the program participant remains eligible. However, under no
circumstances may the recipient or subrecipient commit ESG funds to be
expended beyond the expenditure deadline in Sec. 576.203 or commit funds
for a
[[Page 195]]
future ESG grant before the grant is awarded.
(j) Changes in household composition. The limits on the assistance
under this section apply to the total assistance an individual receives,
either as an individual or as part of a family.
[76 FR 75974, Dec. 5, 2011,, as amended at 81 FR 80808, Nov. 16, 2016]
Sec. 576.107 HMIS component.
(a) Eligible costs. (1) The recipient or subrecipient may use ESG
funds to pay the costs of contributing data to the HMIS designated by
the Continuum of Care for the area, including the costs of:
(i) Purchasing or leasing computer hardware;
(ii) Purchasing software or software licenses;
(iii) Purchasing or leasing equipment, including telephones, fax
machines, and furniture;
(iv) Obtaining technical support;
(v) Leasing office space;
(vi) Paying charges for electricity, gas, water, phone service, and
high-speed data transmission necessary to operate or contribute data to
the HMIS;
(vii) Paying salaries for operating HMIS, including:
(A) Completing data entry;
(B) Monitoring and reviewing data quality;
(C) Completing data analysis;
(D) Reporting to the HMIS Lead;
(F) Training staff on using the HMIS or comparable database; and
(G) Implementing and complying with HMIS requirements;
(viii) Paying costs of staff to travel to and attend HUD-sponsored
and HUD-approved training on HMIS and programs authorized by Title IV of
the McKinney-Vento Homeless Assistance Act;
(ix) Paying staff travel costs to conduct intake; and
(x) Paying participation fees charged by the HMIS Lead, if the
recipient or subrecipient is not the HMIS Lead. The HMIS Lead is the
entity designated by the Continuum of Care to operate the area's HMIS.
(2) If the recipient is the HMIS lead agency, as designated by the
Continuum of Care in the most recent fiscal year Continuum of Care
Homeless Assistance Grants Competition, it may also use ESG funds to pay
the costs of:
(i) Hosting and maintaining HMIS software or data;
(ii) Backing up, recovering, or repairing HMIS software or data;
(iii) Upgrading, customizing, and enhancing the HMIS;
(iv) Integrating and warehousing data, including development of a
data warehouse for use in aggregating data from subrecipients using
multiple software systems;
(v) Administering the system;
(vi) Reporting to providers, the Continuum of Care, and HUD; and
(vii) Conducting training on using the system or a comparable
database, including traveling to the training.
(3) If the subrecipient is a victim services provider or a legal
services provider, it may use ESG funds to establish and operate a
comparable database that collects client-level data over time (i.e.,
longitudinal data) and generates unduplicated aggregate reports based on
the data. Information entered into a comparable database must not be
entered directly into or provided to an HMIS.
(b) General restrictions. Activities funded under this section must
comply with HUD's standards on participation, data collection, and
reporting under a local HMIS.
Sec. 576.108 Administrative activities.
(a) Eligible costs. The recipient may use up to 7.5 percent of its
ESG grant for the payment of administrative costs related to the
planning and execution of ESG activities. This does not include staff
and overhead costs directly related to carrying out activities eligible
under Sec. 576.101 through Sec. 576.107, because those costs are
eligible as part of those activities. Eligible administrative costs
include:
(1) General management, oversight and coordination. Costs of overall
program management, coordination, monitoring, and evaluation. These
costs include, but are not limited to, necessary expenditures for the
following:
(i) Salaries, wages, and related costs of the recipient's staff, the
staff of subrecipients, or other staff engaged in program
administration. In charging
[[Page 196]]
costs to this category, the recipient may either include the entire
salary, wages, and related costs allocable to the program of each person
whose primary responsibilities with regard to the program involve
program administration assignments, or the pro rata share of the salary,
wages, and related costs of each person whose job includes any program
administration assignments. The recipient may use only one of these
methods for each fiscal year grant. Program administration assignments
include the following:
(A) Preparing program budgets and schedules, and amendments to those
budgets and schedules;
(B) Developing systems for assuring compliance with program
requirements;
(C) Developing interagency agreements and agreements with
subrecipients and contractors to carry out program activities;
(D) Monitoring program activities for progress and compliance with
program requirements;
(E) Preparing reports and other documents directly related to the
program for submission to HUD;
(F) Coordinating the resolution of audit and monitoring findings;
(G) Evaluating program results against stated objectives; and
(H) Managing or supervising persons whose primary responsibilities
with regard to the program include such assignments as those described
in paragraph (a)(1)(i)(A) through (G) of this section.
(ii) Travel costs incurred for monitoring of subrecipients;
(iii) Administrative services performed under third-party contracts
or agreements, including general legal services, accounting services,
and audit services; and
(iv) Other costs for goods and services required for administration
of the program, including rental or purchase of equipment, insurance,
utilities, office supplies, and rental and maintenance (but not
purchase) of office space.
(2) Training on ESG requirements. Costs of providing training on ESG
requirements and attending HUD-sponsored ESG trainings.
(3) Consolidated plan. Costs of preparing and amending the ESG and
homelessness-related sections of the consolidated plan in accordance
with ESG requirements and 24 CFR part 91.
(4) Environmental review. Costs of carrying out the environmental
review responsibilities under Sec. 576.407.
(b) Sharing requirement. (1) States. If the recipient is a State,
the recipient must share its funds for administrative costs with its
subrecipients that are units of general purpose local government. The
amount shared must be reasonable under the circumstances. The recipient
may share its funds for administrative costs with its subrecipients that
are private nonprofit organizations.
(2) Territories, metropolitan cities, and urban counties. If the
recipient is a territory, metropolitan city, or urban county, the
recipient may share its funds for administrative costs with its
subrecipients.
Sec. 576.109 Indirect costs.
(a) In general. ESG grant funds may be used to pay indirect costs in
accordance with 2 CFR part 200, subpart E.
(b) Allocation. Indirect costs may be allocated to each eligible
activity under Sec. 576.101 through Sec. 576.108, so long as that
allocation is consistent with 2 CFR part 200, subpart E.
(c) Expenditure limits. The indirect costs charged to an activity
subject to an expenditure limit under Sec. 576.100 must be added to the
direct costs charged for that activity when determining the total costs
subject to the expenditure limit.
[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]
Subpart C_Award and Use of Funds
Sec. 576.200 Submission requirements and grant approval.
(a) Application submission and approval. In addition to meeting the
application submission requirements in 24 CFR part 5, subpart K, each
State, urban county, or metropolitan city must submit and obtain HUD
approval of a consolidated plan in accordance with the requirements in
24 CFR part
[[Page 197]]
91, and each territory must submit and obtain HUD approval of a
consolidated plan in accordance with the requirements that apply to
local governments under 24 CFR part 91. As provided under 2 CFR 200.207,
HUD may impose special conditions or restrictions on a grant, if the
recipient is determined to be high risk.
(b) Amendments. The recipient must amend its approved consolidated
plan in order to make a change in its allocation priorities; make a
change in its method of distributing funds; carry out an activity not
previously described in the plan; or change the purpose, scope,
location, or beneficiaries of an activity. The amendment must be
completed and submitted to HUD in accordance with the requirements under
24 CFR 91.505.
[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]
Sec. 576.201 Matching requirement.
(a) The recipient must make matching contributions to supplement the
recipient's ESG program in an amount that equals the recipient's fiscal
year grant for ESG. This amount may include contributions to any project
under the recipient's ESG program, including any subrecipient's ESG
project, if the requirements in this section are met. The first $100,000
of a State's fiscal year grant is not required to be matched, but the
benefit of this exception must pass to the state's subrecipients that
are least capable of providing matching contributions. The match
requirements under this section do not apply if the recipient is a
territory.
(b) To be recognized as match for ESG, each contribution must meet
the requirements under 2 CFR 200.306, except that:
(1) Notwithstanding 2 CFR 200.306(b)(4), matching contributions are
not subject to the expenditure limits in Sec. 576.100; and
(2) Notwithstanding 2 CFR 200.306(b)(5), the recipient may use funds
from another Federal program as match for ESG, unless doing so would
violate a specific statutory prohibition or the recipient or
subrecipient counts ESG funds as match for that program.
(c) The recipient may count as match the value specified in 2 CFR
200.306(d) for any building the recipient or subrecipient donates for
long-term use in the recipient's ESG program, provided that depreciation
on the building is not counted as match or charged to any Federal award.
If a third party donates a building to the recipient or subrecipient,
the recipient may count as match either depreciation of the building and
fair rental charges for the land for each year the building is used for
the recipient's ESG program or, if the building is donated for long-term
use in the recipient's ESG program, the fair market value of the capital
assets, as specified in 2 CFR 200.306(h)(2), (i), and (j). To qualify as
a donation for long-term use, the donation must be evidenced by a
recorded deed or use restriction that is effective for at least 10 years
after the donation date. If the donated building is renovated with ESG
funds, the minimum period of use under Sec. 576.102(c) may increase the
period for which the building must be used in the recipient's ESG
program.
(d) Eligible types of matching contributions. The matching
requirement may be met by one or both of the following:
(1) Cash contributions. Cash expended for allowable costs, as
defined in OMB Circulars A-87 (2 CFR part 225) and A-122 (2 CFR part
230), of the recipient or subrecipient.
(2) Noncash contributions. The value of any real property,
equipment, goods, or services contributed to the recipient's or
subrecipient's ESG program, provided that if the recipient or
subrecipient had to pay for them with grant funds, the costs would have
been allowable. Noncash contributions may also include the purchase
value of any donated building.
(e) Calculating the amount of noncash contributions. (1) To
determine the value of any donated material or building, or of any
lease, the recipient must use a method reasonably calculated to
establish the fair market value.
(2) Services provided by individuals must be valued at rates
consistent with those ordinarily paid for similar work in the
recipient's or subrecipient's organization. If the recipient or
subrecipient does not have employees performing similar work, the rates
must be consistent with those ordinarily
[[Page 198]]
paid by other employers for similar work in the same labor market.
(3) Some noncash contributions are real property, equipment, goods,
or services that, if the recipient or subrecipient had to pay for them
with grant funds, the payments would have been indirect costs. Matching
credit for these contributions must be given only if the recipient or
subrecipient has established, along with its regular indirect cost rate,
a special rate for allocating to individual projects or programs the
value of those contributions.
(f) Costs paid by program income. Costs paid by program income shall
count toward meeting the recipient's matching requirements, provided the
costs are eligible ESG costs that supplement the recipient's ESG
program.
[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]
Sec. 576.202 Means of carrying out grant activities.
(a) States. If the recipient is a State, the recipient may use an
amount consistent with the restrictions in Sec. 576.100 and Sec. 576.108
to carry out administrative activities through its employees or
procurement contracts. If the recipient is a State, and has been
identified as the HMIS lead by the Continuum of Care, the State may use
funds to carry out HMIS activities set forth in Sec. 576.107(a)(2). The
recipient must subgrant the remaining funds in its fiscal year grant to:
(1) Units of general purpose local government in the State, which
may include metropolitan cities and urban counties that receive ESG
funds directly from HUD; or
(2) Private nonprofit organizations, provided that for emergency
shelter activities the recipient obtains a certification of approval
from the unit of general purpose local government for the geographic
area in which those activities are to be carried out.
(b) Recipients other than States; subrecipients. The recipient, if
it is not a State, and all subrecipients may carry out all eligible
activities through their employees, procurement contracts, or subgrants
to private nonprofit organizations. If the recipient is an urban county,
it may carry out activities through any of its member governments, so
long as the county applies to its members the same requirements that are
applicable to local government subrecipients under this part.
Sec. 576.203 Obligation, expenditure, and payment requirements.
(a) Obligation of funds. (1) Funds allocated to States. (i) Within
60 days from the date that HUD signs the grant agreement with the State
(or grant amendment for reallocated funds), the recipient must obligate
the entire grant, except the amount for its administrative costs. This
requirement is met by a subgrant agreement with, or a letter of award
requiring payment from the grant to, a subrecipient.
(ii) Within 120 days after the date that the State obligates its
funds to a unit of general purpose local government, the subrecipient
must obligate all of those funds by a subgrant agreement with, or a
letter of award requiring payment to, a private nonprofit organization;
a procurement contract; or the written designation of a department
within the government of the subrecipient to directly carry out an
eligible activity.
(2) Funds allocated to metropolitan cities, urban counties, and
territories. Within 180 days after the date that HUD signs the grant
agreement (or a grant amendment for reallocation of funds) with the
metropolitan city, urban county, or territory, the recipient must
obligate all the grant amount, except the amount for its administrative
costs. This requirement is met by an agreement with, or a letter of
award requiring payment to, a subrecipient; a procurement contract; or a
written designation of a department within the government of the
recipient to directly carry out an eligible activity. If the recipient
is an urban county, this requirement may also be met with an agreement
with, or letter of award requiring payment to, a member government,
which has designated a department to directly carry out an eligible
activity.
(b) Expenditures. The recipient must draw down and expend funds from
each year's grant not less than once during each quarter of the
recipient's program year. All of the recipient's grant must be expended
for eligible activity costs
[[Page 199]]
within 24 months after the date HUD signs the grant agreement with the
recipient. For the purposes of this paragraph, expenditure means either
an actual cash disbursement for a direct charge for a good or service or
an indirect cost or the accrual of a direct charge for a good or service
or an indirect cost.
(c) Payments to subrecipients. The recipient must pay each
subrecipient for allowable costs within 30 days after receiving the
subrecipient's complete payment request. This requirement also applies
to each subrecipient that is a unit of general purpose local government.
Subpart D_Reallocations
Sec. 576.300 In general.
(1) Funds not awarded by HUD due to failure by the recipient to
submit and obtain HUD approval of a consolidated plan will be
reallocated in accordance with Secs. 576.301 through 576.303.
(2) Recaptured funds will be awarded by formula. In October and
April each year, HUD will determine if the amount of recaptured funds is
at least 30 percent of the most recent fiscal year appropriation. If so,
HUD will amend all existing grants and reallocate the funds. If the
amount is less than 30 percent of the most recent fiscal year
appropriation, the funds will be reallocated in conjunction with the
next fiscal year's allocation of funding.
Sec. 576.301 Metropolitan cities and urban counties.
Grant funds returned by a metropolitan city or urban county will be
reallocated as follows:
(a) Eligible recipient. HUD will make the funds available to the
State in which the city or county is located.
(b) Notification of availability. HUD will promptly notify the State
of the availability of the amounts to be reallocated.
(c) Application requirement. Within 45 days after the date of
notification, the State must submit to HUD a substantial amendment to
its consolidated plan in accordance with 24 CFR part 91.
(d) Restrictions that apply to reallocated amounts. The same
requirements that apply to grant funds allocated under Sec. 576.3 apply
to grant funds reallocated under this section, except that the State
must distribute the reallocated funds:
(1) To private nonprofit organizations and units of general purpose
local government in the geographic area in which the metropolitan city
or urban county is located;
(2) If funds remain, to private nonprofit organizations and units of
general purpose local government located throughout the State.
Sec. 576.302 States.
Grant funds returned by a State will be reallocated as follows:
(a) Eligible recipients. HUD will make the funds available:
(1) To metropolitan cities and urban counties in the State that were
not allocated funds under Sec. 576.3 because the amount they would have
been allocated did not meet the minimum requirement under
Sec. 576.3(b)(2);
(2) If funds remain, to county governments in the State other than
urban counties;
(3) Then, if funds remain, to metropolitan cities and urban counties
in the State that were allocated funds under Sec. 576.3.
(b) Notification of availability. HUD will notify eligible
recipients of the availability of the funds by a notification letter or
Federal Register notice, which will specify how the awards of funds will
be made.
(c) Application requirements. Within 45 days after the date of
notification, the eligible recipient must submit to HUD:
(1) A substantial amendment to its approved consolidated plan in
accordance with 24 CFR part 91; or
(2) If the eligible recipient does not have an approved consolidated
plan, an abbreviated consolidated plan that meets the requirements in
the Federal Register notice or notification letter from HUD.
(d) Restrictions that apply to reallocated amounts. The same
requirements that apply to grant funds allocated under Sec. 576.3 apply
to grant funds reallocated under this section.
Sec. 576.303 Territories.
(a) General. Grant funds returned by a territory will be reallocated
to other
[[Page 200]]
territories, then if funds remain, to States.
(b) Allocation method. The funds will be allocated as follows:
(1) For territories, the funds will be allocated among the
territories in direct proportion with each territory's share of the
total population of all of the eligible territories. If HUD determines
that a territory failed to spend its funds in accordance with ESG
requirements, then HUD may exclude the territory from the allocation of
reallocation amounts under this section.
(2) For States, the funds will be allocated to each State in direct
proportion with each State's share of the total amount of funds
allocated to States under Sec. 576.3.
(c) Notification of availability. HUD will notify eligible
recipients of the availability of the fund by a letter or Federal
Register notice, which will specify how the awards of funds will be
made.
(d) Application requirements. Within 45 days after the date of
notification, the eligible recipient must submit to HUD a substantial
amendment to its consolidated plan in accordance with 24 CFR part 91.
(e) Restrictions that apply to reallocated amounts. The same
requirements that apply to grant funds allocated under Sec. 576.3 apply
to grant funds reallocated under this section.
Subpart E_Program Requirements
Sec. 576.400 Area-wide systems coordination requirements.
(a) Consultation with Continuums of Care. The recipient must consult
with each Continuum of Care that serves the recipient's jurisdiction in
determining how to allocate ESG funds each program year; developing the
performance standards for, and evaluating the outcomes of, projects and
activities assisted by ESG funds; and developing funding, policies, and
procedures for the administration and operation of the HMIS.
(b) Coordination with other targeted homeless services. The
recipient and its subrecipients must coordinate and integrate, to the
maximum extent practicable, ESG-funded activities with other programs
targeted to homeless people in the area covered by the Continuum of Care
or area over which the services are coordinated to provide a strategic,
community-wide system to prevent and end homelessness for that area.
These programs include:
(1) Shelter Plus Care Program (24 CFR part 582);
(2) Supportive Housing Program (24 CFR part 583);
(3) Section 8 Moderate Rehabilitation Program for Single Room
Occupancy Program for Homeless Individuals (24 CFR part 882);
(4) HUD--Veterans Affairs Supportive Housing (HUD-VASH) (division K,
title II, Consolidated Appropriations Act, 2008, Pub. L. 110-161 (2007),
73 FR 25026 (May 6, 2008));
(5) Education for Homeless Children and Youth Grants for State and
Local Activities (title VII-B of the McKinney-Vento Homeless Assistance
Act (42 U.S.C. 11431 et seq.));
(6) Grants for the Benefit of Homeless Individuals (section 506 of
the Public Health Services Act (42 U.S.C. 290aa-5));
(7) Healthcare for the Homeless (42 CFR part 51c);
(8) Programs for Runaway and Homeless Youth (Runaway and Homeless
Youth Act (42 U.S.C. 5701 et seq.));
(9) Projects for Assistance in Transition from Homelessness (part C
of title V of the Public Health Service Act (42 U.S.C. 290cc-21 et
seq.));
(10) Services in Supportive Housing Grants (section 520A of the
Public Health Service Act);
(11) Emergency Food and Shelter Program (title III of the McKinney-
Vento Homeless Assistance Act (42 U.S.C. 11331 et seq.));
(12) Transitional Housing Assistance Grants for Victims of Sexual
Assault, Domestic Violence, Dating Violence, and Stalking Program
(section 40299 of the Violent Crime Control and Law Enforcement Act (42
U.S.C. 13975));
(13) Homeless Veterans Reintegration Program (section 5(a)(1)) of
the Homeless Veterans Comprehensive Assistance Act (38 U.S.C. 2021);
(14) Domiciliary Care for Homeless Veterans Program (38 U.S.C.
2043);
(15) VA Homeless Providers Grant and Per Diem Program (38 CFR part
61);
[[Page 201]]
(16) Health Care for Homeless Veterans Program (38 U.S.C. 2031);
(17) Homeless Veterans Dental Program (38 U.S.C. 2062);
(18) Supportive Services for Veteran Families Program (38 CFR part
62); and
(19) Veteran Justice Outreach Initiative (38 U.S.C. 2031).
(c) System and program coordination with mainstream resources. The
recipient and its subrecipients must coordinate and integrate, to the
maximum extent practicable, ESG-funded activities with mainstream
housing, health, social services, employment, education, and youth
programs for which families and individuals at risk of homelessness and
homeless individuals and families may be eligible. Examples of these
programs include:
(1) Public housing programs assisted under section 9 of the U.S.
Housing Act of 1937 (42 U.S.C. 1437g) (24 CFR parts 905, 968, and 990);
(2) Housing programs receiving tenant-based or project-based
assistance under section 8 of the U.S. Housing Act of 1937 (42 U.S.C.
1437f) (respectively 24 CFR parts 982 and 983);
(3) Supportive Housing for Persons with Disabilities (Section 811)
(24 CFR part 891);
(4) HOME Investment Partnerships Program (24 CFR part 92);
(5) Temporary Assistance for Needy Families (TANF) (45 CFR parts
260-265);
(6) Health Center Program (42 CFR part 51c);
(7) State Children's Health Insurance Program (42 CFR part 457):
(8) Head Start (45 CFR chapter XIII, subchapter B);
(9) Mental Health and Substance Abuse Block Grants (45 CFR part 96);
and
(10) Services funded under the Workforce Investment Act (29 U.S.C.
2801 et seq.).
(d) Centralized or coordinated assessment. Once the Continuum of
Care has developed a centralized assessment system or a coordinated
assessment system in accordance with requirements to be established by
HUD, each ESG-funded program or project within the Continuum of Care's
area must use that assessment system. The recipient and subrecipient
must work with the Continuum of Care to ensure the screening, assessment
and referral of program participants are consistent with the written
standards required by paragraph (e) of this section. A victim service
provider may choose not to use the Continuum of Care's centralized or
coordinated assessment system.
(e) Written standards for providing ESG assistance. (1) If the
recipient is a metropolitan city, urban county, or territory, the
recipient must have written standards for providing Emergency Solutions
Grant (ESG) assistance and must consistently apply those standards for
all program participants. The recipient must describe these standards in
its consolidated plan.
(2) If the recipient is a state:
(i) The recipient must establish and consistently apply, or require
that its subrecipients establish and consistently apply, written
standards for providing ESG assistance. If the written standards are
established by the subrecipients, the recipient may require these
written standards to be:
(A) Established for each area covered by a Continuum of Care or area
over which the services are coordinated and followed by each
subrecipient providing assistance in that area; or
(B) Established by each subrecipient and applied consistently within
the subrecipient's program.
(ii) Written standards developed by the state must be included in
the state's Consolidated Plan. If the written standards are developed by
its subrecipients, the recipient must describe its requirements for the
establishment and implementation of these standards in the state's
Consolidated Plan.
(3) At a minimum these written standards must include:
(i) Standard policies and procedures for evaluating individuals' and
families' eligibility for assistance under Emergency Solutions Grant
(ESG);
(ii) Standards for targeting and providing essential services
related to street outreach;
(iii) Policies and procedures for admission, diversion, referral,
and discharge by emergency shelters assisted under ESG, including
standards regarding length of stay, if any, and safeguards to meet the
safety and shelter
[[Page 202]]
needs of special populations, e.g., victims of domestic violence, dating
violence, sexual assault, and stalking; and individuals and families who
have the highest barriers to housing and are likely to be homeless the
longest;
(iv) Policies and procedures for assessing, prioritizing, and
reassessing individuals' and families' needs for essential services
related to emergency shelter;
(v) Policies and procedures for coordination among emergency shelter
providers, essential services providers, homelessness prevention, and
rapid re-housing assistance providers; other homeless assistance
providers; and mainstream service and housing providers (see
Sec. 576.400(b) and (c) for a list of programs with which ESG-funded
activities must be coordinated and integrated to the maximum extent
practicable);
(vi) Policies and procedures for determining and prioritizing which
eligible families and individuals will receive homelessness prevention
assistance and which eligible families and individuals will receive
rapid re-housing assistance (these policies must include the emergency
transfer priority required under Sec. 576.409);
(vii) Standards for determining what percentage or amount of rent
and utilities costs each program participant must pay while receiving
homelessness prevention or rapid re-housing assistance;
(viii) Standards for determining how long a particular program
participant will be provided with rental assistance and whether and how
the amount of that assistance will be adjusted over time; and
(ix) Standards for determining the type, amount, and duration of
housing stabilization and/or relocation services to provide to a program
participant, including the limits, if any, on the homelessness
prevention or rapid re-housing assistance that each program participant
may receive, such as the maximum amount of assistance, maximum number of
months the program participant receive assistance; or the maximum number
of times the program participant may receive assistance.
(f) Participation in HMIS. The recipient must ensure that data on
all persons served and all activities assisted under ESG are entered
into the applicable community-wide HMIS in the area in which those
persons and activities are located, or a comparable database, in
accordance with HUD's standards on participation, data collection, and
reporting under a local HMIS. If the subrecipient is a victim service
provider or a legal services provider, it may use a comparable database
that collects client-level data over time (i.e., longitudinal data) and
generates unduplicated aggregate reports based on the data. Information
entered into a comparable database must not be entered directly into or
provided to an HMIS.
[76 FR 75974, Dec. 5, 2011, as amended at 81 FR 80808, Nov. 16, 2016]
Sec. 576.401 Evaluation of program participant eligibility and needs.
(a) Evaluations. The recipient or its subrecipient must conduct an
initial evaluation to determine the eligibility of each individual or
family's eligibility for ESG assistance and the amount and types of
assistance the individual or family needs to regain stability in
permanent housing. These evaluations must be conducted in accordance
with the centralized or coordinated assessment requirements set forth
under Sec. 576.400(d) and the written standards established under
Sec. 576.400(e).
(b) Re-evaluations for homelessness prevention and rapid re-housing
assistance. (1) The recipient or subrecipient must re-evaluate the
program participant's eligibility and the types and amounts of
assistance the program participant needs not less than once every 3
months for program participants receiving homelessness prevention
assistance, and not less than once annually for program participants
receiving rapid re-housing assistance. At a minimum, each re-evaluation
of eligibility must establish that:
(i) The program participant does not have an annual income that
exceeds 30 percent of median family income for the area, as determined
by HUD; and
(ii) The program participant lacks sufficient resources and support
networks necessary to retain housing without ESG assistance.
[[Page 203]]
(2) The recipient or subrecipient may require each program
participant receiving homelessness prevention or rapid re-housing
assistance to notify the recipient or subrecipient regarding changes in
the program participant's income or other circumstances (e.g., changes
in household composition) that affect the program participant's need for
assistance under ESG. When notified of a relevant change, the recipient
or subrecipient must re-evaluate the program participant's eligibility
and the amount and types of assistance the program participant needs.
(c) Annual income. When determining the annual income of an
individual or family, the recipient or subrecipient must use the
standard for calculating annual income under 24 CFR 5.609.
(d) Connecting program participants to mainstream and other
resources. The recipient and its subrecipients must assist each program
participant, as needed, to obtain:
(1) Appropriate supportive services, including assistance in
obtaining permanent housing, medical health treatment, mental health
treatment, counseling, supervision, and other services essential for
achieving independent living; and
(2) Other Federal, State, local, and private assistance available to
assist the program participant in obtaining housing stability,
including:
(i) Medicaid (42 CFR chapter IV, subchapter C):
(ii) Supplemental Nutrition Assistance Program (7 CFR parts 271-
283);
(iii) Women, Infants and Children (WIC) (7 CFR part 246);
(iv) Federal-State Unemployment Insurance Program (20 CFR parts 601-
603, 606, 609, 614-617, 625, 640, 650);
(v) Social Security Disability Insurance (SSDI) (20 CFR part 404);
(vi) Supplemental Security Income (SSI) (20 CFR part 416);
(vii) Child and Adult Care Food Program (42 U.S.C. 1766(t) (7 CFR
part 226));
(viii) Other assistance available under the programs listed in
Sec. 576.400(c).
(e) Housing stability case management. (1) While providing
homelessness prevention or rapid re-housing assistance to a program
participant, the recipient or subrecipient must:
(i) Require the program participant to meet with a case manager not
less than once per month to assist the program participant in ensuring
long-term housing stability; and
(ii) Develop a plan to assist the program participant to retain
permanent housing after the ESG assistance ends, taking into account all
relevant considerations, such as the program participant's current or
expected income and expenses; other public or private assistance for
which the program participant will be eligible and likely to receive;
and the relative affordability of available housing in the area.
(2) The recipient or subrecipient is exempt from the requirement
under paragraph (e)(1)(i) of this section if the Violence Against Women
Act of 1994 (42 U.S.C. 13701 et seq.) or the Family Violence Prevention
and Services Act (42 U.S.C. 10401 et seq.) prohibits that recipient or
subrecipient from making its shelter or housing conditional on the
participant's acceptance of services.
Sec. 576.402 Terminating assistance.
(a) In general. If a program participant violates program
requirements, the recipient or subrecipient may terminate the assistance
in accordance with a formal process established by the recipient or
subrecipient that recognizes the rights of individuals affected. The
recipient or subrecipient must exercise judgment and examine all
extenuating circumstances in determining when violations warrant
termination so that a program participant's assistance is terminated
only in the most severe cases.
(b) Program participants receiving rental assistance or housing
relocation and stabilization services. To terminate rental assistance or
housing relocation and stabilization services to a program participant,
the required formal process, at a minimum, must consist of:
(1) Written notice to the program participant containing a clear
statement of the reasons for termination;
(2) A review of the decision, in which the program participant is
given the opportunity to present written or oral objections before a
person other than the person (or a subordinate of that
[[Page 204]]
person) who made or approved the termination decision; and
(3) Prompt written notice of the final decision to the program
participant.
(c) Ability to provide further assistance. Termination under this
section does not bar the recipient or subrecipient from providing
further assistance at a later date to the same family or individual.
Sec. 576.403 Shelter and housing standards.
(a) Lead-based paint remediation and disclosure. The Lead-Based
Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential
Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and
implementing regulations in 24 CFR part 35, subparts A, B, H, J, K, M,
and R apply to all shelters assisted under ESG program and all housing
occupied by program participants.
(b) Minimum standards for emergency shelters. Any building for which
Emergency Solutions Grant (ESG) funds are used for conversion, major
rehabilitation, or other renovation, must meet state or local government
safety and sanitation standards, as applicable, and the following
minimum safety, sanitation, and privacy standards. Any emergency shelter
that receives assistance for shelter operations must also meet the
following minimum safety, sanitation, and privacy standards. The
recipient may also establish standards that exceed or add to these
minimum standards.
(1) Structure and materials. The shelter building must be
structurally sound to protect residents from the elements and not pose
any threat to health and safety of the residents. Any renovation
(including major rehabilitation and conversion) carried out with ESG
assistance must use Energy Star and WaterSense products and appliances.
(2) Access. The shelter must be accessible in accordance with
Section 504 of the Rehabilitation Act (29 U.S.C. 794) and implementing
regulations at 24 CFR part 8; the Fair Housing Act (42 U.S.C. 3601 et
seq.) and implementing regulations at 24 CFR part 100; and Title II of
the Americans with Disabilities Act (42 U.S.C. 12131 et seq.) and 28 CFR
part 35; where applicable.
(3) Space and security. Except where the shelter is intended for day
use only, the shelter must provide each program participant in the
shelter with an acceptable place to sleep and adequate space and
security for themselves and their belongings.
(4) Interior air quality. Each room or space within the shelter must
have a natural or mechanical means of ventilation. The interior air must
be free of pollutants at a level that might threaten or harm the health
of residents.
(5) Water supply. The shelter's water supply must be free of
contamination.
(6) Sanitary facilities. Each program participant in the shelter
must have access to sanitary facilities that are in proper operating
condition, are private, and are adequate for personal cleanliness and
the disposal of human waste.
(7) Thermal environment. The shelter must have any necessary
heating/cooling facilities in proper operating condition.
(8) Illumination and electricity. The shelter must have adequate
natural or artificial illumination to permit normal indoor activities
and support health and safety. There must be sufficient electrical
sources to permit the safe use of electrical appliances in the shelter.
(9) Food preparation. Food preparation areas, if any, must contain
suitable space and equipment to store, prepare, and serve food in a safe
and sanitary manner.
(10) Sanitary conditions. The shelter must be maintained in a
sanitary condition.
(11) Fire safety. There must be at least one working smoke detector
in each occupied unit of the shelter. Where possible, smoke detectors
must be located near sleeping areas. The fire alarm system must be
designed for hearing-impaired residents. All public areas of the shelter
must have at least one working smoke detector. There must also be a
second means of exiting the building in the event of fire or other
emergency.
(c) Minimum standards for permanent housing. The recipient or
subrecipient cannot use ESG funds to help a program participant remain
or move into
[[Page 205]]
housing that does not meet the minimum habitability standards provided
in this paragraph (c). The recipient may also establish standards that
exceed or add to these minimum standards.
(1) Structure and materials. The structures must be structurally
sound to protect residents from the elements and not pose any threat to
the health and safety of the residents.
(2) Space and security. Each resident must be provided adequate
space and security for themselves and their belongings. Each resident
must be provided an acceptable place to sleep.
(3) Interior air quality. Each room or space must have a natural or
mechanical means of ventilation. The interior air must be free of
pollutants at a level that might threaten or harm the health of
residents.
(4) Water supply. The water supply must be free from contamination.
(5) Sanitary facilities. Residents must have access to sufficient
sanitary facilities that are in proper operating condition, are private,
and are adequate for personal cleanliness and the disposal of human
waste.
(6) Thermal environment. The housing must have any necessary
heating/cooling facilities in proper operating condition.
(7) Illumination and electricity. The structure must have adequate
natural or artificial illumination to permit normal indoor activities
and support health and safety. There must be sufficient electrical
sources to permit the safe use of electrical appliances in the
structure.
(8) Food preparation. All food preparation areas must contain
suitable space and equipment to store, prepare, and serve food in a safe
and sanitary manner.
(9) Sanitary conditions. The housing must be maintained in a
sanitary condition.
(10) Fire safety. (i) There must be a second means of exiting the
building in the event of fire or other emergency.
(ii) Each unit must include at least one battery-operated or hard-
wired smoke detector, in proper working condition, on each occupied
level of the unit. Smoke detectors must be located, to the extent
practicable, in a hallway adjacent to a bedroom. If the unit is occupied
by hearing impaired persons, smoke detectors must have an alarm system
designed for hearing-impaired persons in each bedroom occupied by a
hearing-impaired person.
(iii) The public areas of all housing must be equipped with a
sufficient number, but not less than one for each area, of battery-
operated or hard-wired smoke detectors. Public areas include, but are
not limited to, laundry rooms, community rooms, day care centers,
hallways, stairwells, and other common areas.