HomeMy WebLinkAboutCatholic Charities; 2022-12-27; PSA23-03CDBG1
CA 11/4/2022
PSA23-03CDBG
AGREEMENT BETWEEN THE CITY OF CARLSBAD AND
CATHOLIC CHARITIES FOR
FEDERAL COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
THIS AGREEMENT (“Agreement”) made and entered into as of this day of
20___ by and between the CITY OF CARLSBAD ("City") and Catholic Charities, a California non-
profit corporation ("Subrecipient").
RECITALS
WHEREAS, the City has applied for and received funds from the United States
Government under Title I of the Housing and Community Development Act of 1974, Public Law
93-383 as amended to fund eligible activities which benefit persons of low and moderate income
under Catalog of Federal Domestic Assistance number 14.218; and,
WHEREAS, the City wishes to provide assistance to non-profit public service providers
who offer services for lower income Carlsbad residents; and,
WHEREAS, the Subrecipient can provide these basic services for lower income
households with some assistance from the City; and,
WHEREAS, the City has determined that the services offered by the Subrecipient are
exempt from environmental review under 24 CFR Section 58.34(a)(4); and,
WHEREAS, the U.S. Department of Housing and Urban Development has approved the
City’s Annual Consolidated Plan for Community Development Block Grant funds (hereinafter
referred to as the “Annual Consolidated Plan”).
NOW, THEREFORE, in consideration of these recitals and the mutual covenants
contained herein, City and Subrecipient agree as follows:
1.STATEMENT OF WORK
The City has allocated federal community development block grant (“CDBG”) funds, in the amount
of twelve thousand six hundred and ninety-eight dollars ($12,698) to the Subrecipient for provision
of services through their offices located at 2478 Impala Drive, Carlsbad, CA, 92010, for the period
beginning July 1, 2022, and ending June 30, 2023. The Subrecipient agrees to use all federal
funds provided by the City to the Subrecipient pursuant to the provisions of this Agreement, the
Scope of Work, attached hereto as Exhibit “A”, and in accordance with the terms of the Annual
Consolidated Plan.
National Objectives: All activities funded with CDGB funds must meet one of the CDBG
program’s National Objectives: benefit low- and moderate-income persons; aid in the prevention
or elimination of slums or blight; or meet community development needs having a particular
urgency, as defined in 24 CFR 570.208.
The Subrecipient certifies that the activity(ies) carried out under this Agreement will meet the
National Objective of benefiting low- and moderate-income persons.
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
22
27th December
2 CA 11/4/2022
Levels of Accomplishment – Goals and Performance Measures: The levels of
accomplishment may include such measures as units rehabilitated; persons or households
assisted, or meals served, and should include periods for performance. Refer to Exhibit A for the
level of project and program services.
Staffing: Subrecipient shall be responsible for staff and time to be allocated to each activity, as
set forth in Exhibit A, attached hereto and incorporated herein.
Performance Monitoring: The City will monitor the performance of the Subrecipient against
goals and performance standards as stated above and Exhibit “A”. Substandard performance as
determined by the City will constitute noncompliance with this Agreement. If action to correct such
substandard performance is not taken by the Subrecipient within a reasonable period of time after
being notified by the City, contract suspension or termination procedures will be initiated.
Every effort shall be made by the Subrecipient to expend the allocated funds in their entirety by
June 30, 2023. If the Subrecipient will be unable to expend all of the funds allocated to the project
by the noted date, the Subrecipient shall request an extension from the City for continued use of
the funds on the approved project based on progress made by the Subrecipient towards
completing the subject project. The City may agree to grant the extension or notify the
Subrecipient that, in its sole discretion, the funds must be reallocated to another eligible activity
due to slow project progress.
2. DISBURSEMENT OF FUNDS
The City shall reimburse the Subrecipient with CDBG funds for necessary and reasonable costs
related to the provision of services for eligible residents of Carlsbad for the term of this Agreement.
The reimbursements for costs shall not exceed a total of $12,698. However, no more than
90 percent of the total agreed upon compensation will be paid during the performance of this
Agreement. The balance due (remaining 10 percent) shall be paid upon final certification by the
City that Subrecipient has administered the services and activities in compliance with all
applicable Federal, state, and local rules and regulations governing these funds, and in a manner
satisfactory to the City.
Payment for eligible expenses shall be made in accordance with budget information provided in
Exhibit “B” and in accordance with performance. Subrecipient represents that the budget
includes only allowable costs and an accurate analysis of costs applicable to the CDBG funds
pursuant to 24 CFR Section 570.502.
Subrecipient shall submit a "Request for Reimbursement" to the City for compensation of eligible
and actual expenses incurred. The City shall not provide any payments/reimbursements in
advance of actual expenditures by the Subrecipient. Subrecipient may request reimbursements
anytime after this Agreement is approved by the City Council and continue until the expiration
date, or amended expiration date, of this Agreement.
Each request for reimbursement shall include documentation to verify expenditure of funds are
consistent with this Agreement, the Statement of Work, the Annual Consolidated Plan, and with
all applicable Federal, state, and local rules and regulations governing these funds. Payroll
records, receipts, paid invoices including an itemized statement of all costs are samples of
appropriate methods of reimbursement documentation.
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
3 CA 11/4/2022
3. PROGRAM INCOME
The Subrecipient shall report, to the City, any interest, or other income, earned as a direct result
of the use of federal CDBG funds for the program outlined within this Agreement. All reported
program income may be retained by the Subrecipient for costs related to the subject program
activities. However, the program income, retained by the Subrecipient, must be expended before
additional funds are requested from the City. The requirements are set forth in 24 CFR Section
570.504 which is incorporated herein by reference.
4. LABOR, MATERIALS AND SUPPLIES:
The Subrecipient shall furnish all labor, materials and services and bear all expenses necessary
to provide the subject program as outlined in this agreement. Under this Agreement, the City's
only financial obligation to the Subrecipient is to provide the CDBG funds of $12698 maximum as
allocated by the City Council for program year 2023.
5. RECORDS AND REPORTS
The Subrecipient shall maintain all records required by the Federal regulations specified in 24
CFR Section 570.506 that are pertinent to the activities to be funded under this Agreement. Such
records shall include but not be limited to:
• Records providing a full description of each activity undertaken;
• Records demonstrating each activity undertaken meets one of the National
Objectives of the CDBG program;
• Records required to determine the eligibility of activities;
• Records demonstrating compliance with 24 CFR Section 570.505 regarding
change of use of real property acquired or improved with CDBG assistance;
• Records demonstrating compliance with the requirements in 24 CFR Section
570.606 regarding acquisition, displacement, relocation, and replacement
housing;
• Records documenting compliance with the fair housing and equal opportunity
components of the CDBG program;
• Documentation of all CDBG funds received from the City, eligible expenses
incurred for administration of each activity, and other financial records as required
by 24 CFR Section 570.502, and OMB (the United States Office of Management
and Budget) Circular A-110; and,
• Any other related records as the City shall be required to demonstrate compliance
with applicable Federal, state, and local rules and regulations governing these
funds.
The Subrecipient shall submit quarterly "Progress Reports" within ten (10) calendar days of the
end of each quarter for the full term of this Agreement. The final progress report is due no later
than July 10, 2023. The report must include sufficient information to assist the City in monitoring
the Subrecipient's performance. The Subrecipient must demonstrate satisfactory performance
prior to reimbursement for expenditures.
At a minimum, the performance reports shall include the following information:
• Total number of participants in program during reported period;
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
4 CA 11/4/2022
• Total number of participants from Carlsbad;
• Number of low/moderate income Carlsbad persons/households participating in
the program during the reporting period;
• Age and ethnic background of Carlsbad participants; and,
• Summary of program(s) provided to Carlsbad participants.
• Quarterly reports must be submitted by within ten (10) calendar days of the end
of each quarter.
The Subrecipient shall maintain client data demonstrating client eligibility for services provided.
Such data shall include at the minimum, client name, address, ethnicity, income level or other
basis for determining eligibility, and a description of service provided. This data shall assist the
Subrecipient in completing the required quarterly progress reports to be submitted to the City.
The Subrecipient shall maintain separate accounting records for the federal CDBG funds provided
by the City. The City, Federal Grantor Agency, Comptroller General of the United States, or any
of their duly authorized representatives shall have access to all books, documents, papers and
records maintained by the Subrecipient which directly pertain to the above project for the purpose
of audit, examination, excerpts and transcriptions.
Unless otherwise notified by the City, the Subrecipient shall retain all financial records, supporting
documents and statistical reports related to the project identified under this Agreement for a period
of five (5) years after the termination of all activities funded under this Agreement. All records
subject to litigation, claims, audit findings, negotiations, or other actions must be retained for five
(5) years from the date such action commenced or until completion of the action and resolution
of all issues by the appropriate officials and verified by official written notice to the Subrecipient,
whichever occurs later.
If the Subrecipient shall receive more than $750,000 in total federal funds in one fiscal year
from the City of Carlsbad and/or any other city or agency, the Subrecipient is required to submit
a Single Audit Report. As required by the Federal Single Audit Act, the Subrecipient shall be
required to submit, to the City, a comprehensive financial audit prepared by an independent,
neutral third-party auditor. The audit shall cover financial operations of the Subrecipient for the
term of this Agreement and is due not later than one year after expiration of the agreement. The
Subrecipient shall also be required to submit a second audit for the following period covered under
the fiscal year beginning July 1, 2022, and ending June 30, 2023, for any funds received in fiscal
year 2022-23 per this Agreement.
6. PROGRAM REQUIREMENTS
The Subrecipient agrees to comply with the requirements of Title 24 of the Code of Federal
Regulations, Part 570 (the Housing and Urban Development regulations concerning Community
Development Block Grants). The Subrecipient also agrees to adhere to the terms of the City's
CDBG Application and Subrecipient Agreement on file at the Housing & Homeless Services
Department and with assurances and agreements made, by the City to the United States
Department of Housing and Urban Development of which the Subrecipient is given notice.
The Subrecipient shall comply with applicable Uniform Administrative Requirements as described
in 24 CFR Section 570.502, the federal regulations for the CDBG Program; the federal
requirements are set forth, and incorporated by reference herein, as a provision of this
Agreement.
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
5 CA 11/4/2022
The Subrecipient shall carry out all activities in compliance with all Federal laws and regulations
as described in Subpart K of the CDBG Program Regulations, such as affirmatively furthering fair
housing, labor standards (Davis Bacon Act), displacement, relocation and acquisition, and
employment and contracting opportunities, except that:
• The Subrecipient will not assume the City's environmental responsibilities as
described in 24 CFR Section 570.604; and
• The Subrecipient will not assume the City's responsibility for initiating the review
process required under the provisions of 24 CFR Section 52.
The provisions of Subpart K, of the CDBG Program Regulations, incorporated herein by
reference, are a condition of this Agreement.
The Subrecipient shall comply with all federal regulations related to the use of CDBG funds by
religious organizations, if applicable to this Agreement and the approved project outlined herein.
6.1. The Housing and Community Development Act of 1974 (Public Law 93-383), as
amended;
6.2. Regulations of the Department of Housing and Urban Development relating to
Community Development Block Grants (Title 24, Chapter V, Part 570 of the Code of
Federal Regulations commencing with Section 570.l), and amended thereafter;
6.3. Regulations of the Department of Housing and Urban Development relating to
environmental review procedures for the Community Development Block Grant program
(Title 24, Subtitle A, Part 58 of the Code of Federal Regulations, commencing at Section 58.l);
6.4. Title VI of the Civil Rights Act of 1964 (Public Law 88-352); Title VIII of the Civil
Rights Act of 1968 (Public Law 90-284); Section 109 of the Housing and Community
Development Act of 1974; Executive Order 11246; Executive Order 11063; and any HUD
regulations heretofore issued or to be issued to implement these authorities relating to
civil rights;
6.5. If applicable under 24 C.F.R. §75.3, then pursuant to 24 SECTION 3 CLAUSE
C.F.R. §75.27, Subrecipient (and, if indicated below, City) shall comply with the following
“Section 3 Clause”:
6.5.1. The work to be performed under this Agreement is subject to the
requirements of Section 3 of the Housing and Urban Development Act of 1968, as
amended, 12 USC 1701u (Section 3). The purpose of Section 3 is to ensure that
employment and other economic opportunities generated by HUD assistance or
HUD-assisted projects covered by Section 3, shall, to the greatest extent feasible,
be directed to low- and very low-income persons, particularly persons who are
recipients of HUD assistance for housing.
6.5.2. The Parties to this Agreement agree to comply with HUD’s regulations in
24 C.F.R. Part 75, which implement Section 3. As evidenced by their execution of
this Agreement, the Parties to this Agreement certify that they are under no
contractual or other impediment that would prevent them from complying with the
Part 75 regulations.
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
6 CA 11/4/2022
6.5.3. Subrecipient agrees to send to each labor organization or representative
of workers with which Subrecipient has a collective bargaining agreement or other
understanding, if any, a notice advising the labor organization or workers’
representative of Subrecipient’s commitments under this Section 3 Clause and will
post copies of the notice in conspicuous places at the work site where both
employees and applicants for training and employment positions can see the notice.
The notice shall describe the Section 3 preference, shall set forth minimum number
and job titles subject to hire, availability of apprenticeship and training positions, the
qualifications for each, the name and location of the Person(s) taking applications
for each of the positions and the anticipated date the work shall begin.
6.5.4. Subrecipient agrees to include this Section 3 Clause in every subcontract
subject to compliance with the regulations in 24 C.F.R. Part 75, and agrees to take
appropriate action, as provided in an applicable provision of the subcontract or in
this Section 3 Clause, upon a finding that the subcontractor is in violation of the
regulations in 24 C.F.R. Part 75. Subrecipient will not subcontract with any
subcontractor where Subrecipient has notice or knowledge that the subcontractor
has been found in violation of the regulations in 24 C.F.R. Part 75.
6.5.5. Subrecipient will certify that any vacant employment positions, including
training positions, that are filled (1) after Subrecipient is selected, but before this
Agreement is executed, and (2) with persons other than those to whom the
regulations of 24 C.F.R. Part 75 require employment opportunities to be directed,
were not filled to circumvent Subrecipient’s obligations under 24 C.F.R. Part 75.
6.5.6. Noncompliance with HUD’s regulations in 24 C.F.R. Part 75 may result in
sanctions, termination of this Agreement for default, and debarment or suspension
from future HUD assisted agreements.
6.5.7. With respect to work performed in connection with Section 3 covered Indian
housing assistance, Section 7(b) of the Indian Self-Determination and Education
Assistance Act (25 USC 450e) also applies to the work to be performed under this
Agreement. Section 7(b) requires that to the greatest extent feasible (i) preference
and opportunities for training and employment shall be given to Indians, and (ii)
preference in the award of contracts and subcontracts shall be given to Indian
organizations and Indian-owned Economic Enterprises. Parties to this Agreement
that are subject to the provisions of Section 3 and Section 7(b) agree to comply with
Section 3 to the maximum extent feasible, but not in derogation of compliance with
Section 7(b).
6.5.8. Subrecipient shall document its good faith efforts to comply with the terms
and conditions of the above Section 3 Clause and furnish such documentation to
City, upon request.
6.6. The Uniform Relocation Assistance and Real Property Acquisition Policies Act of
1970 and regulations adopted to implement that Act in the Code of Federal Regulations,
Title 24, part 42;
6.7. Cost principles have been established for State, Local and Indian Tribal
Governments through 2CFR, Part 225 (OMB Circular A-87). This part provides a uniform
approach for determining costs and to promote effective program delivery, efficiency, and
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
7 CA 11/4/2022
better relationships between governmental units and the Federal Government. The
principles are for determining allowable costs only. They are not intended to identify the
circumstances or to dictate the extent of Federal and governmental unit participation in
the financing of a particular Federal award. Provision for profit or other increment above
cost is outside the scope of this part;
6.8. Additional cost principles have been established for non-profits through 2 CFR part
200, subpart E, entitled “Cost Principles for Non-Profit Organizations”; 2 CFR part 230
entitled “Cost Principles for Non-Profit Organizations” (Circular A–122); and 2 CFR Part
225 entitled “Cost Principles for State, Local, and Indian Tribal Governments” (OMB
Circular A–87); This part establishes principles for determining costs of grants, contracts
and other agreements with non-profit organizations. The principles are designed to
provide that the Federal Government bear its fair share of costs except where restricted
or prohibited by law. The principles do not attempt to prescribe the extent of cost sharing
or matching on grants, contracts, or other agreements. However, such cost sharing or
matching shall not be accomplished through arbitrary limitations on individual cost
elements by Federal agencies;
6.9. The following laws and regulations relating to preservation of historic places: Public
Law 89-665 the Archeological and Historical Preservation Act of 1974 (Public Law
93-291), and Executive Order 11593 including the procedures prescribed by the Advisory
Council on Historic Preservation in 36 Code of Federal Regulations, Part 800;
6.10. The Labor Standards Regulations set forth in 24 CFR, Part 570;
6.11. The Architectural Barriers Act of 1968 (42 U.S.C. Section 4151);
6.12. The Hatch Act relating to the conduct of political activities (Chapter 15 of Title 5,
U.S.C.);
6.13. The Flood Disaster Protection Act of 1974 (Public Law 93-234 and the regulations
adopted pursuant thereto) 24 CFR, Chapter X Subpart B;
6.14. The Rehabilitation Act of 1973 (Public Law 93-112) as amended; including Section
504 which relates to nondiscrimination in Federal programs and Housing and Urban
Development Regulations set forth in 24 CFR Part 8.
6.15. The Clean Air Act (42 U.S.C. Section 1857 et seq.) and the Federal Water Pollution
Control Act, as amended (33 U.S.C. Section 1251 et seq.) and the regulations adopted
pursuant thereto (40 CFR, Part 15);
6.16. The Drug-Free Workplace Act of 1988 (Public Law 100-690);
6.17. In the procurement of supplies, equipment, construction and services by
Subrecipient the conflict-of-interest provisions in Attachment 0 of OMB Circular No. A-110
and 24 C.F.R. 570.611 shall apply;
6.18. No member, officer or employee of the Subrecipient , or its designee or agents, no
member of the governing body of the locality in which the program is situated, and no
other public official of such locality or localities who exercises any functions or
responsibilities with respect to the program during his/her tenure or for one year thereafter,
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
8 CA 11/4/2022
shall have any interest, direct, or indirect, in any contract or subcontract, or the process
thereof, for work to be performed in connection with the program assisted under the Grant,
and that it shall incorporate, or cause to be incorporated, in all such contracts or
subcontracts a provision prohibiting such interest pursuant to the purposes of this
certification.
6.19. The Contractor certifies, that in accordance with Section 319 of Public Law 101-
121, to the best of his or her knowledge and belief that:
6.19.1. No federal appropriated funds have been paid or will be paid, by or on
behalf of the undersigned, to any person for influencing or attempting to influence an
officer or employee of any agency, a Member of Congress, an officer or employee
of Congress, in connection with the awarding of any Federal contract, the making of
any Federal grant, the making of any Federal loan, the entering into of any
cooperative agreement, and the extension, continuation, renewal, amendment, or
modification of any Federal contract, grant, loan, or cooperative agreement.
6.19.2. If any funds other than Federal appropriated funds have been paid or will
be paid to any person for influencing or attempting to influence an officer or
employee of any agency, a Member of Congress, or an employee of a Member of
Congress in connection with this Federal contract, grant, loan, or cooperative
agreement, the undersigned shall complete and submit Standard Form-LLL,
"Disclosure Form to Report Lobbying", in accordance with its instructions.
6.20. Subrecipient shall comply with and make good faith and reasonable efforts to carry
out the purposes of Executive Order 13166 relating to “Improving Access to Services by
Persons with Limited English Proficiency (“LEP”);
6.21. Subrecipient shall comply with Federal Funding Accountability and Transparency
Act (FFAT) requirements established by the Office of Management and Budget (OMB)
concerning the Dun and Bradstreet Data Universal Numbering System (DUNS), the
Central Contractor Registration (CCR) database, and the Federal Funding Accountability
and Transparency Act, including Appendix A to Part 25 of the Financial Assistance Use of
Universal Identifier and Central Contractor Registration, 75 Fed. Reg.55671 (Sept. 14,
2010)(to be codified at 2 CFR part 25) and Appendix A to Part 170 of the Requirements
for Federal Funding Accountability and Transparency Act Implementation, 75 Fed. Reg.
55663 (Sept. 14, 2010)(to be codified at 2 CFR part 170), including any subsequent
amendments.
6.22. Subrecipient agrees that funds provided under this Agreement will not be utilized
for inherently religious activities prohibited by 24 CFR 570.200(j), such as worship,
religious instruction, or proselytization.
6.23. 2 CFR Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards.
7. CHANGES IN USE OF FUNDS
Changes in the use of CDBG funds must be approved by the City Council and the U.S.
Department of HUD. If the Subrecipient desires a change in the use of the CDBG funds following
approval of this Agreement, a written request must be submitted to the City for review by the City
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
9 CA 11/4/2022
Council. No change in use of the CDBG funds will be permitted without prior written approval of
the City Council.
8. NONDISCRIMINATION CLAUSE
The Subrecipient shall comply with all state and federal laws regarding nondiscrimination in the
provision of services and the equal opportunity employment of personnel.
8.1. Provision of Program Services.
8.1.1. Subrecipient shall not on the ground of race, color, national origin, or sex,
exclude any person from participation in, deny any person the benefits of, or subject
any person to discrimination under any program or activity funded in whole or in part
with CDBG funds.
8.1.2. Subrecipient shall not under any program or activity funded in whole or in part
with CDBG funds, on the ground of race, color, national origin, or sex:
8.1.2.1. Deny any facilities, services, financial aid or other benefits provided under
the program or activity.
8.1.2.2. Provide any facilities, services, financial aid, or other benefits which are
different or are provided in a different form from that provided to others under the
program or activity.
8.1.2.3. Subject to segregated or separate treatment in any facility in, or in any
matter of process related to receipt of any service or benefit under the program or
activity.
8.1.2.4. Restrict in any way access to, or in the enjoyment of any advantage or
privilege enjoyed by others in connection with facilities, services, financial aid or
other benefits under the program or activity.
8.1.2.5. Treat an individual differently from others in determining whether the
individual satisfies any admission, enrollment, eligibility, membership, or other
requirement or condition which the individual must meet in order to be provide any
facilities, services or other benefit provided under the program or activity as an
employee.
8.1.2.6. Deny an opportunity to participate in a program or activity as an employee.
8.1.3. Subrecipient may not utilize criteria or methods of administration which have
the effect of subjecting individuals to discrimination on the basis of race, color,
national origin, or sex, or have the effect of defeating or substantially impairing
accomplishment of the objectives of the program or activity with respect to individuals
of a particular race, color, national origin, or sex.
8.1.4. Subrecipient, in determining the site or location of housing or facilities provided
in whole or in part with CDBG funds, may not make selections of such site or location
which have the effect of excluding individuals from, denying them the benefits or, or
subjecting them to discrimination on the ground of race, color, national origin, or sex,
or which have the purpose or effect of defeating or substantially impairing the
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
10 CA 11/4/2022
accomplishment of the objectives of the Civil Rights Act of 1964 and amendments
thereto.
8.1.5. In administering a program or activity funded in whole or in part with CDBG
funds regarding which the Subrecipient has previously discriminated against persons
on the ground of race, color, national origin, or sex, the Subrecipient must take
affirmative action to overcome the effects of prior discrimination. Even in the absence
of such prior discrimination, a Subrecipient in administering a program or activity
funded in whole or in part with CDBG funds should take affirmative action to overcome
the effects of conditions which would otherwise result in limiting participation by
persons of a particular race, color, national origin, or sex, to exclude individuals from
participation in, to deny them the benefits of, or to subject them to discrimination under
any program or activity to which CDBG funding applies, the Subrecipient has an
obligation to take reasonable action to remove or overcome the consequences of the
prior discriminatory practice or usage, and to accomplish the purpose of the Civil
Rights Act of 1964. A Subrecipient shall not be prohibited by this part from taking any
eligible action to ameliorate any imbalance in services or facilities provided to any
geographic area or specific group of persons within its jurisdiction where the purpose
of such action is to overcome prior discriminatory practice or usage.
8.1.6. Notwithstanding anything to the contrary, nothing contained herein shall be
construed to prohibit any Subrecipient from maintaining or constructing separate
living facilities or rest room facilities for the different sexes. Furthermore, selectivity
on the basis of sex is not prohibited when institutional or custodial services can
properly be performed only by a member of the same sex as the recipients of the
services.
8.1.7. Subrecipient shall also provide ready access to and use of all CDBG fund
assisted buildings to physically handicapped persons in compliance with the
standards established in the Architectural Barriers Act of 1968 (42 U.S.C. 4151 et seq.).
8.2. Employment Discrimination.
8.2.1. Subrecipient shall not discriminate against any employee or application for
employment because of race, color, religion, sex, national origin, age, or handicap.
Subrecipient shall take affirmative action to ensure that applicants are employed, and
that employees are treated during employment, without regard to their race, color,
religion, sex, national origin, age, or handicap. Such action shall include, but not be
limited to, the following: employment, upgrading, demotion or transfer, recruitment or
recruitment advertising, layoff or termination, rate of pay or other forms of
compensation and selection for training including apprenticeship. Subrecipient
agrees to post in conspicuous places available to employees and applicants for
employment, notices setting forth the provisions of this nondiscrimination clause.
8.2.2. Subrecipient shall, in all solicitations or advertisements for employees
placed by or on behalf of Subrecipient, state that all qualified applications will receive
consideration for employment without regard to race, color, religion, sex, national
origin, age or handicap.
8.2.3. Subrecipient shall send to each labor union or representative of workers
with which it has a collective bargaining agreement or other Subrecipient
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
11 CA 11/4/2022
understanding, a notice to be provided by City's contracting officers advising the labor
union or workers' representative of Subrecipient 'S commitments under Section 202
of Executive Order No. 11246 of September 14, 1965, and Subrecipient shall post
copies of the notices in conspicuous places available to employees and applicants
for employment.
8.2.4. Subrecipient shall comply with all provisions of Executive Order 11246 of
September 24, 1965, and of the rules, regulations, and relevant orders of the
Secretary of Labor.
8.2.5. Subrecipient shall furnish to the City all information and reports required by
Executive Order No. 11246 of September 24, 1965, and of the related rules,
regulations, and orders.
8.2.6. Subrecipient shall include the provisions of Section 11, "Affirmative Action
Policy," in every subcontract or purchase order unless exempted by rules,
regulations, or order of the Secretary of Labor issued pursuant to Section 204 of
Executive Order No. 11246 of September 24, 1965, so that such provisions will be
binding upon each sub-contractor or vendor. Subrecipient shall take such action with
respect to any sub-contractor or purchase order as the City may direct as a means of
enforcing such provisions including sections for noncompliance: Provided, however,
that in the event Subrecipient becomes involved in, or is threatened with, litigation
with a sub-contractor or vendor as a result of such direction by the City, Subrecipient
may request the United States to enter into such litigation to protect the interests of
the United States.
8.2.7. Subrecipient shall not discriminate on the basis of age in violation of any
provision of the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.) or with
respect to any otherwise qualified handicapped individual as provided in Section 504
of the Rehabilitation Act of 1973 (29 U.S.C. 794).
7. SUSPENSION AND TERMINATION OF AGREEMENT
In accordance with 24 CFR Sections 85.43 and 85.44, this Agreement may be suspended or
terminated if the Subrecipient fails to comply with any term(s) of the award. 24 CFR Sections
85.43 and 85.44 are incorporated herein by reference, as provisions of this Agreement.
10. REVERSION OF ASSETS
The use and disposition of real property and equipment under this Agreement shall be in
compliance with the requirements of 24 CFR Part 84 and 24 CFR 570.502, 570.503, and 570.504,
570.505 as applicable, which include but are not limited to the following:
10.1. Real Property
10.1.1. Upon expiration of the Agreement, the Subrecipient shall transfer to the City
any CDBG funds on hand at the time of expiration and any accounts receivable
attributable to the use of CDBG funds. The Subrecipient shall be required to use any
real property under the Subrecipient's control that was acquired or improved in whole
or in part with CDBG funds in excess of $25,000 to either be:
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
12 CA 11/4/2022
(a) Used to meet one of the national objectives in 24 CFR Section 570.208 of the
federal regulations, until five (5) years after expiration of the Agreement; or,
(b) Disposed of in a manner that results in the City being 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, or improvement
to, the property. Reimbursement is not required after the period of time specified
in paragraph (10.1.1. a.) of this section.
10.2. Equipment
10.2.1. In all cases in which equipment acquired, in whole or in part, with funds under
this Agreement is sold, the proceeds shall be program income (prorated to reflect
the extent to that funds received under this Agreement were used to acquire the
equipment). Equipment not needed by the Subrecipient for activities under this
Agreement shall be (a) transferred to the Grantee for the CDBG program or (b)
retained after compensating the Grantee [an amount equal to the current fair market
value of the equipment less the percentage of non-CDBG funds used to acquire the
equipment].
11. HOLD HARMLESS AGREEMENT
The City, its officers, and employees shall not be liable for any claims, liabilities, penalties, fines,
or any damage to goods, or real or personal property of any person whatsoever, nor for personal
injuries or death caused by, or claimed to have been caused by, or resulting from, any intentional
or negligent acts, errors or omission of Subrecipient or Subrecipient's agents, employees, or
representatives arising directly or indirectly out of performance of the project outlined in this
Agreement.
Subrecipient agrees to defend, indemnify, and hold free and harmless the City, its officers,
employees and agents against any of the foregoing liabilities or claims of any kind and any cost
or expenses incurred by the City including attorneys’ fees, on account of any of the foregoing
liabilities, including liabilities or claims arising out of alleged defects in any plans or specifications
for the project or facility.
Subrecipient agrees that it undertakes hereby the same obligations to the City that the City has
undertaken to HUD pursuant to said application and assurances. Subrecipient agrees to hold City
harmless against any indemnity, which it may suffer with respect to HUD on account of any failure
on the part of Subrecipient to comply with the requirements of any such obligation. Said Federal
documents are on file with the Housing & Homeless Services Department at the City of Carlsbad,
located at 1200 Carlsbad Village Drive, Carlsbad, CA 92008, and are incorporated herein by
reference. The obligations undertaken by Subrecipient include, but are not limited to, the
obligations as specified in Section 6 of this Agreement.
12. ASSIGNMENT OF AGREEMENT
The Subrecipient shall not assign this Agreement or any monies due thereunder without the prior
written consent of the City Council.
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
13 CA 11/4/2022
13. SUCCESSORS OR ASSIGNS
Subject to the provisions of this Subrecipient Agreement Paragraph 11, "Hold Harmless
Agreement," all terms, conditions, and provisions hereof shall inure to and shall bind each of the
parties hereto, and each of their respective heirs, executors, administrators, successors, and
assigns.
14. INSURANCE
If the Subrecipient shall receive more than $5,000 from the City in CDBG funds and/or other funds,
the Subrecipient shall obtain and maintain policies of Commercial General Liability insurance and
a combined policy of worker's compensation and employers liability insurance in an insurable
amount of not less than one million dollars ($1,000,000) each, unless a lower amount is approved
by the Risk Manager or the City Manager. The insurance will be obtained from an insurance
carrier admitted and authorized to do business in the State of California. The insurance carrier is
required to have a current Best's Key Rating of not less than "A-:VII" or have a surplus line insurer
which is on the State of California’s List of Eligible Surplus Line Insurers with a current Best’s Key
Rating of not less than “A:X”. The City shall be named as an additional insured on the Commercial
General Liability Policy which shall provide primary coverage to the City.
This insurance shall be in force during the term of this Agreement and shall not be canceled or
materially changed without ten (10) days prior written notice to the City sent by certified mail.
The Subrecipient shall furnish certificates of insurance and required endorsements to the Housing
& Homeless Services Director before commencement of work.
15. LICENSING/PERMITS
Subrecipient will obtain and maintain a City of Carlsbad Business License for the term of the
Agreement, as may be amended from time-to-time.
Subrecipient agrees to obtain and maintain all licenses, registrations, accreditations, and
inspections from all agencies governing its operations. Subrecipient shall insure that its staff shall
also obtain and maintain all required licenses, registrations, accreditations, and inspections from
all agencies governing Subrecipient’s operations hereunder.
16. AMENDMENTS
The City or Subrecipient may amend this Agreement at any time provided that such amendments
make specific reference to this Agreement, and are executed in writing, signed by a duly
authorized representative of each organization, and approved by the City’s governing body. Such
amendments shall not invalidate this Agreement, nor relieve or release the City or Subrecipient
from its obligations under this Agreement.
The City may, in its discretion, amend this Agreement to conform with Federal, state or local
governmental guidelines, policies and available funding amounts, or for other reasons. If such
amendments result in a change in the funding, the scope of services, or schedule of the activities
to be undertaken as part of this Agreement, such modifications will be incorporated only by written
amendment signed by both City and Subrecipient.
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
14 CA 11/4/2022
17. NOTICES
The name of the persons who are authorized to give written notice or to receive written notice on
behalf of City and on behalf of Subrecipient under this Agreement.
For City: For Subrecipient:
Name:
Title:
Nicole Piano-Jones
Program Manager
Antoinette Fallon
Director of Homeless Services
Department: Housing & Homeless Services Catholic Charities
Address: 1200 Carlsbad Village Drive
Carlsbad, CA 92008
2478 Impala Drive
Carlsbad, CA, 92010
Telephone: (442) 339-2191 (619) 381-0910
Email: nicole.pianojones@carlsbadca.gov AFallon@ccdsd.org
Each party will notify the other immediately of any changes of address that would require any
notice or delivery to be directed to another address.
18. INELIGIBILITY OF SUB-CONTRACTORS.
Subrecipient shall not use CDBG funds directly or indirectly in its operations or to employ, award
contracts to, or otherwise engage the services of, or fund any Subrecipient during any period of
debarment, suspension, or placement in ineligibility status of the Subrecipient or such
Subrecipient under the provisions of 24 C.F.R. Part 24.
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
15
CA 11/4/2022
SUBRECIPIENT:
Catholic Charities
By:
Appaswamy Pajanor
Chief Executive Officer
Dated:
CITY OF CARLSBAD:
By:
Mandy Mills
Housing & Homeless Services Director
Dated:
ATTEST:
________________________________
For Faviola Medina
City Clerk Services Manager
Dated:
APPROVED AS TO FORM:
Cindie McMahon, City Attorney
By:
Ron Kemp, Senior Assistant City Attorney
Dated:
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
12/13/2022
12/27/2022
12/27/2022
12/27/2022
CA 11/4/2022
EXHIBIT “A”
CITY OF CARLSBAD
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
SCOPE OF WORK
TERM July 1, 2022 – June 30, 2023 CONTACT Antoinette Fallon
AGENCY Catholic Charities PHONE (619) 381-0910
PROJECT La Posada Shelter Services EMAIL AFallon@ccdsd.org
ADDRESS 2478 Impala Drive, Carlsbad, CA, 92010
PROGRAM GOALS AND OBJECTIVES
GOAL
MEASURABLE 1: La Posada will provide shelter for 89 men during the grant period
MEASURABLE 2: La Posada will provide 10,680 meals to shelter residents
MEASURABLE 3: 40% of 89 men will exit into housing (36 men)
MEASURABLE 4: La Posada will provide case management to 71 men (80%) during the grant
period
PROGRAM TIMELINE
DUE DELIVERABLE
October 10, 2022 Quarterly Report and Invoice
(Approx. 25% program accomplishments and grant amount)
January 10, 2023 Quarterly Report and Invoice
(Approx. 50% program accomplishments and grant amount)
April 10, 2023 Quarterly Report and Invoice
(Approx. 75% program accomplishments and grant amount)
June 30, 2023 Quarterly Report, Year-End Report, and Invoice
(Approx. 100% program accomplishments and grant amount)
REPORTING REQUIREMENTS
1.Demographic reporting: Provide quarterly, and year-end, summary demographic reports on
number of persons served by the project and related demographic data on a City provided
reporting form.
2.Progress reporting: Provide quarterly, and year-end, summary narrative reports on progress
made in achieving the project goal and performance objectives described above on a City
provided reporting form.
La Posada will assist 89 unhoused men with shelter and trauma-
informed wrap-around services to help them on their path to self-sustainability.
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
CA 11/4/2022
EXHIBIT “B”
CITY OF CARLSBAD
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
BUDGET
TERM July 1, 2022 – June 30, 2023 CONTACT Antoinette Fallon
AGENCY Catholic Charities PHONE (619) 381-0910
PROJECT La Posada Shelter Services EMAIL AFallon@ccdsd.org
ADDRESS 2478 Impala Drive, Carlsbad, CA, 92010
BUDGET DETAIL
LINE ITEM CDBG OTHER
(SPECIFY)
TOTAL
Wages and Salaries $12,698
TOTAL $12,698 $ - $12,698
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
CA 11/4/2022
EXHIBIT “C”
CITY OF CARLSBAD
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
CODE OF FEDERAL REGULATIONS
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
31
SUBCHAPTER C—COMMUNITY FACILITIES
PART 570—COMMUNITY
DEVELOPMENT BLOCK GRANTS
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 preserva-
tion activities.
570.203 Special economic development ac-
tivities.
570.204 Special activities by Community-
Based Development Organizations
(CBDOs).
570.205 Eligible planning, urban environ-
mental design and policy-planning-man-
agement-capacity building activities.
570.206 Program administrative costs.
570.207 Ineligible activities.
570.208 Criteria for national objectives.
570.209 Guidelines for evaluating and select-
ing 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 eco-
nomic diversification planning assist-
ance.
570.402 Technical assistance awards.
570.403 New Communities.
570.404 Historically Black colleges and uni-
versities program.
570.405 The insular areas.
570.406 Formula miscalculation grants.
570.410 Special Projects Program.
570.411 Joint Community Development Pro-
gram.
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 de-
sign.
570.422–4.25 [Reserved]
570.426 Program income.
570.427 Program amendments.
570.428 [Reserved]
570.429 Hawaii general and grant require-
ments.
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, acquisi-
tion, and replacement of housing.
570.461 Post-preliminary approval require-
ments; lead-based paint.
570.463 Project amendments and revisions.
570.464 Project closeout.
570.465 Applicability of rules and regula-
tions.
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, acquisi-
tion, and replacement of housing.
570.489 Program administrative require-
ments.
570.490 Recordkeeping requirements.
570.491 Performance and evaluation report.
570.492 State’s reviews and audits.
570.493 HUD’s reviews and audits.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00041 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
32
24 CFR Ch. V (4–1–13 Edition) §570.1
570.494 Timely distribution of funds by
states.
570.495 Reviews and audits response.
570.496 Remedies for noncompliance; oppor-
tunity for hearing.
570.497 Condition of State election to ad-
minister State CDBG Program.
Subpart J—Grant Administration
570.500 Definitions.
570.501 Responsibility for grant administra-
tion.
570.502 Applicability of uniform administra-
tive 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 rehabili-
tation 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 hous-
ing; 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, acquisi-
tion, and replacement of housing.
570.607 Employment and contracting oppor-
tunities.
570.608 Lead-based paint.
570.609 Use of debarred, suspended or ineli-
gible contractors or subrecipients.
570.610 Uniform administrative require-
ments and cost principles.
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.
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 regula-
tions.
570.708 Sanctions.
570.709 Allocation of loan guarantee assist-
ance.
570.710 State responsibilities.
570.711 State borrowers; additional require-
ments and application procedures.
Subpart N—Urban Renewal Provisions
570.800 Urban renewal regulations.
Subpart O—Performance Reviews
570.900 General.
570.901 Review for compliance with the pri-
mary and national objectives and other
program requirements.
570.902 Review to determine if CDBG funded
activities are being carried out in a time-
ly manner.
570.903 Review to determine if the recipient
is meeting its consolidated plan respon-
sibilities.
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 adjust-
ment of a grant or other appropriate ac-
tion.
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: 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.
§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 Develop-
ment Act of 1974, as amended:
(1) Entitlement grants program (sub-
part D);
(2) Nonentitlement Funds: HUD-ad-
ministered Small Cities and Insular
Area programs (subpart F);
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00042 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
33
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.3
(3) State program: State-adminis-
tered CDBG nonentitlement funds (sub-
part 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 provi-
sions of these subparts or the applica-
ble program regulations. In the appli-
cation of the subparts to Special Pur-
pose 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 §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 pro-
grams 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]
§570.3 Definitions.
The terms HUD and Secretary are de-
fined in 24 CFR part 5. All of the fol-
lowing 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 de-
cennial census.
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 pro-
vided in section 102(a)(21) of the Act.
CDBG funds means Community De-
velopment Block Grant funds, includ-
ing funds received in the form of grants
under subpart D, F, or §570.405 of this
part, funds awarded under section
108(q) of the Housing and Community
Development Act of 1974, loans guaran-
teed under subpart M of this part,
urban renewal surplus grant funds, and
program income as defined in
§570.500(a).
Chief executive officer of a State or
unit of general local government
means the elected official or the le-
gally designated official, who has the
primary responsibility for the conduct
of that entity’s governmental affairs.
Examples of the ‘‘chief executive offi-
cer’’ of a unit of general local govern-
ment are: the elected mayor of a mu-
nicipality; the elected county execu-
tive of a county; the chairperson of a
county commission or board in a coun-
ty that has no elected county execu-
tive; and the official designated pursu-
ant to law by the governing body of a
unit of general local government.
City means the following:
(1) For purposes of Entitlement Com-
munity Development Block Grant and
Urban Development Action Grant eligi-
bility:
(i) Any unit of general local govern-
ment that is classified as a munici-
pality 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 associ-
ated with municipalities;
(B) Is closely settled (except that the
Secretary may reduce or waive this re-
quirement on a case by case basis for
the purposes of the Action Grant pro-
gram); 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
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.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00043 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
34
24 CFR Ch. V (4–1–13 Edition) §570.3
(2) For purposes of Urban Develop-
ment 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 Assist-
ance Act of 1972 and located on reserva-
tions in Oklahoma as determined by
the Secretary of the Interior or in
Alaskan Native Villages.
Community Development Financial In-
stitution has the same meaning as used
in the Community Development Bank-
ing 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, prior-
ities and proposed activities to be un-
dertaken with respect to HUD pro-
grams, including the CDBG program.
An approved consolidated plan means a
consolidated plan that has been ap-
proved 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 is
entitled to receive under the Entitle-
ment 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 Bu-
reau 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 in-
come and cost of living.
Family refers to the definition of
‘‘family’’ in 24 CFR 5.403.
Household means all persons occu-
pying a housing unit. The occupants
may be a family, as defined in 24 CFR
5.403; two or more families living to-
gether; or any other group of related or
unrelated persons who share living ar-
rangements, regardless of actual or
perceived, sexual orientation, gender
identity, or marital status.
Income. For the purpose of deter-
mining whether a family or household
is low- and moderate-income under
subpart C of this part, grantees may se-
lect any of the three definitions listed
below for each activity, except that in-
tegrally related activities of the same
type and qualifying under the same
paragraph of §570.208(a) shall use the
same definition of income. The option
to choose a definition does not apply to
activities that qualify under
§570.208(a)(1) (Area benefit activities),
except when the recipient carries out a
survey under §570.208(a)(1)(vi). Activi-
ties qualifying under §570.208(a)(1) gen-
erally 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 rehabili-
tation under §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 re-
cent available decennial Census. This
definition includes:
(A) Wages, salaries, tips, commis-
sions, etc.;
(B) Self-employment income from
own nonfarm business, including pro-
prietorships and partnerships;
(C) Farm self-employment income;
(D) Interest, dividends, net rental in-
come, or income from estates or trusts;
(E) Social Security or railroad retire-
ment;
(F) Supplemental Security Income,
Aid to Families with Dependent Chil-
dren, or other public assistance or pub-
lic welfare programs;
(G) Retirement, survivor, or dis-
ability pensions; and
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00044 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
35
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.3
(H) Any other sources of income re-
ceived regularly, including Veterans’
(VA) payments, unemployment com-
pensation, and alimony; or
(iii) Adjusted gross income as defined
for purposes of reporting under Inter-
nal 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 per-
son at the time assistance is provided
for the individual, family, or household
(as applicable). Estimated annual in-
come shall include income from all
family or household members, as appli-
cable. Income or asset enhancement
derived from the CDBG-assisted activ-
ity shall not be considered in calcu-
lating 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 Sec-
tion 8 low-income limit established by
HUD. Unrelated individuals will be
considered as one-person families for
this purpose.
Low-income household means a house-
hold 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-in-
come limit established by HUD. Unre-
lated 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 mean-
ing provided in section 102(a)(4) of the
Act except that the term ‘‘central
city’’ is replaced by ‘‘principal city.’’
Microenterprise shall have the mean-
ing 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 mem-
ber of a family that has an income
equal to or less than the Section 8 low-
income limit and greater than the Sec-
tion 8 very low-income limit, estab-
lished by HUD. Unrelated individuals
shall be considered as one-person fami-
lies 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.
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 re-
sulting from the Boundary and Annex-
ation Survey, new incorporations and
consolidations of governments pursu-
ant to §570.4, and which reflects, where
applicable, changes resulting from the
Bureau’s latest population determina-
tion 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 coun-
ty’s combined population contains the
required percentage of low- and mod-
erate-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 cen-
sus was taken.
Urban Development Action Grant
(UDAG) means a grant made by the
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00045 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
36
24 CFR Ch. V (4–1–13 Edition) §570.4
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]
§570.4 Allocation of funds.
(a) The determination of eligibility
of units of general local government to
receive entitlement grants, the entitle-
ment amounts, the allocation of appro-
priated funds to States for use in non-
entitlement areas, the reallocation of
funds, the allocation of appropriated
funds to insular areas, and the alloca-
tion of appropriated funds for discre-
tionary 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 §570.3 shall gov-
ern in applying the policies and proce-
dures described in sections 106 and 107
of the Act.
(c) In determining eligibility for enti-
tlement and in allocating funds under
section 106 of the Act for any federal
fiscal year, HUD will recognize cor-
porate status and geographical bound-
aries and the status of metropolitan
areas and principal cities effective as
of July 1 preceding such federal fiscal
year, subject to the following limita-
tions:
(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 Cen-
sus Bureau in preparing population es-
timates for all general purpose govern-
mental units and are available for
processing by the Census Bureau as of
such date, except that any such bound-
ary changes or annexations which re-
sult in the population of a unit of gen-
eral local government reaching or ex-
ceeding 50,000 shall be recognized for
this purpose whether or not such
changes are used by the Census Bureau
in preparing such population esti-
mates; and
(3) With respect to the status of Met-
ropolitan Statistical Areas and prin-
cipal 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 val-
ues 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 non-
entitlement 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 imbal-
ance with those overall data.
(e) Amounts remaining after closeout
of a grant which are required to be re-
turned to HUD under the provisions of
§570.509, Grant closeout procedures,
shall be considered as funds available
for reallocation unless the appropria-
tion under which the funds were pro-
vided 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]
§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 sec-
tion 122 of the Act, respectively.
[61 FR 11476, Mar. 20, 1996]
Subpart B [Reserved]
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00046 Fmt 8010 Sfmt 8006 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
37
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.200
Subpart C—Eligible Activities
SOURCE: 53 FR 34439, Sept. 6, 1988, unless
otherwise noted.
§570.200 General policies.
(a) Determination of eligibility. An ac-
tivity 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 eligi-
bility requirements of section 105 of
the Act as further defined in this sub-
part.
(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 max-
imum feasible priority to activities
which will carry out one of the na-
tional 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 recipi-
ent certifies are designed to meet other
community development needs having
a particular urgency because existing
conditions pose a serious and imme-
diate threat to the health or welfare of
the community where other financial
resources are not available to meet
such needs. Consistent with the fore-
going, each recipient under the Entitle-
ment or HUD-administered Small Cit-
ies programs, and each recipient of in-
sular area funds under section 106 of
the Act must ensure and maintain evi-
dence that each of its activities as-
sisted with CDBG funds meets one of
the three national objectives as con-
tained in its certification. Criteria for
determining whether an activity ad-
dresses one or more of these objectives
are found in §570.208.
(3) Compliance with the primary objec-
tive. The primary objective of the Act
is described in section 101(c) of the Act.
Consistent with this objective, entitle-
ment recipients, non-entitlement
CDBG grantees in Hawaii, and recipi-
ents of insular area funds under section
106 of the Act must ensure that, over a
period of time specified in their certifi-
cation not to exceed three years, not
less than 70 percent of the aggregate of
CDBG fund expenditures shall be for
activities meeting the criteria under
§570.208(a) or under §570.208(d)(5) or (6)
for benefiting low- and moderate-in-
come persons. For grants under section
107 of the Act, insular area recipients
must meet this requirement for each
separate grant. See §570.420(d)(3) for ad-
ditional discussion of the primary ob-
jective requirement for insular areas
funded under section 106 of the Act.
The requirements for the HUD-admin-
istered Small Cities program in New
York are at §570.420(d)(2). In deter-
mining the percentage of funds ex-
pended for such activities:
(i) Cost of administration and plan-
ning eligible under §570.205 and §570.206
will be assumed to benefit low and
moderate income persons in the same
proportion as the remainder of the
CDBG funds and, accordingly shall be
excluded from the calculation;
(ii) Funds deducted by HUD for re-
payment of urban renewal temporary
loans pursuant to §570.802(b) shall be
excluded;
(iii) Funds expended for the repay-
ment of loans guaranteed under the
provisions of subpart M shall also be
excluded;
(iv) Funds expended for the acquisi-
tion, new construction or rehabilita-
tion of property for housing that quali-
fies under §570.208(a)(3) shall be count-
ed for this purpose but shall be limited
to an amount determined by multi-
plying the total cost (including CDBG
and non-CDBG costs) of the acquisi-
tion, construction or rehabilitation by
the percent of units in such housing to
be occupied by low and moderate in-
come persons.
(v) Funds expended for any other ac-
tivities qualifying under §570.208(a)
shall be counted for this purpose in
their entirety.
(4) Compliance with environmental re-
view procedures. The environmental re-
view procedures set forth at 24 CFR
part 58 must be completed for each ac-
tivity (or project as defined in 24 CFR
part 58), as applicable.
(5) Cost principles. Costs incurred,
whether charged on a direct or an indi-
rect basis, must be in conformance
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00047 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
38
24 CFR Ch. V (4–1–13 Edition) §570.200
1These circulars are available from the
American Communities Center by calling
the following toll-free numbers: (800) 998–9999
or (800) 483–2209 (TDD).
with OMB Circulars A–87, ‘‘Cost Prin-
ciples for State, Local and Indian Trib-
al Governments’’; A–122, ‘‘Cost Prin-
ciples for Non-profit Organizations’’; or
A–21, ‘‘Cost Principles for Educational
Institutions,’’ as applicable.1 All items
of cost listed in Attachment B of these
Circulars that require prior Federal
agency approval are allowable without
prior approval of HUD to the extent
they comply with the general policies
and principles stated in Attachment A
of such circulars and are otherwise eli-
gible under this subpart C, except for
the following:
(i) Depreciation methods for fixed as-
sets shall not be changed without
HUD’s specific approval or, if charged
through a cost allocation plan, the
Federal cognizant agency.
(ii) Fines and penalties (including pu-
nitive damages) are unallowable costs
to the CDBG program.
(iii) Pre-award costs are limited to
those authorized under paragraph (h) of
this section.
(b) Special policies governing facilities.
The following special policies apply to:
(1) Facilities containing both eligible
and ineligible uses. A public facility oth-
erwise eligible for assistance under the
CDBG program may be provided with
CDBG funds even if it is part of a mul-
tiple use building containing ineligible
uses, if:
(i) The facility which is otherwise el-
igible 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 pro-
posed for assistance as separate and
distinct from the overall costs of the
multiple-use building and/or facility.
Allowable costs are limited to those at-
tributable 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 member-
ship 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 di-
rect result of benefit derived from the
installation of a public improvement,
or a one-time charge made as a condi-
tion 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 improve-
ment, 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 improve-
ment.
(2) Special assessments to recover cap-
ital 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 per-
sons 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; ex-
cept that CDBG funds need not be used
to pay the special assessments in be-
half 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-occu-
pant persons. Funds collected through
such special assessments are not pro-
gram income.
(3) Public improvements not initially as-
sisted with CDBG funds. The payment of
special assessments with CDBG funds
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00048 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
39
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.200
constitutes CDBG assistance to the
public improvement. Therefore, CDBG
funds may be used to pay special as-
sessments provided:
(i) The installation of the public im-
provements was carried out in compli-
ance with requirements applicable to
activities assisted under this part in-
cluding environmental, citizen partici-
pation and Davis-Bacon requirements;
(ii) The installation of the public im-
provement meets a criterion for na-
tional objectives in §570.208(a)(1), (b),
or (c); and
(iii) The requirements of
§570.200(c)(2)(ii) are met.
(d) Consultant activities. Consulting
services are eligible for assistance
under this part for professional assist-
ance in program planning, development
of community development objectives,
and other general professional guid-
ance relating to program execution.
The use of consultants is governed by
the following:
(1) Employer-employee type of relation-
ship. 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 agree-
ments 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 re-
quirements in 24 CFR 85.36, and are not
subject to the compensation limitation
of Level IV of the Executive Schedule.
(e) Recipient determinations required as
a condition of eligibility. In several in-
stances under this subpart, the eligi-
bility of an activity depends on a spe-
cial local determination. Recipients
shall maintain documentation of all
such determinations. A written deter-
mination is required for any activity
carried out under the authority of
§§570.201(f), 570.201(i)(2), 570.201(p),
570.201(q), 570.202(b)(3), 570.206(f), 570.209,
570.210, and 570.309.
(f) Means of carrying out eligible activi-
ties. (1) Activities eligible under this
subpart, other than those authorized
under §570.204(a), may be undertaken,
subject to local law:
(i) By the recipient through:
(A) Its employees, or
(B) Procurement contracts governed
by the requirements of 24 CFR 85.36; or
(ii) Through loans or grants under
agreements with subrecipients, as de-
fined at §570.500(c); or
(iii) By one or more public agencies,
including existing local public agen-
cies, that are designated by the chief
executive officer of the recipient.
(2) Activities made eligible under
§570.204(a) may only be undertaken by
entities specified in that section.
(g) Limitation on planning and admin-
istrative costs. No more than 20 percent
of the sum of any grant, plus program
income, shall be expended for planning
and program administrative costs, as
defined in §§570.205 and 507.206, respec-
tively. Recipients of entitlement
grants under subpart D of this part
shall conform with this requirement by
limiting the amount of CDBG funds ob-
ligated for planning plus administra-
tion during each program year to an
amount no greater than 20 percent of
the sum of its entitlement grant made
for that program year (if any) plus the
program income received by the recipi-
ent and its subrecipients (if any) dur-
ing that program year.
(h) Reimbursement for pre-award costs.
The effective date of the grant agree-
ment 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 par-
ticular 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 effec-
tive 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 consoli-
dated plan action plan, an amended
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00049 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
40
24 CFR Ch. V (4–1–13 Edition) §570.200
consolidated plan action plan, or an ap-
plication under subpart M of this part,
except that a new entitlement grantee
preparing to receive its first allocation
of CDBG funds may incur costs nec-
essary to develop its consolidated plan
and undertake other administrative ac-
tions 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 af-
fect future grants;
(iii) The costs and activities funded
are in compliance with the require-
ments of this part and with the Envi-
ronmental Review Procedures stated in
24 CFR part 58;
(iv) The activity for which payment
is being made complies with the statu-
tory and regulatory provisions in effect
at the time the costs are paid for with
CDBG funds;
(v) CDBG payment will be made dur-
ing a time no longer than the next two
program years following the effective
date of the grant agreement or amend-
ment in which the activity is first in-
cluded; 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 contribu-
tion to the goals and purposes of the
CDBG program;
(ii) Whether failure to grant the au-
thority 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 regu-
latory provision;
(iv) Whether circumstances are clear-
ly beyond the recipient’s control; or
(v) Any other relevant consider-
ations.
(i) Urban Development Action Grant.
Grant assistance may be provided with
Urban Development Action Grant
funds, subject to the provisions of sub-
part G, for:
(1) Activities eligible for assistance
under this subpart; and
(2) Notwithstanding the provisions of
§570.207, such other activities as the
Secretary may determine to be con-
sistent with the purposes of the Urban
Development Action Grant program.
(j) Faith-based activities. (1) Organiza-
tions that are religious or faith-based
are eligible, on the same basis as any
other organization, to participate in
the CDBG program. Neither the Fed-
eral government nor a State or local
government receiving funds under
CDBG programs shall discriminate
against an organization on the basis of
the organization’s religious character
or affiliation.
(2) Organizations that are directly
funded under the CDBG program may
not engage in inherently religious ac-
tivities, such as worship, religious in-
struction, or proselytization, as part of
the programs or services funded under
this part. If an organization conducts
such activities, the activities must be
offered separately, in time or location,
from the programs or services funded
under this part, and participation must
be voluntary for the beneficiaries of
the HUD-funded programs or services.
(3) A religious organization that par-
ticipates in the CDBG program will re-
tain its independence from Federal,
State, and local governments, and may
continue to carry out its mission, in-
cluding the definition, practice, and ex-
pression of its religious beliefs, pro-
vided that it does not use direct CDBG
funds to support any inherently reli-
gious activities, such as worship, reli-
gious instruction, or proselytization.
Among other things, faith-based orga-
nizations may use space in their facili-
ties to provide CDBG-funded services,
without removing religious art, icons,
scriptures, or other religious symbols.
In addition, a CDBG-funded religious
organization retains its authority over
its internal governance, and it may re-
tain religious terms in its organiza-
tion’s name, select its board members
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00050 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
41
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.201
on a religious basis, and include reli-
gious references in its organization’s
mission statements and other gov-
erning documents.
(4) An organization that participates
in the CDBG program shall not, in pro-
viding program assistance, discrimi-
nate against a program beneficiary or
prospective program beneficiary on the
basis of religion or religious belief.
(5) CDBG funds may not be used for
the acquisition, construction, or reha-
bilitation of structures to the extent
that those structures are used for in-
herently religious activities. CDBG
funds may be used for the acquisition,
construction, or rehabilitation of
structures only to the extent that
those structures are used for con-
ducting eligible activities under this
part. Where a structure is used for both
eligible and inherently religious activi-
ties, CDBG funds may not exceed the
cost of those portions of the acquisi-
tion, construction, or rehabilitation
that are attributable to eligible activi-
ties in accordance with the cost ac-
counting requirements applicable to
CDBG funds in this part. Sanctuaries,
chapels, or other rooms that a CDBG-
funded religious congregation uses as
its principal place of worship, however,
are ineligible for CDBG-funded im-
provements. Disposition of real prop-
erty after the term of the grant, or any
change in use of the property during
the term of the grant, is subject to gov-
ernment-wide regulations governing
real property disposition (see 24 CFR
parts 84 and 85).
(6) If a State or local government vol-
untarily contributes its own funds to
supplement federally funded activities,
the State or local government has the
option to segregate the Federal funds
or commingle them. However, if the
funds are commingled, this section ap-
plies to all of the commingled funds.
[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]
§570.201 Basic eligible activities.
CDBG funds may be used for the fol-
lowing activities:
(a) Acquisition. Acquisition in whole
or in part by the recipient, or other
public or private nonprofit entity, by
purchase, long-term lease, donation, or
otherwise, of real property (including
air rights, water rights, rights-of-way,
easements, and other interests therein)
for any public purpose, subject to the
limitations of §570.207.
(b) Disposition. Disposition, through
sale, lease, donation, or otherwise, of
any real property acquired with CDBG
funds or its retention for public pur-
poses, 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 in-
come subject to the requirements set
forth in §570.504.
(c) Public facilities and improvements.
Acquisition, construction, reconstruc-
tion, rehabilitation or installation of
public facilities and improvements, ex-
cept as provided in §570.207(a), carried
out by the recipient or other public or
private nonprofit entities. (However,
activities under this paragraph may be
directed to the removal of material and
architectural barriers that restrict the
mobility and accessibility of elderly or
severely disabled persons to public fa-
cilities and improvements, including
those provided for in §570.207(a)(1).) In
undertaking such activities, design fea-
tures and improvements which pro-
mote energy efficiency may be in-
cluded. Such activities may also in-
clude the execution of architectural de-
sign features, and similar treatments
intended to enhance the aesthetic qual-
ity of facilities and improvements re-
ceiving CDBG assistance, such as deco-
rative 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 fa-
cilities and not subject to the prohibi-
tion of new housing construction de-
scribed in §570.207(b)(3). Such facilities
include shelters for the homeless; con-
valescent homes; hospitals, nursing
homes; battered spouse shelters; half-
way houses for run-away children, drug
offenders or parolees; group homes for
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00051 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
42
24 CFR Ch. V (4–1–13 Edition) §570.201
mentally retarded persons and tem-
porary housing for disaster victims. In
certain cases, nonprofit entities and
subrecipients including those specified
in §570.204 may acquire title to public
facilities. When such facilities are
owned by nonprofit entities or sub-
recipients, 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 eli-
gible for assistance under this para-
graph are subject to the policies in
§570.200(b).
(d) Clearance and remediation activi-
ties. Clearance, demolition, and re-
moval of buildings and improvements,
including movement of structures to
other sites and remediation of known
or suspected environmental contami-
nation. Demolition of HUD-assisted or
HUD-owned housing units may be un-
dertaken only with the prior approval
of HUD. Remediation may include
project-specific environmental assess-
ment costs not otherwise eligible under
§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, wel-
fare (but excluding the provision of in-
come payments identified under
§570.207(b)(4)), homebuyer downpay-
ment assistance, or recreational needs.
To be eligible for CDBG assistance, a
public service must be either a new
service or a quantifiable increase in
the level of an existing service above
that which has been provided by or on
behalf of the unit of general local gov-
ernment (through funds raised by the
unit or received by the unit from the
State in which it is located) in the 12
calendar months before the submission
of the action plan. (An exception to
this requirement may be made if HUD
determines that any decrease in the
level of a service was the result of
events not within the control of the
unit of general local government.) The
amount of CDBG funds used for public
services shall not exceed paragraphs (e)
(1) or (2) of this section, as applicable:
(1) The amount of CDBG funds used
for public services shall not exceed 15
percent of each grant, except that for
entitlement grants made under subpart
D of this part, the amount shall not ex-
ceed 15 percent of the grant plus 15 per-
cent of program income, as defined in
§570.500(a). For entitlement grants
under subpart D of this part, compli-
ance is based on limiting the amount of
CDBG funds obligated for public serv-
ice 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 pro-
gram year.
(2) A recipient which obligated more
CDBG funds for public services than 15
percent of its grant funded from Fed-
eral fiscal year 1982 or 1983 appropria-
tions (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 dur-
ing the preceding program year; plus
(ii) A portion of the grant received
for the program year which is the high-
est of the following amounts:
(A) The amount determined by apply-
ing the percentage of the grant it obli-
gated for public services in the 1982
program year against the grant for its
current program year;
(B) The amount determined by apply-
ing the percentage of the grant it obli-
gated 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 in-
terim basis in areas exhibiting objec-
tively 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:
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00052 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
43
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.201
(i) The repairing of streets, side-
walks, 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 imme-
diate resolution, CDBG funds may be
used for:
(i) The activities specified in para-
graph (f)(1) of this section, except for
the repair of parks and playgrounds;
(ii) The clearance of streets, includ-
ing snow removal and similar activi-
ties, and
(iii) The improvement of private
properties.
(3) All activities authorized under
paragraph (f)(2) of this section are lim-
ited to the extent necessary to allevi-
ate emergency conditions.
(g) Payment of non-Federal share. Pay-
ment of the non-Federal share required
in connection with a Federal grant-in-
aid program undertaken as part of
CDBG activities, provided, that such
payment shall be limited to activities
otherwise eligible and in compliance
with applicable requirements under
this subpart.
(h) Urban renewal completion. Pay-
ment of the cost of completing an
urban renewal project funded under
title I of the Housing Act of 1949 as
amended. Further information regard-
ing the eligibility of such costs is set
forth in §570.801.
(i) Relocation. Relocation payments
and other assistance for permanently
and temporarily relocated individuals
families, businesses, nonprofit organi-
zations, and farm operations where the
assistance is (1) required under the pro-
visions of §570.606 (b) or (c); or (2) de-
termined by the grantee to be appro-
priate under the provisions of
§570.606(d).
(j) Loss of rental income. Payments to
housing owners for losses of rental in-
come incurred in holding, for tem-
porary periods, housing units to be
used for the relocation of individuals
and families displaced by program ac-
tivities 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)).
(l) Privately owned utilities. CDBG
funds may be used to acquire, con-
struct, reconstruct, rehabilitate, or in-
stall the distribution lines and facili-
ties of privately owned utilities, in-
cluding 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 accord-
ance with section 105(a) of the Act.
(o)(1) The provision of assistance ei-
ther through the recipient directly or
through public and private organiza-
tions, agencies, and other subrecipients
(including nonprofit and for-profit sub-
recipients) to facilitate economic de-
velopment by:
(i) Providing credit, including, but
not limited to, grants, loans, loan
guarantees, and other forms of finan-
cial support, for the establishment,
stabilization, and expansion of micro-
enterprises;
(ii) Providing technical assistance,
advice, and business support services to
owners of microenterprises and persons
developing microenterprises; and
(iii) Providing general support, in-
cluding, but not limited to, peer sup-
port programs, counseling, child care,
transportation, and other similar serv-
ices, to owners of microenterprises and
persons developing microenterprises.
(2) Services provided this paragraph
(o) shall not be subject to the restric-
tions 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.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00053 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
44
24 CFR Ch. V (4–1–13 Edition) §570.202
(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 activi-
ties under this paragraph (o).
(p) Technical assistance. Provision of
technical assistance to public or non-
profit entities to increase the capacity
of such entities to carry out eligible
neighborhood revitalization or eco-
nomic development activities. (The re-
cipient must determine, prior to the
provision of the assistance, that the ac-
tivity for which it is attempting to
build capacity would be eligible for as-
sistance under this subpart C, and that
the national objective claimed by the
grantee for this assistance can reason-
ably be expected to be met once the en-
tity has received the technical assist-
ance and undertakes the activity.) Ca-
pacity building for private or public
entities (including grantees) for other
purposes may be eligible under §570.205.
(q) Assistance to institutions of higher
education. Provision of assistance by
the recipient to institutions of higher
education when the grantee determines
that such an institution has dem-
onstrated a capacity to carry out eligi-
ble 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]
§570.202 Eligible rehabilitation and
preservation activities.
(a) Types of buildings and improve-
ments eligible for rehabilitation assist-
ance. CDBG funds may be used to fi-
nance the rehabilitation of:
(1) Privately owned buildings and im-
provements for residential purposes;
improvements to a single-family resi-
dential 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 build-
ings and improvements;
(3) Publicly or privately owned com-
mercial or industrial buildings, except
that the rehabilitation of such build-
ings owned by a private for-profit busi-
ness is limited to improvement to the
exterior of the building, abatement of
asbestos hazards, lead-based paint haz-
ard evaluation and reduction, and the
correction of code violations;
(4) Nonprofit-owned nonresidential
buildings and improvements not eligi-
ble under §570.201(c); and
(5) Manufactured housing when such
housing constitutes part of the commu-
nity’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 com-
bination, through the use of grants,
loans, loan guarantees, interest supple-
ments, or other means for buildings
and improvements described in para-
graph (a) of this section, except that
rehabilitation of commercial or indus-
trial 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 re-
sale for residential purposes;
(2) Labor, materials, and other costs
of rehabilitation of properties, includ-
ing repair directed toward an accumu-
lation of deferred maintenance, re-
placement of principal fixtures and
components of existing structures, in-
stallation of security devices, includ-
ing smoke detectors and dead bolt
locks, and renovation through alter-
ations, 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 in-
debtedness secured by a property being
rehabilitated with CDBG funds if such
financing is determined by the recipi-
ent to be necessary or appropriate to
achieve the locality’s community de-
velopment objectives;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00054 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
45
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.203
(4) Improvements to increase the effi-
cient 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 heat-
ing and cooling equipment, including
the use of solar energy equipment;
(5) Improvements to increase the effi-
cient use of water through such means
as water savings faucets and shower
heads and repair of water leaks;
(6) Connection of residential struc-
tures to water distribution lines or
local sewer collection lines;
(7) For rehabilitation carried out
with CDBG funds, costs of:
(i) Initial homeowner warranty pre-
miums;
(ii) Hazard insurance premiums, ex-
cept where assistance is provided in the
form of a grant; and
(iii) Flood insurance premiums for
properties covered by the Flood Dis-
aster Protection Act of 1973, pursuant
to §570.605.
(8) Costs of acquiring tools to be lent
to owners, tenants, and others who will
use such tools to carry out rehabilita-
tion;
(9) Rehabilitation services, such as
rehabilitation counseling, energy au-
diting, preparation of work specifica-
tions, loan processing, inspections, and
other services related to assisting own-
ers, tenants, contractors, and other en-
tities, participating or seeking to par-
ticipate in rehabilitation activities au-
thorized under this section, under sec-
tion 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 re-
move material and architectural bar-
riers that restrict the mobility and ac-
cessibility of elderly or severely dis-
abled persons to buildings and improve-
ments 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 deterio-
rated areas when such enforcement to-
gether with public or private improve-
ments, 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 pri-
vately owned. Historic properties are
those sites or structures that are ei-
ther listed in or eligible to be listed in
the National Register of Historic
Places, listed in a State or local inven-
tory of historic places, or designated as
a State or local landmark or historic
district by appropriate law or ordi-
nance. 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 build-
ings for housing.
(f) Lead-based paint activities. Lead-
based paint activities pursuant to
§570.608.
[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]
§570.203 Special economic develop-
ment activities.
A recipient may use CDBG funds for
special economic development activi-
ties in addition to other activities au-
thorized in this subpart that may be
carried out as part of an economic de-
velopment project. Guidelines for se-
lecting activities to assist under this
paragraph are provided at §570.209. The
recipient must ensure that the appro-
priate level of public benefit will be de-
rived pursuant to those guidelines be-
fore obligating funds under this au-
thority. Special activities authorized
under this section do not include as-
sistance for the construction of new
housing. Activities eligible under this
section may include costs associated
with project-specific assessment or re-
mediation of known or suspected envi-
ronmental contamination. Special eco-
nomic development activities include:
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00055 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
46
24 CFR Ch. V (4–1–13 Edition) §570.204
(a) The acquisition, construction, re-
construction, rehabilitation or instal-
lation of commercial or industrial
buildings, structures, and other real
property equipment and improvements,
including railroad spurs or similar ex-
tensions. Such activities may be car-
ried 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, tech-
nical assistance, and other forms of
support, for any activity where the as-
sistance is appropriate to carry out an
economic development project, exclud-
ing those described as ineligible in
§570.207(a). In selecting businesses to
assist under this authority, the recipi-
ent shall minimize, to the extent prac-
ticable, displacement of existing busi-
nesses 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 under-
writing applications for assistance;
preparation of all necessary agree-
ments; management of assisted activi-
ties; and the screening, referral, and
placement of applicants for employ-
ment opportunities generated by
CDBG-eligible economic development
activities, including the costs of pro-
viding 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]
§570.204 Special activities by Commu-
nity-Based Development Organiza-
tions (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 re-
vitalization, community economic de-
velopment, or energy conservation
project. The funded project activities
may include those listed as eligible
under this subpart, and, except as de-
scribed in paragraph (b) of this section,
activities not otherwise listed as eligi-
ble under this subpart. For purposes of
qualifying as a project under para-
graphs (a)(1), (a)(2), and (a)(3) of this
section, the funded activity or activi-
ties may be considered either alone or
in concert with other project activities
either being carried out or for which
funding has been committed. For pur-
poses 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 comprehen-
sive plans, ordinances, or other local
documents as a neighborhood, village,
or similar geographical designation; or
the entire jurisdiction of a unit of gen-
eral local government which is under
25,000 population;
(2) Community economic develop-
ment project includes activities that
increase economic opportunity, prin-
cipally for persons of low- and mod-
erate-income, or that stimulate or re-
tain businesses or permanent jobs, in-
cluding 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 speci-
fied at 24 CFR 91.1(a)(1)(iii); activities
under this paragraph may include costs
associated with project-specific assess-
ment or remediation of known or sus-
pected environmental contamination;
(3) Energy conservation project in-
cludes activities that address energy
conservation, principally for the ben-
efit of the residents of the recipient’s
jurisdiction; and
(4) To carry out a project means that
the CBDO undertakes the funded ac-
tivities directly or through contract
with an entity other than the grantee,
or through the provision of financial
assistance for activities in which it re-
tains a direct and controlling involve-
ment and responsibilities.
(b) Ineligible activities. Notwith-
standing that CBDOs may carry out ac-
tivities that are not otherwise eligible
under this subpart, this section does
not authorize:
(1) Carrying out an activity described
as ineligible in §570.207(a);
(2) Carrying out public services that
do not meet the requirements of
§570.201(e), except that:
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00056 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
47
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.204
(i) Services carried out under this
section that are specifically designed
to increase economic opportunities
through job training and placement
and other employment support serv-
ices, 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 strat-
egy approved by HUD under the provi-
sions of 24 CFR 91.215(e) shall not be
subject to the limitations in
§570.201(e)(1) or (2), as applicable;
(3) Providing assistance to activities
that would otherwise be eligible under
§570.203 that do not meet the require-
ments of §570.209; or
(4) Carrying out an activity that
would otherwise be eligible under
§570.205 or §570.206, but that would re-
sult in the recipient’s exceeding the
spending limitation in §570.200(g).
(c) Eligible CBDOs. (1) A CBDO quali-
fying under this section is an organiza-
tion which has the following character-
istics:
(i) Is an association or corporation
organized under State or local law to
engage in community development ac-
tivities (which may include housing
and economic development activities)
primarily within an identified geo-
graphic area of operation within the ju-
risdiction of the recipient, or in the
case of an urban county, the jurisdic-
tion 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, own-
ers or senior officers of private estab-
lishments and other institutions lo-
cated in and serving its geographic
area of operation, or representatives of
low- and moderate-income neighbor-
hood organizations located in its geo-
graphic area of operation; and
(v) Is not an agency or instrumen-
tality of the recipient and does not per-
mit more than one-third of the mem-
bership of its governing body to be ap-
pointed 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 organi-
zation, or by its permanent governing
body; and
(vii) Is not subject to requirements
under which its assets revert to the re-
cipient upon dissolution; and
(viii) Is free to contract for goods and
services from vendors of its own choos-
ing.
(2) A CBDO that does not meet the
criteria in paragraph (c)(1) of this sec-
tion may also qualify as an eligible en-
tity 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 In-
vestment Act of 1958 (15 U.S.C. 681(d)),
including those which are profit mak-
ing; or
(ii) Is an SBA approved Section 501
State Development Company or Sec-
tion 502 Local Development Company,
or an SBA Certified Section 503 Com-
pany under the Small Business Invest-
ment Act of 1958, as amended; or
(iii) Is a Community Housing Devel-
opment Organization (CHDO) under 24
CFR 92.2, designated as a CHDO by the
HOME Investment Partnerships pro-
gram 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 sec-
tion may also be determined to qualify
as an eligible entity under this section
if the recipient demonstrates to the
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00057 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
48
24 CFR Ch. V (4–1–13 Edition) §570.205
satisfaction of HUD, through the provi-
sion of information regarding the orga-
nization’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]
§570.205 Eligible planning, urban en-
vironmental design and policy-plan-
ning-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 develop-
ment of a consolidated plan;
(ii) Land use and urban environ-
mental design;
(iii) Economic development;
(iv) Open space and recreation;
(v) Energy use and conservation;
(vi) Floodplain and wetlands manage-
ment in accordance with the require-
ments 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 ex-
cluding engineering and design costs
related to a specific activity which are
eligible as part of the cost of such ac-
tivity under §§570.201–570.204);
(iv) The reasonable costs of general
environmental, urban environmental
design and historic preservation stud-
ies; and general environmental
assessment- and remediation-oriented
planning related to properties with
known or suspected environmental
contamination. However, costs nec-
essary to comply with 24 CFR part 58,
including project specific environ-
mental assessments and clearances for
activities eligible for assistance under
this part, are eligible as part of the
cost of such activities under §§570.201–
570.204. Costs for such specific assess-
ments and clearances may also be in-
curred under this paragraph but would
then be considered planning costs for
the purposes of §570.200(g);
(v) Strategies and action programs to
implement plans, including the devel-
opment of codes, ordinances and regu-
lations;
(vi) Support of clearinghouse func-
tions, such as those specified in Execu-
tive Order 12372; and
(vii) Analysis of impediments to fair
housing choice.
(viii) Developing an inventory of
properties with known or suspected en-
vironmental 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 re-
lated to urban environmental design;
(3) Devise programs and activities to
meet these goals and objectives;
(4) Evaluate the progress of such pro-
grams and activities in accomplishing
these goals and objectives; and
(5) Carry out management, coordina-
tion and monitoring of activities nec-
essary for effective planning implemen-
tation, but excluding the costs nec-
essary 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]
§570.206 Program administrative
costs.
Payment of reasonable administra-
tive costs and carrying charges related
to the planning and execution of com-
munity development activities assisted
in whole or in part with funds provided
under this part and, where applicable,
housing activities (described in para-
graph (g) of this section) covered in the
recipient’s housing assistance plan.
This does not include staff and over-
head costs directly related to carrying
out activities eligible under §570.201
through §570.204, since those costs are
eligible as part of such activities.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00058 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
49
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.206
(a) General management, oversight and
coordination. Reasonable costs of over-
all program management, coordina-
tion, 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 en-
gaged in program administration. In
charging costs to this category the re-
cipient may either include the entire
salary, wages, and related costs allo-
cable to the program of each person
whose primary responsibilities with re-
gard to the program involve program
administration assignments, or the pro
rata share of the salary, wages, and re-
lated costs of each person whose job in-
cludes any program administration as-
signments. The recipient may use only
one of these methods during the pro-
gram year (or the grant period for
grants under subpart F). Program ad-
ministration includes the following
types of assignments:
(i) Providing local officials and citi-
zens with information about the pro-
gram;
(ii) Preparing program budgets and
schedules, and amendments thereto;
(iii) Developing systems for assuring
compliance with program require-
ments;
(iv) Developing interagency agree-
ments and agreements with subrecipi-
ents and contractors to carry out pro-
gram activities;
(v) Monitoring program activities for
progress and compliance with program
requirements;
(vi) Preparing reports and other doc-
uments related to the program for sub-
mission 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 re-
gard to the program include such as-
signments as those described in para-
graph (a)(1)(i) through (viii) of this sec-
tion.
(2) Travel costs incurred for official
business in carrying out the program;
(3) Administrative services performed
under third party contracts or agree-
ments, including such services as gen-
eral legal services, accounting services,
and audit services; and
(4) Other costs for goods and services
required for administration of the pro-
gram, including such goods and serv-
ices as rental or purchase of equip-
ment, insurance, utilities, office sup-
plies, 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 par-
ticipating in the planning, implemen-
tation, or assessment of activities
being assisted with CDBG funds.
(c) Fair housing activities. Provision of
fair housing services designed to fur-
ther 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 ori-
gin, 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 de-
signed to further the housing objective
of avoiding undue concentrations of as-
sisted 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 ac-
cordance with OMB Circular A–21, A–
87, or A–122 as applicable.
(f) Submission of applications for fed-
eral programs. Preparation of docu-
ments required for submission to HUD
to receive funds under the CDBG and
UDAG programs. In addition, CDBG
funds may be used to prepare applica-
tions for other Federal programs where
the recipient determines that such ac-
tivities 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 re-
cipients, assistance authorized by this
paragraph is limited to units which are
identified in the recipient’s HUD ap-
proved housing assistance plan; for
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00059 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
50
24 CFR Ch. V (4–1–13 Edition) §570.207
HUD-administered small cities recipi-
ents, 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 afford-
able rents/costs by low and moderate
income persons. Examples of eligible
actions are as follows:
(1) The cost of conducting prelimi-
nary surveys and analysis of market
needs;
(2) Site and utility plans, narrative
descriptions of the proposed construc-
tion, preliminary cost estimates, urban
design documentation, and ‘‘sketch
drawings,’’ but excluding architectural,
engineering, and other details ordi-
narily required for construction pur-
poses, such as structural, electrical,
plumbing, and mechanical details;
(3) Reasonable costs associated with
development of applications for mort-
gage and insured loan commitments,
including commitment fees, and of ap-
plications and proposals under the Sec-
tion 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 in-
cluding those administered by HUD,
Farmers Home Administration
(FmHA), Federal National Mortgage
Association (FNMA), and the Govern-
ment National Mortgage Association
(GNMA);
(5) The cost of issuance and adminis-
tration of mortgage revenue bonds used
to finance the acquisition, rehabilita-
tion or construction of housing, but ex-
cluding costs associated with the pay-
ment 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 Pay-
ments 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 para-
graphs (a), (b), (e) and (f) of this section
for overall program management of the
Rental Rehabilitation and Housing De-
velopment programs authorized under
section 17 of the United States Housing
Act of 1937, whether or not such activi-
ties 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 equiv-
alent to those described in paragraphs
(a), (b), (e), and (f) of this section for
overall program management of:
(1) A Federally designated Empower-
ment Zone or Enterprise Community;
and
(2) The HOME program under title II
of the Cranston-Gonzalez National Af-
fordable 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]
§570.207 Ineligible activities.
The general rule is that any activity
that is not authorized under the provi-
sions of §§570.201–570.206 is ineligible to
be assisted with CDBG funds. This sec-
tion identifies specific activities that
are ineligible and provides guidance in
determining the eligibility of other ac-
tivities 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 §570.3(d) cannot be assisted
with CDBG funds. This does not in-
clude, however, the removal of archi-
tectural barriers under §570.201(c) in-
volving 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 attrib-
utable to the land is eligible, provided
such acquisition meets a national ob-
jective described in §570.208.
(2) General government expenses. Ex-
cept as otherwise specifically author-
ized in this subpart or under OMB Cir-
cular A–87, expenses required to carry
out the regular responsibilities of the
unit of general local government are
not eligible for assistance under this
part.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00060 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
51
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.207
(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 origi-
nally assisted with CDBG funds may be
used on an incidental basis to hold po-
litical 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 au-
thorized under provisions of §570.203 or
as otherwise specifically noted herein
or when carried out by an entity under
the provisions of §570.204.
(1) Purchase of equipment. The pur-
chase of equipment with CDBG funds is
generally ineligible.
(i) Construction equipment. The pur-
chase of construction equipment is in-
eligible, but compensation for the use
of such equipment through leasing, de-
preciation, or use allowances pursuant
to OMB Circulars A–21, A–87 or A–122 as
applicable for an otherwise eligible ac-
tivity is an eligible use of CDBG funds.
However, the purchase of construction
equipment for use as part of a solid
waste disposal facility is eligible under
§570.201(c).
(ii) Fire protection equipment. Fire pro-
tection equipment is considered for
this purpose to be an integral part of a
public facility and thus, purchase of
such equipment would be eligible under
§570.201(c).
(iii) Furnishings and personal property.
The purchase of equipment, fixtures,
motor vehicles, furnishings, or other
personal property not an integral
structural fixture is generally ineli-
gible. CDBG funds may be used, how-
ever, to purchase or to pay deprecia-
tion or use allowances (in accordance
with OMB Circular A–21, A–87 or A–122,
as applicable) for such items when nec-
essary for use by a recipient or its sub-
recipients in the administration of ac-
tivities assisted with CDBG funds, or
when eligible as fire fighting equip-
ment, or when such items constitute
all or part of a public service pursuant
to §570.201(e).
(2) Operating and maintenance ex-
penses. The general rule is that any ex-
pense associated with repairing, oper-
ating or maintaining public facilities,
improvements and services is ineli-
gible. Specific exceptions to this gen-
eral rule are operating and mainte-
nance expenses associated with public
service activities, interim assistance,
and office space for program staff em-
ployed in carrying out the CDBG pro-
gram. For example, the use of CDBG
funds to pay the allocable costs of op-
erating and maintaining a facility used
in providing a public service would be
eligible under §570.201(e), even if no
other costs of providing such a service
are assisted with such funds. Examples
of ineligible operating and mainte-
nance expenses are:
(i) Maintenance and repair of pub-
licly owned streets, parks, play-
grounds, water and sewer facilities,
neighborhood facilities, senior centers,
centers for persons with a disabilities,
parking and other public facilities and
improvements. Examples of mainte-
nance and repair activities for which
CDBG funds may not be used include
the filling of pot holes in streets, re-
pairing 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 nec-
essary for the operation of public
works and facilities.
(3) New housing construction. For the
purpose of this paragraph, activities in
support of the development of low or
moderate income housing including
clearance, site assemblage, provision of
site improvements and provision of
public improvements and certain hous-
ing pre-construction costs set forth in
§570.206(g), are not considered as activi-
ties to subsidize or assist new residen-
tial construction. CDBG funds may not
be used for the construction of new per-
manent residential structures or for
any program to subsidize or assist such
new construction, except:
(i) As provided under the last resort
housing provisions set forth in 24 CFR
part 42;
(ii) As authorized under §570.201(m)
or (n);
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00061 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
52
24 CFR Ch. V (4–1–13 Edition) §570.208
(iii) When carried out by an entity
pursuant to §570.204(a);
(4) Income payments. The general rule
is that CDBG funds may not be used for
income payments. For purposes of the
CDBG program, ‘‘income payments’’
means a series of subsistence-type
grant payments made to an individual
or family for items such as food, cloth-
ing, housing (rent or mortgage), or
utilities, but excludes emergency grant
payments made over a period of up to
three consecutive months to the pro-
vider of such items or services on be-
half 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]
§570.208 Criteria for national objec-
tives.
The following criteria shall be used
to determine whether a CDBG-assisted
activity complies with one or more of
the national objectives as required
under §570.200(a)(2):
(a) Activities benefiting low- and mod-
erate-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 mod-
erate 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 recipi-
ent shall appropriately ensure that ac-
tivities that meet these criteria do not
benefit moderate income persons to the
exclusion of low income persons.)
(1) Area benefit activities. (i) An activ-
ity, 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 co-
terminous 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 other-
wise qualify under §570.208(a)(1)(i), ex-
cept that the area served contains less
than 51 percent low- and moderate-in-
come 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 inap-
plicable to non-entitlement CDBG
grants in Hawaii. In applying this ex-
ception, HUD will determine the lowest
proportion a recipient may use to qual-
ify an area for this purpose, as follows:
(A) All census block groups in the re-
cipient’s jurisdiction shall be rank or-
dered 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 gov-
ernment.
(B) In any case where the total num-
ber of a recipient’s block groups does
not divide evenly by four, the block
group which would be fractionally di-
vided between the highest and second
quartiles shall be considered to be part
of the highest quartile.
(C) The proportion of low and mod-
erate income persons in the last census
block group in the highest quartile
shall be identified. Any service area lo-
cated within the recipient’s jurisdic-
tion and having a proportion of low and
moderate income persons at or above
this level shall be considered to be
within the highest quartile.
(D) If block group data are not avail-
able 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 emer-
gency telephone number system serv-
ing an area having less than the per-
centage of low- and moderate-income
residents required under paragraph
(a)(1)(i) of this section or (as applica-
ble) paragraph (a)(1)(ii) of this section,
provided the recipient obtains prior
HUD approval. To obtain such ap-
proval, the recipient must:
(A) Demonstrate that the system will
contribute significantly to the safety
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00062 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
53
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.208
of the residents of the area. The re-
quest 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 wheth-
er at least 51 percent of the use of the
system will be by low- and moderate-
income persons. As available, the re-
cipient must provide information that
identifies the total number of calls ac-
tually received over the preceding 12-
month period for each of the emer-
gency services to be covered by the
emergency telephone number system
and relates those calls to the geo-
graphic segment (expressed as nearly
as possible in terms of census tracts,
block numbering areas, block groups,
or combinations thereof that are con-
tained within the segment) of the serv-
ice area from which the calls were gen-
erated. In analyzing this data to meet
the requirements of this section, HUD
will assume that the distribution of in-
come among the callers generally re-
flects the income characteristics of the
general population residing in the same
geographic area where the callers re-
side. If HUD can conclude that the
users have primarily consisted of low-
and moderate-income persons, no fur-
ther submission is needed by the recipi-
ent. If a recipient plans to make other
submissions for this purpose, it may re-
quest that HUD review its planned
methodology before expending the ef-
fort to acquire the information it ex-
pects to use to make its case;
(C) Demonstrate that other Federal
funds received by the recipient are in-
sufficient 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 insuffi-
ciency 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 pur-
poses; and
(D) Demonstrate that the percentage
of the total costs of the system paid for
by CDBG funds does not exceed the per-
centage of low- and moderate-income
persons in the service area of the sys-
tem. 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 (cen-
sus tracts or block numbering areas),
the total number of persons and the
total number of low- and moderate-in-
come persons within each census divi-
sion, the percentage of low- and mod-
erate-income persons within the serv-
ice area, and the total cost of the sys-
tem.
(iv) An activity for which the assist-
ance to a public improvement that pro-
vides benefits to all the residents of an
area is limited to paying special assess-
ments (as defined in §570.200(c)) levied
against residential properties owned
and occupied by persons of low and
moderate income.
(v) For purposes of determining qual-
ification under this criterion, activi-
ties of the same type that serve dif-
ferent areas will be considered sepa-
rately 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 re-
cently available decennial census infor-
mation must be used to the fullest ex-
tent feasible, together with the section
8 income limits that would have ap-
plied at the time the income informa-
tion was collected by the Census Bu-
reau. Recipients that believe that the
census data does not reflect current
relative income levels in an area, or
where census boundaries do not coin-
cide 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 ac-
cept information obtained through
such surveys, to be used in lieu of the
decennial census data, where it deter-
mines 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00063 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
54
24 CFR Ch. V (4–1–13 Edition) §570.208
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 dem-
onstrate compliance with section
105(c)(2) of the Act.
(vii) Activities meeting the require-
ments of paragraph (d)(5)(i) of this sec-
tion 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 pri-
marily residential and contains a per-
centage of low- and moderate-income
residents that is no less than the per-
centage 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 con-
sidered to qualify under paragraph
(a)(1) of this section.
(2) Limited clientele activities. (i) An
activity which benefits a limited clien-
tele, 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 ac-
quisition, construction or rehabilita-
tion of property for housing; or activi-
ties where the benefit to low- and mod-
erate-income persons to be considered
is the creation or retention of jobs, ex-
cept as provided in paragraph (a)(2)(iv)
of this section.) To qualify under para-
graph (a)(2) of this section, the activity
must meet one of the following tests:
(A) Benefit a clientele who are gen-
erally presumed to be principally low
and moderate income persons. Activi-
ties that exclusively serve a group of
persons in any one or a combination of
the following categories may be pre-
sumed to benefit persons, 51 percent of
whom are low- and moderate-income:
abused children, battered spouses, el-
derly persons, adults meeting the Bu-
reau of the Census’ Current Population
Reports definition of ‘‘severely dis-
abled,’’ 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 in-
come limit; or
(C) Have income eligibility require-
ments which limit the activity exclu-
sively to low and moderate income per-
sons; 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 Bu-
reau of the Census’ Current Population
Reports definition of ‘‘severely dis-
abled’’ will be presumed to qualify
under this criterion if it is restricted,
to the extent practicable, to the re-
moval of such barriers by assisting:
(A) The reconstruction of a public fa-
cility 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 im-
provement 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 para-
graph (a)(3) of this section.
(iii) A microenterprise assistance ac-
tivity carried out in accordance with
the provisions of §570.201(o) with re-
spect to those owners of microenter-
prises and persons developing micro-
enterprises assisted under the activity
during each program year who are low-
and moderate-income persons. For pur-
poses of this paragraph, persons deter-
mined to be low and moderate income
may be presumed to continue to qual-
ify as such for up to a three-year pe-
riod.
(iv) An activity designed to provide
job training and placement and/or
other employment support services, in-
cluding, but not limited to, peer sup-
port programs, counseling, child care,
transportation, and other similar serv-
ices, in which the percentage of low-
and moderate-income persons assisted
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00064 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
55
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.208
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 as-
sists business(es), the only use of CDBG
assistance for the project is to provide
the job training and/or supportive serv-
ices; 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 ac-
tivity carried out for the purpose of
providing or improving permanent resi-
dential structures which, upon comple-
tion, will be occupied by low- and mod-
erate-income households. This would
include, but not necessarily be limited
to, the acquisition or rehabilitation of
property by the recipient, a sub-
recipient, a developer, an individual
homebuyer, or an individual home-
owner; conversion of nonresidential
structures; and new housing construc-
tion. 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 occu-
pied. Where two or more rental build-
ings being assisted are or will be lo-
cated on the same or contiguous prop-
erties, and the buildings will be under
common ownership and management,
the grouped buildings may be consid-
ered for this purpose as a single struc-
ture. Where housing activities being
assisted meet the requirements of para-
graph §570.208 (d)(5)(ii) or (d)(6)(ii) of
this section, all such housing may also
be considered for this purpose as a sin-
gle structure. For rental housing, occu-
pancy by low and moderate income
households must be at affordable rents
to qualify under this criterion. The re-
cipient 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 mul-
tifamily, non-elderly rental housing
project;
(B) Not less than 20 percent of the
units will be occupied by low and mod-
erate 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 pro-
portion of units in the project that will
be occupied by low and moderate in-
come households.
(ii) When CDBG funds are used to as-
sist rehabilitation eligible under
§570.202(b)(9) or (10) in direct support of
the recipient’s Rental Rehabilitation
program authorized under 24 CFR part
511, such funds shall be considered to
benefit low and moderate income per-
sons 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 mod-
erate income persons.
(iii) When CDBG funds are used for
housing services eligible under
§570.201(k), such funds shall be consid-
ered to benefit low- and moderate-in-
come 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 re-
tain permanent jobs where at least 51
percent of the jobs, computed on a full
time equivalent basis, involve the em-
ployment of low- and moderate-income
persons. To qualify under this para-
graph, the activity must meet the fol-
lowing 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 assist-
ance is provided:
(A) The job is known to be held by a
low- or moderate-income person; or
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00065 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
56
24 CFR Ch. V (4–1–13 Edition) §570.208
(B) The job can reasonably be ex-
pected to turn over within the fol-
lowing 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 turn-
over.
(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 ac-
quired 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 re-
ceive first consideration for filling
such jobs.
(iv) For purposes of determining
whether a job is held by or made avail-
able to a low- or moderate-income per-
son, 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 para-
graph (a)(4)(v) of this section; or
(2) Has at least 70 percent of its resi-
dents who are low- and moderate-in-
come persons; or
(B) The assisted business is located
within a census tract (or block num-
bering area) that meets the require-
ments of paragraph (a)(4)(v) of this sec-
tion and the job under consideration is
to be located within that census tract.
(v) A census tract (or block num-
bering area) qualifies for the presump-
tions permitted under paragraphs
(a)(4)(iv)(A)(1) and (B) of this section if
it is either part of a Federally-des-
ignated Empowerment Zone or Enter-
prise Community or meets the fol-
lowing criteria:
(A) It has a poverty rate of at least 20
percent as determined by the most re-
cently available decennial census infor-
mation;
(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 avail-
able 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 under-
taken is located in a block group that
has a poverty rate of at least 20 per-
cent; 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, nar-
cotics use, homelessness, abandoned
housing, and deteriorated infrastruc-
ture or substantial population decline.
(vi) As a general rule, each assisted
business shall be considered to be a
separate activity for purposes of deter-
mining whether the activity qualifies
under this paragraph, except:
(A) In certain cases such as where
CDBG funds are used to acquire, de-
velop 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 aggre-
gating the jobs created by all of the
businesses receiving loans during each
program year.
(C) Where CDBG funds are used by a
recipient or subrecipient to provide
technical assistance to businesses, this
requirement may be met by aggre-
gating the jobs created or retained by
all of the businesses receiving tech-
nical assistance during each program
year.
(D) Where CDBG funds are used for
activities meeting the criteria listed at
§570.209(b)(2)(v), this requirement may
be met by aggregating the jobs created
or retained by all businesses for which
CDBG assistance is obligated for such
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00066 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
57
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.208
activities during the program year, ex-
cept as provided at paragraph (d)(7) of
this section.
(E) Where CDBG funds are used by a
Community Development Financial In-
stitution to carry out activities for the
purpose of creating or retaining jobs,
this requirement may be met by aggre-
gating the jobs created or retained by
all businesses for which CDBG assist-
ance is obligated for such activities
during the program year, except as pro-
vided at paragraph (d)(7) of this sec-
tion.
(F) Where CDBG funds are used for
public facilities or improvements
which will result in the creation or re-
tention of jobs by more than one busi-
ness, this requirement may be met by
aggregating the jobs created or re-
tained by all such businesses as a re-
sult of the public facility or improve-
ment.
(1) Where the public facility or im-
provement is undertaken principally
for the benefit of one or more par-
ticular 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 facil-
ity/improvement is less than $10,000 per
permanent full-time equivalent job to
be created or retained by those busi-
nesses.
(2) In any case where the cost per job
to be created or retained (as deter-
mined under paragraph (a)(4)(vi)(F)(1)
of this section) is $10,000 or more, the
requirement must be met by aggre-
gating the jobs created or retained as a
result of the public facility or improve-
ment 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/improve-
ment 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 com-
pletion of the facility/improvement. In
addition, the assisted activity must
comply with the public benefit stand-
ards at §570.209(b).
(b) Activities which aid in the preven-
tion or elimination of slums or blight. Ac-
tivities meeting one or more of the fol-
lowing criteria, in the absence of sub-
stantial 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 recipi-
ent, meets a definition of a slum,
blighted, deteriorated or deteriorating
area under State or local law;
(ii) The area also meets the condi-
tions 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 build-
ings 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 val-
ues relative to other areas in the com-
munity; or
(5) Known or suspected environ-
mental contamination.
(B) The public improvements
throughout the area are in a general
state of deterioration.
(iii) Documentation is to be main-
tained by the recipient on the bound-
aries of the area and the conditions and
standards used that qualified the area
at the time of its designation. The re-
cipient shall establish definitions of
the conditions listed at
§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. Documenta-
tion must be retained pursuant to the
recordkeeping requirements contained
at §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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00067 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
58
24 CFR Ch. V (4–1–13 Edition) §570.208
buildings carried out in an area meet-
ing the above requirements will be con-
sidered to address the area’s deteriora-
tion only where each such building re-
habilitated is considered substandard
under local definition before rehabili-
tation, and all deficiencies making a
building substandard have been elimi-
nated if less critical work on the build-
ing 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 Pay-
ments 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 con-
tamination that are not located in a
slum or blighted area: acquisition;
clearance; relocation; historic preser-
vation; remediation of environ-
mentally contaminated properties; or
rehabilitation of buildings or improve-
ments. However, rehabilitation must
be limited to eliminating those condi-
tions that are detrimental to public
health and safety. If acquisition or re-
location 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 preven-
tion 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 Develop-
ment Program (NDP) action area; i.e.,
an area in which funded activities were
authorized under an urban renewal
Loan and Grant Agreement or an an-
nual NDP Funding Agreement, pursu-
ant to title I of the Housing Act of 1949;
and
(ii) Necessary to complete the urban
renewal plan, as then in effect, includ-
ing initial land redevelopment per-
mitted by the plan.
NOTE: Despite the restrictions in (b) (1) and
(2) of this section, any rehabilitation activ-
ity 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 commu-
nity development needs having a par-
ticular urgency. In the absence of sub-
stantial evidence to the contrary, an
activity will be considered to address
this objective if the recipient certifies
that the activity is designed to allevi-
ate existing conditions which pose a se-
rious and immediate threat to the
health or welfare of the community
which are of recent origin or which re-
cently became urgent, that the recipi-
ent is unable to finance the activity on
its own, and that other sources of fund-
ing 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 certifi-
cation 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 na-
tional objective may be based on the
planned use of the property after acqui-
sition. 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 elimi-
nate 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 prop-
erty shall be treated as a ‘‘change of
use’’ under §570.505.
(2) Where the assisted activity is re-
location assistance that the recipient
is required to provide, such relocation
assistance shall be considered to ad-
dress the same national objective as is
addressed by the displacing activity.
Where the relocation assistance is vol-
untary on the part of the grantee the
recipient may qualify the assistance ei-
ther on the basis of the national objec-
tive addressed by the displacing activ-
ity or on the basis that the recipients
of the relocation assistance are low and
moderate income persons.
(3) In any case where the activity un-
dertaken for the purpose of creating or
retaining jobs is a public improvement
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00068 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
59
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.209
and the area served is primarily resi-
dential, the activity must meet the re-
quirements of paragraph (a)(1) of this
section as well as those of paragraph
(a)(4) of this section in order to qualify
as benefiting low and moderate income
persons.
(4) CDBG funds expended for planning
and administrative costs under §570.205
and §570.206 will be considered to ad-
dress the national objectives.
(5) Where the grantee has elected to
prepare an area revitalization strategy
pursuant to the authority of §91.215(e)
of this title and HUD has approved the
strategy, the grantee may also elect
the following options:
(i) Activities undertaken pursuant to
the strategy for the purpose of creating
or retaining jobs may, at the option of
the grantee, be considered to meet the
requirements of this paragraph under
the criteria at paragraph (a)(1)(vii) of
this section in lieu of the criteria at
paragraph (a)(4) of this section; and
(ii) All housing activities in the area
for which, pursuant to the strategy,
CDBG assistance is obligated during
the program year may be considered to
be a single structure for purposes of ap-
plying the criteria at paragraph (a)(3)
of this section.
(6) Where CDBG-assisted activities
are carried out by a Community Devel-
opment 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 Com-
munity Development Financial Insti-
tution for the purpose of creating or re-
taining jobs may, at the option of the
grantee, be considered to meet the re-
quirements of this paragraph under the
criteria at paragraph (a)(1)(vii) of this
section in lieu of the criteria at para-
graph (a)(4) of this section; and
(ii) All housing activities for which
the Community Development Finan-
cial Institution obligates CDBG assist-
ance 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 cri-
teria at §570.209(b)(2)(v) may also meet
the requirements of either paragraph
(d)(5)(i) or (d)(6)(i) of this section, the
grantee may elect to qualify the activ-
ity under either the area benefit cri-
teria at paragraph (a)(1)(vii) of this
section or the job aggregation criteria
at paragraph (a)(4)(vi)(D) of this sec-
tion, 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 cri-
terion, 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]
§570.209 Guidelines for evaluating
and selecting economic develop-
ment projects.
The following guidelines are provided
to assist the recipient to evaluate and
select activities to be carried out for
economic development purposes. Spe-
cifically, these guidelines are applica-
ble to activities that are eligible for
CDBG assistance under §570.203. These
guidelines also apply to activities car-
ried out under the authority of §570.204
that would otherwise be eligible under
§570.203, were it not for the involve-
ment of a Community-Based Develop-
ment 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 require-
ments; and standards for evaluating
public benefit. The standards for evalu-
ating public benefit are mandatory, but
the guidelines for evaluating projects
costs and financial requirements are
not.
(a) Guidelines and objectives for evalu-
ating project costs and financial require-
ments. HUD has developed guidelines
that are designed to provide the recipi-
ent with a framework for financially
underwriting and selecting CDBG-as-
sisted economic development projects
which are financially viable and will
make the most effective use of the
CDBG funds. These guidelines, also re-
ferred to as the underwriting guide-
lines, are published as appendix A to
this part. The use of the underwriting
guidelines published by HUD is not
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00069 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
60
24 CFR Ch. V (4–1–13 Edition) §570.209
mandatory. However, grantees electing
not to use these guidelines would be ex-
pected to conduct basic financial un-
derwriting prior to the provision of
CDBG financial assistance to a for-
profit business. Where appropriate,
HUD’s underwriting guidelines recog-
nize that different levels of review are
appropriate to take into account dif-
ferences in the size and scope of a pro-
posed project, and in the case of a mi-
croenterprise or other small business
to take into account the differences in
the capacity and level of sophistication
among businesses of differing sizes. Re-
cipients are encouraged, when they de-
velop their own programs and under-
writing criteria, to also take these fac-
tors into account. The objectives of the
underwriting guidelines are to ensure:
(1) That project costs are reasonable;
(2) That all sources of project financ-
ing are committed;
(3) That to the extent practicable,
CDBG funds are not substituted for
non-Federal financial support;
(4) That the project is financially fea-
sible;
(5) That to the extent practicable,
the return on the owner’s equity in-
vestment 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 ben-
efit. 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 guide-
lines for project costs and financial re-
quirements covered under paragraph
(a) of this section, the use of the stand-
ards for public benefit is mandatory.
Certain public facilities and improve-
ments eligible under §570.201(c) of the
regulations, which are undertaken for
economic development purposes, are
also subject to these standards, as
specified in §570.208(a)(4)(vi)(F)(2).
(1) Standards for activities in the aggre-
gate. Activities covered by these guide-
lines 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 resi-
dents of an area, such that the number
of low- and moderate-income persons
residing in the areas served by the as-
sisted 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 coun-
ty, a non-entitlement CDBG grantee in
Hawaii, or an Insular Area shall apply
the aggregate standards under para-
graph (b)(1) of this section to all appli-
cable 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 re-
ceived in program years after Fiscal
Year 2004. A grantee under the HUD-ad-
ministered Small Cities Program, or
Insular Areas CDBG grants prior to
Fiscal Year 2005, shall apply the aggre-
gate 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 pur-
poses, be aggregated with the most re-
cent open grant. For any time period in
which a community has no open HUD-
administered or Insular Areas grants,
the aggregate standards shall be ap-
plied to all applicable activities for
which program income is obligated
during that period.
(ii) The grantee shall apply the ag-
gregate 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 activi-
ties.
(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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00070 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
61
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.209
placement and/or other employment
support services, the jobs assisted with
CDBG funds shall be considered to be
created or retained jobs for the pur-
poses of applying the aggregate stand-
ards.
(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 para-
graph (b)(1) of this section:
(A) Provides jobs exclusively for un-
employed 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 pro-
motion and economic advancement,
such as through the provision of train-
ing;
(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 busi-
ness(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 neigh-
borhood that has at least 70 percent of
its residents who are low- and mod-
erate-income;
(H) Provides assistance to a Commu-
nity Development Financial Institu-
tion that serve an area that is predomi-
nantly low- and moderate-income per-
sons;
(I) Provides assistance to a Commu-
nity-Based Development Organization
serving a neighborhood that has at
least 70 percent of its residents who are
low- and moderate-income;
(J) Provides employment opportuni-
ties 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, pro-
vides substantial benefit to low-income
persons through other innovative ap-
proaches;
(L) Provides services to the residents
of an area pursuant to a strategy ap-
proved by HUD under the provisions of
§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 §91.215(e) of this title.
(N) Directly involves the economic
development or redevelopment of envi-
ronmentally contaminated properties.
(3) Standards for individual activities.
Any activity subject to these guide-
lines which falls into one or more of
the following categories will be consid-
ered 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 ap-
plicable:
(A) $50,000 per full-time equivalent,
permanent job created or retained; or
(B) $1,000 per low- and moderate-in-
come person to which goods or services
are provided by the activity.
(ii) The activity consists of or in-
cludes any of the following:
(A) General promotion of the commu-
nity as a whole (as opposed to the pro-
motion of specific areas and programs);
(B) Assistance to professional sports
teams;
(C) Assistance to privately-owned
recreational facilities that serve a pre-
dominantly higher-income clientele,
where the recreational benefit to users
or members clearly outweighs employ-
ment 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 busi-
ness 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.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00071 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
62
24 CFR Ch. V (4–1–13 Edition) §570.210
(4) Applying the individual activity
standards. (i) Where an activity is ex-
pected both to create or retain jobs and
to provide goods or services to resi-
dents of an area, it will be disqualified
only if the amount of CDBG assistance
exceeds both of the amounts in para-
graph (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 activi-
ties.
(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 pur-
poses of applying the individual activ-
ity standards in paragraph (b)(3)(i) of
this section.
(c) Amendments to economic develop-
ment projects after review determinations.
If, after the grantee enters into a con-
tract to provide assistance to a project,
the scope or financial elements of the
project change to the extent that a sig-
nificant contract amendment is appro-
priate, the project should be reevalu-
ated under these and the recipient’s
guidelines. (This would include, for ex-
ample, situations where the business
requests a change in the amount or
terms of assistance being provided, or
an extension to the loan payment pe-
riod required in the contract.) If a re-
evaluation of the project indicates that
the financial elements and public ben-
efit to be derived have also substan-
tially changed, then the recipient
should make appropriate adjustments
in the amount, type, terms or condi-
tions of CDBG assistance which has
been offered, to reflect the impact of
the substantial change. (For example,
if a change in the project elements re-
sults in a substantial reduction of the
total project costs, it may be appro-
priate for the recipient to reduce the
amount of total CDBG assistance.) If
the amount of CDBG assistance pro-
vided 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 dem-
onstrate the level of public benefit,
based on the above standards, that is
actually achieved upon completion of
the CDBG-assisted economic develop-
ment activity(ies) and how that com-
pares to the level of such benefit an-
ticipated 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 im-
prove the accuracy of its projections. If
the actual results demonstrate that
the recipient has failed the public ben-
efit standards, HUD may require the
recipient to meet more stringent
standards in future years as appro-
priate.
[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]
§570.210 Prohibition on use of assist-
ance for employment relocation ac-
tivities.
(a) Prohibition. CDBG funds may not
be used to directly assist a business, in-
cluding a business expansion, in the re-
location of a plant, facility, or oper-
ation 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 defini-
tions apply to this section:
(1) Directly assist. Directly assist
means the provision of CDBG funds for
activities pursuant to:
(i) §570.203(b); or
(ii) §§570.201(a)–(d), 570.201(l),
570.203(a), or §570.204 when the grantee,
subrecipient, or, in the case of an ac-
tivity carried out pursuant to §570.204,
a Community Based Development Or-
ganization (CDBO) enters into an
agreement with a business to under-
take 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 fa-
cilities and indirect assistance that
will provide benefit to multiple busi-
nesses does not fall under the defini-
tion of ‘‘directly assist,’’ unless it in-
cludes the provision of infrastructure
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00072 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
63
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.210
to aid a specific business that is the
subject of an agreement with the spe-
cific assisted business.
(2) Labor market area (LMA). For met-
ropolitan areas, an LMA is an area de-
fined as such by the BLS. An LMA is
an economically integrated geographic
area within which individuals can live
and find employment within a reason-
able distance or can readily change em-
ployment without changing their place
of residence. In addition, LMAs are
nonoverlapping and geographically ex-
haustive. For metropolitan areas,
grantees must use employment data, as
defined by the BLS, for the LMA in
which the affected business is cur-
rently 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. Metro-
politan LMAs cannot be combined, nor
can a non-metropolitan LMA be com-
bined with a metropolitan LMA. For
the HUD-administered Small Cities
Program, each of the three partici-
pating counties in Hawaii will be con-
sidered to be its own LMA. Recipients
of Fiscal Year 1999 Small Cities Pro-
gram funding in New York will follow
the requirements for State CDBG re-
cipients.
(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 per-
sons 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 con-
stitute 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 speci-
fied 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 §570.204) shall sign a writ-
ten agreement with the assisted busi-
ness. The written agreement shall in-
clude:
(1) Statement. A statement from the
assisted business as to whether the as-
sisted activity will result in the reloca-
tion 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 assist-
ance will not result in a relocation cov-
ered 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 agree-
ment 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 reimburse-
ment of any assistance provided to, or
expended on behalf of, the business in
the event that assistance results in a
relocation prohibited under this sec-
tion.
(d) Assistance not covered by this sec-
tion. This section does not apply to:
(1) Relocation assistance. Relocation
assistance required by the Uniform As-
sistance and Real Property Acquisition
Policies Act of 1970, (URA) (42 U.S.C.
4601–4655);
(2) Microenterprises. Assistance to
microenterprises as defined by Section
102(a)(22) of the Housing and Commu-
nity Development Act of 1974; and
(3) Arms-length transactions. Assist-
ance to a business that purchases busi-
ness 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 reloca-
tion of the sellers’ business operation
(including customer base or list, good-
will, product lines, or trade names)
from one LMA to another LMA and
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00073 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
64
24 CFR Ch. V (4–1–13 Edition) §570.300
does not produce a significant loss of
jobs in the LMA from which the reloca-
tion occurs.
[70 FR 76369, Dec. 23, 2005]
Subpart D—Entitlement Grants
SOURCE: 53 FR 34449, Sept. 6, 1988, unless
otherwise noted.
§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 pro-
cedures set forth in subparts A, C, J, K,
and O of this part also apply to entitle-
ment grantees and to non-entitlement
grantees in the State of Hawaii. Sec-
tions 570.307 and 570.308 of this subpart
do not apply to the Hawaii non-entitle-
ment grantees.
[72 FR 46370, Aug. 17, 2007]
§570.301 Activity locations and float-
funding.
The consolidated plan, action plan,
and amendment submission require-
ments referred to in this section are
those in 24 CFR part 91.
(a) For activities for which the grant-
ee has not yet decided on a specific lo-
cation, such as when the grantee is al-
locating an amount of funds to be used
for making loans or grants to busi-
nesses 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 (includ-
ing selection criteria), and how much
and under what terms the assistance
will be provided, or in the case of a
planned public facility or improve-
ment, how it expects to determine its
location.
(b) Float-funded activities and guaran-
tees. 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 ac-
tion 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. When-
ever 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 pro-
gram year. For purposes of this sec-
tion, 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 be-
tween 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 re-
cover the full amount of the float as-
sistance 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.
(3) Unlike other projected program
income, the full amount of income ex-
pected to be generated by a float-fund-
ed 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 identi-
fies the float-funded activity the re-
cipient’s commitment to undertake
one of the following options:
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00074 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
65
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.304
(i) Amend or delete activities in an
amount equal to any default or failure
to produce sufficient income in a time-
ly manner. If the recipient makes this
choice, it must include a description of
the process it will use to select the ac-
tivities to be amended or deleted and
how it will involve citizens in that
process; and it must amend the appli-
cable statement(s) or action plan(s)
showing those amendments or dele-
tions promptly upon determining that
the float-funded activity will not gen-
erate sufficient or timely program in-
come;
(ii) Obtain an irrevocable line of
credit from a commercial lender for
the full amount of the float-funded ac-
tivity and describe the lender and
terms of such line of credit in the ac-
tion plan that identifies the float-fund-
ed activity. To qualify for this purpose,
such line of credit must be uncondi-
tionally 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 sched-
ule;
(iii) Transfer general local govern-
ment funds in the full amount of any
default or shortfall to the CDBG line of
credit within 30 days of the float-fund-
ed activity’s failure to generate the
projected amount of the program in-
come 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 short-
fall within 30 days of the float-funded
activity’s failure to generate the pro-
jected amount of the program income
on schedule.
(5) When preparing an action plan for
a year in which program income is ex-
pected to be received from a float-fund-
ed 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 in-
come 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]
§570.302 Submission requirements.
In order to receive its annual CDBG
entitlement grant, a grantee must sub-
mit 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 de-
veloping the consolidated plan, includ-
ing 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]
§570.303 Certifications.
The jurisdiction must make the cer-
tifications 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]
§570.304 Making of grants.
(a) Approval of grant. HUD will ap-
prove a grant if the jurisdiction’s sub-
missions have been made and approved
in accordance with 24 CFR part 91, and
the certifications required therein are
satisfactory to the Secretary. The cer-
tifications 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 require-
ments of this part, has failed to carry
out its consolidated plan as provided
under §570.903, or has determined that
there is evidence, not directly involv-
ing the grantee’s past performance
under this program, that tends to chal-
lenge in a substantial manner the
grantee’s certification of future per-
formance. If the Secretary makes any
such determination, however, further
assurances may be required to be sub-
mitted by the grantee as the Secretary
may deem warranted or necessary to
find the grantee’s certification satis-
factory.
(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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00075 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
66
24 CFR Ch. V (4–1–13 Edition) §570.307
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 appro-
priated or the consolidated plan is not
approved under 24 CFR part 91, subpart
F—in which case, the grantee will for-
feit the entire entitlement amount; or
(2) The grantee’s performance does
not meet the performance require-
ments 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]
§570.307 Urban counties.
(a) Determination of qualification. The
Secretary will determine the qualifica-
tions of counties to receive entitle-
ments 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 avail-
able from the U.S. Bureau of the Cen-
sus with respect to population and
other pertinent demographic charac-
teristics, and based on information pro-
vided 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 defini-
tion at §570.3(3). As necessitated by
this definition, the Secretary shall de-
termine which counties have authority
to carry out essential community de-
velopment and housing assistance ac-
tivities in their included units of gen-
eral local government without the con-
sent of the local governing body and
which counties must execute coopera-
tion agreements with such units to in-
clude them in the urban county for
qualification and grant calculation
purposes.
(2) At the time of urban county quali-
fication, HUD may refuse to recognize
the cooperation agreement of a unit of
general local government in an urban
county where, based on past perform-
ance and other available information,
there is substantial evidence that such
unit does not cooperate in the imple-
mentation of the essential community
development or housing assistance ac-
tivities 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 con-
stitute noncompliance by the urban
county. In such a case, the unit of gen-
eral local government will not be per-
mitted to participate in the urban
county, and its population or other
needs characteristics will not be con-
sidered in the determination of wheth-
er 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 pro-
posed action.
(c) Essential activities. For purposes of
this section, the term ‘‘essential com-
munity development and housing as-
sistance activities’’ means community
renewal and lower income housing ac-
tivities, specifically urban renewal and
publicly assisted housing. In deter-
mining whether a county has the re-
quired powers, the Secretary will con-
sider both its authority and, where ap-
plicable, the authority of its des-
ignated agency or agencies.
(d) Period of qualification. (1) The
qualification by HUD of an urban coun-
ty shall remain effective for three suc-
cessive Federal fiscal years regardless
of changes in its population during
that period, except as provided under
paragraph (f) of this section and except
as provided under §570.3(3) where the
period of qualification shall be two suc-
cessive Federal fiscal years.
(2) During the period of qualification,
no included unit of general local gov-
ernment may withdraw from nor be re-
moved from the urban county for
HUD’s grant computation purposes.
(3) If some portion of an urban coun-
ty’s unincorporated area becomes in-
corporated during the urban county
qualification period, the newly incor-
porated unit of general local govern-
ment shall not be excluded from the
urban county nor shall it be eligible for
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00076 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
67
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.308
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 in-
cluded unit of general local govern-
ment cannot become eligible for an en-
titlement 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 con-
tinue 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 re-
cipient of assistance under subpart I,
during the entire period of urban coun-
ty qualification.
(f) Failure of an urban county to re-
ceive a grant. Failure of an urban coun-
ty to receive a grant during any year
shall terminate the existing qualifica-
tion 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 in-
cluded in the urban county, in subse-
quent years, from the prohibition to re-
ceive 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 participa-
tion 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 coun-
ty for the remaining one or two year
period by notifying HUD and the coun-
ty, 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]
§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 metropoli-
tan city as a part of the urban county
for purposes of planning and imple-
menting a joint community develop-
ment 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 ap-
proval by HUD, remain effective for the
period for which the county is qualified
as an urban county. An urban county
may be joined by more than one metro-
politan 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 re-
ceipt of the request by HUD.
(2) Each metropolitan city and urban
county submitting a joint request shall
submit an executed cooperation agree-
ment to undertake or to assist in the
undertaking of essential community
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00077 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
68
24 CFR Ch. V (4–1–13 Edition) §570.309
development and housing assistance
activities, as defined in §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 recipi-
ent.
(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 coun-
ty 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 re-
questing a grant under this part, the
urban county shall make a single sub-
mission which meets the submission
requirements of 24 CFR part 91 and
covers all members of the joint recipi-
ent.
[53 FR 34449, Sept. 6, 1988, as amended at 60
FR 1915, Jan. 5, 1995]
§570.309 Restriction on location of ac-
tivities.
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 recipi-
ent’s community development objec-
tives, and that reasonable benefits
from the activity will accrue to resi-
dents within the jurisdiction of the
grantee. The grantee shall document
the basis for such determination prior
to providing CDBG funds for the activ-
ity.
[60 FR 56914, Nov. 9, 1995]
Subpart E—Special Purpose
Grants
§570.400 General.
(a) Applicability. The policies and pro-
cedures 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, includ-
ing specified exemptions described
herein. The HUD Environmental Re-
view Procedures contained in 24 CFR
part 58 also apply to this subpart, un-
less 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 avail-
able from the U.S. Bureau of the Cen-
sus which is referable to the same
point or period of time.
(c) Review of applications for discre-
tionary assistance—(1) Review compo-
nents. 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 es-
tablished by HUD;
(ii) The application is complete;
(iii) Required certifications have
been included in the application; and
(iv) The application meets the spe-
cific program requirements listed in
the FEDERAL REGISTER Notice pub-
lished in connection with a competi-
tion for funding, and any other specific
requirements listed under this subpart
for each of the programs.
(2) Timing and review. HUD is not re-
quired by the Act to review and ap-
prove an application for assistance or a
contract proposal within any specified
time period. However, HUD will at-
tempt to complete its review of any ap-
plication/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,
or disapproved. If an application/pro-
posal is partially approved or dis-
approved, the applicant/proposer will
be informed of the basis for HUD’s deci-
sion. HUD may make conditional ap-
provals under §570.304(d).
(d) Program amendments. (1) Recipi-
ents 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, wheth-
er or not they require HUD approval,
must be fully documented in the recipi-
ent’s records.
(e) Performance reports. Any perform-
ance report required of a discretionary
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00078 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
69
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.401
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 per-
formance 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 correc-
tive and remedial actions under
§570.910.
(g) Funding sanctions. Following no-
tice and opportunity for informal con-
sultation, HUD may withhold, reduce
or terminate the assistance where any
corrective or remedial actions taken
under §570.910 fail to remedy a recipi-
ent’s performance deficiencies, and the
deficiencies are sufficiently substan-
tial, in the judgment of HUD, to war-
rant sanctions.
(h) Publication of availability of funds.
HUD will publish by Notice in the FED-
ERAL REGISTER each year the amount
of funds available for the special pur-
pose grants authorized by each section
under this subpart.
[50 FR 37525, Sept. 16, 1985, as amended at 56
FR 18968, Apr. 24, 1991]
§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 non-
entitlement areas to undertake the
planning of community adjustments
and economic diversification activities,
in response to physical, social, eco-
nomic or governmental impacts on the
communities generated by the actions
of the Department of Defense (DoD) de-
fined in paragraph (a)(2) of this section.
(2) Impacts. Funding under this sec-
tion is available only to communities
affected by one or more of the fol-
lowing DoD-related impacts:
(i) The proposed or actual establish-
ment, realignment, or closure of a
military installation;
(ii) The cancellation or termination
of a DoD contract or the failure to pro-
ceed 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 po-
sitions over a five-year period in the
unit of general local government and
the surrounding area; or
(iv) The Secretary of HUD (in con-
sultation 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 signifi-
cant adverse consequence on the unit
of general local government.
(3) Form of awards. Planning assist-
ance 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 ac-
cept 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 defi-
nitions in §570.3 of this part, the fol-
lowing definitions apply to this sec-
tion:
(1) Adjustment planning. Generally,
developing plans and proposals in di-
rect response to contraction or expan-
sion of the local economy, or changes
in the physical development or the so-
cial conditions of the community, re-
sulting from a DoD-generated impact.
Typically, this planning includes one
or more of the following tasks: Col-
lecting, updating, and analyzing data;
identifying problems; formulating solu-
tions; proposing long- and short-term
policies; recommending public- and pri-
vate-sector actions to implement com-
munity adjustments and economic di-
versification activities; securing cit-
izen involvement; and coordinating
with Federal, State, and local entities
with respect to the DoD-related im-
pacts.
(2) Community adjustment. Any pro-
posed action to change the physical,
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00079 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
70
24 CFR Ch. V (4–1–13 Edition) §570.401
economic, or social infrastructure
within the jurisdiction or surrounding
area, directly and appropriately in re-
sponse 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 facil-
ity producing goods or services pursu-
ant 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 sec-
tor, that are intended to mitigate de-
cline in the local economy resulting
from DoD-generated impacts or, in the
case of expansion of a military instal-
lation or a defense facility, that are in-
tended to respond to new economic
growth spawned by that expansion.
(7) Military installation. Any camp,
post, station, base, yard, or other juris-
diction 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 ci-
vilian personnel positions, but does not
include a reduction in force resulting
from workload adjustments, reduced
personnel or funding levels, or skill im-
balances.
(9) Section 107 means section 107 of
the Housing and Community Develop-
ment 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 pro-
gram 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 pro-
gram are set out in subpart F of this
part.
(12) Surrounding area. The labor mar-
ket area as defined by the Bureau of
Labor Statistics that:
(i) Includes all or part of the appli-
cant’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 in-
clude Indian Tribes.
(d) Eligible activities. Activities eligi-
ble 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 po-
tential public and private sector ac-
tions needed for the community to ini-
tiate its response;
(3) If timely, modification of the ap-
plicant’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 ap-
plicant’s current economic plans and
programs, such as for business develop-
ment, job training, or industrial or
commercial development;
(5) Preparation for and conduct of
initial community outreach activities
to begin involving local citizens and
the private sector in planning for ad-
justment and diversification;
(6) Environmental reviews related to
DoD-related impacts;
(7) Initial identification of and co-
ordination 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 enter-
prise 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 pro-
grams, coordinate with appropriate
public or private entities, or qualify
more quickly for the more substantial
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00080 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
71
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.401
planning assistance available from
DoD.
(e) Ineligible activities. Activities in-
eligible for adjustment planning assist-
ance 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 commu-
nity adjustment or economic diver-
sification, 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 installa-
tions.
(4) Demonstration planning activities
intended to evolve new planning tech-
niques 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 im-
pact triggered by one or more of the
four criteria specified in paragraph
(a)(2) of this section.
(f) Threshold requirements. No applica-
tion will qualify for funding unless it
meets the following requirements:
(1) Verification by HUD that the ap-
plicant is a unit of general government
in a nonentitlement area.
(2) Verification by HUD and DoD that
a triggering event described in para-
graph (a)(2) of this section has occurred
or will occur.
(3) With respect to communities af-
fected by the 49 base closings and 28 re-
alignments listed by the 1991 Base Clo-
sure and Realignment Commission,
verification by DoD that it has pro-
vided no prior funding and that the ap-
plicant may benefit from start-up plan-
ning assistance from HUD.
(4) Determination by HUD that the
proposed planning activities are eligi-
ble.
(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 applica-
tions 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 sur-
rounding area;
(2) The adequacy and appropriateness
of the start-up planning envisioned by
the applicant in response to the im-
pacts;
(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 diversifica-
tion.
(4) The cost-effectiveness of the pro-
posed budget to carry out the planning
work envisioned by the applicant;
(5) The capability of the organization
the applicant proposes to do the plan-
ning;
(6) The credentials and experience of
the key staff the applicant proposes to
do the planning;
(7) The presence of significant pri-
vate sector impact, as measured by the
extent to which the DoD-generated im-
pact is projected to decrease or in-
crease the employment base by 10% or
more;
(8) The presence of significant public
sector impact, as measured by the ex-
tent to which the DoD-generated im-
pact is projected to decrease or in-
crease the applicant’s capital and oper-
ating budgets for the next fiscal year
by 10% or more;
(9) The degree of urgency, to the ex-
tent that a suddenly announced action,
e.g. a plant closing, is officially sched-
uled to occur within a year of the date
of application.
(h) Submission requirements. Appli-
cants 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 per-
son authorized to represent and con-
tractually or otherwise commit the ap-
plicant;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00081 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
72
24 CFR Ch. V (4–1–13 Edition) §570.402
(2) A concise title and brief abstract
of the proposed planning work, includ-
ing the total cost;
(3) A narrative that:
(i) Documents one or more of the
triggering events described in para-
graph (a)(2) of this section that quali-
fies 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 ap-
plicant community and the sur-
rounding area;
(iii) Provides an initial assessment of
the type and extent of start-up plan-
ning envisioned by the applicant in re-
sponse 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 Administra-
tion 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-des-
ignated enterprise zones; appropriate
Federal empowerment zones and enter-
prise communities, when selected and
announced; appropriate other units of
general local government in the non-
entitlement area; appropriate busi-
nesses, corporations, and defense facili-
ties concerned with impacts on the ap-
plicant community; and homeless non-
profit 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 com-
munity adjustment and economic di-
versification activities;
(5) A proposed budget showing the es-
timated 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 ef-
fort;
(6) A description of the qualifications
of the proposed technical staff, includ-
ing 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 Re-
quirements; Disclosure Regarding Pay-
ments to Influence Certain Federal
Transactions; and Prohibition Regard-
ing Excessive Force.
(i) Approval procedures—(1) Accept-
ance. HUD’s acceptance of an applica-
tion meeting the threshold require-
ments of paragraph (f) does not assure
a commitment to provide funding or to
provide the full amount requested.
HUD may elect to negotiate both pro-
posed tasks and budgets in order to
promote more cost-effective planning.
(2) Notification. HUD will provide no-
tification 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 adminis-
tration will be governed by the terms
of individual awards and by the fol-
lowing provisions of this part:
(i) Subpart A, §570.5;
(ii) Subpart E, §§570.400(d), (e), (f),
and (g);
(iii) Subpart J, §§570.500(c), 570.501,
570.502, 570.503, and 570.509;
(iv) Subpart K, §§570.601, 570.602,
570.609, 570.610, and 570.611.
The environmental review require-
ments 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]
§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 In-
dian tribes plan, develop, and admin-
ister assistance under title I and sec-
tion 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00082 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
73
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.402
570, subpart M); the Urban Develop-
ment Action Grant Program (24 CFR
part 570, subpart G); the HUD-adminis-
tered Small Cities Program (24 CFR
part 570, subpart F); the State-adminis-
tered Program for Non-Entitlement
Communities (24 CFR part 570, subpart
I); the grants for Indian Tribes pro-
gram (24 CFR part 571); and the Special
Purpose Grants for Insular Areas, Com-
munity Development Work Study and
Historically Black Colleges and Uni-
versities (24 CFR part 570, subpart E).
The section 810 program is the Urban
Homesteading Program (24 CFR part
590).
(2) Funding under this section is
awarded for the provision of technical
expertise in planning, managing or car-
rying out such programs including the
activities being or to be assisted there-
under and other actions being or to be
undertaken for the purpose of the pro-
gram, such as increasing the effective-
ness of public service and other activi-
ties in addressing identified needs,
meeting applicable program require-
ments (e.g., citizen participation, non-
discrimination, OMB Circulars), in-
creasing program management or ca-
pacity building skills, attracting busi-
ness or industry to CDBG assisted eco-
nomic 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 tan-
gential benefit or effect on a program
is insufficient to qualify for funding.
(3) Awards may be made pursuant to
HUD solicitations for assistance appli-
cations or procurement contract pro-
posals 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 award-
ing the technical assistance funds:
(i) Where the Secretary determines
that such funding procedures will
achieve a particular technical assist-
ance 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 author-
ized by law. The Department will not
accept or fund unsolicited proposals.
(b) Definitions. (1) Areawide planning
organization (APO) means an organiza-
tion authorized by law or local agree-
ment to undertake planning and other
activities for a metropolitan or non-
metropolitan area.
(2) Technical assistance means the fa-
cilitating 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 pro-
grams and activities under title I.
(c) Eligible applicants. Eligible appli-
cants for award of technical assistance
funding are:
(1) States, units of general local gov-
ernment, APOs, and Indian Tribes; and
(2) Public and private non-profit or
for-profit groups, including educational
institutions, qualified to provide tech-
nical assistance to assist such govern-
mental units to carry out the title I or
Urban Homesteading programs. An ap-
plicant 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 at-
tended by more than one unit of gov-
ernment.
(d) Eligible activities. Activities eligi-
ble for technical assistance funding in-
clude:
(1) The provision of technical or advi-
sory services;
(2) The design and operation of train-
ing projects, such as workshops, semi-
nars, or conferences;
(3) The development and distribution
of technical materials and information;
and
(4) Other methods of demonstrating
and making available skills, informa-
tion 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 partici-
pating or seeking to participate.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00083 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
74
24 CFR Ch. V (4–1–13 Edition) §570.402
(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 pro-
gram for non-entitlement commu-
nities;
(2) The cost of carrying out the ac-
tivities authorized under the title I and
Urban Homesteading programs, such as
the provision of public services, con-
struction, rehabilitation, planning and
administration, for which the technical
assistance is to be provided;
(3) The cost of acquiring or devel-
oping the specialized skills or knowl-
edge to be provided by a group funded
under this section;
(4) Research activities;
(5) The cost of identifying units of
governments needing assistance (ex-
cept that the cost of selecting recipi-
ents of technical assistance under the
provisions of paragraph (k) is eligible);
or
(6) Activities designed primarily to
benefit HUD, or to assist HUD in car-
rying out the Department’s respon-
sibilities; such as research, policy anal-
ysis 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 competi-
tive 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 so-
licited by HUD:
(i) Evaluation criteria: These criteria
will be used to rank applications ac-
cording to weights which may vary
with each competition:
(A) Probable effectiveness of the ap-
plication 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 of-
ficial 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 ap-
plicant 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 competi-
tion indicating the objective of the
technical assistance, the amount of
funding available, the application pro-
cedures, including the eligible appli-
cants and activities to be funded, any
special conditions applicable to the so-
licitation, including any requirements
for a matching share or for commit-
ments for CDBG or other title I fund-
ing 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 consid-
ered in assigning the points to each
evaluation criterion. The Notice will
also indicate which program policy fac-
tors will be used, the impact of those
factors on the selection process, the
justification for their use and, if appro-
priate, the relative priority of each
program policy factor.
(2) For competitive procurement con-
tract bids/proposals. The Department’s
criteria for review and selection of so-
licited 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 tech-
nical assistance, shall be procured in
accordance with the Federal Acquisi-
tion Regulation (48 CFR chapter 1) and
the HUD Acquisition Regulation (48
CFR chapter 24).
(g) Submission procedures. Solicited
assistance applications shall be sub-
mitted in accordance with the time and
place and content requirements de-
scribed in the Department’s NOFA. So-
licited bids/proposals for procurement
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00084 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
75
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.404
contracts shall be submitted in accord-
ance with the requirements in the IFB
or RFP.
(h) Approval procedures—(1) Accept-
ance. HUD’s acceptance of an applica-
tion or proposal for review does not
imply a commitment to provide fund-
ing.
(2) Notification. HUD will provide no-
tification 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 Regula-
tion.
(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 as-
sistance instrument (grant or coopera-
tive agreement) will be used. A grant
instrument will be used when substan-
tial Federal involvement is not antici-
pated. A cooperative agreement will be
used when substantial Federal involve-
ment is anticipated. When a coopera-
tive agreement is selected, the agree-
ment 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. How-
ever, nothing in this section shall pre-
clude 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 adminis-
tration will be governed by the terms
of individual awards and relevant regu-
lations. 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 intergovern-
mental review. The requirements for En-
vironmental Reviews and Intergovern-
mental Reviews do not apply to tech-
nical 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 se-
lection of the recipients to be assisted.
Selected recipients must be entities
participating or planning to partici-
pate in the title I or Urban Home-
steading 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]
§570.403 New Communities.
The regulations for New Commu-
nities 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]
§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 address-
ing community development needs, in-
cluding neighborhood revitalization,
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 histori-
cally Black colleges and universities
(as determined by the Department of
Education in accordance with that De-
partment’s responsibilities under Exec-
utive 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 §§570.201 through
570.207, provided that any activity
which is required by State or local law
to be carried out by a governmental en-
tity may not be funded under this sec-
tion. Notwithstanding the provisions of
§§570.200(g), grants under this section
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00085 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
76
24 CFR Ch. V (4–1–13 Edition) §570.404
are not subject to the 20 percent limi-
tation on planning and program admin-
istration costs, as defined in §§570.205
and 570.206, respectively.
(d) Applications. Applications will
only be accepted from eligible appli-
cants in response to a Request for Ap-
plications (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 de-
scribe any special objectives sought to
be achieved by the funding to be pro-
vided, including any limitations on the
type of activities to be funded to
achieve the objectives, points to be
awarded to each of the selection cri-
teria listed in paragraph (e) of this sec-
tion, and any special factors to be eval-
uated in assigning points under the se-
lection factors to achieve the stated
objectives. The NOFA will also state
the deadline for the submission of ap-
plications, 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 pro-
posed activities will have a substantial
impact in achieving the stated objec-
tives.
(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 ac-
tivities, i.e., their technical and finan-
cial feasibility, for achieving the stat-
ed 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, includ-
ing satisfactory performance in car-
rying out any previous HUD-assisted
projects or activities.
(6) In the case of proposals/projects of
approximately equal merit, HUD re-
tains the right to exercise discretion in
selecting projects in a manner that
would best serve the program objec-
tives, with consideration given to the
needs of localities, types of activities
proposed, an equitable geographical
distribution, and program balance.
(f) Certifications. (1) Certifications re-
quired to be submitted by applicants
shall be as prescribed in the RFA pack-
ages.
(2) In the absence of independent evi-
dence 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 fur-
ther information or assurances to be
submitted in order to determine wheth-
er the applicant’s certifications are
satisfactory.
(g) Multiyear funding commitments. (1)
HUD may make funding commitments
of up to five years, subject to the avail-
ability of appropriations. In deter-
mining the number of years for which a
commitment will be made, HUD will
consider the nature of the activities
proposed, the capability of the recipi-
ent to carry out the proposed activi-
ties, and year-by-year funding require-
ments.
(2) Awards will be made on the basis
of a 12-month period of performance.
Once a recipient has been selected for a
multi-year award, that recipient would
not be required to compete in a com-
petition for the subsequent funding
years covered by the multi-year fund-
ing commitment. Recipients per-
forming satisfactorily will be invited
to submit applications for subsequent
funding years in accordance with re-
quirements outlined in the Notice of
Funding Availability and Request for
Grant Application. Subject to the
availability of appropriations, subse-
quent-year funding will be determined
by the following:
(i) The recipient has submitted all re-
ports required for the previous year or
years in a timely, complete and satis-
factory manner in accordance with the
terms and conditions of the grant.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00086 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
77
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.405
(ii) The recipient has submitted suffi-
cient evidence to demonstrate success-
ful completion of the tasks and
deliverables of the grant. A determina-
tion of satisfactory performance will
be made by HUD based upon evidence
of task completions provided by the re-
cipient, along with data from client
feedback and site evaluations.
(iii) The recipient has submitted the
next annual application.
(iv) The subsequent year’s applica-
tion 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. Re-
cipients are, however, eligible to com-
pete for grants for other project or ac-
tivity 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 intergovern-
mental review. The requirements for
Intergovernmental Reviews do not
apply to HBCU awards. HUD will con-
duct an environmental review in ac-
cordance with 24 CFR part 50 before
giving its approval to a proposal.
[56 FR 18968, Apr. 24, 1991]
§570.405 The insular areas.
(a) Eligible applicants. Eligible appli-
cants are Guam, the Virgin Islands,
American Samoa, the Trust Territory
of the Pacific Islands, and the Com-
monwealth of the Northern Mariana Is-
lands.
(b) Threshold requirements. HUD shall
review each grantee’s progress on out-
standing grants made under this sec-
tion based on the grantee’s perform-
ance report, the timeliness of close-
outs and compliance with fund man-
agement requirements and pertinent
regulations, taking into consideration
the size of the grant and the degree and
complexity of the program. If HUD de-
termines upon such review that the ap-
plicant does not have the capacity ef-
fectively 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 out-
standing monetary obligations. HUD
shall not accept for review an applica-
tion from an applicant that has either
an outstanding audit finding for any
HUD program, or an outstanding mone-
tary obligation to HUD that is in ar-
rears, or for which a repayment sched-
ule 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 in-
stance, however, shall a waiver be pro-
vided when funds are due HUD, unless a
satisfactory arrangement for repay-
ment 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 re-
viewing audit, monitoring and perform-
ance reports.
(e) Application and performance report-
ing. Application and performance re-
porting requirements are as follows:
(1) Applicants must submit applica-
tions within 90 days of the notification
of the grant amount from HUD.
(2) Applicants shall prepare and pub-
lish or post a proposed application in
accordance with the citizen participa-
tion requirements of paragraph (h) of
this section.
(3) Applicants shall submit to HUD a
final application containing its com-
munity development objectives and ac-
tivities. This application shall be sub-
mitted to the appropriate HUD office,
together with the required certifi-
cations, 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 de-
termined by HUD. The report should be
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00087 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
78
24 CFR Ch. V (4–1–13 Edition) §570.405
made available to citizens in accord-
ance with the requirements of para-
graph (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 ap-
plicant before submission of the appli-
cation 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 re-
quests to recognize and reimburse costs
that will be incurred after submission
of the application but before it is ap-
proved where failure to do so would im-
pose 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 ac-
cordance with 24 CFR 58.22, and with
the understanding that HUD has no ob-
ligation whatsoever to approve the ap-
plication 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 appli-
cant to satisfy the conditions may re-
sult in a termination of the grant. A
conditional approval may be granted
under any of the following cir-
cumstances:
(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 avail-
able 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 be-
tween the grantee and the Department;
(5) Pending resolution of problems re-
lated to specific projects or the capa-
bility of the grantee to obtain re-
sources 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 appli-
cant shall provide for appropriate cit-
izen 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 avail-
able for community development and
housing activities and the range of ac-
tivities that may be undertaken, in-
cluding the estimated amount proposed
to be used for activities that will ben-
efit persons of low and moderate in-
come, 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 hous-
ing 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 de-
velopment block grant.
(2) Before submitting the application
to HUD, the applicant shall certify
that it has:
(i) Met the requirements of para-
graph (h)(1) of this section;
(ii) Considered any comments and
views expressed by citizens; and
(iii) If appropriate, modified the ap-
plication accordingly and made the
modified application available to citi-
zens.
[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, §570.405(e)(4) was revised. This sec-
tion contains information collection and rec-
ordkeeping requirements and will not be-
come effective until approval has been given
by the Office of Management and Budget.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00088 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
79
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.410
§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 in-
sufficient 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 award-
ed 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 suffi-
cient 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 sec-
tion, 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]
§570.410 Special Projects Program.
(a) Program objectives. The Commu-
nity 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 pur-
poses of title I of the Housing and Com-
munity Development Act of 1974, as
amended.
(b) Eligible applicants. Only States
and units of general local government
(as defined in §570.3) are eligible to sub-
mit proposals or applications for Spe-
cial Projects grants. Proposals or ap-
plications may be submitted by eligible
applicants on behalf of themselves, on
behalf of other eligible applicants, or
jointly by more than one eligible appli-
cant.
(c) Eligible activities. (1) Project ac-
tivities that may be funded under this
section are those eligible under 24 CFR
part 570—Community Development
Block Grants, subpart C—Eligible Ac-
tivities. No more than twenty (20) per-
cent of the funds awarded under this
section may be used for overall pro-
gram administration or planning ac-
tivities eligible under §§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 pub-
lic service activities is limited. The ap-
plicant may use whichever of the fol-
lowing 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
federal fiscal year under the Entitle-
ment 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 §570.201(e)(3), an
amount equal to the amount of the En-
titlement grant funds received for the
same federal fiscal year that may be
used for public service activities, less
the amount of the Entitlement grant
funds which will be used for other pub-
lic service activities.
(d) Proposals. Eligible applicants may
submit unsolicited proposals. HUD may
ask proposers to submit additional in-
formation if necessary for evaluation.
There is no HUD commitment to fund
any unsolicited proposal regardless of
its merit. If HUD elects to fund a pro-
posal, it will request that the proposer
submit a formal application.
(1) Three (3) copies of a proposal must
be sent to the address stated in (3),
below. Each proposal submitted pursu-
ant 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 ad-
dresses a special community develop-
ment need.
(ii) The eligibility of proposed activi-
ties.
(iii) The feasibility of the project;
i.e., its technical and financial feasi-
bility for achieving the goals stated in
the proposal.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00089 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
80
24 CFR Ch. V (4–1–13 Edition) §570.411
(iv) The capacity of the proposer to
carry out satisfactorily the proposed
project activities.
(2) If the proposal is submitted joint-
ly by, or on behalf of, more than one el-
igible 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 ju-
risdictions listed in the proposal; and,
(iii) Be submitted by the lead juris-
diction. The lead jurisdiction shall be
responsible for overall coordination
and administration of the project.
(3) Unsolicited proposals may be sub-
mitted any time during the year. How-
ever, if there are no funds available for
such proposals, they will be returned
without review. Proposals shall con-
tain 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 Hous-
ing and Urban Development, Office of
Community Planning and Develop-
ment, 451 Seventh Street, SW., Wash-
ington, DC 20410, Attention: Director,
Office of Program Policy Development,
CPP.
(e) Applications. Applications are ac-
cepted only from eligible applicants in
response to letters of solicitations, or
to competition announcements pub-
lished in Notices in the FEDERAL REG-
ISTER. 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 applica-
tion. 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 con-
ditionally approve a proposal or appli-
cation shall be communicated in writ-
ing 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]
§570.411 Joint Community Develop-
ment Program.
(a) General. Grants under this section
will be awarded to institutions of high-
er education or to States and local gov-
ernments applying jointly with institu-
tions of higher education. Institutions
of higher education must demonstrate
the capacity to carry out activities
under title I of the Housing and Com-
munity Development Act of 1974. For
ease of reference, this program may be
called the Joint CD Program.
(b) Definitions.
Demonstrated capacity to carry out el-
igible activities under title I means re-
cent satisfactory activity by the insti-
tution of higher education’s staff des-
ignated to work on the program, in-
cluding subcontractors and consultants
firmly committed to work on the pro-
posed 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
out eligible activities under title I may
apply on their own, without the joint
participation of a State or unit of gen-
eral local government. States or unit
of general local governments must file
jointly with an institution of higher
education. For these approved joint ap-
plications, the grant will be made to
the State or unit of general local gov-
ernment and the institution of higher
education jointly. If an eligible appli-
cant is an institution of higher edu-
cation, it will not be funded more than
once for the same kinds of activities.
These grantees may not receive fund-
ing under a subsequent NOFA if it has
the same program objectives as the one
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00090 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
81
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.411
under which the grantee previously re-
ceived funding. However, a State or
unit of general local government is eli-
gible to apply if it files jointly with a
different institution of higher edu-
cation in each NOFA cycle. HUD may
further limit the type of eligible appli-
cant to be funded. Any such limita-
tions will be contained in the Notice of
Funding Availability described below
in paragraph (h) of this section.
(d) Role of participants in joint applica-
tions. An institution of higher edu-
cation and a State or unit of general
local government may carry out eligi-
ble activities approved in joint applica-
tions. Where there are joint applicants,
the grant will be made to both and
both will be responsible for oversight,
compliance, and performance. The ap-
plication will have to clearly delineate
the role of each applicant in the joint
application. Any funding sanctions or
other remedial actions by HUD for non-
compliance or nonperformance, wheth-
er 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 as-
sist 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 appli-
cants in response to a publication of a
Notice of Funding Availability (NOFA)
published by HUD in the FEDERAL REG-
ISTER.
(g) Local approval. (1) Where an insti-
tution of higher education is the appli-
cant, each unit of general local govern-
ment that is an entitlement jurisdic-
tion 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 appli-
cant and it proposes to carry out an ac-
tivity within the jurisdiction of one or
more units of general local govern-
ment, then each such unit must ap-
prove the activity and state that the
activity is consistent with its Consoli-
dated 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 gen-
eral local government affected or a res-
olution of the legislative body of each
such unit of general local government.
(h) NOFA contents. The NOFA will de-
scribe any special objectives sought to
be achieved by the funding to be pro-
vided, 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 se-
lection 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 submis-
sion of applications, the total funding
available for the competition, the pe-
riod of performance and the maximum
and minimum amount of individual
grants. The NOFA will also state which
of the various possible levels of com-
petition HUD will use: national and/or
regional or entitlement areas vs. non-
entitlement areas; and States or units
of general local government vs. institu-
tions of higher education vs. institu-
tions of higher education with a dem-
onstrated capacity. The NOFA will in-
clude further information and instruc-
tions 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 substan-
tial impact in achieving the objectives.
(2) The extent of the needs to be ad-
dressed by the proposed activities, par-
ticularly with respect to benefiting
low- and moderate-income persons and
residents of colonias, where applicable.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00091 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
82
24 CFR Ch. V (4–1–13 Edition) §570.415
(3) The feasibility of the proposed ac-
tivities, i.e., their technical and finan-
cial feasibility, for achieving the stat-
ed objectives.
(4) The capability of the applicant to
carry out satisfactorily the proposed
activities in a timely fashion, includ-
ing satisfactory performance in car-
rying out any previous HUD-assisted
projects or activities.
(5) The extent of commitment to fair
housing and equal opportunity, as indi-
cated by such factors as previous HUD
monitoring/compliance activity, ac-
tions to promote minority- and women-
owned business enterprise, affirma-
tively furthering fair housing issues,
and nondiscriminatory delivery of
services.
(j) Selection discretion. HUD retains
the right to exercise discretion in se-
lecting projects in a manner that
would best serve the program objec-
tives, 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 competi-
tion.
(k) Certifications. (1) Certifications,
including those indicating that appli-
cants have adhered to all civil rights
requirements under subpart K of this
part and the Americans with Disabil-
ities Act of 1990, required to be sub-
mitted by applicants shall be as pre-
scribed in the NOFA.
(2) In the absence of independent evi-
dence 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 in-
formation or assurances to be sub-
mitted in order to determine whether
the applicant’s certifications are satis-
factory.
(l) Consolidated plan. An applicant
that proposes any housing activities as
part of its application will be required
to submit a certification that these ac-
tivities are consistent with the Con-
solidated Plan of the jurisdiction to be
served.
(m) Citizen participation. The citizen
participation requirements of §§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 re-
gardless of race, color, creed, sex, na-
tional origin, familial status, or handi-
cap, particularly low- and moderate-in-
come persons, have been provided an
opportunity to comment on the pro-
posal or application.
(n) Environmental and Intergovern-
mental 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 envi-
ronmental 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]
§570.415 Community Development
Work Study Program.
(a) Applicability and objectives. HUD
makes grants under CDWSP to institu-
tions of higher education, either di-
rectly or through areawide planning
organizations or States, for the pur-
pose of providing assistance to eco-
nomically disadvantaged and minority
students who participate in a work
study program while enrolled in full-
time graduate programs in community
and economic development, commu-
nity planning, and community manage-
ment. 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 profes-
sionals to plan, implement and admin-
ister local community development
programs.
(b) Definitions. The following defini-
tions 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.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00092 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
83
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.415
Areawide planning organization (APO)
means an organization authorized by
law or by interlocal agreement to un-
dertake planning and other activities
for a metropolitan or nonmetropolitan
area. For an organization operating in
a nonmetropolitan area to be consid-
ered an APO, its jurisdiction must
cover at least one county.
CDWSP means the Community Devel-
opment Work Study Program.
Community building means commu-
nity and economic development, com-
munity planning, community manage-
ment, 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 commu-
nity building. ‘‘Community building
academic program’’ or ‘‘academic pro-
gram’’ includes but is not limited to
graduate degree programs in commu-
nity and economic development, com-
munity planning, community manage-
ment, public administration, public
policy, urban economics, urban man-
agement, and urban planning. ‘‘Com-
munity building academic program’’ or
‘‘academic program’’ excludes social
and humanistic fields such as law, eco-
nomics (except for urban economics),
education and history. ‘‘Community
building academic program’’ or ‘‘aca-
demic program’’ excludes joint degree
programs except where both joint de-
gree fields have the purpose and focus
of educating students in community
building.
Economically disadvantaged and minor-
ity 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 assist-
ance, including, but not limited to, stu-
dents who are Black, American Indian/
Alaskan Native, Hispanic, or Asian/Pa-
cific Island, and including students
with disabilities.
Institution of higher education means a
public or private educational institu-
tion that offers a community building
academic program and that is accred-
ited by an accrediting agency or asso-
ciation recognized by the Secretary of
Education under 34 CFR part 602.
Recipient means an approved appli-
cant 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 ineli-
gible.
Student with disabilities means a stu-
dent who meets the definition of ‘‘per-
son with disabilities’’ in the Americans
with Disabilities Act of 1990.
(c) Assistance provided—(1) Types of
assistance available. HUD provides fund-
ing in the form of grants to recipients
who make assistance available to eligi-
ble 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 stu-
dent at the work placement assign-
ment, except that the hourly rate used
should be sufficiently high to allow a
student to earn the full stipend with-
out 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.
(B) Tuition support and additional sup-
port. The amount of support for tui-
tion, fees, books, and travel related to
the academic program, workplace as-
signment or conferences may not ex-
ceed actual costs incurred or $5,000 per
year, whichever is higher. The con-
ferences 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 par-
ticipating in the program.
(2) Number of students assisted. The
minimum number of students that may
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00093 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
84
24 CFR Ch. V (4–1–13 Edition) §570.415
be assisted is three students per par-
ticipating institution of higher edu-
cation. If an APO or State receives as-
sistance for a program that is con-
ducted 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 responsibil-
ities—(1) Recipient eligibility. (i) The fol-
lowing organizations are eligible to
apply for assistance under the pro-
gram:
(A) Institutions of higher education. In-
stitutions of higher education offering
a community building academic pro-
gram 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 institu-
tions of higher education. Institutions
participating in an APO program must
be located within the particular area
that is served by the APO and is identi-
fied by the State law or interlocal
agreement creating the APO. Institu-
tions 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-fund-
ed academic program.
(iii) If an institution of higher edu-
cation that submits an individual ap-
plication is also included in the appli-
cation of an APO or State, then the
separate individual application of the
institution of higher education will be
disregarded. Additionally, if an institu-
tion of higher education is included in
the application of both an APO and a
State, then the references to the insti-
tution in the application of the State
will be stricken. The State’s applica-
tion will then be ineligible if fewer
than two institutions of higher edu-
cation remain as participants in the
State’s application.
(2) Recipient responsibilities. (i) The re-
cipient is responsible for the adminis-
tration 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 institu-
tions of higher education. The recipi-
ent must:
(A) Recruit and select students for
participation in CDWSP. The recipient
shall establish recruitment procedures
that identify economically disadvan-
taged and minority students pursuing
careers in community building, and
make such students aware of the avail-
ability of assistance opportunities.
Students must be selected before the
beginning of the semester for which
funding has been provided.
(B) Recruit and select work place-
ment agencies, and negotiate and exe-
cute agreements covering each work
placement assignment.
(C) Refer participating students to
work placement agencies and assist
students in the selection of work place-
ment assignments.
(D) Assign sufficient staff to admin-
ister and supervise the program on a
day-to-day basis, and, where the recipi-
ent is an APO or State, to monitor the
activities of the work study coordi-
nating committee.
(E) Encourage participating students
to obtain employment for a minimum
of two years after graduation with a
unit of State or local government, In-
dian tribe or nonprofit organization en-
gaged in community building.
(F) Maintain records by racial and
ethnic categories for each economi-
cally disadvantaged student enrolled in
the CDWSP.
(G) Keep records and make such re-
ports 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 coordi-
nate activities between program par-
ticipants, to advise the recipient on
policy matters, to assist the recipient
in ranking and selection of partici-
pating students, and to review disputes
concerning compliance with program
agreements and performance. The com-
mittee shall be chaired by a represent-
ative of the recipient, and shall include
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00094 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
85
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.415
representatives of the participating in-
stitutions 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. In-
stitutions of higher education partici-
pating in a program are responsible for
providing its educational component.
Where the recipient is an APO or
State, the institution of higher edu-
cation 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 eligi-
bility of students for the academic pro-
gram, and by making the analysis of
students under the financial need
guidelines established by the institu-
tion. All institutions of higher edu-
cation must comply with other applica-
ble 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 re-
cipient) 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 pro-
vide 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 dur-
ing the summer, to the work placement
assignment. Work placement agencies
may provide flexibility in the work pe-
riod, if such a schedule is consistent
with the requirements of the student’s
academic program. However, a partici-
pating 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 responsibil-
ities. Students apply directly to recipi-
ents receiving grants under CDWSP.
Students shall be selected in accord-
ance with the following eligibility re-
quirements and selection procedures.
(1) Eligibility. To be eligible for
CDWSP, the student:
(i) Must satisfy all applicable guide-
lines 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 en-
rolled in the first year of graduate
study in a community building aca-
demic program at the participating in-
stitution of higher education. Individ-
uals enrolled in doctoral programs are
ineligible.
(iii) Must demonstrate an ability to
maintain a satisfactory level of per-
formance in the community building
academic program and in work place-
ment assignments, and to comply with
the professional standards set by the
recipient and the work placement
agencies.
(iv) May not have previously partici-
pated in CDWSP.
(v) Must provide appropriate written
evidence that he or she is lawfully ad-
mitted for permanent residence in the
United States, if the individual is not a
citizen.
(2) Selection. In selecting among eligi-
ble students, the recipient must con-
sider the extent to which each student
has demonstrated:
(i) Financial need under the applica-
ble financial need guidelines estab-
lished at the institution of higher edu-
cation;
(ii) An interest in, and commitment
to, a professional career in community
building;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00095 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
86
24 CFR Ch. V (4–1–13 Edition) §570.415
(iii) The ability satisfactorily to
complete academic and work place-
ment responsibilities under CDWSP.
(3) Student responsibilities. Partici-
pating students must:
(i) Enroll in a two-year program. A
student’s academic and work place-
ment responsibilities include: Full-
time enrollment in an approved aca-
demic program; maintenance of a satis-
factory 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 sat-
isfactory level of academic perform-
ance consists of maintaining a B aver-
age. 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 non-
profit organization. The term of em-
ployment should be for at least two
consecutive years following graduation
from the academic program. If the stu-
dent 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 in-
stitutions of higher education, APO’s
and States by publishing a notice of
fund availability in the FEDERAL REG-
ISTER. The notice will:
(1) Explain how application packages
(requests for grant applications) pro-
viding specific application require-
ments and guidance may be obtained;
(2) Specify the place for filing com-
pleted applications, and the date by
which the applications must be phys-
ically received at that location;
(3) State the amount of funding
available under the notice;
(4) Provide other appropriate pro-
gram information and guidance.
(i) Recipient selection process. The se-
lection process for applications under
CDWSP consists of a threshold review,
ranking of eligible applications and
final selection.
(1) Threshold. To be eligible for rank-
ing, 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 pe-
riods;
(ii) The applicant must demonstrate
that it is eligible to participate;
(iii) The applicant must demonstrate
that each institution of higher edu-
cation 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 re-
quired staff and community building
work study program to carry out its
activities under CDWSP.
(2) Rating. All applications that meet
the threshold requirements for appli-
cant eligibility will be rated based on
the following selection criteria:
(i) Quality of academic program. The
quality of the academic program of-
fered by the institution of higher edu-
cation, including without limitation
the:
(A) Quality of course offerings;
(B) Appropriateness of course offer-
ings for preparing students for careers
in community building; and
(C) Qualifications of faculty and per-
centage of their time devoted to teach-
ing and research in community build-
ing.
(ii) Rates of graduation. The rates of
graduation of students previously en-
rolled in a community building aca-
demic program at the institution of
higher education, specifically including
(where applicable) graduation rates
from any previously funded CDWSP
academic programs or similar pro-
grams.
(iii) Extent of financial commitment.
The commitment and ability of the in-
stitution of higher education to assure
that CDWSP students will receive suf-
ficient financial assistance (including
loans, where necessary) above and be-
yond 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.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00096 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
87
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.415
(iv) Quality of work placement assign-
ments. The extent to which the partici-
pating students will receive a suffi-
cient number and variety of work
placement assignments, the assign-
ments 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 pro-
posed program will lead participating
students directly and immediately to
permanent employment in community
building, as indicated by, without limi-
tation:
(A) The past success of the institu-
tion 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 de-
voted to assisting students (particu-
larly students in CDWSP-funded and
similar programs where applicable) in
finding permanent employment in
community building.
(vi) Effectiveness of program adminis-
tration. The degree to which an appli-
cant will be able effectively to coordi-
nate 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 be-
tween 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 assign-
ments;
(B) The degree to which the indi-
vidual who will coordinate and admin-
ister the program has clear responsi-
bility, ample available time, and suffi-
cient authority to do so; and
(C) The effectiveness of the appli-
cant’s prior coordination and adminis-
tration of a CDWSP-funded program,
where applicable (including the timeli-
ness and completeness of the appli-
cant’s compliance with CDWSP report-
ing requirements).
(vii) Commitment to meeting economi-
cally disadvantaged and minority stu-
dents’ needs. The applicant’s commit-
ment to meeting the needs of economi-
cally disadvantaged and minority stu-
dents as demonstrated by policies and
plans regarding, and past effort and
success in, recruiting, enrolling and fi-
nancially assisting economically dis-
advantaged 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 re-
cruit and hire economically disadvan-
taged and minority students.
(3) Final selection. Eligible applica-
tions will be considered for selection in
their rank order. HUD may make
awards out of rank order to achieve ge-
ographic diversity, and may provide as-
sistance to support a number of stu-
dents that is less than the number re-
quested 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
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 incor-
porating their mutual responsibilities
under CDWSP. The agreement must be
executed before the student can be en-
rolled in the program. A student’s par-
ticipation in CDWSP shall be termi-
nated for failure to meet the respon-
sibilities and standards in the agree-
ment.
(3) Work placement assignment agree-
ment. The institution of higher edu-
cation, the APO or state (if an APO or
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00097 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
88
24 CFR Ch. V (4–1–13 Edition) §570.416
State is the grant recipient), the par-
ticipating student, and the work place-
ment agency must execute a written
agreement covering each work place-
ment assignment. The agreement must
address the responsibilities of each of
the parties, the educational objectives,
the nature of supervision, the stand-
ards 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 ob-
ligation 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 re-
ceive 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 repay-
ment. (i) HUD may deobligate amounts
for grants if proposed activities are not
begun or completed within a reason-
able time after selection.
(ii) If a student’s participation in
CDWSP is terminated before the com-
pletion of the two-year term of the stu-
dent’s program, the recipient may sub-
stitute another student to complete
the two-year term of a student whose
participation has terminated. The sub-
stituted student must have a sufficient
number of academic credits to com-
plete the degree program within the re-
maining portion of the terminated stu-
dent’s two-year term. With respect to
any CDWSP grant, there is no require-
ment, 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 OMB Circulars
No. A–101 and A–110, 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 sanc-
tions 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 de-
nied the benefits of, or otherwise be
subjected to discrimination under the
CDWSP.
(2) Nondiscrimination. The recipient
must adhere to the following non-
discrimination provisions: The require-
ments of title VIII of the Civil Rights
Act of 1968, 42 U.S.C. 3600–20 (Fair
Housing Act) and implementing regula-
tions 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 Rehabili-
tation Act of 1973 (29 U.S.C. 794) and
implementing regulations at 24 CFR
part 8; Executive Order 11063 and im-
plementing 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]
§570.416 Hispanic-serving institutions
work study program.
(a) Applicability and objectives. HUD
makes grants under the Hispanic-serv-
ing Institutions Work Study Program
(HSI-WSP) to public and private non-
profit Hispanic-serving Institutions
(HSI’s) of higher education for the pur-
pose of providing assistance to eco-
nomically 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 defini-
tions apply to HSI-WSP:
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00098 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
89
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.416
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 aca-
demic degree program, and that applies
for funding under HSI-WSP.
Community building means commu-
nity and economic development, com-
munity planning, community manage-
ment, 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 jus-
tice, child development, and human
services.
Community building academic program
or academic program means an under-
graduate 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 en-
compassed 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 pro-
grams in community and economic de-
velopment, community planning, com-
munity management, public adminis-
tration, public policy, urban econom-
ics, urban management, urban plan-
ning, land use planning, housing, and
related fields of study. Related fields of
study that promote community build-
ing, such as administration of justice,
child development, and human services
are eligible, while fields such as nat-
ural sciences, computer sciences,
mathematics, accounting, electronics,
engineering, and the humanities (such
as English or history) would not be eli-
gible. A transfer program (i.e., one that
leads to transfer to a four-year institu-
tion of higher education for the stu-
dent’s junior year) in a community
building academic discipline is eligible
only if the student is required to de-
clare 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 pro-
gram.
Economically disadvantaged and minor-
ity students means students who satisfy
all the applicable guidelines estab-
lished at the participating institution
of higher education to measure finan-
cial need for academic scholarship or
loan assistance, including, but not lim-
ited to, students with disabilities and
students who are Black, American In-
dian/Alaska Native, Hispanic, Asian/
Pacific Islanders, where such students
satisfy the financial needs guidelines
defined above.
Hispanic-serving institution is an insti-
tution of higher education that cer-
tifies to the satisfaction of the Sec-
retary 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 per-
cent Hispanic; in which not less than 50
percent of the Hispanic students are
low-income individuals (i.e., their fam-
ilies’ 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 indi-
viduals or first generation college stu-
dents.
HSI-WSP or HSI-WSP program means
the Hispanic-serving Institutions Work
Study program.
Institution of higher education means a
public or private educational institu-
tion that offers two-year associate de-
grees in a community building aca-
demic program and that is accredited
by an accrediting agency or association
recognized by the Secretary of Edu-
cation. Institutions offering BOTH
four-year and two-year degrees are not
eligible for HSI-WSP.
Recipient means an approved appli-
cant 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 insti-
tution and pursuing an eligible commu-
nity 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 stu-
dent who meets the definition of a
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00099 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
90
24 CFR Ch. V (4–1–13 Edition) §570.416
‘‘person with disabilities’’ in the Amer-
icans with Disabilities Act of 1990.
(c) Assistance provided—(1) Types of
assistance available. HUD provides fund-
ing in the form of grants to recipients
who make assistance available to eligi-
ble 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 docu-
ment that the amounts paid are cus-
tomary 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 sup-
port through HSI-WSP. However, HSI-
WSP can substitute for all or part of
the Pell grant.
(3) Student assistance. Grants are pro-
vided in the form of student stipends,
tuition support, and additional sup-
port.
(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 stu-
dent at the work placement assign-
ment. The stipend should be suffi-
ciently 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 sum-
mer.
(ii) Tuition support. The amount of
tuition support may not exceed the tui-
tion and required fees charged at the
participating institution of higher edu-
cation.
(iii) Additional support. The recipient
may provide additional support for
books, tutoring, and travel related to
the academic program or work place-
ment assignment. Costs associated
with reasonable accommodations for
students with disabilities including,
but not limited to, interpreters for the
deaf/hard of hearing, special equip-
ment, and braille materials are eligible
under this category.
(4) Administrative allowance. HUD pro-
vides an allowance to recipients to
cover the administrative costs of the
program. The administrative allowance
is $1,000 per year for each student par-
ticipating in the program; however, no
more than 20 percent of the grant may
be used for planning and program ad-
ministrative costs.
(5) Number of students assisted. The
minimum number of students that may
be assisted is three students per par-
ticipating institution of higher edu-
cation. The maximum number of stu-
dents that may be assisted is ten stu-
dents 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 responsibil-
ities—(1) Recipient eligibility. Public or
private Hispanic-serving institutions of
higher education offering only under-
graduate two-year degrees, including
degrees in at least one community
building academic program, are eligi-
ble 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 re-
cipient is responsible for administering
the program, for compliance with all
program requirements, and for coordi-
nation of program activities carried
out by the work placement agencies.
The recipient must:
(i) Recruit students for participation
in HSI-WSP. The recipient shall estab-
lish recruitment procedures that iden-
tify eligible economically disadvan-
taged 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 re-
cipient may neither restrict the pro-
gram to any particular minority group
or groups, nor provide any preferential
treatment in the selection process
based on race or ethnicity. Only eco-
nomically disadvantaged students, as
defined herein, may be assisted.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00100 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
91
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.416
(ii) Select students for participation
in HSI-WSP. In selecting among the el-
igible students, the recipient must con-
sider 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 ca-
reer in community building; and the
ability to satisfactorily complete the
academic and work placement respon-
sibilities under HSI-WSP. Students
must be selected before the beginning
of the semester for which funding is
being provided. If a student’s participa-
tion 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 compo-
nent for participating students.
(iv) Recruit and select work place-
ment agencies, and negotiate and exe-
cute an agreement covering each work
placement assignment.
(v) Refer participating students to
work placement agencies and assist
students in the selection of work place-
ment assignments.
(vi) Assign sufficient staff to admin-
ister and supervise the program on a
day-to-day basis.
(vii) Encourage participating stu-
dents to either: obtain post-graduation
employment with a unit of State or
local government, an areawide plan-
ning organization (APO), Indian tribe
or nonprofit organization engaged in
community building; or transfer to a
four-year institution of higher edu-
cation to obtain a bachelor’s degree in
a community building academic dis-
cipline.
(viii) Maintain records by racial and
ethnic categories for each economi-
cally disadvantaged and minority stu-
dent participating in HSI-WSP.
(ix) Keep records and make such re-
ports 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 insti-
tution 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 com-
munity 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 place-
ment assignment. Work placement
agencies may provide flexibility in the
work period, if such a schedule is con-
sistent 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 responsibil-
ities. Students apply directly to recipi-
ents receiving grants under HSI-WSP.
(1) Eligibility. To be eligible for HSI-
WSP, the student:
(i) Must satisfy all applicable guide-
lines 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 en-
rolled in a community building asso-
ciate degree program at the partici-
pating institution of higher education.
The student must have attained no
more than 50 percent of the credits re-
quired for his/her degree at the time
the student first receives assistance
under this program.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00101 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
92
24 CFR Ch. V (4–1–13 Edition) §570.416
(iii) Must demonstrate an ability to
maintain a satisfactory level of per-
formance in community building aca-
demic program (i.e., maintain a B aver-
age, 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 partici-
pated in HSI-WSP.
(2) Student responsibilities. Partici-
pating students must:
(i) Enroll or be enrolled in a two-year
community building associate degree
program. A student’s academic and
work placement responsibilities in-
clude: Full-time enrollment in an ap-
proved academic program; mainte-
nance of a satisfactory level of per-
formance in the community building
academic program and in work place-
ment assignments; and compliance
with the professional conduct stand-
ards 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 partici-
pation in HSI-WSP shall be terminated
for failure to meet these responsibil-
ities and standards. If the student’s
participation is terminated, the stu-
dent is ineligible for further HSI-WSP
assistance.
(ii) Devote 12–20 hours per week dur-
ing the regular school year, and 35–40
hours a week during the summer, to
the work placement assignment. Work
placement agencies may provide flexi-
bility in the work period, if such a
schedule is consistent with the require-
ments of the student’s academic pro-
gram. However, a participating student
may receive a stipend payment only
during the period when the student is
placed with the work placement agen-
cy.
(iii) Agree to make a good-faith ef-
fort to either: obtain employment in
community building with a unit of
State or local government, an APO, an
Indian tribe, or a non-profit organiza-
tion; or to transfer to a four-year insti-
tution of higher education to obtain a
bachelor’s degree in a community
building academic discipline. However,
if the student does not obtain such em-
ployment or transfer to a four-year in-
stitution, the student is not required to
repay the assistance received.
(g) Notice of funding availability. HUD
will solicit grant applications from eli-
gible institutions of higher education
by publishing a notice of funding avail-
ability in the FEDERAL REGISTER. The
notice will:
(1) Explain how application kits pro-
viding specific application require-
ments and guidance may be obtained;
(2) Specify the place for filing com-
pleted 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 pre-
viously awarded grants;
(4) Provide other appropriate pro-
gram 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 incor-
porating 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 participa-
tion in HSI-WSP for failure to meet the
responsibilities and standards in the
agreement.
(3) Work placement assignment agree-
ment. The recipient, the student, and
the work placement agency must exe-
cute a written agreement covering
each work placement assignment. The
agreement must address the respon-
sibilities of each of the parties, the
educational objectives, the nature of
the supervision, the standards of eval-
uation, and the student’s time commit-
ments under the work placement as-
signment.
(i) Grant administration—(1) Initial ob-
ligation of funds. When HUD selects an
application for funding, HUD will obli-
gate 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 dis-
cretion for good cause.
(2) Disbursement. Recipients will re-
ceive grant payments by direct deposit
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00102 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
93
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.420
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 activi-
ties are not begun or completed within
a reasonable period of time after selec-
tion.
(j) Other Federal requirements—(1) Ap-
plicability 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 provi-
sions of this Notice. The provisions of
subparts C and J of part 570 shall not
apply to HSI-WSP.
(2) Uniform Administrative require-
ments. Recipients under HSI-WSP shall
comply with the requirements and
standards of OMB Circular No. A–22,
‘‘Cost Principles for Educational Insti-
tutions.’’ Recipients that are private
institutions of higher education shall
comply with OMB Circular A–133,
‘‘Non-Federal Audit Requirements for
Institutions of Higher Education and
Other Nonprofit Institutions,’’ which is
implemented at 24 CFR part 45. Recipi-
ents that are public institutions of
higher education shall comply with
OMB Circular A–128, ‘‘Non-Federal
Audit Requirements for State and
Local Governments,’’ which is imple-
mented at 24 CFR part 44. Audits shall
be conducted annually. In addition, all
recipients under HSI-WSP shall comply
with the provisions of OMB Circular A–
110, ‘‘Uniform Administrative Require-
ments for Grants and Agreements With
Institutions of Higher Education, Hos-
pitals and Other Non-Profit Organiza-
tions,’’ which is implemented at 24
CFR part 84. OMB Circular A–110 shall
apply to recipients in its entirety.
[62 FR 17493, Apr. 9, 1997, as amended at 63
FR 9683, Feb. 25, 1998]
Subpart F—Small Cities, Non-Enti-
tlement CDBG Grants in Ha-
waii and Insular Areas Pro-
grams
SOURCE: 62 FR 62914, Nov. 25, 1997, unless
otherwise noted.
§570.420 General.
(a) Administration of Non-entitlement
CDBG funds in New York by HUD or In-
sular Areas—(1) Small cities. The Act
permits each state to elect to admin-
ister all aspects of the CDBG program
annual fund allocation for the non-en-
titlement areas within its jurisdiction.
All states except Hawaii have elected
to administer the CDBG program for
non-entitlement areas within their ju-
risdiction. This section is applicable
only to active HUD-administered small
cities grants in New York. The require-
ments for the non-entitlement CDBG
grants in Hawaii are set forth in
§570.429 of this subpart. States that
elected to administer the program
after the close of Fiscal Year 1984 can-
not return administration of the pro-
gram to HUD. A decision by a state to
discontinue administration of the pro-
gram 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 spe-
cific 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 in-
sular areas of Guam, the Northern
Mariana Islands, the Virgin Islands,
and American Samoa are permitted to
administer all aspects of their Commu-
nity Development Block Grant (CDBG)
program under section 106 of the Act in
accordance with their final statement
as further described at §570.440.
(b) Scope and applicability. (1) This
subpart describes the policies and pro-
cedures of the Small Cities program
that apply to non-entitlement areas in
states where HUD administers the
CDBG program. HUD currently admin-
isters the Small Cities program in only
two states—New York (for grants prior
to FY 2000) and Hawaii (for non-entitle-
ment CDBG grants in Hawaii). The
Small Cities portion of this subpart ad-
dresses the requirements for New York
Small Cities grants in §§570.421, 570.426,
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00103 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
94
24 CFR Ch. V (4–1–13 Edition) §570.420
570.427, and 570.431. Section 570.429 iden-
tifies special procedures applicable to
Hawaii.
(2) This subpart also describes the
policies and procedures governing com-
munity development block grants to
insular areas under section 106 of the
Act. Sections 570.440 and 570.441 iden-
tify procedures applicable to the Insu-
lar 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 §§570.400 and
570.405 of this part.
(3) The policies and procedures set
forth in the following identified sub-
parts of this part apply to the HUD-ad-
ministered 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 Administra-
tion;
(iv) Subpart K—Other Program Re-
quirements;
(v) Subpart M—Loan Guarantees; and
(vi) Subpart O—Performance Re-
views.
(c) Abbreviated consolidated plan. Ap-
plications 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 con-
sistent with the applicant’s consoli-
dated 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 na-
tional objectives as defined under the
criteria in §570.208:
(i) Benefit low- and moderate-income
families;
(ii) Aid in the prevention or elimi-
nation of slums or blight; or
(iii) Be an activity that the grantee
certifies is designed to meet other com-
munity development needs having a
particular urgency because existing
conditions pose a serious and imme-
diate threat to the health or welfare of
the community and other financial re-
sources are not available to meet such
needs.
(2) In addition to the objectives de-
scribed in paragraph (e)(1) of this sec-
tion, 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 Sec-
tion 108 loan guarantee funds received
under subpart M of this part within a
fiscal year must be expended for activi-
ties which benefit low- and moderate-
income persons under the criteria of
§570.208(a) or of §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 ex-
pended 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 re-
quirement, 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 deter-
mining the percentage of funds ex-
pended for such activity, the provisions
of §570.200(a)(3)(i), (iii), (iv), and (v)
shall apply.
(3) In addition to the objectives de-
scribed in paragraph (e)(1) of this sec-
tion, 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 sepa-
rate 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 speci-
fied in their certifications not to ex-
ceed three years, not less than 70 per-
cent of the aggregate of CDBG fund ex-
penditures shall be for low- and mod-
erate-income activities meeting the
criteria under §570.208(a) or under
§570.208(d)(5) or (6). See also
§570.200(a)(3) for further discussion of
the primary objective.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00104 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
95
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.421
(e) Allocation of funds—The allocation
of appropriated funds for insular areas
under section 106 of the Act shall be
governed by the policies and proce-
dures described in section 106(a)(2) of
the Act and §§570.440, 570.441, and
570.442 of this subpart. The annual ap-
propriations 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]
§570.421 New York Small Cities Pro-
gram design.
(a) Selection system—(1) Competitive
applications. Each competitive applica-
tion 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 pov-
erty as further explained in the NOFA;
(iii) Program Impact; and
(iv) Fair Housing and Equal Oppor-
tunity, which may include the appli-
cant’s Section 3 plan and implementa-
tion efforts with respect to actions to
affirmatively further fair housing. The
NOFA described in paragraph (b) of
this section will contain a more de-
tailed 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 se-
lect grants in accordance with §570.425
and the applicable NOFA.
(3) Imminent threats to public health
and safety. The criteria for these grants
are described in §570.424.
(4) Repayment of Section 108 loans. The
criteria for these grants are described
in §570.432.
(5) Economic development grants. HUD
intends to use the Section 108 loan
guarantee program to the maximum
extent feasible to fund economic devel-
opment projects in the nonentitlement
areas of New York. In the event that
there are not enough Section 108 loan
guarantee funds available to fund via-
ble 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 require-
ments 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 eco-
nomic development projects in a notice
of funding availability, notwith-
standing paragraph (g) of this section.
HUD also has the option in a NOFA of
funding economic development activi-
ties on a competitive basis, as a com-
petitive 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 fis-
cal year which will indicate the
amount of funds available, the annual
grant limits per grantee, type of grants
available, the application require-
ments, and the rating factors that will
be used for those grants which are com-
petitive. A NOFA may set forth, sub-
ject to the requirements of this sub-
part, additional selection criteria for
all grants.
(c) Eligible applicants. (1) Eligible ap-
plicants in New York are units of gen-
eral local government, excluding: Met-
ropolitan cities, urban counties, units
of general local government which are
participating in urban counties or met-
ropolitan cities, even if only part of the
participating unit of government is lo-
cated in the urban county or metro-
politan city. Indian tribes are also in-
eligible for assistance under this sub-
part. An application may be submitted
individually or jointly by eligible ap-
plicants.
(2) Counties, cities, towns, and vil-
lages 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 gen-
eral local government (e.g., both the
county and village cannot receive fund-
ing for a sewer system to be located in
the same village, but the county can
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00105 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
96
24 CFR Ch. V (4–1–13 Edition) §§570.422–425
receive funding for a sewer system that
is located in the same village as a reha-
bilitation project for which the village
receives funding). The NOFA will con-
tain additional information on appli-
cant eligibility.
(3) Counties may apply on behalf of
units of general local government lo-
cated 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 au-
thorizes the county to submit an appli-
cation on behalf of the unit of general
local government. The county will be
considered the grantee and will be re-
sponsible for executing all grant docu-
ments. The county is responsible for
ensuring compliance with all laws, reg-
ulations, and Executive Orders applica-
ble to the CDBG Program. HUD will
deal exclusively with the county with
respect to issues of program adminis-
tration and performance, including re-
medial actions. The unit of general
local government will be considered
the grantee for the purpose of deter-
mining grant limits. The unit of gen-
eral local government’s statistics will
be used for purposes of the selection
factors referred to in §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 govern-
ment 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 ob-
jectives, and must be consistent with
State and local law. This provision in-
cludes 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 provi-
sions of NOFAs published prior to cal-
endar year 1997.
(g) Maximum grant amount. The max-
imum grant amount that will be
awarded to a single unit of general
local government in response to the an-
nual 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 develop-
ment projects awarded under NOFAs in
which there is no set-aside of funds for
such projects.
§§570.422–425 [Reserved]
§570.426 Program income.
(a) The provisions of §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 govern-
ment has another ongoing CDBG grant
at the time of closeout, the program
income will be considered to be pro-
gram 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 govern-
ment has no open ongoing CDBG grant
at the time of closeout, program in-
come of the unit of general local gov-
ernment 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 Sec-
tion 108 guaranteed loan. When more
than $25,000 of program income is gen-
erated from one or more closed out
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00106 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
97
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.431
grants in a year after closeout, the en-
tire amount of the program income is
subject to the requirements of this
part. This will be a subject of the close-
out agreement described in §570.509(c).
§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, lo-
cation, 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 prompt-
ly.
(b) Documentation of program amend-
ments. 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 §570.431 must be met.
[62 FR 62914, Nov. 25, 1997, as amended at 72
FR 46370, Aug. 17, 2007]
§570.428 [Reserved]
§570.429 Hawaii general and grant re-
quirements.
(a) General. This section applies to
non-entitlement CDBG grants in Ha-
waii. 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 provi-
sions thereof or this subpart, the poli-
cies and procedures outlined in sub-
parts A, C, D, J, K, and O of this part
apply to non-entitlement CDBG grants
in Hawaii.
(c) Grant amounts. (1) For each eligi-
ble unit of general local government, a
formula grant amount will be deter-
mined which bears the same ratio to
the total amount available for the non-
entitlement 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 non-
entitlement areas of the State;
(ii) The extent of poverty in that eli-
gible unit of general local government
and the extent of poverty in all the eli-
gible units of general local government
in the nonentitlement areas of the
State; and
(iii) The extent of housing over-
crowding in that eligible unit of gen-
eral local government and the extent of
housing overcrowding in all the eligi-
ble 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 re-
ductions under subpart O of this part
shall be reallocated in the same or fu-
ture fiscal year to any remaining eligi-
ble applicants on a pro rata basis.
(2) Any formula grant amounts re-
served 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 sub-
part 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]
§570.431 Citizen participation.
(a) General. An applicant that is lo-
cated 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 ap-
plication and the final application. The
requirements for citizen participation
do not restrict the responsibility or au-
thority of the applicant for the devel-
opment and execution of its commu-
nity development program.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00107 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
98
24 CFR Ch. V (4–1–13 Edition) §570.431
(b) Citizen participation plan. The ap-
plicant must develop and follow a de-
tailed citizen participation plan and
must make the plan public. The plan
must be completed and available before
the application for assistance is sub-
mitted 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, infor-
mation, 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 ex-
pected 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-in-
come persons;
(iv) The proposed CDBG activities
likely to result in displacement and
the applicant’s plans, consistent with
the policies developed under §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 avail-
able) 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 pro-
vided is at the discretion of the appli-
cant. 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 re-
sponding to proposals and questions.
Each public hearing must be conducted
at a different stage of the CDBG pro-
gram. Together, the hearings must ad-
dress community development and
housing needs, development of pro-
posed 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 ac-
tual beneficiaries, with reasonable ac-
commodations including material in
accessible formats for persons with dis-
abilities. The applicant must specify in
its plan how it will meet the require-
ment for hearings at times and loca-
tions 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 proce-
dures that citizens must follow when
submitting complaints and grievances.
The applicant’s policies and procedures
must provide for timely written an-
swers to written complaints and griev-
ances within 15 working days of the re-
ceipt of the complaint, where prac-
ticable; and
(6) Encouraging citizen participation,
particularly by low- and moderate-in-
come 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 pro-
posed application consisting of the pro-
posed community development activi-
ties and community development ob-
jectives in order to afford affected citi-
zens an opportunity to:
(i) Examine the application’s con-
tents to determine the degree to which
they may be affected;
(ii) Submit comments on the pro-
posed application; and
(iii) Submit comments on the per-
formance 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 appli-
cation available at libraries, govern-
ment offices, and public places. The
summary must describe the contents
and purpose of the proposed applica-
tion, and must include a list of the lo-
cations where copies of the entire pro-
posed application may be examined.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00108 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
99
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.440
(d) Preparation of a final application.
An applicant must prepare a final ap-
plication. In the preparation of the
final application, the applicant shall
consider comments and views received
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 develop-
ment 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 §570.427,
the grantee shall:
(1) Furnish citizens information con-
cerning 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 af-
ford 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 amend-
ment accordingly; and
(5) Make the final amendment to the
community development program
available to the public before its sub-
mission to HUD.
§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 govern-
ments, discussed at 24 CFR 91.200
through 91.230.
(b) Proposed statement. An insular
area jurisdiction shall prepare and pub-
lish a proposed statement and comply
with the citizen participation require-
ments described in §570.441, if it sub-
mits 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 §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 commu-
nity development objectives and activi-
ties. The statement also must include a
priority nonhousing community devel-
opment 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 insu-
lar 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 exten-
sion of the submission deadline for
good cause.
(e) Certifications. The insular area ju-
risdiction’s final statement must be ac-
companied by appropriate certifi-
cations 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 con-
solidated plan. For insular area juris-
dictions receiving CDBG funds under
an abbreviated consolidated plan, these
certifications shall include at a min-
imum:
(1) The following general certifi-
cations described at §91.225(a) of this
title: Affirmatively furthering fair
housing; anti-displacement and reloca-
tion 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 §91.225(b) of this title: Cit-
izen participation; community develop-
ment plan; following a plan; use of
funds; excessive force; compliance with
anti-discrimination laws; compliance
with lead-based paint procedures; and
compliance with laws.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00109 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
100
24 CFR Ch. V (4–1–13 Edition) §570.441
(f) HUD action on final statement. Fol-
lowing the review of the statement,
HUD will promptly notify each juris-
diction of the action taken with regard
to its statement. HUD will approve a
grant if the jurisdiction’s submissions
have been made and approved in ac-
cordance with 24 CFR part 91, and if
the certifications required in such sub-
missions are satisfactory to HUD. The
certifications will be satisfactory to
HUD for this purpose, unless HUD de-
termines pursuant to subpart O of this
part that the jurisdiction has not com-
plied with the requirements of this
part, has failed to carry out its consoli-
dated plan (or abbreviated consolidated
plan) as provided under §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, fur-
ther assurances may be required to be
submitted by the jurisdiction as HUD
may deem warranted or necessary to
find the jurisdiction’s certification sat-
isfactory.
(g) Reimbursement for pre-award costs.
Insular area jurisdictions may request
reimbursement for pre-award costs in
accordance with §570.200(h).
(h) Float funding. An insular area ju-
risdiction may use undisbursed funds
in the line of credit and its CDBG pro-
gram 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 limi-
tations described in §570.301(b).
(i) Program amendments. (1) The insu-
lar area jurisdiction’s citizen participa-
tion plan (see §570.441) must specify the
criteria the jurisdiction will use for de-
termining what changes in the jurisdic-
tion’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 substan-
tial amendment.
(2) The citizen participation plan
must provide citizens with reasonable
notice and an opportunity to comment
on substantial amendments. The cit-
izen 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 sub-
stantial amendment before the amend-
ment is implemented.
(3) The citizen participation plan
shall require the jurisdiction to con-
sider comments or views of citizens re-
ceived in writing, or orally at public
hearings, if any, in preparing the sub-
stantial amendment of its statement.
A summary of comments or views not
accepted and the reasons for non-ac-
ceptance shall be attached to the sub-
stantial amendment.
(4) Any program amendment, regard-
less 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]
§570.441 Citizen participation—insu-
lar areas.
(a) General. An insular area jurisdic-
tion submitting an abbreviated consoli-
dated 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 accord-
ance with 24 CFR 91.200 through 91.230
shall follow the citizen participation
requirements of §91.100 and §91.105, ex-
cept for §91.100(a)(4). For funding under
section 106 of the Act, these require-
ments are applicable to all aspects of
the Insular Areas program, including
the preparation of the proposed state-
ment and final statements as described
in §570.440. The requirements for cit-
izen participation do not restrict the
responsibility or authority of the juris-
diction for the development and execu-
tion of its community development
program.
(b) Citizen participation plan. The in-
sular area jurisdiction must develop
and follow a detailed citizen participa-
tion plan and must make the plan pub-
lic. The plan must be completed and
available before the statement for as-
sistance is submitted to HUD, and the
jurisdiction must certify that it is fol-
lowing the plan. The plan must set
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00110 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
101
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.441
forth the jurisdiction’s policies and
procedures for:
(1) Giving citizens timely notice of
local meetings and reasonable and
timely access to local meetings, infor-
mation, 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 ex-
pected 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-in-
come persons;
(iv) The proposed CDBG activities
likely to result in displacement and
the jurisdiction’s plans, consistent
with the policies developed under
§570.606(b), for minimizing displace-
ment of persons as a result of its pro-
posed activities; and
(v) The types and levels of assistance
the jurisdiction plans to make avail-
able (or to require others to make
available) to persons displaced by
CDBG-funded activities, even if the ju-
risdiction 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 pro-
vided is at the discretion of the juris-
diction. The assistance need not in-
clude 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 re-
sponding to proposals and questions.
Each public hearing must be conducted
at a different stage of the CDBG pro-
gram. Together, the hearings must ad-
dress community development and
housing needs, development of pro-
posed activities, and review of program
performance. There must be reasonable
notice of the hearings, and the hear-
ings must be held at times and acces-
sible locations convenient to potential
or actual beneficiaries, with reasonable
accommodations including material in
accessible formats for persons with dis-
abilities. The jurisdiction must specify
in its plan how it will meet the require-
ment for hearings at times and loca-
tions 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 proce-
dures that citizens must follow when
submitting complaints and grievances.
The jurisdiction’s policies and proce-
dures 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-in-
come persons who reside in areas in
which CDBG funds are proposed to be
used.
(c) Publication of proposed statement.
(1) The insular area jurisdiction shall
publish a proposed statement con-
sisting of the proposed community de-
velopment activities and community
development objectives in order to af-
ford affected citizens an opportunity
to:
(i) Examine the statement’s contents
to determine the degree to which they
may be affected;
(ii) Submit comments on the pro-
posed statement; and
(iii) Submit comments on the per-
formance of the jurisdiction.
(2) The requirement for publishing in
paragraph (c)(1) of this section may be
met by publishing a summary of the
proposed statement in one or more
newspapers of general circulation and
by making copies of the proposed state-
ment available at libraries, govern-
ment offices, and public places. The
summary must describe the contents
and purpose of the proposed statement
and must include a list of the locations
where copies of the entire proposed
statement may be examined.
(d) Preparation of a final statement. An
insular area jurisdiction must prepare
a final statement. In the preparation of
the final statement, the jurisdiction
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00111 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
102
24 CFR Ch. V (4–1–13 Edition) §570.442
shall consider comments and views re-
ceived relating to the proposed state-
ment and may, if appropriate, modify
the final statement. The final state-
ment shall be made available to the
public and shall include the commu-
nity development objectives, projected
use of funds, and the community devel-
opment activities.
(e) Program amendments. To assure
citizen participation on program
amendments to final statements, the
insular area grantee shall:
(1) Furnish citizens information con-
cerning 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 af-
ford 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 amend-
ment accordingly; and
(5) Make the final amendment to the
community development program
available to the public before its sub-
mission to HUD.
(f) Performance reports. (1) The citizen
participation plan must provide citi-
zens with reasonable notice and an op-
portunity 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 con-
sider comments or views of citizens re-
ceived in writing or orally at public
hearings in preparing the performance
report. A summary of these comments
or views shall be attached to the per-
formance report.
(g) Application for loan guarantees. In-
sular area jurisdictions intending to
apply for the Section 108 Loan Guar-
antee program must ensure that they
follow the applicable presubmission
and citizen participation requirements
of §570.704.
[69 FR 32780, June 10, 2004]
§570.442 Reallocations-Insular Areas.
(a) Any Insular Area funds that be-
come available as a result of reduc-
tions 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 accord-
ing 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 §570.440
to receive such funds, shall be reallo-
cated in the same or future fiscal year
to any remaining eligible Insular Area
grantees pro rata according to popu-
lation.
(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 sub-
part O of this part or who did not sub-
mit a final statement in accordance
with §570.440 for that fiscal year.
(d) Insular Area grantees receiving
additional funds under this section will
be evaluated for timeliness under
§570.902 based upon the original grant
amount plus the additional funds re-
ceived. Accordingly, references in
§570.902 to an Insular Area’s grant
amount for its current program year
include such additional funds, and ref-
erences 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.
§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 stimu-
late economic development activity
needed to aid in economic recovery.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00112 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
103
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.456
This subpart G contains those regula-
tions that are essential for the contin-
ued operation of this grant program.
[61 FR 11476, Mar. 20, 1996]
§570.456 Ineligible activities and limi-
tations on eligible activities.
(a) Large cities and urban counties
may not use assistance under this sub-
part for planning the project or devel-
oping the application. However, they
may use entitlement community devel-
opment block grant funds for this pur-
pose, provided that the UDAG project
meets the eligibility test of this part.
Any small city which submits a project
application which is selected for pre-
liminary approval and for which le-
gally binding grant agreement and for
which a release of funds pursuant to 24
CFR part 58 has been issued may de-
vote up to three (3) percent of the ap-
proved 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 §570.201(e).
(c)(1) No assistance may be provided
under this subpart for speculative
projects intended to facilitate the relo-
cation of industrial or commercial
plants or facilities from one area to an-
other. 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 in-
tended to facilitate the relocation of a
plant or facility from one area to an-
other, if it is demonstrated to HUD’s
satisfaction that:
(A) The proposed project is reason-
ably proximate (i.e., within 50 miles) to
an area from which there has been a
significant current pattern of move-
ment, to areas reasonably proximate,
of jobs of the category for which such
space is appropriate; and
(B) There is a likelihood of continu-
ation of the pattern, based on measur-
able comparisons between the area
from which the movement has been oc-
curring 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 relo-
cation does not significantly and ad-
versely affect the employment or eco-
nomic base of the area from which the
industrial or commercial plant or facil-
ity is to be relocated. However, the
Secretary will not be required to make
a determination whether there is a sig-
nificant and adverse effect. If such a
determination is undertaken, the Sec-
retary will presume that there is a sig-
nificant and adverse effect where the
significant pattern of job movement
and the likelihood of continuation of
such a pattern has been from a dis-
tressed community.
(iii) The presumptions established in
accordance with this paragraph (c)(1)
are rebuttable by the applicant. How-
ever, the burden of overcoming the pre-
sumptions 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 facil-
ity 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 fa-
cility 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.
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 oc-
cupants. No assistance may be provided
or utilized under this subpart for any
project with identified intended occu-
pants that is likely to facilitate:
(i) A relocation of any operation of
an industrial or commercial plant or
facility or other business establish-
ment from any UDAG eligible jurisdic-
tion; or
(ii) An expansion of any operation of
an industrial or commercial plant or
facility or other business establish-
ment that results in a substantial re-
duction of any such operation in any
UDAG eligible jurisdiction. The provi-
sions of this paragraph (c)(2) shall not
apply to a relocation of an operation or
to an expansion of an operation within
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00113 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
104
24 CFR Ch. V (4–1–13 Edition) §570.456
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 para-
graph (c)(2) shall not apply if the Sec-
retary determines that the relocation
or expansion does not significantly and
adversely affect the employment or
economic base of the UDAG eligible ju-
risdiction from which the relocation or
expansion occurs. However, the Sec-
retary will not be required to make a
determination whether there is a sig-
nificant and adverse effect. If such a
determination is undertaken, among
the factors which the Secretary will
consider are:
(A) Whether it is reasonable to an-
ticipate 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 as-
sistance under paragraph (c) (1) or (2)
of this section, the applicant may ap-
peal in writing to the Secretary the
withholding, denial or cancellation of
assistance. The applicant will be noti-
fied and given an opportunity within a
prescribed time for an informal con-
sultation 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 regu-
lation 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 op-
eration of an industrial or commercial
plant or facility or other business es-
tablishment 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 in-
volved before the relocation or reduc-
tion and whose employment or terms
of employment were adversely affected
by the relocation or reduction. The as-
sistance 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 para-
graph (c)(4) shall be applicable to any
amount withdrawn by, recaptured by,
or paid to the Secretary under this sec-
tion, 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:
(i) ‘‘Operation’’ means any plant,
equipment, facility, substantial num-
ber of positions, substantial employ-
ment opportunities, production capac-
ity, or product line.
(ii) ‘‘Metropolitan area’’ means a
metropolitan area as defined in §570.3
and which consists of either a free-
standing metropolitan area or a pri-
mary metropolitan statistical area
where both primary and consolidated
areas exist.
(iii) ‘‘Likely’’ means probably or rea-
sonably to be expected, as determined
by firm evidence such as resolutions of
a corporation to close a plant or facil-
ity, notifications of closure to collec-
tive 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. Consult-
ant studies and marketing studies may
be submitted as supportive evidence,
but by themselves are not firm evi-
dence.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00114 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
105
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.466
(iv) ‘‘UDAG eligible jurisdiction’’
means a distressed community, a Pock-
et of Poverty, a Pocket of Poverty
community, or an identifiable commu-
nity described in section 119(p) of the
Housing and Community Development
Act of 1974.
(6) Notwithstanding any other provi-
sion 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]
§570.457 Displacement, relocation, ac-
quisition, and replacement of hous-
ing.
The displacement, relocation, acqui-
sition, and replacement of housing re-
quirements of §570.606 apply to appli-
cants under this subpart G.
[55 FR 29309, July 18, 1990]
§570.461 Post-preliminary approval re-
quirements; lead-based paint.
The recipient may receive prelimi-
nary approval prior to the accomplish-
ment of lead-based paint activities con-
ducted 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]
§570.463 Project amendments and re-
visions.
(a) Pre-approval revisions to the appli-
cation. Applicants must submit to the
HUD Area Office and to Central Office
all revisions to the application. A revi-
sion is considered significant if it al-
ters 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 sig-
nificant revision to the application.
(b) Post preliminary approval amend-
ments. Applicants receiving prelimi-
nary 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 bene-
ficiaries of such activities or which, as
a result of a number of smaller
changes, add up to an amount that ex-
ceeds ten percent of the grant. HUD ap-
proval of amendments may be granted
to those requests which meet all of the
following criteria:
(1) New or significantly altered ac-
tivities must meet the criteria for se-
lection applicable at the time of re-
ceipt of the program amendment.
(2) The recipient must have complied
with all requirements of this subpart.
(3) The recipient may make amend-
ments 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]
§570.464 Project closeout.
HUD will advise the recipient to ini-
tiate closeout procedures when HUD
determines, in consultation with the
recipient, that there are not impedi-
ments to closeout. Closeout shall be
carried out in accordance with §570.509
and applicable HUD guidelines.
[53 FR 8058, Mar. 11, 1988]
§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.
§570.466 Additional application sub-
mission requirements for Pockets of
Poverty—employment opportuni-
ties.
Applicants for Action Grants under
the Pockets of Poverty provision must
describe the number and, to the extent
possible, the types of new jobs (con-
struction and permanent) that will be
provided to the low- and moderate-in-
come residents of the Pocket of Pov-
erty as a direct result of the proposed
project. If the application calls for job
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00115 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
106
24 CFR Ch. V (4–1–13 Edition) §570.480
training programs (such as those re-
lated to the CETA program) or job re-
cruiting services for the pocket’s resi-
dents, then such proposed activities
must be clearly and fully explained.
HUD requires applicants to ensure that
at least 75 percent of whatever perma-
nent jobs initially result from the
project are provided to low- and mod-
erate-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 en-
courages 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 result-
ing from any Action Grant-assisted
project are provided to low- and mod-
erate-income persons and that at least
51 percent of all permanent jobs result-
ing from any Action Grant-assisted
project are provided to low- and mod-
erate-income residents from the pock-
et. The application should clearly de-
scribe how the applicant intends to
meet initial and continuous job re-
quirements. Private participating par-
ties must meet these employment re-
quirements in the aggregate. To enable
the private participants to do so, lease
agreements executed by a private par-
ticipating 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 prac-
tices.
[61 FR 11476, Mar. 20, 1996]
Subpart H [Reserved]
Subpart I—State Community De-
velopment Block Grant Pro-
gram
SOURCE: 57 FR 53397, Nov. 9, 1992, unless
otherwise noted.
§570.480 General.
(a) This subpart describes policies
and procedures applicable to states
that have permanently elected to re-
ceive 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 Develop-
ment Act of 1974, as amended (the Act).
Other subparts of part 570 are not ap-
plicable 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 §§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 sec-
tion 122 of the Act, respectively.
(c) In exercising the Secretary’s obli-
gation and responsibility to review a
state’s performance, the Secretary will
give maximum feasible deference to
the state’s interpretation of the statu-
tory requirements and the require-
ments of this regulation, provided that
these interpretations are not plainly
inconsistent with the Act and the Sec-
retary’s obligation to enforce compli-
ance with the intent of the Congress as
declared in the Act. The Secretary will
not determine that a state has failed to
carry out its certifications in compli-
ance 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 ac-
tivities undertaken by units of general
local government were not plainly in-
appropriate to meeting the primary ob-
jectives of the Act, this regulation, and
the state’s community development ob-
jectives.
(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 gen-
erally applicable to the state-adminis-
tered CDBG program.
(e) Religious organizations are eligi-
ble to participate under the State
CDBG Program as provided in
§570.200(j).
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00116 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
107
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.482
(f) In administering the CDBG pro-
gram, 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 reg-
ulatory 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 pay-
ments to other parties for state admin-
istrative expenses and technical assist-
ance activities authorized in section
106(d) of the Act.
[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]
§570.481 Definitions.
(a) Except for terms defined in appli-
cable statutes or this subpart, the Sec-
retary will defer to a state’s defini-
tions, 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 and
program income, and loans guaranteed
under section 108 of the Act.
(b) [Reserved]
[57 FR 53397, Nov. 9, 1992, as amended at 61
FR 5209, Feb. 9, 1996; 74 FR 36389, July 22,
2009]
§570.482 Eligible activities.
(a) General. The choice of activities
on which block grant funds are ex-
pended represents the determination
by state and local participants, devel-
oped in accordance with the state’s
program design and procedures, as to
which approach or approaches will best
serve these interests. The eligible ac-
tivities 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 as-
sisted 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 fol-
lows:
(i) Special assessments to recover the
CDBG funds may be made only against
properties owned and occupied by per-
sons 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; ex-
cept that CDBG funds need not be used
to pay the special assessments in be-
half of properties owned and occupied
by moderate income persons if, when
permitted by the state, the unit of gen-
eral 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 as-
sisted 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 improve-
ments initially financed solely from
sources other than CDBG funds. The
payment of special assessments with
CDBG funds constitutes CDBG assist-
ance to the public improvement.
Therefore, CDBG funds may be used to
pay special assessments, provided that:
(i) The installation of the public im-
provements was carried out in compli-
ance with requirements applicable to
activities assisted under this subpart,
including labor, environmental and cit-
izen participation requirements;
(ii) The installation of the public im-
provement meets a criterion for na-
tional objectives. (See §570.483(b)(1),
(c), and (d).)
(iii) The requirements of
§570.482(b)(1)(ii) are met.
(c) Special eligibility provisions. (1) Mi-
croenterprise development activities
eligible under section 105(a)(23) of the
Housing and Community Development
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00117 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
108
24 CFR Ch. V (4–1–13 Edition) §570.482
Act of 1974, as amended (42 U.S.C. 5301
et seq.) (the Act) may be carried out ei-
ther through the recipient directly or
through public and private organiza-
tions, agencies, and other subrecipients
(including nonprofit and for-profit sub-
recipients).
(2) Provision of public services. The fol-
lowing 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 para-
graph (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 serv-
ices, 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 §91.315(e)(2) of this title.
(3) Environmental cleanup and eco-
nomic development or redevelopment
of contaminated properties. Remedi-
ation of known or suspected environ-
mental contamination may be under-
taken under the authority of section
205 of Public Law 105–276 and section
105(a)(4) of the Act. Economic develop-
ment activities carried out under sec-
tions 105(a)(14), (a)(15), or (a)(17) of the
Act may include costs associated with
project-specific assessment or remedi-
ation of known or suspected environ-
mental contamination.
(d) [Reserved]
(e) Guidelines and objectives for evalu-
ating project costs and financial require-
ments—(1) Applicability. The following
guidelines, also referred to as the un-
derwriting guidelines, are provided to
assist the recipient to evaluate and se-
lect activities to be carried out for eco-
nomic development purposes. Specifi-
cally, these guidelines are applicable to
activities that are eligible for CDBG
assistance under section 105(a)(17) of
the Act, economic development activi-
ties 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 ex-
pected to ensure that the state or units
of general local government conduct
basic financial underwriting prior to
the provision of CDBG financial assist-
ance to a for-profit business.
(2) Objectives. The underwriting
guidelines are designed to provide the
recipient with a framework for finan-
cially 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 recog-
nize that different levels of review are
appropriate to take into account dif-
ferences in the size and scope of a pro-
posed project, and in the case of a mi-
croenterprise or other small business
to take into account the differences in
the capacity and level of sophistication
among businesses of differing sizes. Re-
cipients are encouraged, when they de-
velop their own programs and under-
writing criteria, to also take these fac-
tors into account. These underwriting
guidelines are published as appendix A
to this part. The objectives of the un-
derwriting guidelines are to ensure:
(i) That project costs are reasonable;
(ii) That all sources of project financ-
ing 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 in-
vestment 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 ben-
efit—(1) Purpose and applicability. The
grantee is responsible for making sure
that at least a minimum level of public
benefit is obtained from the expendi-
ture of CDBG funds under the cat-
egories of eligibility governed by these
standards. The standards set forth
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00118 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
109
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.482
below identify the types of public ben-
efit that will be recognized for this pur-
pose 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 eli-
gible for CDBG assistance under sec-
tion 105(a)(17) of the Act, economic de-
velopment activities eligible under sec-
tion 105(a)(14) of the Act, and activities
that are part of a community economic
development project eligible under sec-
tion 105(a)(15) of the Act. Certain pub-
lic facilities and improvements eligible
under section 105(a)(2) of the Act,
which are undertaken for economic de-
velopment purposes, are also subject to
these standards, as specified in
§570.483(b)(4)(vi)(F)(2). Unlike the
guidelines for project costs and finan-
cial requirements covered under para-
graph (a) of this section, the use of the
standards for public benefit is manda-
tory.
(2) Standards for activities in the aggre-
gate. Activities covered by these stand-
ards 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 resi-
dents of an area, such that the number
of low- and moderate-income persons
residing in the areas served by the as-
sisted 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 ap-
plicable 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 guar-
anteed loan funds made under the pro-
visions of subpart M of this part cov-
ered in the method of distribution in
the final statement for a given annual
grant year.
(ii) The grantee shall apply the ag-
gregate 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 activi-
ties.
(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 pur-
poses of applying the aggregate stand-
ards.
(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 para-
graph (f)(2) of this section:
(A) Provides jobs exclusively for un-
employed 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 pro-
motion and economic advancement,
such as through the provision of train-
ing;
(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 busi-
ness(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 neigh-
borhood income that has at least 70
percent of its residents who are low-
and moderate-income;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00119 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
110
24 CFR Ch. V (4–1–13 Edition) §570.482
(H) Provides assistance to a Commu-
nity Development Financial Institu-
tion (as defined in the Community De-
velopment Banking and Financial In-
stitutions 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 organi-
zation eligible to carry out activities
under section 105(a)(15) of the Act serv-
ing an area that has at least 70 percent
of its residents who are low- and mod-
erate-income;
(J) Provides employment opportuni-
ties 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, pro-
vides substantial benefit to low-income
persons through other innovative ap-
proaches;
(L) Provides services to the residents
of an area pursuant to a strategy ap-
proved by the State under the provi-
sions of §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 §91.315(e)(2) of
this title.
(N) Directly involves the economic
development or redevelopment of envi-
ronmentally contaminated properties.
(4) Standards for individual activities.
Any activity subject to these standards
which falls into one or more of the fol-
lowing categories will be considered by
HUD to provide insufficient public ben-
efit, and therefore may under no cir-
cumstances be assisted with CDBG
funds:
(i) The amount of CDBG assistance
exceeds either of the following, as ap-
plicable:
(A) $50,000 per full-time equivalent,
permanent job created or retained; or
(B) $1,000 per low- and moderate-in-
come person to which goods or services
are provided by the activity.
(ii) The activity consists of or in-
cludes any of the following:
(A) General promotion of the commu-
nity as a whole (as opposed to the pro-
motion of specific areas and programs);
(B) Assistance to professional sports
teams;
(C) Assistance to privately-owned
recreational facilities that serve a pre-
dominantly higher-income clientele,
where the recreational benefit to users
or members clearly outweighs employ-
ment 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 busi-
ness 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 ex-
pected both to create or retain jobs and
to provide goods or services to resi-
dents of an area, it will be disqualified
only if the amount of CDBG assistance
exceeds both of the amounts in para-
graph (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 pur-
poses of applying the individual activ-
ity standards in paragraph (f)(4)(i) of
this section.
(6) Documentation. The state and its
grant recipients must maintain suffi-
cient 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 respec-
tive control to improve the accuracy of
the projections. If the actual results
demonstrate that the state has failed
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00120 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
111
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.482
the public benefit standards, HUD may
require the state to meet more strin-
gent standards in future years as ap-
propriate.
(g) Amendments to economic develop-
ment projects after review determinations.
If, after the grantee enters into a con-
tract to provide assistance to a project,
the scope or financial elements of the
project change to the extent that a sig-
nificant contract amendment is appro-
priate, the project should be reevalu-
ated under these and the recipient’s
guidelines. (This would include, for ex-
ample, situations where the business
requests a change in the amount or
terms of assistance being provided, or
an extension to the loan payment pe-
riod required in the contract.) If a re-
evaluation of the project indicates that
the financial elements and public ben-
efit to be derived have also substan-
tially changed, then the recipient
should make appropriate adjustments
in the amount, type, terms or condi-
tions of CDBG assistance which has
been offered, to reflect the impact of
the substantial change. (For example,
if a change in the project elements re-
sults in a substantial reduction of the
total project costs, it may be appro-
priate for the recipient to reduce the
amount of total CDBG assistance.) If
the amount of CDBG assistance pro-
vided 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) Pro-
hibition. 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 an-
other LMA if the relocation is likely to
result in a significant loss of jobs in
the LMA from which the relocation oc-
curs.
(2) Definitions. The following defini-
tions apply to the section:
(i) Directly assist. Directly assist
means the provision of CDBG funds to
a business pursuant to section
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 eligi-
ble under section 105(a)(15) enters into
an agreement with a business to under-
take 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 busi-
ness that is the subject of an agree-
ment with the specific assisted busi-
ness.
(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 reason-
able distance or can readily change em-
ployment without changing their place
of residence. In addition, LMAs are
nonoverlapping and geographically ex-
haustive. For metropolitan areas,
grantees must use employment data, as
defined by the BLS, for the LMA in
which the affected business is cur-
rently 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 cur-
rent jobs may be lost. For non-metro-
politan areas, a LMA is either an area
defined by the BLS as an LMA, or a
state may choose to combine non-met-
ropolitan LMAs. States are required to
define or reaffirm prior definitions of
their LMAs on an annual basis and re-
tain records to substantiate such areas
prior to any business relocation that
would be impacted by this rule. Metro-
politan LMAs cannot be combined, nor
can a non-metropolitan LMA be com-
bined 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 partici-
pating counties in Hawaii will be con-
sidered to be its own LMA. Recipients
of Fiscal Year 1999 Small Cities Pro-
gram funding in New York will follow
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00121 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
112
24 CFR Ch. V (4–1–13 Edition) §570.483
the requirements for State CDBG re-
cipients.
(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 per-
sons 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 con-
stitute 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 pro-
vided 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 pursu-
ant to 105(a)(15)) nonprofit entity shall
sign a written agreement with the as-
sisted business. The written agreement
shall include:
(i) Statement. A statement from the
assisted business as to whether the as-
sisted activity will result in the reloca-
tion 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 assist-
ance will not result in a relocation cov-
ered 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 agree-
ment is signed that would result in a
significant job loss as defined in this
rule; and
(iii) Reimbursement of assistance. The
agreement shall provide for reimburse-
ment to the recipient of any assistance
provided to, or expended on behalf of,
the business in the event that assist-
ance results in a relocation prohibited
under this section.
(4) Assistance not covered by this para-
graph. This paragraph does not apply
to:
(i) Relocation assistance. Relocation
assistance required by the Uniform As-
sistance and Real Property Acquisition
Policies Act of 1970 (URA), (42 U.S.C.
4601–4655); optional relocation assist-
ance under section 105(a)(11), as imple-
mented at 570.606(d);
(ii) Microenterprises. Assistance to
microenterprises as defined by section
102(a)(22) of the Housing and Commu-
nity Development Act of 1974; and
(iii) Arms-length transactions. Assist-
ance to a business that purchases busi-
ness 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 reloca-
tion of the sellers’ business operation
(including customer base or list, good-
will, 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 reloca-
tion 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]
§570.483 Criteria for national objec-
tives.
(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 accord-
ance with §570.480(b)).
(b) Activities benefiting low and mod-
erate 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 evi-
dence, 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 per-
sons to the exclusion of low income
persons:
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00122 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
113
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.483
(1) Area benefit activities. (i) An activ-
ity, 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 co-
terminous with census tracts or other
officially recognized boundaries but
must be the entire area served by the
activity. Units of general local govern-
ment may, at the discretion of the
state, use either HUD-provided data
comparing census data with appro-
priate low and moderate income levels
or survey data that is methodologi-
cally 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 pro-
vides benefits to all the residents of an
area, that is limited to paying special
assessments levied against residential
properties owned and occupied by per-
sons of low and moderate income.
(iii)(A) An activity to develop, estab-
lish and operate (not to exceed two
years after establishment), a uniform
emergency telephone number system
serving an area having less than 51 per-
cent of low and moderate income resi-
dents, 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 sig-
nificantly 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 certifi-
cation may be based upon information
which identifies the total number of
calls actually received over the pre-
ceding 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 near-
ly as possible in terms of census tracts,
enumeration districts, block groups, or
combinations thereof that are con-
tained within the segment) of the serv-
ice area from which the calls were gen-
erated. In analyzing this data to meet
the requirements of this section, the
state will assume that the distribution
of income among callers generally re-
flects the income characteristics of the
general population residing in the same
geographic area where the callers re-
side. Alternatively, the state’s certifi-
cation 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 serv-
ices 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 gov-
ernment must submit a statement ex-
plaining 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 mod-
erate 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 require-
ments of paragraph (e)(4)(i) of this sec-
tion may be considered to qualify
under paragraph (b)(1) of this section.
(v) HUD will consider activities
meeting the requirements of paragraph
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00123 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
114
24 CFR Ch. V (4–1–13 Edition) §570.483
(e)(5)(i) of this section to qualify under
paragraph (b)(1) of this section, pro-
vided that the area covered by the
strategy meets one of the following cri-
teria:
(A) The area is in a Federally-des-
ignated Empowerment Zone or Enter-
prise 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 pov-
erty 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 per-
cent, and the area is primarily residen-
tial. (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 clien-
tele, 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 acquisi-
tion, construction or rehabilitation of
property for housing; or
(C) Activities where the benefit to
low- and moderate-income persons to
be considered is the creation or reten-
tion of jobs, except as provided in para-
graph (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 prin-
cipally low and moderate income per-
sons. Activities that exclusively serve
a group of persons in any one or a com-
bination 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 meet-
ing the Bureau of the Census’ Current
Population Reports definition of ‘‘se-
verely disabled,’’ homeless persons, il-
literate adults, persons living with
AIDS, and migrant farm workers; or
(B) It must require information on
family size and income so that it is evi-
dent that at least 51 percent of the cli-
entele are persons whose family in-
come does not exceed the low and mod-
erate income limit; or
(C) It must have income eligibility
requirements which limit the activity
exclusively to low and moderate in-
come 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 in-
come persons.
(iii) An activity that serves to re-
move material or architectural bar-
riers to the mobility or accessibility of
elderly persons or of adults meeting
the Bureau of the Census’ Current Pop-
ulation Reports definition of ‘‘severely
disabled’’ will be presumed to qualify
under this criterion if it is restricted,
to the extent practicable, to the re-
moval of such barriers by assisting:
(A) The reconstruction of a public fa-
cility or improvement, or portion
thereof, that does not qualify under
§570.483(b)(1);
(B) The rehabilitation of a privately
owned nonresidential building or im-
provement that does not qualify under
§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
§570.483(b)(3).
(iv) A microenterprise assistance ac-
tivity (carried out in accordance with
the provisions of section 105(a)(23) of
the Act or §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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00124 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
115
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.483
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, in-
cluding, but not limited to, peer sup-
port programs, counseling, child care,
transportation, and other similar serv-
ices, 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 larg-
er project, the only use of CDBG assist-
ance 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 ac-
tivity carried out for the purpose of
providing or improving permanent resi-
dential structures that, upon comple-
tion, will be occupied by low and mod-
erate 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 sec-
tion 105(a)(15) of the Act, a developer,
an individual homebuyer, or an indi-
vidual homeowner; conversion of non-
residential 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
properties, and the buildings will be
under common ownership and manage-
ment, the grouped buildings may be
considered for this purpose as a single
structure. If housing activities being
assisted meet the requirements of para-
graph (e)(4)(ii) or (e)(5)(ii) of this sec-
tion, all such housing may also be con-
sidered for this purpose as a single
structure. For rental housing, occu-
pancy 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 mul-
tifamily, non-elderly rental housing
project; and
(B) Not less than 20 percent of the
units will be occupied by low and mod-
erate 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 pro-
portion of units in the project that will
be occupied by low and moderate in-
come households.
(ii) Where CDBG funds are used to as-
sist rehabilitation delivery services or
in direct support of the unit of general
local government’s Rental Rehabilita-
tion 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 in-
come 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
§92.252 or §92.254 of this title are met.
(4) Job creation or retention activities.
(i) An activity designed to create per-
manent jobs where at least 51 percent
of the jobs, computed on a full time
equivalent basis, involve the employ-
ment of low and moderate income per-
sons. 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00125 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
116
24 CFR Ch. V (4–1–13 Edition) §570.483
made available to low and moderate in-
come persons.
(ii) For an activity that retains jobs,
the unit of general local government
must document that the jobs would ac-
tually be lost without the CDBG assist-
ance and that either or both of the fol-
lowing 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 ac-
quired 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 govern-
ment and the assisted business take ac-
tions to ensure that low and moderate
income persons receive first consider-
ation for filling such jobs.
(iv) For purposes of determining
whether a job is held by or made avail-
able to a low- or moderate-income per-
son, 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 para-
graph (b)(4)(v) of this section; or
(2) Has at least 70 percent of its resi-
dents who are low- and moderate-in-
come persons; or
(B) The assisted business is located
within a census tract (or block num-
bering area) that meets the require-
ments of paragraph (b)(4)(v) of this sec-
tion and the job under consideration is
to be located within that census tract.
(v) A census tract (or block num-
bering area) qualifies for the presump-
tions permitted under paragraphs
(b)(4)(iv) (A)(1) and (B) of this section if
it is either part of a Federally-des-
ignated Empowerment Zone or Enter-
prise Community or meets the fol-
lowing criteria:
(A) It has a poverty rate of at least 20
percent as determined by the most re-
cently available decennial census infor-
mation;
(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 avail-
able 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 under-
taken is located in a block group that
has a poverty rate of at least 20 per-
cent; 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, nar-
cotics use, homelessness, abandoned
housing, and deteriorated infrastruc-
ture or substantial population decline.
(vi) As a general rule, each assisted
business shall be considered to be a
separate activity for purposes of deter-
mining whether the activity qualifies
under this paragraph, except:
(A) In certain cases such as where
CDBG funds are used to acquire, de-
velop 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 prop-
erty, 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 aggre-
gating 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 aggre-
gating the jobs created or retained by
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00126 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
117
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.483
all of the businesses receiving tech-
nical assistance during any one-year
period.
(D) Where CDBG funds are used for
activities meeting the criteria listed at
§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 In-
stitution to carry out activities for the
purpose of creating or retaining jobs,
this requirement may be met by aggre-
gating the jobs created or retained by
all businesses for which CDBG assist-
ance is obligated for such activities
during any one-year period, except as
provided at paragraph (e)(6) of this sec-
tion.
(F) Where CDBG funds are used for
public facilities or improvements
which will result in the creation or re-
tention of jobs by more than one busi-
ness, this requirement may be met by
aggregating the jobs created or re-
tained by all such businesses as a re-
sult of the public facility or improve-
ment.
(1) Where the public facility or im-
provement is undertaken principally
for the benefit of one or more par-
ticular 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 facil-
ity/improvement is less than $10,000 per
permanent full-time equivalent job to
be created or retained by those busi-
nesses.
(2) In any case where the cost per job
to be created or retained (as deter-
mined under paragraph (b)(4)(vi)(F)(1)
of this section) is $10,000 or more, the
requirement must be met by aggre-
gating the jobs created or retained as a
result of the public facility or improve-
ment 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/im-
provement between the date the state
awards the CDBG funds to the recipi-
ent and the date one year after the
physical completion of the public facil-
ity/improvement. In addition, the as-
sisted activity must comply with the
public benefit standards at §570.482(f).
(5) Planning-only activities. An activ-
ity involving planning (when such ac-
tivity is the only activity for which the
grant to the unit of general local gov-
ernment is given, or if the planning ac-
tivity is unrelated to any other activ-
ity assisted by the grant) if it can be
documented that at least 51 percent of
the persons who would benefit from im-
plementation of the plan are low and
moderate income persons. Any such
planning activity for an area or a com-
munity composed of persons of whom
at least 51 percent are low and mod-
erate income shall be considered to
meet this national objective.
(c) Activities which aid in the preven-
tion or elimination of slums or blight. Ac-
tivities meeting one or more of the fol-
lowing criteria, in the absence of sub-
stantial 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 defi-
nition of a slum, blighted, deteriorated
or deteriorating area under state or
local law;
(ii) The area also meets the condi-
tions 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 build-
ings 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 val-
ues relative to other areas in the com-
munity; or
(5) Known or suspected environ-
mental contamination.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00127 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
118
24 CFR Ch. V (4–1–13 Edition) §570.483
(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 meet-
ing the above requirements will be con-
sidered to address the area’s deteriora-
tion only where each such building re-
habilitated is considered substandard
before rehabilitation, and all defi-
ciencies making a building substandard
have been eliminated if less critical
work on the building is also under-
taken. 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 suffi-
cient to document its findings that a
project meets the national objective of
prevention or elimination of slums and
blight. The state must establish defini-
tions of the conditions listed at
§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. Documenta-
tion must be retained pursuant to the
recordkeeping requirements contained
at §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 con-
tamination that are not located in a
slum or blighted area: Acquisition;
clearance; relocation; historic preser-
vation; remediation of environ-
mentally contaminated properties; or
rehabilitation of buildings or improve-
ments. However, rehabilitation must
be limited to eliminating those condi-
tions that are detrimental to public
health and safety. If acquisition or re-
location 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 activ-
ity involving planning (when the activ-
ity is the only activity for which the
grant to the unit of general local gov-
ernment is given, or the planning ac-
tivity is unrelated to any other activ-
ity 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 commu-
nity development needs having a par-
ticular urgency. In the absence of sub-
stantial 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 condi-
tions which pose a serious and imme-
diate threat to the health or welfare of
the community which are of recent ori-
gin or which recently became urgent,
that the unit of general local govern-
ment 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 re-
cent 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 pub-
lic 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 ac-
quisition of real property, a prelimi-
nary determination of whether the ac-
tivity addresses a national objective
may be based on the planned use of the
property after acquisition. A final de-
termination shall be based on the ac-
tual use of the property, excluding any
short-term, temporary use. Where the
acquisition is for the purpose of clear-
ance which will eliminate specific con-
ditions of blight or physical decay, the
clearance activity shall be considered
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00128 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
119
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.484
the actual use of the property. How-
ever, any subsequent use or disposition
of the cleared property shall be treated
as a ‘‘change of use’’ under §570.489(j).
(3) Where the assisted activity is re-
location assistance that the unit of
general local government is required to
provide, the relocation assistance shall
be considered to address the same na-
tional objective as is addressed by the
displacing activity. Where the reloca-
tion assistance is voluntary, the unit
of general local government may qual-
ify 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 in-
come persons, on the basis of the na-
tional objective of benefiting low and
moderate income persons.
(4) Where CDBG-assisted activities
are carried out by a Community Devel-
opment 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 Com-
munity Development Financial Insti-
tution for the purpose of creating or re-
taining 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 Finan-
cial Institution obligates CDBG assist-
ance 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.
(5) If the unit of general local govern-
ment has elected to prepare a commu-
nity revitalization strategy pursuant
to the authority of §91.315(e)(2) of this
title, and the State has approved the
strategy, the unit of general local gov-
ernment 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
§570.483(b)(1)(v) instead of the criteria
at §570.483(b)(4); and
(ii) All housing activities in the area
undertaken pursuant to the strategy
may be considered to be a single struc-
ture for purposes of applying the cri-
teria at paragraph (b)(3) of this section.
(6) If an activity meeting the criteria
in §570.482(f)(3)(v) also meets the re-
quirements 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 para-
graph (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 plan-
ning and administrative costs by units
of general local government in con-
junction with other CDBG assisted ac-
tivities 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]
§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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00129 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
120
24 CFR Ch. V (4–1–13 Edition) §570.485
(a) of this section requires evidence
that not less than 70 percent of the ag-
gregate 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 dis-
tribution in the final statement or
statements for the designated annual
grant year or years have been expended
for activities meeting criteria as pro-
vided in §570.483(b) for activities bene-
fiting low and moderate income per-
sons. 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 pro-
gram administration, or for planning
activities other than those which must
meet a national objective under
§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 sub-
part 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 ex-
pended for an eligible activity meeting
the criteria for activities benefiting
low and moderate income persons shall
count in their entirety towards meet-
ing the 70 percent benefit to persons of
low and moderate income requirement.
(4) Funds expended for the acquisi-
tion, new construction or rehabilita-
tion of property for housing that quali-
fies under §570.483(b)(3) shall be count-
ed for this purpose, but shall be limited
to an amount determined by multi-
plying the total cost (including CDBG
and non-CDBG costs) of the acquisi-
tion, construction or rehabilitation by
the percent of units in such housing to
be occupied by low and moderate in-
come persons, except that the amount
counted shall not exceed the amount of
CDBG funds provided.
§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 re-
quirements for the content of the con-
solidated plan, for the process of devel-
oping the plan, including citizen par-
ticipation provisions, for the submis-
sion 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 sec-
tion within the prescribed deadline
constitutes the state’s election not to
receive and distribute amounts allo-
cated 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 ap-
prove a grant if the State’s submis-
sions have been made and approved in
accordance with 24 CFR part 91, and
the certifications required therein are
satisfactory to the Secretary. The cer-
tifications will be satisfactory to the
Secretary for this purpose unless the
Secretary has determined pursuant to
§570.493 that the State has not com-
plied with the requirements of this sub-
part, 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 certifi-
cation of future performance. If the
Secretary makes any such determina-
tion, however, the State may be re-
quired to submit further assurances as
the Secretary may deem warranted or
necessary to find the grantee’s certifi-
cation satisfactory.
[57 FR 53397, Nov. 9, 1992, as amended at 60
FR 1916, Jan. 5, 1995; 61 FR 54922, Oct. 22,
1996]
§570.486 Local government require-
ments.
(a) Citizen participation requirements of
a unit of general local government. Each
unit of general local government shall
meet the following requirements as re-
quired by the state at §91.115(e) of this
title.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00130 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
121
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.486
(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 citizens will be given
reasonable and timely access to local
meetings, information, and records re-
lating to the unit of local government’s
proposed and actual use of CDBG funds;
(3) Furnish citizens information, in-
cluding but not limited to:
(i) The amount of CDBG funds ex-
pected 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 ac-
tivities that will meet the national ob-
jective 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 §570.488.
(4) Provide technical assistance to
groups representative of persons of low
and moderate income that request as-
sistance in developing proposals in ac-
cordance with the procedures devel-
oped 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 citizens’ views and respond-
ing to proposals and questions. To-
gether the hearings must cover com-
munity development and housing
needs, development of proposed activi-
ties and a review of program perform-
ance. 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 hear-
ings and they must be held at times
and locations convenient to potential
or actual beneficiaries, with accom-
modations for the handicapped. Public
hearings shall be conducted in a man-
ner to meet the needs of non-English
speaking residents where a significant
number of non-English speaking resi-
dents 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 pro-
posed to be added, deleted or substan-
tially 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 de-
fined by criteria established by the
state.
(7) Provide citizens the address,
phone number, and times for submit-
ting complaints and grievances, and
provide timely written answers to writ-
ten complaints and grievances, within
15 working days where practicable.
(b) Activities serving beneficiaries out-
side the jurisdiction of the unit of general
local government. Any activity carried
out by a recipient of State CDBG pro-
gram 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 ac-
cordance with section 106(d)(2)(D) of
the Act. For an activity to signifi-
cantly benefit residents of the recipi-
ent jurisdiction, the CDBG funds ex-
pended by the unit of general local gov-
ernment must not be unreasonably dis-
proportionate to the benefits to its
residents.
(c) Activities located in Entitlement ju-
risdictions. 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 deter-
mine 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00131 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
122
24 CFR Ch. V (4–1–13 Edition) §570.487
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]
§570.487 Other applicable laws and re-
lated program requirements.
(a) General. Certain statutes are ex-
pressly 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 govern-
mental officials, departments or agen-
cies other than HUD. Paragraphs (d)
and (c) of this section contain two of
the requirements expressly made appli-
cable to CDBG activities by the Act
itself.
(b) Affirmatively furthering fair hous-
ing. The Act requires the state to cer-
tify to the satisfaction of HUD that it
will affirmatively further fair housing.
The act also requires each unit of gen-
eral local government to certify that it
will affirmatively further fair housing.
The certification that the State will
affirmatively further fair housing shall
specifically require the State to as-
sume the responsibility of fair housing
planning by:
(1) Conducting an analysis to identify
impediments to fair housing choice
within the State;
(2) Taking appropriate actions to
overcome the effects of any impedi-
ments identified through that analysis;
(3) Maintaining records reflecting the
analysis and actions in this regard; and
(4) Assuring that units of local gov-
ernment funded by the State comply
with their certifications to affirma-
tively further fair housing.
(c) Lead-Based Paint Poisoning Preven-
tion Act. States shall devise, adopt and
carry out procedures with respect to
CDBG assistance that fulfill the objec-
tives 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 im-
plementing regulations at part 35, sub-
parts 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 im-
plementing regulations in 24 CFR part
135. Section 3 requires that employ-
ment and other economic opportunities
arising in connection with housing re-
habilitation, 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 Ar-
chitectural Barriers Act of 1968 (42
U.S.C. 4151–4157) requires certain Fed-
eral and Federally-funded buildings
and other facilities to be designed, con-
structed, 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 allo-
cated 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 De-
partment of Housing and Urban Devel-
opment, Office of Fair Housing and
Equal Opportunity, Disability Rights
Division, Room 5240, 451 Seventh
Street, SW, Washington, DC 20410; tele-
phone (202) 708–2333 (voice) or (202) 708–
1734 (TTY) (these are not toll-free num-
bers).
[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]
§570.488 Displacement, relocation, ac-
quisition, and replacement of hous-
ing.
The requirements for States and
state recipients with regard to the dis-
placement, relocation, acquisition, and
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00132 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
123
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.489
replacement of housing are in §570.606
and 24 CFR part 42.
[61 FR 11477, Mar. 20, 1996]
§570.489 Program administrative re-
quirements.
(a) Administrative and planning costs—
(1) State administrative and technical as-
sistance costs. (i) The state is respon-
sible for the administration of all
CDBG funds. The state shall pay from
its own resources all administrative ex-
penses incurred by the state in car-
rying out its responsibilities under this
subpart, except as provided in this
paragraph (a)(1)(i) of this section,
which is subject to the time limita-
tions in paragraph (a)(1)(iv) of this sec-
tion. To pay administrative expenses,
the state may use CDBG funds not to
exceed $100,000, plus 50 percent of ad-
ministrative expenses incurred in ex-
cess of $100,000. Amounts of CDBG
funds used to pay administrative ex-
penses in excess of $100,000 shall not,
subject to paragraph (a)(1)(iii) of this
section, exceed 3 percent of the sum of
the state’s annual grant, program in-
come received by units of general local
government during each program year,
regardless of the fiscal 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 of funds reallocated by HUD to the
state.
(ii) To pay the costs of providing
technical assistance to local govern-
ments and nonprofit program recipi-
ents, a state may, subject to paragraph
(a)(1)(iii) of this section, use CDBG
funds received on or after January 23,
2004, in an amount not to exceed
3 percent of the sum of its annual
grant, program income received by
units of general local government dur-
ing each program year, regardless of
the fiscal year in which the state grant
funds that generate the program in-
come were appropriated (whether re-
tained by units of general local govern-
ment or paid to the state), and 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 pursu-
ant to paragraph (a)(1)(ii) of this sec-
tion must not exceed 3 percent of the
sum of a state’s annual grant, program
income received by units of general
local government during each program
year, regardless of the fiscal year in
which the state grant funds generate
the program income were appropriated
(whether retained by the unit of gen-
eral local government or paid to the
state), and 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 ele-
ments only to the extent that they are
within the following time limitations:
(A) $100,000 per annual grant begin-
ning with FY 1984 allocations;
(B) Two percent of the sum of a
state’s annual grant and funds reallo-
cated by HUD to the state within a pro-
gram year, without limitation based on
when such amounts were received;
(C) Two percent of program income
returned by units of general local gov-
ernment to states after August 21, 1985;
and
(D) Two percent of program income
received and retained by units of gen-
eral local government after February
11, 1991.
(v) In regard to its administrative
costs, the state has the option of se-
lecting its approach for demonstrating
compliance with the requirements of
this paragraph (a)(1) of this section.
Any state whose matching cost con-
tributions toward state administrative
expense matching requirements are in
arrears must bring matching cost con-
tributions 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 ex-
pended for administration. Funds from
any year’s grant may be used to pay
administrative costs associated with
any other year’s grant. The two ap-
proaches for demonstrating compliance
with this paragraph (a)(1) of this sec-
tion are:
(A) Cumulative accounting of adminis-
trative costs incurred by the state since its
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00133 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
124
24 CFR Ch. V (4–1–13 Edition) §570.489
assumption of the CDBG program. 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 that the state is required to con-
tribute. The amounts will then be ag-
gregated for all grants received. The
state must keep records demonstrating
the actual amount of CDBG funds from
each grant received that were used for
state administrative expenses, as well
as matching amounts that were con-
tributed by the state. The state will be
considered to be in compliance with
the applicable requirements if the ag-
gregate of the actual amounts of CDBG
funds spent on state administrative ex-
penses 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 ex-
penses during its
3- to 5-year Consolidated Planning pe-
riod. 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 adminis-
trative expenses, the aggregate max-
imum allowable amount, the aggregate
matching funds expended, and the ag-
gregate amount of CDBG funds in ex-
cess of $100,000 (for each annual grant
within the subject period) will be re-
duced by amounts attributable to the
grant year for which the state grant
has been closed out.
(B) Year-to-year tracking and limitation
on drawdown of funds. For each grant
year, the state will calculate the max-
imum allowable amount of CDBG funds
that may be used for state administra-
tive expenses, and 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 administra-
tive expenses does not exceed the max-
imum 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 ad-
ministrative expenses in excess of
$100,000 by the end of each grant year.
(2) The state may not charge fees of
any entity for processing or consid-
ering any application for CDBG fund,
or for carrying out its responsibilities
under this subpart.
(3) The state and its funded units of
general local government shall not ex-
pend for planning, management and ad-
ministrative costs more than 20 per-
cent of the aggregate amount of the
annual grant, plus program income and
funds reallocated by HUD to the State
which are distributed during the time
the final Statement for the annual
grant is in effect. Administrative costs
are those described at §570.489(a)(1) for
states, and for units of general local
government those described at sections
105(a)(12) and (a)(13) of the Act.
(b) Reimbursement of pre-agreement
costs. The state may permit, in accord-
ance 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 gov-
ernment and to charge these pre-agree-
ment costs to the grant, provided that
the activities are eligible and under-
taken in accordance with the require-
ments of this part and 24 CFR part 58.
A state may incur costs prior to enter-
ing into a grant agreement with HUD
and charge those pre-agreement costs
to the grant, provided that the activi-
ties 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 re-
quests, must comply with 31 CFR part
205. The state must use procedures to
minimize the time elapsing between
the transfer of grant funds and dis-
bursement of funds by the state to
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00134 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
125
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.489
units of general local government.
States must also have procedures in
place, and units of general local gov-
ernment 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 pro-
cedures. (1) A state shall have fiscal and
administrative requirements for ex-
pending and accounting for all funds
received under this subpart. These re-
quirements must be available for Fed-
eral inspection and must:
(i) Be sufficiently specific to ensure
that funds received under this subpart
are used in compliance with all appli-
cable statutory and regulatory provi-
sions:
(ii) Ensure that funds received under
this subpart are only spent for reason-
able 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 gov-
ernments.
(2) A state may satisfy this require-
ment by:
(i) Using fiscal and administrative re-
quirements applicable to the use of its
own funds;
(ii) Adopting new fiscal and adminis-
trative requirements; or
(iii) Applying the provisions in 24
CFR part 85 ‘‘Uniform Administrative
Requirements for Grants and Coopera-
tive Agreements to State and Local
Governments.’’
(A) A state that opts to satisfy this
requirement for fiscal controls and ad-
ministrative procedures by applying
the provisions of part 85 must comply
with the requirements therein.
(B) A state that opts to satisfy this
requirement for fiscal controls and ad-
ministrative procedures by applying
the provisions of part 85 of this title
must also ensure that recipients of the
state’s CDBG funds comply with part 84
of this title, ‘‘Uniform Administrative
Requirements for Grants and Agree-
ments with Institutions of Higher Edu-
cation, Hospitals, and Other Non-Profit
Organizations,’’ as applicable.
(e) Program income. (1) For the pur-
poses of this subpart, ‘‘program in-
come’’ is defined as gross income re-
ceived 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 par-
cel of land purchased with CDBG funds
and other funds). Program income in-
cludes, but is not limited to, the fol-
lowing:
(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 ac-
quired by the unit of general local gov-
ernment 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 ac-
tivity that was constructed or im-
proved with CDBG funds, less the costs
incidental to the generation of the in-
come;
(v) Payments of principal and inter-
est 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 other-
wise eligible costs under sections
105(a)(13) or 106(d)(3)(A) of the Act;
(vii) Proceeds from the sale of obliga-
tions secured by loans made with
CDBG funds, less reasonable legal and
other costs incurred in the course of
such sale that are not otherwise eligi-
ble costs under sections 105(a)(13) or
106(d)(3)(A) of the Act;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00135 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
126
24 CFR Ch. V (4–1–13 Edition) §570.489
(viii) Interest earned on funds held in
a revolving fund account;
(ix) Interest earned on program in-
come pending disposition of the in-
come;
(x) Funds collected through special
assessments made against nonresiden-
tial properties and properties owned
and occupied by households not of low
and moderate income, if the special as-
sessments 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 sub-
grantee of the unit of general local
government from the ownership inter-
est in a for-profit entity acquired in re-
turn for the provision of CDBG assist-
ance.
(2) ‘‘Program income’’ does not in-
clude 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 inter-
est 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 sub-
grantee, to the extent that program in-
come 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 §570.482 or section 105(a) of the
Act, to fail to meet a national objec-
tive in accordance with the require-
ments of §570.483, or to fail substan-
tially 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 depos-
its 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 ex-
penses 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 re-
ceived more than 5 years after expira-
tion 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 re-
ceives or will receive program income
to retain the program income, subject
to the requirements of paragraph
(e)(3)(ii) of this section, or the state
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 gov-
ernment to retain the program income
if the program income will be used to
continue the activity from which the
program income was derived. The state
will determine when an activity will be
considered to be 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 re-
ceive program income to return the
program income to the state. Program
income that is paid to the state is
treated as additional CDBG funds sub-
ject to the requirements of this sub-
part. Except for program income re-
tained and used by the state for admin-
istrative 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 §91.320(k)(1)(i) of this title
that is in effect at the time the pro-
gram income is distributed. To the
maximum extent feasible, the state
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00136 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
127
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.489
must distribute program income before
it makes additional withdrawals from
the Department of the Treasury, ex-
cept 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 govern-
ment that receives or will receive pro-
gram income to retain the program in-
come. Alternatively, subject to the ex-
ception in paragraph (e)(3)(ii)(A) of this
section, a state may require that the
unit of general local government pay
any such income to the state.
(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 will be
considered to be continued, and HUD
will give maximum feasible deference
to a state’s determination, in accord-
ance with §570.480(c). In making such a
determination, a state may consider
whether the unit of general local gov-
ernment is or will be unable to comply
with the requirements of paragraph
(e)(3)(ii)(B) of this section or other re-
quirements of this part, and the extent
to which the program income is un-
likely to be applied to continue the ac-
tivity within the reasonably near fu-
ture. When a state determines that the
program income will be applied to con-
tinue the activity from which it was
derived, but that the amount of pro-
gram income held by the unit of gen-
eral local government exceeds pro-
jected 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 the program income
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 ac-
tivity within a reasonable amount of
time, or that it will not likely apply
the program income in accordance with
applicable requirements, the state may
require the unit of general local gov-
ernment 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 (e)(3)(ii)(A) of this sec-
tion must describe its approach in the
state’s action plan required under
§91.320 of this title or in a substantial
amendment if the state intends to im-
plement 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 addi-
tional CDBG funds and is subject to all
applicable requirements of this sub-
part, regardless of whether the activity
that generated the program income has
been closed out. If the grant that gen-
erated the program income is still open
when the program income is generated,
program income permitted to be re-
tained will be considered part of the
unit of general local government’s
grant that generated the program in-
come. If the grant is closed, program
income permitted to be retained will be
considered to be part of the unit of gen-
eral local government’s most recently
awarded open grant. If the unit of gen-
eral local government has no open
grants, the program income retained
by the unit of general local govern-
ment will be counted as part of the
state’s grant year in which the pro-
gram income was generated. A state
must employ one or more of the fol-
lowing methods to ensure that units of
general local government comply with
applicable program income require-
ments:
(1) Maintaining contractual relation-
ships with units of general local gov-
ernment for the duration of the exist-
ence of the program income;
(2) Closing out the underlying activ-
ity, but requiring as a condition of
closeout that the unit of general local
government obtain advance state ap-
proval of either a unit of general local
government’s plan for the use of pro-
gram income, or of each use of program
income by grant recipients via regu-
larly occurring reports and requests for
approval;
(3) Closing out the underlying activ-
ity, but requiring as a condition of
closeout that the unit of general local
government notify the state when new
program income is received; or
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00137 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
128
24 CFR Ch. V (4–1–13 Edition) §570.489
(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.
(C) The state must require units of
general local government, to the max-
imum extent feasible, to disburse pro-
gram income that is subject to the re-
quirements of this subpart before re-
questing additional funds from the
state for activities, except as provided
in paragraph (f) of this section.
(iii) Transfer of program income to En-
titlement program. A unit of general
local government that becomes eligible
to be an Entitlement grantee may re-
quest the state’s approval to transfer
State CDBG grant-generated program
income to the unit of general local gov-
ernment’s Entitlement program. A
state may approve the transfer, pro-
vided that the unit of general local
government:
(A) Has officially elected to partici-
pate in the Entitlement grant program;
(B) Agrees to use such program in-
come in accordance with Entitlement
program requirements; and
(C) Has set up Integrated Disburse-
ment Information System (IDIS) ac-
cess and agrees to enter receipt of pro-
gram 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 Entitle-
ment status must, with respect to pro-
gram 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 re-
ceipt and use of all program income
(whether retained by units of general
local government or paid to the state)
in its annual performance and evalua-
tion report.
(f) Revolving funds. (1) The state may
permit units of general local govern-
ment 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 spe-
cific activities which, in turn, generate
payments to the fund for use in car-
rying out such activities. These pay-
ments to the revolving fund are pro-
gram income and must be substantially
disbursed from the revolving fund be-
fore additional grant funds are drawn
from the Treasury for revolving fund
activities. Such program income is not
required to be disbursed for non-revolv-
ing fund activities.
(2) The state may establish one or
more state revolving funds to dis-
tribute grants to units of general local
government throughout a state or a re-
gion 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 inde-
pendent of other program accounts) es-
tablished to fund grants to units of
general local government to carry out
specific activities which, in turn, gen-
erate payments to the fund for addi-
tional grants to units of general local
government to carry out such activi-
ties. 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 revolv-
ing fund.
(3) A revolving fund established by ei-
ther the State or unit of general local
government shall not be directly fund-
ed 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 poli-
cies and procedures. The state shall es-
tablish requirements for procurement
policies and procedures for units of
general local government, based on full
and open competition. Methods of pro-
curement (e.g., small purchase, sealed
bids/formal advertising, competitive
proposals, and noncompetitive pro-
posals) and their applicability shall be
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00138 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
129
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.489
specified by the state. Cost plus a per-
centage of cost and percentage of con-
struction costs methods of contracting
shall not be used. The policies and pro-
cedures shall also include standards of
conduct governing employees engaged
in the award or administration of con-
tracts. (Other conflicts of interest are
covered by §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.
(h) Conflict of interest—(1) Applica-
bility. (i) In the procurement of sup-
plies, equipment, construction, and
services by the States, units of local
general governments, and subrecipi-
ents, the conflict of interest provisions
in paragraph (g) of this section shall
apply.
(ii) In all cases not governed by para-
graph (g) of this section, this para-
graph (h) shall apply. Such cases in-
clude the acquisition and disposition of
real property and the provision of as-
sistance with CDBG funds by the unit
of general local government or its sub-
recipients, to individuals, businesses
and other private entities.
(2) Conflicts prohibited. Except for eli-
gible administrative or personnel
costs, the general rule is that no per-
sons described in paragraph (h)(3) of
this section who exercise or have exer-
cised any functions or responsibilities
with respect to CDBG activities as-
sisted under this subpart or who are in
a position to participate in a decision-
making process or gain inside informa-
tion with regard to such activities,
may obtain a financial interest or ben-
efit from the activity, or have an inter-
est or benefit from the activity, or
have an interest in any contract, sub-
contract or agreement with respect
thereto, or the proceeds thereunder, ei-
ther 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 in-
terest 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 para-
graph (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 gen-
eral local government provided the
state shall fully document its deter-
mination in compliance with all re-
quirements of paragraph (h)(4) of this
section including the state’s position
with respect to each factor at para-
graph (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 de-
termined that such an exception will
serve to further the purpose of the Act
and the effective and efficient adminis-
tration of the program or project of the
state or unit of general local govern-
ment as appropriate. An exception may
be considered only after the state or
unit of general local government, as
appropriate, has provided the fol-
lowing:
(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 gov-
ernment, as appropriate, that the in-
terest for which the exception is
sought would not violate state or local
law.
(5) Factors to be considered for excep-
tions. In determining whether to grant
a requested exception after the require-
ments of paragraph (h)(4) of this sec-
tion have been satisfactorily met, the
cumulative effect of the following fac-
tors, where applicable, shall be consid-
ered:
(i) Whether the exception would pro-
vide a significant cost benefit or an es-
sential degree of expertise to the pro-
gram or project which would otherwise
not be available;
(ii) Whether an opportunity was pro-
vided for open competitive bidding or
negotiation;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00139 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
130
24 CFR Ch. V (4–1–13 Edition) §570.489
(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 ac-
tivity, 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 as-
sisted activity in question;
(v) Whether the interest or benefit
was present before the affected person
was in a position as described in para-
graph (h)(3) of this section;
(vi) Whether undue hardship will re-
sult either to the State or the unit of
general local government or the person
affected when weighed against the pub-
lic interest served by avoiding the pro-
hibited conflict; and
(vii) Any other relevant consider-
ations.
(i) Closeout of grants to units of general
local government. The State shall estab-
lish requirements for timely closeout
of grants to units of general local gov-
ernment and shall take action to en-
sure 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 (24
CFR 85.36, ‘‘Administrative Require-
ments for Grants and Cooperative
Agreements to State, Local and Feder-
ally Recognized Indian Tribal Govern-
ments’’). 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 govern-
ments may not change the use or
planned use of any such property (in-
cluding the beneficiaries of such use)
from that for which the acquisition or
improvement was made, unless the
unit of general local government pro-
vides affected citizens with reasonable
notice of and opportunity to comment
on any proposed change, and either:
(i) The new use of the property quali-
fies as meeting one of the national ob-
jectives 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 govern-
ment determines, after consultation
with affected citizens, that it is appro-
priate to change the use of the prop-
erty 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 gen-
eral local government’s CDBG program
is reimbursed or the state’s CDBG pro-
gram 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 ex-
penditures of non-CDBG funds for ac-
quisition 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 re-
quirements in 2 CFR part 2424 are ap-
plicable. CDBG funds may not be pro-
vided to excluded or disqualified per-
sons.
(m) Audits. Notwithstanding any
other provision of this title, audits of a
state and units of general local govern-
ment shall be conducted in accordance
with §85.26 of this title, which imple-
ments the Single Audit Act (31 U.S.C.
7501–07) and incorporates OMB Circular
A–133. States shall develop and admin-
ister an audits management system to
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00140 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
131
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.490
ensure that audits of units of general
local government are conducted in ac-
cordance with OMB Circular A–133, if
applicable.
(n) Cost principles and prior approval.
(1) A state must ensure that costs in-
curred by the state and by its recipi-
ents are in conformance with the fol-
lowing cost principles, as applicable:
(i) ‘‘Cost Principles for State, Local,
and Indian Tribal Governments (OMB
Circular A–87),’’ which is codified at 2
CFR part 225;
(ii) ‘‘Cost Principles for Non-Profit
Organizations (OMB Circular A–122),’’
which is codified at 2 CFR part 230; and
(iii) ‘‘Cost Principles for Educational
Institutions (OMB Circular A–21),’’
which is codified at 2 CFR part 220.
(2) All cost items described in Appen-
dix B of 2 CFR part 225 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
225 and are otherwise eligible under
this subpart I, except for the following:
(i) Depreciation methods for fixed as-
sets shall not be changed without the
express approval of HUD or, if charged
through a cost allocation plan, of the
cognizant federal agency.
(ii) Fines and penalties (including pu-
nitive damages) are unallowable costs
to the CDBG program.
[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]
§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 admin-
istration of CDBG funds under §570.493.
The content of records maintained by
the state shall be as jointly agreed
upon by HUD and the states and suffi-
cient to enable HUD to make the deter-
minations described at §570.493. For
fair housing and equal opportunity pur-
poses, and as applicable, such records
shall include data on the racial, ethnic,
and gender characteristics of persons
who are applicants for, participants in,
or beneficiaries of the program. The
records shall also permit audit of the
states in accordance with 24 CFR part
85.
(2) The state shall keep records to
document its funding decisions reached
under the method of distribution de-
scribed in 24 CFR 91.320(j)(1), including
all the criteria used to select applica-
tions from local governments for fund-
ing 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 In-
spector General, the Government Ac-
countability Office, and citizens pursu-
ant to the requirements of §570.490(c).
(3) Integrated Disbursement and Infor-
mation System (IDIS). The state shall
make entries into IDIS in a form pre-
scribed by HUD to accurately capture
the state’s accomplishment and fund-
ing data, including program income,
for each program year. It is rec-
ommended that the state enter IDIS
data on a quarterly basis and it is re-
quired to be entered annually.
(b) Unit of general local government’s
record. The State shall establish rec-
ordkeeping requirements for units of
general local government receiving
CDBG funds that are sufficient to fa-
cilitate reviews and audits of such
units of general local government
under §§570.492 and 570.493. For fair
housing and equal opportunity pur-
poses, and as applicable, such records
shall include data on the racial, ethnic,
and gender characteristics of persons
who are applicants for, participants in,
or beneficiaries of the program.
(c) Access to records. (1) Representa-
tives of HUD, the Inspector General,
and the General Accounting Office
shall have access to all books, ac-
counts, 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 re-
garding the past use of CDBG funds and
ensure that units of general local gov-
ernment provide citizens with reason-
able access to records regarding the
past use of CDBG funds consistent with
State or local requirements concerning
the privacy of personal records.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00141 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
132
24 CFR Ch. V (4–1–13 Edition) §570.491
(d) Record retention. Records of the
State and units of general local govern-
ment, including supporting documenta-
tion, shall be retained for the greater
of three years from closeout of the
grant to the state, or the period re-
quired by other applicable laws and
regulations as described in §570.487 and
§570.488.
[57 FR 53397, Nov. 9, 1992, as amended at 71
FR 6971, Feb. 9, 2006; 77 FR 24146, Apr. 23,
2012]
§570.491 Performance and evaluation
report.
The annual performance and evalua-
tion report shall be submitted in ac-
cordance with 24 CFR part 91.
(Approved by the Office of Management and
Budget under control number 2506–0117)
[60 FR 1916, Jan. 5, 1995]
§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
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 appro-
priate to prevent a continuance of the
deficiency, mitigate any adverse ef-
fects or consequences and prevent a re-
currence. The state shall establish
remedies for units of general local gov-
ernment noncompliance.
§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 ap-
propriate to determine:
(1) Whether the state has distributed
CDBG funds to units of general local
government in a timely manner in con-
formance 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 re-
views and audits of the units of general
local government required by §570.492.
(b) Information considered. In con-
ducting performance reviews and au-
dits, HUD will rely primarily on infor-
mation obtained from the state’s per-
formance report, records maintained
by the state, findings from on-site
monitoring, audit reports, and the sta-
tus 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 §570.490
may result in a finding that the State
has failed to meet the applicable re-
quirement to which the record per-
tains.
[57 FR 53397, Nov. 9, 1992, as amended at 61
FR 54922, Oct. 22, 1996]
§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 de-
termine 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 (ex-
cluding 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 in-
come received by the state are expedi-
tiously obligated and announced to
units of general local government.
(c) HUD may collect necessary infor-
mation from states to determine
whether CDBG funds have been distrib-
uted in a timely manner.
§570.495 Reviews and audits response.
(a) If HUD’s review and audit under
§570.493 results in a negative deter-
mination, or if HUD otherwise deter-
mines 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00142 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
133
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.496
to contest the finding and will be re-
quested 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 defi-
ciency; mitigate, to the extent pos-
sible, the adverse effects or con-
sequence of the deficiency; or prevent a
recurrence of the deficiency:
(1) Issue a letter of warning that ad-
vises 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 re-
quired before acceptance of one or
more of the certifications required for
the succeeding year grant;
(3) Advise the state to suspend or ter-
minate disbursement of funds for a de-
ficient activity or grant;
(4) Advise the state to reimburse its
grant in any amounts improperly ex-
pended;
(5) Change the method of payment to
the state from an advance basis to a re-
imbursement basis;
(6) Based on the state’s current fail-
ure 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 correc-
tive 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 govern-
ment which is a recipient of CDBG
funds has failed to comply with section
109 of the Act (nondiscrimination re-
quirements), HUD shall notify the gov-
ernor of the State or chief executive of-
ficer of the unit of general local gov-
ernment of the noncompliance and
shall request the governor or the chief
executive officer to secure compliance.
If within a reasonable time, not to ex-
ceed sixty days, the governor or chief
executive officer fails or refuses to se-
cure compliance, HUD may take the
following action:
(i) Refer the matter to the Attorney
General with a recommendation that
an appropriate civil action be insti-
tuted;
(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 func-
tions provided for in §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 para-
graph (b)(1)(i) of this section, or when-
ever HUD has reason to believe that a
State or unit of general local govern-
ment is engaged in a pattern or prac-
tice 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 appro-
priate, including injunctive relief.
§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 ac-
tions specified in §570.495 has been
taken, and only then if the State or
unit of general local government has
not made an appropriate or timely re-
sponse.
(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 com-
pliance with the requirements of this
subpart;
(iii) Limit the availability of pay-
ments to the state to activities not af-
fected 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 sub-
part (other than the state’s current
failure to comply which will affect the
use of the succeeding year grant), con-
dition the use of the grant funds upon
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00143 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
134
24 CFR Ch. V (4–1–13 Edition) §570.496
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 gen-
eral local government, withhold, re-
duce, or withdraw the grant, require
the state to withhold, reduce, or with-
draw the grant, or take other action as
appropriate, except that CDBG funds
expended on eligible activities shall
not be recaptured or deducted from fu-
ture CDBG grants to such unit of gen-
eral 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 de-
termines such action necessary to pre-
vent a continuation of the noncompli-
ance.
(c) In lieu of, or in addition to, the
action authorized by paragraph (b) of
this section, if HUD has reason to be-
lieve that the state or unit of general
local government has failed to comply
substantially with any provision of
this subpart, HUD may:
(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 re-
cover 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 no-
tice shall be sent to the respondent by
first class mail and shall provide no-
tice:
(i) In a manner which is adequate to
allow the respondent to prepare its re-
sponse, the basis upon which HUD de-
termined that the respondent failed to
comply with a provision of this sub-
part;
(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 hear-
ing to the Docket Clerk, Office of Ad-
ministrative Law Judges, and the ad-
dress and telephone number of the
Docket Clerk;
(iv) Of the action which HUD pro-
poses to take and that the authority
for this action is §570.496 of this sub-
part;
(v) That if the respondent fails to re-
quest a hearing within the time speci-
fied, HUD’s determination that the re-
spondent failed to comply with a provi-
sion of this subpart shall be final and
HUD may proceed to take the proposed
action.
(2) Initiation of hearing. The respond-
ent shall be allowed 14 days from re-
ceipt of the notice within which to no-
tify HUD in writing of its request for a
hearing. If no request is received with-
in the time specified, HUD’s deter-
mination 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. Pro-
ceedings conducted under these rules
shall be presided over by an Adminis-
trative Law Judge (ALJ), appointed as
provided by section 11 of the Adminis-
trative Procedure Act (5 U.S.C. 3105).
The case shall be referred to the ALJ
by HUD at the time a hearing is re-
quested. The ALJ shall promptly no-
tify 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 pro-
ceedings 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 affirma-
tions;
(ii) To issue subpoenas as authorized
by law;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00144 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
135
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.496
(iii) To rule upon offers of proof and
receive relevant evidence;
(iv) To order or limit discovery be-
fore the hearing as the interests of jus-
tice 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 set-
tlement or simplification of the issues
by consent of the parties;
(vii) To consider and rule upon all
procedural and other motions appro-
priate in adjudicative proceedings; and
(viii) To make and file initial deter-
minations.
(4) Ex parte communications. An ex
parte communication is any commu-
nication with an ALJ, direct or indi-
rect, 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 dis-
closed in advance or simultaneously to
all parties, or the communication is a
request for information concerning the
status of the case. Any ALJ who re-
ceives an ex parte communication
which the ALJ knows or has reason to
believe is unauthorized shall promptly
place the communication, or its sub-
stance, 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 hear-
ing by counsel. The ALJ shall conduct
the proceedings in an expeditious man-
ner while allowing the parties to
present all oral and written evidence
which tends to support their respective
positions, but the ALJ shall exclude ir-
relevant, immaterial or unduly repeti-
tious 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 sub-
part. Each party shall be allowed to
cross-examine adverse witnesses and to
rebut and comment upon evidence pre-
sented by the other party. Hearings
shall be open to the public. So far as
the orderly conduct of the hearing per-
mits, interested persons other than the
parties may appear and participate in
the hearing.
(6) Transcripts. Hearings shall be re-
corded and transcribed only by a re-
porter under the supervision of the
ALJ. The original transcript shall be a
part of the record and shall constitute
the sole official transcript. Respond-
ents and the public, at their own ex-
pense, shall obtain copies of the tran-
script.
(7) The ALJ’s decisions. At the conclu-
sion of the hearing, the ALJ shall give
the parties a reasonable opportunity to
submit proposed findings and conclu-
sions and supporting reasons therefor.
Generally, within 60 days after the con-
clusion of the hearing, the ALJ shall
prepare a written decision which in-
cludes a Statement of findings and con-
clusions, 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 accord-
ance with the reliable, probative, and
substantial evidence. A copy of the de-
cision 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 with-
in 30 days of the receipt of the decision.
(8) Record. The transcript of testi-
mony and exhibits, together with the
decision of the ALJ and all papers and
requests filed in the proceeding, con-
stitutes the exclusive record for deci-
sion and, on payment of its reasonable
cost, shall be made available to the
parties. After reaching the initial deci-
sion, the ALJ shall certify to the com-
plete record and forward the record to
the Secretary.
(9) Review by the Secretary. The deci-
sion 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 re-
quest for review by the Secretary. The
excepting party must transmit simul-
taneously to the Secretary and the
other party the request for review and
the bases of the party’s exceptions to
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00145 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
136
24 CFR Ch. V (4–1–13 Edition) §570.497
the findings of the ALJ. The other
party shall be allowed 30 days from re-
ceipt 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, in-
cluding the exceptions and the reply.
On the basis of such review, the Sec-
retary shall issue a written determina-
tion, including a Statement of the ra-
tionale 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 de-
cision pursuant to section 111(c) of the
Act.
[74 FR 4636, Jan. 26, 2009]
§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
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 sub-
part A and this subpart. Such pledge
shall be for the purpose of assuring re-
payment of any debt obligations (as de-
fined in §570.701), in accordance with
their terms, that HUD may have guar-
anteed in the respective State on be-
half of any nonentitlement public enti-
ty (as defined in §570.701) or its des-
ignated 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.
§570.500 Definitions.
For the purposes of this subpart, the
following terms shall apply:
(a) Program income means gross in-
come received by the recipient or a
subrecipient directly generated from
the use of CDBG funds, except as pro-
vided in paragraph (a)(4) of this sec-
tion.
(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 ac-
quired by the recipient or by a sub-
recipient 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 genera-
tion of the income;
(v) Payments of principal and inter-
est 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 obliga-
tions secured by loans made with
CDBG funds;
(viii) [Reserved]
(ix) Interest earned on program in-
come 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 de-
scribed in §570.513) on grant advances
from the U.S. Treasury. The following
items of income earned on grant ad-
vances 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 invest-
ment of the initial proceeds of a grant
advance by the U.S. Treasury;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00146 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
137
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.500
(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 ineli-
gible or to fail to meet a national ob-
jective in accordance with the require-
ments of subpart C of this part, or that
fail substantially to meet any other re-
quirement of this part; and
(iii) Interest earned on the invest-
ment 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., com-
prising activities carried out by a
grantee and its subrecipients) shall ex-
clude 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 sub-
recipient shall be deemed to have
transferred program income to the
grantee.) The amount of program in-
come derived from this calculation
shall be used for reporting purposes, for
purposes of applying the requirement
under §570.504(b)(2)(iii), and in deter-
mining limitations on planning and ad-
ministration and public services activi-
ties 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 cri-
teria specified at §570.209(b)(2)(v) or are
carried out in conjunction with a grant
under section 108(q) in an area deter-
mined by HUD to meet the eligibility
requirements for designation as an
Urban Empowerment Zone pursuant to
24 CFR part 597, subpart B. Such exclu-
sion shall not apply if CDBG funds are
used to repay the guaranteed loan.
When such a guaranteed loan is par-
tially repaid with CDBG funds, the
amount generated shall be prorated to
reflect the percentage of CDBG funds
used. Amounts generated by activities
financed with loans guaranteed under
section 108 which are not defined as
program income shall be treated as
miscellaneous revenue and shall not be
subject to any of the requirements of
this part, except that the use of such
funds shall be limited to activities that
are located in a revitalization strategy
area and implement a HUD approved
area revitalization strategy pursuant
to §91.215(e) of this title. However, such
treatment shall not affect the right of
the Secretary to require the section 108
borrower to pledge such amounts as se-
curity for the guaranteed loan. The de-
termination whether such amounts
shall constitute program income shall
be governed by the provisions of the
contract required at §570.705(b)(1).
(5) Examples of other receipts that
are not considered program income are
proceeds from fund raising activities
carried out by subrecipients receiving
CDBG assistance (the costs of fund-
raising are generally unallowable
under the applicable OMB circulars ref-
erenced in 24 CFR 84.27), funds col-
lected through special assessments
used to recover the non-CDBG portion
of a public improvement, and proceeds
from the disposition of real property
acquired or improved with CDBG funds
when the disposition occurs after the
applicable time period specified in
§570.503(b)(8) for subrecipient-con-
trolled property, or in §570.505 for re-
cipient-controlled property.
(b) Revolving fund means a separate
fund (with a set of accounts that are
independent of other program ac-
counts) established for the purpose of
carrying out specific activities which,
in turn, generate payments to the fund
for use in carrying out the same activi-
ties. 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 annu-
ally. (Interest paid by borrowers on eli-
gible loans made from the revolving
loan fund shall be program income and
treated accordingly.)
(c) Subrecipient means a public or pri-
vate nonprofit agency, authority, or
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00147 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
138
24 CFR Ch. V (4–1–13 Edition) §570.501
organization, or a for-profit entity au-
thorized under §570.201(o), receiving
CDBG funds from the recipient or an-
other subrecipient to undertake activi-
ties eligible for such assistance under
subpart C of this part. The term ex-
cludes an entity receiving CDBG funds
from the recipient under the authority
of §570.204, unless the grantee explic-
itly designates it as a subrecipient. The
term includes a public agency des-
ignated by a unit of general local gov-
ernment to receive a loan guarantee
under subpart M of this part, but does
not include contractors providing sup-
plies, equipment, construction, or serv-
ices subject to the procurement re-
quirements in 24 CFR 85.36 or 84.40, as
applicable.
[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]
§570.501 Responsibility for grant ad-
ministration.
(a) One or more public agencies, in-
cluding existing local public agencies,
may be designated by the chief execu-
tive officer of the recipient to under-
take activities assisted by this part. A
public agency so designated shall be
subject to the same requirements as
are applicable to subrecipients.
(b) The recipient is responsible for
ensuring that CDBG funds are used in
accordance with all program require-
ments. The use of designated public
agencies, subrecipients, or contractors
does not relieve the recipient of this re-
sponsibility. The recipient is also re-
sponsible for determining the adequacy
of performance under subrecipient
agreements and procurement con-
tracts, and for taking appropriate ac-
tion when performance problems arise,
such as the actions described in
§570.910. Where a unit of general local
government is participating with, or as
part of, an urban county, or as part of
a metropolitan city, the recipient is re-
sponsible for applying to the unit of
general local government the same re-
quirements as are applicable to sub-
recipients, except that the five-year pe-
riod identified under §570.503(b)(8)(i)
shall begin with the date that the unit
of general local government is no
longer considered by HUD to be a part
of the metropolitan city or urban coun-
ty, as applicable, instead of the date
that the subrecipient agreement ex-
pires.
[53 FR 8058, Mar. 11, 1988, as amended at 57
FR 27120, June 17, 1992]
§570.502 Applicability of uniform ad-
ministrative requirements.
(a) Recipients and subrecipients that
are governmental entities (including
public agencies) shall comply with the
requirements and standards of OMB
Circular No. A–87, ‘‘Cost Principles for
State, Local, and Indian Tribal Govern-
ments’’; OMB Circular A–128, ‘‘Audits
of State and Local Governments’’ (im-
plemented at 24 CFR part 44); and with
the following sections of 24 CFR part 85
‘‘Uniform Administrative Require-
ments for Grants and Cooperative
Agreements to State and Local Gov-
ernments’’ or the related CDBG provi-
sion, as specified in this paragraph:
(1) Section 85.3, ‘‘Definitions’’;
(2) Section 85.6, ‘‘Exceptions’’;
(3) Section 85.12, ‘‘Special grant or
subgrant conditions for ‘high-risk’
grantees’’;
(4) Section 85.20, ‘‘Standards for fi-
nancial management systems,’’ except
paragraph (a);
(5) Section 85.21, ‘‘Payment,’’ except
as modified by §570.513;
(6) Section 85.22, ‘‘Allowable costs’’;
(7) Section 85.26, ‘‘Non-federal au-
dits’’;
(8) Section 85.32, ‘‘Equipment,’’ ex-
cept in all cases in which the equip-
ment is sold, the proceeds shall be pro-
gram income;
(9) Section 85.33, ‘‘Supplies’’;
(10) Section 85.34, ‘‘Copyrights’’;
(11) Section 85.35, ‘‘Subawards to
debarred and suspended parties’’;
(12) Section 85.36, ‘‘Procurement,’’ ex-
cept paragraph (a);
(13) Section 85.37, ‘‘Subgrants’’;
(14) Section 85.40, ‘‘Monitoring and
reporting program performance,’’ ex-
cept paragraphs (b) through (d) and
paragraph (f);
(15) Section 85.41, ‘‘Financial report-
ing,’’ except paragraphs (a), (b), and (e);
(16) Section 85.42, ‘‘Retention and ac-
cess requirements for records,’’ except
that the period shall be four years;
(17) Section 85.43, ‘‘Enforcement’’;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00148 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
139
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.503
(18) Section 85.44, ‘‘Termination for
convenience’’;
(19) Section 85.51 ‘‘Later disallow-
ances and adjustments’’ and
(20) Section 85.52, ‘‘Collection of
amounts due.’’
(b) Subrecipients, except subrecipi-
ents that are governmental entities,
shall comply with the requirements
and standards of OMB Circular No. A–
122, ‘‘Cost Principles for Non-profit Or-
ganizations,’’ or OMB Circular No. A–
21, ‘‘Cost Principles for Educational In-
stitutions,’’ as applicable, and OMB
Circular A–133, ‘‘Audits of Institutions
of Higher Education and Other Non-
profit Institutions’’ (as set forth in 24
CFR part 45). Audits shall be conducted
annually. Such subrecipients shall also
comply with the following provisions of
the Uniform Administrative require-
ments of OMB Circular A–110 (imple-
mented at 24 CFR part 84, ‘‘Uniform
Administrative Requirements for
Grants and Agreements With Institu-
tions of Higher Education, Hospitals
and Other Non-Profit Organizations’’)
or the related CDBG provision, as spec-
ified in this paragraph:
(1) Subpart A—‘‘General’’;
(2) Subpart B—‘‘Pre-Award Require-
ments,’’ except for §84.12, ‘‘Forms for
Applying for Federal Assistance’’;
(3) Subpart C—‘‘Post-Award Require-
ments,’’ except for:
(i) Section 84.22, ‘‘Payment Require-
ments.’’ Grantees shall follow the
standards of §§85.20(b)(7) and 85.21 in
making payments to subrecipients;
(ii) Section 84.23, ‘‘Cost Sharing and
Matching’’;
(iii) Section 84.24, ‘‘Program In-
come.’’ In lieu of §84.24, CDBG sub-
recipients shall follow §570.504;
(iv) Section 84.25, ‘‘Revision of Budg-
et and Program Plans’’;
(v) Section 84.32, ‘‘Real Property.’’ In
lieu of §84.32, CDBG subrecipients shall
follow §570.505;
(vi) Section 84.34(g), ‘‘Equipment.’’ In
lieu of the disposition provisions of
§84.34(g), the following applies:
(A) In all cases in which equipment is
sold, the proceeds shall be program in-
come (prorated to reflect the extent to
which CDBG funds were used to acquire
the equipment); and
(B) Equipment not needed by the sub-
recipient for CDBG activities shall be
transferred to the recipient for the
CDBG program or shall be retained
after compensating the recipient;
(vii) Section 84.51 (b), (c), (d), (e), (f),
(g), and (h), ‘‘Monitoring and Reporting
Program Performance’’;
(viii) Section 84.52, ‘‘Financial Re-
porting’’;
(ix) Section 84.53(b), ‘‘Retention and
access requirements for records.’’ Sec-
tion 84.53(b) applies with the following
exceptions:
(A) The retention period referenced
in §84.53(b) pertaining to individual
CDBG activities shall be four years;
and
(B) The retention period starts from
the date of submission of the annual
performance and evaluation report, as
prescribed in 24 CFR 91.520, in which
the specific activity is reported on for
the final time rather than from the
date of submission of the final expendi-
ture report for the award;
(x) Section 84.61, ‘‘Termination.’’ In
lieu of the provisions of §84.61, CDBG
subrecipients shall comply with
§570.503(b)(7); and
(4) Subpart D—‘‘After-the-Award Re-
quirements,’’ except for §84.71, ‘‘Close-
out Procedures.’’
[53 FR 8058, Mar. 11, 1988, as amended at 60
FR 1916, Jan. 5, 1995; 60 FR 56915, Nov. 9, 1995]
§570.503 Agreements with subrecipi-
ents.
(a) Before disbursing any CDBG funds
to a subrecipient, the recipient shall
sign a written agreement with the sub-
recipient. The agreement shall remain
in effect during any period that the
subrecipient has control over CDBG
funds, including program income.
(b) At a minimum, the written agree-
ment with the subrecipient shall in-
clude provisions concerning the fol-
lowing following items:
(1) Statement of work. The agreement
shall include a description of the work
to be performed, a schedule for com-
pleting 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 par-
ticular records the subrecipient must
maintain and the particular reports
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00149 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
140
24 CFR Ch. V (4–1–13 Edition) §570.504
the subrecipient must submit in order
to assist the recipient in meeting its
recordkeeping and reporting require-
ments.
(3) Program income. The agreement
shall include the program income re-
quirements set forth in §570.504(c). The
agreement shall also specify that, at
the end of the program year, the grant-
ee 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 bal-
ances of a revolving loan fund, cash
balances from a lump sum drawdown,
or cash or investments held for section
108 security needs).
(4) Uniform administrative require-
ments. The agreement shall require the
subrecipient to comply with applicable
uniform administrative requirements,
as described in §570.502.
(5) Other program requirements. The
agreement shall require the sub-
recipient 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 respon-
sibilities described at §570.604; and
(ii) The subrecipient does not assume
the recipient’s responsibility for initi-
ating the review process under the pro-
visions of 24 CFR part 52.
(6) Suspension and termination. The
agreement shall specify that, in ac-
cordance with 24 CFR 85.43, suspension
or termination may occur if the sub-
recipient materially fails to comply
with any term of the award, and that
the award may be terminated for con-
venience in accordance with 24 CFR
85.44.
(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 ac-
counts receivable attributable to the
use of CDBG funds. It shall also include
provisions designed to ensure that any
real property under the subrecipient’s
control that was acquired or improved
in whole or in part with CDBG funds
(including CDBG funds provided to the
subrecipient in the form of a loan) in
excess of $25,000 is either:
(i) Used to meet one of the national
objectives in §570.208 (formerly
§570.901) until five years after expira-
tion 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 para-
graph (b)(7)(i) of this section, in which
event the subrecipient shall pay to the
recipient an amount equal to the cur-
rent 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]
§570.504 Program income.
(a) Recording program income. The re-
ceipt and expenditure of program in-
come as defined in §570.500(a) shall be
recorded as part of the financial trans-
actions of the grant program.
(b) Disposition of program income re-
ceived 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 re-
payments to, or interest earned on, a
revolving fund as defined in §570.500(b)
shall be substantially disbursed from
the fund before additional cash with-
drawals are made from the U.S. Treas-
ury for the same activity. (This rule
does not prevent a lump sum disburse-
ment to finance the rehabilitation of
privately owned properties as provided
for in §570.513.)
(ii) Substantially all other program
income shall be disbursed for eligible
activities before additional cash with-
drawals are made from the U.S. Treas-
ury.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00150 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
141
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.504
(iii) At the end of each program year,
the aggregate amount of program in-
come cash balances and any invest-
ment 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, ex-
ceeds one-twelfth of the most recent
grant made pursuant to §570.304 shall
be remitted to HUD as soon as prac-
ticable thereafter, to be placed in the
recipient’s line of credit. This provi-
sion 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 ex-
pended.
(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 re-
ceived directly from HUD, funds re-
ceived after closeout shall be treated
as program income of the ongoing
grant program.
(5) If the recipient does not have an-
other ongoing grant received directly
from HUD at the time of closeout, in-
come received after closeout from the
disposition of real property or from
loans outstanding at the time of close-
out shall not be governed by the provi-
sions of this part, except that such in-
come shall be used for activities that
meet one of the national objectives in
§570.901 and the eligibility require-
ments described in section 105 of the
Act.
(c) Disposition of program income re-
ceived by subrecipients. The written
agreement between the recipient and
the subrecipient, as required by
§570.503, shall specify whether program
income received is to be returned to
the recipient or retained by the sub-
recipient. Where program income is to
be retained by the subrecipient, the
agreement shall specify the activities
that will be undertaken with the pro-
gram income and that all provisions of
the written agreement shall apply to
the specified activities. When the sub-
recipient retains program income,
transfers of grant funds by the recipi-
ent to the subrecipient shall be ad-
justed according to the principles de-
scribed 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 expira-
tion, shall be paid to the recipient as
required by §570.503(b)(8).
(d) Disposition of certain program in-
come received by urban counties. Pro-
gram income derived from urban coun-
ty program activities undertaken by or
within the jurisdiction of a unit of gen-
eral local government which thereafter
terminates its participation in the
urban county shall continue to be pro-
gram income of the urban county. The
urban county may transfer the pro-
gram income to the unit of general
local government, upon its termination
of urban county participation, provided
that the unit of general local govern-
ment has become an entitlement grant-
ee and agrees to use the program in-
come in its own CDBG entitlement pro-
gram.
(e)(1) Transfer of program income to
Entitlement program. A unit of general
local government that becomes eligible
to be an Entitlement grantee may re-
quest the state’s approval to transfer
State CDBG grant-generated program
income to the unit of general local gov-
ernment’s Entitlement program. A
state may approve the transfer, pro-
vided that the unit of general local
government:
(i) Has officially elected to partici-
pate in the Entitlement grant program;
(ii) Agrees to use such program in-
come in accordance with Entitlement
program requirements; and
(iii) Has set up Integrated Disburse-
ment and Information System (IDIS)
access and agrees to enter receipt of
program income into IDIS.
(2) Transfer of program income of grant-
ees losing Entitlement status. Upon entry
into the State CDBG program, a unit of
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00151 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
142
24 CFR Ch. V (4–1–13 Edition) §570.505
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 re-
tain, either:
(i) Retain the program income gen-
erated under Entitlement grants and
continue to comply with Entitlement
program requirements for program in-
come; 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 §570.489(e).
[53 FR 8058, Mar. 11, 1988, as amended at 60
FR 56915, Nov. 9, 1995; 77 FR 24146, Apr. 23,
2012]
§570.505 Use of real property.
The standards described in this sec-
tion 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 participa-
tion 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 acquisi-
tion or improvement was made unless
the recipient provides affected citizens
with reasonable notice of, and oppor-
tunity to comment on, any proposed
change, and either:
(1) The new use of such property
qualifies as meeting one of the na-
tional objectives in §570.208 (formerly
§570.901) and is not a building for the
general conduct of government; or
(2) The requirements in paragraph (b)
of this section are met.
(b) If the recipient determines, after
consultation with affected citizens,
that it is appropriate to change the use
of the property to a use which does not
qualify under paragraph (a)(1) of this
section, it may retain or dispose of the
property for the changed use if the re-
cipient’s CDBG program is reimbursed
in the amount of the current fair mar-
ket value of the property, less any por-
tion of the value attributable to ex-
penditures of non-CDBG funds for ac-
quisition of, and improvements to, the
property.
(c) If the change of use occurs after
closeout, the provisions governing in-
come from the disposition of the real
property in §570.504(b)(4) or (5), as ap-
plicable, 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 prop-
erty no longer will be subject to any
CDBG requirements.
[53 FR 8058, Mar. 11, 1988, as amended at 53
FR 41331, Oct. 21, 1988]
§570.506 Records to be maintained.
Each recipient shall establish and
maintain sufficient records to enable
the Secretary to determine whether
the recipient has met the requirements
of this part. At a minimum, the fol-
lowing records are needed:
(a) Records providing a full descrip-
tion of each activity assisted (or being
assisted) with CDBG funds, including
its location (if the activity has a geo-
graphical locus), the amount of CDBG
funds budgeted, obligated and expended
for the activity, and the provision in
subpart C under which it is eligible.
(b) Records demonstrating that each
activity undertaken meets one of the
criteria set forth in §570.208. (Where in-
formation on income by family size is
required, the recipient may substitute
evidence establishing that the person
assisted qualifies under another pro-
gram having income qualification cri-
teria at least as restrictive as that
used in the definitions of ‘‘low and
moderate income person’’ and ‘‘low and
moderate income household’’ (as appli-
cable) at §570.3, such as Job Training
Partnership Act (JTPA) and welfare
programs; or the recipient may sub-
stitute evidence that the assisted per-
son is homeless; or the recipient may
substitute a copy of a verifiable certifi-
cation from the assisted person that
his or her family income does not ex-
ceed the applicable income limit estab-
lished in accordance with §570.3; or the
recipient may substitute a notice that
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00152 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
143
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.506
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 informa-
tion:
(1) For each activity determined to
benefit low and moderate income per-
sons, the income limits applied and the
point in time when the benefit was de-
termined.
(2) For each activity determined to
benefit low and moderate income per-
sons 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 mod-
erate income persons in the service
area is less than 51 percent, data show-
ing that the area qualifies under the
exception criteria set forth at
§570.208(a)(1)(ii).
(3) For each activity determined to
benefit low and moderate income per-
sons because the activity involves a fa-
cility 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 exclu-
sively by senior citizens, adults meet-
ing the Bureau of the Census’ Current
Population Reports definition of ‘‘se-
verely disabled,’’ persons living with
AIDS, battered spouses, abused chil-
dren, the homeless, illiterate adults, or
migrant farm workers, for which the
regulations provide a presumption con-
cerning the extent to which low- and
moderate-income persons benefit; or
(ii) Documentation describing how
the nature and, if applicable, the loca-
tion of the facility or service estab-
lishes that it is used predominantly by
low and moderate income persons; or
(iii) Data showing the size and an-
nual income of the family of each per-
son 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 receiv-
ing CDBG assistance indicating the
total number of dwelling units in each
multifamily structure assisted and the
number of those units which will be oc-
cupied by low and moderate income
households after assistance;
(ii) The total cost of the activity, in-
cluding 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 as-
sisted; and
(B) Such information as necessary to
show the affordability of units occu-
pied (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 cri-
teria in §570.208(a)(3) will be met when
the structures are built;
(vi) Where applicable, records dem-
onstrating that the activity qualifies
under the special conditions at
§570.208(a)(3)(i);
(vii) For any homebuyer assistance
activity qualifying under §570.201(e),
570.201(n), or 570.204, identification of
the applicable eligibility paragraph
and evidence that the activity meets
the eligibility criteria for that provi-
sion; for any such activity qualifying
under §570.208(a), the size and income
of each homebuyer’s household; and
(viii) For a §570.201(k) housing serv-
ices activity, identification of the
HOME project(s) or assistance that the
housing services activity supports, and
evidence that project(s) or assistance
meet the HOME program income tar-
geting requirements at 24 CFR 92.252 or
92.254.
(5) For each activity determined to
benefit low and moderate income per-
sons based on the creation of jobs, the
recipient shall provide the documenta-
tion described in either paragraph
(b)(5)(i) or (ii) of this section.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00153 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
144
24 CFR Ch. V (4–1–13 Edition) §570.506
(i) Where the recipient chooses to
document that at least 51 percent of
the jobs will be available to low and
moderate income persons, documenta-
tion for each assisted business shall in-
clude:
(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 train-
ing for any of those jobs requiring spe-
cial skills or education;
(2) A listing by job title of the perma-
nent 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 per-
manent jobs filled, and which jobs of
those were available to low and mod-
erate income persons, and a description
of how first consideration was given to
such persons for those jobs. The de-
scription shall include what hiring
process was used; which low and mod-
erate 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 mod-
erate 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 per-
sons; and
(2) A listing by job title of the perma-
nent jobs to be created, identifying
which are part-time, if any;
(B) A listing by job title of the per-
manent jobs filled and which jobs were
initially held by low and moderate in-
come persons; and
(C) For each such low and moderate
income person hired, the size and an-
nual 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 per-
sons 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 list-
ing by job title of permanent jobs re-
tained, indicating which of those jobs
are part-time and (where it is known)
which are held by low and moderate in-
come persons at the time the CDBG as-
sistance is provided. Where applicable,
identification of any of the retained
jobs (other than those known to be
held by low and moderate income per-
sons) 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 an-
nual 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 ‘‘avail-
able 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 ei-
ther 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 in-
cluded in the record.
(7) For purposes of documenting, pur-
suant to paragraph (b)(5)(i)(B),
(b)(5)(ii)(C), (b)(6)(iii) or (b)(6)(v) of this
section, that the person for whom a job
was either filled by or made available
to a low- or moderate-income person
based upon the census tract where the
person resides or in which the business
is located, the recipient, in lieu of
maintaining records showing the per-
son’s family size and income, may sub-
stitute records showing either the per-
son’s address at the time the deter-
mination of income status was made or
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00154 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
145
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.506
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 ap-
plicable, the data source used for deter-
mining the percentage, and a descrip-
tion of the pervasive poverty and gen-
eral distress in the census tract in suf-
ficient detail to demonstrate how the
census tract met the criteria in
§570.208(a)(4)(v), as applicable.
(8) For each activity determined to
aid in the prevention or elimination of
slums or blight based on addressing one
or more of the conditions which quali-
fied 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 cri-
teria in §570.208(b)(1).
(9) For each residential rehabilita-
tion activity determined to aid in the
prevention or elimination of slums or
blight in a slum or blighted area:
(i) The local definition of ‘‘sub-
standard’’;
(ii) A pre-rehabilitation inspection
report describing the deficiencies in
each structure to be rehabilitated; and
(iii) Details and scope of CDBG as-
sisted rehabilitation, by structure.
(10) For each activity determined to
aid in the prevention or elimination of
slums or blight based on the elimi-
nation of specific conditions of blight
or physical decay not located in a slum
or blighted area:
(i) A description of the specific condi-
tion of blight or physical decay treat-
ed; 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 activ-
ity 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 na-
ture and degree of seriousness of the
condition requiring assistance;
(ii) Evidence that the recipient cer-
tified that the CDBG activity was de-
signed 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) Records that demonstrate that
the recipient has made the determina-
tions required as a condition of eligi-
bility of certain activities, as pre-
scribed in §§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.
(d) Records which demonstrate com-
pliance with §570.505 regarding any
change of use of real property acquired
or improved with CDBG assistance.
(e) Records that demonstrate compli-
ance with the citizen participation re-
quirements prescribed in 24 CFR part
91, subpart B, for entitlement recipi-
ents, or in 24 CFR part 91, subpart C,
for HUD-administered small cities re-
cipients.
(f) Records which demonstrate com-
pliance with the requirements in
§570.606 regarding acquisition, displace-
ment, relocation, and replacement
housing.
(g) Fair housing and equal oppor-
tunity records containing:
(1) Documentation of the analysis of
impediments and the actions the re-
cipient has carried out with its housing
and community development and other
resources to remedy or ameliorate any
impediments to fair housing choice in
the recipient’s community.
(2) Data on the extent to which each
racial and ethnic group and single-
headed households (by gender of house-
hold head) have applied for, partici-
pated in, or benefited from, any pro-
gram or activity funded in whole or in
part with CDBG funds. Such informa-
tion 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00155 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
146
24 CFR Ch. V (4–1–13 Edition) §570.507
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 cat-
egories prescribed on the Equal Em-
ployment Opportunity Commission’s
EEO–4 form; and documentation of any
actions undertaken to assure equal em-
ployment opportunities to all persons
regardless of race, color, national ori-
gin, sex or handicap in operating units
funded in whole or in part under this
part.
(4) Data indicating the race and eth-
nicity of households (and gender of sin-
gle heads of households) displaced as a
result of CDBG funded activities, to-
gether 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 re-
quirements. No recipient is required to
attain or maintain any particular sta-
tistical measure by race, ethnicity, or
gender in covered programs.
(5) Documentation of actions under-
taken to meet the requirements of
§570.607(b) which implements section 3
of the Housing Development Act of
1968, as amended (12 U.S.C. 1701U) rel-
ative 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 re-
ceiving 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 en-
terprises as defined in Executive Order
12138, the amount of the contract or
subcontract, and documentation of re-
cipient’s affirmative steps to assure
that minority business and women’s
business enterprises have an equal op-
portunity to obtain or compete for con-
tracts and subcontracts as sources of
supplies, equipment, construction and
services. Such affirmative steps may
include, but are not limited to, tech-
nical assistance open to all businesses
but designed to enhance opportunities
for these enterprises and special out-
reach efforts to inform them of con-
tract opportunities. Such steps shall
not include preferring any business in
the award of any contract or sub-
contract 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 discrimina-
tion, where the courts or HUD have
found that the recipient has previously
discriminated against persons on the
ground of race, color, national origin
or sex in administering a program or
activity funded in whole or in part
with CDBG funds.
(h) Financial records, in accordance
with the applicable requirements listed
in §570.502, including source docu-
mentation for entities not subject to
parts 84 and 85 of this title. Grantees
shall maintain evidence to support how
the CDBG funds provided to such enti-
ties are expended. Such documentation
must include, to the extent applicable,
invoices, schedules containing com-
parisons of budgeted amounts and ac-
tual expenditures, construction
progress schedules signed by appro-
priate parties (e.g., general contractor
and/or a project architect), and/or
other documentation appropriate to
the nature of the activity.
(i) Agreements and other records re-
lated to lump sum disbursements to
private financial institutions for fi-
nancing rehabilitation as prescribed in
§570.513; and
(j) Records required to be maintained
in accordance with other applicable
laws and regulations set forth in sub-
part 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]
§570.507 Reports.
(a) Performance and evaluation re-
port—(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 re-
cipients in New York, and Hawaii recipi-
ents for pre-FY 1995 grants—(i) Content.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00156 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
147
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.509
Each performance and evaluation re-
port must contain completed copies of
all forms and narratives prescribed by
HUD, including a summary of the cit-
izen 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 execu-
tion 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 sub-
mitted annually on October 31 until
completion of the activities funded
under the grant;
(B) Hawaii grantees will submit their
small cities performance and evalua-
tion report for each pre-FY 1995 grant
no later than 90 days after the comple-
tion of their most recent program year.
After the initial submission, the per-
formance 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 §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 com-
ment on the report before its submis-
sion to HUD. Each recipient may deter-
mine the specific manner and times the
report will be made available to citi-
zens consistent with the preceding sen-
tence.
(b) Equal employment opportunity re-
ports. Recipients of entitlement grants
or HUD-administered small cities
grants shall submit to HUD each year a
report (HUD/EEO–4) on recipient em-
ployment 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 re-
port on contracts and subcontract ac-
tivity 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 respon-
sibilities under the Act or other appli-
cable 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]
§570.508 Public access to program
records.
Notwithstanding 24 CFR 85.42(f), re-
cipients shall provide citizens with rea-
sonable access to records regarding the
past use of CDBG funds, consistent
with applicable State and local laws re-
garding privacy and obligations of con-
fidentiality.
§570.509 Grant closeout procedures.
(a) Criteria for closeout. 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 have been incurred, with the ex-
ception of closeout costs (e.g., audit
costs) and costs resulting from contin-
gent liabilities described in the close-
out agreement pursuant to paragraph
(c) of this section. Contingent liabil-
ities include, but are not limited to,
third-party claims against the recipi-
ent, as well as related administrative
costs.
(2) With respect to activities (such as
rehabilitation of privately owned prop-
erties) which are financed by means of
escrow accounts, loan guarantees, or
similar mechanisms, the work to be as-
sisted with CDBG funds (but excluding
program income) has actually been
completed.
(3) Other responsibilities of the re-
cipient under the grant agreement and
applicable laws and regulations appear
to have been carried out satisfactorily
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00157 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
148
24 CFR Ch. V (4–1–13 Edition) §570.509
or there is no further Federal interest
in keeping the grant agreement open
for the purpose of securing perform-
ance.
(b) Closeout actions. (1) Within 90 days
of the date it is determined that the
criteria for closeout have been met, the
recipient shall submit to HUD a copy
of the final performance and evalua-
tion report described in 24 CFR part 91.
If an acceptable report is not sub-
mitted, an audit of the recipient’s
grant activities may be conducted by
HUD.
(2) Based on the information provided
in the performance report and other
relevant information, HUD, in con-
sultation with the recipient, will pre-
pare a closeout agreement in accord-
ance with paragraph (c) of this section.
(3) HUD will cancel any unused por-
tion 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 pos-
session of the recipient shall be re-
funded to HUD.
(4) Any costs paid with CDBG funds
which were not audited previously
shall be subject to coverage in the re-
cipient’s next single audit performed in
accordance with 24 CFR part 44. The re-
cipient may be required to repay HUD
any disallowed costs based on the re-
sults of the audit, or on additional
HUD reviews provided for in the close-
out agreement.
(c) Closeout agreement. Any obliga-
tions remaining as of the date of the
closeout shall be covered by the terms
of a closeout agreement. The agree-
ment shall be prepared by the HUD
field office in consultation with the re-
cipient. The agreement shall identify
the grant being closed out, and include
provisions with respect to the fol-
lowing:
(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) Identification of any program in-
come on deposit in financial institu-
tions at the time the closeout agree-
ment is signed:
(4) Description of the recipient’s re-
sponsibility after closeout for:
(i) Compliance with all program re-
quirements, certifications and assur-
ances in using program income on de-
posit at the time the closeout agree-
ment is signed and in using any other
remaining CDBG funds available for
closeout costs and contingent liabil-
ities;
(ii) Use of real property assisted with
CDBG funds in accordance with the
principles described in §570.505;
(iii) Compliance with requirements
governing program income received
subsequent to grant closeout, as de-
scribed in §570.504(b)(4) and (5); and
(iv) Ensuring that flood insurance
coverage for affected property owners
is maintained for the mandatory pe-
riod;
(5) Other provisions appropriate to
any special circumstances of the grant
closeout, in modification of or in addi-
tion to the obligations in paragraphs
(c)(1) through (4) of this section. The
agreement shall authorize monitoring
by HUD, and shall provide that find-
ings 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 close-
out until the expiration of the program
year covered by the last approved con-
solidated plan.
(e) Termination of grant for conven-
ience. Grant assistance provided under
this part may be terminated for con-
venience in whole or in part before the
completion of the assisted activities, in
accordance with the provisions of 24
CFR 85.44. The recipient shall not incur
new obligations for the terminated por-
tions after the effective date, and shall
cancel as many outstanding obliga-
tions as possible. HUD shall allow full
credit to the recipient for those por-
tions of obligations which could not be
canceled and which had been properly
incurred by the recipient in carrying
out the activities before the termi-
nation. The closeout policies contained
in this section shall apply in such
cases, except where the approved grant
is terminated in its entirety. Responsi-
bility for the environmental review to
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00158 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
149
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.511
be performed under 24 CFR part 50 or 24
CFR part 58, as applicable, shall be de-
termined as part of the closeout proc-
ess.
(f) Termination for cause. In cases in
which the Secretary terminates the re-
cipient’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 sec-
tion shall apply, except where the ap-
proved grant is cancelled in its en-
tirety. The provisions in 24 CFR 85.43(c)
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]
§570.510 Transferring projects from
urban counties to metropolitan cit-
ies.
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 coun-
ty 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 be-
fore such qualification; and the city
and county agree to transfer responsi-
bility for the administration of the
funds being transferred from the coun-
ty’s letter of credit to the city’s letter
of credit. The following rules apply to
the transfer of responsibility for an ac-
tivity from an urban county to the new
metropolitan city.
(a) The urban county and the metro-
politan city must execute a legally
binding agreement which shall specify:
(1) The amount of funds to be trans-
ferred 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 trans-
ferred;
(3) The county’s responsibility for all
expenditures and unliquidated obliga-
tions associated with the activities be-
fore the time of transfer, including a
statement that responsibility for all
audit and monitoring findings associ-
ated with those expenditures and obli-
gations shall remain with the county;
(4) The responsibility of the metro-
politan 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.
(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 con-
sultation 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 re-
quested transfer of funds.
(c) HUD shall notify the metropoli-
tan city and urban county of any spe-
cial audit and monitoring rules which
apply to the transferred funds when the
date of the transfer is communicated
to the city and the county.
§570.511 Use of escrow accounts for
rehabilitation of privately owned
residential property.
(a) Limitations. A recipient may with-
draw funds from its letter of credit for
immediate deposit into an escrow ac-
count for use in funding loans and
grants for the rehabilitation of pri-
vately owned residential property
under §570.202(a)(1). The following addi-
tional limitations apply to the use of
escrow accounts for residential reha-
bilitation 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 pri-
marily residential properties con-
taining 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).
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00159 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
150
24 CFR Ch. V (4–1–13 Edition) §570.512
(2) An escrow account shall not be
used unless the contract between the
property owner and the contractor se-
lected 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 §570.500(c), by a public agency des-
ignated under §570.501(a), or by an
agent under a procurement contact
governed by the requirements of 24
CFR 85.36. No deposit to the escrow ac-
count shall be made until after the
contract has been executed between
the property owner and the rehabilita-
tion contractor.
(3) All funds withdrawn under this
section shall be deposited into one in-
terest 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 require-
ments of U.S. Treasury Financial Man-
ual, 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 administra-
tive costs under §570.206 or rehabilita-
tion services costs under §570.202(b)(9),
are not permissible uses of escrowed
funds. Such other eligible rehabilita-
tion 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 remit-
ted to HUD at least quarterly but not
more frequently than monthly. Inter-
est 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 addi-
tion 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]
§570.512 [Reserved]
§570.513 Lump sum drawdown for fi-
nancing 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 financ-
ing the rehabilitation of privately
owned properties. The fund may be
used in conjunction with various reha-
bilitation financing techniques, includ-
ing loans, interest subsidies, loan guar-
antees, loan reserves, or such other
uses as may be approved by HUD con-
sistent with the objectives of this sec-
tion. The fund may also be used for
making grants, but only for the pur-
pose of leveraging non-CDBG funds for
the rehabilitation of the same prop-
erty.
(a) Limitation on drawdown of grant
funds. (1) The funds that a recipient de-
posits to a rehabilitation fund shall not
exceed the grant amount that the re-
cipient reasonably expects will be re-
quired, together with anticipated pro-
gram income from interest and loan re-
payments, for the rehabilitation activi-
ties during the period specified in the
agreement to undertake activities,
based on either:
(i) Prior level of rehabilitation activ-
ity; or
(ii) Rehabilitation staffing and man-
agement capacity during the period
specified in the agreement to under-
take activities.
(2) No grant funds may be deposited
under this section solely for the pur-
pose of investment, notwithstanding
that the interest or other income is to
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00160 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
151
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.513
be used for the rehabilitation activi-
ties.
(3) The recipient’s rehabilitation pro-
gram administrative costs and the ad-
ministrative costs of the financial in-
stitution may not be funded through
lump sum drawdown. Such costs must
be paid from periodic letter of credit
withdrawals in accordance with stand-
ard procedures or from program in-
come, other than program income gen-
erated by the lump sum distribution.
(b) Standards to be met. The following
standards shall apply to all lump sum
drawdowns of CDBG funds for rehabili-
tation:
(1) Eligible rehabilitation activities. The
rehabilitation fund shall be used to fi-
nance the rehabilitation of privately
owned properties eligible under the
general policies in §570.200 and the spe-
cific provisions of either §570.202, in-
cluding the acquisition of properties
for rehabilitation, or §570.203.
(2) Requirements for agreement. The re-
cipient shall execute a written agree-
ment with one or more private finan-
cial institutions for the operation of
the rehabilitation fund. The agreement
shall specify the obligations and re-
sponsibilities of the parties, the terms
and conditions on which CDBG funds
are to be deposited and used or re-
turned, the anticipated level of reha-
bilitation activities by the financial in-
stitution, 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 pro-
visions of this section. Upon execution
of the agreement, a copy must be pro-
vided 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 reha-
bilitation 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 rehabili-
tation financing assistance must start
(e.g., first loan must be made, sub-
sidized 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
will be regarded as meeting this re-
quirement. If a recipient with an agree-
ment specifying two years to under-
take 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 de-
termination shall be included in the
program file. Should use of deposited
funds not start within 45 days, or sub-
stantial 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 re-
cipient’s letter of credit.
(5) Program activity. Recipients shall
review the level of program activity on
a yearly basis. Where activity is sub-
stantially below that anticipated, pro-
gram funds shall be returned to the re-
cipient’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 termi-
nate 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 let-
ter of credit.
(7) Return of unused deposits. At the
end of the period specified in the agree-
ment for undertaking activities, all un-
obligated deposited funds shall be re-
turned to the recipient’s letter of cred-
it unless the recipient enters into a
new agreement conforming to the re-
quirements of this section. 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 au-
thorized under §570.910(b), §570.911,
§570.912 or §570.913.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00161 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
152
24 CFR Ch. V (4–1–13 Edition) §570.600
(8) Rehabilitation loans made with non-
CDBG funds. If the deposited funds or
program income derived from deposited
funds are used to subsidize or guar-
antee 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 activi-
ties subject to the requirements appli-
cable to such activities, except that re-
payment of non-CDBG funds shall not
be treated as program income.
(9) Provision of consideration. In con-
sideration for the lump sum deposit by
the recipient in a private financial in-
stitution, the deposit must result in
appropriate benefits in support of the
recipient’s local rehabilitation pro-
gram. Minimum requirements for such
benefits are:
(i) Grantees shall require the finan-
cial institution to pay interest on the
lump sum deposit.
(A) The interest rate paid by the fi-
nancial 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 matu-
rity.
(ii) In addition to the payment of in-
terest, at least one of the following
benefits must be provided by the finan-
cial institution:
(A) Leverage of the deposited funds
so that the financial institution com-
mits private funds for loans in the re-
habilitation 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 rehabilita-
tion loans at below market interest
rates, at higher than normal risk, or
with longer than normal repayment pe-
riods; or
(C) Provision of administrative serv-
ices 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
loans made from such deposits are pro-
gram income and, during the period of
the agreement, shall be used for reha-
bilitation activities under the provi-
sions of this section.
(d) Outstanding findings. Notwith-
standing 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 draw-
down 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 fi-
nancial institution before distribution
under the provisions of this section.
(f) Recordkeeping requirements. The re-
cipient shall maintain in its files a
copy of the written agreement and re-
lated documents establishing conform-
ance with this section and concerning
performance by a financial institution
in accordance with the agreement.
Subpart K—Other Program
Requirements
SOURCE: 53 FR 34456, Sept. 6, 1988, unless
otherwise noted.
§570.600 General.
(a) This subpart K enumerates laws
that the Secretary will treat as appli-
cable 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 de-
terminations 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 §570.405 and §570.440 with
the exception of §570.612. The absence
of mention herein of any other statute
for which the Secretary does not have
direct enforcement responsibility is
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00162 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
153
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.604
not intended to be taken as an indica-
tion 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 re-
quired to be made by the Secretary
pursuant to section 104(e)(2) of the Act,
see §570.487.
(b) This subpart also sets forth cer-
tain 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 pursu-
ant to section 106(b) and 106(d)(2)(B) of
the Act (subparts D and F, respec-
tively), the requirements of this sub-
part 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]
§570.601 Public Law 88–352 and Public
Law 90–284; affirmatively fur-
thering 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 grant-
ees administer all programs and activi-
ties related to housing and community
development in a manner to affirma-
tively further the policies of the Fair
Housing Act. Furthermore, in accord-
ance with section 104(b)(2) of the Act,
for each community receiving a grant
under subpart D of this part, the cer-
tification that the grantee will affirm-
atively further fair housing shall spe-
cifically require the grantee to assume
the responsibility of fair housing plan-
ning by conducting an analysis to iden-
tify impediments to fair housing choice
within its jurisdiction, taking appro-
priate actions to overcome the effects
of any impediments identified through
that analysis, and maintaining records
reflecting the analysis and actions in
this regard.
(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]
§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 ori-
gin, religion, or sex be excluded from
participation in, be denied the benefits
of, or be subjected to discrimination
under any program or activity receiv-
ing 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 discrimi-
nation 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]
§570.603 Labor standards.
(a) Section 110(a) of the Act contains
labor standards that apply to nonvol-
unteer 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 re-
quirements 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]
§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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00163 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
154
24 CFR Ch. V (4–1–13 Edition) §570.605
which further the purposes of the Na-
tional Environmental Policy Act of
1969, and the procedures by which
grantees must fulfill their environ-
mental responsibilities. In certain
cases, grantees assume these environ-
mental review, decisionmaking, and
action responsibilities by execution of
grant agreements with the Secretary.
[61 FR 11477, Mar. 20, 1996]
§570.605 National Flood Insurance
Program.
Notwithstanding the date of HUD ap-
proval of the recipient’s application
(or, in the case of grants made under
subpart D of this part or HUD-adminis-
tered 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]
§570.606 Displacement, relocation, ac-
quisition, and replacement of hous-
ing.
(a) General policy for minimizing dis-
placement. Consistent with the other
goals and objectives of this part, grant-
ees (or States or state recipients, as ap-
plicable) shall assure that they have
taken all reasonable steps to minimize
the displacement of persons (families,
individuals, businesses, nonprofit orga-
nizations, and farms) as a result of ac-
tivities assisted under this part.
(b) Relocation assistance for displaced
persons at URA levels. (1) A displaced
person shall be provided with reloca-
tion assistance at the levels described
in, and in accordance with the require-
ments of 49 CFR part 24, which con-
tains the government-wide regulations
implementing the Uniform Relocation
Assistance and Real Property Acquisi-
tion 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 per-
son (family, individual, business, non-
profit organization, or farm) that
moves from real property, or moves his
or her personal property from real
property, permanently and involun-
tarily, as a direct result of rehabilita-
tion, demolition, or acquisition for an
activity assisted under this part. A per-
manent, involuntary move for an as-
sisted 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 offi-
cial 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 para-
graph (b)(2)(i)(A) or (B) of this section,
if either HUD or the grantee (or State,
as applicable) determines that the dis-
placement directly resulted from ac-
quisition, rehabilitation, or demolition
for the requested activity.
(D) After the ‘‘initiation of negotia-
tions’’ if the person is the tenant-occu-
pant 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 ten-
ant’s monthly rent and estimated aver-
age utility costs before the initiation
of negotiations or 30 percent of the
household’s average monthly gross in-
come; 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 in-
curred in connection with the tem-
porary relocation, including the cost of
moving to and from the temporary lo-
cation 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00164 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
155
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.606
(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 in-
clude:
(A) A person who is evicted for cause
based upon serious or repeated viola-
tions 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 evad-
ing 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 displace-
ment 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 ac-
quisition, 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 re-
cipient, as applicable) may, at any
time, request HUD to determine wheth-
er a person is a displaced person under
this section.
(3) Initiation of negotiations. For pur-
poses of determining the type of re-
placement housing assistance to be
provided under paragraph (b) of this
section, if the displacement is the di-
rect result of privately undertaken re-
habilitation, 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 recipi-
ent, as applicable) and the person own-
ing or controlling the real property.
(c) Residential antidisplacement and re-
location 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
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) re-
location assistance to persons receiv-
ing 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 applica-
ble) must adopt a written policy avail-
able to the public that describes the re-
location 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 ac-
quisition of real property for an as-
sisted 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) con-
cerning 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 dis-
placed from a dwelling may file a writ-
ten 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 con-
tractual obligation to the grantee to
comply with the provisions of this sec-
tion. For purposes of the State CDBG
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00165 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
156
24 CFR Ch. V (4–1–13 Edition) §570.607
2See footnote 1 at §570.200(a)(5).
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 dem-
onstrate compliance with the provi-
sions 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]
§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 Execu-
tive Order 13279 (Equal Protection of
the Laws for Faith-Based and Commu-
nity Organizations), 67 FR 77141, 3 CFR,
2002 Comp., p. 258; and the imple-
menting 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 regula-
tions at 24 CFR part 135.
[68 FR 56405, Sept. 30, 2003]
§570.608 Lead-based paint.
The Lead-Based Paint Poisoning Pre-
vention 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]
§570.609 Use of debarred, suspended
or ineligible contractors or sub-
recipients.
The requirements set forth in 24 CFR
part 5 apply to this program.
[61 FR 5209, Feb. 9, 1996]
§570.610 Uniform administrative re-
quirements and cost principles.
The recipient, its agencies or instru-
mentalities, and subrecipients shall
comply with the policies, guidelines,
and requirements of 24 CFR part 85 and
OMB Circulars A–87, A–110 (imple-
mented at 24 CFR part 84), A–122, A–133
(implemented at 24 CFR part 45), and
A–1282 (implemented at 24 CFR part
44), as applicable, as they relate to the
acceptance and use of Federal funds
under this part. The applicable sections
of 24 CFR parts 84 and 85 are set forth
at §570.502.
[60 FR 56916, Nov. 9, 1995]
§570.611 Conflict of interest.
(a) Applicability. (1) In the procure-
ment of supplies, equipment, construc-
tion, and services by recipients and by
subrecipients, the conflict of interest
provisions in 24 CFR 85.36 and 24 CFR
84.42, respectively, shall apply.
(2) In all cases not governed by 24
CFR 85.36 and 84.42, the provisions of
this section shall apply. Such cases in-
clude the acquisition and disposition of
real property and the provision of as-
sistance by the recipient or by its sub-
recipients to individuals, businesses,
and other private entities under eligi-
ble activities that authorize such as-
sistance (e.g., rehabilitation, preserva-
tion, and other improvements of pri-
vate properties or facilities pursuant to
§570.202; or grants, loans, and other as-
sistance to businesses, individuals, and
other private entities pursuant to
§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 exer-
cise 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 in-
side information with regard to such
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00166 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
157
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.612
activities, may obtain a financial in-
terest or benefit from a CDBG-assisted
activity, or have a financial interest in
any contract, subcontract, or agree-
ment with respect to a CDBG-assisted
activity, or with respect to the pro-
ceeds of the CDBG-assisted activity, ei-
ther for themselves or those with
whom they have business or immediate
family ties, during their tenure or for
one year thereafter. For the UDAG pro-
gram, 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 dur-
ing, or at any time after, such person’s
tenure.
(c) Persons covered. The conflict of in-
terest 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 re-
quest of the recipient, HUD may grant
an exception to the provisions of para-
graph (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 ac-
count the cumulative effects of para-
graph (d)(2) of this section.
(1) Threshold requirements. HUD will
consider an exception only after the re-
cipient has provided the following doc-
umentation:
(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 at-
torney that the interest for which the
exception is sought would not violate
State or local law.
(2) Factors to be considered for excep-
tions. In determining whether to grant
a requested exception after the recipi-
ent has satisfactorily met the require-
ments of paragraph (d)(1) of this sec-
tion, HUD shall conclude that such an
exception will serve to further the pur-
poses of the Act and the effective and
efficient administration of the recipi-
ent’s program or project, taking into
account the cumulative effect of the
following factors, as applicable:
(i) Whether the exception would pro-
vide a significant cost benefit or an es-
sential degree of expertise to the pro-
gram or project that would otherwise
not be available;
(ii) Whether an opportunity was pro-
vided 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 ac-
tivity, 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 as-
sisted activity in question;
(v) Whether the interest or benefit
was present before the affected person
was in a position as described in para-
graph (b) of this section;
(vi) Whether undue hardship will re-
sult either to the recipient or the per-
son affected when weighed against the
public interest served by avoiding the
prohibited conflict; and
(vii) Any other relevant consider-
ations.
[60 FR 56916, Nov. 9, 1995]
§570.612 Executive Order 12372.
(a) General. Executive Order 12372,
Intergovernmental Review of Federal
Programs, and the Department’s imple-
menting 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 activi-
ties proposed to be assisted under
UDAG, but it applies to the Entitle-
ment program only where a grantee
proposes to use funds for the planning
or construction (reconstruction or in-
stallation) of water or sewer facilities.
Such facilities include storm sewers as
well as all sanitary sewers, but do not
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00167 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
158
24 CFR Ch. V (4–1–13 Edition) §570.613
include water and sewer lines con-
necting a structure to the lines in the
public right-of-way or easement. It is
the responsibility of the grantee to ini-
tiate the Executive Order review proc-
ess if it proposes to use its CDBG or
UDAG funds for activities subject to
review.
§570.613 Eligibility restrictions for
certain resident aliens.
(a) Restriction. Certain newly legal-
ized 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 serv-
ices, jobs and access to new or rehabili-
tated housing and other facilities made
available under covered activities fund-
ed by programs listed in paragraph (e)
of this section. ‘‘Benefits’’ do not in-
clude relocation services and payments
to which displacees are entitled by law.
(b) Covered activities. ‘‘Covered activi-
ties’’ under this section means activi-
ties meeting the requirements of
§570.208(a) that either:
(1) Have income eligibility require-
ments 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 restric-
tions 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 ac-
complished by obtaining certification
as provided in 24 CFR 49.20.
(e) Programs affected. (1) The Commu-
nity Development Block Grant pro-
gram 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, ad-
ministered 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]
§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 cer-
tain Federal and Federally funded
buildings and other facilities to be de-
signed, constructed, or altered in ac-
cordance with standards that insure
accessibility to, and use by, physically
handicapped people. A building or facil-
ity designed, constructed, or altered
with funds allocated or reallocated
under this part after December 11, 1995,
and that meets the definition of ‘‘resi-
dential structure’’ as defined in 24 CFR
40.2 or the definition of ‘‘building’’ as
defined in 41 CFR 101–19.602(a) is sub-
ject to the requirements of the Archi-
tectural Barriers Act of 1968 (42 U.S.C.
4151–4157) and shall comply with the
Uniform Federal Accessibility Stand-
ards (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 comprehen-
sive civil rights to individuals with dis-
abilities in the areas of employment,
public accommodations, State and
local government services, and tele-
communications. 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 disabil-
ities. Further, the ADA requires the re-
moval of architectural barriers and
communication barriers that are struc-
tural in nature in existing facilities,
where such removal is readily achiev-
able—that is, easily accomplishable
and able to be carried out without
much difficulty or expense.
[60 FR 56917, Nov. 9, 1995]
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00168 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
159
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.703
Subpart L [Reserved]
Subpart M—Loan Guarantees
SOURCE: 59 FR 66604, Dec. 27, 1994, unless
otherwise noted.
§570.700 Purpose.
This subpart contains requirements
governing the guarantee under section
108 of the Act of debt obligations as de-
fined in §570.701.
§570.701 Definitions.
Borrower means the public entity or
its designated public agency or the
State that issues debt obligations
under this subpart.
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 pub-
lic agencies or by States and guaran-
teed or eligible for guarantee by HUD
under this subpart.
Designated public agency means a pub-
lic agency designated by a public enti-
ty to issue debt obligations as borrower
under this subpart.
Entitlement public entity means a met-
ropolitan city or an urban county re-
ceiving a grant under subpart D of this
part.
Guaranteed loan funds means the pro-
ceeds 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 §570.711.
Nonentitlement public entity means
any unit of general local government
in a nonentitlement area.
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 §570.704(b)(9)
and §570.705(b)(2) or pursuant to
§570.711.
[59 FR 66604, Dec. 27, 1994, as amended at 61
FR 11481, Mar. 20, 1996; 74 FR 36389, July 22,
2009]
§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 con-
sist, at a minimum, of the certifi-
cations required under §570.704(b)(9)
(and actions pursuant thereto).
(c) Nonentitlement public entities el-
igible to apply for grant assistance
under subpart F of this part.
§570.703 Eligible activities.
Guaranteed loan funds may be used
for the following activities, provided
such activities meet the requirements
of §570.200. However, guaranteed loan
funds may not be used to reimburse the
CDBG program account or line of cred-
it for costs incurred by the public enti-
ty or designated public agency and paid
with CDBG grant funds or program in-
come.
(a) Acquisition of improved or unim-
proved 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 obliga-
tions guaranteed under this subpart.
(d) Relocation payments and other
relocation assistance for individuals,
families, businesses, nonprofit organi-
zations, and farm operations who must
relocate permanently or temporarily
as a result of an activity financed with
guaranteed loan funds, where the as-
sistance is:
(1) Required under the provisions of
§570.606(b) or (c); or
(2) Determined by the public entity
to be appropriate under the provisions
of §570.606(d).
(e) Clearance, demolition, and re-
moval, including movement of struc-
tures to other sites and remediation of
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00169 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
160
24 CFR Ch. V (4–1–13 Edition) §570.704
properties with known or suspected en-
vironmental contamination, of build-
ings and improvements on real prop-
erty acquired or rehabilitated pursuant
to paragraphs (a) and (b) of this sec-
tion. Remediation may include project-
specific environmental assessment
costs not otherwise eligible under
§570.205.
(f) Site preparation, including con-
struction, reconstruction, installation
of public and other site improvements,
utilities or facilities (other than build-
ings), or remediation of properties (re-
mediation can include project-specific
environmental assessment costs not
otherwise eligible under §570.205) with
known or suspected environmental
contamination, which is:
(1) Related to the redevelopment or
use of the real property acquired or re-
habilitated pursuant to paragraphs (a)
and (b) of this section, or
(2) For an economic development
purpose.
(g) Payment of issuance, under-
writing, servicing, trust administra-
tion and other costs associated with
private sector financing of debt obliga-
tions under this subpart.
(h) Housing rehabilitation eligible
under §570.202.
(i) The following economic develop-
ment activities:
(1) Activities eligible under §570.203;
and
(2) Community economic develop-
ment projects eligible under §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 Develop-
ment Grants Program, 24 CFR part 850)
or title VI of the Housing and Commu-
nity Development Act of 1987 (Nehe-
miah Housing Opportunity Grants Pro-
gram, 24 CFR part 280).
(k) A debt service reserve to be used
in accordance with requirements speci-
fied in the contract entered into pursu-
ant to §570.705(b)(1).
(l) Acquisition, construction, recon-
struction, rehabilitation or historic
preservation, or installation of public
facilities (except for buildings for the
general conduct of government) to the
extent eligible under §570.201(c), in-
cluding public streets, sidewalks, other
site improvements and public utilities,
and remediation of known or suspected
environmental contamination in con-
junction with these activities. Remedi-
ation may include project-specific en-
vironmental assessment costs not oth-
erwise eligible under §570.205.
(m) In the case of applications by
public entities which are, or which con-
tain, ‘‘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 in-
stallation of public works and site or
other improvements which serve the
colonia.
[59 FR 66604, Dec. 27, 1994, as amended at 61
FR 11481, Mar. 20, 1996; 71 FR 30036, May 24,
2006]
§570.704 Application requirements.
(a) Presubmission and citizen participa-
tion requirements. (1) Before submission
of an application for loan guarantee as-
sistance to HUD, the public entity
must:
(i) Develop a proposed application
that includes the following items:
(A) The community development ob-
jectives the public entity proposes to
pursue with the guaranteed loan funds.
(B) The activities the public entity
proposes to carry out with the guaran-
teed loan funds. Each activity must be
described in sufficient detail, including
the specific provision of §570.703 under
which it is eligible and the national ob-
jective to be met, amount of guaran-
teed loan funds expected to be used,
and location, to allow citizens to deter-
mine the degree to which they will be
affected. The proposed application
must indicate which activities are ex-
pected 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 §570.705(b)(2). In
the case of applications by State-as-
sisted public entities, the description
shall note that pledges of grants will be
made by the State and by the public
entity.
(ii) Fulfill the applicable require-
ments in its citizen participation plan
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00170 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
161
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.704
developed in accordance with
§570.704(a)(2).
(iii) Publish community-wide its pro-
posed application so as to afford af-
fected citizens an opportunity to exam-
ine the application’s contents and to
provide comments on the proposed ap-
plication.
(iv) Prepare its final application.
Once the public entity has held the
public hearing and published the pro-
posed application as required by para-
graphs (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 appli-
cation. Upon completion, the public en-
tity must make the final application
available to the public. The final appli-
cation must describe each activity in
sufficient detail to permit a clear un-
derstanding of the nature of each activ-
ity, as well as identify the specific pro-
vision of §570.703 under which it is eli-
gible, 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 guar-
antee assistance is to be submitted by
an entitlement or nonentitlement pub-
lic entity simultaneously with the pub-
lic entity’s submission for its grant,
the public entity shall include and
identify in its proposed and final con-
solidated plan the activities to be un-
dertaken 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
received during the program year, and
the amount of guaranteed loan funds to
be used. The public entity shall also in-
clude in the consolidated plan a de-
scription of the pledge of grants, as re-
quired under §570.705(b)(2). In such
cases the proposed and final applica-
tion requirements of paragraphs
(a)(1)(i), (iii), and (iv) of this section
will be deemed to have been met.
(2) Citizen participation plan. The pub-
lic entity must develop and follow a de-
tailed citizen participation plan and
make the plan public. The plan must be
completed and available before the ap-
plication 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 consoli-
dated plan and for the guaranteed loan
funds to obtain citizens’ views on com-
munity development and housing
needs. The plan must set forth the pub-
lic entity’s policies and procedures for:
(i) Giving citizens timely notice of
local meetings and reasonable and
timely access to local meetings, infor-
mation, 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 in-
come anticipated to be generated by
the activities carried out with guaran-
teed loan funds;
(B) The range of activities that may
be undertaken with guaranteed loan
funds;
(C) The estimated amount of guaran-
teed loan funds (including program in-
come 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 poli-
cies developed under §570.606 for mini-
mizing displacement of persons as a re-
sult of its proposed activities.
(ii) Providing technical assistance to
groups representative of persons of low
and moderate income that request as-
sistance in developing proposals. The
level and type of assistance to be pro-
vided is at the discretion of the public
entity. Such assistance need not in-
clude the provision of funds to such
groups.
(iii) Holding a minimum of two pub-
lic hearings, each at a different stage
of the public entity’s program, for the
purpose of obtaining the views of citi-
zens and formulating or responding to
proposals and questions. Together the
hearings must address community de-
velopment and housing needs, develop-
ment of proposed activities and review
of program performance. At least one
of these hearings must be held before
submission of the application to obtain
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00171 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
162
24 CFR Ch. V (4–1–13 Edition) §570.704
the views of citizens on community de-
velopment and housing needs. Reason-
able notice of the hearing must be pro-
vided and the hearing must be held at
times and locations convenient to po-
tential or actual beneficiaries, with ac-
commodation for the handicapped. The
public entity must specify in its plan
how it will meet the requirement for a
hearing at times and locations conven-
ient to potential or actual bene-
ficiaries.
(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 op-
portunity to comment on, proposed ac-
tivities not previously included in an
application and activities which are
proposed to be deleted or substantially
changed in terms of purpose, scope, lo-
cation, 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’ com-
plaints and grievances, including the
procedures that citizens must follow
when submitting complaints and griev-
ances. 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 participa-
tion, particularly by low and moderate
income persons who reside in slum or
blighted areas, and other areas in
which guaranteed loan funds are pro-
posed to be used.
(b) Submission requirements. An appli-
cation for loan guarantee assistance
may be submitted at any time. The ap-
plication (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 §570.208.
(2) A schedule for repayment of the
loan which identifies the sources of re-
payment, together with a statement
identifying the entity that will act as
borrower and issue the debt obliga-
tions.
(3) A certification providing assur-
ance that the public entity possesses
the legal authority to make the pledge
of grants required under §570.705(b)(2).
(4) A certification providing assur-
ance that the public entity has made
efforts to obtain financing for activi-
ties described in the application with-
out the use of the loan guarantee, the
public entity will maintain documenta-
tion of such efforts for the term of the
loan guarantee, and the public entity
cannot complete such financing con-
sistent with the timely execution of
the program plans without such guar-
antee.
(5)–(6) [Reserved]
(7) The anti-lobbying statement re-
quired 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 guar-
anteed 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 under-
standings and assurances contained
therein, and directing and authorizing
the person identified as the official rep-
resentative 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 rep-
resentative to execute such documents
as may be required in order to imple-
ment the application and issue debt ob-
ligations 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 execu-
tion of the contract required by
§570.705(b);
(iii) Before submission of its applica-
tion to HUD, the public entity has:
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00172 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
163
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.704
(A) Furnished citizens with informa-
tion required by §570.704(a)(2)(i);
(B) Held at least one public hearing
to obtain the views of citizens on com-
munity development and housing
needs; and
(C) Prepared its application in ac-
cordance with §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 re-
quirements described in §570.704(a)(2).
(v) The public entity will affirma-
tively further fair housing, and the
guaranteed loan funds will be adminis-
tered 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 enti-
ties only.) In the aggregate, at least 70
percent of all CDBG funds, as defined
at §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 in-
come persons, as described in criteria
at §570.208(a).
(B) (For nonentitlement public enti-
ties 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 require-
ments governing displacement, reloca-
tion, real property acquisition, and the
replacement of low and moderate in-
come housing described in §570.606.
(viii) It will comply with the require-
ments of §570.200(c)(2) with regard to
the use of special assessments to re-
cover the capital costs of activities as-
sisted with guaranteed loan funds.
(ix) (Where applicable, the public en-
tity may also include the following ad-
ditional certification.) It lacks suffi-
cient resources from funds provided
under this subpart or program income
to allow it to comply with the provi-
sions of §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 pay-
ing such assessments in their behalf
from guaranteed loan funds.
(x) It will comply with the other pro-
visions of the Act and with other appli-
cable laws.
(9) In the case of an application sub-
mitted by a State-assisted public enti-
ty, certifications by the State that:
(i) It agrees to make the pledge of
grants required under §570.705(b)(2).
(ii) It possesses the legal authority to
make such pledge.
(iii) At least 70 percent of the aggre-
gate use of CDBG grant funds received
by the State, guaranteed loan funds,
and program income during the one,
two, or three consecutive years speci-
fied by the State for its CDBG program
will be for activities that benefit low
and moderate income persons.
(iv) It agrees to assume the respon-
sibilities described in §570.710.
(c) HUD review and approval of appli-
cations. (1) HUD will normally accept
the certifications submitted with the
application. HUD may, however, con-
sider relevant information which chal-
lenges the certifications and require
additional information or assurances
from the public entity or State as war-
ranted by such information.
(2) The HUD Office shall review the
application for compliance with re-
quirements specified in this subpart
and forward the application together
with its recommendation for approval
or disapproval of the requested loan
guarantee to HUD Headquarters.
(3) HUD may disapprove an applica-
tion, or may approve loan guarantee
assistance for an amount less than re-
quested, for any of the following rea-
sons:
(i) HUD determines that the guar-
antee constitutes an unacceptable fi-
nancial risk. Factors that will be con-
sidered in assessing financial risk shall
include, but not be limited to, the fol-
lowing:
(A) The length of the proposed repay-
ment period;
(B) The ratio of expected annual debt
service requirements to expected an-
nual grant amount;
(C) The likelihood that the public en-
tity or State will continue to receive
grant assistance under this part during
the proposed repayment period;
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00173 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
164
24 CFR Ch. V (4–1–13 Edition) §570.705
(D) The public entity’s or State’s
ability to furnish adequate security
pursuant to §570.705(b), and
(E) The amount of program income
the proposed activities are reasonably
estimated to contribute toward repay-
ment of the guaranteed loan.
(ii) The requested loan amount ex-
ceeds any of the limitations specified
under §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 eligi-
ble under §570.703.
(vi) Activities to be undertaken with
the guaranteed loan funds do not meet
the criteria in §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 guar-
antee 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 dis-
approval. If the request is reduced or
disapproved, the public entity shall be
informed of the specific reasons for re-
duction or disapproval. If the request is
approved, HUD shall issue an offer of
commitment to guarantee debt obliga-
tions of the borrower identified in the
application subject to compliance with
this part, including the requirements
under §570.705(b), (d), (g) and (h) for se-
curing and issuing debt obligations, the
conditions for release of funds de-
scribed 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
change the purpose, scope, location, or
beneficiaries of an activity, the amend-
ment 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 §570.704(a)(2).
(d) Environmental review. The public
entity shall comply with HUD environ-
mental 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, responsibil-
ities and procedures governing the car-
rying out of environmental review re-
sponsibilities of public entities. All
public entities, including nonentitle-
ment public entities, shall submit the
request for release of funds and related
certification for each project to be as-
sisted with guaranteed loan funds to
the appropriate HUD Field Office.
(e) Displacement, relocation, acquisi-
tion, and replacement of housing. The
public entity (or the designated public
agency) shall comply with the displace-
ment, relocation, acquisition, and re-
placement of low/moderate-income
housing requirements in §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]
§570.705 Loan requirements.
(a) Limitations on commitments. (1) If
loan guarantee commitments have
been issued in any fiscal year in an ag-
gregate amount equal to 50 percent of
the amount approved in an appropria-
tion 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 lim-
ited to $35,000,000.
(ii) The amount any one nonentitle-
ment public entity may receive may be
limited to $7,000,000.
(iii) The amount any one public enti-
ty may receive may be limited to such
amount as is necessary to allow HUD
to give priority to applications con-
taining activities to be carried out in
areas designated as empowerment
zones/enterprise communities by the
Federal Government or by any State.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00174 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
165
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.705
(2) In addition to the limitations
specified in paragraph (a)(1) of this sec-
tion, the following limitations shall
apply.
(i) Entitlement public entities. No com-
mitment to guarantee shall be made if
the total unpaid balance of debt obliga-
tions guaranteed under this subpart
(excluding any amount defeased under
the contract entered into under
§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
§570.304 to the public entity.
(ii) States and State-assisted public en-
tities. No commitment to guarantee
shall be made if the total unpaid bal-
ance of debt obligations guaranteed
under this subpart (excluding any
amount defeased under the contract
entered into under §570.705(b)(1)) on be-
half 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 eligi-
ble under subpart F of this part. No com-
mitment to guarantee shall be made
with respect to a nonentitlement pub-
lic entity in an insular area or the
State of Hawaii if the total unpaid bal-
ance of debt obligations guaranteed
under this subpart (excluding any
amount defeased under the contract
entered into under §570.705(b)(1)) on be-
half of the public entity would thereby
exceed an amount equal to five times
the amount of the most recent grant
made pursuant to §570.429 or §570.440
(as applicable) to the public entity.
(A) The most recent grant approved
for the public entity pursuant to sub-
part 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
(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 assist-
ance, the public entity (and State and
designated public agency, as applica-
ble) shall:
(1) Enter into a contract for loan
guarantee assistance with HUD, in a
form acceptable to HUD, including pro-
visions for repayment of debt obliga-
tions 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 re-
quired for all loans with repayment pe-
riods of ten years or longer. Such other
security shall be specified in the con-
tract entered into pursuant to
§570.705(b)(1). Examples of other secu-
rity HUD may require are:
(i) Program income as defined in
§570.500(a);
(ii) Liens on real and personal prop-
erty;
(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.
Notwithstanding any other provision of
this part:
(1) Community Development Block
Grants allocated pursuant to section
106 of the Act (including program in-
come derived therefrom) may be used
for:
(i) Paying principal and interest due
(including such issuance, servicing, un-
derwriting, or other costs as may be in-
curred under paragraph (g) of this sec-
tion) on the debt obligations guaran-
teed under this subpart;
(ii) Defeasing such debt obligations;
and
(iii) Establishing debt service re-
serves as additional security pursuant
to paragraph (b)(3) of this section.
(2) HUD may apply grants pledged
pursuant to paragraph (b)(2) of this sec-
tion to any amounts due under the debt
obligations, the payment of costs in-
curred under paragraph (g) of this sec-
tion, 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.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00175 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
166
24 CFR Ch. V (4–1–13 Edition) §570.706
(d) Debt obligations. Debt obligations
guaranteed under this subpart shall be
in the form and denominations pre-
scribed by HUD. Such debt obligations
may be issued and sold only under such
terms and conditions as may be pre-
scribed by HUD. HUD may prescribe
the terms and conditions of debt obli-
gations, or of their issuance and sale,
by regulation or by contractual ar-
rangements authorized by section
108(r)(4) of the Act and paragraph (h) of
this section. Unless specifically pro-
vided 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 tax-
ation 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. Each public entity or
its designated public agency and each
State issuing debt obligations under
this subpart must pay the issuance, un-
derwriting, servicing, trust administra-
tion, and other costs associated with
the private sector financing of the debt
obligations. Such costs are payable out
of the guaranteed loan funds and shall
be secured under paragraph (b) of this
section.
(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 re-
spect to public offerings and other
sales of debt obligations under this
subpart upon such terms and condi-
tions as HUD deems appropriate;
(2) The right to enforce any such con-
tract 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]
§570.706 Federal guarantee; subroga-
tion.
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 guaran-
teed obligations. If HUD pays a claim
under a guarantee made under section
108 of the Act, HUD shall be fully sub-
rogated for all the rights of the holder
of the guaranteed debt obligation with
respect to such obligation.
[61 FR 11481, Mar. 20, 1996]
§570.707 Applicability of rules and
regulations.
(a) Entitlement public entities. The pro-
visions of subparts A, C, J, K and O of
this part applicable to entitlement
grants shall apply equally to guaran-
teed loan funds and other CDBG funds,
except to the extent they are specifi-
cally 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 re-
ceiving Community Development
Block Grants or program income to the
extent applicable, shall apply equally
to guaranteed loan funds and Commu-
nity Development Block Grants (in-
cluding program income derived there-
from) administered by the State under
the CDBG program, except to the ex-
tent they are specifically modified or
augmented by the provisions of this
subpart.
(c) Nonentitlement public entities eligi-
ble under subpart F of this part. The pro-
visions 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.
§570.708 Sanctions.
(a) Non-State assisted public entities.
The performance review procedures de-
scribed in subpart O of this part apply
to all public entities receiving guaran-
teed loan funds other than State-as-
sisted public entities. Performance de-
ficiencies in the use of guaranteed loan
funds made available to such public en-
tities (or program income derived
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00176 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
167
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.711
therefrom) or violations of the con-
tract entered into pursuant to
§570.705(b)(1) may result in the imposi-
tion of a sanction authorized pursuant
to §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 pro-
vision 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 §570.913 and/or
may take action as provided in the
contract for loan guarantee assistance.
(b) State-assisted public entities. Per-
formance deficiencies in the use of
guaranteed loan funds (or program in-
come derived therefrom) or violations
of the contract entered into pursuant
to §570.705(b)(1) may result in an action
authorized pursuant to §570.495 or
§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 §570.496 and/or may take action as
provided in the contract.
§570.709 Allocation of loan guarantee
assistance.
Of the amount approved in any ap-
propriation act for guarantees under
this subpart in any fiscal year, 70 per-
cent shall be allocated for entitlement
public entities and 30 percent shall be
allocated for States and nonentitle-
ment public entities. HUD need not
comply with these percentage require-
ments in any fiscal year to the extent
that there is an absence of applications
approvable under this subpart from en-
titlement public entities or from
States and nonentitlement public enti-
ties.
[74 FR 36389, July 22, 2009]
§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 deter-
mining which activities will be as-
sisted, 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 appli-
cable requirements governing the use
of the guaranteed loan funds. Notwith-
standing the State’s responsibilities
described in this section, HUD may
take any action necessary for ensuring
compliance with requirements affect-
ing 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]
§570.711 State borrowers; additional
requirements and application pro-
cedures.
This section contains additional re-
quirements and alternative application
procedures for guarantees of debt obli-
gations 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 Agen-
cies 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 Ap-
propriations 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 ad-
ditional 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. Notwith-
standing §570.702 and §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 applica-
tion shall consist of the following:
(1) A copy of the State’s CDBG meth-
od 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00177 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
168
24 CFR Ch. V (4–1–13 Edition) §570.800
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 amend-
ment, identify the maximum amount
of guaranteed loan funds for which the
State will apply during the period cov-
ered by the action plan, describe the
pledge of grants required under
§570.705(b)(2), and identify the non-
entitlement public entities in the
State that may be assisted with such
guaranteed loan funds (to satisfy this
requirement, the method of distribu-
tion may identify one or more specific
nonentitlement public entities that
may be assisted, or may indicate that
all or a specified subset of the non-
entitlement public entities in the
State may be assisted and describe how
applications will be selected for assist-
ance).
(2) Either:
(i) A description of each activity to
be carried out with the guaranteed
loan funds, including the specific provi-
sion of §570.703 under which the activ-
ity is eligible and how the activity
meets one of the criteria in §570.208; or
(ii) An indication of the type or types
of activities to be assisted, the provi-
sions of §570.703 under which such ac-
tivities are eligible, and the criteria in
§570.208 intended to be met, in which
case HUD shall require that the de-
scription 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 re-
payment.
(b) Distribution to Local Governments.
Proceeds payable to a State from the
issuance of debt obligations under this
subpart may be used only for:
(1) Loans and grants to the non-
entitlement public entities identified
in the State’s approved application for
activities eligible under §570.703; and
(2) The uses specified in paragraphs
(c), (g), and (k) of §570.703.
(c) Certification of need. Prior to ap-
proving a nonentitlement public enti-
ty’s application for assistance, the
State shall obtain a certification from
such public entity conforming to
§570.704(b)(4).
(d) Local government citizen participa-
tion requirements. The presubmission
and citizen participation requirements
in §570.704(a) and the third sentence of
§570.704(c)(5) shall not apply with re-
spect to nonentitlement public enti-
ties’ applications to a State for assist-
ance under this section. Nonentitle-
ment public entities shall comply with
the provisions of §570.486(a) with re-
spect to such applications and such as-
sistance.
(e) Environmental review; displacement,
relocation, acquisition, and replacement
of housing. Nonentitlement public enti-
ties assisted by a State under this sec-
tion shall comply with §570.704(d) and
(e).
[74 FR 36389, July 22, 2009]
Subpart N—Urban Renewal
Provisions
SOURCE: 41 FR 20524, May 18, 1976, unless
otherwise noted.
§570.800 Urban renewal regulations.
The regulations governing urban re-
newal projects and neighborhood devel-
opment programs in subpart N of this
part, that were effective immediately
before April 19, 1996, will continue to
govern the rights and obligations of re-
cipients 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.
§570.900 General.
(a) Performance review authorities—(1)
Entitlement, Insular Areas, and HUD-ad-
ministered Small Cities performance re-
views. Section 104(e)(1) of the Act re-
quires that the Secretary shall, at
least on an annual basis, make such re-
views and audits as may be necessary
or appropriate to determine whether
the recipient has carried out its activi-
ties in a timely manner, whether the
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00178 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
169
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.901
recipient has carried out those activi-
ties and its certifications in accord-
ance 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 Sec-
retary, at least on an annual basis, to
make such reviews and audits of recipi-
ents of Urban Development Action
Grants as necessary to determine
whether the recipient’s progress in car-
rying out the approved activities is
substantially in accordance with the
recipient’s approved plans and time-
tables.
(b) Performance review procedures.
This paragraph describes the review
procedures the Department will use in
conducting the performance reviews re-
quired 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 re-
viewing for compliance with the re-
quirements described in §570.901 and by
applying the performance criteria de-
scribed in §§570.902 and 570.903 relative
to carrying out activities in a timely
manner. The review criteria in §570.904
will be used to assist in determining if
the recipient’s program is being carried
out in compliance with civil rights re-
quirements.
(2) The Department will review
UDAG projects and activities to deter-
mine whether such projects and activi-
ties are being carried out substantially
in accordance with the recipient’s ap-
proved plans and schedules. The De-
partment will also review to determine
if the recipient has carried out its
UDAG program in accordance with all
other requirements of the Grant Agree-
ment and with all applicable require-
ments of this part.
(3) In conducting performance re-
views, HUD will primarily rely on in-
formation obtained from the recipi-
ent’s performance report, records
maintained, findings from monitoring,
grantee and subrecipient audits, audits
and surveys conducted by the HUD In-
spector General, and financial data re-
garding the amount of funds remaining
in the line of credit plus program in-
come. 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 pre-
scribed 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 recipi-
ent has not met a civil rights review
criterion in §570.904, the recipient will
be provided an opportunity to dem-
onstrate that it has nonetheless met
the applicable civil rights requirement.
(5) If HUD finds that a recipient has
failed to comply with a program re-
quirement or has failed to meet a per-
formance criterion in §570.902 or
§570.903, HUD will give the recipient an
opportunity to provide additional in-
formation concerning the finding.
(6) If, after considering any addi-
tional information submitted by a re-
cipient, HUD determines to uphold the
finding, HUD may advise the recipient
to undertake appropriate corrective or
remedial actions as specified in
§570.910. HUD will consider the recipi-
ent’s capacity as described in §570.905
prior to selecting the corrective or re-
medial actions.
(7) If the recipient fails to undertake
appropriate corrective or remedial ac-
tions which resolve the deficiency to
the satisfaction of the Secretary, the
Secretary may impose a sanction pur-
suant to §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]
§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 de-
termine if the recipient has carried out
its activities and certifications in com-
pliance with:
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00179 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
170
24 CFR Ch. V (4–1–13 Edition) §570.902
(a) The requirement described at
§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 activi-
ties that benefit low and moderate in-
come persons;
(b) The requirement described at
§570.200(a)(2) that each CDBG assisted
activity meets the criteria for one or
more of the national objectives de-
scribed at §570.208;
(c) All other activity eligibility re-
quirements 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 re-
quirements at §570.606;
(e) For HUD-administered Small Cit-
ies grants in New York, the citizen par-
ticipation requirements at §570.431, the
amendment requirements at §570.427,
and the displacement policy require-
ments of §570.606;
(f) For Insular Areas Program grants
only, the application and amendment
requirements at §570.440, the citizen
participation requirements at §570.441,
the displacement policy requirements
of §570.606, and the lead-based paint re-
quirements of 24 CFR 35.940;
(g) The grant administration require-
ments described in subpart J;
(h) Other applicable laws and pro-
gram requirements described in sub-
part K; and
(i) Where applicable, the require-
ments pertaining to loan guarantees
(subpart M) and urban renewal comple-
tions (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]
§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 recipi-
ent to determine whether each recipi-
ent is carrying out its CDBG-assisted
activities in a timely manner.
(a) Entitlement recipients and Non-enti-
tlement CDBG grantees in Hawaii. (1) Be-
fore the funding of the next annual
grant and absent contrary evidence
satisfactory to HUD, HUD will consider
an entitlement recipient or a non-enti-
tlement 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 con-
trol.
(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 in-
come 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, ex-
ceeds 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 con-
trol.
(3) In determining the appropriate
corrective action to take with respect
to a HUD determination that a recipi-
ent is not carrying out its activities in
a timely manner pursuant to para-
graphs (a)(1) or (a)(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 unex-
pended funds to a level that will fall
within the standard described in para-
graph (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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00180 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
171
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.903
which funds on hand have been obli-
gated by the recipient and its sub-
recipients for specific activities at the
time the finding is made and other rel-
evant information.
(b) HUD-administered Small Cities pro-
gram 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 ac-
tivities in a timely manner if the
schedule for carrying out its activities,
as contained in the approved applica-
tion (including any subsequent amend-
ment(s)), is being substantially met.
(c) Insular Areas recipients. (1) Before
the funding of the next annual grant
and absent contrary evidence satisfac-
tory to HUD, HUD will consider an In-
sular 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 con-
trol.
(2) Notwithstanding that the amount
of funds in the line of credit indicates
that the Insular Area recipient is car-
rying 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 ac-
tivities in a timely manner if:
(i) The amount of CDBG program in-
come 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, ex-
ceeds 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 con-
trol.
(3) In determining the appropriate
corrective action to take with respect
to a HUD determination that a recipi-
ent is not carrying out its activities in
a timely manner pursuant to para-
graphs (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 unex-
pended funds to a level that will fall
within the standards described in para-
graphs (c)(1) and (2) of this section
when HUD next measures the grantee’s
timeliness performance. For these pur-
poses, 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 reason-
able 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]
§570.903 Review to determine if the
recipient is meeting its consoli-
dated plan responsibilities.
The consolidated plan, action plan,
and amendment submission require-
ments referred to in this section are in
24 CFR part 91. For the purpose of this
section, the term consolidated plan in-
cludes an abbreviated consolidated
plan that is submitted pursuant to 24
CFR 91.235.
(a) Review timing and purpose. HUD
will review the consolidated plan per-
formance of each entitlement, Insular
Areas, and Hawaii HUD-administered
Small Cities grant recipient prior to
acceptance of a grant recipient’s an-
nual certification under 24 CFR
91.225(b)(3) to determine whether the
recipient followed its HUD-approved
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00181 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
172
24 CFR Ch. V (4–1–13 Edition) §570.904
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 con-
solidated 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 fol-
lowing its consolidated plan if it has
taken all of the planned actions de-
scribed in its action plan. This in-
cludes, but is not limited to:
(1) Pursuing all resources that the
grantee indicated it would pursue;
(2) Providing certifications of con-
sistency, 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 will-
ful inaction.
(c) Disapproval. If HUD determines
that a recipient has not met the cri-
teria 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 re-
cipient’s actions and lack of actions af-
fecting the provision of assistance cov-
ered by the consolidated plan within
its jurisdiction. Failure to so dem-
onstrate in a timely manner will be
cause for HUD to find that the recipi-
ent 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 con-
solidated plan performance report to
facilitate following the consolidated
plan, including the effects of such ac-
tions.
(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 para-
graph (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 require-
ments of the notice of fund avail-
ability, 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]
§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 certifi-
cations and civil rights requirements of
the Act relating to equal employment
opportunity, equal opportunity in serv-
ices, 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 con-
siderations of race, color, religion
where applicable, sex, national origin,
age or handicap, has treated some per-
sons less favorably than others, or
(ii) There is evidence that a policy,
practice, standard or method of admin-
istration, although neutral on its face,
operates to deny or affect adversely in
a significantly disparate way the provi-
sion of employment or services, bene-
fits 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
(iii) Where the Secretary required a
further assurance pursuant to §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 re-
view 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
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00182 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
173
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.905
rights certifications and fair housing
requirements of the Act. The Sec-
retary’s determination of whether
there has been compliance with the ap-
plicable requirements will be made
based on a review of the recipient’s per-
formance, evidence submitted by the
recipient, and all other available evi-
dence. The Department may also ini-
tiate 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
§570.602), prohibit discrimination in
any program or activity funded in
whole or in part with funds made avail-
able under this part.
(1) Review for equal employment oppor-
tunity. The Department will presume
that a recipient’s hiring and employ-
ment 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 cir-
cumstances, there has been a depriva-
tion of employment, promotion, or
training opportunities by a recipient to
any person within the meaning of sec-
tion 109. The extent to which persons of
a particular race, gender, or ethnic
background are represented in the
workforce may in certain cir-
cumstances be considered, together
with complaints, performance reviews,
and other information.
(2) Review of equal opportunity in serv-
ices, benefits and participation. The De-
partment will presume a recipient is
carrying out its programs and activi-
ties in accordance with the civil rights
certifications and requirements of the
Act. This presumption may be rebutted
where, based on the totality of cir-
cumstances, there has been a depriva-
tion of services, benefits, or participa-
tion 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 par-
ticipate in a program or activity may
in certain circumstances be considered,
together with complaints, performance
reviews, and other information.
(c) Fair housing review criteria. See
the requirements in the Fair Housing
Act (42 U.S.C. 3601–20), as well as
§570.601(a), which sets forth the grant-
ee’s responsibility to certify that it
will affirmatively further fair housing.
(d) Actions to use minority and women’s
business firms. The Department will re-
view a recipient’s performance to de-
termine if it has administered its ac-
tivities funded with assistance under
this part in a manner to encourage use
of minority and women’s business en-
terprises described in Executive Orders
11625, 12432 and 12138, and 24 CFR
85.36(e). In making this review, the De-
partment will determine if the grantee
has taken actions required under
§85.36(e) of this chapter, and will re-
view the effectiveness of those actions
in accomplishing the objectives of
§85.36(e) of this chapter and the Execu-
tive Orders. No recipient is required by
this part to attain or maintain any
particular statistical level of participa-
tion in its contracting activities by
race, ethnicity, or gender of the con-
tractor’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]
§570.905 Review of continuing capac-
ity to carry out CDBG funded ac-
tivities 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
in §570.901 or 570.902, HUD will under-
take a further review to determine
whether or not the recipient has the
continuing capacity to carry out its ac-
tivities in a timely manner. In making
the determination, the Department
will consider the nature and extent of
the recipient’s performance defi-
ciencies, types of corrective actions
the recipient has undertaken and the
success or likely success of such ac-
tions.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00183 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
174
24 CFR Ch. V (4–1–13 Edition) §570.906
§570.906 Review of urban counties.
In reviewing the performance of an
urban county, HUD will hold the coun-
ty accountable for the actions or fail-
ures to act of any of the units of gen-
eral local government participating in
the urban county. Where the Depart-
ment 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 activ-
ity 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 govern-
ment. 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 §570.307(b)(2).
§§570.907–570.909 [Reserved]
§570.910 Corrective and remedial ac-
tions.
(a) General. Consistent with the pro-
cedures described in §570.900(b), the
Secretary may take one or more of the
actions described in paragraph (b) of
this section. Such actions shall be de-
signed 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 dur-
ing the review of a recipient’s perform-
ance:
(1) Issue a letter of warning advising
the recipient of the deficiency and put-
ting the recipient on notice that addi-
tional action will be taken if the defi-
ciency is not corrected or is repeated;
(2) Recommend, or request the recipi-
ent to submit, proposals for corrective
actions, including the correction or re-
moval of the causes of the deficiency,
through such actions as:
(i) Preparing and following a sched-
ule of actions for carrying out the af-
fected CDBG activities, consisting of
schedules, timetables and milestones
necessary to implement the affected
CDBG activities;
(ii) Establishing and following a
management plan which assigns re-
sponsibilities for carrying out the ac-
tions 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 defi-
ciency and re-programming funds from
such affected activities to other eligi-
ble 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 defi-
ciency, mitigate (to the extent pos-
sible) the adverse effects or con-
sequences of the deficiency, and pre-
vent a recurrence of the deficiency;
(3) Advise the recipient that a certifi-
cation will no longer be acceptable and
that additional assurances will be re-
quired;
(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 require-
ments;
(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 sub-
part 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 cor-
rective action by the recipient. The
failure of the recipient to undertake
the actions specified in the condition
may result in a reduction, pursuant to
§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]
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00184 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
175
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.913
§570.911 Reduction, withdrawal, or
adjustment of a grant or other ap-
propriate action.
(a) Opportunity for an informal con-
sultation. Prior to a reduction, with-
drawal, or adjustment of a grant or
other appropriate action, taken pursu-
ant 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 proce-
dures described in §570.900(b), the Sec-
retary may make a reduction in the en-
titlement, 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 sever-
ity of the deficiency and may be for the
entire grant amount.
(c) HUD-administered small cities
grants. Consistent with the procedures
described in §570.900(b), the Secretary
may adjust, reduce or withdraw the
grant or take other actions as appro-
priate, except that funds already ex-
pended on eligible approved activities
shall not be recaptured or deducted
from future grants.
(d) Urban Development Action Grants.
Consistent with the procedures de-
scribed in §570.900(b), the Secretary
may adjust, reduce or withdraw the
grant or take other actions as appro-
priate, except that funds already ex-
pended on eligible approved activities
shall not be recaptured or deducted
from future grants made to the recipi-
ent.
[61 FR 11481, Mar. 20, 1996, as amended at 72
FR 12537, Mar. 15, 2007; 72 FR 46371, Aug. 17,
2007]
§570.912 Nondiscrimination compli-
ance.
(a) Whenever the Secretary deter-
mines that a unit of general local gov-
ernment which is a recipient of assist-
ance under this part has failed to com-
ply with §570.602, the Secretary shall
notify the governor of such State or
chief executive officer of such unit of
general local government of the non-
compliance and shall request the gov-
ernor or the chief executive officer to
secure compliance. If within a reason-
able period of time, not to exceed sixty
days, the governor or chief executive
officer fails or refuses to secure compli-
ance, the Secretary is authorized to:
(1) Refer the matter to the Attorney
General with a recommendation that
an appropriate civil action be insti-
tuted;
(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 §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 para-
graph (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 §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.
§570.913 Other remedies for non-
compliance.
(a) Action to enforce compliance. When
the Secretary acts to enforce the civil
rights provisions of Section 109, as de-
scribed in §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 op-
portunity 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 recipi-
ent;
(2) Reduce payments to the recipient
by an amount equal to the amount of
such payments which were not ex-
pended in accordance with this part; or
(3) Limit the availability of pay-
ments to programs or activities not af-
fected by such failure to comply.
Provided, however, that the Secretary
may on due notice suspend payments
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00185 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
176
24 CFR Ch. V (4–1–13 Edition) §570.913
at any time after the issuance of a no-
tice of opportunity for hearing pursu-
ant to paragraph (c)(1) of this section,
pending such hearing and a final deci-
sion, to the extent the Secretary deter-
mines such action necessary to pre-
clude 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 recipi-
ent 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 re-
cover the amount of the assistance fur-
nished 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 de-
scribed in paragraph (a) of this section:
(1) Notice of opportunity for hearing:
The Secretary shall notify the respond-
ent in writing of the proposed action
and of the opportunity for a hearing.
The notice shall:
(i) Specify, in a manner which is ade-
quate to allow the respondent to pre-
pare its response, allegations with re-
spect to a failure to comply substan-
tially with a provision of this part;
(ii) State that the hearing procedures
are governed by these rules;
(iii) State that a hearing may be re-
quested 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 Sec-
retary 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 cer-
tified mail, return receipt requested.
(2) Initiation of hearing. The respond-
ent shall be allowed at least 10 days
from receipt of the notice within which
to notify HUD of its request for a hear-
ing. If no request is received within the
time specified, the Secretary may pro-
ceed to make a finding on the issue of
compliance with this part and to take
the proposed action.
(3) Administrative Law Judge. Pro-
ceedings conducted under these rules
shall be presided over by an Adminis-
trative Law Judge (ALJ), appointed as
provided by section 11 of the Adminis-
trative 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 pro-
ceedings 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 affirma-
tions;
(ii) Issue subpoenas as authorized by
law;
(iii) Rule upon offers of proof and re-
ceive relevant evidence;
(iv) Order or limit discovery prior to
the hearing as the interests of justice
may require;
(v) Regulate the course of the hear-
ing and the conduct of the parties and
their counsel;
(vi) Hold conferences for the settle-
ment or simplification of the issues by
consent of the parties;
(vii) Consider and rule upon all proce-
dural and other motions appropriate in
adjudicative proceedings; and
(viii) Make and file initial determina-
tions.
(4) Ex parte communications. An ex
parte communication is any commu-
nication with an ALJ, direct or indi-
rect, oral or written, concerning the
merits or procedures of any pending
proceeding which is made by a party in
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00186 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
177
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD §570.913
the absence of any other party. Ex
parte communications are prohibited
except where the purpose and content
of the communication have been dis-
closed in advance or simultaneously to
all parties, or the communication is a
request for information concerning the
status of the case. Any ALJ who re-
ceives an ex parte communication
which the ALJ knows or has reason to
believe is unauthorized shall promptly
place the communication, or its sub-
stance, 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 hear-
ing by counsel. The ALJ shall conduct
the proceedings in an expeditious man-
ner while allowing the parties to
present all oral and written evidence
which tends to support their respective
positions, but the ALJ shall exclude ir-
relevant, immaterial or unduly repeti-
tious evidence. The Department has
the burden of proof in showing by a
preponderance of the evidence that the
respondent failed to comply substan-
tially 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 or-
derly conduct of the hearing permits,
interested persons other than the par-
ties may appear and participate in the
hearing.
(6) Transcripts. Hearing shall be re-
corded and transcribed only by a re-
porter under the supervision of the
ALJ. The orginal transcript shall be a
part of the record and shall constitute
the sole official transcript. Respond-
ents and the public, at their own ex-
pense, may obtain copies of the tran-
script.
(7) The ALJ’s decision. At the conclu-
sion of the hearing, the ALJ shall give
the parties a reasonable opportunity to
submit proposed findings and conclu-
sions 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 dis-
cretion presented on the record and the
appropriate sanction or denial thereof.
The decision shall be based on consid-
eration of the whole record or those
parts thereof cited by a party and sup-
ported by and in accordance with the
reliable, probative, and substantial evi-
dence. A copy of the decision shall be
furnished to the parties immediately
by certified mail, return receipt re-
quested, and shall include a notice that
any requests for review by the Sec-
retary must be made in writing to the
Secretary within 30 days of the receipt
of the decision.
(8) The record. The transcript of testi-
mony and exhibits, together with the
decision of the ALJ and all papers and
requests filed in the proceeding, con-
stitutes the exclusive record for deci-
sion 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 deci-
sion 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 ex-
ception and request for review by the
Secretary. The excepting party must
transmit simultaneously to the Sec-
retary 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 except-
ing 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 re-
view, the Secretary shall issue a writ-
ten determination, including a state-
ment of the reasons or basis therefor,
affirming, modifying or revoking the
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.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00187 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
178
24 CFR Ch. V (4–1–13 Edition) Pt. 570, App. A
(10) Judicial review. The respondent
may seek judicial review of the Sec-
retary’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]
APPENDIX A TO PART 570—GUIDELINES
AND OBJECTIVES FOR EVALUATING
PROJECT COSTS AND FINANCIAL RE-
QUIREMENTS
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 develop-
ment 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 manda-
tory. However, grantees electing not to use
these underwriting guidelines would be ex-
pected to conduct basic financial under-
writing prior to the provision of CDBG finan-
cial 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 govern-
ment conduct basic financial underwriting
prior to the provision of CDBG financial as-
sistance 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 pro-
posed project, and in the case of a microen-
terprise 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 under-
writing criteria, to also take these factors
into account. For example, a recipient ad-
ministering a program providing only tech-
nical 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 fi-
nancial support;
(4) that the project is financially feasible;
(5) that to the extent practicable, the re-
turn 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 rea-
sonableness. The amount of time and re-
sources 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 re-
viewer 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 re-
viewer to help determine the reasonableness
of cost elements below $10,000 when the re-
viewer evaluates projects infrequently or if
the reviewer is less experienced in cost esti-
mations. If a recipient does not use third-
party price quotations to verify cost ele-
ments, then the recipient would need to con-
duct its own cost analysis using appropriate
cost estimating manuals or services.
ii. The recipient should pay particular at-
tention to any cost element of the project
that will be carried out through a non-arms-
length transaction. A non-arms-length trans-
action 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 financ-
ing. 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 pro-
ceed. 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 fi-
nance the project; all participating parties
providing those funds have affirmed their in-
tention to make the funds available; and the
participating parties have the financial ca-
pacity to provide the funds.
3. Avoid substitution of CDBG funds for non-
Federal financial support. i. The recipient
should review the economic development
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00188 Fmt 8010 Sfmt 8002 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
179
Ofc. of Asst. Secy., Comm. Planning, Develop., HUD Pt. 570, App. A
project to ensure that, to the extent prac-
ticable, CDBG funds will not be used to sub-
stantially 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 develop-
ment. To reach this determination, the re-
cipient’s reviewer would conduct a financial
underwriting analysis of the project, includ-
ing reviews of appropriate projections of rev-
enues, expenses, debt service and returns on
equity investments in the project. The ex-
tent 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 fac-
tors 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 commu-
nity. If the project’s total cost is one that
would normally fall within the range that fi-
nancial institutions participate, then the re-
cipient should normally determine the fol-
lowing:
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 fi-
nancial underwriting and loan approval ac-
tions 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 capac-
ity of the entrepreneur(s) to make additional
financial investments.
iii. If the recipient is assisting a microen-
terprise 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 fi-
nancing are not available (at terms appro-
priate for such financing) in the community
to serve the low- or moderate-income entre-
preneur.
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 reason-
able chance for the project’s success, the re-
cipient should evaluate the financial viabil-
ity of the project. A project would be consid-
ered financially viable if all of the assump-
tions about the project’s market share, sales
levels, growth potential, projections of rev-
enue, project expenses and debt service (in-
cluding 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). Gen-
erally 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 pro-
jections should take these factors into ac-
count 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 in-
vestment. The recipient should carefully ex-
amine 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 over-
stating some of the project’s operating ex-
penses 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 under-
writing reviews carried out earlier, the re-
cipient 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 finan-
cial feasibility.
5. Return on equity investment. To the ex-
tent practicable, the CDBG assisted activity
should provide not more than a reasonable
return on investment to the owner of the as-
sisted 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 in-
vestment given industry rates of return for
that investment, local conditions and the
risk of the project.
6. Disbursement of CDBG funds on a pro rata
basis. To the extent practicable, CDBG funds
used to finance economic development ac-
tivities should be disbursed on a pro rata
basis with other funding sources. Recipients
should be guided by the principle of not plac-
ing CDBG funds at significantly greater risk
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00189 Fmt 8010 Sfmt 8002 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
180
24 CFR Ch. V (4–1–13 Edition) Pt. 572
1See §572.420(a) concerning the availability
of OMB Circulars.
than non-CDBG funds. This will help avoid
the situation where it is learned that a prob-
lem has developed that will block the com-
pletion 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 po-
sition of having to provide additional financ-
ing to complete the project or watch the po-
tential loss of its funds if the project is not
able to be completed. When the recipient de-
termines that it is not practicable to dis-
burse CDBG funds on a pro rata basis, the re-
cipient should consider taking other steps to
safeguard CDBG funds in the event of a de-
fault, such as insisting on securitizing assets
of the project.
[60 FR 1953, Jan. 5, 1995]
PART 572—HOPE FOR HOMEOWN-
ERSHIP OF SINGLE FAMILY
HOMES PROGRAM (HOPE 3)
Subpart A—General
Sec.
572.1 Overview of HOPE 3.
572.5 Definitions.
572.10 Section 8 assistance.
Subpart B—Homeownership Program
Requirements—Implementation Grants
572.100 Acquisition and rehabilitation of eli-
gible properties; rehabilitation stand-
ards.
572.105 Financing the purchase of properties
by eligible families.
572.110 Identifying and selecting eligible
families for homeownership.
572.115 Transfer of homeownership inter-
ests.
572.120 Affordability standards.
572.125 Replacement reserves.
572.130 Restrictions on resale by initial
homeowners.
572.135 Use of proceeds from sales to eligible
families, resale proceeds, and program
income.
572.140 Third party rights.
572.145 Displacement prohibited; protection
of nonpurchasing residents.
Subpart C—Grants
572.200 Planning grants.
572.205 Planning grants—eligible activities.
572.210 Implementation grants.
572.215 Implementation grants—eligible ac-
tivities.
572.220 Implementation grants—matching
requirements.
572.225 Grant agreements; corrective and re-
medial actions.
572.230 Cash and Management Information
(C/MI) System.
572.235 Amendments.
Subpart D—Selection Process
572.300 Notices of funding availability
(NOFAs); grant applications.
572.315 Rating criteria for planning grants.
Subpart E—Other Federal Requirements
572.400 Consolidated plan.
572.405 Nondiscrimination and equal oppor-
tunity requirements.
572.410 Environmental procedures and
standards.
572.415 Conflict of interest.
572.420 Miscellaneous requirements.
572.425 Recordkeeping and reports; audit of
recipients.
AUTHORITY: 42 U.S.C. 3535(d) and 12891.
SOURCE: 58 FR 36526, July 7, 1993, unless
otherwise noted.
Subpart A—General
§572.1 Overview of HOPE 3.
The purpose of the HOPE for Home-
ownership of Single Family Homes pro-
gram (HOPE 3) is to provide homeown-
ership opportunities for eligible fami-
lies to purchase Federal, State, and
local government-owned single family
properties. HOPE 3 provides grants to
eligible applicants to plan and imple-
ment homeownership programs de-
signed to meet the needs of low-income
first-time homebuyers.
[58 FR 36526, July 7, 1993, as amended at 61
FR 48797, Sept. 16, 1996]
§572.5 Definitions.
The terms HUD, Indian Housing Au-
thority (IHA), NAHA, 1937 Act, NOFA,
and Public Housing Agency (PHA) are
defined in 24 CFR part 5.
Administrative costs means reasonable
and necessary costs, as described and
valued in accordance with OMB Cir-
cular No. A–87 or A–1221 as applicable,
incurred by a recipient in carrying out
a homeownership program under this
part. For purposes of complying with
the 15 percent limitation in §572.215(o),
administrative costs do not include the
costs of activities that are separately
eligible under §572.215.
VerDate Mar<15>2010 14:40 May 03, 2013 Jkt 229082 PO 00000 Frm 00190 Fmt 8010 Sfmt 8010 Y:\SGML\229082.XXX 229082erowe on DSK2VPTVN1PROD with CFRDocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
CA 11/4/2022
EXHIBIT “D”
CITY OF CARLSBAD
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
CONSTRUCTION PROJECT
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
P.O. Box 121831, San Diego, California 92112-1831 * Tel. (619) 323-2841 * Fax (619) 234-2272
Member Agency of United Way * Member Agency of Catholic Charities USA
CATHOLIC CHARITIES
Administration RESOLUTION 21-21
WHEREAS:
A. Catholic Charities, Diocese of San Diego (CCDSD) is a nonprofit corporation; and
B. CCDSD is eligible to apply for and receive, during calendar year 2022, public and private funds:
NOW THEREFORE LET IT BE RESOLVED THAT:
1. The Board of Directors of CCDSD and the Chair, hereby authorize Appaswamy “Vino” Pajanor, the Chief Executive Officer, to apply for, negotiate, and administer the final terms of funding agreements/contracts, revisions, amendments, extensions and renewals with public and private entities, and to sign them on behalf of CCDSD. AYES: __16___ ABSTENTIONS: __0____
NOES: __0___ ABSENT: __5___
PASSED AND ADOPTED by the Catholic Charities Board of Directors this 2nd day of December 2021.
________________________________ ______________________________ Rev. Bruce Orsborn Tom Maddox
Chair Secretary
DocuSign Envelope ID: B6E20ECC-3A0C-4D3B-8D18-99243D1E3BB5DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
cr Catholic
Charities
DIOCESE OF SAN DIEGO
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B
□ □
presentatives. ,. , . '"""'f j ../ (i d t
~
" I. er I_.
.
I -
I V I
DocuSign Envelope ID: 968D30E0-3B7C-4C2F-B807-A67ED49A3E3B