HomeMy WebLinkAboutHUD bookletPARAGRAPH
TABLE OF CONTENTS
INTRODUCTION
1-1. Purpose
1-2. Scope
1-3. How to Cite a HUD Regulation
SECTION
•�4
Subpart A -- General Provisions.
570.1 Purpose.
570.2 Primary objective.
570.3 Definitions.
570.4 Allocation of funds.
570.5 Waivers.
Subpart C -- Eligible Activities.
570.200
General policies.
570.201
Basic eligible activities.
570.202
Eligible rehabilitation and preservation
activities.
570.203
Special economic development activities.
570.204
Special activities by certain subrecipients.
570.205
Eligible planning, urban environmental
design and policy -planning -management
capacity building activities.
570.206
Program administrative costs.
570.207
Ineligible activities.
570.208
Criteria for national objectives.
i
PAGE
A-1
A-1
A-2
A-8
A-10
C-1
C-8
C-12
C-14
C-15
C-17
C-18
C-21
C-24
SECTION PAGE
Subpart D -- Entitlement Grants.
570.300
General.
D-1
570.301
Presubmission requirements.
D--1
570.302
Submission requirements.
D-3
570.303
Certifications.
D-4
570.304
Making of grants.
D--6
570.305
Amendments.
D--7
570.306
Housing assistance plan.
D-7
570.307
Urban counties.
D-14
570.308
Joint requests.
D-16
Subpart J -- Grant Administration.
570.500
Definitions.
J-1
570.501
Responsibility for grant administration.
J-3
570.502
Applicability of uniform administrative
requirements.
J-3
570.503
Agreements with subrecipients.
1-5
570.504
Program income.
1-7
570.505
Use of real property.
J-8
570.506
Records to be maintained.
J-9
570.507
Reports.
J-16
570.508
Public access to program records.
J-18
570.509
Grant closeout procedures.
J-18
570.510
Transferring projects from urban counties
to metropolitan cities.
J-20
570.511
Reserved.
J-21
570.5.12
Reserved.
J-21
570.513
Lump sum drawdowns for financing of property
rehabilitation activities.
J--22
Subpart K -- Other Program Requirements.
570.600
General.
K-1
570.601
Public Law 88-352 and Public Law 90-284;
affirmatively furthering fair housing;
and Executive Order 11063.
K-2
570.602
Section 109 of the Act.
K-3
570.603
Labor standards.
K-6
570.604
Environmental standards.
K-6
570.605
National Flood Insurance Program.
K-7
570.606
Relocation, displacement and acquisition.
K-7
570.607
Employment and contracting opportunities.
K-17
ii
SECTION PAGE
Subpart K -- Other Program Requirements
Continued
570.608 Lead-based paint. K-17
570.609 Use of debarred, suspended, or ineligible
contractors or subrecipients. K-22
570.610 Uniform administrative requirements and cost
principles. K-22
570.611 Conflict of interest. K-22
570.612 Executive Order 12372. K-24
Subpart M -- Loan Guarantees.
570.700 Eligible applicants. M-1
570.701 Eligible activities. M-1
570.702 Application requirements. M-2
570.703 Loan requirements. M-5
570.704 Federal guarantee. M-7
570.705 Applicability of rules and regulations. M-7
570.706 Sanctions. M-7
Subpart O -- Performance Reviews
570.900
General.
0-1
570.901
Review for compliance with the primary
and national objectives and other
program requirements.
0-3
570.902
Review to determine if CDBG funded
activities are being carried out in
a timely manner.
0-4
570.903
Review to determine if the housing
assistance plan (HAP) is being carried
out in a timely manner.
0-5
570.904
Equal Opportunity and Fair Housing
review criteria.
O-6
570.905
Review of continuing capacity to carry out
CDBG funded activities in a timely manner.
0-10
570.906
Review of urban counties.
0-10
570.907
Reserved.
0-10
570.909
Reserved.
0-10
570.910
Corrective and remedial actions.
0-11
570.911
Reduction, withdrawal, or adjustment of
a grant or other appropriate action.
0-12
570.912
Nondiscrimination compliance.
0-13
570.913
Other remedies for noncompliance.
0-13
iii
CHAPTER 1.
INTRODUCTION
PURPOSE. This handbook sets forth HUD requirements
implementing the provisions of Title I of the Housing and
Community Development Act of 1974 governing the Community
Development Block Grant (CDBG) Entitlement program. The
Handbook is provided in loose leaf form so that individual
pages or sections can be easily updated.
1-2. SCOPE. The Handbook contains the regulations for the CDBG
program Part 570, Subparts A, C, D, J, K, M and O.
1-3. HOW TO CITE A HUD REGULATION. Following is an example in
citing a requirement of the Community. Development Block
Grant Regulations. (24 C.F.R. Part 570):
Code of Federal Regulations
Sectio
24CFR570.50
Part
Title
1-1
Paragraph
n
(b)(1)
Paragraph
Subpart A -- General Provisions.
4!m
570.1
Purpose.
570.2
Primary objective.
570.3
Definitions.
570.4
Allocation of funds.
570.5
Waivers.
Subpart A -- General Provisions.
S 570.1 Purpose.
(a) This part describes policies and procedures applicable to the
following programs authorized under Title I of the Housing and
Cotmnuiity Development Act of 1974, as amended:
(1) Entitlement grants program (Subpart D);
(2) Small Cities program: HUD administered CDBG nonentitlement
funds (Subpart F);
(3) State program: State -administered CDBG nonentitlement funds
(Subpart I);
(4) Secretary's Fund program (Subpart E);
(5) Urban Development Action Grant program (Subpart G); and
(6) Loan Guarantees (Subpart M).
(b) Subparts A, C, J, K, and O apply to all programs in paragraph (a)
except as modified or limited under the provisions of these
subparts or the applicable program regulations. In the
application of the subparts to the Secretary's Fund program or the
Urban Development Action Grant program, the reference to funds in
the form of grants in the term "CDBG funds," as defined in
S 570.3(e), 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.
S 570.2 Primary Objective.
The primary objective of Title I of the Housing and Community
Development Act of 1974, as amended, and of the community development
program of each grantee under the Title is the development of viable
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urban coma pities, by providing decent housing and a suitable living
environment and expanding economic opportunities, principally for
persons of low and moderate income. Consistent with this primary
objective, not less than 60 percent of CDBG funds received by the
grantee under Subparts D, F, and M shall be used in accordance with the
applicable requirements of those subparts for activities that benefit
persons of low and moderate income.
5 570.3 Def ixLitions.
(a) "Act" means Title I of the Housing and Community Development Act
of 1974 as amended (42 U.S.C. 5301 et seq.).
(b) "Age of housing" means the number of existing year-round housing
units constructed in 1939 or earlier, based on data compiled by
the United States Bureau of the Census referable to the same point
or period of time available from the latest decennial census.
(c) "Applicant" means a State, unit of general local government, or an
Indian tribe which makes application pursuant to the provisions of
Subparts E, F, G or M.
(d) "Buildings for the general conduct of government" means city
halls, county administrative buildings, State capitol or office
buildings or other facilities in which the legislative, judicial
or general administrative affairs of the government are conducted.
Such term does not include such facilities as neighborhood service
centers or special purpose buildings located in low and moderate
income areas that house various nonlegislative functions or
services provided by government at decentralized locations.
(e) "CDBG funds" means Community Development Block Grant funds,
including funds received in the form of grants under Subparts D or
F, loans guaranteed under Subpart M, urban renewal surplus grant
funds under Subpart N, and program income defined in
S 570.500(x).
(f) "Chief Executive Officer" of a State or unit of general local
government means the elected official or the legally designated
official, who has the primary responsibility for the conduct of
that entity's governmental affairs. Examples of the "chief
executive officer" of a unit of general local government are: the
elected mayor of a municipality; the elected county executive of a
county; the chairperson of a county commission or board in a
county that has no elected county executive; and the official
designated pursuant to law by the governing body of a unit of
general local government.
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(9)(1) "City" means, for purposes of Entitlement Community
Development Block Grant and Urban Development Action Grant
eligibility:
(i) Any unit of general local government which is classified
as a municipality by the United States Bureau of the
Census or
(ii) Any other unit of general local government which is a
town or township and which, in the determination of the
Secretary:
(A) Possesses powers and performs functions comparable
to those associated with municipalities;
(B) Is closely settled (except that the Secretary may
reduce or waive this requirement on a case by case
basis for the purposes of the Action Grant
program) ; and
(C) Contains within its boundaries no incorporated
places as defined by the United States Bureau of
the Census which have not entered into cooperation
ay��o,=„ts with such 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.
(2) For purposes of Urban Development Action Grant eligibility
only, "city" means Cham, 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 which are eligible recipients under the
State and Local GovG-L,u,m,,t Fiscal Assistance Act of 1972 and
located on reservations or on former Indian reservations in
Oklahoma as determined by the Secretary of the Interior or in
Alaskan Native Villages.
(h) "Discretionary grant" means a grant made from the Secretary's Fund
in accordance with Subpart E.
(i) "Entitlement amount" means the amount of funds which a
metropolitan city is entitled to receive under the Entitlement
grant program, as determined by formula set forth in section 106
of the Act.
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(j) "Extent of growth lag" means the number of persons who would have
been residents in a metropolitan city or urban county, in excess
of the current population of such metropolitan city or urban
county, if such metropolitan city or urban county had a population
growth rate between 1960 and the date of the most recent
population count available from the United States Bureau of the
Census referable to the same point or period in time equal to the
population growth rate for such period of all metropolitan
cities.
(k) "Extent of housing overcrowding" means the number of housing units
with 1.01 or more persons per room based on data compiled and
published by the United States Bureau of the Census available from
the latest census referable to the same point or period in time.
(1) "Extent of poverty" means the number of persons whose incomes are
below the poverty level based on data compiled and published by
the United States Bureau of the Census available from the latest
census referable to the same point or period in time and the
latest reports from the Office of Management and Budget. For
purposes of this part, the Secretary has determined that it is
neither feasible nor appropriate to make adjustments at this time
in the computations of "extent of poverty" for regional or area
variations in income and cost of living.
(m) "Family" means all persons living in the same household who are
related by birth, marriage or adoption.
(n) "Household" means all the persons who occupy a housing unit. The
occupants may be a single family, one person living alone, two or
more families living together, or any other group of related or
unrelated persons who share living arrangements.
(o) "HUD" means the Department of Housing and Urban Development.
(p) "Indian tribe" means any Indian tribe, band, group, and nation,
including Alaska Indians, Aleuts, and Eskimos and any Alaska
Native Village, of the United States which is considered an
eligible recipient under the Indian Self -Determination and
Education Assistance Act (Public Law 93-638) or under the State
and Local Fiscal Assistance Act of 1972 (Public Law 92-512).
(q) "Low and moderate income household" or "lower income household"
means a household having an income equal to or less than the
Section 8 lower income limits established by HUD. The method for
determining income under the Section 8 Housing Assistance Payments
program need not be used for this purpose.
A-4 5/89
(r) ,Low and moderate income person" or "lower income person" means a
member of a family having an income equal to or less than the
Section 8 lower income limit established by HUD. Unrelated
individuals shall be considered as one person families for this
purpose. The method for determining income under the Section 8
Housing Assistance Payments program need not be used for this
purpose.
(s) "Loa income household" means a household having an income equal to
or less than the Section 8 very low income limit established by
HUD. The method for determining income under the Section 8
Housing Assistance Payments program need not be used for this
purpose.
(t) "Low income person" means a member of a family having an income
equal to or less than the Section 8 very low income limit
established by HUD. Unrelated individuals shall be considered as
one person families for this purpose. The method for determining
income under the Section 8 Housing Assistance Payments program
need not be used for this purpose.
(u) "Metropolitan area" means a metropolitan statistical area, as
established by the Office of Management and Budget.
(v) "Metropolitan city" means:
(1) A city within a metropolitan area which is the central city
of such area, as defined and used by the Office of Management
and Budget, or
(2) Any other city, within a metropolitan area, which has a
population of fifty thousand or more.
(3) (i) Each city losing its classification as a metropolitan
city by reason of a decrease in population or revisions
in the designation of metropolitan areas or central
cities, or any city classified as or deemed by law to be
a metropolitan city for purposes of assistance under any
section of the Act for fiscal year 1983 or any
subsequent fiscal year shall retain such qualification
for purposes of receiving such assistance through
September 30, 1989.
(ii) Any unit of general local government that becomes
eligible to be classified as a metropolitan city, and
was not classified as a metropolitan city in the
immediately preceding fiscal year, may, upon submission
of written notification to the Secretary, defer its
classification as a metropolitan city for all purposes
under the Act, if it elects to have its population
included in an urban county.
A-5 5/89
(iii) Notwithstanding paragraph (v)(3)(i) of this definition,
a city may elect not to retain its classification as a
metropolitan city for fiscal year 1988 or 1989.
(iv) Any city classified as a metropolitan city pursuant to
paragraph (v)(1), (2) or (3)(i) of this definition, and
that no longer qualifies as a metropolitan city under
paragraph (v)(1), (2) or (3)(i) of this definition in a
fiscal year beginning after fiscal year 1989, shall
retain its classification as a metropolitan city for
such fiscal year and the succeeding fiscal year, except
that in such succeeding fiscal year the amount of the
grant to such city shall be 50 percent of the amount
calculated under section 106(b) of the Act; and the
remaining 50 percent shall be added to the amount
allocated under section 106(d) of the Act to the State
in which the city is located and the city shall be
eligible in such succeeding fiscal year to receive a
distribution from the State allocation under section
106(d) of the Act.
(w) "Moderate income household" means a household having an income
equal to or less than the Section 8 lower income limit and greater
than the Section 8 very low income limit, established by HUD. The
method for determining income under the Section 8 Housing
Assistance Payments program need not be used for this purpose.
(x) "Moderate income person" means a member of a family having an
income equal to or less than the Section 8 lower income limit and
greater than the Section 8 very low income limit, established by
HUD. Unrelated individuals shall be considered as one person
families for this purpose. The method for determining income
under the Section 8 Housing Assistance Payments program need not
be used for this purpose.
(y) "Nonentitlenent 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.
(z) "Nonentitlement area" means an area which is not a metropolitan
city and not included as part of an urban county.
(aa) "Population" means the total resident population based on data
compiled and published by the United States Bureau of the Census
available from the latest census or which has been upgraded by the
Bureau to reflect the changes resulting from the Boundary and
Annexation Survey, new incorporations and consolidations of
governments pursuant to 5 570.4, and which reflects, where
applicable, changes resulting from the Bureau's latest population
A-6 5/89
determination through it estimating technique using natural
changes (birth and death) and net migration, and is referable to
the same point or period in time.
(bb) "Secretary" means the Secretary of Housing and Urban Development.
(cc) "State" means any State of the United States, or an
instrumentality thereof approved by the Governor; and the
Commonwealth of Puerto Rico.
(dd) "Unit of general local government" means any city, county, town,
township, parish, village or other general purpose political
subdivision of a State; Guam, the Northern Mariana Islands, the
Virgin Islands, and American Samoa or a general purpose political
subdivision thereof; a combination of such political subdivisions
recognized by the Secretary; the District of Columbia; and the
Trust Territory of the Pacific Islands. Such term also includes a
State or a local public body or agency (as defined in section 711
of the Housing and Urban Development Act of 1970), a community
association, or other entity, which is approved by the Secretary
for the purpose of providing public facilities or services to a
new community as part of a program meeting the eligibility
standards of section 712 of the Housing and Urban Development Act
of 1970 or title IV of the Housing and Urban Development Act of
1968.
(ee)
(1) The term "urban county" means any county within a
metropolitan area which --
(i) is authorized under State law to undertake essential
community development and housing assistance activities
in its unincorporated areas, if any, which are not units
of general local and
(ii) has a population of 200,000 or more (excluding the
population of metropolitan cities therein) and has a
combined population of 100,000 or more (excluding the
population of metropolitan cities therein) in such
unincorporated areas and in its included units of
general local goNfr-.L,L,K--„t (and in the case of counties
having a combined population of less than 200,000, the
areas and units of general local government must include
the areas and units of general local government which in
the aggregate have the preponderance of the persons of
low and moderate income who reside in the county
excluding metropolitan cities therein) in which it has
authority to undertake essential community development
and housing assistance activities and which do not elect
A--7 5/89
to have their population excluded, or with which it has
entered into cooperation agreements to undertake or to
assist in the undertaking of essential community
development and housing assistance activities.
(2) The term "urban county" also includes any other county
eligible under section 102(a)(6) of the Act.
(3) Any county classified as an urban county pursuant to
paragraph (ee)(1) or (2) of this definition, and that no
longer qualifies as an urban county under paragraph (ee)(1)
or (2) of this definition in a fiscal year beginning after
fiscal year 1989, shall retain its classification as an urban
county for such fiscal year and the succeeding fiscal year,
except that in such succeeding fiscal year the amount of the
grant to such an urban county shall be 50 percent of the
amount calculated under section 106(b) of the Act; and the
remaining 50 percent shall be added to the amount allocated
under section 106(d) of the Act to the State in which the
urban county is located and the urban county shall be
eligible in such succeeding fiscal year to receive a
distribution from the State allocation under section 106(d)
of the Act.
(4) in determining whether a county's combined population
contains the required percentage of low and moderate income
persons, the Department will identify the number of persons
that resided in applicable areas and units of general local
government based on data from the most recent decennial
census, and using income limits that would have applied for
the year in which that census was taken.
(ff) "Urban Development Action Grant" (UDAG) means a grant made by the
Secretary pursuant to section 119 of the Act and Subpart G of this
part.
§ 570.4 Allocation of funds.
(a) The determination of eligibility of units of general local
government to receive entitlement grants, the entitlement amounts,
the allocation of appropriated funds to States for use in
nonentitl®ment areas, the reallocation of funds, and the
allocation of appropriated funds for discretionary grants under
the Secretary's Fund shall be governed by the policies and
procedures described in sections 106 and 107 of the Act.
(b) The definitions in § 570.3 shall govern in applying the policies
and procedures described in sections 106 and 107 of the Act.
A-8 589
(c) In determining eligibility for entitlement and in allocating funds
under section 106 of the Act for any Federal fiscal year, HUD will
recognize corporate status and geographical boundaries and the
status of metropolitan areas and central cities effective as of
July 1 preceding such Federal fiscal year, subject to the
following limitations:
(1) With respect to corporate status as certified by the
applicable State and available for processing by the Census
Bureau as of such date;
(2) With respect to boundary changes or annexations, as are used
by the Census Bureau in preparing population estimates for
all general purpose governmental units and are available for
processing by the Census Bureau as of such date, except that
any such boundary changes or annexations which result in the
population of a unit of general local government reaching or
exceeding 50,000 shall be recognized for this purpose whether
or not such changes are used by the Census Bureau in
preparing such population estimates; and
(3) With respect to the status of Metropolitan Statistical Areas
and central cities, as officially designated by the Office of
Management and Budget as of such date.
(d) In determining whether a county qualifies as an urban county, and
in computing entitlement amounts for urban counties, the
demographic values of population, poverty, housing overcrowding,
and age of housing of any Indian tribes located within the county
shall be excluded. In allocating amounts to States for use in
nonentitle ent 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 seen
appropriate, regardless of the data's point or period of time and
shall use the best judgement possible in adjusting such data to
reflect the same point or period of time as the overall data from
which the Indian tribes are being deducted, so that such deduction
shall not create an imbalance with those overall data.
(e) Amounts remaining after closeout of a grant which are required to
be returned to HUD under the provisions of § 570.509, Grant
closeout procedures, shall be considered as funds available for
reallocation unless the appropriation under which the funds were
provided to the Department has lapsed.
A-9 5/89
5 570.5 Waivers.
The Secretary may waive any requirement of this part not required
by law whenever it is determined that undue hardship will result from
applying the requirement and where application of the requirement would
adversely affect the purposes of the Act.
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Subpart C -- Eligible Activities.
Sec.
570.200 General policies.
570.201 Basic eligible activities.
570.202 Eligible rehabilitation and preservation activities.
570.203 Special economic development activities.
570.204 Special activities by subrecipients.
570.205 Eligible planning, urban environmental design and
policy -planning -management -capacity building activities.
570.206 Program administrative costs.
570.207 Ineligible activities.
570.208 Criteria for national objectives.
Subpart C -- Eligible Activities.
S 570.200 General policies.
(a) Determination of eliibilitT, An activity may be assisted in
whole or in part witg CDBG funds only if all of the following
requirements are met:
(1) Compliance with section 105 of the Act. Each activity must
meet the eligibility requirements of section 105 of the Act
as further defined in this subpart.
(2) Compliance with national ob)ectives. Grant recipients under
the Entitlement and HUD -administered Small Cities programs
must certify that their projected use of funds has been
developed so as to give maximum feasible priority to
activities which will carry out one of the national
objectives of benefit to low and moderate income families or
aid in the prevention or elimination of slums or blight; the
projected use of funds may also include activities which the
recipient certifies are designed to meet other community
development needs having a particular urgency because
existing conditions pose a serious and immediate threat to
the health or welfare of the community where other financial
resources are not available to meet such needs. Consistent
with the foregoing, each recipient under the Entitlement and
HUD -administered Small Cities programs must ensure, and
maintain evidence, that each of its activities assisted with
CDBG funds meets one of the three national objectives as
contained in its certification. Criteria for determining
whether an activity addresses one or more of these objectives
are contained at S 570.208.
C-1 5/89
(3) CorTliance with the primary objective. The Act establishes
as its primary objective the development of viable urban
communities, by providing decent housing and a suitable
living environment and expanding economic opportunities,
principally for persons of low and moderate income.
Consistent with this objective, Entitlement and HUD -
administered Small Cities recipients must ensure that, over a
period of time specified in their certification not to exceed
three years, not less than 60 percent of the aggregate of
CDBG fund expenditures shall be for activities meeting the
criteria under § 570.208(a) for benefiting low and moderate
income persons. In determining the percentage of funds
expended for such activities:
(i) Cost of administration and planning eligible under
S 570.205 and S 570.206 will be assumed to benefit low
and moderate income persons in the same proportion as
the remainder of the CDBG funds and, accordingly shall
be excluded from the calculation;
(ii) Funds deducted by HUD for repayment of urban renewal
temporary loans pursuant to § 570.802(b) shall be
excluded;
(iii) Funds expended for the repayment of loans guaranteed
under the provisions of Subpart M shall also be
excluded;
(iv) Funds expended for the acquisition, new construction or
rehabilitation of property for housing that qualifies
under § 570.208(a)(3) shall be counted for this purpose
but shall be limited to an amount determined by
multiplying the total cost (including CDBG and non-CDBG
costs) of the acquisition, construction or
rehabilitation by the percent of units in such housing
to be occupied by low and moderate income persons; and
(v) Funds expended for any other activities qualifying under
§ 570.208(a) shall be counted for this purpose in their
entirety.
(4) Cm4)11ance with environmental review procedures. The
environmental review procedures set forth at 24 CFR Part 58
must be completed for each activity (or project as defined in
24 CFR Part 58), as applicable.
(5) Cost principles. Costs incurred, whether charged on a direct
or an indirect basis, must be in conformance with the
requirements of OMB Circulars A-87, "Cost Principles
Applicable to Grants and Contracts with State and Local
Governments," A-122, "Cost Principles for Non-profit
C-2 5/89
organizations," or A-21, "Cost Principles for Educational
Institutions," as applicable. All items of cost listed in
Attachment B of these Circulars which require prior Federal
agency approval are allowable without prior approval of HUD
to the extent they comply with the general policies and
principles stated in Attachment A of such Circulars and are
otherwise eligible under this subpart. However, pre -
costs are limited to those costs described at
§ 570.200(h).
(b) Special policies governing facilities. The following special
policies apply to:
(1) Facilities containing both eligible and ineligible uses. A
public facility otherwise eligible for assistance under the
CDBG program may be provided with CDBG funds even if it is
part of a multiple use building containing ineligible uses,
if:
(i) The facility which is otherwise eligible and proposed
for assistance will occupy a designated and discrete
area within the larger facility; and
(ii) The recipient can determine the costs attributable to
the facility proposed for assistance as separate and
distinct from the overall costs of the multiple -use
building and/or facility.
Allowable costs are limited to those attributable to the
eligible portion of the building or facility.
(2) Fees for use of facilities. Reasonable fees may be charged
for the use of the facilities assisted with CDBG funds, but
charges, such as excessive membership fees, which will have
the effect of precluding low and moderate income persons from
using the facilities, are not permitted.
(c) Special assessments under the CDBG program. The following
policies relate to special assessments under the CDBG program:
(1) Definition of special assessment. The term "special
assessment" means the recovery of the capital costs of a
public improvement, such as streets, water or sewer lines,
curbs, and gutters, through a fee or charge levied or filed
as a lien against a parcel of real estate as a direct result
of benefit derived from the installation of a public
improvement, or a one-time charge made as a condition of
access to a public improvement. This term does not relate to
taxes, or the establishment of the value of real estate for
the purpose of levying real estate, property, or ad valorem
taxes, and does not include periodic charges based on the use
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of a public improvement, such as water or sewer user charges,
even if such charges include the recovery of all or some
portion of the capital costs of the public improvement.
(2) Special assessments to recover capital costs. Where CDBG
funds are used to pay all or part of the cost of a public
improvement, special assessments may be imposed as follows:
(i) Special assessments to recover the CDBG funds may be
made only against properties owned and occupied by
persons not of low and moderate income. Such
assessments constitute program income.
(ii) Special assessments to recover the non-CDBG portion may
be made provided that CDBG funds are used to pay the
special assessment in behalf of all properties owned and
occupied by low and moderate income persons; except that
CDBG funds need not be used to pay the special
assessments in behalf of properties owned and occupied
by moderate income persons if the grant recipient
certifies that it does not have sufficient CDBG funds to
pay the assessments in behalf of all of the low and
moderate income owner -occupant persons. Funds collected
through such special assessments are not program
income.
(3) Public improvements not initially assisted with CDBG funds.
The payment of special assessments with CDBG funds
constitutes CDBG assistance to the public improvement.
Therefore, CDBG funds may be used to pay special assessments
provided:
(i) The installation of the public improvements was carried
out in compliance with requirements applicable to
activities assisted under this part including
environmental, citizen participation and Davis -Bacon
requirements;
(ii) The installation of the public improvement meets a
criterion for national objectives in § 570.208(a)(1),
(b), or (c); and
(iii) The requirements of S 570.200(c)(2)(ii) are met.
(d) Consultant activities. Consulting services are eligible for
assistance under this part for professional assistance in program
planning, development of community development objectives, and
other general professional guidance relating to program execution.
The use of consultants is governed by the following:
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(1) Emplo r -employee type of relationship. No person providing
consultant services in an employer-employee type of
relationship shall receive more than a reasonable rate of
compensation for personal services paid with CDBG funds. In
no event, hawever, shall such compensation exceed the maximum
daily rate of compensation for a GS -18 as established by
Federal law. Such services shall be evidenced by written
agreements between the parties which detail the
responsibilities, standards, and compensation.
(2) Independent contractor relationship. Consultant services
provided under an independent contractor relationship are
governed by the procurement requirements in 24 CFR 85.36 and
are not subject to the GS -18 limitation.
(e) Recipient determinations required as a condition of eliqibility.
In several instances under this subpart, the eligibility of an
activity depends on a special local determination. Recipients
shall maintain documentation of all such determinations. A
written determination is required for any activity carried out
under the authority of §§ 570.201(f), 570.202(b)(3), 570.203(b),
570.204, and 570.206(f). A written determination is also required
for certain relocation costs under § 570.201(i).
(f) Means of carrying out eliqible activities.
(1) Activities eligible under this subpart, other than those
authorized under § 570.204(a), may be undertaken, subject to
local law:
(i) By the recipient through:
(A) Its employees, or
(B) Procurement contracts governed by the requirements
of 24 CFR 85.36; or
(ii) Through agreements with subrecipients, as defined at
§ 570.500(c); or
(iii) By one or more public agencies, including existing
local public agencies, that are designated by the chief
executive officer of the recipient.
(2) Activities made eligible under § 570.204(a) may only be
undertaken by subrecipients specified in that section.
(g) Limitation on planninq and administrative costs. No more than 20
percent of the sum of any grant plus program income received
during the program year (or the grant period for grants under
Subpart F) shall be expended for planning and program
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administrative costs, as defined in §§ 570.205 and 570.206
respectively. Recipients of entitlement grants under Subpart D
will be considered to be in conformance with this limitation if
expenditures for planning and administration during the most
recently completed program year did not exceed 20 percent of the
stun of the entitlement grant made for that program year and the
program income received during that program year.
(h) Reimbursement for pre -agreement costs. Prior to the effective
date of the grant agreement, a recipient may obligate and spend
local funds for the purpose of environmental assessments required
by 24 CFR Part 58, for the planning and capacity building purposes
authorized by § 570.205(b), for engineering and design costs
associated with an activity eligible under § 570.201 through
§ 570.204, for the provision of information and other resources to
residents pursuant to § 570.206(b), for relocation activities
carried out pursuant to § 570.606, and for costs of complying with
procedural requirements for acquisition under § 570.606 but not
for the cost of the real property itself. After the effective
date of the grant agreement, the recipient may be reimbursed with
funds from its grant to cover those costs, provided such locally
funded activities were undertaken in compliance with the
requirements of this part and 24 CFR Part 58.
(i) Urban Development Action Grant. Grant assistance may be provided
with Urban Development Action Grant funds, subject to the
provisions of Subpart G, for:
(1) Activities eligible for assistance under this subpart; and
(2) Notwithstanding the provisions of § 570.207, such other
activities as the Secretary may determine to be consistent
with the purposes of the Urban Development Action Grant
program.
(j) Constitutional prohibition. In accordance with First Amendment
Church/State Principles, as a general rule, CDBG assistance may
not be used for religious activities or provided to primarily
religious entities for any activities, including secular
activities. The following restrictions and limitations therefore
apply to the use of CDBG funds:
(1) CDBG funds may not be used for the acquisition of property or
the construction or rehabilitation (including historic
preservation and removal of architectural barriers) of
structures to be used for religious purposes or which will
otherwise promote religious interests. This limitation
includes the acquisition of property for ownership by
primarily religious entities and the construction or
rehabilitation (including historic preservation and removal
of architectural barriers) of structures owned by such
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entities (except as permitted under paragraph (j)(2) of this
section with respect to rehabilitation and under paragraph
(j)(4) of this section with respect to repairs undertaken in
connection with public services) regardless of the use to be
made of the property or structure. Property owned by
primarily religious entities may be acquired with CDBG funds
at no more than fair market value for a non -religious use.
(2) CDBG funds may be used to rehabilitate buildings owned by
primarily religious entities to be used for a wholly secular
purpose under the following conditions:
(i) The building (or portion thereof) that is to be improved
with the CDBG assistance has been leased to an existing
or newly established wholly secular entity (which may be
an entity established by the religious entity);
(ii) The CDBG assistance is provided to the lessee (and not
the lessor) to make the improvements;
(iii) The leased premises will be used exclusively for
secular purposes available to persons regardless of
religion;
(iv) The lease payments do not exceed the fair market rent of
the premises as they were before the improvements are
made;
(v) The portion of the cost of any improvements that also
serve a non -leased part of the building will be
allocated to and paid for by the lessor;
(vi) The lessor enters into a binding agreement that unless
the lessee, or a qualified successor lessee, retains the
use of the leased premises for a wholly secular purpose
for at least the useful life of the improvements, the
lessor will pay to the lessee an amount equal to the
residual value of the improvements;
(vii) The lessee must remit the amount received from the
lessor under subparagraph (2)(vi) of this section to
the recipient or subrecipient from which the CDBG funds
were derived.
The lessee can also enter into a management contract
authorizing the lessor religious entity to use the building
for its intended secular purpose, e.g., homeless shelter,
provision of public services. In such case, the religious
entity must agree in the management contract to carry out the
secular purpose in a manner free from religious influences in
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accordance with the principles set forth in paragraph (j)(3)
of this section.
(3) As a general rule, CDBG funds may be used for eligible public
services to be provided through a primarily religious entity,
where the religious entity enters into an agreement with the
.recipient or subrecipient from which the CDBG funds are
derived that, in connection with the provision of such
services:
(i) it will not discriminate against any employee or
applicant for employment on the basis of religion and
will not limit employment or give preference in
employment to persons on the basis of religion;
(ii) it will not discriminate against any person applying for
such public services on the basis of religion and will
not limit such services or give preference to persons on
the basis of religion;
(iii) it will provide no religious instruction or counseling,
conduct no religious worship or services, engage in no
religious proselytizing, and exert no other religious
influence in the provision of such public services;
(iv) the portion of a facility used to provide the public
services shall contain no religious symbols or
decorations, other than those permanently affixed to or
part of the structure.
(4) Where the public services provided under paragraph (j)(3) of
this section are carried out on property owned by the
primarily religious entity, CDBG funds may also be used for
minor repairs to such property which are directly related to
carrying out the public services where the cost constitutes
in dollar terms only an incidental portion of the CDDG
expenditure for the public services.
S 570.201 Basic eligible activities.
CDBG funds may be used for the following activities:
(a) Acquisition. Acquisition in whole or in part by the recipient, or
other public or private nonprofit entity, by purchase, long-term
lease, donation, or otherwise, of real property (including air
rights, water rights, rights-of-way, easements, and other
interests therein) for any public purpose, subject to the
limitations of S 570.207.
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(b) Disposition. Disposition, through sale, lease, donation, or
otherwise, of any real property acquired with CDBG funds or its
retention for public purposes, including reasonable costs of
temporarily managing such property or property acquired under
urban renewal, provided that the proceeds from any such
disposition shall be Vi.uyiai<< income subject to the requirements
set forth in § 570.504.
(c) Public facilities and improvements. Acquisition, construction,
reconstruction, rehabilitation or installation of public
facilities and improvements, except as provided in § 570.207(a),
carried out by the recipient or other public or private nonprofit
entities. In undertaking such activities, design features and
improvements which promote energy efficiency may be included.
Such activities may also include the execution of architectural
design features, and similar treatments intended to enhance the
aesthetic quality of facilities and improvements receiving CDBG
assistance, such as decorative pavements, railings, sculptures,
pools of water and fountains, and other works of art. Facilities
designed for use in providing shelter for persons having special
needs are considered public facilities and not subject to the
prohibition of new housing construction described in
§ 570.207(b)(3). Such facilities include shelters for the
homeless; convalescent homes; hospitals; nursing homes; battered
spouse shelters; halfway houses for run -away children, drug
offenders or parolees; group homes for mentally retarded persons
and temporary housing for disaster victims. In certain cases,
nonprofit entities and subrecipients including those specified in
§ 570.204 may acquire title to public facilities. When such
facilities are owned by nonprofit entities or subrecipients, they
shall be operated so as to be open for use by the general public
during all normal hours of operation. Public facilities and
improvements eligible for assistance under this paragraph are
subject to the policies in § 570.200(b).
(d) Clearance activities. Clearance, demolition, and removal of
buildings and improvements, including movement of structures to
other sites. Demolition of HUD -assisted housing units may be
undertaken only with the prior approval of HUD.
(e) Public services. Provision of public services (including labor,
supplies, and materials) which are directed toward improving the
community's public services and facilities, including but not
limited to those concerned with employment, crime prevention,
child care, health, drug abuse, education, fair housing
counseling, energy conservation, welfare, or recreational needs.
In order to be eligible for CDBG assistance, public services must
meet each of the following criteria:
(1) A public service must be either a new service, or a
quantifiable increase in the level of a service above that
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{f)
which has been provided by or in behalf of the unit of
general local gov=�.,u,.„t (through funds raised by such unit,
or received by such unit from the State in which it is
located) in the twelve calendar months prior to the
submission of the statement. (An exception to this
requirement may be made if HUD determines that the decrease
in the level of a service was the result of events not within
the control of the unit of general local government.)
(2) The amount of CDBG funds used for public services shall not
exceed 15 percent of each grant except as provided in
paragraph (3) below. For entitlement grants under Subpart D,
compliance is based on the amount of CDBG funds obligated for
public service activities in each program year compared to 15
percent of the entitlement grant made for that program year.
(3) A recipient which obligated more CDBG funds for public
services than 15 percent of its grant funded from Federal
fiscal year 1982 or 1983 arN-Luv-Liations (excluding any
assistance received pursuant to Public Law 98-8), may
obligate more CDBG funds than 15 percent of its grant for
public services so long as the amount obligated in any
program year does not exceed the percentage or amount
obligated in Federal fiscal year 1982 or 1983, whichever
method of calculation yields the higher amount.
Interim assistance.
(1) The following activities may be undertaken on an interim
basis in areas exhibiting objectively determinable signs of
physical deterioration where the recipient has determined
that immediate action is necessary to arrest the
deterioration and that permanent improvements will be carried
out as soon as practicable:
(i) The repairing of streets, sidewalks, parks, playgrounds,
publicly owned utilities, and public buildings; and
(ii) The execution of special garbage, trash, and debris
removal, including neighborhood cleanup campaigns, but
not the regular curbside collection of garbage or trash
in an area.
(2) In order to alleviate emergency conditions threatening the
public health and safety in areas where the chief executive
officer of the recipient determines that such an emergency
condition exists and requires immediate resolution, CDBG
funds may be used for:
(i) The activities specified in paragraph (f)(1) of this
section, except for the repair of parks and
playgrounds;
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(ii) The clearance of streets, including snow removal and
similar activities; and
(iii) The improvement of private properties.
(3) All activities authorized under paragraph (f)(2) of this
section are limited to the extent necessary to alleviate
emergency conditions.
(g) Payment of non -Federal share. Payment of the non -Federal share
required in connection with a Federal grant-in-aid program
undertaken as part of CDBG activities, provided, that such payment
shall be limited to activities otherwise eligible and in
compliance with applicable requirements under this subpart.
(h) Urban renewal completion. Payment of the cost of completing an
urban renewal project funded under Title I of the Housing Act of
1949 as amended. Further information regarding the eligibility of
such costs is set forth in § 570.801.
(i) Relocation. Relocation payments and other assistance for
permanently and temporarily relocated individuals, families,
businesses, nonprofit organizations, and farm operations where
assistance is:
(1) Required under the provisions of § 570.606(a), (b) or (c);
or
(2) Determined by the recipient to be aDN.LuN.Liate under the
provisions of § 570.606(d).
(j) boss of rental income. Payments to housing owners for losses of
rental income incurred in holding, for temporary periods, housing
units to be used for the relocation of individuals and families
displaced by program activities assisted under this part.
(k) Removal of architectural barriers. Special projects directed to
the removal of material and architectural barriers which restrict
the mobility and accessibility of elderly or handicapped persons
to publicly owned and privately owned buildings, facilities, and
improvements.
(1) Privately owned utilities. CDBG funds may be used to acquire,
construct, reconstruct, rehabilitate, or install the distribution
lines and facilities of privately owned utilities, including the
placing underground of new or existing distribution facilities and
lines.
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(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.
5 570.202 Eligible rehabilitation and preservation activities.
(a) Types of buildings and improvements eliible for rehabilitation
assistance. CDBG funds may be used to Knance the rehabilitation
of:
(1) Privately owned buildings and improvements for residential
purposes;
(2) Lor income public housing and other publicly owned
residential buildings and improvements;
(3) Publicly or privately owned commercial or industrial
buildings, except that the rehabilitation of such buildings
owned by a private for-profit business is limited to
improvements to the exterior of the building and the
correction of code violations (further improvements to such
buildings may be undertaken pursuant to S 570.203(b)); and
(4) Manufactured housing when such housing constitutes part of
the community's permanent housing stock.
(b)lls of assistance. CDBG funds may be used to finance the
foowing types of rehabilitation activities, and related costs,
either singly, or in combination, through the use of grants,
loans, loan guarantees, interest supplements, or other means for
buildings and improvements described in paragraph (a) of this
section, except that rehabilitation of commercial or industrial
buildings is limited as described in paragraph (a)(3) of this
section.
(1) Assistance to private individuals and entities, including
profit making and nonprofit organizations, to acquire for the
purpose of rehabilitation, and to rehabilitate properties,
for use or resale for residential purposes;
(2) Labor, materials, and other costs of rehabilitation of
properties, including repair directed toward an accumulation
of deferred maintenance, replacement of principal fixtures
and components of existing structures, installation of
security devices, including smoke detectors and dead bolt
locks, and renovation through alterations, additions to, or
enhancement of existing structures, which may be undertaken
singly, or in combination;
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(3) Loans for refinancing existing indebtedness secured by a
property being rehabilitated with CDBG funds if such
financing is determined by the recipient to be necessary or
appropriate to achieve the locality's community development
objectives;
(4) Improvements to increase the efficient use of energy in
structures through such means as installation of storm
windows and doors, siding, wall and attic insulation, and
conversion, modification, or replacement of heating and
cooling equipment, including the use of solar energy
equipment;
(5) Improvements to increase the efficient use of water through
such means as water saving faucets and shower heads and
repair of water leaks;
(6) Connection of residential structures to water distribution
lines or local sewer collection lines;
(7) For rehabilitation carried out with CDBG funds, costs of:
(i) Initial homeowner warranty premiums;
(ii) Hazard insurance premiums, except where assistance is
provided in the form of a grant; and
(iii) Flood insurance premiums for properties covered by the
Flood Disaster Protection Act of 1973, pursuant to
§ 570.605.
(iv) Procedures concerning inspection and testing for and
abatement of lead-based paint, pursuant to § 570.608.
(8) Costs of acquiring tools to be lent to owners, tenants, and
others who will use such tools to carry out rehabilitation;
(9) Rehabilitation services, such as rehabilitation counseling,
energy auditing, preparation of work specifications, loan
processing, inspections, and other services related to
assisting owners, tenants, contractors, and other entities,
participating or seeking to participate in rehabilitation
activities authorized under this section, under section 312
of the Housing Act of 1964, as amended, under section 810 of
the Act, or under section 17 of the United States Housing Act
of 1937; and
(10) Assistance for the rehabilitation of housing under section 17
of the United States Housing Act of 1937.
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(c) Code enforcement. Code enforcement in deteriorating or
deteriorated areas where such enforcement together with public
improvements, rehabilitation, and services to be provided, may be
expected to arrest the decline of the area.
(d) Historic preservation. CDBG funds may be used for the
rehabilitation, preservation or restoration of historic
properties, whether publicly or privately owned. Historic
properties are those sites or structures that are either listed in
or eligible to be listed in the National Register of Historic
Places, listed in a State or local inventory of historic places,
or designated as a State or local landmark or historic district by
appropriate law or ordinance. Historic preservation, however, is
not authorized for buildings for the general conduct of
government.
(e) Renovation of closed buildings. CDBG funds may be used to
renovate closed buildings, such as closed school buildings, for
use as an eligible public facility or to rehabilitate such
buildings for housing.
§ 570.203 Special economic development activities.
A recipient may use CDBG funds for special economic development
activities in addition to other activities authorized in this subpart
which may be carried out as part of an economic development project.
Special activities authorized under this section do not include
assistance for the construction of new housing. Special economic
development activities include:
(a) The acquisition, construction, reconstruction, rehabilitation or
installation of commercial or industrial buildings, structures,
and other real property equipment and improvements, including
railroad spurs or similar extensions. Such activities may be
carried out by the recipient or public or private nonprofit
subrecipients.
(b) The provision of assistance to a private for-profit business,
including, but not limited to, grants, loans, loan guarantees,
interest supplements, technical assistance, and other forms of
support, for any activity where the assistance is necessary or
appropriate to carry out an economic development project,
excluding those described as ineligible in § 570.207(a). In order
to ensure that any such assistance does not unduly enrich the for-
profit business, the recipient shall conduct an analysis to
determine that the amount of any financial assistance to be
provided is not excessive, taking into account the actual needs of
the business in making the project financially feasible and the
extent of public benefit expected to be derived from the econamtic
development project. The recipient shall document the analysis as
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well as any factors it considered in making its determination that
the assistance is necessary or appropriate to carry out the
project. The requirement for making such a determination applies
whether the business is to receive assistance from the recipient
or through a subrecipient.
§ 570.204 Special activities by certain subrecipients.
(a) Eligible activities. The recipient may provide CDBG funds (e.g.,
grant or loan) to any of the three types of subrecioients
specified in paragraph (c) of this section to carry out a
neighborhood revitalization, community economic development, or
energy conservation project. Such a project may include activities
listed as eligible under this subpart, and activities not
otherwise listed as eligible under this subpart, except those
described as ineligible in § 570.207(a), when the recipient
determines that such activities are necessary or appropriate to
achieve its community development objectives. Notwithstanding
that such subrecipients may carry out activities as part of such
project that are not otherwise eligible under this subpart, this
provision does not authorize:
(1) provision of public services that do not meet the
requirements of § 570.201(e)(1) and (2);
(2) provision of assistance to a for-profit business that does
not comply with the requirements of § 570.203(b); or
(3) carrying out activities that would otherwise be eligible
under §S 570.205 or 570.205 but that would result in the
recipient exceeding the limitation in § 570.200(g).
(b) Recipient responsibilities. Recipients are responsible for
ensuring that CDBG funds are used by the subrecipients in a manner
consistent with the requirements of this part and other applicable
Federal, State, or local law. Recipients are also responsible for
carrying out the environmental review and clearance
responsibilities.
(c) Eligible subrecipients. The following are subrecipients
authorized to receive assistance under this section:
(1) Neighborhood -based nonprofit organizations. A neighborhood -
based nonprofit organization is an association or
corporation, duly organized to promote and undertake
community development activities on a not-for-profit basis
within a neighborhood. An organization is considered to be
neighborhood -based if the majority of either its membership,
clientele, or governing body are residents of the
neighborhood where activities assisted with CDBG funds are to
be carried out. A neighborhood is defined as:
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(i) A geographic location within the jurisdiction of a unit
of general local go-v�-,�wr--��t (but not the entire
jurisdiction) designated in comprehensive plans,
ordinances, or other local documents as a neighborhood,
village, or similar geographical designation;
(ii) The entire jurisdiction of a unit of general local
government which is under 25,000 population; or
(iii) A neighborhood, village, or similar geographical
designation in a New Conmunity as defined in
§ 570.403(a)(1).
(2) Section 301(d) Small Business Investment Coapanies. A
Section 301(d) Small Business Investment Conpany is an entity
organized pursuant to section 301(d) of the Small Business
Investment Act of 1958 (15 U.S.C. 681(d)), including those
which are profit making.
(3) Local development corporations. A local development
corporation is:
(i) An entity organized pursuant to Title VII of the
Headstart, Economic Opportunity, and Coimiunity
Partnership Act of 1974 (42 U.S.C. 2981) or the
Community Economic Development Act of 1981 (42 U.S.C.
9801 et seq.);
(ii) An entity eligible for assistance under section 502 or
503 of the Small Business Investment Act of 1958 (15
U.S.C. 696);
(iii) Other entities incorporated under State or local law
whose membership is representative of the area of
operation of the entity (including nonresident owners
of businesses in the area) and which are similar in
purpose, function, and scope to those specified in (i)
or (ii) above; or
(iv) A State development entity eligible for assistance under
section 501 of the Small Business Investment Act of 1958
(15 U.S.C. 695).
§ 570.205 Eligible planning, urban design and policy -
planning -management -capacity building activities.
(a) Planning activities which consist of all costs of data gathering,
studies, analysis, and preparation of plans and the identification
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of actions that will implement such plans, including, but not
limited to:
(1) Comprehensive plans;
(2) Community development plans;
(3) Functional plans, in areas such as:
(i) Housing, including the development of a housing
assistance plan;
(ii) Land use and urban environmental design;
(iii) Economic development;
(iv) Open space and recreation;
(v) Energy use and conservation;
(vi) Floodplain and wetlands management in accordance with
the requirements of Executive Orders 11988 and 11990;
(vii) Transportation;
(viii) Utilities; and
(ix) Historic preservation.
(4) Other plans and studies such as:
(i) mall area and neighborhood plans;
(ii) Capital improvements programs;
(iii) Individual project plans (but excluding engineering and
design costs related to a specific activity which are
eligible as part of the cost of such activity under
§§ 570.201-570.204);
(iv) The reasonable costs of general environmental, urban
environmental design and historic preservation studies.
However, costs necessary to comply with 24 CFR Part 58,
including project specific environmental assessments and
clearances for activities eligible for assistance under
this part, are eligible as part of the cost of such
activities under §§ 570.201-570.204. Costs for such
specific assessments and clearances may also be incurred
under this paragraph but would then be considered
planning costs for the purposes of § 570.200(g);
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M Strategies and action programs to implement plans,
including the development of codes, ordinances and
regulations;
(vi) Support of clearinghouse functions, such as those
specified in Executive Order 12372; and
(vii) Analysis of impediments to fair housing choice.
(b) Policy - planning - management - capacity building activities
which will enable the recipient to:
(1) Determine its needs;
(2) Set long-term goals and short -terns objectives, including
those related to urban environmental design;
(3) Devise programs and activities to meet these goals and
objectives;
(4) Evaluate the progress of such programs and activities in
accomplishing these goals and objectives; and
(5) Carry out management, coordination and monitoring of
activities necessary for effective planning implementation,
but excluding the costs necessary to implement such plans.
5 570.206 Program administration costs.
Payment of reasonable administrative costs and carrying charges
related to the planning and execution of community development
activities assisted in whole or in part with funds provided under this
part and, where applicable, housing activities (described in paragraph
(g) of this section) covered in the recipient's housing assistance
plan. This does not include staff and overhead costs directly related
to carrying out activities eligible under S 570.201 through § 570.204,
since those costs are eligible as part of such activities.
(a) General management, oversight and coordination. Reasonable costs
of overall program management, coordination, monitoring, and
evaluation. Such costs include, but are not necessarily limited
to, necessary expenditures for the following:
(1) Salaries, wages, and related costs of the recipient's staff,
the staff of local public agencies, or other staff engaged in
program administration. In charging costs to this category
the recipient may either include the entire salary, wages,
and related costs allocable to the program of each person
whose primary responsibilities with regard to the program
involve program administration assignments, or the prorata
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share of the salary, wages, and related costs of each person
whose job includes any program administration assignments.
The recipient may use only one of these methods during the
program year (or the grant period for grants under Subpart
F). Program administration includes the following types of
assignments:
(i) Providing local officials and citizens with information
about the program;
(ii) Preparing pLllyLal. budgets and schedules, and amendments
thereto;
(iii) Developing systems for assuring compliance with program
requirements;
(iv) Developing interagency ayLCd,&--„ts and agreements with
subrecipients and contractors to carry out program
activities;
(v) Monitoring program activities for progress and
compliance with program requirements;
(vi) Preparing reports and other documents related to the
program for submission to HUD;
(vii) Coordinating the resolution of audit and monitoring
findings;
(viii) Evaluating program results against stated objectives;
and
(ix) Managing or supervising persons whose primary
responsibilities with regard to the program include such
assignments as those described in paragraph (a)(1)(i)
through (viii) of this section.
(2) Travel costs incurred for official business in carrying out
the program;
(3) Administrative services performed under third party contracts
or agreements, including such services as general legal
services, accounting services, and audit services; and
(4) other costs for goods and services required for
administration of the program, including such goods and
services as rental or purchase of equipment, insurance,
utilities, office supplies, and rental and maintenance (but
not purchase) of office space.
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(b) Public information. The provision of information and other
resources to residents and citizen organizations participating in
the planning, implementation, or assessment of activities being
assisted with CDBG funds.
(c) Fair housing activities. Provision of fair housing services
designed to further the fair housing objectives of Title VIII of
the Civil Rights Act of 1968 by making persons of all races,
colors, religions, sexes, and national origins aware of the range
of housing opportunities available to them; other fair housing
enforcement, education, and outreach activities; and other
activities designed to further the housing objective of avoiding
undue concentrations of assisted persons in areas containing a
high proportion of low and moderate income persons.
(d) (Removed and Reserved)
(e) Indirect Costs. Indirect costs may be charged to the CDBG program
under a cost allocation plan prepared in accordance with OMB
Circulars A-21, A-87 or A-122 as applicable.
(f) Submission of applications for Federal programs. Preparation of
documents required for submission to HUD to receive funds under
the CDBG and UDAG programs, except as limited under Subpart F at
§ 570.433(a)(3). In addition, CDBG funds may be used to prepare
applications for other Federal programs where the recipient
determines that such activities are necessary or appropriate to
achieve its community development objectives.
(g) Administrative expenses to facilitate housing. CDBG funds may be
used for necessary administrative expenses in planning or
obtaining financing for housing as follows: for entitlement
recipients, assistance authorized by this paragraph is limited to
units which are identified in the recipient's HUD approved housing
assistance plan; for HUD -administered small cities recipients,
assistance authorized by the paragraph is limited to facilitating
the purchase or occupancy of existing units which are to be
occupied by low and moderate income households, or the
construction of rental or owner units where at least 20 percent of
the units in each project will be occupied at affordable
rents/costs by low and moderate income persons. Examples of
eligible actions are as follows:
(1) The cost of conducting preliminary surveys and analysis of
market needs;
(2) Site and utility plans, narrative descriptions of the
proposed construction, preliminary cost estimates, urban
design documentation, and "sketch drawings," but excluding
architectural, engineering, and other details ordinarily
C-20 5/89
required for constriction purposes, such as structural,
electrical, plumbing, and mechanical details;
(3) Reasonable costs associated with development of applications
for mortgage and insured loan commitments, including
commitment fees, and of applications and proposals under the
Section 8 Housing Assistance Payments Program pursuant to 24
CFR Parts 880-883;
(4) Fees associated with processing of applications for mortgage
or insured loan commitments under programs including those
administered by HUD, Farmers Home Administration (FmHA),
Federal National Mortgage Association (FNMA), and the
Go-vt__Lf u,icf ft National Mortgage Association ( GNMA) ;
(5) The cost of issuance and administration of mortgage revenue
bonds used to finance the acquisition, rehabilitation or
construction of housing, but excluding costs associated with
the payment or guarantee of the principal or interest on such
bonds; and
(6) Special outreach activities which result in greater landlord
participation in Section 8 Housing Assistance Payments
Program -Existing Housing or similar programs for low and
moderate income persons.
(h) Section 17 of the United States Housing Act of 1937. Reasonable
costs equivalent to those described in paragraphs (a), (b), (e)
and (f) of this section for overall program management of the
Rental Rehabilitation and Housing Development programs authorized
under section 17 of the United States Housing Act of 1937, whether
or not such activities are otherwise assisted with funds provided
under this part.
§ 570.207 Ineligible activities.
The general rule is that any activity that is not authorized under
the provisions of §§ 570.201-570.206 is ineligible to be assisted with
CDBG funds. This section identifies specific activities that are
ineligible and provides guidance in determining the eligibility of
other activities frequently associated with housing and community
development.
(a) The following activities may not be assisted with CDBG funds:
(1) Buildings or portions thereof, used for the general conduct
qLgovernment as defined at § 570.3(d) cannot be assisted
with CDBG funds. This does not exclude, however, the removal
of architectural barriers under § 570.201(k) involving any
such building. Also, where acquisition of real property
C-21 589
includes an existing improvement which is to be used in the
provision of a building for the general conduct of
government, the portion of the acquisition cost attributable
to the land is eligible, provided such acquisition meets a
national objective described in § 570.208.
(2) General government expenses. Except as otherwise
specifically authorized in this subpart or under OMB Circular
A-87, expenses required to carry out the regular
responsibilities of the unit of general local government are
not eligible for assistance under this part.
(3) Political activities. CDBG funds shall not be used to
finance the use of facilities or equipment for political
purposes or to engage in other partisan political activities,
such as candidate forums, voter transportation, or voter
registration. However, a facility originally assisted with
CDBG funds may be used on an incidental basis to hold
political meetings, candidate forums, or voter registration
campaigns, provided that all parties and organizations have
access to the facility on an equal basis, and are assessed
equal rent or use charges, if any.
(b) The following activities may not be assisted with CDBG funds
unless authorized under provisions of § 570.203 or as otherwise
specifically noted herein, or when carried out by a subrecipient
under the provisions of § 570.204.
(1) Purchase of equint. The purchase of equipment with CDBG
funds is generally ineligible.
(i) Construction equipment. The purchase of construction
equipment is ineligible, but compensation for the use of
such equipment through leasing, depreciation, or use
allowances pursuant to OMB Circulars A-21, A-87 or A-122
as applicable for an otherwise eligible activity is an
eligible use of CDBG funds. However, the purchase of
construction equipment for use as part of a solid waste
disposal facility is eligible under § 570.201(c).
(ii) Fire protection equipment. Fire protection equipment is
considered for this purpose to be an integral part of a
public facility and thus, purchase of such equipment
would be eligible under § 570.201(c).
(iii.) Furnishings and personal property. The purchase of
equipment, fixtures, motor vehicles, furnishings, or
other personal property not an integral structural
fixture is generally ineligible. CDBG funds may be
used, however, to purchase or to pay depreciation or
use allowances (in accordance with OMB Circulars A-21,
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A-87 or A-122, as applicable) for such items when
necessary for use by a recipient or its subrecipients
in the administration of activities assisted with CDBG
funds, or when eligible as fire fighting equipment, or
when such items constitute all or part of a public
service pursuant to § 570.201(e).
(2) Operatinq and maintenance expenses. The general rule is that
any expense associated with repairing, operating or
maintaining public facilities, improvements and services is
ineligible. Specific exceptions to this general rule are
operating and maintenance expenses associated with public
service activities, interim assistance, and office space for
program staff employed in carrying out the CDBG program. For
example, the use of CDBG funds to pay the allocable costs of
operating and maintaining a facility used in providing a
public service would be eligible under S 570.201(e), even if
no other costs of providing such a service are assisted with
such funds. Examples of ineligible operating and maintenance
expenses are:
(i) Maintenance and repair of streets, parks, playgrounds,
water and sewer facilities, neighborhood facilities,
senior centers, centers for the handicapped, parking and
similar public facilities. Examples of maintenance and
repair activities for which CDBG funds may not be used
include the filling of pot holes in streets, repairing
of cracks in sidewalks, the mowing of recreational
areas, and the replacement of expended street light
bulbs; and
(ii) Payment of salaries for staff, utility costs and similar
expenses necessary for the operation of public works and
facilities.
(3) New housing construction. For the purpose of this paragraph,
activities in support of the development of low or moderate
income housing including clearance, site assemblage,
provision of site improvements and provision of public
improvements and certain housing pre -construction costs set
forth in S 570.206(g), are not considered as activities to
subsidize or assist new residential construction. CDBG funds
may not be used for the construction of new permanent
residential structures or for any program to subsidize or
assist such new construction, except:
(i) As provided under the last resort housing provisions set
forth in 24 CFR Part 42;
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(ii) As authorized under § 570.201(m); or
(iii) When carried out by a subrecipient pursuant to
§ 570.204(a);
(4) Income payments. The general rule is that CDBG funds shall
not be used for income payments for housing or any other
purpose. Examples of ineligible income payments include:
payments for income maintenance, housing allowances, down
payments, and mortgage subsidies.
5 570.208 Criteria for national objectives.
The following criteria shall be used to determine whether a CDBG-
assisted activity complies with one or more of the national objectives
as required under § 570.200(a)(2):
(a) Activities benefiting low and moderate income persons. Activities
meeting the criteria in paragraph (a)(1), (2), (3), or (4) of this
section as applicable, will be considered to benefit low and
moderate income persons unless there is substantial evidence to
the contrary. In assessing any such evidence, the full range of
direct effects of the assisted activity will be considered. (The
recipient shall appropriately ensure that activities that meet
these criteria do not benefit moderate income persons to the
exclusion of low income persons.)
(1) Area benefit activities.
(i) An activity, the benefits of which are available to all
the residents in a particular area, where at least 51
percent of the residents are low and moderate income
persons. Such an area need not be coterminous with
census tracts or other officially recognized boundaries
but must be the entire area served by the activity. An
activity that serves an area that is not primarily
residential in character shall not qualify under this
criterion.
(ii) For metropolitan cities and urban counties, an activity
that would otherwise qualify under S 570.208(a)(1)(i)
except that the area served contains less than 51
percent low and moderate income residents will also be
considered to meet the objective of benefiting low and
moderate income persons where the proportion of low and
moderate income persons in the area is within the
highest quartile of all areas in the recipient's
jurisdiction in terms of the degree of concentration of
such persons. In applying this exception, HUD will
C-24 5/89
determine the lowest proportion a recipient may use to
qualify an area for this purpose as follows:
(A) All census block groups in the recipient's
jurisdiction shall be rank ordered from the block
group of highest p.Lup-,i Lion of low and moderate
income persons to the block group with the lowest.
For urban counties, the rank ordering shall cover
the entire area constituting the urban county and
shall not be done separately for each participating
unit of general local government.
(B) In any case where the total number of a recipient's
block groups does not divide evenly by four, the
block group which would be fractionally divided
between the highest and second quartiles shall be
considered to be part of the highest quartile.
(C) The proportion of low and moderate income persons
in the last census block group in the highest
quartile shall be identified. Any service area
located within the recipient's jurisdiction and
having a proportion of low and moderate income
persons at or above this level shall be considered
to be within the highest quartile.
(D) If block group data are not available for the
entire jurisdiction, other data acceptable to the
Secretary may be used in the above calculations.
(iii) For purposes of determining qualification under this
criterion, activities of the same type that serve
different areas will be considered separately on the
basis of their individual service area.
(iv) 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) or (ii) of this section, the most
recently available decennial census information shall be
used to the fullest extent feasible, together with the
Section 8 income limits that would have applied at the
time the income information was collected by the Census
Bureau. Recipients that believe that the census data
does not reflect current relative income levels in an
area, or where census boundaries do not coincide
sufficiently well with the service area of an activity,
may conduct (or have conducted) a current survey of the
residents of the area to determine the percent of such
persons that are low and moderate income. HUD will
accept information obtained through such surveys, to be
C-25 5/89
used in lieu of the decennial census data, where it
determines that the survey was conducted in such a
manner that the results meet standards of statistical
reliability that are comparable to that of the decennial
census data for areas of similar size. Where there is
substantial evidence that provides a clear basis to
believe that the use of the decennial census data would
substantially overstate the proportion of persons
residing there that are low and moderate income, HUD may
require that the recipient rebut such evidence in order
to demonstrate compliance with section 105(c)(2) of the
Act.
(2) Limited clientele activities.
(i) An activity which benefits a limited clientele, at least
51 percent of whom are low or moderate income persons.
(The following kinds of activities may not qualify under
this paragraph: activities, the benefits of which are
available to all the residents of an area; activities
involving the acquisition, construction or
rehabilitation of property for housing; or activities
where the benefit to low and moderate income persons to
be considered is the creation or retention of jobs.) To
qualify under this paragraph, the activity must meet one
of the following tests:
(A) Benefit a clientele who are generally presumed to
be principally low and moderate income persons.
The following groups are presumed by HUD to meet
this criterion: abused children, battered spouses,
elderly persons, handicapped persons, homeless
persons, illiterate persons and migrant farm
workers; or
(B) Require information on family size and income so
that it is evident that at least 51 percent of the
clientele are persons whose family income does not
exceed the low and moderate income limit; or
(C) Have income eligibility requirements which limit
the activity exclusively to low and moderate income
persons; or
(D) Be of such nature and be in such location that it
may be concluded that the activity's clientele will
primarily be low and moderate income persons.
(ii) A special project directed to removal of material and
architectural barriers which restrict the mobility and
accessibility of elderly or handicapped persons to
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publicly owned and privately owned non-residential
buildings, facilities and improvements and the common
areas of residential structures containing more than one
dwelling unit.
(3) Housing activities. An eligible activity carried out for the
purpose of providing or improving permanent residential
structures which, upon completion, will be occupied by low
and moderate income households. This would include, but not
necessarily be limited to, the acquisition or rehabilitation
of property, 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. Where two or more
rental buildings being assisted are or will be located on the
same or contiguous properties, and the buildings will be
under common ownership and management, the grouped buildings
may be considered for this purpose as a single structure.
For rental housing, occupancy by low and moderate income
households must be at affordable rents to qualify under this
criterion. The recipient shall adopt and make public its
standards for determining "affordable rents" for this
purpose. The following shall also qualify under this
criterion:
(i) When less than 51 percent of the units in a structure
will be occupied by low and moderate income households,
CDBG assistance may be provided in the following limited
circumstances:
(A) The assistance is for an eligible activity to
reduce the development cost of the new construction
of a multifamily, non -elderly rental housing
project;
(B) Not less than 20 percent of the units will be
occupied by low and moderate income households at
affordable rents; and
(C) The proportion of the total cost of developing the
project to be borne by CDBG funds is no greater
than the proportion of units in the project that
will be occupied by low and moderate income
households.
(ii) when CDBG funds are used to assist rehabilitation
eligible under § 570.202(b)(9) or (10) in direct support
of the recipient's Rental Rehabilitation progri-mm
authorized under 2.4 CFR Part 511, such funds shall_ be
considered to benefit low and moderate income persons
C-27 5/89
where not less than 51 percent of the units assisted, or
to be assisted, by the recipient's Rental Rehabilitation
program overall are for lav and moderate income
persons.
(4) Job creation or retention activities. An activity designed
to create or retain permanent jobs where at least 51 percent
of the jobs, computed on a full time equivalent basis,
involve the employment of low and moderate income persons.
As a general rule, each assisted business shall be considered
to be a separate activity for purposes of determining whether
the activity qualifies under this paragraph. However, in
certain cases such as where CDBG funds are used to acquire,
develop or improve a real property (e.g., a business
incubator or an industrial park) the requirement may be met
by measuring jobs in the aggregate for all the businesses
which locate on the property, provided such businesses are
not otherwise assisted by CDBG funds. Additionally, where
CDBG funds are used to pay for the staff and overhead costs
of a § 570.204 subrecipient making loans to businesses from
non-CDBG funds, this requirement may be met by aggregating
the jobs created by all of the businesses receiving loans
during any one year period. 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. For an activity that retains jobs,
the recipient must document that the jobs would actually be
lost without the CDBG assistance and that either or both of
the following conditions apply with respect to at least 51
percent of the jobs at the time the CDBG assistance is
provided: 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 steps will be
taken to ensure that it will be filled by, or made available
to, a low or moderate income person upon turnover. Jobs will
be considered to be available to low and moderate income
persons for these purposes only if:
(i) Special skills that can only be acquired with
substantial training or work experience or education
beyond high school are not a prerequisite to fill such
jobs, or the business agrees to hire unqualified persons
and provide training; and
(ii) The recipient and the assisted business take actions to
ensure that low and moderate income persons receive
first consideration for filling such jobs.
Note: Expenditures for activities meeting the criteria for
benefiting low and moderate income persons shall be used in
determining the extent to which the recipient's overall program
C-28 5/89
benefits such persons. The calculation shall be made following
the rules described at S 570.200(a)(3).
(b) Activities which aid in the prevention or elimination of slums or
blight. Activities meeting one or more of the following criteria,
in the absence of substantial evidence to the contrary, will be
considered to aid in the prevention or elimination of slums or
blight:
(1) Activities to address slums or blight on an area basis. An
activity will be considered to address prevention or
elimination of slums or blight in an area if:
(i) The area, delineated by the recipient, meets a
definition of a slum, blighted, deteriorated or
deteriorating area under State or local law;
(ii) Throughout the area there is a substantial number of
deteriorated or deteriorating buildings or the public
improvements are in a general state of deterioration;
(iii) Documentation is maintained by the recipient on the
boundaries of the area and the condition which
qualified the area at the time of its designation; and
(iv) The assisted activity addresses one or more of the
conditions which contributed to the deterioration of the
area. Rehabilitation of residential buildings
carried out in an area meeting the above requirements
will be considered to address the area's deterioration
only where each such building rehabilitated is
considered substandard under local definition before
rehabilitation, and all deficiencies malting a building
substandard have been eliminated if less critical work
on the building is undertaken. At a minimum, the local
definition for this purpose must be such that buildings
that it would render substandard would also fail to meet
the housing quality standards for the Section 8 Housing
Assistance Payments Program -Existing Housing (24 CFR
882.109).
(2) Activities to address slums or blight on a spot basis.
Acquisition, clearance, relocation, historic preservation and
building rehabilitation activities which eliminate specific
conditions of blight or physical decay on a spot basis not
located in a slum or blighted area will meet this objective.
Under this criterion, rehabilitation is limited to the extent
necessary to eliminate specific conditions detrimental to
public health and safety.
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(3) Activities to address slums or blight in an urban renewal
area. An activity will be considered to address prevention
or elimination of slums or blight in an urban renewal area if
the activity is:
(i) located within an urban renewal project area or
Neighborhood Development Program (NDP) action area;
i.e., an area in which funded activities were authorized
under an urban renewal Loan and Grant Agreement or an
annual NDP Funding Agreement, pursuant to Title I of the
Housing Act of 1949; and
(ii) necessary to complete the urban renewal plan, as then in
effect, including initial land redevelopment permitted
by the plan.
Note: Despite the restrictions in (b)(1) and (2) of this section,
any rehabilitation activity which benefits low and moderate income
persons pursuant to paragraph (a)(3) of this section can be
undertaken without regard to the area in which it is located or
the extent or nature of rehabilitation assisted.
(c) Activities designed to meet cormunity development needs having as
particular urgency. In the absence of substantial evidence to the
contrary, an activity will be considered to address this objective
if the recipient certifies that the activity is designed to
alleviate existing conditions which pose a serious and immediate
threat to the health or welfare of the community which are of
recent origin or which recently became urgent, that the recipient
is unable to finance the activity on its own, and that other
sources of funding are not available. A condition will generally
be considered to be of recent origin if it developed or became
critical within 18 months preceding the certification by the
recipient.
(d) Additional criteria.
(1) Where the assisted activity is acquisition of real property,
a preliminary determination of whether the activity addresses
a national objective may be based on the planned use of the
property after acquisition. A final determination shall be
based on the actual use of the property, excluding any short-
term, temporary use. Where the acquisition is for the
purpose of clearance which will eliminate specific conditions
of blight or physical decay, the clearance activity shall be
considered the actual use of the property. However, any
subsequent use or disposition of the cleared property shall
be treated as a "change of use" under S 570.505.
(2) Where the assisted activity is relocation assistance that the
recipient is required to provide, such relocation assistance
C-30 5/89
shall be considered to address the same national objective as
is addressed by the displacing activity. Where the
relocation assistance is voluntary on the part of the grantee
the recipient may qualify the assistance either on the basis
of the national objective addressed by the displacing
activity or on the basis that the recipients of the
relocation assistance are low and moderate income persons.
(3) In any case where the activity undertaken for the purpose of
creating or retaining jobs is a public improvement and the
area served is primarily residential, the activity must meet
the requirements of paragraph (a)(1) of this section as well
as those of paragraph (a)(4) of this section in order to
qualify as benefiting low and moderate income persons.
(4) CDBG funds expended for planning and administrative costs
under § 570.205 and S 570.206 will be considered to address
the national objectives.
C-31 5/89
Subpart D -- Entitlement Grants.
Sec.
570.300 General.
570.301 Presubmission requirements.
570.302 Submission requirements.
570.303 Certifications.
570.304 Making of grants.
570.305 Amendments.
570.306 Housing assistance plan.
570.307 Urban counties.
570.308 Joint requests.
Subpart D -- Entitlement Gants.
S 570.300 General.
This subpart describes the policies and procedures governing the
making of co mmmity development block grants to entitlement
conmunities. The policies and procedures set forth in Subparts A, C, J,
K, and O of this part also apply to entitlement grantees.
S 570.301 Presubmission requirements.
Prior to the submission to HUD for its annual grant, the grantee
must:
(a) Develop a proposed statement of conuunity development objectives
and projected use of funds, including the following items:
(1) The community development objectives the grantee proposes to
pursue.
(2) The community development activities the grantee proposes to
carry out with anticipated CDBG funds, including all funds
identified in paragraph (b)(1)(i) of this section, to address
its identified community development objectives. Each such
activity must:
(i) Meet the applicable requirements of 24 CFR 570 Subpart
C; and
(ii) Be described in sufficient detail, including location,
to allow citizens to determine the degree to which they
may be affected.
D-1 5/89
(b) In a manner which provides for the timely citizen examination,
appraisal, and comment on its statements, meet the following
citizen participation requirements:
(1) Furnish citizens with information concerning:
(i) The amount of CDBG funds expected to be available
(including the annual grant, program income expected to
be received during the V,,-,y,ca,, year together with
program income received during the preceding program
year and that has not yet been programmed for use, and
surplus from urban renewal settlement for conuiunity
development and housing activities);
(ii) The range of activities that may be undertaken with
those funds pursuant to the criteria in 24 CFR 570
Subpart C;
(iii) The estimated amount of those funds proposed to be used
for activities that will benefit low and moderate
income persons;
(iv) The proposed CDBG activities likely to result in
displacement and the grantee's plans (consistent with
the grantee's Housing Assistance Plan and policies
developed pursuant to § 570.606(b)) for minimizing such
displacement of persons as a result of its proposed
activities; and
(v) The types and levels of assistance the grantee will make
available (or to require others to make available) to
persons displaced by CDBG funded activities, even if the
grantee expects no such displacement to occur.
(2) Hold at least one public hearing to obtain the views of
citizens on the grantee's housing and community development
needs (grantees may elect to hold additional hearings and to
cover other subjects through such public hearings, such as
obtaining views on specific community development or housing
activities).
(3) Publish community -wide its proposed statement of community
development objectives and projected use of funds so as to
afford affected citizens an opportunity to examine the
statement's contents, and to provide comments on the proposed
statement and on the grantee's community development
performance.
(c) Prepare its final statement of community development objectives
and projected use of funds. Once the grantee has completed the
D-2 5/89
citizen participation requirements in paragraph (b) of this
section, the grantee must consider any such comments and views
received and if the grantee deems aNp��jNLiate modify the proposed
statement. The grantee shall make the final statement available
to the public. The final statement may include activities which
do not either benefit low and moderate income persons or prevent
or eliminate slums and blight only if the grantee identifies such
activities in the final statement and certifies that such
activities are designed to meet other community development needs
having a particular urgency because existing conditions pose a
serious and immediate threat to the health or welfare of the
community, and other financial resources are not available.
(d) Submit and receive approval of its housing assistance plan in
accordance with 5 570.306.
(Approved by Office of Management and
Budget under Control No. 2506-0077)
5 570.302 Submission requirements.
(a) Content. In order to receive its annual CDBG entitlement grant, a
grantee must submit the following:
(1) Standard Form 424;
(2) A copy of the grantee's final statement of community
development objectives and projected use of funds, covering
the same items as listed in 5 570.301(x); and
(3) Certifications satisfactory to the Secretary covering all of
the items listed in 5 570.303.
(b) Timinq of submissions.
(1) In order to facilitate continuity in its program, the grantee
should submit its final statement to HUD at least 30 days
prior to the start of its community development program year,
but in no event will HUD accept a submission for a grant
earlier than December 1 or later than the first working day
in September of the Federal fiscal year for which the grant
funds are appropriated.
(2) A program year shall run for a twelve month period. A
grantee may, however, either shorten or lengthen its program
year, provided HUD receives written notice of a lengthened
program year at least two months prior to the date the
program year would have ended if it had not been lengthened,
D-3 5/89
or HUD receives notice of a shortened program year at least
two months prior to the end of the shortened program year.
(Approved by the Office of Management
and Budget under Control No. 2506-0077)
§ 570.303 Certifications.
The grantee shall submit certifications that:
(a) It possesses legal authority to make a grant submission and to
execute a community development and housing program;
(b) Its governing body has duly adopted or passed as an official act a
resolution, motion or similar action authorizing the person
identified as the official representative of the grantee to submit
the final statement and amendments thereto and all understandings
and assurances contained therein, and directing and authorizing
the person identified as the official representative of the
grantee to act in connection with the submission of the final
statement and to provide such additional information as may be
required.
(c) Prior to submission of its final statement to HUD, the grantee
has:
(1) Met the citizen participation requirements of section
104(a)(3) of the Act; and
(2) Prepared its final statement of connutunity development
objectives and projected use of funds in accordance with
§ 570.301(c) and made the final statement available to the
public.
(d) The grantee will affirmatively further fair housing, and the grant
will be conducted and administered in compliance with:
(1) Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352, 42
U.S.C. 2000d et seq.); and
(2) Title VIII of the Civil Rights Act of 1968 (Pub. L. 90-284,
42 U.S.C. 3601 et sem.).
(e) It has developed its final statement of projected use of funds so
as to give maximum feasible priority to activities which benefit
low and moderate income families or aid in the prevention or
elimination of slums or blight. [The final statement of projected
use of funds may also include activities which the grantee
certifies pursuant to § 570.301(c) are designed to meet other
community development needs having a particular urgency.]
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(f) In the aggregate, at least 60 percent of all CDBG funds, as
defined at § 570.3(e), to be expended during the one, two or three
consecutive program years specified by the grantee will be for
activities which benefit low and moderate income persons, as
described in criteria at 24 CFR 570.208(a).
(g) Its notification, inspection, testing and abatement procedures
concerning lead-based paint will comply with § 570.608.
(h) It will comply with the acquisition and relocation requirements of
the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 as required under § 570.606(a) and HUD
implementing regulations at 24 CFR Part 42; the requirements in
§ 570.606(b) governing the residential antidisplacement and
relocation assistance plan under section 104(d) of the Housing and
Community Development Act of 1974 (the Act) (including a
certification that the grantee is following such a plan); the
relocation requirements of § 570.606(c) governing displacement
subject to section 104(k) of the Act; and the relocation
requirements of § 570.606(d) governing optional relocation
assistance under section 105(a)(11) of the Act.
(i) It has developed a community development plan, which at a minimum,
covers the same one, two or three program years pursuant to
paragraph (f) of this section. At a minimum the community
development plan must:
(1) Identify the grantee's community development needs and
housing needs; and
(2) Specify both short-term and long-term community development
objectives, consistent with the grantee's final statement,
that have been developed in accordance with the primary
objective of the Act and the requirements of this part.
(j) It will comply with the requirements of § 570.200(c)(2) with
regard to the use of special assessments to recover the capital
costs of activities assisted with CDBG funds.
(k) (Where applicable, the grantee may also include the following
additional certification.) It lacks sufficient resources from
funds provided under this subpart or program income to allow it to
comply with the provisions of § 570.200(c)(2), and it must
therefore assess properties owned and occupied by moderate income
persons, to recover the non-CDBG funded portion of the capital
cost without paying such assessments in their behalf from CDBG
funds.
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(1) It is following a current housing assistance plan which has been
approved by HUD pursuant to § 570.306.
(m) It will comply with the other provisions of the Act and with other
applicable laws.
S 570.304 Making of grants.
(a) Acceptance of final statement and certifications. The final
statement and certifications will be accepted by the responsible
HUD field office unless it is determined that one or more of the
following requirements have not been met.
(1) Completeness. The submission shall include all of the
components required in § 570.302(a).
(2) Timeliness. The submission must be received within the time
period established in § 570.302(b)(1).
(3) Certifications. The certifications made by the grantee will
be satisfactory to the Secretary if made in conformance with
§ 570.303, unless the Secretary has determined pursuant to
Subpart 0 that the grantee has not complied with the
requirements of this part or has failed to carry out its
housing assistance plan in a timely manner, or determined
that there is evidence, not directly involving the grantee's
past performance under this program, which tends to challenge
in a substantial manner the grantee's certification of future
performance. If the Secretary makes any such determination,
however, further assurances may be required to be submitted
by the grantee as the Secretary may deem warranted or
necessary to find the grantee's certification satisfactory.
(b) Grant agreement. The grant will be made by means of a grant
agreement executed by both HUD and the grantee.
(c) Grant amount. The Secretary will make a grant in the full
entitlement amount, generally within the last 30 days of the
grantee's current program year, unless:
(1) The final statement or certifications are not received by the
first working day in September or are not acceptable under
paragraphs (a)(1) and (3) of this section in which case the
grantee will forfeit the entire entitlement amount; or
(2) The grantee's performance does not meet the performance
requirements or criteria prescribed in Subpart O and the
grant amount is reduced.
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(d) Conditional grant. The Secretary may make a conditional grant in
which case the obligation and use of grant funds for activities
may be restricted. Conditional grants may be made where there is
substantial evidence that there has been, or there will be, a
failure to meet the performance requirements or criteria described
in Subpart 0. In such case, the conditional grant will be made by
means of a grant agreement, executed by HUD, which includes the
terms of the condition specifying the reason for the conditional
grant, the actions necessary to remove the condition and the
deadline for taking those actions. The grantee shall execute and
return such an to HUD within 60 days of the date of its
transmittal. Failure of the grantee to execute and return the
grant ay,�=L«lLt within 60 days may be deemed by HUD to constitute
rejection of the grant by the grantee and shall be cause for HUD
to determine that the funds provided in the grant agreement are
available for reallocation in accordance with section 106(c) of
the Act. Failure to satisfy the condition may result in a
reduction in the entitlement amount pursuant to § 570.911.
S 570.305 A =. ts.
(a) The grantee shall amend its final statement whenever it decides
not to carry out an activity described in the final statement, to
carry out an activity not previously described, or to
substantially change the purpose, scope, location, or
beneficiaries of an activity. Within 120 days of the effective
date of this rule or, for a new grantee, prior to submission of
its final statement, the grantee shall develop and make public its
criteria for what constitutes a substantial change for this
purpose.
(b) Prior to amending its final statement, the grantee shall provide
citizens with reasonable notice of, and opportunity to comment on,
such proposed changes in its use of funds. The grantee shall
consider any such convents and, if the grantee deems appropriate,
modify the changes. The grantee shall make available to the
public, and shall submit to HUD, a description of any changes
adopted. A letter transmitting such description to HUD shall be
signed by the official representative of the grantee.
S 570.306 Housing assistance plan.
(a) Purpose. In its housing assistance plan (HAP), each metropolitan
city and urban county surveys its housing conditions, assesses the
housing assistance needs of its low and moderate income
households, specifies goals for the number of dwelling units and
low and moderate income households to be assisted, and indicates
the general locations of proposed assisted housing for low and
moderate income persons.
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(b) Use. A grantee's HAP is a basis upon which HUD approves or
disapproves assisted housing in the grantee's jurisdiction and
against which HUD monitors a grantee's provision of assisted
housing.
(c) Grantee's responsibility. Each grantee is responsible for
implementing its HAP expeditiously. This includes the timely
achievement of goals for assisted housing. Each grantee is
expected to use all available resources and, when needed, to take
all actions within its control to implement the approved HAP.
Performance under the HAP is one of the factors considered in
grantee performance reviews conducted as provided in Subpart O of
this part. Subpart O also provides further requirements relating
to the responsibility of the grantee in implementing its HAP.
(d) General.
(1) The HAP consists of the five components described in
paragraph (e) of this section. The HAP shall be submitted to
HUD by an authorized representative of the grantee.
(2) Each city or county which expects to receive an entitlement
grant shall submit a HAP between September 1 and October 31
prior to its submission of the final statement required by
§ 570.302. The HAP will be considered in effect from October
1 through September 30 for purposes of crediting performance
against the goals established regardless of the specific date
that HUD approves the HAP. A grantee which has a three year
goal which will be in effect for the fiscal year in which the
final statement is to be submitted need only submit an annual
goal and may reference (to the extent that there have been no
significant changes) the other required portions of the HAP.
(3) Any newly entitled community which was not made aware of its
entitlement status by August 31 shall be considered unable to
comply with the October 31 deadline and may submit an interim
HAP in accordance with the requirements of paragraph (e)(6)
of this section in lieu of the requirements of paragraphs
(e)(1) through (e)(5) of this section.
(e) Housing conditions, needs, goals, and locations.
(1) Conditions. The grantee shall describe the condition of the
current housing stock in the community by providing a
statistical profile (including an identification of data
sources and data time frames) by tenure type (renter and
owner), which describes housing conditions by the number of
occupied, vacant and abandoned dwelling units in standard and
substandard condition. The grantee shall develop its own
definition of substandard housing which, at a minimum, shall
D-6 5/89
include units which do not meet the housing quality standards
of the Section 8 Housing Assistance Payments Program --
Existing Housing (24 CFR 882.109) and shall include such
definition in its submission. In addition, the grantee shall
identify the number of its occupied, vacant and abandoned
substandard housing units which it considers to be suitable
for rehabilitation, and include its definition of suitable
for rehabilitation in the HAP submission.
(2) Needs.
(i) The grantee shall assess the housing assistance needs of
low and moderate income households currently residing in
the community by tenure and, for households requiring
rental subsidies, by household type (elderly, small
family and non -elderly individuals, and large family),
including households expected to be involuntarily
displaced by public and private action over the three
year period of the HAP. The grantee shall also assess
the housing assistance needs of low and moderate income
households that could reasonably be expected to reside
in the community. Such households are those that could
be expected to reside in the community as a result of
existing and projected employment opportunities, and the
estimate shall consider changes in population known to
have occurred since the last Census. For elderly
households, the estimate of those that are expected to
reside in the co"iunity must be based on the number
known to be seeking assisted housing in the community or
using the community's health services. In no case shall
the estimate of all households expected to reside be
less than zero.
(ii) A narrative statement accompanying the needs shall
indicate the composition of the needs of low and
moderate income persons including separate numerical
estimates, by tenure and household type, for households
to be involuntarily displaced, households expected to
reside, and total minority households. This narrative
statement shall also include the source and date of the
data used in developing the needs assessment. In
addition, the narrative shall include a description
which summarizes any special housing conditions and/or
any special housing needs of particular groups of low
and moderate income households in the community. Such
description shall include but need not be limited to,
discussion of the special housing needs and/or
conditions of individual minority groups, impact of
conversion of rental housing to condominium or
cooperative ownership, handicapped persons, and single
heads of household. All handicapped single person
D-9 5/89
households (elderly and nonelderly) as well as two
person households which include one elderly person and
one handicapped person, must be included in the elderly
category, but separately identified in the narrative.
All other nonelderly handicapped persons must be
included with small or large family households,
according to the size of their households.
(3) Three year goal.
(i) The grantee shall specify a realistic three year goal by
tenure type for goals which are designed to improve the
condition of the housing stock, and also by household
type for the number of households to be assisted with
rental subsidies. The three year goal must include all
assisted housing resources which can be expected to be
available to the grantee. In addition, the grantee
shall identify the maximum number of HUD assisted rental
units it will accept during that three year period of
each housing type (i.e., new, rehabilitation, existing)
in an amount at least equal to the total number of HUD
assisted rental goals by household type.
(ii) Goals relating to improving the condition of the housing
stock should be based on an evaluation of the data
presented in the housing conditions portion of the HAP
as well as other current data available to the grantee.
(iii) The goals relating to households to be assisted with
rental subsidies must be proportional to need by
household type, except that HUD may approve or require
a different proportion in cases of:
(A) Disproportionate provision of assisted housing
under a previous HAP;
(B) Significant displacement of a particular household
type;
(C) Adjustments for projects of feasible size;
(D) Natural disasters;
(E) Meeting the requirements of sections 105(f) and (h)
of the Housing Act of 1949, as amended (42 U.S.C.
1450 et seq.) or of § 570.606(b)(1);
(F) As provided under paragraph (e)(3)(vi) of this
section.
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(iv) The majority of goals for the rehabilitation of dwelling
units must assist low and moderate income households.
For this purpose, publicly assisted rehabilitation of a
dwelling unit shall be deemed to assist a low and
moderate income household when the dwelling unit, after
rehabilitation, is occupied by a low and moderate income
household.
(v) Each grantee shall include a narrative describing those
specific actions which the grantee will take to address
any special housing conditions or needs identified in
§ 570.306(e)(2)(ii) above, as well as any actions
determined necessary to ensure the timely achievement of
its three year goals (including a discussion of any
expected or known impediments and planned remedies);
those specific actions that the grantee will take to
minimize displacement of low income persons and of
moderate income persons, specified separately; and those
specific actions that the grantee will take to preserve
or expand the availability of housing for low income
persons and for moderate income persons, specified
separately, such as the preservation of single room
occupancy housing and the development by public and
private ru,,H�jfit organizations of vacant properties
that become available under in rem p-Luut=dings.
(vi) Amendments to three-year goals occurring in the second
or third year of such goals may contain goals which are
not p��,V,_Ltional to need by household type under the
following circumstances:
(A) The amendment is for the sole purpose of
a� at"dating an otherwise acceptable proposal for
housing assistance from HUD;
(B) The likely level of resources available for the
other household types precludes the commensurate
increase of the goals for those categories; and
(C) HUD determines that, with respect to meeting the
three year goals for the other household types, the
grantee has taken all reasonable actions necessary
to make use of available resources and has taken no
actions designed to block the provision of housing
assistance.
(4) Annual qoal.
(i) The grantee shall specify an annual goal which must
include all assisted housing resources which can be
expected to be available to the grantee; be established
D -I1 5/89
considering feasible project size; and constitute
reasonable progress towards meeting the three year goal.
In addition, the grantee shall indicate its preference
for the distribution of HUD's assisted rental housing by
housing type (i.e., new, rehabilitation, existing).
(ii) In its annual goal, the grantee shall also describe the
specific actions (including any new problems encountered
and planned remedies) it will take during the year to
meet its annual goal and, as app-Lupiiate, its three year
goal; those specific actions that the grantee will take
to minimize displacement of low income persons and of
moderate income persons, specified separately; and those
specific actions that the grantee will take to preserve
or expand the availability of housing for low income
persons and for moderate income persons, specified
separately, such as the preservation of single room
occupancy housing and the development by public and
private nonprofit organizations of vacant properties
that become available under in rem proceedings. The
grantee must also include a description of the
provisions that it will make to assure that a majority
of dwelling units to receive rehabilitation subsidy will
assist low and moderate income households.
(5) General locations.
(i) A grantee having goals for new construction or
substantial rehabilitation shall identify general
locations of proposed projects with the objective of
furthering community revitalization, promoting housing
opportunity, enabling persons that are to be
involuntarily displaced to remain in their
neighborhoods, avoiding undue concentrations of assisted
housing in areas containing high proportions of low and
moderate income persons, and assuring the availability
of public facilities and services.
(ii) The grantee may, at its option, designate any of the
general locations identified pursuant to paragraph (e)
(5)(i) of this section as High Priority areas. (Under
provisions of HUD's assisted housing ranking procedures,
a higher rating can be obtained under the ranking
criteria with respect to responsiveness of proposed
projects to preferences and priorities of applicable
HAPs.)
(iii) Each general location identified under paragraph (e)
(5)(i) of this section must contain at least one site
which conforms to the Departmental regulations and
policies relating to the site and neighborhood
D-12 5/89
standards established for the appropriate HUD assisted
housing program.
(iv) Identification of the general locations must be
accomplished by attaching a map to the HAP except that
the HUD field office may accept a listing where it
determines that the development of a map would present a
hardship for the grantee.
(6) Interim HAP. A newly entitled grantee which has not been
notified by HUD in sufficient time to meet the October 31 HAP
submittal deadline (see § 570.306(d)(3)) shall submit an
interim HAP at least 45 days prior to the submission of its
final statement. Such submission shall include a narrative
description of the condition of the housing stock; a
narrative assessment of the housing assistance needs of low
and moderate income households; a realistic annual goal
indicating the number of dwelling units by housing type, and
low and moderate income households by household type, to be
assisted during the balance of the fiscal year; and a listing
of general locations of proposed new construction and
substantially rehabilitated housing for low and moderate
income persons; and any other element specifically required
under section 104(c) of the Act. This HAP submission will be
effective through September 30 of the year in which it is
submitted.
(f) Amendments to the HAP. The grantee shall amend its HAP whenever
there is a substantial change in its housing needs or the public
resources available to address those needs and shall notify HUD
within 45 days of any changes it makes to its HAP.
(g) HUD review of HAPS, interim HAPs, and amendments. HUD will review
these HAP submissions to assure that the requirements of this
section have been met, and will approve them unless the grantee's
stated conditions and needs are plainly inconsistent with
significant facts or data generally available; the grantee's
proposed goals and activities are plainly inappropriate to meeting
those conditions or needs; or the HAP fails to comply with other
provisions of this section. Within 30 days of the date that the
submission is received, HUD will notify the grantee in writing
that the submission has been approved, disapproved, or that a
final decision is still pending (in which case HUD may take no
more than 30 additional days to decide whether to approve or
disapprove the submission). In the event that HUD has not
notified the grantee in writing within 30 days of receipt, the
submission shall be considered fully approved.
(Approved by the Office of Management
and Budget under Control No. 2506-0077)
D-13 5/89
S 570.307 Urban counties.
(a) Determination of qualification. The Secretary will determine the
qualifications of counties to receive entitlements as urban
counties upon receipt of qualification documentation from counties
at such time, and in such manner and form as prescribed by HUD.
The Secretary shall determine eligibility and applicable portions
of each eligible county for purposes of fund allocation under
section 106 of the Act on the basis of information available from
the U.S. Bureau of the Census with respect to population and other
pertinent demographic characteristics, and based on information
provided by the county and its included units of general local
government.
(b) Qualification as an urban county.
(1) A county will qualify as an urban county if such county meets
the definition at § 570.3(ee). As necessitated by this
definition, the Secretary shall determine which counties have
authority to carry out essential community development and
housing assistance activities in their included units of
general local government without the consent of the local
governing body and which counties must execute cooperation
agreements with such units to include then in the urban
county for qualification and grant calculation purposes.
(2) At the time of urban county qualification, HUD may refuse to
recognize the cooperation agreement of a unit of general
local government in an urban county where, based on past
performance and other available information, there is
substantial evidence that such unit does not cooperate in the
implementation of the essential community development or
housing assistance activities or where legal impediments to
such implementation exist, or where participation by a unit
of general local government in noncompliance with the
applicable law in Subpart K would constitute noncompliance by
the urban county. In such a case, the unit of general local
government will not be permitted to participate in the urban
county, and its population or other needs characteristics
will not be considered in the determination of whether the
county qualifies as an urban county or in determining the
amount of funds to which the urban county may be entitled.
HUD will not take this action unless the unit of general
local government and the county have been given an
opportunity to challenge HUD's determination and to
informally consult with HUD concerning the proposed action.
D-14 5/89
(c) Essential activities. For purposes of this section, the terns
"essential community development and housing assistance
activities" means community renewal and lower income housing
activities, specifically urban renewal and publicly assisted
housing. In determining whether a county has the required powers,
the Secretary will consider both its authority and, where
applicable, the authority of its designated agency or agencies.
(d) Period of qualification.
(1) The qualification by HUD of an urban county shall remain
effective for three successive Federal fiscal years
regardless of changes in its population during that period,
except as provided under paragraph (f) of this section and
except as provided under § 570.3(ee)(3) of this part where
the period of qualification shall be two successive Federal
fiscal years.
(2) During the period of qualification, no included unit of
general local government may withdraw from nor be removed
from the urban county for HUD's grant computation purposes.
(3) If some portion of an urban county's unincorporated area
becomes incorporated during the urban county qualification
period, the newly incorporated unit of general local
government shall not be excluded from the urban county nor
shall it be eligible for a separate grant under Subparts 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 qeneral local
government.
(1) An included unit of general local government cannot become
eligible for an entitlement grant as a metropolitan city
during the period of qualification of the urban county (even
if it becomes a central city of a metropolitan area or its
population surpasses 50,000 during that period). Rather,
such a unit of general local government shall continue to be
included as part of the urban county for the remainder of the
urban county's qualification period, and no separate grant
amount shall be calculated for the included unit.
(2) An included unit of general local government which is part of
an urban county shall be ineligible to apply for grants under
Subpart F, or to be a recipient of assistance under
Subpart I, during the entire period of urban county
qualification.
D-15 5/89
(f) Failure of an urban county to receive a grant. Failure of an
urban county to receive a grant during any year shall terminate
the existing qualification of that urban county, and that county
shall requalify as an urban county before receiving an entitlement
grant in any successive Federal fiscal year. Such termination
shall release units of general local government included in the
urban county, in subsequent years, from the prohibition to receive
grants under paragraphs (d)(3), (e)(1) and (e)(2) of this section.
For this purpose an urban county shall be deemed to have received
a grant upon having satisfied the requirements of sections 104(a),
(b), (c), and (d) of the Act, without regard to adjustments which
may be made to this grant amount under sections 104(e) or 111 of
the Act.
(g) Notifications of the opportunity to be excluded. Any county
seeking to qualify for an entitlement grant as an urban county for
any Federal fiscal year shall notify each unit of general local
government which is located, in whole or in part, within the
county and which would otherwise be included in the urban county,
but which is eligible to elect to have its population excluded
from that of the urban county, that it has the opportunity to make
such an election, and that such an election, or the failure to
make such an election, shall be effective for the period for which
the county qualifies as an urban county. These notifications
shall be made by a date specified by HUD. A unit of general local
government which elects to be excluded from participation as a
part of the urban county shall notify the county and HUD in
writing by a date specified by HUD. Such a unit of government may
subsequently elect to participate in the urban county for the
remaining one or two year period by notifying HUD and the county,
in writing, of such election by a date specified by HUD.
5 570.308 Joint requests.
(a) Joint requests and cooperation agre Tients.
(1) Any urban county and any metropolitan city located, in whole
or in part, within that county may submit a joint request to
HUD to approve the inclusion of the metropolitan city as a
part of the urban county for purposes of planning and
implementing a joint community development and housing
program. Such a joint request shall only be considered if
submitted at the time the county is seeking a three year
qualification or requalification as an urban county. Such a
joint request shall, upon approval by HUD, remain effective
for the period for which the county is qualified as an urban
county. An urban county may be joined by more than one
metropolitan city, but a metropolitan city located in more
D-16 5/R9
than one urban county may only be included in one urban
county for any program year. A joint request shall be deemed
approved by HUD unless HUD notifies the city and the county
of its disapproval and the reasons therefore within 30 days
of receipt of the request by HUD.
(2) Each metropolitan city and urban county submitting a joint
request shall submit an executed cooperation agreement to
undertake or to assist in the undertaking of essential
community development and housing assistance activities, as
defined in 5 570.307(c).
(b) joint grant amount. The grant amount for a joint recipient shall
be the sum of the amounts authorized for the individual
entitlement grantees, as described in section 106 of the Act. The
urban county shall be the grant recipient.
(c) Effect of inclusion. Upon urban county qualification and HUD
approval of the joint request and cooperation agreement, the
metropolitan city shall be considered a part of the urban county
for purposes of program planning and implementation for the period
of the urban county qualification, and shall be treated the same
as any other unit of general local government which is part of the
urban county.
(d) Submission requirements. In requesting a grant under this part,
the urban county shall make a single submission which meets the
submission requirements of this subpart and covers all menbers of
the joint recipient.
D-17 5/89
Subpart J --- Gant Administration.
Sec.
570.500 Definitions.
570.501 Responsibility for grant administration.
570.502 Applicability of uniform administrative requirements.
570.503 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 (Reserved).
570.512 (Reserved).
570.513 Lump stun drawdowns for financing of property
rehabilitation activities.
Subpart J -- Gant Administration.
S 570.500 Definitions.
For the purposes of this subpart, the following terms shall
apply:
(a) "Program income" means gross income received by the recipient or a
subrecipient directly generated from the use of CDBG funds. When
program income is generated by an activity that is only partially
assisted with CDBG funds, the income shall be prorated to reflect
the percentage of CDBG funds used.
(1) Program income includes, but is not limited to, the
following:
(i) Proceeds from the disposition by sale or long-term lease
of real property purchased or improved with CDBG funds;
(ii) Proceeds from the disposition of equipment purchased
with CDBG funds;
(iii) Gross income from the use or rental of real or personal
property acquired by the recipient or by a subrecipient
with CDBG funds, less costs incidental to generation of
the income;
J-1 5/89
(iv) Gross income from the use or rental of real property,
caned by the recipient or a subrecipient, that was
constructed or improved with CDBG funds, less costs
incidental to generation of the income;
(v) Payments of principal and interest on loans made using
CDBG funds;
(vi) Proceeds from the sale of loans made with CDBG funds;
(vii) Proceeds from the sale of obligations secured by loans
made with CDBG funds;
(viii) Interest earned on funds held in a revolving fund
account;
(ix) Interest earned on program income pending its
disposition; and
(x) Funds collected through special assessments made against
properties owned and occupied by households not of low
and moderate income, where the assessments are used to
recover all or part of the CDBG portion of a public
improvement.
(2) Program income does not include interest earned (except for
interest described in § 570.513) on grant advances from the
U.S. Treasury. Such interest shall 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. Examples of other
receipts that are not considered program income are proceeds
from fundraising activities carried out by sub -recipients
receiving CDBG assistance; funds collected through special
assessments used to recover the non-CDBG portion of a public
improvement; and proceeds from the disposition of real
property acquired or improved with CDBG funds when the
disposition occurs after the applicable time period specified
in § 570.503(b)(8) for subrecipient-controlled property, or
in § 570.505 for recipient -controlled property.
(b) "Revolving fund" means a separate fund (with a set of accounts
that are independent of other program accounts) established for
the purpose of carrying out specific activities which, in turn,
generate payments to the fund for use in carrying out the same
activities.
(c) "Subrecipient" means a public- or private nonprofit agency,
authority or organization, or an entity described in § 570.204(c),
receiving CDBG funds fmii the recipient to undertake activities
eligible for assistance under Subpart C. The term includes a
public agency designated by a metropolitan city or urban county to
J-2 589
receive a loan guarantee under Subpart M, but does not include
contractors providing supplies, equipment, construction or
services subject to the procurement requirements in 24 CFR 85.36,
or in Attachment 0 of OMB Circular A-110, as applicable.
5 570.501 Responsibility for grant administration.
(a) One or more public agencies, including existing local public
agencies, may be designated by the chief executive officer of the
recipient to undertake activities assisted by this part. A public
agency so designated shall be subject to the same requirements as
are applicable to subrecipients.
(b) The recipient is responsible for ensuring that CDBG funds are used
in accordance with all program requirements. The use of
designated public agencies, subrecipients, or contractors does not
relieve the recipient of this responsibility. The recipient is
also responsible for determining the adequacy of performance under
subrecipient agreements and procurement contracts, and for taking
appropriate action when performance problems arise, such as the
actions described in S 570.910. Where a unit of general local
government is participating with, or as part of, an urban county,
or as part of a metropolitan city, the recipient is responsible
for applying to the unit of general local government the same
requirements as are applicable to subrecipients.
5 570.502 Applicability of uniform administrative requirements.
(a) Recipients and subrecipients which are governmental entities
(including public agencies) shall comply with the requirements and
standards of OMB Circular No. A-87, "Principles for Determining
Costs Applicable to Grants and Contracts with State, Local and
Federally recognized Indian Tribal Governments", OMB Circular A-
128, "Audits of State and Local Governments" (implemented at
24 CFR Part 44) and with the following sections of 24 CFR Part 85
"Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments":
(1) Section 85.3, "Definitions";
(2) Section 85.6, "Exceptions";
(3) Section 85.12, "Special grant or subgrant conditions for
'high-risk' grantees";
(4) Section 85.20, "Standards for financial management systems,"
except paragraph (a);
7-3 580
(5)
Section
85.21,
"Payment," except as modified by § 570.513;
(6)
Section
85.22,
"Allowable costs";
(7)
Section
85.26,
"Non-federal audits";
(8)
Section
85.32,
"Equipment," except in all cases in which the
equipment
is sold,
the proceeds shall be program income;
(9)
Section
85.33,
"Supplies";
(10)
Section
85.34,
"Copyrights";
(11)
Section
85.35,
"Subawards to debarred and suspended
parties";
(12)
Section
85.36,
"Procurement," except paragraph (a);
(13)
Section
85.37,
"Subgrants";
(14)
Section
85.40,
"Monitoring and reporting program
performance,"
except paragraphs (b) through (d) and paragraph
(f);
(15)
Section
85.41,
"Financial reporting," except paragraphs
(a),(b),
and (e);
(16)
Section
85.42,
"Retention and access requirements for
records";
(17)
Section
85.43,
"Enforcement";
(18)
Section
85.44,
"Termination for convenience";
(19)
Section
85.51,
"Later disallowances and adjustments" and
(20)
Section
85.52,
"Collection of amounts due."
(b) Subrecipients, except subrecipients which are governmental
entities, shall comply with the requirements and standards of OMB
Circular No. A-122, "Cost Principles for Non -Profit Organizations"
or OMB Circular No. A-21, "Cost Principles for Educational
Institutions," as applicable, and with the following Attachments
to OMB Circular No. A-110:
(1) Attactm ent A, "Cash Depositories", except for paragraph 4
concerning deposit insurance;
J-4 5/89
(2) Attachment B, "Bonding and Insurance";
(3) Attachment C, "Retention and Custodial Requirements for
Records", except that in lieu of the provisions in paragraph
4, the retention period for records pertaining to individual
CDBG activities starts from the date of submission of the
annual performance and evaluation report, as prescribed in
§ 570.507, in which the specific activity is reported on for
the final time;
(4) Attachment F, "Standards for Financial Management Systems";
(5) Attachment H, "Monitoring and Reporting Program Performance,"
paragraph 2;
(6) Attachment N, "Property Management Standards", except for
paragraph 3 concerning the standards for real property, and
except that paragraphs 6 and 7 are modified so that -
(i) In all cases in which personal property is sold, the
proceeds shall be program income, and
(ii) Personal property not needed by the subrecipient for
CDBG activities shall be transferred to the recipient
for the CDBG program or shall be retained after
compensating the recipient; and
(7) Attachment 0, "Procurement Standards."
§ 570.503 with subrecipients.
(a) Before disbursing any CDBG funds to a subrecipient, the recipient
shall sign a written agreement with the subrecipient. The
agreement shall remain in effect during any period that the
subrecipient has control over CDBG funds, including program
income.
(b) At a minimum, the written agreement with the subrecipient shall
include provisions concerning the following items:
(1) Statement of work. The agreement shall include a description
of the work to be performed, a schedule for completing the
work, and a budget. These items shall be in sufficient
detail to provide a sound basis for the recipient effectively
to monitor performance under the agreement.
(2) Records and reports. The recipient shall specify in the
agreement the particular records the subrecipient must
maintain and the particular reports the subrecipient must
J-5 589
submit in order to assist the recipient in meeting its
recordkeeping and reporting requirements.
(3) Proqram income. The agreement shall include the program
income requirements set forth in § 570.504(c).
(4) Uniform administrative requirements. The ayi-ct=«,,t shall
require the subrecipient to comply with applicable uniform
administrative requirements, as described in § 570.502.
(5) other program requirements. The agreement shall require the
subrecipient to carry out each activity in compliance with
all Federal laws and regulations described in Subpart K of
these regulations, except that:
(i) The subrecipient does not assume the recipient's
environmental responsibilities described at S 570.604;
and
(ii) The subrecipient does not assume the recipient's
responsibility for initiating the review process under
the provisions of 24 CFR Part 52.
(6) Conditions for religious organizations. Where applicable,
the conditions prescribed by HUD for the use of CDBG funds by
religious organizations shall be included in the agreement.
(7) Suspension and termination. The agreement shall specify
that, in accordance with 24 CFR 85.43, suspension or
termination may occur if the subrecipient materially fails to
comply with any term of the award, and that the award may be
terminated for convenience in accordance with 24 CFR 85.44.
(8) Reversion of assets. The agreement shall specify that upon
its expiration the subrecipient shall transfer to the
recipient any CDBG funds on hand at the time of expiration
and any accounts receivable attributable to the use of CDBG
funds. It shall also include provisions designed to ensure
that any real property under the subrecipient's control that
was acquired or improved in whole or in part with CDBG funds
in excess of $25,000 is either:
(i) Used to meet one of the national objectives in § 570.208
until five years after expiration of the agreement, or
for such longer period of time as determined to be
appropriate by the recipient; or
(ii) Disposed of in a mariner that results in the recipient's
being reimbursed in the anxDunt of the current fair
market value of the property less any portion of the
value attributable, to Pxl-enditurvs of non-CDBG funds for
;T 6 5/89
acquisition of, or improvement to, the property.
(Reimbursement is not required after the period of time
specified in paragraph (b)(8)(i) of this section.)
5 570.504 PiWyiarn incrme.
(a) Recording proqram income. The receipt and expenditure of program
income as defined in § 570.500(a) shall be recorded as part of the
financial transactions of the grant program.
(b) Disposition of program income received by recipients.
(1) Program income received before grant closeout may be retained
by the recipient if the income is treated as additional CDBG
funds subject to all applicable requirements governing the
use of CDBG funds.
(2) If the recipient chooses to retain program income, that
income shall affect withdrawals of grant funds from the U. S.
Treasury as fol lows :
(i) Program income in the form of repayments to, or interest
earned on, a revolving fund as defined in § 570.500(b)
shall be substantially disbursed from the fund before
additional cash withdrawals are made from the U.S.
Treasury for the same activity. (This rule does not
prevent a lump sum disbursement to finance the
rehabilitation of privately owned properties as provided
for in § 570.513.)
(ii) Substantially all other program income shall be
disbursed for eligible activities before additional cash
withdrawals are made from the U.S. Treasury.
(3) Program income on hand at the time of closeout shall continue
to be subject to the eligibility requirements in Subpart C
and all other applicable provisions of this part until it is
expended.
(4) Unless otherwise provided in any grant closeout agreement,
and subject to the requirements of paragraph (b)(5) of this
section, income received after closeout shall not be governed
by the provisions of this part, except that, if at the time
of closeout the recipient has another ongoing CDBG grant
received directly from HUD, funds received after closeout
shall be treated as program income of the ongoing grant
program.
(5) If the recipient does not have another ongoing grant received
directly from HUi7 at the time of closeout, income received
J-7 5/89
after closeout from the disposition of real property or from
loans outstanding at the time of closeout shall not be
governed by the provisions of this part, except that such
income shall be used for activities that meet one of the
national objectives in § 570.208 and the eligibility
requirements described in section 105 of the Act.
(c) Disposition of program income received by subrecipients. The
written agreement between the recipient and the subrecipient, as
required by § 570.503, shall specify whether program income
received is to be returned to the recipient or retained by the
subrecipient. Where program income is to be retained by the
subrecipient, the agreement shall specify the activities that will
be undertaken with the program income and that all provisions of
the written agreement shall apply to the specified activities.
When the subrecipient retains program income, transfers of grant
funds by the recipient to the subrecipient shall be adjusted
according to the principles described in paragraphs (b)(2)(i) and
(ii) of this section. Any program income on hand when the
agreement expires, or received after the agreement's expiration,
shall be paid to the recipient as required by 5 570.503(b)(8).
(d) Disposition of certain program income received by urban counties.
Program income derived from urban county program activities
undertaken by or within the jurisdiction of a unit of general
local government which thereafter terminates its participation in
the urban county shall continue to be program income of the urban
county. The urban county may transfer the program income to the
unit of general local government, upon its termination of urban
county participation, provided that the unit of general local
government has become an entitlement grantee and agrees to use the
program income in its own CDBG entitlement program.
5 570.505 Use of real property.
The standards described in this section apply to real property
within the recipient's control which was acquired or improved in whole
or in part using CDBG funds in excess of $25,000. These standards
shall apply from the date CDBG funds are first spent for the property
until five years after closeout of an entitlement recipient's
participation in the entitlement CDBG program or, with respect to other
recipients, until five years after the closeout of the grant from which
the assistance to the property was provided.
(a) A recipient may not change the use or planned use of any such
property (including the beneficiaries of such use) from that for
which the acquisition or improvement was made unless the recipient
provides affected citizens with reasonable notice of, and
opportunity to comment on, any proposed change, and either:
J-8 5/89
(1) The new use of such qualifies as meeting one of the
national objectives in § 570.208 and is not a building for
the general conduct of government; or
(2) The requirements in paragraph (b) of this section are met.
(b) If the recipient determines, after consultation with affected
citizens, that it is appropriate to change the use of the property
to a use which does not qualify under paragraph (a)(1) of this
section, it may retain or dispose of the property for the changed
use if the recipient's CDBG program is reimbursed in the amount of
the current fair market value of the property, less any portion of
the value attributable to expenditures of non-CDBG funds for
acquisition of, and improvements to, the V.L,,�.L Ly.
(c) If the change of use occurs after closeout, the provisions
governing income from the disposition of the real property in
5 570.504(b)(4) or (5), as applicable, shall apply to the use of
funds reimbursed.
(d) Following the reimbursement of the CDBG program in accordance with
paragraph (b) of this section, the property no longer will be
subject to any CDBG requirements.
§ 570.506 Records to be maintained.
Each recipient shall establish and maintain sufficient records to
enable the Secretary to determine whether the recipient has met the
requirements of this part. At a minimum, the following records are
needed:
(a) Records providing a full description of each activity assisted (or
being assisted) with CDBG funds, including its location (if the
activity has a geographical locus), the amount of CDBG funds
budgeted, obligated and expended for the activity, and the
provision in Subpart C under which it is eligible.
(b) Records demonstrating that each activity undertaken meets one of
the criteria set forth in 5 570.208. (Where information on income
by family size is required, the recipient may substitute evidence
establishing that the person assisted qualifies under another
program having income qualification criteria at least as
restrictive as that used in the definitions of "low and moderate
income person" and "low and moderate income household" (as
applicable) at § 570.3; or the recipient may substitute a copy of
a verifiable certification from the assisted person that his or
her family income does not exceed the applicable income limit
established in accordance with § 570.3; or the recipient may
substitute a notice that the assisted person is a referral from a
state, county or local employment agency or other entity that
J-9 5/89
agrees to refer individuals it determines to be low and moderate
income persons based on HUD's criteria and agrees to maintain
documentation supporting these determinations.) Such records
shall include the following information:
(1) For each activity determined to benefit low and moderate
income persons, the income limits applied and the point in
time when the benefit was determined.
(2) For each activity determined to benefit low and moderate
income persons based on the area served by the activity:
(i) The boundaries of the service area;
(ii) The income characteristics of families and unrelated
individuals in the service area; and
(iii) If the percent of low and moderate income persons in
the service area is less than 51 percent, data showing
that the area qualifies under the exception criteria
set forth at § 570.208(a)(1)(ii).
(3) For each activity determined to benefit low and moderate
income persons because the activity involves a facility or
service designed for use by a limited clientele consisting
exclusively or predominantly of low and moderate income
persons:
(i) Documentation establishing that the facility or service
is designed for and used by senior citizens, handicapped
persons, battered spouses, abused children, the
homeless, illiterate persons, or migrant farm workers,
for which the regulations provide presumptive benefit to
low and moderate income persons; or
(ii) Documentation describing how the nature and, if
applicable, the location of the facility or service
establishes that it is used predominantly by low and
moderate income persons; or
(iii) Data showing the size and annual income of the family
of each person receiving the benefit.
(4) For each activity carried out for the purpose of providing or
improving housing which is determined to benefit low and
moderate income persons:
(i) A copy of a written agreement with each landlord or
developer receiving CDRG assistance indicating the total
number of dwelling units in each multifamily structure
assisted and the number of those units which will be
J-10 5/89
occupied by low and moderate income households after
assistance;
(ii) The total cost of the activity, including both CDBG and
non-CDBG funds.
(iii) For each unit occupied by a low and moderate income
household, the size and income of the household;
(iv) For rental housing only:
(A) The rent charged (or to be charged) after
assistance for each dwelling unit in each structure
assisted; and
(B) Such information as necessary to show the
affordability of units occupied (or to be occupied)
by low and moderate income households pursuant to
criteria established and made public by the
recipient;
(v) For each property acquired on which there are no
structures, evidence of commitments ensuring that the
criteria in S 570.208(a)(3) will be met when the
structures are built; and
(vi) Where applicable, records demonstrating that the
activity qualifies under the special conditions at
S 570.208(a)(3)(i).
(5) For each activity determined to benefit low and moderate
income persons based on the creation of jobs, the recipient
shall provide the documentation described in either paragraph
(b)(5)(i) or (ii) of this section.
(i) Where the recipient chooses to document that at least 51
percent of the jobs will be available to low and
moderate income persons, documentation for each assisted
business shall include:
(A) A copy of a written agreement containing:
(1) A commitment by the business that it will make
at least 51 percent of the jobs available to
low and moderate income persons and will
provide training for any of those jobs
requiring special skills or education;
(2) A listing by job title of the permanent jobs
to be created indicating which jobs will be
available to low and moderate income persons,
J-11 5/89
which jobs require special skills or
education, and which jobs are part-time, if
any; and
(3) A description of actions to be taken by the
recipient and business to ensure that low and
moderate income persons receive first
consideration for those jobs; and
(B) A listing by job title of the permanent jobs
filled, and which jobs of those were available to
low and moderate income persons, and a description
of how first consideration was given to such
persons for those jobs. The description shall
include what hiring process was used; which low and
moderate income persons were interviewed for a
particular job; and which low and moderate income
persons were hired.
(ii) Where the recipient chooses to document that at least 51
percent of the jobs will be held by low and moderate
income persons, documentation for each assisted business
shall include:
(A) A copy of a written agreement containing:
(1) A commitment by the business that at least 51
percent of the jobs, on a full-time equivalent
basis, will be held by low and moderate income
persons; and
(2) A listing by job title of the permanent jobs
to be created, identifying which are part-
time, if any;
(B) A listing by job title of the permanent jobs filled
and which jobs were initially held by low and
moderate income persons; and
(C) For each such low and moderate income person hired,
the size and annual income of the person's family
prior to the person being hired for the job.
(6) For each activity determined to benefit low and moderate
income persons based on the retention of jobs:
(i) Evidence that in the absence of CDBG assistance jobs
would be lost;
(ii) For each business assisted, a listing by job title of
permanent jobs retained, indicating which of those jobs
J-12 5/89
are part-time and (where it is known) which are held by
low and moderate income persons at the time the CDBG
assistance is provided. Where applicable,
identification of any of the retained jobs (other than
those known to be held by low and moderate income
persons) which are projected to become available to low
and moderate income persons through job turnover within
two years of the time CDBG assistance is provided.
Information upon which the job turnover projections were
based shall also be included in the record;
(iii) For each retained job claimed to be held by a low and
moderate income person, information on the size and
annual income of the person's family;
(iv) For jobs claimed to be available to low and moderate
income persons based on job turnover, a description
covering the items required for "available to" jobs in
paragraph (b)(5) of this section; and
(v) Where jobs were claimed to be available to low and
moderate income persons through turnover, a listing of
each job which has turned over to date, indicating which
of those jobs were either taken by, or available to, low
and moderate income persons. For jobs made available, a
description of has first consideration was given to such
persons for those jobs shall also be included in the
record.
(7) For each activity determined to aid in the prevention or
elimination of slums or blight based on addressing one or
more of the conditions which qualified an area as a slum or
blighted area:
(i) The boundaries of the area; and
(ii) A description of the conditions which qualified the area
at the time of its designation in sufficient detail to
demonstrate how the area met the criteria in
S 570.208(b)(1).
(8) For each residential rehabilitation activity determined to
aid in the prevention or elimination of slums or blight in a
slum or blighted area:
(i) The local definition of "substandard";
(ii) A pre --rehabilitation inspection report describing the
deficiencies in each structure to be rehabilitated; and
J-13 5/89
(iii) Details and scope of CDBG assisted rehabilitation, by
structure.
(9) For each activity determined to aid in the prevention or
elimination of slums or blight based on the elimination of
specific conditions of blight or physical decay not located
in a slum or blighted area:
(i) A description of the specific condition of blight or
physical decay treated; and
(ii) For rehabilitation carried out under this category, a
description of the specific conditions detrimental to
public health and safety which were identified and the
details and scope of the CDBG assisted rehabilitation by
structure.
(10) For each activity determined to aid in the prevention or
elimination of slums or blight based on addressing slimes or
blight in an urban renewal area, a copy of the Urban Renewal
Plan, as in effect at the time the activity is carried out,
including maps and supporting documentation.
(11) For each activity determined to meet a conrMity developmnt
need having a particular urgency:
(i) Documentation concerning the nature and degree of
seriousness of the condition requiring assistance;
(ii) Evidence that the recipient certified that the CDBG
activity was designed to address the urgent need;
(iii) Information on the timing of the development of the
serious condition; and
(iv) Evidence confirming that other financial resources to
alleviate the need were not available.
(c) Records which demonstrate that the recipient has made the
determination:. required as a condition of eligibility of certain
activities, as prescribed in §§ 570.201(f), 570.201(i),
570.202(b)(3), 570.203(b), 570.204(a), and 570.206(f).
(d) Records which demonstrate compliance with § 570.505 regarding any
change of use of real property acquired or improved with CDBG
assistance.
(e) Records which demonstrate compliance with the citizen
participation requirements prescribed in section 104(a)(3) of the
Act, and in §§ 570.301(b) and 570.305 for entitlement recipients
or § 570.431 for HUD -administered small cities recipients.
J-14 5/89
(f) Records which demonstrate compliance with the requirements in
§ 570.606 regarding acquisition, displacement, relocation, and
replacement housing.
(g) Fair housing and equal opportunity records containing:
(1) Documentation of the actions the recipient has carried out
with its housing and community development and other
resources to remedy or ameliorate any conditions limiting
fair housing choice in the recipient's community, and
documentation of any other official actions the recipient has
taken which demonstrate its support for fair housing, such as
development of a fair housing analysis described in
S 570.904(c).
(2) Data on the extent to which each racial and ethnic group and
single -headed households (by gender of household head) have
applied for, participated in, or benefited from, any program
or activity funded in whole or in part with CDBG funds. Such
information shall be used only as a basis for further
investigation as to compliance with nondiscrimination
requirements. No recipient is required to attain or maintain
any particular statistical measure by race, ethnicity, or
gender in covered programs.
(3) Data on employment in each of the recipient's operating units
funded in whole or in part with CDBG funds, with such data
maintained in the categories prescribed on the Equal
FYnployment Opportunity Commission's EEO -4 form; and
documentation of any actions undertaken to assure equal
employment opportunities to all persons regardless of race,
color, national origin, sex or handicap in operating units
funded in whole or in part under this part.
(4) Data indicating the race and ethnicity of households (and
gender of single heads of households) displaced as a result
of CDBG funded activities, together with the address and
census tract of the housing units to which each displaced
household relocated. Such information shall be used only as
a basis for further investigation as to compliance with
nondiscrimination requirements. No recipient is required to
attain or maintain any particular statistical measure by
race, ethnicity, or gender in covered programs.
(5) Documentation of actions undertaken to meet the requirements
of 5 570.607(b) which implements section 3 of the Housing
Development Pact of 1968, as amended (12 U.S.C. 1701U)
relative to the hiring and training of low and moderate
income persons and the use of local businesses.
J-15 5/89
(6) Data indicating the racial/ethnic character of each business
entity receiving a contract or subcontract of $25,000 or more
paid, or to be paid, with CDBG funds, data indicating which
of those entities are women's business enterprises as defined
in Executive Order 12138, the amount of the contract or
subcontract, and documentation of recipient's affirmative
steps to assure that minority business and women's business
enterprises have an equal opportunity to obtain or compete
for contracts and subcontracts as sources of supplies,
equipment, construction and services. Such affirmative steps
may include, but are not limited to, technical assistance
open to all businesses but designed to enhance opportunities
for these enterprises and special outreach efforts to inform
them of contract opportunities. Such steps shall not include
preferring any business in the award of any contract or
subcontract solely or in part on the basis of race or gender.
(7) Documentation of the affirmative action measures the
recipient has taken to overcome prior discrimination, where
the courts or HUD have found that the recipient has
previously discriminated against persons on the ground of
race, color, national origin or sex in administering a
program or activity funded in whole or in part with CDBG
funds.
(h) Financial records, in accordance with the applicable requirements
listed in § 570.502.
(i) Agreements and other records related to lump sum disbursements to
private financial institutions for financing rehabilitation as
prescribed in § 570.513; and
(j) Records required to be maintained in accordance with other
applicable laws and regulations set forth in Subpart K of this
part -
(Approved by the Office of Management
and Budget under Control No. 2506-0077)
§ 570.507 Reports.
(a) Performance and evaluation report.
(1) Content. Each performance and evaluation report must contain
completed copies of all forms and narratives prescribed by
the Secretary, including a summary of the citizen comments
received on the report, as prescribed in (a)(3) of this
section.
J-16 5/89
(2) Timinq.
(i) Entitlement grants. Each entitlement grant recipient
shall submit a performance and evaluation report:
(A) No later than 90 days after the completion of the
most recent program year showing the status of all
activities as of the end of the program year;
(B) No later than October 31 each year showing housing
assistance performance as of the end of the Federal
fiscal year; and
(C) No later than 90 days after the criteria for grant
closeout, as described in S 570.509(a), have been
met.
(ii) HUD -administered small cities grants. Each small cities
recipient shall submit a performance and evaluation
report on each grant:
(A) No later than 12 months after the date of the grant
award and annually thereafter on the date of the
award until completion of the activities funded
under the grant; and
(B) No later than 90 days after the criteria for grant
closeout, as described in S 570.509(a), have been
met. If HUD determines that the previous report
adequately describes project results, HUD will
notify the recipient that a final report is not
necessary.
(3) Citizen comments on the report. Each recipient shall make
copies of the performance and evaluation report available to
its citizens in sufficient time to permit the citizens to
comment on the report prior to its submission to HUD. Each
recipient may determine the specific manner and times the
report will be made available to citizens consistent with the
preceding sentence.
(b) Equal employment opportunity reports. Recipients of entitlement
grants or HUD -administered small cities grants shall submit to HUD
each year a report (HUD/EEO-4) on recipient employment containing
data as of June 30.
(c) Minority business enterprise reports. Recipients of entitlement
grants, HUD -administered small cities grants or Urban Development
Action Grants shall submit to HUD, by April 30, a report on
contract and subcontract activity during the first half of the
J-17 5/89
fiscal year and by October 31 a report on such activity during the
second half of the year.
(d) Other reports. Recipients may be required to submit such other
reports and information as HUD determines are necessary to carry
out its responsibilities under the Act or other applicable laws.
(Approved by the Office of Management and Budget under Control Nos.
2506-0077 for paragraph (a) and 2529-0008 for paragraph (b) and 2506-
0066 for paragraph (c))
S 570.508 Public access to pLu,Lmn records.
Notwithstanding 24 CFR 85.42(f), recipients shall provide citizens
with reasonable access to records regarding the past use of CDBG funds,
consistent with applicable State and local laws regarding personal
privacy and obligations of confidentiality.
5 570.509 Grant closeout
(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 exception of closeout costs (e.g., audit costs) and costs
resulting from contingent liabilities described in the
closeout agreement pursuant to paragraph (c) of this section.
Contingent liabilities include, but are not limited to,
third -party claims against the recipient, as well as related
administrative costs.
(2) With respect to activities (such as rehabilitation of
privately owned properties) which are financed by means of
escrow accounts, loan guarantees, or similar mechanisms, the
work to be assisted with CDBG funds (but excluding program
income) has actually been completed.
(3) Other responsibilities of the recipient under the grant
agreement and applicable laws and regulations, appear to have
been carried out satisfactorily or there is no further
Federal interest in keeping the grant agreement open for the
purpose of securing performance.
(b) Closeout actions.
(1) 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 perfonkance and evaluation report
J-18 5/89
described in § 570.507. If an acceptable report is not
submitted, 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 consultation with the
recipient, will prepare a closeout ayL�-a«.Lt in accordance
with paragraph (c) of this section.
(3) HUD will cancel any unused portion of the awarded grant, as
shown in the signed grant closeout agreement. Any unused
grant funds disbursed from the U.S. Treasury which are in the
possession of the recipient shall be refunded to HUD.
(4) Any costs paid with CDBG funds which were not audited
previously shall be subject to coverage in the recipient's
neat single audit performed in accordance with 24 CFR
Part 44. The recipient may be required to repay HUD any
disallowed costs based on the results of the audit, or
additional HUD reviews provided for in the closeout
agreement.
(c) Closeout agreement. Any obligations remaining as of the date of
the closeout shall be covered by the terms of a closeout
agreement. The agreement shall be prepared by the HUD field
office in consultation with the recipient. The agreEnent shall
identify the grant being closed out, and include provisions with
respect to the following:
(1) Identification of any closeout costs or contingent
liabilities subject to payment with CDBG funds after the
closeout ayL=-t:=,Clit is signed;
(2) Identification of any unused grant funds to be canceled by
HUD;
(3) Identification of any program income on deposit in financial
institutions at the time the closeout agreement is signed;
(4) Description of the recipient's responsibility after closeout
for:
(i) Compliance with all program requirements, certifications
and assurances in using program income on deposit at the
time the closeout agreement is signed and in using any
other remaining CDBG funds available for closeout costs
and contingent liabilities;
(ii) Use of real property assisted with CDPC funds in
accordance with the principles described in 5 570.505;
1J- 19 5/89
(iii) Compliance with requirements governing program income
received subsequent to grant closeout, as described at
S 570.504(b)(4) and (5); and
(iv) Ensuring that flood insurance coverage for affected
property owners is maintained for the mandatory period.
(5) Other provisions appropriate to any special circumstances of
the grant closeout, in modification of or in addition to the
obligations in paragraphs (c)(1) through (4) of this section.
The agreement shall authorize monitoring by HUD, and shall
provide that findings of noncompliance may be taken into
account by HUD, as unsatisfactory performance of the
recipient, in the consideration of any future grant award
under this part.
(d) Status of housinq assistance plan after closeout. Unless
otherwise provided in a closeout ayic_=[=Iit, the housing assistance
plan (HAP) will remain in effect after closeout until the
expiration of the fiscal year covered by the last approved HAP.
The HAP will be used for allocations of HUD -assisted housing and
local review and comment under 24 CFR 791 for purposes of
achieving the housing goals under the performance criteria of
S 570.903.
(e) Termination of qrant for convenience. Grant assistance provided
under this part may be terminated for convenience in whole or in
part before the completion of the assisted activities, in
accordance with the provisions of 24 CFR 85.44. The recipient
shall not incur new obligations for the terminated portions after
the effective date, and shall cancel as many outstanding
obligations as possible. HUD shall allow full credit to the
recipient for those portions of obligations which could not be
canceled and which had been properly incurred by the recipient in
carrying out the activities before the termination. The closeout
policies contained in this section shall apply in such cases,
except where the approved grant is terminated in its entirety.
Responsibility for the environmental review to be performed under
24 CFR Part 50 or 24 CFR Part 58, as applicable, shall be
determined as part of the closeout process.
(f) Termination for cause. In cases in which the Secretary terminates
the recipient's grant under the authority of Subpart 0 of this
part, or under the terms of the grant agreement, the closeout
policies contained in this section shall apply, except where the
approved grant is canceled in its entirety. 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 pursuant to the provisions of 24 CFR Part 50.
J-20 5/89
5 570.510 Transferring projects from urban counties to metropolitan
cities.
Section 106(c)(3) of the Act authorizes the Secretary to transfer
unobligated grant funds from an urban county to a new metropolitan
city, provided: the city was an included unit of general local
government in the urban county immediately before its qualification as
a metropolitan city; the funds to be transferred were received by the
county before the qualification of the city as a metropolitan city; the
funds to be transferred had been programmed by the urban county for use
in the city before such qualification; and the city and county agree to
transfer responsibility for the administration of the funds being
transferred from the county's letter of credit to the city's letter of
credit. The following rules apply to the transfer of responsibility
for an activity from an urban county to the new metropolitan city.
(a) The urban county and the metropolitan city must execute a legally
binding agreement which shall specify:
(1) The amount of funds to be transferred from the urban county's
letter of credit to the metropolitan city's letter of credit;
(2) The activities to be carried out by the city with the funds
being transferred;
(3) The county's responsibility for all expenditures and
unliquidated obligations associated with the activities
before the time of transfer, including a statement that
responsibility for all audit and monitoring findings
associated with those expenditures and obligations shall
remain with the county;
(4) The responsibility of the metropolitan city for all other
audit and monitoring findings;
(5) How program income (if any) from the activities specified
shall be divided between the metropolitan city and the urban
county; and
(6) Such other provisions as may be required by HUD.
(b) Upon receipt of a request for the transfer of funds from an urban
county to a metropolitan city and a copy of the executed
agreement, HUD, in consultation with the Department of the
Treasury, shall establish a date upon which the funds shall be
transferred from the letter of credit of the urban county to the
letter of credit of the metropolitan city, and shall take all
necessary actions to affect the requested transfer of funds.
J-21 5/89
(c) HUD shall notify the metropolitan city and urban county of any
special audit and monitoring rules which apply to the transferred
funds when the date of the transfer is communicated to the city
and the county.
5 5 570.511 and 570.512 (RESERVED)
§ 570.513 Ltd stem drawdown for financing of property rehabilitation
activities.
Subject to the conditions prescribed in this section, recipients
may draw funds from the letter of credit in a lump sum to establish a
rehabilitation fund in one or more private financial institutions for
the purpose of financing the rehabilitation of privately owned
properties. The fund may be used in conjunction with various
rehabilitation financing techniques, including loans, interest
subsidies, loan guarantees, loan reserves, or such other uses as may be
approved by HUD consistent with the objectives of this section. The
fund may also be used for making grants, but only for the purpose of
leveraging non-CDHG funds for the rehabilitation of the same property.
(a) Limitation on drawdown of grant funds.
(1) The funds that a recipient deposits to a rehabilitation fund
shall not exceed the grant amount that the recipient
reasonably expects will be required, together with
anticipated program income from interest and loan repayments,
for the rehabilitation activities during the period specified
in the agreement to undertake activities, based on either:
(i) Prior level of rehabilitation activity; or
(ii) Rehabilitation staffing and management capacity during
the period specified in the agreement to undertake
activities.
(2) No grant funds may be deposited under this section solely for
the purpose of investment, notwithstanding that the interest
or other income is to be used for the rehabilitation
activities.
(3) The recipient's rehabilitation program administrative costs
and the achministrative costs of the financial institution may
not be funded through lung sum drawdown. Such costs nnist be
paid from periodic letter of credit withdrawals in accordance
with standard procedures or from program income other than
program income generat(A by the lump stun distribution.
,1 22 5/89
(b) Standards to be met. The following standards shall apply to all
lump sum drawdowns of CDBG funds for rehabilitation:
(1) Eligible rehabilitation activities. The rehabilitation fund
shall be used to finance the rehabilitation of privately
owned properties eligible under the general policies in
S 570.200 and the specific provisions of either S 570.202,
including the acquisition of properties for rehabilitation,
or S 570.203.
(2 ) Requirements for The recipient shall execute a
written ay.L�w =P -M Lt with one or more private financial
institutions for the operation of the rehabilitation fund.
The agreement shall specify the obligations and
responsibilities of the parties, the terms and conditions on
which CDBG funds are to be deposited and used or returned,
the anticipated level of rehabilitation activities by the
financial institution, the rate of interest and other
benefits to be provided by the financial institution in
return for the lump sum deposit, and such other terms as are
necessary for compliance with the provisions of this section.
Upon execution of the a copy must be provided to
the HUD field office for its record and use in monitoring.
Any modifications made during the term of the ay-Lcn,R--„t must
also be provided to HUD.
(3) Period to undertake activities. The agreement must provide
that the rehabilitation fund may only be used for authorized
activities during a period of no more than two years. The
lump sum deposit shall be made only after the agreement is
fully executed.
(4) Time limit on use of deposited funds. Use of the deposited
funds for rehabilitation financing assistance must start
(e.g., first loan must be made, subsidized or guaranteed)
within 45 days of the deposit. In addition, substantial
disbursements from the fund must occur within 180 days of the
receipt of the deposit. (Where CDBG funds are used as a
guarantee, the funds that must be substantially disbursed are
the guaranteed funds.) For a recipient with an agreement
specifying two years to undertake activities, the
disbursement of 25 percent of the fund (deposit plus any
interest earned) within 180 days will be regarded as meeting
this requirement. If a recipient with an agreement
specifying two years to undertake activities determines that
it has had substantial disbursement from the fund within the
180 days although it had not met this 25 percent threshold,
the justification for the recipient's determination shall be
included in the program file. Should use of deposited funds
not start within 45 days, or substantial disbursement from
such fund not occur within 180 days, the recipient may be
J-23 5/89
required by HUD to return all or part of the deposited funds
to the recipient's letter of credit.
(5) Program activity. Recipients shall review the level of
program activity on a yearly basis. Where activity is
substantially below that anticipated, program funds shall be
returned to the recipient's letter of credit.
(6) Termination of agreement. In the case of substantial failure
by a private financial institution to comply with the terms
of a lump sum drawdown agreement, the recipient shall
terminate its agreement, provide written justification for
the action, withdraw all unobligated deposited funds from the
private financial institution, and return the funds to the
recipient's letter of credit.
(7) Return of unused deposits. At the end of the period
specified in the agreement for undertaking activities, all
unobligated deposited funds shall be returned to the
recipient's letter of credit unless the recipient enters into
a new agreement conforming to the requirements of this
section. In addition, the recipient shall reserve the right
to withdraw any unobligated deposited funds required by HUD
in the exercise of corrective or remedial actions authorized
under §S 570.910(b), 570.911, 570.912 or 570.913.
(8) Rehabilitation loans made with non-CDBG funds. If the
deposited funds or program income derived from deposited
funds are used to subsidize or guarantee repayment of
rehabilitation loans made with non-CDBG funds, or to provide
a supplemental loan or grant to the borrower of the non-CDBG
funds, the rehabilitation activities are considered to be
CDBG-assisted activities subject to the requirements
applicable to such activities, except that repayment of non-
CDBG funds shall not be treated as program income.
(9) Provision of consideration. In consideration for the lump
sum deposit by the recipient in a private financial
institution, the deposit must result in appropriate benefits
in support of the recipient's local rehabilitation program.
Minimum requirements for such benefits are:
(i) Grantees shall require the financial institution to pay
interest on the lump sum deposit:
(A) The interest rate paid by the financial institution
shall be no more than three points below the rate
on one year Treasury obligations at constant
maturity.
J-24 5/89
(B) When an sets a fixed interest rate for
the entire term of the ayj-�„--„t, the rate should
be based on the rate at the time the ay.LCn,t--„t is
executed.
(C) The ay t-t-mr „t may provide for an interest rate that
would fluctuate periodically during the term of the
agreement, but at no time shall the rate be
established at more than three points below the
rate on one year Treasury obligations at constant
maturity.
(ii) In addition to the payment of interest, at least one of
the following benefits must be provided by the financial
institution:
(A) Leverage of the deposited funds so that the
financial institution corrrdts private funds for
loans in the rehabilitation program in an amount
substantially in excess of the amount of the lump
sum deposit;
(B) Commitment of private funds by the financial
institution for rehabilitation loans at below
market interest rates, at higher than normal risk,
or with longer than normal repayment periods; or
(C) Provision of administrative services in support of
the rehabilitation program by the participating
financial institution at no cost or at lower than
actual cost.
(c) Proqram income. Interest earned on lump sum deposits and payments
on loans made from such deposits are program income and, during
the period of the agreement, shall be used for rehabilitation
activities under the provisions of this section.
(d) Outstandinq findinqs. Notwithstanding any other provision of this
section, no recipient shall enter into a new ay.LCG,,r--„t during any
period of time in which an audit or monitoring finding on a
previous lump sum drawdown agreement remains unresolved.
(e) Prior notification. The recipient shall provide the HUD field
office with written notification of the amount of funds to be
distributed to a private financial institution before distribution
under the provisions of this section.
(f) RecordkeepinqrI
.rements. The recipient shall maintain in its
files a copy of the written &y,=t= mt and related documents
establishing conformance with this section and concerning
performance by a financial institution in accordance with the
ay�C"„�„t .
J-25 589
Subpart K -- C t *r Prc gramn iaeyui.re nents .
Sec.
570.600 General.
570.601 Public Law 88-352 and Public Law 90-284; affirn-atively
furthering fair housing; and 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 Relocation, displacement and acquisition.
570.607 Employment and contracting opportunities.
570.608 Lead-based paint.
570.609 Use of debarred, suspended, or ineligible contractors or
subrecipients.
570.610 Uniform administrative requirements and cost principles.
570.611 Conflict of interest.
570.612 Executive Order 12372.
Subpart K -- other FJ-%Jy.A-cmq% Requirernents .
5 570.600 General.
(a) Section 104(b) of the Act provides that any grant under section
106 of the Act shall be made only if the grantee certifies to the
satisfaction of the Secretary, among other things, that the grant
"will be conducted and administered in conformity with Public Law
88-352 and Public Law 90-284," and, further, that the grantee
"will comply with the other provisions of this title and with
other applicable laws." Section 104(e)(1) of the Act requires
that the Secretary determine with respect to grants made pursuant
to section 106(b) (Entitlement Grants) and 106(d)(2)(B) (HUD -
administered Small Cities Grants), at least on an annual basis,
among other things, "whether the grantee has carried out [its)
certifications in compliance with the requirements and the primary
objectives of this title and with other applicable laws...."
Certain other statutes are expressly made applicable to activities
assisted under the Act by the Act itself, while other laws not
referred to in the Act may be applicable to such activities by
their own terms. Certain statutes or Executive Orders which may
be applicable to activities assisted under the Act by their own
terms are administered or enforced by governmental departments or
agencies other than the Secretary or the Department. This Subpart
K enumerates laws which the Secretary will treat as applicable to
grants made under section 106 of the Act, other than grants to
States made pursuant to section 106(d) of the Act, for purposes of
K-1 5/89
the determinations described above to be made by the Secretary
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. The absence of mention herein of any other
statute for which the Secretary does not have direct enforcement
responsibility is not intended to be taken as an indication that,
in the Secretary's opinion, such statute or Executive Order is not
applicable to activities assisted under the Act. For laws which
the Secretary will treat as applicable to grants made to States
under section 106(d) of the Act for purposes of the determination
required to be made by the Secretary pursuant to section 104(e)(2)
of the Act, see 5 570.496.
(b) This subpart also sets forth certain additional program
requirements which the Secretary has determined to be applicable
to grants provided under the Act as a matter of administrative
discretion.
(c) In addition to grants made pursuant to section 106(b) and
106(d)(2)(B) of the Act (Subparts D and F, respectively), the
requirements of this Subpart K are applicable to grants made
pursuant to sections 107 and 119 of the Act (Subparts E and G,
respectively), and to loans guaranteed pursuant to Subpart M.
5 570.601 Public Law 88-352 and Public Law 90-284; affirmtively
furthering fair housing; Executive Order 11063.
Section 104(b) of the Act provides that any grant under
section 106 of the Act shall be made only if the grantee certifies to
the satisfaction of the Secretary that the grant "will be conducted and
administered in conformity with Public Law 88-352 and Public Law 90-284
and the grantee will affirmatively further fair housing." Similarly,
section 107 provides that no grant may be made under that section
(Secretary's Discretionary Fund) or section 119 (UDAG) without
satisfactory assurances that the grantee's program will be conducted
and administered in conformity with Public Law 88-352 and Public Law
90-284.
(a) "Public Law 88---352" refers to Title VI of the Civil Rights Act of
1964 (42 U.S.C. 2000d et sic-.), which provides that no person in
the United States shall on the ground of race, color, or national
origin, be excluded from participation in, be denied the benefits
of, or be subjected to discrimination under any program or
activity receiving Federal financial assistance. Section 602 of
the Civil Rights Act of 1964 directs each Federal department and
agency empowered to extend Federal financial assistance to any
program or activity by way of grant to effectuate the foregoing
prohibition by issuing rules, regulations, or orders of general
K--2 5/89
applicability which shall be consistent with achievement of the
statute authorizing the financial assistance. HUD regulations
implementing the requirements of Title VI with respect to HUD
programs are contained in 24 CFR Part 1.
(b) "Public Law 90-284" refers to Title VIII of the Civil Rights Act
of 1968 (42 U.S.C. 3601 et seg.), popularly known as the Fair
Housing Act, which provides that it is the policy of the United
States to provide, within constitutional limitations, for fair
housing throughout the United States and prohibits any person from
discriminating in the sale or rental of housing, the financing of
housing, or the provision of brokerage services, including
otherwise making unavailable or denying a dwelling to any person,
because of race, color, religion, sex, or national origin. Title
VIII further requires the Secretary to administer the programs and
activities relating to housing and urban development in a manner
affirmatively to further the policies of Title VIII. Pursuant to
this statutory direction, the Secretary requires that grantees
administer all programs and activities related to housing and
community development in a manner to affirmatively further the
policies of Title VIII; furthermore, section 104(b)(2) of the Act
requires that each grantee receiving funds under section 106 of
the Act (entitlement or small cities grantees) certify to the
satisfaction of the Secretary that it will affirmatively further
fair housing.
(c) Executive Order 11063, as amended by Executive Order 12259,
directs the Department to take all action necessary and
appropriate to prevent discrimination because of race, color,
religion (creed), sex, or national origin, in the sale, leasing,
rental, or other disposition of residential property and related
facilities (including land to be developed for residential use),
or in the use or occupancy thereof, if such property and related
facilities are, among other things, provided in whole or in part
with the aid of loans, advances, grants, or contributions agreed
to be made by the Federal Government. HUD regulations
implementing Executive Order 11063 are contained in 24 CFR Part
107.
S 570.602 Section 109 of the Art.
(a) Section 109 of the Act requires that no person in the United
States shall on the ground of race, color, national origin or sex,
be excluded from participation in, be denied the benefits of, or
be subjected to discrimination under, any program or activity
funded in whole or in part with community development funds made
available pursuant to the Act. For purposes of this section
"program or activity" is defined as any function conducted by an
identifiable administrative unit of the recipient, or by any unit
of government, subrecipient, or private contractor receiving
K-3 5/89
community development funds or loans from the recipient. "Funded
in whole or in part with coimtunity development funds" means that
ccnuuni.ty development funds in any amount in the form of grants or
proceeds from HW guaranteed loans have been transferred by the
recipient or a subrecipient to an identifiable administrative unit
and disbursed in a program or activity. In subsection (b) of this
section, "recipient" means recipient as defined in 24 CFR 1.2(f).
(b) Specific discriminatory actions prohibited and corrective
actions.
(1) A recipient may not, under any program or activity to which
the regulations of this part may apply, directly or through
contractual or other arrangements, on the ground of race,
color, national origin, or sex:
(i) Deny any individual any facilities, services, financial
aid or other benefits provided under the program or
activity.
(ii) 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.
(iii) Subject an individual 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.
(iv) Restrict an individual in any way in 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.
(v) 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 provided any facilities, services or
other benefit provided under the program or activity.
(vi) Deny an individual an opportunity to participate in a
program or activity as an employee.
(2) A recipient may not use criteria or methods of administration
which have the effect of subjecting persons to discrimination
on the basis of race, color, national origin, or sex, or have
KA 5/89
the effect of defeating or substantially impairing
accomplishment of the objectives of the program or activity
with respect to persons of a particular race, color, national
origin, or sex.
(3) A recipient, in determining the site or location of housing
or facilities provided in whole or in part with funds under
this part, may not make selections of such site or location
which have the effect of excluding persons from, denying them
the benefits of, or subjecting these 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 acccimplishment of the objectives of the Act and of this
section.
(4)
(i) In administering a program or activity funded in whole
or in part with CDBG funds regarding which the recipient
has previously discriminated against persons on the
ground of race, color, national origin or sex, or if
there is sufficient evidence to conclude that such
discrimination existed, the recipient must take remedial
affirmative action to overcome the effects of prior
discrimination. The word "previously" does not exclude
current discriminatory practices.
(ii) in the absence of discrimination, a recipient, in
administering a program or activity funded in whole or
in part with funds made available under this part, may
take any nondiscriminatory affirmative action necessary
to ensure that the program or activity is open to all
without regard to race, color, national origin or sex.
(iii) After a finding of noncompliance or after a recipient
has a firm basis to conclude that discrimination has
occurred, a recipient shall not be prohibited by this
section from taking any action eligible under Subpart C
to ameliorate an 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 remedy prior discriminatory practice
or usage.
(5) [Notwithstanding anything to the contrary in this section,
nothing contained herein shall be construed to prohibit any
recipient 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
K-5 5/89
p_Lu�_Lly be performed only by a member of the same sex as the
recipients of the services.
(c) Section 109 of the Act further provides that any prohibition
against discrimination on the basis of age under the Age
Discrimination Act of 1975 (42 U.S.C. 6101 et seq.) or with
respect to an otherwise qualified handicapped person as provided
in section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794)
shall also apply to any program or activity funded in whole or in
part with funds made available pursuant to the Act. HUD
regulations implementing the Age Discrimination Act are contained
in 24 CFR Part 146 and the regulations implementing section 504
are contained in 24 CFR Part 8.
§ 570.603 Labor standards.
Section 110 of the Act requires that all laborers and mechanics
Toyed by contractors or subcontractors on construction work financed
in whole or in part with assistance received under the Act shall be
paid wages at rates not less than those prevailing on similar
construction in the locality as determined by the Secretary of Labor in
accordance with the Davis -Bacon Act, as amended (40 U.S.C. 276a - 276a-
5). By reason of the foregoing requirement, the Contract Work Hours
and Safety Standards Act (40 U.S.C. 327 et see.) also applies.
However, these requirements apply to the rehabilitation of residential
property only if such property contains not less than 8 units. With
respect to the labor standards specified in this section, the Secretary
of Labor has the authority and functions set forth in Reorganization
Plan Number 14 of 1950 (5 U.S.C. 1.332-15) and section 2 of the Act of
June 13, 1934, as amended (40 U.S.C. 276c).
5 570.604 Environuental standards.
Section 104(g) expresses the intent that "the policies of the
National Environmental Policy Act of 1969 and other provisions of law
which further the purposes of such Act (as specified in regulations
issued by the Secretary) ... [be] most effectively implemented in
connection with the expenditure of funds under" the Act. Such other
provisions of law which further the purposes of the National
Environmental Policy Act of 1969 are specified in regulations issued
pursuant to section 104(g) of the Act and contained in 24 CFR Part 58.
Section 104(8) also provides that, in lieu of the environmental
protection procedures otherwise applicable, the Secretary may under
regulations provide for the release of funds for particular projects to
grantees who assume all of the responsibilities for environmental
review, decisionmaking, and action pursuant to the National
Environmental Policy Act of 1969, and the other provisions of law
specified by the Secretary as described above, that would apply to the
Secretary were he/she to undertake such projects as Federal projects.
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Grantees assume such environmental review, decisionmaking, and action
responsibilities by execution of grant ay-LCdm--,�ts with the Secretary.
The procedures for carrying out such environmental responsibilities are
contained in 24 CFR Part 58.
5 570.605 National Flood Insurance F��,,44.L,..
Section 202(a) of the Flood Disaster Protection Act of 1973 (42
U.S.C. 4106) provides that no Federal officer or agency shall approve
any financial assistance for acquisition or construction purposes (as
defined under section 3(a) of said Act (42 U.S.C. 400(a)), one year
after a conTm-mity has been formally notified of its identification as a
comminity containing an area of special flood hazard, for use in any
area that has been identified by the Director of the Federal Emergency
Management Agency as an area having special flood hazards unless the
community ity in which such area is situated is then participating in the
National Flood Insurance Pram. Notwithstanding the date of HUD
approval of the recipient's application (or, in the case of grants made
under Subpart D, the date of submission of the grantee's final
statement pursuant to 5 570.302), funds provided under this part shall
not be expended for acquisition or construction purposes in an area
that has been identified by the Federal Emergency Management Agency
(FEMA) as having special flood hazards unless the community in which
the area is situated is participating in the National Flood Insurance
Program in accordance with 44 CFR Parts 59-79, or less than a year has
passed since FEMA notification to the community regarding such hazards;
and flood insurance is obtained in accordance with section 102(a) of
the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001).
5 570.606 Relocation, displacement and acquisition.
(a) Uniform Relocation Act.
(1) The Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (URA) (42 U.S.0 4601) and
HUD implementing regulations at 24 CFR Part 42 apply to the
acquisition of real property by a State agency for an
activity assisted under this part and to the displacement of
any family, individual, business, nonprofit organization or
farm that results from such acquisition. The grantee's
certification of compliance with the URA is required in the
grant agreement.
(2) An acquisition and resulting displacement by a State agency
is "for an assisted activity" if it occurs on or after the
date of the initial submission of a final statement under 24
CFR 570.302(a)(2) (Entitlement Grants); the initial
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submission of an application to HUD by a unit of general
local government under §§ 570.426, 570.430, or 570.435(d)
that is granted for the requested activity (HUD administered
Small Cities Program); or the submission of an application to
HUD by a city or urban county under § 570.458 that is granted
for the requested activity (UDAG). However, an acquisition
or displacement that occurs on or after the described date is
not subject to the URA if the grantee determines that the
acquisition or displacement was not carried out for an
assisted activity, and the HUD Field Office concurs in that
determination. An acquisition or displacement that occurs
before the described date is subject to the URA, if the
grantee or the HUD Field Office determines that the
acquisition or displacement was carried out for the assisted
activity. The grantee may, at any time, request a HUD
determination whether an acquisition or displacement will be
considered to be for an assisted activity and thus subject to
these regulations. To be eligible for relocation assistance,
however, a person must also meet the eligibility criteria in
24 CFR Part 42.
(b) Residential antidisplacement and relocation assistance plan.
Under section 104(d) of the Act, each grantee must adopt, make
public and certify that it is following a residential
antidisplacement and relocation assistance plan providing one-for-
one replacement units (paragraph (b)(1) of this section), and
relocation assistance (paragraph (b)(2) of this section). The
plan must also indicate the steps that will be taken consistent
with other goals and objectives of this part to minimize the
displacement of persons from their homes as a result of any
activities assisted under this part.
(1) One-for-one replacement units.
(i) All occupied and vacant occupiable low/moderate income
dwelling units that are demolished or converted to a use
other than as low/moderate income dwelling units as a
direct result of an activity assisted under this part
must be replaced by governmental agencies or private
developers with lav/moderate income dwelling units.
Replacement low/moderate income dwelling units may
include public housing, or existing housing receiving
Section 8 project -based assistance under the United
States Housing Act of 1937. The replacement
low/moderate income dwelling units must be provided
within three years of the commencement of the demolition
or rehabilitation related to the conversion, and must
meet the following requirements:
(A) The units must be located within the grantee's
jurisdiction.
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(B) The units must be sufficient in number and size to
house at least the number of occupants that could
have been housed in the units that are demolished
or converted. The number of occupants that may be
housed in units shall be determined in accordance
with local housing occupancy codes.
(C) The units must be provided in standard condition.
Replacement low/moderate income dwelling units may
include units that have been raised to standard
from substandard condition.
(D) The units must be designed to remain low/moderate
income dwelling units for at least 10 years from
the date of initial occupancy.
(ii) Before obligating or expending funds provided under this
part for any activity that will directly result in the
demolition of low/moderate income dwelling units or the
conversion of low/moderate income dwelling units to
another use, the grantee must make public, and submit
the following information in writing to HUD:
(A) A description of the proposed assisted activity;
(B) The general location on a map and approximate
number of dwelling units by size (number of
bedrooms) that will be demolished or converted to a
use other than for low/moderate income dwelling
units as a direct result of the assisted activity;
(C) A time schedule for the commencement and completion
of the demolition or conversion;
(D) The general location on a map and approximate
number of dwelling units by size (number of
bedrooms) that will be provided as replacement
dwelling units;
(E) The source of funding and a time schedule for the
provision of replacement dwelling units;
(F) The basis for concluding that each replacement
dwelling unit will remain a low/moderate income
dwelling unit for at least 10 years from the date
of initial occupancy.
(A) The requirements of paragraph (b)(1) of this
section do not apply if the HUD Field Office
determines, based upon objective data, that there
is an adequate supply of vacant law/moderate income
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dwelling units in standard condition available on a
nondiscriminatory basis within the grantee's
jurisdiction. In making this determination, the
HUD Field Office will consider the housing vacancy
rate for the jurisdiction, the number of vacant
low/moderate income dwelling units in the
jurisdiction (excluding units that will be
demolished or converted) and the number of eligible
families on waiting lists for housing assisted
under the United States Housing Act of 1937 in the
jurisdiction.
(B) The HUD Field Office may consider the supply of
vacant law/moderate income dwelling units in
standard condition available on a nondiscriminatory
basis in an area that is larger than the grantee's
jurisdiction. Such additional dwelling units shall
be considered if the MID Field Office determines
that the units would be suitable to serve the needs
of the low and moderate income households that
could be served by the law/moderate income dwelling
units that are to be demolished or converted to
another use. The HUD Field Office must base this
determination on geographic and demographic
factors, such as location and access to places of
employment and to other facilities.
(C) The grantee must submit a request for a
determination under paragraph (b)(1)(iii) of this
section directly to the HUD Field Office.
(2) Relocation assistance.
(i) Each low or moderate income household that is displaced
by demolition or by the conversion of a low/moderate
income dwelling unit to another use as a direct result
of an activity assisted under this part shall be
provided with relocation assistance. The low or
moderate income household may elect to receive
relocation assistance described at 24 CFR Part 42 (HUD's
regulations implementing the URA), or may elect to
receive the following relocation assistance:
(A) The relocation assistance described at 24 CFR Part
42, Subpart C (General Relocation Requirements) and
Subpart D (Payment for Moving and Related
Expenses). Relocation notices must be issued
consistent with, and in the manner prescribed
under, 24 CFR 42.203. The definition of
"comparable replacement dwelling" used in 24 CFR
Part 42 is modified as described in paragraph
(b)(3)(i) of this section. Displaced households
provided with replacement housing assistance under
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paragraph (b)(2)(i)(C) of this section in the form
of a certificate or housing voucher under Section 8
of the United States Housing Act of 1937, must be
provided referrals to comparable replacement
dwelling units whose owners are willing to
participate in the housing voucher or certificate
program. The grantee shall advise tenants of their
rights under the Federal Fair Housing Law (Title
VIII) and of replacement housing opportunities in
such a manner that, whenever feasible, they will
have a choice between relocating within their
neighborhoods and other neighborhoods consistent
with the grantee's responsibility to affirmatively
further fair housing;
(B) The reasonable and necessary cost of any security
deposit required to rent the replacement dwelling
unit, and credit checks required to rent or
purchase the replacement dwelling unit; and
(C) Replacement housing assistance. Households are
eligible to receive one of the following forms of
replacement housing assistance:
(1) Each household must be offered compensation
designed to ensure that, for a five-year
period, the displaced household will not bear,
after relocation, a ratio of shelter costs to
income that exceeds 30 percent. Such
compensation shall be either:
(i) A certificate or housing voucher for
rental assistance provided through the
local Public Housing Agency under Section
8 of the United State Housing Act of
1937; or
(ii) Cash rental assistance equal to 60 times
the amount that is obtained by
subtracting 30 percent of the displaced
household's monthly gross income (with
such adjustments as the grantee may deem
appropriate) from the lesser of: the
monthly cost of rent and utilities at a
comparable replacement dwelling unit or
the monthly cost of rent and utilities at
the decent, safe and sanitary replacement
dwelling to which the household
relocates. The grantee may provide the
cash payment in either a lump sum or in
installments. The grantee may at its
discretion offer the household a choice
between the certificate/housing voucher
or cash rental assistance.
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(2) If the household purchases an interest in
a housing cooperative or mutual housing
association and occupies a decent, safe
and sanitary unit in the cooperative or
association, the household may elect to
receive a lump sum payment. This lump
sum payment shall be equal to the
capitalized value of 60 monthly
installments of the amount that is
obtained by subtracting 30 percent of the
displaced household's monthly gross
income (with such adjustments as the
grantee may deem appropriate) from the
monthly cost of rent and utilities at a
comparable replacement dwelling unit. To
compute the capitalized value, the
installments shall be discounted at the
rate of interest paid on passbook savings
deposits by a federally -insured bank or
savings and loan institution conducting
business within the grantee's
jurisdiction. To the extent necessary to
minimize hardship to the household, the
grantee shall, subject to app.Lup.Liate
safeguards, issue a payment in advance of
the purchase of the interest in the
housing cooperative or mutual housing
association.
(ii) Eligibility for relocation assistance.
(A) A low or moderate income household that is required
to move as a direct result of demolition or
conversion of a low/moderate income dwelling unit
to another use, is eligible for relocation
assistance under paragraph (b)(2) of this section
if:
(1) The household is required to move from
the dwelling unit on or after the date
that the owner submits a request to the
grantee for financial assistance that is
later approved for the requested
activity. (This applies to dwelling
units owned by a person other than a
Federal or State agency, as defined under
the URA).
(2) The household is required to move from
the dwelling unit on or after the date of
the initial submission of a final
statement under 24 CFA 570.302(a)(2)
(Entitlement Grants); the initial
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submission of an application to HUD by a
unit of general local government under
§ 570.426, 570.430, or 570.435(d) that is
granted for the requested activity (HUD
administered Small Cities Program); or
the submission of an application to HUD
by a city or urban county under § 570.458
that is granted for the requested
activity (UDAG). (This applies to
dwelling units owned by a Federal or
State agency as defined under the URA.)
(B) If the displacement occurs on or after the
appropriate date described in paragraph
(b)(2)(ii)(A) of this section, the low or moderate
income household is not eligible for relocation
assistance if:
(1) The household is evicted for cause;
(2) The household moved into the property on or
after the date described in paragraph
(b)(2)(ii)(A) of this section, after receiving
written notice of the expected displacement;
or
(3) The grantee determines that the displacement
was not a direct result of the assisted
activity, and the HUD office concurs in that
determination.
(C) If the displacement occurs before the appropriate
date described in paragraph (b)(2)(ii)(A) of this
section, the low or moderate income household is
eligible for relocation assistance if the grantee
or HUD determines that the displacement was a
direct result of an activity assisted under this
part.
(3) Definitions. For the purposes of paragraph (b) of this
section:
(i) "Comparable replacement dwelling unit" means a dwelling
unit that:
(A) Meets the criteria of 24 CFR 42.2(c)(1) through
(4) ; and
(B) Is available at a monthly cost for rent plus
estimated average monthly utility costs that does
not exceed 30 percent of the household's average
gross monthly income (with such adjustiments to
income as the grantee may deem appropriate) after
taking into account any rental assistance the
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household would receive. Where a certificate or
housing voucher is provided to a household under
paragraph (b)(2)(i)(C) (1)(i) of this section, the
dwelling unit must be available to the household at
a monthly cost for rent and estimated average
monthly utility cost that does not exceed the Fair
Market Rent or the payment standard, respectively.
(ii) "Decent, safe and sanitary dwelling" means a decent,
safe and sanitary dwelling as defined in 24 CFR 42.2(e).
(iii) "Low/moderate income dwelling unit" means a dwelling
unit with a market rental (including utility costs)
that does not exceed the applicable Fair Market Rent
(FMR) for existing housing and moderate rehabilitation
established under 24 CFR Part 888.
(iv) "Occupiable dwelling unit" means a dwelling unit that is
in a standard condition, or is in a substandard
condition, but is suitable for rehabilitation.
(v) "Standard condition" and "substandard condition suitable
for rehabilitation." If the grantee has a HUD -approved
Housing Assistance Plan, the definitions of "standard
condition" and "substandard condition suitable for
rehabilitation" established in the plan will apply. If
the grantee does not have a HUD -approved Housing
Assistance Plan, the grantee must establish and make
public its definition of these terns consistent with the
requirements of § 570.306(e)(1).
(4) Effective date. For all grants except those made under
Subpart D of this part (Entitlement Grants), the provisions
of this paragraph (b) are applicable to grants made on or
after October 1, 1988. For grants made under Subpart D,
these provisions will govern all activities for which funds
are first obligated by the grantee on or after the date the
first grant is made after September 30, 1988, without regard
to the source year of the funds used for the activity.
(c) Section 104(k) relocation requirements. Section 104(k) of the Act
requires that reasonable relocation assistance be provided to
persons (families, individuals, businesses, nonprofit
organizations, or farms) displaced (i.e., moved permanently and
involuntarily) as a result of the use of assistance received under
this part to acquire or substantially rehabilitate property. If
such displacement is subject to paragraph (a) or (b) of this
section, above, this paragraph does not apply. The grantee must
develop, adopt and provide to persons to be displaced a written
notice of the relocation assistance for which they are eligible.
The minimum requirements for such assistance under the UDAG
Program are described at § 570.457(b) . Under CD®G programs,
persons entitled to assistance under this paragraph must be
provided relocation assistance, including at a minimum:
K-14 5/89
(1) Reasonable moving expenses;
(2) Advisory services needed to help in relocating. The grantee
shall advise tenants of their rights under the Federal Fair
Housing Law (Title VIII) and of replacement housing
opportunities in such a manner that, whenever feasible, they
will have a choice between relocating within their
neighborhoods and other neighborhoods consistent with the
grantee's responsibility to affirmatively further fair
housing; and
(3) Financial assistance sufficient to enable any person
displaced from his or her dwelling to lease and occupy a
suitable, decent, safe and sanitary replacement dwelling
where the cost of rent and utilities does not exceed 30
percent of the household's gross income.
(d) Optional relocation assistance. Under section 105(a)(11) of the
Act, the grantee may provide relocation payments and other
relocation assistance for individuals, families, businesses,
nonprofit organizations and farms displaced by an activity not
subject to paragraphs (a), (b) or (c) of this section. The
grantee may also provide relocation assistance to persons covered
under paragraphs (a), (b) or (c) of this section beyond that
required. Unless such assistance is provided pursuant to State or
local law, the grantee must provide the assistance only upon the
basis of a written determination that the assistance is
appropriate and must adopt a written policy available to the
public that describes the relocation assistance that the grantee
has elected to provide and that provides for equal relocation
assistance within each class of displacees.
(e) Appeals. If a person disagrees with the grantee's determination
concerning the person's eligibility for, or the amount of a
relocation payment under this section, the person may file a
written appeal of that determination with the grantee. The appeal
procedures to be followed are described in 24 CFR 42.10. A low or
moderate income household that has been displaced from a dwelling
may file a written request for review of the grantee decision, to
the HUD Field Office.
(f) Responsibility of grantee.
(1) The grantee is responsible for ensuring compliance with the
requirements of this section, notwithstanding any third
party's contractual obligation to the grantee to comply with
the provisions of this part.
(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.
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(3) The grantee must maintain records in sufficient detail to
demonstrate compliance with the provisions of this section.
(g) Displacement. For the purposes of this section, a "displaced
person" is a person that is required to move permanently and
involuntarily and includes a residential tenant who moves from the
real property if:
(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 or in a nearby
building on the real property following the completion of the
assisted activity at a monthly rent and estimated average
cost for utilities that does not exceed the greater of
(i) 30 percent of the tenant household's average monthly
gross income; or
(ii) The tenant's monthly rent and average cost for utilities
before
(A) The date that the owner submits a request to the
grantee for financial assistance that is later
approved for the requested activity. (This applies
to dwelling units owned by a person other than a
Federal or State agency, as defined under the URA);
or
(B) The date of the initial submission of a final
statement under § 570.302(a)(2)(Entitlement
Grants); the initial submission of an application
to HUD by a unit of general local government under
§ 570.426, 570.430, or 570.435(d) that is granted
for the requested activity (HUD administered Small
Cities Program); or the submission of an
application to HUD by a city or urban county under
§ 570.458 that is granted for the requested
activity (UDAG). (This applies to dwelling units
owned by a Federal or State agency as defined under
the URA); or
(2) The tenant is required to move to another dwelling in the
real property but is not reimbursed for all actual reasonable
out-of-pocket costs incurred in connection with the move; or
(3) The tenant is required to relocate temporarily and:
(i) Is not reimbursed for all reasonable out-of-pocket
expenses incurred in connection with the temporary
relocation, including moving costs and any increased
rent and utility costs; or
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(ii) Other conditions of the temporary relocation are not
reasonable.
S 570.607 Emplayment and contracting opportunities.
(a) Grantees shall comply with Executive Order 11246, as amended by
Executive Order 12086, and the regulations issued pursuant thereto
(41 CFR Chapter 60) which provide that no person shall be
discriminated against on the basis of race, color, religion, sex,
or national origin in all phases of employment during the
performance of Federal or federally assisted construction
contracts. As specified in Executive Order 11246 and the
implementing regulations, contractors and subcontractors on
Federal or federally assisted construction contracts shall take
affirmative action to ensure fair treatment in employment,
upgrading, demotion or transfer, recruitment or recruitment
advertising, layoff or termination, rates of pay, or other forms
of compensation and selection for training and apprenticeship.
(b) Section 3 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701u) requires, in connection with the planning and
carrying out of any project assisted under the Act, that to the
greatest extent feasible opportunities for training and employment
be given to low and moderate income persons residing within the
unit of local government or the metropolitan area (or
nonmetropolitan county) as determined by the Secretary, in which
the project is located, and that contracts for work in connection
with the project be awarded to eligible business concerns which
are located in, or owned in substantial part by persons residing
in the same metropolitan area (or normietropolitan county) as the
project. Grantees shall adopt appropriate procedures and
requirements to assure good faith efforts toward compliance with
the statutory directive. HUD regulations at 24 CFR Part 135 are
not applicable to activities assisted under this part but may be
referred to as guidance indicative of the Secretary's view of the
statutory objectives in other contexts.
S 570.608 Tread -based paint.
(a) Prohibition against the use of lead-based paint. Section 401(b)
of the Lead -Based Paint Poisoning Prevention Act (42 U.S.C.
4831(b)) directs the Secretary to prohibit the use of lead-based
paint in residential structures constructed or rehabilitated with
Federal assistance. Such prohibitions are contained in 24 CFR
Part 35, Subpart B, and are applicable to residential structures
constructed or rehabilitated with assistance provided under this
part.
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(b) Notification of hazards of lead-based paint poisoning.
(1) The Secretary has promulgated requirements regarding
notification to purchasers and tenants of HUD -associated
housing constructed prior to 1978 of the hazards of lead-
based paint poisoning at 24 CFR Part 35, Subpart A. This
paragraph is promulgated pursuant to the authorization
granted in 24 CFR 35.5(c) and supersedes, with respect to all
housing to which it applies, the notification requirements
prescribed by Subpart A of 24 CFR Part 35.
(2) For properties constructed prior to 1978, applicants for
rehabilitation assistance provided under this part and
tenants or purchasers of properties owned by the grantee or
its subrecipient and acquired or rehabilitated with
assistance provided under this part shall be notified:
(i) That the property may contain lead-based paint;
(ii) of the hazards of lead-based paint;
(iii) of the symptoms and treatment of lead-based poisoning;
(iv) of the precautions to be taken to avoid lead-based paint
poisoning (including maintenance and removal techniques
for eliminating such hazards);
(v) of the advisability and availability of blood lead level
screening for children under seven years of age; and
(vi) that in the event lead-based paint is found on the
property, appropriate abatement procedures may be
undertaken.
(c) Elimination of lead-based paint hazards. The purpose of this
paragraph is to implement the provisions of section 302 of the
Lead -Based Paint Poisoning Prevention Act, 42 U.S.C. 4822, by
establishing procedures to eliminate as far as practicable the
hazards due to the presence of paint which may contain lead and to
which children under seven years of age may be exposed in existing
housing which is rehabilitated with assistance provided under this
part. The Secretary has promulgated requirements regarding the
elimination of lead-based paint hazards in HUD -associated housing
at 24 CFR Part 35, Subpart C. This paragraph is promulgated
pursuant to the authorization granted in 24 CFR 35.24(b)(4) and
supersedes, with respect to all housing to which it applies, the
requirements prescribed by Subpart C of 24 CFR Part 35.
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(1) Applicability. This paragraph applies to the rehabilitation
of applicable surfaces in existing housing which is assisted
under this part. The following activities assisted under the
Ccamninity Development Block Grant program are not covered by
this paragraph:
(i) Emergency repairs (not including lead-based paint -
related emergency repairs);
(ii) weatherization;
(iii) water or sewer hook-ups;
(iv) installation of security devices;
(v) facilitation of tax exempt bond issuances which provide
funds for rehabilitation;
(vi) other similar types of single -purpose programs that do
not include physical repairs or remodeling of applicable
surfaces (as defined in 24 CFR 35.22) of residential
structures; and
(vii) any non -single purpose rehabilitation that does not
involve applicable surfaces (as defined in
24 CFR 35.22) that does not exceed $3,000 per unit.
(2) Definitions.
Applicable surface. A11 intact and nonintact interior
and exterior painted surfaces of a residential
structure.
Chewable surface. All chewable protruding painted
surfaces up to five feet from the floor or ground, which
are readily accessible to children under seven years of
age, e.g., protruding corners, windowsills and frames,
doors and frames, and other protruding woodwork.
Defective paint surface. Paint on applicable surfaces
that is cracking, scaling, chipping, peeling or loose.
Elevated blood lead level or EBL. Excessive absorption
of lead, that is, a confirmed concentration of lead in
whole blood of 25 ug/dl (micrograms of lead per
deciliter of whole blood) or greater.
Lead-based paint surface. A paint surface, whether or
not defective, identified as having a lead content
greater than or equal to 1 mg/cm2.
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(3) Inspection and Testing
(i) Defective paint surfaces. The grantee shall inspect for
defective paint surfaces in all units constructed prior
to 1978 which are occupied by families with children
under seven years of age and which are proposed for
rehabilitation assistance. The inspection shall occur
at the same time the property is being inspected for
rehabilitation. Defective paint conditions will be
included in the work write-up for the remainder of the
rehabilitation work.
(ii) Chewable surfaces. The grantee shall be required to
test the lead content of chewable surfaces if the family
residing in a unit, constructed prior to 1978 and
receiving rehabilitation assistance, includes a child
under seven years of age with an identified EBL
condition. Lead content shall be tested by using an X-
ray fluorescence analyzer (XRF) or other method approved
by HUD. Test readings of 1 mg/cm2 or higher using an
XRF shall be considered positive for presence of lead-
based paint.
(iii) Abatement without testing. In lieu of the procedures
set forth in paragraph (c)(3)(ii) of this section, in
the case of a residential structure constructed prior
to 1978, the grantee may forgo testing and abate all
applicable surfaces in accordance with the methods set
out in 24 CFR 35.24(b)(2)(ii).
(4) Abatement Actions.
(i) For inspections performed under § 570.608(c)(3)(i) and
where defective paint surfaces are found, treatment
shall be provided to defective areas. Treatment shall
be performed before final inspection and approval of the
work.
(ii) For testing performed under § 570.608(c)(3)(ii) and
where interior chewable surfaces are found to contain
lead-based paint, all interior chewable surfaces in any
affected room shall be treated. Where exterior chewable
surfaces are found to contain lead-based paint, the
entire exterior chewable surface shall be treated.
Treatment shall be performed before final inspection and
approval of the work.
(iii) When weather prohibits repainting exterior surfaces
before final inspection, the grantee may permit the
owner to abate the defective paint or chewable lead-
based paint as required by this section and agree to
repaint by a specified date. A separate inspection is
required.
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(5) Abatement methods. At a minimum, treatment of the defective
areas and chewable lead-based paint surfaces shall consist of
covering or removal of the painted surface as described .in 24
CFR 35.24(b)(2)(ii).
(6) Funding for inspection, testing and abatement. Program
requirements and local program design will determine whether
the cost of inspection, testing or abatement is to be borne
by the owner/developer, the grantee or a combination of the
owner/developer and the grantee.
(7) Tenant protection. The owner/developer shall take
appropriate action to protect tenants from hazards associated
with abatement procedures. Where necessary, these actions
may include the temporary relocation of tenants during the
abatement process. The owner/developer shall notify the
grantee of all such actions taken.
(8) Records. The grantee shall keep a copy of each inspection
and/or test report for at least three years.
(9) Monitoring and enforcement. HUD field office monitoring of
rehabilitation programs includes reviews for compliance with
applicable program requirements for lead-based paint. The
CPD Field Monitoring Handbook which currently includes
instructions for monitoring lead-based paint requirements
will be amended as appropriate. In cases of noncompliance,
HUD may impose conditions or sanctions on grantees to
encourage prompt compliance.
(la) Compliance with other program requirements, Federal, State
and local laws.
(i) Other program requirements. To the extent that
assistance from any of the programs covered by this
section is used in conjunction with other HUD program
assistance which have lead-based paint requirements
which may have more or less stringent requirements, the
mole stringent requirements will prevail.
(ii) HUD responsibility. If HUD determines that a State or
local law, ordinance, code or regulation provides for
lead-based paint testing or hazard abatement in a manner
which provides a level of protection from the hazards of
lead-based paint poisoning at least comparable to that
provided by the requirements of this section and that
adherence to the requirements of this subpart would be
duplicative or otherwise cause inefficiencies, HUD may
modify or waive the requirements of this section in such
manner as may be appropriate to promote efficiency while
ensuring such comparable level of protection.
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(iii) Grantee responsibility. Nothing in this section is
intended to relieve any grantee in the programs covered
by this section of any responsibility for compliance
with State or local laws, ordinances, codes or
regulations governing lead-based paint testing or
hazard abatement.
(iv) Disposal of lead-based paint debris. Lead-based paint
and defective paint debris shall be disposed of in
accordance with applicable Federal, State or local
requirements. (See, e.g., 40 CFR Parts 260 through
271.)
§ 570.609 Use of debarred, suspended, or ineligible contractors or
subrecipients.
Assistance under this part shall not be used directly or
indirectly to employ, award contracts to, or otherwise engage the
services of, or fund any contractor or subrecipient during any period
of debarment, suspension, or placement in ineligibility status under
the provisions of 24 CFR Part 24.
§ 570.610 Uniform administrative requirements and cost principles.
The recipient, its agencies or instrumentalities, and
subrecipients shall comply with the policies, guidelines, and
requirements of 24 CFR Part 85 and OMB Circulars A-87, A-110, A-122,
and A--128 (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 Part 85 and OMB Circular A-110 are set
forth at § 570.502.
5 570.611 Conflict of interest.
(a) Applicability.
(1) In the procurement of supplies, equipment, construction, and
services by recipients, and by subrecipients (including those
specified at § 570.204(c)), the conflict of interest
provisions in 24 CFR 85.36 and OMB Circular A-110,
respectively, shall apply.
(2) In all cases not governed by 24 CFR 85.36 and OMB Circular A-
110, the provisions of this section shall apply. Such cases
include the acquisition and disposition of real property and
the provision of assistance by the recipient, by its
subrecipients, or to individuals, businesses and other
private entities under eligible activities which authorize
such assistance (e.g., rehabilitation, preservation, and
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other improvements of private properties or facilities
pursuant to § 570.202, or grants, loans and other assistance
to businesses, individuals and other private entities
pursuant to § 570.203, § 570.204 or § 570.455).
(b) Conflicts prohibited. Except for the use of CDBG funds to pay
salaries and other related administrative or personnel costs, the
general rule is that no persons described in paragraph (c) of this
section who exercise or have exercised any functions or
responsibilities with respect to CDBG activities assisted under
this part or who are in a position to participate in a
decisioruT king process or gain inside information with regard to
such activities, may obtain a personal or financial interest or
benefit from a CDBG assisted activity, or have an interest in any
contract, subcontract or agreement with respect thereto, or the
proceeds thereunder, either for themselves or those with whom they
have family or business ties, during their tenure or for one year
thereafter. For the UDAG program, the above restrictions shall
apply to all activities that are a part of the UDAG project, and
shall cover any such interest or benefit during, or at any time
after, such person's tenure.
(c) Persons covered. The conflict of interest provisions of paragraph
(b) of this section apply to any person who is an employee, agent,
consultant, officer, or elected official or appointed official of
the recipient, or of any designated public agencies, or
subrecipients which are receiving funds under this part.
(d) Exceptions: threshold requirements. Upon the written request of
the recipient, HUD may grant an exception to the provisions of
paragraph (b) of this section on a case-by-case basis when it
determines that such an exception will serve to further the
purposes of the Act and the effective and efficient administration
of the recipient's program or project. An exception may be
considered only after the recipient has provided the following:
(1) A disclosure of the nature of the conflict, accompanied by an
assurance that there has been public disclosure of the
conflict and a description of how the public disclosure was
made; and
(2) An opinion of the recipient's attorney that the interest for
which the exception is sought would not violate State or
local law.
(e) Factors to be considered for exceptions. In determining whether
to grant a requested exception after the recipient has
satisfactorily met the requirements of paragraph (d) of this
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section, HUD shall consider the cumulative effect of the following
factors, where applicable:
(1) Whether the exception would provide a significant cost
benefit or an essential degree of expertise to the program or
project which would otherwise not be available;
(2) Whether an opportunity was provided for open competitive
bidding or negotiation;
(3) Whether the person affected is a menber of a group or class
of low or moderate income persons intended to be the
beneficiaries of the assisted activity, and the exception
will permit such person to receive generally the same
interests or benefits as are being made available or provided
to the group or class;
(4) Whether the affected person has withdrawn from his or her
functions or responsibilities, or the decisionmaking process
with respect to the specific assisted activity in question;
(5) Whether the interest or benefit was present before the
affected person was in a position as described in paragraph
(b) of this section;
(6) Whether undue hardship will result either to the recipient or
the person affected when weighed against the public interest
served by avoiding the prohibited conflict; and
(7) Any other relevant considerations.
§ 570.612 Executive Order 12372.
(a) General. Executive Order 12372, Intergovernmental Review of
Federal Programs, and the Department's implementing regulations at
24 CFR Part 52, allow each State to establish its own process for
review and comment on proposed Federal financial assistance
programs.
(b) Applicability. Executive Order 12372 applies to the CDBG
Entitlement program and the UDAG program. The Executive Order
applies to all activities proposed to be assisted under UDAG, but
it applies to the Entitlement program only where a grantee
proposes to use funds for the planning or construction
(reconstruction or installation) of water or sewer facilities.
Such facilities include storm sewers as well as all sanitary
sewers, but do not include water and sewer lines connecting a
structure to the lines in the public right-of-way or easement. It
is the responsibility of the grantee to initiate the Executive
Order review process if it proposes to use its CDBG or UDAG funds
for activities subject to review.
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Subpart M -- moan Guarantees.
Sec.
570.700 Eligible applicants.
570.701 Eligible activities.
570.702 Application requirements.
570.703 Loan requirements.
570.704 Federal guarantee.
570.705 Applicability of rules and regulations.
570.706 Sanctions.
Subpart M -- Laan Guarantees.
5 570.700 Eligible applicants.
(a) Units of general local gotic�LU1P--1Lt entitled to receive a grant
under section 106(b) of the Act (metropolitan cities and urban
counties) may apply for loan guarantee assistance under this
subpart.
(b) Public agencies may be designated by eligible units of general
local government to receive a loan guarantee on notes or other
obligations issued by the public agency in accordance with this
subpart. In such case the applicant unit of general local
govc,,.,�t shall be required to pledge its current and future
grants under the Act as security for the notes or other
obligations issued by the public agency.
5 570.701 Eligible activities.
Loan guarantee assistance under this subpart may be used for the
following activities undertaken by the unit of general local government
or its designated public agency provided such activities meet the
requirements of 5 510.200. However, guaranteed loan funds may not be
used to reimburse the program account or letter of credit for costs
incurred by the unit of general local government or designated public
agency and paid with other CABG funds.
(a) Acquisition of improved or unimproved real property in fee or by
long-term lease, including acquisition for economic development
purposes.
(b) Rehabilitation of real property owned or acquired by the unit of
general local government or its designated public agency.
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(c) Payment of interest on obligations guaranteed under this subpart.
(d) Relocation payments and assistance for individuals, families,
businesses, nonprofit organizations and farm operations displaced
as a result of activities financed with loan guarantee
assistance.
(e) Clearance, demolition and removal, including movement of
structures to other sites, of buildings and improvements on real
property acquired or rehabilitated pursuant to paragraphs (a) and
(b) of this section.
(f) Site preparation, including construction, reconstruction, or
installation of public improvements, utilities, or facilities
(other than buildings) related to the redevelopment or use of the
real property acquired or rehabilitated pursuant to paragraphs (a)
and (b) of this section.
(g) Payment of issuance, underwriting, servicing, and other costs
associated with private sector financing of notes or other
obligations guaranteed under this subpart.
(h) Housing rehabilitation eligible under § 570.202.
(i) Activities eligible under § 570.203.
(j) Community economic development projects eligible under § 570.204.
(k) Acquisition, construction, reconstruction, rehabilitation, or
installation of public facilities (except for buildings for the
general conduct of government), site improvements, and utilities,
for an economic development purpose.
§ 570.702 Application requirements.
(a) Presubmission requirements.
(1) Prior to submission of an application for loan guarantee
assistance to HUD, the applicant must comply with the
presubmission requirements specified in S 570.301 with
respect to the activities proposed for loan guarantee
assistance.
(2) 1f an application for loan guarantee assistance is
simultaneous with the applicant's submission for its
entitlement grant, the applicant may use the statement of
community development objectives and projected use of funds
prepared for its annual grant pursuant to S 570.301 by
including and identifying the activities to be undertaken
with the guaranteed loan funds.
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(b) Submission requirements. An application for loan guarantee
assistance shall be suhnitted to the appropriate HUD field office
and shall consist of the following:
(1) A copy of the applicant's final statement of community
development objectives and projected use of guaranteed loan
funds.
(2) 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.
(3) A schedule for repayment of the loan which identifies the
sources of repayment.
(4 ) A certification providing assurance that the applicant
possesses legal authority to make the pledge of grants
required under § 570.703(b)(2).
(5) A certification providing assurance that the applicant has
made efforts to obtain financing for activities described in
the application without the use of the loan guarantee, the
applicant will maintain documentation of such efforts for the
term of the loan guarantee, and the applicant cannot complete
such financing consistent with the timely execution of the
program plans without such guarantee.
(6) Certifications required pursuant to § 570.303. For the
purposes of this requirement, the terms "grant" and "CDBG" in
such certifications shall also mean guaranteed loan.
(c) Economic feasibility and financial risk. The Secretary will make
no determination with respect to the economic feasibility of
projects proposed to be funded with the proceeds of guaranteed
loans; such determination is the responsibility of the applicant.
In determining whether a loan guarantee constitutes an acceptable
financial risk, the Secretary will consider the applicant's
current and future entitlement block grants as the primary source
of loan repayment. Approval of a loan guarantee under this
subpart is not to be construed, in any way, as indicating that HUD
has agreed to the feasibility of a project beyond recognition that
pledged grant funds should be sufficient to retire the debt.
(d) HUD review and approval of applications.
(1) HUD will normally accept the grantee's certifications. The
Secretary reserves the right, however, to consider relevant
information which challenges the certifications and to
require additional information or assurances from the grantee
as warranted by such information.
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(2) The field office shall review the application for compliance
with requirements specified in this subpart and forward the
application together with its recc mandation for approval or
disapproval of the requested loan guarantee to HUD
Headquarters.
(3) The Secretary may disapprove an application, or may approve
loan guarantee assistance for an amount less than requested,
for any of the following reasons:
(i) The Secretary determines that the guarantee constitutes
an unacceptable financial risk. Factors that will be
considered in assessing financial risk shall include,
but not be limited to, the following:
(A) The length of the proposed repayment period;
(B) The ratio of expected annual debt service
requirements to expected annual grant amount;
(C) The applicant's status as a metropolitan city or
urban county during the proposed repayment period;
and
(D) The applicant's ability to furnish adequate
security pursuant to § 570.703(b).
(ii) The guarantee requested exceeds the maximum loan amount
specified under S 570.703(a).
(iii) Funds are not available in the amount requested.
(iv) The applicant's performance does not meet the standards
prescribed in Subpart O.
(v) Activities to be undertaken with the guaranteed loan
funds are not listed as eligible under § 570.701(a)
through (k).
(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) The Secretary will notify the applicant in writing that the
loan guarantee request has either been approved, reduced or
disapproved. If the request is reduced or disapproved, the
applicant shall be informed of the specific reasons for
reduction or disapproval. If the request is approved, the
Secretary shall issue an offer of commitment to guarantee
M-4 5/89
obligations of the applicant or the designated public agency
subject to such conditions as the Secretary may prescribe,
including the conditions for release of funds described in
paragraph (e) of this section.
(5) Amendments to the loan guarantee shall comply with the
requirements of § 570.305. If the applicant wishes to carry
out an activity not previously described in its final
statement or to substantially change the purpose, scope,
location or beneficiaries of an activity, the amendment must
be approved by the Secretary.
(e) Environmental review. The applicant shall comply with HUD
environmental review procedures (24 CFR Part 58) for the release
of funds for each project carried out with loan guarantee
assistance. These procedures set forth the regulations, policies,
responsibilities and procedures governing the carrying out of
environmental review responsibilities of applicants.
(f) The applicant (or the designated public agency) shall comply with
relocation, displacement and acquisition requirements in
connection with activities financed in whole or in part with a
loan guarantee under this subpart that are identical to the
acquisition and relocation requirements of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 as
described at § 570.606(a) and HUD implementing regulations at 24
CFR Part 42; the requirements in § 570.606(b) governing the
residential antidisplacement and relocation assistance plan under
section 104(d) of the Act; the relocation requirements of
§ 570.606(c) governing displacement subject to section 104(k) of
the Act; and the relocation requirements of § 570.606(d) governing
optional relocation assistance under section 105(a)(11) of the
Act.
§ 570.703 Loan requirements.
(a) Maximum loan amount. No guarantee or commitment to guarantee
shall be made with respect to any note or other obligation if the
total outstanding notes or obligations guaranteed under this
subpart on behalf of the applicant and each public agency duly
designated by the applicant would thereby exceed an amount equal
to three times the amount of the entitlement grant made pursuant
to § 570.304 to the applicant.
(b) Security pec
jpirements. To assure the repayment of notes or other
obligations and charges incurred under this subpart and as a
condition for receiving loan guarantee assistance, the applicant
(or the applicant and designated public agency, where appropriate)
shall:
M-5 5/89
(1) Enter into a contract with HUD, in a form acceptable to the
Secretary, for repayment of notes or other obligations
guaranteed hereunder;
(2) Pledge all grants made or for which the applicant may become
eligible under this part; and
(3) Furnish, at the discretion of the Secretary, such other
security as may be deemed appropriate by the Secretary in
making such guarantees, including increments in local tax
receipts generated by the activities assisted under this part
or disposition proceeds from the sale of land or
rehabilitated property.
(c) Use of grants for loan repayment. Notwithstanding any other
provision of this part:
(1) Entitlement grants (including program income derived
therefrom) are authorized for use in the payment of principal
and interest due (including such servicing, underwriting, or
other costs as may be authorized by the Secretary) on the
notes or other obligations guaranteed pursuant to this
subpart.
(2) The Secretary may apply grants pledged pursuant to paragraph
(b)(2) of this section to any amounts due under the note or
other obligation guaranteed pursuant to this subpart, or to
the purchase of such obligation, in accordance with the terms
of the contract required by paragraph (b)(1) of this
section.
(d) Debt obligations. Notes or other obligations guaranteed under
this subpart shall be in the form and denominations prescribed by
the Secretary. Such notes or other obligations may be issued and
sold only under such terms and conditions as may be prescribed by
the Secretary.
(e) Taxable obligations. Interest earned on obligations guaranteed
under this subpart shall be subject to Federal taxation as
provided in section 108(j) of the Act. All applicants or
designated public agencies issuing guaranteed obligations must
bear the full cost of interest.
(f) Loan repayment period. As a general rule, the repayment period
for a loan guaranteed under this subpart shall be limited to six
years. However, a longer repayment period may be permitted in
special cases where it is deemed necessary to achieve the purposes
of this part.
(g) _Issuance, underwriting, servicing, and other costs. Each
applicant or its designated public agency issuing guaranteed
M-6 5/89
obligations must pay the issuance, underwriting, servicing, and
other costs associated with the private sector financing of the
guaranteed obligations. Such costs are payable out of the
proceeds from the sale of the guaranteed obligations.
S 570.704 Federal guarantee.
The full faith and credit of the United States is pledged to the
payment of all guarantees made under this subpart. Any such guarantee
made by the Secretary shall be conclusive evidence of the eligibility
of the obligations for such guarantee with respect to principal and
interest, and the validity of such guarantee so made shall be
incontestable in the hands of a holder of the guaranteed obligations.
§ 570.705 Applicability of rules and regulations.
The provisions of Subparts A, C, D, J, K and 0 applicable to
Entitlement grants shall apply to loan funds guaranteed under this
subpart, except to the extent they are specifically modified or
augmented by the provisions of this subpart.
S 570.706 Sanctions.
The performance review procedures described in Subpart 0 for
entitlement recipients apply to this subpart. Performance deficiencies
in the use of loans guaranteed under this subpart or violations of the
contract entered into pursuant to § 570.703(b)(1) may result in the
imposition of a sanction authorized pursuant to § 570.900(b)(7) against
the pledged entitlement grants. In addition, upon a finding by the
Secretary that the recipient has failed to comply substantially with
any provision of the Act with respect to either the pledged entitlement
grants or the guaranteed loan funds, the Secretary may take action
against the pledged grants as provided in § 570.913 and/or may take
action as provided in the contract.
M-7 5/89
Smart O -- Performance Reviews
Sec.
570.900 General.
570.901 Review for compliance with the primary and national
objectives and other program requirements.
570.902 Review to determine if CDBG funded activities are being
carried out in a timely manner.
570.903 Review to determine if the housing assistance plan (HAP)
is being carried out in a timely manner.
570.904 Equal Opportunity and Fair Housing review criteria.
570.905 Review of continuing capacity to carry out CDBG funded
activities in a timely manner.
570.906 Review of urban counties.
570.907 - 570.909 Reserved.
570.910 Corrective and remedial actions.
570.911 Reduction, withdrawal, or adjustment of a grant or other
app-LvY-Liate action.
570.912 Nondiscrimination compliance.
570.913 Other remedies for noncompliance.
Subpart O -- Perfoxmance Reviews
§ 570.900 General..
(a) Performance review authorities.
(1) Entitlement and HUD -administered Small Cities performance
reviews. Section 104(e)(1) of the Act requires that the
Secretary shall, at least on an annual basis, make such
reviews and audits as may be necessary or appropriate to
determine whether the recipient has carried out its
activities, and where applicable, its housing assistance plan
in a timely manner, whether the recipient has carried out
those activities and its certifications in accordance with
the requirements and the primary objectives of the Act and
with other applicable laws, and whether the recipient has a
continuing capacity to carry out those activities in a timely
manner.
(2) Urban Development Action Grant (UDAG) performance reviews.
Section 119(g) of the Act requires the Secretary, at least
on an annual basis, to make such reviews and audits of
recipients of Urban Development Action Grants as necessary to
determine whether the recipient's progress in carrying out
the approved activities is substantially in accordance with
the recipient's approved plans and timetables.
0-1 5/89
(b) Performance review procedures. This paragraph describes the
review procedures the Department will use in conducting the
performance reviews required by sections 104(e) and 119(g) of the
Act:
(1) The Department will determine the performance of each
entitlement and HUD -administered small cities recipient in
accordance with section 104(e)(1) of the Act by reviewing for
compliance with the requirements described in S 570.901 and
by applying the performance criteria described in §§ 570.902
and 570.903 relative to carrying out activities and, where
applicable, the housing assistance plan in a timely manner.
The review criteria in S 570.904 will be used to assist in
determining if the recipient's program is being carried out
in compliance with civil rights requirements.
(2) The Department will review UDAG projects and activities to
determine whether such projects and activities are being
carried out substantially in accordance with the recipient's
approved plans and schedules. The Department will also
review to determine if the recipient has carried out its UDAG
program in accordance with all other requirements of the
Grant Agreement and with all applicable requirements of this
pert
(3) In conducting performance reviews, HUD will primarily rely on
information obtained from the recipient's performance report,
records maintained, findings from on-site monitoring, audit
reports, and the status of the letter of credit. Where
applicable, the Department may also consider relevant
information pertaining to a recipient's performance gained
from other sources, including litigation, citizen comments
and other information provided by the recipient. A
recipient's failure to maintain records in the prescribed
manner may result in a finding that the recipient has failed
to meet the applicable requirement to which the record
pertains .
(4) If 'IUD determines that a recipient has not met a civil rights
review criterion in § 570.904, the recipient will be provided
an opportunity to demonstrate that it has nonetheless net the
applicable civil rights requirement.
(5) If HUD finds that a recipient has failed to comply with a
program requirement or has failed to meet a performance
criterion in § 570.902 or § 570.903, the recipient will be
provided an opportunity to contest the finding.
(6) If the recipient is unsuccessful in contesting the validity
of a finding of nonccinpliance or a finding that the recipient
0-2 5/89
has failed to carry out its activities or its housing
assistance plan in a timely manner, HUD may require the
recipient to undertake arr.Lur.Liate corrective or remedial
actions as specified in § 570.910. HUD will undertake the
continuing capacity review required by § 570.905 prior to
selecting the corrective or remedial actions.
(7) If the recipient fails to undertake appropriate corrective or
remedial actions which resolve the deficiency to the
satisfaction of the Secretary, the Secretary may impose a
sanction pursuant to §§ 570.911, 570.912, or 570.913, as
applicable.
§ 570.901 Review for ccupliance with the primary and national
objectives and other requirements-
HUD
equirenents-
HUD will review each entitlement and HUD -administered small cities
recipient's program to determine if the recipient has carried out its
activities and certifications in compliance with:
(a) The requirement described at § 570.200(a)(3) that, consistent with
the primary objective of the Act, not less than 60 percent of the
aggregate amount of CDBG funds received by the recipient shall be
used over the period specified in its certification for activities
that benefit low and moderate income persons;
(b) The requirement described at § 570.200(a)(2) that each CDBG
assisted activity meets the criteria for one or more of the
national objectives described at § 570.208;
(c) All other activity eligibility requirements defined in Subpart C
of this part;
(d) For entitlement grants only, the presubmission requirements at
§ 570.301, the amendment requir(nents at § 570.305 and the
displacement policy requirements at § 570.606;
(e) For HUD -administered small cities grants only, the citizen
participation requirements at § 570.431, the amendment
requirements at § 570.434 and the displacement policy requirements
of § 570.606;
(f) The grant administration requirements described in Subpart J;
(g) Other applicable laws and program requirements described in
Subpart K; and
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(h) Where applicable, the requirements pertaining to loan guarantees
(Subpart M) and urban renewal completions (Subpart N).
5 570.902 Review to determine if CDBG funded activities are being
carried out in a timely manner.
HUD will review the performance of each entitlement and HUD -
administered small cities recipient to determine whether each recipient
is carrying out its CDBG assisted activities in a timely manner.
(a) Entitlement recipients.
(1) Before the funding of the next annual grant and absent
substantial evidence to the contrary, the Department will
consider an entitlement recipient to be carrying out its CDBG
activities in a timely manner if, 60 days prior to the end of
its current program year:
(i) The amount of entitlement grant funds available to the
recipient under grant agreements but undisbursed by the
U.S. Treasury is less than 1.5 times the entitlement
grant amount for its current program year; and,
(ii) In cases where the recipient has received at least two
consecutive entitlement grants, the amount of
entitlement grant funds disbursed by the U.S. Treasury
to the recipient during the previous twelve month period
is equal to or greater than one-half of the entitlement
grant amount for its current program year.
(2) Where it is known that a recipient has an unusually large
amount of program income funds on hand (relative to the grant
amount), HUD may determine that the amount of such funds is
sufficient to override the conclusion that would otherwise be
made based solely on the criteria in paragraph (1) above.
(3) HUD may also review an entitlement recipient's progress at
other times during the year to determine whether the
recipient's rate of fund expenditure is likely to fall
outside of the criteria in subparagraph (i), in which case
the Department will notify the recipient of a potential
problem with the lack of timeliness in carrying out its
activities.
(b) HUD -administered Small Cities program. The Department will,
absent substantial evidence to the contrary, consider that a HUD -
administered small cities recipient is carrying out its CDBG
funded activities in a timely manner if the schedule for carrying
out its activities as contained in the approved application, or
subsequent amendment, is being substantially met.
0-4 5/89
5 570.903 Review to determine if the housing assistance plan (HAP) is
being carried out in a timely mannar.
(a) HUD will review an entitlement grant recipient's HAP performance
prior to HUD's approval of each succeeding year's HAP and prior to
acceptance of a grant recipient's HAP certification in order to
determine whether the recipient is achieving its specific HAP
goals in a timely manner.
(b) Absent substantial evidence to the contrary, HUD will consider
that an entitlement recipient is carrying out its approved HAP in
a timely manner if at the end of each of the first two years
governed by the HAP, the recipient has substantially met each
annual goal for that year, and if at the end of the third year of
the period governed by the HAP, a recipient has substantially met
its three year goals. For the three year period, this standard
also requires that the provision of rental subsidies has been made
in reasonable proportion to the goal for each household type as
identified in the HAP.
(c) For a recipient whose HAP performance does not fall within the
criteria in paragraph (b) of this section, a review shall be
conducted which considers the extent to which the recipient made
use of housing assistance resources that were available to meet
the applicable HAP goals. Where such consideration of the use of
available resources results in a determination that the recipient
has taken all reasonable actions to use available resources and
has not impeded the provision of housing assistance which would
have been consistent with the HAP goals, HUD may also consider,
under such circumstances, that a recipient has carried out its HAP
in a timely manner.
(d) In measuring progress in achieving one-year goals, HUD will
consider the extent to which the recipient has made or received
firm financial commitments which have not subsequently been
canceled for specific projects, households or units identified in
the HAP by household and tenure type within a two year period.
Progress in achieving the three-year goal will consider the
movement of firm financial commitments to start of rehabilitation
or construction, or in the case of the Section 8 Housing
Assistance Payment Program --Existing Housing (24 CFR Part 882)
certificates or vouchers under section 8(o) of the United States
Housing Act of 1937 to occupancy, within a reasonable period of
time. Such reasonable period of time may be within the three-year
period covered by the applicable three-year goals, or, for firm
financial commitments received late in the three-year period, it
may be a year or more into the next three-year cycle.
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(e) If HUD determines that an entitlement grant recipient has not met
the criteria outlined in paragraph (b) or (c) of this section, the
recipient will be notified and provided a reasonable opportunity
to demonstrate to the satisfaction of the Secretary that the
recipient has carried out its HAP in a timely manner considering
all relevant circumstances and the recipient's actions and lack of
actions affecting the provision of housing assistance within its
jurisdiction. Failure to so demonstrate will be cause for HUD to
find that the recipient has failed to carry out its HAP in a
timely manner. The response by the recipient should describe:
(1) The factors which prevented it from meeting those HAP goals
it failed to meet; and
(2) The actions which were taken to facilitate achieving its HAP
goals, including the following where applicable:
(i) The removal of impediments under local ordinances and
land use requirements to the development of assisted
housing;
(ii) The formation of a local housing authority or execution
of an agreement with a housing authority having powers
to provide assisted housing within the jurisdiction of
the recipient, when necessary to carry out the HAP;
(iii) The provision of sites, improvements to sites, and/or
extensions of utilities to sites for assisted housing
new construction, provided that such sites meet the
applicable HUD site and neighborhood standards;
(iv) Establishment of a housing rehabilitation program or
increased use of an existing one where substantial need
for rehabilitation is evident; and
(v) Cooperation with a local housing authority or other
proper administrative body to facilitate operation of
the Section 8 Housing Assistance Payment. Program -
Existing housing (or a comparable rental assistance
pLogram) through such means as landlord information
programs and identification of available rental unit
inventories.
§ 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-
furdiec.i program in accordance with civil rights certifications
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and civil rights requirements of the Act relating to equal
employment opportunity, equal opportunity in services,
benefits and participation, and is affirmatively furthering
fair housing unless:
(i) There is evidence which shows, or from which it is
reasonable to infer, that the recipient, motivated by
considerations of race, color, religion where
applicable, sex, national origin, age or handicap, has
treated some persons less favorably than others, or
(ii) There is evidence that a policy, practice, standard or
method of administration, although neutral on its face,
operates to deny or affect adversely in a significantly
disparate way the provision of cloyment or services,
benefits or participation to persons of a particular
race, color, religion where applicable, sex, national
origin, age or handicap, or fair housing to persons of a
particular race, color, religion, sex, or national
origin, or
(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 review criteria in this
section are not met, the recipient will be afforded an
opportunity to present evidence that it has not failed to
carry out the civil rights certifications and fair housing
requirements of the Act. The Secretary's determination of
whether there has been compliance with the applicable
requirements will be made based on a review of the
recipient's performance, evidence submitted by the recipient,
and all other available evidence. The Department may also
initiate separate compliance reviews under Title VI of the
Civil Rights Act of 1964 or section 109 of the Act.
(b) Review for equal opportunity. Section 570.601(a) sets forth the
general requirements for Title VI of the Civil Rights Act of 1964
and § 570.602 sets forth the general requirements for section 109
of the Act. Together these provisions prohibit discrimination in
any program or activity funded in whole or in part with funds made
available under this part.
(1) Review for equal employment opportunity. The Department will
presume that a recipient's hiring and employment practices
have been carried out in compliance with its equal
opportunity certifications and requirements of the Act. This
presumption may be rebutted where, based on the totality of
circumstances, there has been a deprivation of employment,
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promotion, or training opportunities by a recipient to any
person within the meaning of section 109. The extent to
which persons of a particular race, gender, or ethnic
background are represented in the workforce may in certain
circumstances be considered, together with complaints,
performance reviews, and other information.
(2) Review of equal opportunity in services, benefits and
participation. The Department will presume a recipient is
carrying out its programs and activities in accordance with
the civil rights certifications and requirements of the Act.
This presumption may be rebutted where, based on the totality
of circumstances, there has been a deprivation of services,
benefits, or participation in any program or activity funded
in whole or in part with block grant funds by a recipient to
any person within the meaning of section 109. The extent to
which persons of a particular race, gender, or ethnic
background participate in a program or activity may in
certain circumstances be considered, together with
complaints, performance reviews, and other information.
(c) Fair housing review criteria. Section 570.601(b) sets forth the
general requirements for Title VIII of the Civil Rights Act of
1968 and the grantee's certification that it will affirmatively
further fair housing. In reviewing a recipient's actions in
carrying out its housing and community development activities in a
manner to affirmatively further fair housing in the private and
public housing sectors, absent independent evidence to the
contrary, the Department will consider that a recipient has taken
such actions in accordance with its certification if the recipient
meets the following review criteria:
(1) The recipient has conducted an analysis to determine the
impediments to fair housing choice in its housing and
community development program and activities. The term
"fair housing choice" means the ability of persons,
regardless of race, color, religion, sex, or national origin,
of similar income levels to have available to then the same
housing choices. This analysis shall include a review for
impediments to fair housing choice in the following areas:
(i) The sale or rental of dwellings;
(ii) The provision of housing brokerage services;
(iii) The provision of financing assistance for dwellings;
(iv) Public policies and actions affecting the approval of
sites and other building requirements used in the
approval process for the construction of publicly
assisted housing;
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(v) The administrative policies concerning community
development and housing activities, such as urban
homesteading, multifamily rehabilitation, and activities
causing displacement, which affect opportunities of
minority households to select housing inside or outside
areas of minority concentration; and
(vi) Where there is a determination of unlawful segregation
or other housing discrimination by a court or a finding
of noncompliance by HUD regarding assisted housing
within a recipient's jurisdiction, an analysis of the
actions which could be taken by the recipient to help
renedy the discriminatory condition, including actions
involving the expenditure of funds made available under
this part.
(2) Based upon the conclusions of the analysis in (1) above, the
recipient has taken lawful steps, consistent with this part,
relating to housing and community development to overcome the
effects of conditions that limit fair housing choice within
the recipient's jurisdiction. Such actions may include:
(i) Enactment and enforcement of an ordinance providing for
fair housing consistent with the federal fair housing
law;
(ii) Support of the administration and enforcement of state
fair housing laws providing for fair housing consistent
with the federal fair housing law;
(iii) Participation in voluntary partnerships developed with
public and private organizations to promote the
achievement of the goal of fair housing choice
(including implementation of a locally -developed and
HUD -approved New Horizons comprehensive fair housing
plan);
(iv) Contracting with private organizations, including
private fair housing organizations, where such support
will bring about actions consistent with titles VI and
VIII, to address the impediments identified in the
analysis described in (c)(1) of this section;
(v) Activities which assist in remedying findings or
determinations of unlawful segregation or other
discrimination involving assisted housing within the
recipient's jurisdiction.
(vi) Other actions consistent with law determined to be
appropriate based upon the conclusions of the analysis.
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(d) Actions to use minority and women's business firms. The
Department will review a recipient's performance to determine if
it has administered its activities funded with assistance under
this part in a manner to encourage use of minority and women's
business enterprises described in Executive Orders 11625, 12432
and 12138, and 24 CFR 85.36(e). In making this review, the
Department will determine if the grantee has taken actions
required under § 85.36(e) of this chapter, and will review the
effectiveness of those actions in accomplishing the objectives of
§ 85.36(e) of this chapter and the Executive Orders. No recipient
is required by this part to attain or maintain any particular
statistical level of participation in its contracting activities
by race, ethnicity, or gender of the contractor's owners or
managers.
§ 570.905 Review of continuing capacity to cavy out CDBG funded
activities in a timely manner.
If HUD determines that the recipient has not carried out its CDHG
activities and certifications in accordance with the requirements and
criteria described in §§ 570.901 or 570.902, HUD will undertake a
further review to determine whether or not the recipient has the
continuing capacity to carry out its activities in a timely manner. In
making the determination, the Department will consider the nature and
extent of the recipient's performance deficiencies, types of corrective
actions the recipient has undertaken and the success or likely success
of such actions.
§ 570.906 Review of urban counties.
In reviewing the performance of an urban county, HUD will hold the
county accountable for the actions or failures to act of any of the
units of general local government participating in the urban county.
Where the Department finds that a participating unit of government has
failed to cooperate with the county to undertake or assist in
undertaking an essential community development or assisted housing
activity and that such failure results, or is likely to result, in a
failure of the urban county to meet any requirement of the program or
other applicable laws, the Department may prohibit the county's use of
funds made available under this part for that unit of government. HUD
will also consider any such failure to cooperate in its review of a
future cooperation agreement between the county and such included unit
of government described at § 570.307(b)(2).
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S5 570.907 - 570.909 RESERVED.
5 570.910 Corrective and remedial actions.
(a) General. Consistent with the procedures described in
5 570.900(b), the Secretary may take one or more of the actions
described in paragraph (b) of this section. Such actions shall be
designed to prevent a continuation of the performance deficiency;
mitigate, to the extent possible, the adverse effects or
consequences of the deficiency; and prevent a recurrence of the
deficiency.
(b) Actions authorized. The following lists the actions that HUD may
take in response to a deficiency identified during the review of a
recipient's performance:
(1) Issue a letter of warning advising the recipient of the
deficiency and putting the recipient on notice that
additional action will be taken if the deficiency is not
corrected or is repeated;
(2) Recommend, or request the recipient to submit, proposals for
corrective actions, including the correction or removal of
the causes of the deficiency, through such actions as:
(i) Preparing and following a schedule of actions for
carrying out the affected CDBG activities, consisting of
schedules, timetables and milestones necessary to
implement the affected CDBG activities;
(ii) Establishing and following a management plan which
assigns responsibilities for carrying out the actions
identified in paragraph (b)(2)(i) of this section;
(iii) For entitlement recipients, canceling or revising
affected activities which are no longer feasible to
implement due to the deficiency and reprogramming funds
from such affected activities to other eligible
activities (pursuant to the citizen participation
requirements in Subpart D); or
(iv) Other actions which will serve to prevent a continuation
of the deficiency, mitigate (to the extent possible) the
adverse effects or consequences of the deficiency, and
prevent a recurrence of the deficiency;
(3) Advise the recipient that a certification will no longer be
acceptable and that additional assurances will be required;
0-11 5/89
(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
icr.Lvylam the use of the funds in accordance with applicable
requirements;
(6) Change the method of payment to the recipient from a letter
of credit basis to a reimbursement basis;
(7) In the case of claims payable to HUD or the U.S. Treasury,
institute collection procedures pursuant to Subpart H of
24 CFR Fart 17; and
(8) In the case of an entitlement recipient, condition the use of
funds from a succeeding fiscal year's allocation upon
appropriate corrective action by the recipient pursuant to
§ 570.304(d). 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 recipient's annual
grant by up to the amount conditionally granted.
§ 570.911 Reduction, withdrawal, or adjustment of a grant or other
avp.Lul� iate action.
(a) Opportunity for an informal consultation. Prior to a reduction,
withdrawal, or adjustment of a grant or other appropriate action,
taken pursuant to paragraph (b), (c), or (d) below, 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. Consistent with the procedures described in
§ 570.900(b), the Secretary may make a reduction in the
entitlement grant amount either for the succeeding program year
or, if the grant had been conditioned, up to the amount that had
been conditioned. The amount of the reduction shall be based on
the severity of the deficiency and may be for the entire grant
amount.
(c) HUD -administered small cities grants. Consistent with the
procedures described in § 570.900(b), the Secretary may adjust,
reduce or withdraw the grant or take other actions as appropriate,
except that funds already expended on eligible approved activities
shall not be recaptured or deducted from future grants.
(d) Urban Development Action Grants. Consistent with the procedures
described in § 570.900(b), the Secretary may adjust, reduce or
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reasons or basis therefor, on all the material issues of
fact, law or discretion presented on the record and the
appropriate sanction or denial thereof. The decision shall
be based on consideration of the whole record or those parts
thereof cited by a party and supported by and in accordance
with the reliable, probative, and substantial evidence. A
copy of the decision shall be furnished to the parties
immediately by certified mail, return receipt requested, and
shall include a notice that any requests for review by the
Secretary must be made in writing to the Secretary within 30
days of the receipt of the decision.
(8) The record. The transcript of testimony and exhibits,
together with the decision of the ALJ and all papers and
requests filed in the proceeding, constitutes the exclusive
record for decision and, on payment of its reasonable cost,
shall be made available to the parties. After reaching
his/her initial decision, the ALJ shall certify to the
complete record and forward the record to the Secretary.
(9) Review by the Secretary. The decision by the ALJ shall
constitute the final decision of the Secretary unless, within
30 days after the receipt of the decision, either the
respondent or the Assistant Secretary for Community Planning
and Development files an exception and request for review by
the Secretary. The excepting party must transmit
simultaneously to the Secretary and the other party the
request for review and the basis of the party's exceptions to
the findings of the ALJ. The other party shall be allowed 30
days from receipt of the exception to provide the Secretary
and the excepting party with a written reply. The Secretary
shall then review the record of the case, including the
exceptions and the reply. On the basis of such review, the
Secretary shall issue a written determination, including a
statement of the reasons or basis therefor, affirming,
modifying or revoking the decision of the ALJ. The
Secretary's decision shall be made and transmitted to the
parties within 80 days after the decision of the ALT was
furnished to the parties.
(10) Judicial review. The respondent may seek judicial review of
the Secretary's decision pursuant to section 111(c) of the
Act.
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