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Basically CDBG Slides - NSP2 Training 2010
BASICALLY CDBG FOR NSP2 GRANTEES
HUDHUD -- Office of Block Grant AssistanceOffice of Block Grant Assistance CoCommunitmmunityy PPllanninganning && DevDeveelopmlopmentent
A LITTLE ABOUT YOU
Years of experience with CDBG?
<1 yr 1-5 yr 6-10 yr 10+ yr
Level of CDBG expertise Beginner (what’s Part 570?) Some experience I can cite Part 570 in my sleep
HUD, Office of Block Grant Assistance Slide 2
INTRODUCTIONS
Name
Community
Organization & NSP2 Role
CDBG activities carried out
NSP2 eligible uses to be carried out
HUD, Office of Block Grant Assistance Slide 3
Basically CDBG Slides - NSP2 Training 2010
COURSE STRUCTURE Agenda
Exercises
Training manual
Training manual appendices
Overheads
Primarily CDBG: NSP adaptations shown in Green
HUD, Office of Block Grant Assistance Slide 4
RULES
Ask questions
Keep side conversations to minimum
Parking lot messages
Please turn cell phones, etc. to silent mode
Training - Amnesty for all
HUD, Office of Block Grant Assistance Slide 5
LOGISTICS
Timing of breaks and lunch
Restrooms
Hey, where’s the coffee??
HUD, Office of Block Grant Assistance Slide 6
Basically CDBG Slides - NSP2 Training 2010
OOVVERERVIVIEWEW
BASICALLY CDBG
CDBG HISTORY
Authorized under Title I of the Housing and Community Development Act of 1974
NEIGHBORHOOD
OPEN DEVELOPMENT
SPACE WATER AND
LAND SEWER
NEIGHBORHOODCDBG FACILITIES
RENEWAL GRANTS
URBAN
REHABILITATION MODEL AND PUBLIC FACILITIES CITIES HISTORIC LOANS
GRANTS PRESERVATION
HUD, Office of Block Grant Assistance Slide 8
CDBG PRIMARY OBJECTIVES
Development of viable urban communities, principally for low/mod persons, through: Decent housing
Suitable living environment
Expanded economic opportunity
HUD, Office of Block Grant Assistance Slide 9
Basically CDBG Slides - NSP2 Training 2010
CDBG REGULATIONS Found at 24 CFR Part 570
Recent Rule changes due to: Statutory changes Increased flexibility & Faith-Based Organizations Brownfields Cleanup & Anti-Pirating Public Benefit Stds. for Econ. Dev. projects
Major rule revisions: January & November 1995 April 1996 November 2000 September 2003 December 2005 May 2006
HUD, Office of Block Grant Assistance Slide 10
KEY DEFINITIONS
Entitlement Program
State CDBG Program
CDBG Recipient/Grantee
Consolidated Plan (Con Plan)
Low and Moderate Income Person (LMI)
Household v. Family
HUD, Office of Block Grant Assistance Slide 11
TOP 10 CDBG Entitlement Grantees
NEW YORK CITY $195,203,459
CHICAGO $90,582,706
LOS ANGELES $77,983,283
PHILADELPHIA $55,325,903
DETROIT $40,142,357
HOUSTON $32,769,402
LOS ANGELES COUNTY $32,219,273
CLEVELAND $25,908,893
BALTIMORE $25,179,425
SAN FRANCISCO $22,267,380
HUD, Office of Block Grant Assistance Slide 12
Basically CDBG Slides - NSP2 Training 2010
CDBG ROLES
HUD’s key partners in CDBG programs include:
Entitlements Communities (cities and urban counties)
States & Units of General Local Government (UGLGs)
Subrecipients, CBDOs & CDFIs (will discuss in
the next module) Contractors Beneficiaries
HUD, Office of Block Grant Assistance Slide 13
NSP2 ROLES Single Entity Grantees Units of General Local Government (UGLG), State
governments, Non-profit organizations
Consortia Grantees Combinations of UGLGs, States, Non-profits
Some include For-profit Partners
Developers
Contractors
Beneficiaries HUD, Office of Block Grant Assistance Slide 14
NSP2 ROLES DEFINED Direct Grantee Consortium
Member Developer Contractor
Treated as recipient of grant?
YES YES NO (considered beneficiary or end‐user)
NO
Compensation Administrative costs
Administrative costs
Fee Fee
Procurement Must follow OMB Process
Must follow OMB Process
No process specified
Selected BY procurement process
Records Full NSP/CDBG Full NSP/CDBG Limited Limited
HUD, Office of Block Grant Assistance Slide 15
Basically CDBG Slides - NSP2 Training 2010
HUD, Office of Block Grant Assistance Slide 16
CDBG MONEY FLOW
Entitlement communities partners
States must award funds to UGLGs
Entitlement
Subrecipients, CBDOs, CDFIs
Beneficiaries
HUD
Contractors
HUD, Office of Block Grant Assistance Slide 17
CDBG IMPLEMENTATION STEPS
SUBMIT Consolidated Plan & Determine Program Delivery Method
SELECT Eligible Activities: Meet a National Objective
COMPLY with Other Federal Requirements
ADDRESS Administrative & Financial Requirements
IDIS – Set Up & Fund Activity
REPORTS – MONITOR & Report Progress
IDIS – ENTER Accomplishments into IDIS
Acquisition of real property
Relocation and demolition
Rehabilitation of residential and non-residential structures
Construction of public facilities and improvements, such as water and sewer facilities, streets, neighborhood centers, and the conversion of school buildings for eligible purposes
Public services, within certain limits
Activities relating to energy conservation and renewable energy resources
Provision of assistance to profit-motivated businesses to carry out economic development and job creation/retention activities
Clearance and remediation – including maintenance and environmental remediation
Homeownership Assistance – including principal and interest reduction, downpayment assistance, and closing costs
ELIGIBLE ACTIVITIES
HUD, Office of Block Grant Assistance Slide 18
Basically CDBG Slides - NSP2 Training 2010
NATIONAL OBJECTIVES
Reg cite §570.208, 570.480
All CDBG activities must result in one of the following: Benefit low/mod income persons
Prevent or eliminate slums and blight OR
Meet an urgent need
HUD, Office of Block Grant Assistance Slide 19
INELIGIBLE ACTIVITIES
Regulations expressly prohibit: Buildings for conduct of government For example, city hall improvements Exception for community service centers
General government expenses For example, normal trash pick-up or operating the
city’s tax collection department
Political activities Includes any cost related to political campaigns,
including “get out the vote” drives
HUD, Office of Block Grant Assistance Slide 20
INELIGIBLE ACTIVITIES (cont.)
The following are generally not allowed, except under specific circumstances: New housing construction
Income payments
Purchase of equipment
Operating and maintenance expenses
We will cover the exceptions during the activity modules
HUD, Office of Block Grant Assistance Slide 21
Basically CDBG Slides - NSP2 Training 2010
OTHER FEDERAL REQUIREMENTS
CDBG activities must also meet other federal laws, regulations & requirements, including: Environmental review & compliance
Davis-Bacon and related Acts (Labor)
Uniform Relocation Act (URA)
OMB Circulars (administrative, financial, audits)
Fair Housing
Handicapped accessibility
Lead-based paint hazard reduction Chapters at end of the training manual summarize these requirements
HUD, Office of Block Grant Assistance Slide 22
KEY QUESTIONS TO CONSIDER FOR CDBG IMPLEMENTATION
What are our community development needs, especially for LMI persons?
How can CDBG be used to address these needs?
Do we have effective procedures for CDBG grant administration & oversight?
Do we have a process for timely collection and reporting of outcome and eligibility data in IDIS?
How will we evaluate and improve our program results and processes?
HUD, Office of Block Grant Assistance Slide 23
CCOONNSSOLIOLIDDATEDATED PLANPLAN ANDAND IMPIMPLLEEMMENENTATATIONTION
BASICALLY CDBG
Basically CDBG Slides - NSP2 Training 2010
THE CONSOLIDATED PLAN
Needs determine activities and organizations to fund
Components: Lead agency description
Housing and homeless needs assessment
Housing market analysis
Strategic plan
One-year action plan
HUD, Office of Block Grant Assistance Slide 25
HUD, Office of Block Grant Assistance Slide 26
FALL 2008 Sept. 28, 2008 2007/2008 CAPER must be submitted in IDIS no later than this
date (90 days after the end of the PY)
End of the 2007 Program Year
2008 Annual Action Plan Submitted to HUD Field Office (45 days before the start of the PY)
HUD Reviews and Approves 2008 Action Plan
June 30, 2008
May 16, 2008
Conduct Public Hearings and Present 2008 Action Plan for required 30-day public comment period
Citizen Participation, input , consultations, and revise previous Consolidated/Action Plan Solicit RFPs for proposed activities
Conduct Public Hearings and Present Consolidated/Action Plan for required 30-day public comment period
FALL 2006
2007 PY Annual Action Plan Submitted to HUD Field Office (45 days before the start of the PY)
May 16, 2007
End of 2006 Program Year June 30, 2007
HUD Reviews and Approves Consolidated Plan/2007 Action Plan
Sept. 28, 2007 2006/2007 CAPER due to HUD (90 days after the end of the PY)
FALL 2007
Citizen Participation, input , consultations, and revise previous Consolidated Plan/Action Plan. Solicit RFPs for proposed activities
2005/2006 CAPER due to HUD (90 days after the end of the PY) Sept. 28, 2006
July 1, Start 2007/2008 PY
Implement 2007 Program Activities
Implement 2006 Program Activities
Complete 2006 Program Activities
July 1, Start 2008/2009 PY
HUD, Office of Block Grant Assistance Slide 27
CON PLAN & CPMP CPMP = Consolidated Plan Management
Process
Optional tool to assist grantees in meeting the requirements of Con Plan Comprised of 19 different documents
Allows grantees to submit Con Plan materials to HUD almost entirely in e-format
HELP LINE – 1-877-483-8282
Grantee may submit Con Plan, Action Plan & CAPER in format that they have used in the past May also combine parts of the CPMP with formats currently
used by grantees
Basically CDBG Slides - NSP2 Training 2010
THE CONSOLIDATED PLAN (cont.)
Requires Citizen participation
HUD Reviews and Approves Con Plan Submitted to local field office at least 45 days prior to
start of program year
August 16 is annual DEADLINE for submission
Amendments can be made
Annual performance reporting measured against Con Plan goals and activities
HUD, Office of Block Grant Assistance Slide 28
WHO WILL MANAGE & IMPLEMENT ACTIVITIES?
Grantees Options: Grantee staff
Subrecipients
Community-Based Development Organizations (CBDOs)
Community-Development Finance Institutions (CDFIs)
Faith-Based Organizations
Contractors
HUD, Office of Block Grant Assistance Slide 29
SUBRECIPIENT DEFINED
A Public or Private nonprofit organization/ agency receiving CDBG funds from grantee for eligible activities
A for-profit agency assisting microenterprises may also be a subrecipient
Institutions of higher learning may be subrecipients
Who is not a subrecipient?
CBDOs are not automatically subrecipients
Procured contractors are not subrecipients
Beneficiaries of assistance are not subrecipients
HUD, Office of Block Grant Assistance Slide 30
Basically CDBG Slides - NSP2 Training 2010
SUBRECIPIENT AGREEMENTS
A written agreement MUST be executed before funds are disbursed
Minimal required elements: Statement of work
Records and reports
Program income
Uniform administrative & other federal requirements
Suspension/termination & reversion of assets
Conditions for religious organizations
HUD, Office of Block Grant Assistance Slide 31
COMMUNITY BASED DEVELOPMENT ORGANIZATIONS
Reg cite §570.204
CBDOs may carry out only certain types of projects: Neighborhood revitalization
Community economic development
Energy conservation
All activities undertaken by a CBDO must fall into 1 of these 3 categories
HUD, Office of Block Grant Assistance Slide 32
CBDO ACTIVITIES
Possible activities include (but are not limited to): New housing construction (can only be carried out by
a CBDO) in CDBG
Job training not subject to public service cap
Neighborhood Revitalization Strategy Area (NRSA) public services not subject to the public service cap
Other economic development activities
HUD, Office of Block Grant Assistance Slide 33
Basically CDBG Slides - NSP2 Training 2010
CBDO REQUIREMENTS
Organization must: Be organized under state/local law for specific
community development activities
Operate in specific geographic area within grantee’s jurisdiction
Have as its primary focus the improvement of economic/ physical/social aspect of service area, particularly for low/mod persons
Have a governing body of at least 51% low/mod rep’s
HUD, Office of Block Grant Assistance Slide 34
COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS
A community-based lending institution
CDFI fund is managed by the Department of Treasury beginning in 1994
CDFIs have these characteristics: Promote community development
Serve an investment area or targeted population
Provide loans or development investments and development services
Maintain accountability to residents
Are not an agency of government
HUD, Office of Block Grant Assistance Slide 35
CDFI FLEXIBILITIES
Special consideration for CDFI activities under CDBG regulations
Flexibilities apply regardless of whether CDFI funded by Treasury program or not
For any CDFI, may aggregate jobs created/retained by all businesses for determining low/mod benefit
HUD, Office of Block Grant Assistance Slide 36
Basically CDBG Slides - NSP2 Training 2010
CDFI FLEXIBILITIES (cont.)
When CDFI charter limited to a 51% LMI investment area: Job activities qualified as meeting area benefit
Scattered-site housing may be considered a single structure
ED activities may be exempt from aggregate standards
HUD, Office of Block Grant Assistance Slide 37
FAITH-BASED ORGANIZATIONS
Rule changed in 2003
No longer need to set up separate nonprofit
Can undertake all CDBG eligible activities but cannot: Support inherently religious activities
Discriminate in employment on basis of religion for staff working on CDBG programs
Discriminate in serving eligible beneficiaries
HUD, Office of Block Grant Assistance Slide 38
CONTRACT ADMINISTRATORS
Not a CBDO or subrecipient
Must be competitively procured under Part 85 A state may use part 85, or its own procurement
rules
Use when activity: Is discrete
Has a defined beginning and end date
Is for a specific project
HUD, Office of Block Grant Assistance Slide 39
Basically CDBG Slides - NSP2 Training 2010
ACTIVITY SELECTION PROCESS Subrecipients, CBDOs and CDFIs may
be “picked” by the grantee in any manner
Four typical models: Formal application process (or RFP)
Limited application process
RFQ process
Open door (unsolicited) process
Most grantees use a combination
Helpful information on application contents & evaluation in the training manual
HUD, Office of Block Grant Assistance Slide 40
NANATIONATIONALL OOBBJECJECTTIVESIVES
BASICALLY CDBG
NATIONAL OBJECTIVES
Reg cite §570.208, 570.480
All CDBG activities must result in one of the following: Benefit low/mod income persons
Prevent or eliminate slums and blight
Meet an urgent need
HUD, Office of Block Grant Assistance Slide 42
Basically CDBG Slides - NSP2 Training 2010
HUD, Office of Block Grant Assistance Slide 43
LMI AREA BENEFIT
URGENT NEED LOW/MOD
Area Benefit
Limited Clientele
Housing Jobs
SLUM/BLIGHT
Area Basis
Spot Basis
Urban Renewal
NATIONAL OBJECTIVES
Urban renewal objective not allowed in state program
LOW/MOD BENEFIT AREA BENEFIT
Activities that benefit all residents of an area
Typical activities: water/sewer, parks, community centers
Must determine service area of activity Based on reasonable assumptions as to who would
access the facility, service, etc.
Area must be primarily residential
HUD, Office of Block Grant Assistance Slide 44
LOW/MOD BENEFIT AREA BENEFIT (cont.)
Area must be at least 51% LMI persons
Typically use annual Census data (July 1)
Some entitlement grantees are “exception communities” (these grantees are allowed to go below 51%)
Can conduct survey using HUD approved methodology See guidance at Notice CPD-05-06
HUD, Office of Block Grant Assistance Slide 45
Basically CDBG Slides - NSP2 Training 2010
HUD, Office of Block Grant Assistance Slide 46
LMI LIMITED CLIENTELE
URGENT NEED LOW/MOD
Area Benefit
Limited Clientele
Housing Jobs
SLUM/BLIGHT
Area Basis
Spot Basis
Urban Renewal
NATIONAL OBJECTIVES
Urban renewal objective not allowed in state program
LOW/MOD BENEFIT LIMITED CLIENTELE Activities that benefit specific populations (e.g.,
services for seniors; homeless shelters; micro loan programs)
Options for meeting limited clientele:
51% of participants are documented as LMI
Participation limited to LMI only Presumed clientele Activity must exclusively serve: elderly, severely disabled
adults, homeless persons, illiterate adults, migrant farm workers, abused children, persons with AIDS or battered spouses
Nature and location indicate low/mod benefit
HUD, Office of Block Grant Assistance Slide 47
LIMITED CLIENTELE (cont.)
Some specific activities are unique
Removal of architectural barriers (some activities); or
Microenterprise activities with LMI owners; or
Certain types of job training efforts
HUD, Office of Block Grant Assistance Slide 48
Basically CDBG Slides - NSP2 Training 2010
HUD, Office of Block Grant Assistance Slide 49
LMI HOUSING
URGENT NEED LOW/MOD
Area Benefit
Limited Clientele
Housing Jobs
SLUM/BLIGHT
Area Basis
Spot Basis
Urban Renewal
NATIONAL OBJECTIVES
Urban renewal objective not allowed in state program
LOW/MOD BENEFIT HOUSING
This is the only L/M national objective for housing activities
To meet the housing national objective, structures must be occupied by low/mod households
Typical activities: homeowner unit rehab, rental acquisition and rehab, homebuyer assistance
Documented based on unit occupancy:
One unit structures occupied by LMI
One unit of duplex occupied by LMI
51% of 3+ units LMI occupied by LMI
HUD, Office of Block Grant Assistance Slide 50
LOW/MOD BENEFIT HOUSING (cont.)
May have less than 51% LMI occupancy only under certain circumstances
Assist the development cost of multi-family non-elderly new construction AND
At least 20% of the units LMI occupied AND
Portion of CDBG cost is no greater than LMI occupancy
Aggregation allowed in some instances
CDFI
NRSA HUD, Office of Block Grant Assistance Slide 51
Basically CDBG Slides - NSP2 Training 2010
LMI JOBS
URGENT NEED LOW/MOD
Area Benefit
Limited Clientele
Housing Jobs
SLUM/BLIGHT
Area Basis
Spot Basis
Urban Renewal
NATIONAL OBJECTIVES
Urban renewal objective not allowed in state program
HUD, Office of Block Grant Assistance Slide 52
JOB CREATION & RETENTION Activities related to economic opportunity
Typical activities: business loans, commercial rehabilitation, infrastructure to a business
In order to meet this criteria, activities must create or retain permanent jobs
AND
51% of the jobs created/retained must be available to or held by LMI persons
Jobs counted on full time equivalent (FTE) basis
HUD, Office of Block Grant Assistance Slide 53
SLUM & BLIGHT
URGENT NEED LOW/MOD
Area Benefit
Limited Clientele
Housing Jobs
SLUM/BLIGHT
Area Basis
Spot Basis
Urban Renewal
NATIONAL OBJECTIVES
Urban renewal objective not allowed in state program
HUD, Office of Block Grant Assistance Slide 54
Basically CDBG Slides - NSP2 Training 2010
HUD, Office of Block Grant Assistance Slide 55
SLUM AND BLIGHT AREA BASIS
Activities designed to address dilapidated physical environment Not based on income of residents
Typical activities: code enforcement, infrastructure, commercial rehabilitation
Must be defined area & meet definition of slum/blighted area under state/local law AND
HUD, Office of Block Grant Assistance Slide 56
SLUM AND BLIGHT AREA BASIS (cont.)
Meet either (A) or (B) below: (A) The public improvements in the area are in a general
state of deterioration
(B) At least 25% of properties throughout the area experience 1 or more of the following conditions:
Physical deterioration of buildings or improvements
Abandonment of properties;
Chronic high occupancy turnover rates or chronic high vacancy rates in commercial/industrial buildings;
Significant declines in property values or abnormally low property values relative to other areas in community; or
Known or suspected environmental contamination.
HUD, Office of Block Grant Assistance Slide 57
URGENT NEED
URGENT NEED LOW/MOD
Area Benefit
Limited Clientele
Housing Jobs
SLUM/BLIGHT
Area Basis
Spot Basis
Urban Renewal
NATIONAL OBJECTIVES
Urban renewal objective not allowed in state program
Basically CDBG Slides - NSP2 Training 2010
URGENT NEED NATIONAL OBJECTIVE
Used to address emergency situations
Typical activities: infrastructure, interim assistance, rehab of community facilities
To meet the urgent need test: Existing conditions pose serious & immediate threat to
health/welfare of community
Existing conditions are recent or recently became urgent
Generally 18 months
Recipient cannot finance on its own
Other funding sources not available
HUD, Office of Block Grant Assistance Slide 58
HUD, Office of Block Grant Assistance Slide 59
NSP National Objectives vs. CDBG National Objectives
CDBG National Objectives NSP National Objectives Benefit low/mod income persons (LMI) ONLY ONE: Benefit low/mod/middle
income persons (LMMI) • Low/mod/middle Housing (LMMH) •Low/Mod/Middle Area Benefit (LMMA)
*Note that although NSP changes the low and moderate income requirement level of the CDBG program, the remaining requirements of 24 CFR 570.208(a) and 570.483(b) regarding area benefit, housing, and limited clientele benefit remain unchanged.
Prevent or eliminate slums and blight (SBA)
Meet an urgent need
Low Income Housing 25% Set-Aside
LH 25 National Objective At a minimum 25% of NSP funds must create housing
for low-income residents (50% of Area Median Income)
25% of total NSP2 funds, not beneficiaries; not applied to each activity
ONLY abandoned or foreclosed residential properties
Must provide ‘Permanent’ Housing – No group homes or shelters
***Grantees are encouraged to go above the 25% minimum
HUD, Office of Block Grant Assistance Slide 60
Basically CDBG Slides - NSP2 Training 2010
LMI INCOME DOCUMENTATION
Annual income definitions, options: Section 8 Annual Income (24 CFR Part 5)
Census Long Form
IRS 1040 Series (Long Form)
Same definition must be used within programs or activities
Income is that of all family or household members for upcoming 12-month period
HUD, Office of Block Grant Assistance Slide 61
LMI INCOME DOCUMENTATION (cont.) Several options for documentation: Full 3rd party documentation (e.g., an employer)
Evidence of qualification under another program at least as restrictive as CDBG (e.g., public housing, etc…)
Evidence that assisted person is homeless
Verifiable self-certification from assisted person WARNING on using this method: If self-certification
determined to be incorrect or fraudulent, project maybe ineligible
Referral from state, county or local employment agencyor other entity that agrees to determine income and maintain documentation for grantee
HUD, Office of Block Grant Assistance Slide 62
HOHOUSIUSINNGG AANND RD REELLAATTEED AD ACCTITIVIVITITIEESS
BASICALLY CDBG
Basically CDBG Slides - NSP2 Training 2010
APPROACHES TO HOMEOWNER REHABILITATION
Many rehabilitation program options
Assistance can be in form of grants, loans, loan guarantees, interest subsidies
Minor, moderate & substantial rehab possible; Grantee: May/may not involve bringing all items up to code
May/may not adopt property or housing standards
May include improvements to enhance livability of unit
HUD, Office of Block Grant Assistance Slide 64
APPROACHES to HOMEOWNER REHABILITATION (cont.)
Reconstruction:
CDBG allows as rehab activity [24 CFR 570.202]
Same lot -- not necessarily standing at time of project commitment
Manufactured housing is allowed, if part of the community’s permanent housing stock
HUD, Office of Block Grant Assistance Slide 65
APPROACHES TO HOMEOWNER REHABILITATION (cont.)
Special purpose programs OK Energy efficiency and weatherization
Emergency repair
Handicapped accessibility
CDBG entitlement regulations allows refinancing if part of rehab and makes that rehab affordable No refinancing only!
HUD, Office of Block Grant Assistance Slide 66
Basically CDBG Slides - NSP2 Training 2010
Costs of labor and materials eligible
Related eligible costs: Initial homeowner warranty premium
Hazard insurance premium (except with grant)
Flood insurance premium
Lead-based paint testing & abatement
Purchase of construction equipment not eligible Tool lending programs are OK (sweat equity approach)
Be sure to follow CDBG rules on eligible rehab costs (States follow HCDA) PLUS A-87 cost reasonableness
HUD, Office of Block Grant Assistance Slide 67
HOMEOWNER REHAB ELIGIBLE COSTS
HOME PURCHASE ELIGIBLE ACTIVITIES
Two ways to approach home purchase activities: Assistance to homebuyers
Development assistance
Eligible activities for assistance to homebuyers: • As direct homeownership assistance -- now a
separate & permanently eligible activity
• As a public service activity (subject to cap)
HUD, Office of Block Grant Assistance Slide 68
HOME PURCHASE ELIGIBLE ACTIVITIES (cont.)
Direct homeownership assistance means: Up to 50% of required downpayment
Payment of reasonable closing costs
Principal write-down
Acquisition financing
Acquisition of mortgages guarantees & PMI
As public service, downpayment assistance only is eligible
Individual Development Acct’s (IDAs) Dedicated savings accounts
Use program funds as match to owner’s contribution
Can deposit funds in IDA if family eligible
HUD, Office of Block Grant Assistance Slide 69
Basically CDBG Slides - NSP2 Training 2010
HOME PURCHASE ELIGIBLE ACTIVITIES (cont.)
Assistance for homeownership Acquisition with rehabilitation
Activities in support of home ownership:
Acquisition (if nonprofit/public developer)
Infrastructure (if public ownership)
Clearance and demolition
New housing construction only by CBDOs as part of eligible CBDO project in CDBG
In NSP, new construction is an eligible activity for any grantee not just CBDOs
HUD, Office of Block Grant Assistance Slide 70
APPROACHES TO RENTAL HOUSING Many possible approaches: Acquisition
Rehabilitation
New construction
Acquisition: Grantees subsidize the purchase
In return units are rented to LMI persons at affordable rent
Must be public or nonprofit purchaser
HUD, Office of Block Grant Assistance Slide 71
APPROACHES TO RENTAL HOUSING (cont.)
Rehabilitation Can be combined with acquisition
CDBG mandates no standard
Can do historic preservation
Conversion = changing something into affordable housing
Reconstruction = re-building same size structure on same site
HUD, Office of Block Grant Assistance Slide 72
Basically CDBG Slides - NSP2 Training 2010
ELIGIBLE RENTAL PROJECTS
Project ownership can be public or private
Mixed-use buildings are allowed Can pay for both commercial and residential
Mixed-income units are also possible
Special needs projects are allowed SRO & transitional housing
Can develop facilities but these are not “housing” Not subject to new construction ban
Must be owned by public agency or nonprofit
HUD, Office of Block Grant Assistance Slide 73
RENTAL HOUSING ELIGIBLE COSTS
Expenditures may include: Labor & materials
Refinancing (if necessary & appropriate)
Energy efficiency improvements
Utility connections
Lead-based paint activities
Rehabilitation services (loan processing, specs, etc.)
Handicapped accessibility improvements
HUD, Office of Block Grant Assistance Slide 74
NEW HOUSING CONSTRUCTION
CDBG cannot generally be used to construct rental housing Exception for housing of last resort under URA
Exception for CBDOs (§105(a)(15) for states)
Exception for special needs facilities (considered public facilities)
CDBG can be used to support new construction
Acquisition and disposition Site clearance and assemblage Site improvements
HUD, Office of Block Grant Assistance Slide 75
Basically CDBG Slides - NSP2 Training 2010
Housing services may be eligible as:
Public service activity – subject to 15% Cap
Part of other CDBG activity (program delivery) OR
As separate activity when activities linked to HOME Program activities (HOME income limits apply)
As public service, housing services may fit under Area Benefit or Limited Clientele of Low/Mod National Objective
As part of CDBG or HOME housing activity, housing services must qualify under the Low/Mod Housing National Objective
HUD, Office of Block Grant Assistance Slide 76
HOUSING SERVICES
INELIGIBLE HOUSING ACTIVITIES
New construction, unless by CBDO
Direct mortgage guarantees
Purchase of construction equipment
Mortgage or utility payments, except when: As an emergency, can provide up to 3 consecutive
months, with payments made to service provider
When provided as a loan
When provided by CBDO as part of CBDO project
HUD, Office of Block Grant Assistance Slide 77
HOUSING NATIONAL OBJECTIVES
Most common national objective is LMI housing
Only L/M national objective that can be used
To meet the housing national objective, structures must be occupied by low/mod households
One unit structures occupied by LMI
One of two duplex units occupied by LMI
More than two units require 51% units occupied by LMI
HUD, Office of Block Grant Assistance Slide 78
Basically CDBG Slides - NSP2 Training 2010
HOUSING NATIONAL OBJECTIVES
Multi-family housing:
51% of units in each structure occupied by LMI households, AND
Rents must be affordable; grantee determines “affordable” and makes public
If carried out by CDFI within target area or in NRSA, may aggregate buildings to meet 51%
HUD, Office of Block Grant Assistance Slide 79
Some activities may qualify under Slum/ Blight Area Basis or Spot Basis
If Slum/Blight Area Basis: Area must meet requirements & rehab must address
deterioration
Building must be substandard & all deficiencies must be addressed before less critical work done
If Spot Basis, rehab limited to elimination of public health/safety issues
HUD, Office of Block Grant Assistance Slide 80
HOUSING NATIONAL OBJECTIVES
NSP USES AND ACTIVITIES HERA defines five “uses” of funds
Generally, uses of HERA funds must be CDBG eligible
Some exceptions
HUD has cross referenced HERA uses to CDBG activities
HUD permission needed if CDBG activity not on list
Need to understand key terms for types of eligible properties to understand uses
HUD, Office of Block Grant Assistance Slide 81
Basically CDBG Slides - NSP2 Training 2010
NEW DEFINITION OF ABANDONED
Abandoned — A home or residential property is abandoned if either:
a) mortgage, tribal leasehold, or tax payments are at least 90 days delinquent, or
b) a code enforcement inspection has determined property is not habitable and owner has taken no corrective actions within 90 days of notice, or
c) property is subject to court-ordered receivership or nuisance abatement related to abandonment pursuant to state or local law or otherwise meets a state definition of an abandoned home or residential property.
HUD, Office of Block Grant Assistance Slide 82
NEW DEFINITION OF FORECLOSED
Foreclosed: A home or residential property has been foreclosed upon if any one of the following conditions apply: a) the property’s current delinquency status is at least 60 days
delinquent, or
b) property owner is 90 days or more delinquent on tax payments, or
c) under state, local, or tribal law, foreclosure proceedings have been initiated or completed, or
d) foreclosure proceedings complete and title transferred to intermediary aggregator or servicer that is not an NSP grantee, subrecipient, contractor, developer, or end user.
HUD, Office of Block Grant Assistance Slide 83
DISCOUNT/APPRAISAL REQUIREMENTS
When tax payments are 90 days delinquent,
a property could be defined as either “foreclosed”
and “abandoned”
However, if the property meets both the definitions,
the property should be considered “foreclosed” and
the NSP discount and appraisal requirements would
apply.
HUD, Office of Block Grant Assistance Slide 84
Basically CDBG Slides - NSP2 Training 2010
ELIGIBLE USE A
Eligible Use CDBG Eligible Activities
A. Financing mechanisms • Activity delivery cost for an eligible
for purchase & activity (designing & setting it up)
redevelopment of • The financing of an NSP eligible
foreclosed upon homes & activity – such as soft second loans,
residential properties loan loss reserve, equity sharing
• Housing counseling for program
participants
• Other activities in Uses B-D
HUD, Office of Block Grant Assistance Slide 85
Common Questions: Eligible Use A
When is this activity used?
Must it be used whenever financing is provided directly to homebuyer or developer?
Can this activity be related to redevelopment into commercial property?
HUD, Office of Block Grant Assistance Slide 86
ELIGIBLE USE B
Eligible Use
B. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties
CDBG Eligible Activities
• Acquisition
• Disposition
• Relocation
• Direct homeownership assistance
• Eligible rehabilitation and preservation activities for homes and other residential properties
• Housing counseling for program participants
HUD, Office of Block Grant Assistance Slide 87
Basically CDBG Slides - NSP2 Training 2010
Common Questions: Eligible Use B
Does a unit count as foreclosed if it is purchased prior to completion of legal action?
Can NSP funds be used to acquire a foreclosed property if the bank that foreclosed on the home has designated an asset manager as the seller?
Can rehabilitation be done on units purchased by buyers out of foreclosure (without NSP assistance)?
HUD, Office of Block Grant Assistance Slide 88
Common Questions: Eligible Use B (cont.)
What criteria must be met for NSP funds to be used for rehabilitation of a private purchase?
If vacant, abandoned, blighted property owes back taxes to grantee, can NSP funds be used to forgive tax liens as part of acquisition process?
HUD, Office of Block Grant Assistance Slide 89
ELIGIBLE USE C
Eligible Use CDBG Eligible Activities
C. Land banks for homes and
residential properties that have been foreclosed upon
• Acquisition
• Disposition (includes maintenance)
• Housing counseling for program participants
Land Bank = government or non-government entity temporarily assembles, manages, disposes of homes •Must operate in specific defined area
•10 year reuse plan
HUD, Office of Block Grant Assistance Slide 90
Basically CDBG Slides - NSP2 Training 2010
Common Questions: Eligible Use C
Can land banked properties be rented and used while still held in land bank?
What rules apply to re-use of land banked properties?
What is national objective for land bank?
HUD, Office of Block Grant Assistance Slide 91
ELIGIBLE USE D
Eligible Use CDBG Eligible Activities
D. Demolish blighted structures
• Clearance, for blighted structures only
Must be blighted, defined in Action Plan
Can be any type of unit or property • Residential, commercial , industrial
Must meet a national objective • Some projects based on demo itself, most on re-use of site
HUD, Office of Block Grant Assistance Slide 92
Common Questions: Eligible Use D
How to determine the right national objective?
Does “change of use” apply?
Can a grantee do demolition of public housing?
Can subrecipient purchase home, demolish it, and build new home in its place and sell it to eligible homebuyer?
HUD, Office of Block Grant Assistance Slide 93
Basically CDBG Slides - NSP2 Training 2010
Eligible Use CDBG Eligible Activities
• Acquisition E. Redevelop • Disposition demolished or • Public facilities and improvements
vacant properties • Housing counseling public services (limited to purchasers or tenants of redeveloped properties)
• Relocation • New housing construction • Direct homeownership assistance • 570.204 activities by CBDOs • Rehabilitation • Housing counseling for program participants
ELIGIBLE USE E
Any property or unit type HUD, Office of Block Grant Assistance Slide 94
Common Questions: Eligible Use E
Must new construction be done by CBDO?
Can commercial properties be developed under this use?
Can activities done under Eligible use E count towards the 25% set-aside?
Can NSP funds be used for infrastructure charges such as roads, water, sewer lines, power lines, etc?
HUD, Office of Block Grant Assistance Slide 95
INELIGIBLE USES
If ineligible under CDBG, usually ineligible under NSP New construction is exception, CBDO not needed
Ineligible under NSP: Foreclosure prevention
Demolition of non-blighted structures
Acquisition of property or structures that are not abandoned, foreclosed or vacant (eligible use E)
HUD, Office of Block Grant Assistance Slide 96
Basically CDBG Slides - NSP2 Training 2010
INELIGIBLE USES (cont.)
Need to be careful when addressing tax or other foreclosed properties owned by grantee
Cannot use NSP funds to reimburse grantee for its tax-foreclosed units Can only pay for reasonable title transfer costs
Can pay for back taxes as part of acquisition cost when foreclosed unit owned by private lender
HUD, Office of Block Grant Assistance Slide 97
OTHEROTHER REAL PRREAL PROPEROPERTYTY ACACTITIVVIITIESTIES
BASICALLY CDBG
OTHER REAL PROPERTY ACTIVITIES
Acquisition possible when undertaken by public agency or nonprofit Must meet national objective based on end use
Disposition involves selling property assisted with CDBG Can pay for transfer costs such as legal docs or
preparation of legal documents
Clearance is site clean-up or demolition Often is combined with other eligible activities
HUD, Office of Block Grant Assistance Slide 99
Basically CDBG Slides - NSP2 Training 2010
TAX FORECLOSED (IN REM) HOUSING
Covers eligible costs for properties acquired through tax foreclosure (“In Rem” is Latin for power against the thing [a court’s power to take property]) Not yet in regulations – in statute
Can do: Essential repair of units
Operating expenses to maintain habitability
Used to prevent abandonment and deterioration in LMI areas
National objective is usually LMI area benefit
Slum blight may be possible
HUD, Office of Block Grant Assistance Slide 100
CODE ENFORCEMENT ACTIVITIES
Costs for code enforcement eligible if: Enforcement takes place in a deteriorated or deteriorating area
AND the enforcement is accompanied by public or private improvements or services
Eligible costs include: Inspection (e.g., salaries and overhead)
Enforcement (e.g., salaries and legal costs)
Costs of correcting violations is not eligible as code enforcement, but may be eligible as rehab
HUD, Office of Block Grant Assistance Slide 101
CODE ENFORCEMENT (cont.)
Typically use Low/Mod Area Benefit
Area must contain 51% low/mod persons and
Area must be primarily residential in nature
May also use Slum/Blight Area Basis
Area must meet qualifying requirements
Activity must address slum/blight conditions
HUD, Office of Block Grant Assistance Slide 102
Basically CDBG Slides - NSP2 Training 2010
ELIGIBLE LEAD-BASED PAINT ACTIVITIES
Costs for evaluation and reduction of lead hazards in housing Inspection
Testing of surfaces
Interim Controls or Abatement
Relocation
Lead paint evaluation and reduction is eligible as an independent activity evenwhen buildings are not scheduled for rehab
HUD, Office of Block Grant Assistance Slide 103
LEAD-BASED PAINT ACTIVITIES (cont.)
Typically use LMI Housing national objective (LMH) One unit structures occupied by LMH
One of two duplex units occupied by LMH
More than two units require 51% units occupied by LMH
Slum/Blight Area Basis also possible Area must meet requirements
Activity must address slum/blight conditions
HUD, Office of Block Grant Assistance Slide 104
HISTORIC PRESERVATION ACTIVITIES
Funds may be used for preservation, rehabilitation, or restoration of historic properties – public or private
Historic properties include those: Listed or eligible to be listed in the National Register of
Historic Places
Listed in a State or local inventory of historic places
Designated as a State or local landmark or historic district by appropriate law or ordinance
HUD, Office of Block Grant Assistance Slide 105
Basically CDBG Slides - NSP2 Training 2010
HISTORIC PRESERVATION ACTIVITIES (cont.)
Range of national objectives possible:
Low/Mod Housing criteria, if residential
Low/Mod Area Benefit, Limited Clientele, or Job Creation/Retention if non-residential
Slum/Blight Area Basis, Spot Basis, or Urban Renewal (possible for entitlements only)
HUD, Office of Block Grant Assistance Slide 106
RENOVATION OF CLOSED BUILDINGS
CDBG can be used to transform obsolete buildings into new uses, such as: Housing – Note: Renovation is not considered new
construction
Economic development projects
Public facilities
National objective depends upon the end use of the building
HUD, Office of Block Grant Assistance Slide 107
HANDICAPPED ACCESS
Carry handicapped accessibility improvements by removing barriers Eligible under rehab activity if carried out on existing
residential, commercial, or industrial property
Otherwise, must be carried out as part of another eligible activity (e.g., public facility)
National objective depends upon activity Typically low mod limited clientele
HUD, Office of Block Grant Assistance Slide 108
Basically CDBG Slides - NSP2 Training 2010
ENERGY EFFICIENCY Wide range of activities possible:
Weatherize home or apartment building
Install solar and wind equipment
Finance energy-efficient rehabilitation
Establish energy standards, including recognition of the use of energy star for appliances and buildings
Provide audits and home energy ratings
Develop energy facilities
Eligible activity category depends on type
Must meet a national objective Will depend on type of energy efficiency activity
HUD, Office of Block Grant Assistance Slide 109
GREEN BUILDING INVESTMENTS
Alternative materials
Recycled materials
Low VOC paint
Formaldehyde-free cabinets
Solar panels
Green roofing
HUD, Office of Block Grant Assistance Slide 110
BROWNFIELDS REMEDIATION & DEVELOPMENT
Brownfields are vacant or underused industrial sites with environmental contamination
CDBG use for: Acquisition
Remediation (under clearance)
Redevelopment for economic development
Other eligible activities as applicable
National objective based on type of activity funded New flexibility in spot slum blight national objective for brownfields
Brownfields Economic Development Initiative Grants (BEDI) may be available
HUD, Office of Block Grant Assistance Slide 111
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PPUUBLIBLICC FFAACICILILITITIESES
BASICALLY CDBG
ELIGIBLE PUBLIC FACILITIES ACTIVITIES Infrastructure Streets, sidewalks
Water, sewer
Neighborhood facilities Parks, playgrounds
Recreational facilities
Facilities for special needs populations Homeless shelters
Group homes
HUD, Office of Block Grant Assistance Slide 113
PUBLIC FACILITIES AND NSP2
Public facilities ONLY allowed under Redevelopment (Use E)
NSP2 Redevelopment ONLY for Housing
(No parks, gardens, homeless shelters)
HUD, Office of Block Grant Assistance Slide 114
Basically CDBG Slides - NSP2 Training 2010
PUBLIC FACILITIES AND NSP2 (cont.)
Examples of acceptable NSP2 public facilities:
Water lines in public street for affordable housing project
Public sidewalks adjacent to redeveloped apartment complex
Public streets in redeveloped NSP subdivision CAN DO PUBLIC IMP’S, THEN TRANSFER TITLE
HUD, Office of Block Grant Assistance Slide 115
INELIGIBLE PUBLIC FACILITIES ACTIVITIES
Maintenance and repair of public facilities Exception for handicapped accessibility
Operating costs Exception for costs related to operating a CDBG public
service activity
Buildings for general conduct of government (e.g., city hall) Some exceptions
HUD, Office of Block Grant Assistance Slide 116
PUBLIC FACILITIES NATIONAL OBJECTIVES
Infrastructure improvements will typically qualifyunder: Low/Mod Area Benefit Surveys common for small service areas within Census
Tracts (must have HUD approved survey methodology)
Low/Mod Limited Clientele (facilities for persons withspecial needs)
LMI Housing national objective used IF publicimprovements are for purpose of providing Low/Mod Housing
HUD, Office of Block Grant Assistance Slide 117
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PPUUBLIBLICC SESERRVVIICCEESS
BASICALLY CDBG
ELIGIBLE PUBLIC SERVICE ACTIVITIES
Wide range of public services possible
Includes services related to:
Employment
Job training
Crime prevention/public safety
Child care
Health
Health services
Substance abuse services HUD, Office of Block Grant Assistance Slide 119
PUBLIC SERVICE ACTIVITIES (cont.)
In CDBG, annual obligations for public service activities may not exceed: 15% of annual entitlement grant PLUS 15% of last year’s program income
In NSP, the only eligible public service activity is homebuyer counseling (though this can also be an activity delivery cost)
HUD, Office of Block Grant Assistance Slide 120
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ECECONONOMICOMIC DEVDEVEELOPLOPMMENENTT ANDAND SECSECTIONTION 108108
BASICALLY CDBG
ELIGIBLE ECONOMIC DEVELOPMENT ACTIVITIES
Special economic development activities
Community-based development organizations
Technical assistance to businesses
Microenterprise activities
Commercial rehabilitation
Infrastructure to assist businesses
Job training
HUD, Office of Block Grant Assistance Slide 122
SPECIAL ECONOMIC DEVELOPMENT ACTIVITIES
Acquire, construct, rehabilitate, reconstruct or install commercial/industrial buildings or equipment By recipient or subrecipient only
Assistance to for-profit businesses
Economic development services in connection with special economic development activities
HUD, Office of Block Grant Assistance Slide 123
MICRO ENTERPRISE ASSISTANCE
Basically CDBG Slides - NSP2 Training 2010
SPECIAL ECONOMIC DEVELOPMENT (cont.)
Special economic development has flexibility in types of assistance to businesses Grants
Loans
Guarantees
Technical assistance & support services
May meet several different national objectives; depends on business & location
Triggers the requirement for public benefit standards
HUD, Office of Block Grant Assistance Slide 124
Helps reduce risk of business failure
Often focused on business plan development or legal and accounting issues
Often offered in conjunction with financial assistance
Critical to programs directed to start-ups DUNS # not required for TA
HUD, Office of Block Grant Assistance Slide 125
TECHNICAL ASSISTANCE TO BUSINESSES
MICRO ENTERPRISE ASSISTANCE
CDBG can fund micro enterprise assistance
Micro enterprise defined as: Owners or persons who work toward developing,
expanding or stabilizing a business
Commercial enterprise with employees (including owner)
Note: This definition differs from SBA
HUD, Office of Block Grant Assistance Slide 126
SECTION 108 Loan Guarantees
Basically CDBG Slides - NSP2 Training 2010
COMMERCIAL REHABILITATION
Rehabilitation of commercial or industrial structures – §570.202(a)(3)
If private, for-profit owner: Rehabilitation limited to exterior of building and
correction of code violations
Other improvements must be carried out under the special economic development category §570.203
Not subject to public benefit standards if carried out under §570.202(a)(3)
HUD, Office of Block Grant Assistance Slide 127
SECTION 108 Loan Guarantees
Method of expanding CDBG funds by using future CDBG grant as collateral to borrow funds
Section 108 process basics:
1. Community applies to HUD
2. Based on community’s pledge, HUD issues promissory notes
3. $$$ from sale of notes used for Section 108 eligible project
4. Notes are repaid
HUD, Office of Block Grant Assistance Slide 128
OTHEROTHER EELLIGIGIBIBLELE ACACTIVTIVIITIESTIES
BASICALLY CDBG
Basically CDBG Slides - NSP2 Training 2010
OTHER ELIGIBLE ACTIVITIES
Many other CDBG eligible activity options not discussed in detail in these webcast sessions, including:
Interim assistance
Relocation
Loss of rental income
Technical assistance
Assistance to institutions of higher learning
Payment of non-federal share
Urban renewal completion
HUD, Office of Block Grant Assistance Slide 130
RELOCATION
Must comply with the URA and 104(d)
May pay for: Temporary relocation
Permanent relocation
May be related to CDBG-assisted project or other activity
HUD, Office of Block Grant Assistance Slide 131
RELOCATION (cont.)
National objective depends on whether relocation is voluntary or required
If required under URA: Meets a LMI national objective if the associated CDBG
project meets national objective
If voluntary: Can qualify based on re-use of the property OR
Income of assisted recipients
Activity itself does not need to meet national objective HUD, Office of Block Grant Assistance Slide 132
Basically CDBG Slides - NSP2 Training 2010
LOSS OF RENTAL INCOME
Used to compensate owners for loss of rental income due to CDBG activities Used while holding units pending relocation of displaced
households
Not used to simply cover on-going rental losses
National objective based on objective for original CDBG activity
HUD, Office of Block Grant Assistance Slide 133
REVREVIITATALIZATIONLIZATION SSTTRARATETEGIESGIES
BASICALLY CDBG
LOCAL REVITALIZATION AREAS
CDBG grantees are allowed to designate geographic target areas May offer funding or certain types of programs in only
those areas
No HUD requirements on how to designate, criteria for selection of target areas
State or local law may apply
Indicate the designation of such areas in
Con Plan/Action Plan
IDIS project set-ups HUD, Office of Block Grant Assistance Slide 135
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NEIGHBORHOOD REVITALIZATION STRATEGY AREAS
Multi-faceted approach to address needs in neighborhoods
Targets resources and efforts
Approved strategies offer flexibility in using CDBG
Done as a part of or amendment to Consolidated Plan
HUD is developing new notice
HUD, Office of Block Grant Assistance Slide 136
FIFINANANNCCIIAAL ML MAANAGNAGEEMMEENTNT
BASICALLY CDBG
GENERAL ADMIN VS. ACTIVITY DELIVERY
Direct cost of carrying out activity is considered activity /program delivery cost Example: cost of running a rehab program (taking
applications, writing specs, inspections, etc.)
Other = general administration
General administration is capped at 20% for CDBG
This cap is set at 10% for NSP
HUD, Office of Block Grant Assistance Slide 138
Basically CDBG Slides - NSP2 Training 2010
General management, oversight & coordination
Two options for charging salaries: Entire amount
Pro rata share
Direct v. indirect
Must maintain supporting documentation by timesheets or indirect cost allocation plan
HUD, Office of Block Grant Assistance Slide 139
GENERAL ADMIN AND PLANNING COSTS
ADMINISTRATIVE AND PLANNING COSTS (cont.)
Other eligible admin/planning functions include: Public information
Fair Housing
Preparation of Consolidated Plan
Submission of applications for Federal programs
Admin expenses to facilitate housing
Overall program management of: EZ/ECs HOME program
Planning, policy work, and studies
HUD, Office of Block Grant Assistance Slide 140
ACTIVITY DELIVERY COSTS (ADC) Some costs related to administering
programs may be charged to the activity Activity delivery costs for staff & subrecipients Rehabilitation delivery costs HOME project delivery costs Housing counseling Energy auditing Work specifications Loan processing Inspections Tenant selection Management of TBRA
None of these project delivery costs count against the CDBG admin cap
HUD, Office of Block Grant Assistance Slide 141
Basically CDBG Slides - NSP2 Training 2010
HUD, Office of Block Grant Assistance Slide 142
ADMIN VS. ADC Ex. RESIDENTIAL REHAB PROGRAM
Phases of Development
CDBG Grantee Tasks Activity Delivery General Administration
Pre-Development
Managing comprehensive project design issues, site acquisition, and relocation
Analyze sub-market where project is proposed for need, rent levels, costs, etc.
Analyze overall market conditions and develop financial guidelines.
Promoting municipal CDBG funded programs and activities
Create and produce brochure for specific project. Present project to housing developers and notify them of upcoming request for proposals (general community promotion is ineligible).
Design and oversee overall marketing plan. Announce marketing plan to elected officials and chief executive.
HUD, Office of Block Grant Assistance Slide 143
ADMIN VS. ADC Ex. RESIDENTIAL REHAB PROGRAM
Phases of Development
CDBG Grantee Tasks
Activity Delivery General Administration
Development
Writing and processing loan agreements
Negotiate specific loan terms and conditions for approved project; negotiate and close loan agreement for specific project.
Negotiate with lenders community-wide to solicit participation in housing projects; develop standards and requirements for all loan agreements.
Soliciting, reviewing and writing responses to request for approvals (RFP)
Write and issue RFP, accept and process proposals.
Manage staff development for selection process and provide necessary resources.
ADMIN VS. ADC Ex. RESIDENTIAL REHAB PROGRAM
Phases of Development
CDBG Grantee Tasks
Activity Delivery General Administration
Post-Development
Writing and responding to correspondence related to construction issues
Collect detailed data on individual projects and gather input from IDIS staff.
Meet with HUD officials, develop staff capacity for DRGR and other systems, provide reports to Mayor and Council.
Relocation activities
Relocating existing residents in order to rehabilitate a specific housing project.
Budget setting, staff reviews
Evaluation
Provide detailed analysis of individual projects for review by upper management.
Assess overall progress of all individual projects for timeliness, quality housing, and compliance; visit sites for ceremonial activities such as ground breaking or grand opening.
HUD, Office of Block Grant Assistance Slide 144
Basically CDBG Slides - NSP2 Training 2010
ADMINISTRATIVE CAP
Obligations for planning and administration may not exceed the amount of: 20% of annual entitlement grant and the estimated
program income for the current Program Year
10% of NSP grant and 10% of Program Income
Cap is imposed through annual appropriations legislation, not regs.
HUD, Office of Block Grant Assistance Slide 145
CALCULATING ADMIN CAP
Total entitlement grant amount $1,000,000
Surplus from Urban Renewal -
Program income received by grantee and its subrecipients $50,000
Total: the basis for calculating the cap $1,050,000
Multiplied by 20 percent x 0.20
Maximum dollar level that may obligated and charged to Planning and $210,000 Capacity Building and Program Administration
HUD, Office of Block Grant Assistance Slide 146
DETERMINING COMPLIANCE WITH THE ADMIN CAP
Total costs under Planning and Administration for the program year $150,000
Add unliquidated obligations for planning and administration activities, $35,000 as of the end of the program year
Subtract unliquidated obligations for planning and administration ($20,000) activities, as of the end of the preceeding program year
Net obligations for planning and administration during the program $165,000 year
Compare to maximum dollar level calculated above to determine $210,000 planning and administrative cost cap
HUD, Office of Block Grant Assistance Slide 147
Basically CDBG Slides - NSP2 Training 2010
Costs incurred prior to effective date of grant agreement Grant agreement effective date is latter of:
Program year start date, OR
Date Con Plan received by HUD
Activity must meet applicable rules & requirements and must be in the Action Plan
Total must not exceed $300,000 or 25% of grant amount, whichever is greater
Pre-award rules for states are at the UGLG level HUD, Office of Block Grant Assistance Slide 148
PRE-AWARD COST RULES
REVOLVING FUND
A separate fund/account for specific activities that generate repayments for reuse with similar activities (hence revolving funds)
Must be in an interest bearing account Interest earned on fund remitted to HUD
Interest paid by borrowers & loan repayments are program income
HUD, Office of Block Grant Assistance Slide 149
HUD, Office of Block Grant Assistance Slide 150
LUMP-SUM DRAWDOWNS
Lump-sum drawdowns may be used to establish a rehabilitation loan fund with a private financial institution
If States wish to do lump sum, they’ll use entitlement regulations
Subject to certain limitations:
Cannot be used solely for investment
Rehabilitation administrative costs not eligible
Cannot exceed the grant amount for specific program
Basically CDBG Slides - NSP2 Training 2010
LUMP SUM DRAWDOWNS (cont.)
Grantee must execute a written agreement with a lending institution
First funds must be committed within 45 days of deposit
Disbursements must begin within 180 days
Financial institution must provide specific considerations in exchange for deposit
Account must earn interest
Interest is considered program income HUD, Office of Block Grant Assistance Slide 151
ESCROW ACCOUNTS
Escrow account is a trust account held in a borrower's name to pay certain obligations
Escrow accounts provide an excellent way to pay contractors on an owner’s behalf
CDBG rules on escrow accounts: Used for loans and grants for primarily residential
structures
Require an executed contract with homeowner authorizing escrow account
HUD, Office of Block Grant Assistance Slide 152
ESCROW ACCOUNTS (cont.)
Funds deposited in account must be used within 10 working days
Limited to paying actual rehab costs
Account must be interest bearing & interest must be paid to HUD quarterly
Above requirements are for entitlements & are safe harbor for state programs
HUD, Office of Block Grant Assistance Slide 153
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PROGRAM INCOME
What is PI? Money that comes back to the grantee or subrecipient that is generated by a CDBG activity: Proceeds from sale or lease of real property acquired
and/or improved with CDBG
Proceeds from lease of equipment purchased with CDBG
Gross income from use/rental of real or personal property acquired, constructed, improved (less costs incidental to generation of income)
HUD, Office of Block Grant Assistance Slide 154
What is program income:
Payments of principal & interest on loans made with CDBG
Proceeds from the sale of loans or obligations secured by loans made with CDBG
Interest earned on program income pending its disposition
Funds collected through special assessments on properties not owned/occupied by LMI persons
HUD, Office of Block Grant Assistance Slide 155
PROGRAM INCOME (cont.)
PROGRAM INCOME (cont.)
What is not program income?
Income received in a single year not exceeding $25,000
Income generated by some Section 108 activities
Proceeds of subrecipient fundraising
Funds collected through special assessment
Subrecipients’ proceeds from disposition of property five years or more after grant close-out
HUD, Office of Block Grant Assistance Slide 156
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USE OF PROGRAM INCOME
Program income Use for eligible CDBG activities
Subject to all CDBG rules and regulations Examples: Procurement, labor standards, environmental,
etc.
Miscellaneous revenue is not subject to these rules
Can expend up to 20% of total program income for administration for CDBG Can expend up to10% of program income on admin
for NSP HUD, Office of Block Grant Assistance Slide 157
FIRST IN – FIRST OUT
Must use program income prior to drawing new CDBG funds from line of credit at HUD Program income cannot be held for specific projects
Program income cannot be banked
Exception: Revolving loan fund balances
HUD, Office of Block Grant Assistance Slide 158
PROGRAM INCOME REMITTANCE
Reg cite §570.504(b)(2)(iii)
Grantee must determine at end of program year whether it has excess program income
Excess must be returned to HUD’s Fort Worth CFO for deposit into a separate grantee account
HUD, Office of Block Grant Assistance Slide 159
Basically CDBG Slides - NSP2 Training 2010
CALCULATING EXCESS PROGRAM INCOME
(1) Determine aggregate amount of program income held by grantee and subrecipients
(2) Subtract immediate cash needs, revolving fund loan balances, lump sum drawdown balances, and cash used as security for Section 108
(3) Anything in excess of 1/12 of recent entitlement must be remitted
HUD, Office of Block Grant Assistance Slide 160
SAMPLE CALCULATION
Program income: $250,000 Less:
Immediate cash needs ($ 20,000) Revolving loan fund balance ($180,000) Lump sum draw down ($0) Cash held for 108 ($0)
Balance: $ 50,000
Annual CDBG entitlement: $1,920,000 1/12 annual entitlement: $ 160,000 Amount to be remitted: ($0)
HUD, Office of Block Grant Assistance Slide 161
MISCELLANEOUS REVENUE
Total amount of funds earned in a single year that is less than $25,000 not program income
Funds earned from certain types of activities carried out by certain nonprofits not program income
CBDOs
Nonprofits serving local development needs (state program only)
HUD, Office of Block Grant Assistance Slide 162
Basically CDBG Slides - NSP2 Training 2010
TIMELINESS
Timeliness refers to how quickly the grantee is able to commit and expend CDBG funds
Entitlement not allowed to have more than 1.5 times their annual allocation sitting in line of credit at U.S. Treasury
If the grantee chronically has more than 1.5 times their allocation in their line of credit, HUD can withhold future grants until the grantee effectively spends their existing resources
States do not have same requirement HUD, Office of Block Grant Assistance Slide 163
TIMELINESS FOR NSP2 Expenditure Deadlines:
NSP2 recipients must expend 50 percent of their NSP2 funds within 2 years and 100 percent within 3 years
These expenditure requirements refer to your original NSP2 allocation. Any program income expended would not count towards these expenditure deadlines.
HUD, Office of Block Grant Assistance Slide 164
UNIFORM ADMINISTRATIVE REQUIREMENTS
CDBG recipients must comply with federal admin guidelines & financial management requirements: Governmental entities/public agencies OMB Circular A-87 24 CFR Part 85 (except states, which may adopt their
own standard)
Nonprofit subrecipients OMB Circular A-122 24 CFR Part 84 (not applicable in state programs if
part 85 is not used)
HUD, Office of Block Grant Assistance Slide 165
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OMB A-87/122
Establishes cost principles
Grantee is responsible for efficient and effective administration
Administer consistent with program rules and agreements
All costs must be reasonable, allowable, and allocable
HUD, Office of Block Grant Assistance Slide 166
ALLOWABLE COSTS
A-87/A-122 Identifies allowable and unallowable costs
Some costs are never allowed Examples of unallowable costs: entertainment,
alcohol, bad debts
Some costs are allowed but with certain conditions
Some costs depend on the federal funding source
HUD, Office of Block Grant Assistance Slide 167
ALLOWABLE COSTS (cont.)
Criteria for allowability Must be reasonable
Must conform to limitations
Must be in accordance with GAAP
Must not be included under another federally funded program
Must be adequately documented
HUD, Office of Block Grant Assistance Slide 168
Basically CDBG Slides - NSP2 Training 2010
COST REASONABLENESS
Cost is reasonable when it does not exceed what a prudent person would incur under similar circumstances
Consideration should be given to: Is cost necessary and ordinary?
Market prices for comparable goods and services
Individuals acted with prudence
Deviations from set policy
HUD, Office of Block Grant Assistance Slide 169
HUD, Office of Block Grant Assistance Slide 170
SOURCE DOCUMENTS
Records must be supported by source documents Explain basis of costs incurred
Actual dates of expenditure
Examples include cancelled checks, paid bills, payroll, etc.
HUD, Office of Block Grant Assistance Slide 171
COST ALLOCABILITY
Determine where to charge costs
Process known as cost allocation methods
And a cost allocation plan (re: direct & indirect costs [see beginning of FM])
GAAP provides guidance
Basically CDBG Slides - NSP2 Training 2010
PART 85/84 Part 85/84 covers two key topics:
Effective financial management systems
Procurement
Also covers: Pre-award
Property & equipment
Records
Close-out
HUD, Office of Block Grant Assistance Slide 172
EFFECTIVE FINANCIAL MANAGEMENT SYSTEMS
Under Part 85, effective financial management systems must:
Record all financial transactions
Relate expenditures to activities
Ensure compliance with laws and regulations
HUD, Office of Block Grant Assistance Slide 173
ACCOUNTING RECORDS
Records should sufficiently identify source and application of funds
Minimally, a records system must have: Internal Controls
Chart of Accounts
Transactions – Identify & Track
HUD, Office of Block Grant Assistance Slide 174
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CIRCULAR A-133
If expend $500,000 or more in federal awards, get single or program audit Program audit allowed only if that agency expended
funds under only one Federal program
If less than $500,000, exempt from audit requirements for that year
HUD, Office of Block Grant Assistance Slide 175
AUDIT REQUIREMENTS
Audits due to federal clearinghouse no later than nine months after end of fiscal year Clearinghouse is supposed to send to HUD
Recipients must resolve audit findings
CPA mandatory
HUD, Office of Block Grant Assistance Slide 176
CHANGE IN USE
Applies to real property under a subrecipient’s control acquired or improvedwith $25K or more of CDBG If changed, property must:
Meet a national objective for five years after expiration of Subrecipient Agreement, OR
Must return $ at current market value and treat as CDBG program income
See 24 CFR 570.503
HUD, Office of Block Grant Assistance Slide 177
Sl de 180
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HUD, Office of Block Grant Assistance Slide 178
CHANGE IN USE Applies to real property under the
grantee’s control acquired or improved with $25K or more of CDBG Must notify citizens and receive comments on change, &
If changed, property use must: Meet a national objective for five years after close-out
of the grant agreement, or Must return $ at current fair market value and treat as
CDBG program income
See 24 CFR 570.505 Note: State CDBG rule is based on $100k of CDBG
assistance
BASICALLY CDBG
PERFORMANCE MEASUREMENT,PERFORMANCE MEASUREMENT, RECORDKEEPING AND MONITORINGRECORDKEEPING AND MONITORING
HUD, Office of Block Grant Assistance i
HUD CPD OUTCOME FRAMEWORK
Outcome 1: Availability/Accessibility
Outcome 2: Affordability
Outcome 3: Sustainability
Accessibility for the purpose of creating
Suitable Living Environments
Accessibility for the purpose of providing
Decent Housing
Accessibility for the purpose of creating
Economic Opportunities
Affordability for the purpose of creating Suitable
Living Environments
Affordability for the purpose of providing Decent
Housing Affordability
for the purpose of creating Economic
Opportunities
Sustainability for the purpose of creating Suitable
Living Environments
Sustainability for the purpose of providing
Decent Housing
Sustainability for the purpose of creating
Economic Opportunities
Objective #1 Suitable Living Environment
Objective #2 Decent Housing
Objective #3 Economic
Opportunity
Outcome Statements
Basically CDBG Slides - NSP2 Training 2010
Appropriate documentation necessary to ensure compliance
Major categories of records to be kept: General administrative
Financial
Project/activity specific documents
National objective compliance
Subrecipients, CBDOs, CDFIs
Other Federal requirements
Have a strong and comprehensive filing system
Use checklists, logs and cross indexing
HUD, Office of Block Grant Assistance Slide 181
RECORDKEEPING REQUIREMENTS
RECORD RETENTION Record retention
Entitlements maintain records for four years following end of program year activity funded
States and UGLGs maintain records for three years following closeout
Consistent with Consolidated Plan requirements
Public access to records Citizens must have reasonable access
Citizens must be provided timely information
HUD, Comptroller General have access
HUD, Office of Block Grant Assistance Slide 182
MONITORING PURPOSE
Monitoring fosters: Production/accountability
Compliance with requirements
Responsiveness to community needs
Effective use of resources
Good organizational performance
HUD, Office of Block Grant Assistance Slide 183
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MONITORING BASICS Everyone in the process gets monitored: HUD monitoring of grantee
Grantee monitoring of: Grantee’s own files Public agency partners Subrecipients For profit contractors and beneficiaries CBDOs
Monitoring includes: Desk reviews (reports, documentation)
On-site visits (review of files, staff interviews, etc.) HUD, Office of Block Grant Assistance Slide 184
HUD MONITORING OF GRANTEE PROGRAMS
HUD and in-house grantee monitors should have access to all records on CDBG programs and projects Files should be accessible and in order
If another entity is administering the project, grantee must have records to demonstrate compliance
HUD’s monitoring checklists are good way to prepare for visit Make sure all questions can be answered, documents can be
found for each area http://www.hud.gov/offices/cpd/library/monitoring/handbook.cfm#3
HUD, Office of Block Grant Assistance Slide 185
HUD MONITORING OF NSP2 GRANTEES
HUD has added specific monitoring checklists for the NSP1 and NSP2 Programs Go through the checklists. Make sure all questions can
be answered, documents can be found for each area
These checklists are referred to as Exhibits and can be found on HUDClips website:
http://www.hud.gov/offices/adm/hudclips/handbooks/cp dh/6509.2/index.cfm
NSP specific exhibits include 8-10 to 8-17
HUD, Office of Block Grant Assistance Slide 186
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MONITORING TASKS Typical steps in the process:
Develop an annual monitoring plan
Consider doing risk assessments
Conduct periodic desk reviews
Conduct on-site assessments:
Entrance meeting
Review of files/other documents
Exit meeting/interview
Review letter & follow-up actions
HUD, Office of Block Grant Assistance Slide 187
WHAT SHOULD BE MONITORED?
Program benefit, including eligible activities and
national objective
Environmental
Financial
Procurement
Labor
Relocation & acquisition
FHEO/504/section 3
Citizen participation/certifications
Program management
Program progress & reporting HUD, Office of Block Grant Assistance Slide 188
MORE INFORMATION ON CDBG
For more information on CDBG, go to: HUD Field Offices
http://www.hud.gov/local/
HUD CDBG website
http://www.hud.gov/offices/cpd/communitydevelopm ent/programs/index.cfm
CDBG laws and regulations
http://www.hud.gov/offices/cpd/communitydevelopm ent/programs/index.cfm
HUD, Office of Block Grant Assistance Slide 189
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MORE INFORMATION (cont.)
For more information on CDBG, go to: Guide to Eligible Activities and National Objectives for
Entitlements
http://www.hud.gov/offices/cpd/communitydevelopm ent/library/deskguid.cfm
Guide to Eligible Activities and National Objectives for States
http://www.hud.gov/offices/cpd/communitydevelopm ent/library/stateguide/
HUD, Office of Block Grant Assistance Slide 190
OTHEROTHER FEDERAFEDERAL REL REQQUUIREIREMMENENTSTS
BASICALLY CDBG
OTHER FEDERAL REQUIREMENTS
Wide range are triggered by expenditure of CDBG funds: Procurement
Environmental review
Uniform Relocation Act and 104(d)
Davis Bacon and Other Labor Standards
Lead Based Paint
Fair Housing and Equal Opportunity
OMB Circulars (covered in the financial module)
HUD, Office of Block Grant Assistance Slide 192
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When a grantee elects to hire a contractor, whether to administer a program, complete a task or do construction, those contractors must be procured competitively.
Both grantees and subrecipients must follow federal procurement rules when purchasing services, supplies, materials, or equipment. State and local governments and Indian tribes – 24 CFR Part 85
Nonprofits, institutions of higher education and hospitals – OMB Circular A-110, as implemented through 24 CFR Part 84.
HUD, Office of Block Grant Assistance Slide 193
PROCUREMENT
PROCUREMENT (cont.) In addition to federal regulations, most states
and many local governments have laws and regulations regarding procurement. Each entity receiving CDBG funds (or NSP funds) should be aware of state and/or local laws that may affect procurement policies.
Keep in mind if federal regulations differ from state or local laws, grantees should always follow the stricter requirement.
In general, awards should always be made to the lowest responsive and responsible source.
HUD, Office of Block Grant Assistance Slide 194
PROCUREMENT (cont.)
Small purchase procedures allow recipients to acquire goods and services totaling no more than $100,000, without publishing a formal request for proposals or invitation for bids.
Under the small purchases method, grantees send a request for quotes to potential vendors with a detailed description of the goods or services needed. In return, they receive competitive written quotations from an adequate number of qualified sources.
HUD, Office of Block Grant Assistance Slide 195
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For contracts and goods over $100,000 you must use one of the following procurement procedures:
Competitive proposals
The grantee must publish a written request for submissions and then review these submissions based on established selection criteria.
Two methods: RFP that includes qualifications and cost, OR an RFQ that focuses on expertise/experience and not cost (but still subject to a negotiation of fair and reasonable compensation).
PROCUREMENT (cont.)
HUD, Office of Block Grant Assistance Slide 196
PROCUREMENT (cont.)
Competitive sealed bidding Sealed bids require publicly solicited, sealed
bids and a firm-fixed-price lump sum or unit price contract.
It is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is lowest in price.
HUD, Office of Block Grant Assistance Slide 197
PROCUREMENT (cont.) Non-competitive procurement may be used only
when the award of a contract is infeasible under small purchase procedures, sealed bids, or competitive proposals and one of the following circumstances applies:
Where the item is available only from a single source;
Where a public emergency or urgent situation is such that the urgency will not permit a delay beyond the time needed to employ one or the other procurement methods; or
Where after solicitation of a number of sources, competition is determined inadequate.
HUD, Office of Block Grant Assistance Slide 198
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PROCUREMENT (cont.)
For additional information on procurement please see:
24 CFR PART 85/84
Chapter 14 in your Notebook
HUD, Office of Block Grant Assistance Slide 199
EENNVIVIRORONMNMEENNTTAAL REQL REQUUIIRREMEMEENNTTSS
BASICALLY CDBG
ENVIRONMENTAL REVIEW
Environmental review of CDBG projects required before any funds obligated
Environmental review refers to process of looking at project for impact on environment and notifying the public of findings
Resources: 24 CFR Part 58 & various other laws
HUD, Office of Block Grant Assistance Slide 201
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ENVIRONMENTAL REVIEW ENTITIES
Responsible Entity (RE)
Certifying Official
Environmental Officer
HUD, Office of Block Grant Assistance Slide 202
ENVIRONMENTAL REVIEW RECORD Written record of compliance with all applicable
environmental requirements
Legal challenges can be won or lost based on the completeness of the ERR
ERR should contain all documentation:
Project descriptions, maps, pictures, etc.
Forms & checklists
Most current HUD recommended formats are available from HUD Field Offices
Notices
Correspondence and relevant documents
Public comments HUD, Office of Block Grant Assistance Slide 203
LIMITS ON ACTIVITIES PRIOR TO CLEARANCE
No participant may commit or expend HUD funds prior to receiving state (or HUD) approval IF the activity would have an adverse environmental impact or limit the choice of reasonable alternatives “Participant” includes public or private nonprofit or
for-profit entities or their contractors
Activities that are exempt or categorically excluded not subject to §58.5 may proceed
HUD, Office of Block Grant Assistance Slide 204
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LIMITS ON ACTIVITIES PRIOR TO CLEARANCE
Must ensure actions are not taken prior to receiving HUD approval
It is OK to make: A statement of conditional funding or
A non-legally binding agreement
HUD, Office of Block Grant Assistance Slide 205
LIMITS ON ACTIVITIES PRIOR TO CLEARANCE
For land acquisition projects, an option agreement (to purchase land) is allowable prior to HUD approval only when:
It is subject to a HUD determination of environmental desirability, and
It is of a nominal amount.
HUD, Office of Block Grant Assistance Slide 206
PROJECT AGGREGATION
Must group together & evaluate as a single project all individual activities which are related or are logical parts of a composite of contemplated actions
Functional Aggregation
Geographic Aggregation
HUD, Office of Block Grant Assistance Slide 207
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CLASSIFYING THE ACTIVITY
Next, determine the classification of the activity Exempt
Categorically Excluded (“Subject To” or “Not Subject To”)
Requires Environmental Assessment
Requires Environmental Impact Statement
If more than one activity or classification, go with most stringent
HUD, Office of Block Grant Assistance Slide 208
HUD, Office of Block Grant Assistance Slide 209
EXEMPT ACTIVITIES
Activity is exempt when there is no effect on the environment Studies, plans and admin costs
Public service activities with no physical impact
What steps do you take? Document that the activity is exempt by completing
proper forms
Move forward with the activity
HUD, Office of Block Grant Assistance Slide 210
CATEGORICALLY EXCLUDED ACTIVITIES
Categorically Excluded means excluded from NEPA requirements
Some activities still subject to other Federal Requirements Such as Historical Preservation, Floodplain impact,
etc…
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CATEGORICALLY EXCLUDED ‘NOT SUBJECT TO’ ACTIVITIES
“NOT subject to” activities include: Operating costs or supportive services
Direct assistance to homebuyers for existing housing or housing under construction
Predevelopment costs with no physical impact
Steps for activities NOT subject to 58.5: Make sure activities not in Runway Clear Zone or on
Coastal Barrier Island
Complete & submit proper forms
Proceed with the activity
HUD, Office of Block Grant Assistance Slide 211
CATEGORICALLY EXCLUDED ‘SUBJECT TO’ ACTIVITIES
Acquisition, improvement, or rehabilitation of public facilities other than buildings
Removal of material and architectural barriers Rehab & improvement of single family (1 to 4 unit)
dwellings Rehab & improvement of multifamily dwellings
provided the unit density isn’t increased more than 20%, does not change to non-residential use & the est. cost of rehab is less than 75% of replacement cost
HUD, Office of Block Grant Assistance Slide 212
CATEGORICALLY EXCLUDED ‘SUBJECT TO’ ACTIVITIES
An individual action on 1 to 4 dwelling units where there is a max of 4 units on any 1 site
An individual action on 5 or more housing units developed on scattered sites when sites are more than 2,000 feet apart & there are no more than 4 units on any 1 site
Acquisition (incl. leasing) or disposition of an existing structure provided its for the same use
HUD, Office of Block Grant Assistance Slide 213
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CATEGORICALLY EXCLUDED ‘SUBJECT TO’ ACTIVITIES
Steps to take for those activities Subject To 58.5: Prepare project description & map
Prepare & submit Section 106 Review Form to SHPO
Send project info. to relevant entities and request written determinations
Begin to prepare the Statutory Worksheet
HUD, Office of Block Grant Assistance Slide 214
CATEGORICALLY EXCLUDED ‘SUBJECT TO’ ACTIVITIES
Determine if in or impact on floodplains or wetlands If yes, apply “Eight Step Process” and publish notices
Complete the Statutory Worksheet If determination is that project will NOT affect resources,
converts to exempt -- sign form and file If project will affect resources, show mitigation, publish
“Notice of Intent to Request Release of Funds” and submit required information to state
Place all documentation in ERR Proceed with activity only after receipt of
NOREC from state
HUD, Office of Block Grant Assistance Slide 215
ENVIRONMENTAL ASSESSMENTS
If project not Exempt or Categorically Excluded, an Assessment is required
Steps to follow: Complete the first part of the Format II, incl. project
description & map
Prepare & submit Section 106 Review Form
Send project info. to various agencies & request written determinations
Complete the Modified Format II
HUD, Office of Block Grant Assistance Slide 216
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ENVIRONMENTAL ASSESSMENTS (cont.)
Steps (cont.) Determine whether project will or will not have
significant impact on environment
If no significant impact:
Publish “Combined Notice of FONSI/Notice of Request for Release of Funds”
Put documentation in ERR
Submit required information to state
Proceed with project only after receipt of NOREC received from the state
HUD, Office of Block Grant Assistance Slide 217
Publish notices in newspaper of general circulation or post in prominent public places NOTE: Floodplains/wetlands notices must be
published - no posting allowed
Send copies of notices to EPA, Corps, SHPO & other agencies & interested persons
HUD, Office of Block Grant Assistance Slide 218
TIMING OF ENVIRONMENTAL NOTICES
HUD, Office of Block Grant Assistance Slide 219
ENVIRONMENTAL NOTICES
Notice Method Timing
FONSI Published 15 days
FONSI Posted 18 days
NOI/RROF Published 7 days + 15 days for state
NOI/RROF Posted 10 days + 15 days for state
Combined FONSI & NOI/RROF Published 15 days for comment 15 days for objections
Floodplain Notice of Early Public Review
Published (required) 15 days
Floodplain Statement of Findings & Public Explanation
Published (required) 7 days
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LABLABOORR SSTTANDAANDARDSRDS
BASICALLY CDBG
LABOR STANDARDS – DAVIS-BACON Davis-Bacon applies to all construction
contracts over $2,000 involving CDBG funds Davis-Bacon is also triggered when an NSP-assisted
property contains 8 or more units. A property isdefined as 1 or more buildings on an undivided lot or on contiguous lots or parcels, which are commonly-owned and operated as 1 rental, cooperative or condominium project.
Requires workers be paid at least minimum wages provided by Dept of Labor
Acquisition, Demolition, and soft costs do not trigger Davis-Bacon
HUD, Office of Block Grant Assistance Slide 221
DAVIS-BACON IMPLEMENTATION
All bids & contracts subject to Davis-Bacon must contain standard clauses on requirements
Hold a preconstruction conference to review requirements with contractor
Prime or general contractor is responsible for full compliance, including lower tier subs
Contract administrator enforces requirements and provides information to contractor
HUD, Office of Block Grant Assistance Slide 222
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DAVIS-BACON WAGE DECISIONS
Decisions are needed to determine prevailing wages by worker classification
Recipients get wage decisions through state or online Types: Building, Residential, Highway, Heavy
Prime contractors must post wage decision
All contractors need to use the right type of classificationfor each job or request additional classifications
HUD guide provides definitions of key terms such as:
Employee, apprentice, prevailing wage, trade
HUD, Office of Block Grant Assistance Slide 223
WEEKLY PAYROLLS Prime contractors and subcontractors must submit
certified weekly payrolls in timely fashion Content of the payroll form: Project information Employee information
Work classification Hours Rate of pay Wages Deductions Net pay Statement of compliance
HUD, Office of Block Grant Assistance Slide 224
PAYROLL REVIEW
Recipient will conduct on-site review of employment on the project (HUD 11) Contractor must make employees available for interviews
Prime contractor and recipient should review all payrolls Compare to wage decision & interviews
Make sure calculations OK and deductions are documented
Contractors must keep copies of payroll records
HUD, Office of Block Grant Assistance Slide 225
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RESTITUTION
If underpayments, contractor will make restitution
Steps include: Recipient notifies the prime contractor
Computation of restitution & payment to worker
Contractor submits correct payroll
Recipient review of corrected payroll
If workers not found, will escrow restitution and recipient will look for 3 years After 3 years, amount is credited to HUD
HUD, Office of Block Grant Assistance Slide 226
HUD, Office of Block Grant Assistance Slide 227
OTHER LABOR LAWS
Contract Work Hours & Safety Standards Act Workers shall not work more than 40 hours/week unless they get
overtime & projects must comply with safety standards
Copeland Anti-Kickback Act Requires payment once a week & only permissible payroll
deductions
Fair Labor Standards Act Federal minimum wage & overtime requirements
HUD, Office of Block Grant Assistance Slide 228
The above apartment building contains more than 8 units and any rehab above $2k would trigger Davis Bacon
DAVIS-BACON (cont.)
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DAVIS-BACON (cont.)
In the same building, if windows were being installed in only three units for under $2,000 then Davis Bacon would not triggered.
HUD, Office of Block Grant Assistance Slide 229
HUD, Office of Block Grant Assistance Slide 230
This four unit apartment would not trigger Davis Bacon
DAVIS-BACON (cont.)
HUD, Office of Block Grant Assistance Slide 231
In most cases, single family homes will not trigger Davis Bacon because they are single residential structures, the exception is explained in the following slides.
DAVIS-BACON (cont.)
DAVIS-BACON (cont.)
Basically CDBG Slides - NSP2 Training 2010
Davis Bacon would not apply to the house, highlighted to the left above, because it’s a single residential structure that is owner occupied, as is the house next to it.
HUD, Office of Block Grant Assistance Slide 232
However, Davis Bacon would apply if all 8 single-family properties, highlighted in red, were owned and operated by the same person. Even though they are separate residential structures, if they are commonly owned and operated they would trigger Davis-Bacon.
HUD, Office of Block Grant Assistance Slide 233
HUD, Office of Block Grant Assistance Slide 234
DAVIS-BACON (cont.)
The above example shows contiguous residential townhouse structures, but these are individually owned properties, so they would not trigger Davis-Bacon.
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LEADLEAD--BASEDBASED PAPAIINNTT
BASICALLY CDBG
LEAD BASED PAINT REQUIREMENTS
Lead rules generally apply to properties built prior to 1978 Certain types of rehab work exempt
Properties tested & found not to have lead
Properties where lead has been removed
Rehab won’t disturb paint surfaces
Lead evaluation and treatment depends on level of assistance which is the lower of: Per unit rehabilitation hard costs (all funds) OR
Per unit federal assistance
HUD, Office of Block Grant Assistance Slide 236
LEAD PAINT REQUIREMENTS (cont.)
Evaluation activity depends on level of assistance: Less than $5,000 = Paint testing
$5,000 to $25,000 = Risk assessment
More than $25,000 = Risk assessment
Notification: Notice of Lead Hazard Evaluation to homeowner within 15 days
of inspection
Alternatively, can presume presence of lead & provide “Notice of Presumption”
HUD, Office of Block Grant Assistance Slide 237
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LEAD PAINT REQUIREMENTS (cont.)
How to address lead depends upon amount of assistance: <$5k = repair surfaces to be disturbed using safe
work practices
$5k - $25k = interim controls using safe work practices & trained workers
>$25k = abatement using safe work practices & certified supervisor & workers
HUD, Office of Block Grant Assistance Slide 238
LEAD PAINT REQUIREMENTS (cont.)
Clearance must also be performed Do NOT pay final payment to contractor before unit
has passed clearance
Provide Notice of Lead Hazard Reduction to property owner within 15 days of clearance test
HUD, Office of Block Grant Assistance Slide 239
LEAD-BASED PAINT (NEW RULE)
On April 22, 2008 EPA issued a new rule
Beginning in April 2010, contractors performing renovation, repair and painting (RRP) projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 must be certified and must follow specific work practices to prevent lead contamination.
There are some differences between the EPA RRP Rule and the HUD Lead Safe Housing Rule (LSHR). A major difference is that the LSHR requires clearance examinations. All housing receiving federal assistance must still comply with the LSHR.
HUD, Office of Block Grant Assistance Slide 240
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RREELOLOCACATITIOONN AANND TD TEENNAANTNT PRPROTEOTECCTIONSTIONS
BASICALLY CDBG
Uniform Act
When real property is acquired or persons displaced as a direct result of acquisition, demolition, and rehabilitation for a Federally funded project
Applies to government agencies, private organizations and others
Note: URA may be triggered if federal assistance is in any phase of project
URA requirements apply to:
Virtually all Federal programs, including CDBG/Section108 loan guarantees
Grants, loans, other contributions
HUD, Office of Block Grant Assistance Slide 242
WHEN IS THE URA TRIGGERED?
RELOCATION BASICS: WHO IS A DISPLACED PERSON?
Family
Individual
Business, Farm, or Nonprofit
Who Moves:
Permanently as a direct result of a Federally-assisted project
HUD, Office of Block Grant Assistance Slide 243
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RELOCATION BASICS: RESIDENTIAL
Residential displaced persons are eligible to receive: Advisory services & notices
Minimum 90 Day notice to vacate (based on availability of comparable replacement dwelling)
Replacement housing payments
Possibly housing of last resort
Moving expense payments
HUD, Office of Block Grant Assistance Slide 244
RELOCATION BASICS: NONRESIDENTIAL
Nonresidential displaced persons are eligible to receive: Advisory services & notices
Minimum 90 Day notice to vacate
Reestablishment expense payments (for small businesses) and moving expense payments OR
Fixed payment
HUD, Office of Block Grant Assistance Slide 245
RELOCATION BASICS: TEMPORARY RELOCATION
Families who do not need to move permanently are entitled to: Advisory services, including notices
Temporary relocation assistance (if applicable). Not to exceed 1 year
Remain in DSS, suitable, affordable unit
If no rent increase, unit is deemed affordable
HUD, Office of Block Grant Assistance Slide 246
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URA AND ACQUISITION
Applies to wide range of types of purchases: Fee simple title
Permanent easements
Temporary easements necessary for the project
Life estate
Long term lease (50 years or more)
HUD, Office of Block Grant Assistance Slide 247
PURCHASERS
URA covers purchases by: Grantee
Nonprofits with federal assistance
For profits with federal assistance
Agent or consultant acting on grantee behalf
Homebuyers with federal downpayment assistance
HUD, Office of Block Grant Assistance Slide 248
VOLUNTARY ACQUISITIONS
Three possible: Grantee has eminent domain powers but won’t use
Grantee doesn’t have eminent domain powers
Purchases from government agency where buyer does not have eminent domain powers over that agency
HUD, Office of Block Grant Assistance Slide 249
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GRANTEE WILL NOT USE EMINENT DOMAIN
Grantee must not intend to use its eminent domain powers if sale cannot be negotiated
Property cannot be: Specifically required
Part of a planned or designated area in which all or substantially all property in area will be purchased
Private developer acting as agent of grantee is treated as grantee
HUD, Office of Block Grant Assistance Slide 250
GRANTEE WILL NOT USE EMINENT DOMAIN (cont.) Must notify the seller: Grantee will not use the power of
eminent domain
Seller not eligible to receive relocation assistance
Estimate of fair market value
Appraisal not required, but determination made by someone with knowledge of real estate market
HUD, Office of Block Grant Assistance Slide 251
DONATIONS
Owners may voluntarily donate but… Must be fully informed of rights
Must acknowledge his or her decision to voluntarily relinquish payments due under URA
Get it in writing!
Keep in project file!
HUD, Office of Block Grant Assistance Slide 252
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INVOLUNTARY ACQUISITION
Grantees must: Provide notices to the owner Need proof of delivery
Provide URA notices and assistance to occupants Offer market value for the property Complete the purchase expeditiously
New rule: with fy06 funds, eminent domain cannot beused for any acquisition not benefiting the public Generally applies to economic development and
related activities Check before proceeding on eminent domain if not for
housing or infrastructure related to public use
HUD, Office of Block Grant Assistance Slide 253
General process: 1. Notify owner of the agency’s interest in acquiring
the property and their protections under the URA 2. Appraise the property and invite the owner to
accompany the appraiser or prepare waiver valuation
3. Review the appraisal 4. Establish just compensation for the property 5. Provide owner with written offer and summary
statement for property to be acquired
HUD, Office of Block Grant Assistance Slide 254
PROCESS FOR INVOLUNTARY ACQUISITION
PROCESS FOR INVOLUNTARY ACQUISITION
General process (cont.) 6. Negotiate with owner for the purchase of
property If negotiations are successful, complete the sale
If negotiations are unsuccessful, consider an administrative settlement to complete the sale
If negotiations are still unsuccessful, the agencyshould acquire the property through use of eminent domain
HUD, Office of Block Grant Assistance Slide 255
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SECTION 104(d)
Some projects also subject to 104(d)
Triggered only when CDBG or HOME funds are used for the project and there is: Demolition or conversion of units
104(d) addresses: People: Relocation assistance is provided for LOW-
INCOME residents
Units: One-for-one replacement is required when the stock of low/moderate housing is decreased
HUD, Office of Block Grant Assistance Slide 256
Statute includes noticing requirements for “bona fide” tenants in occupancy when unit acquired by initial successor in interest through foreclosure (usually lender)
“Bona fide” tenant:
Not former mortgagor
Lease is arms length transaction
Lease requires rent that is not substantially less than fair market rent for property
Effective for acquisitions by successor in interest (lender) after 2/17/09 ( & note PTFA 5/20/09)
HUD, Office of Block Grant Assistance Slide 257
TENANT PROTECTIONS
TENANT PROTECTIONS (cont.)
Lender must provide 90 day notice to vacate to “bona fide” tenant occupants
NSP funds cannot be used in any property unless lender followed notice rule, OR
Grantee assumes NSP tenant protection obligations
May trigger relocation assistance to displaced persons under URA
HUD, Office of Block Grant Assistance Slide 258
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TENANT PROTECTIONS (cont.)
Grantee must document lender compliance
If tenant in property, must have 90 day notice
If not occupied, lender must certify either that property was not occupied by “bona fide” tenant at time of foreclosure or that tenant received 90 day notice
If tenant has Section 8 assistance, lender must agree to continue lease & HAP contract
Protecting Tenants At Foreclosure Act
HUD, Office of Block Grant Assistance Slide 259
FAFAIRIR HHOOUUSSIINNG, ACG, ACCESSIBCESSIBIILITYLITY, AND, AND EQEQUAUAL EML EMPPLLOOYYMMEENNTT
BASICALLY CDBG
FAIR HOUSING LAWS Use of CDBG requires compliance with certain
Fair Housing and accessibility laws
Key Fair Housing laws: Title VIII of Civil Rights Act of 1968 – The Fair Housing Act
Title VI of the Civil Rights Act of 1964
Executive Orders 11063 and 12259
Age Discrimination Act
Section 109 of HCDA
Applicable state laws
No discrimination in housing on basis of race, ethnicity, color, religion, sex, national origin, familial status or disability
HUD, Office of Block Grant Assistance Slide 261
Basically CDBG Slides - NSP2 Training 2010
COMPLIANCE WITH FAIR HOUSING LAWS
Recipient must not discriminate and must affirmatively further Fair Housing in the community Conduct affirmative marketing
Rules apply to locality as a whole, not just with CDBG $: Maximize housing choice
Lessen racial, ethnic, and economic concentrations of housing
Facilitate desegregation and racially inclusive patterns of occupancy/public facilities
HUD, Office of Block Grant Assistance Slide 262
COMPLIANCE WITH FAIR HOUSING LAWS (cont.)
Analysis of impediments to fair housing
No official regulations – guidebook
See Con Plan guidance
Analyze current situation and describe actions
Certify to compliance but not required to submit documentation
HUD, Office of Block Grant Assistance Slide 263
ACCESSIBILITY – GENERAL
Adhere to laws and regulations: Architectural Barriers Act
Americans with Disabilities Act
Section 504
Fair Housing Act
HUD, Office of Block Grant Assistance Slide 264
Basically CDBG Slides - NSP2 Training 2010
SECTION 504
Section 504 makes it unlawful to discriminate based on disability in HUD-funded housing programs
Covered disabilities include: mobility, visual, hearing, cognitive
HUD, Office of Block Grant Assistance Slide 265
SECTION 504 (cont.)
Recipient must take steps to ensure accessibility of communication
Prohibitions against employment discrimination — make reasonable accommodations
Ensure program accessibility: Housing
Non housing
HUD, Office of Block Grant Assistance Slide 266
APPLICATION OF 504 TO HOUSING
New construction and substantial rehab of MF rental w/15+ units Substantial rehab: rehab costs = more than 75%
replacement cost
5% of units accessible for persons with mobility impairments
Additional 2% of units accessible for persons with hearing/vision impairments
HUD, Office of Block Grant Assistance Slide 267
Basically CDBG Slides - NSP2 Training 2010
SECTION 504 AND FACILITIES
Facility can be: Approached
Entered
Used by persons with physical handicaps
Several options for improving program access
HUD, Office of Block Grant Assistance Slide 268
SPECIAL 504 REQUIREMENTS FOR RECIPIENTS WITH 15+ EMPLOYEES
If 15 or more full or part-time employees: Designation of responsible employee and adoption
of grievance procedures
Notification to participants, beneficiaries, and employees of nondiscrimination policy
HUD, Office of Block Grant Assistance Slide 269
EQUAL OPPORTUNITY
Various Federal laws & authorities Title VI of Civil Rights Act of 1964
Title VIII of Civil Rights Act of 1968, as amended
Section 109 of HUD Act of 1974
Section 3 of HUD Act of 1968 (amended 1992)
Age Discrimination Act of 1975
Section 504 of the Rehab Act of 1973
E.O. 11063 & 11246
HUD, Office of Block Grant Assistance Slide 270
Basically CDBG Slides - NSP2 Training 2010
COMPLIANCE WITH EQUAL OPPORTUNITY LAWS
Provide equal opportunity in: Provision of services, facilities & improvements
(program benefit)
CDBG-related employment
Procurement & contracts
Keep records on beneficiaries to document compliance
HUD, Office of Block Grant Assistance Slide 271
SECTION 3
Section 3 of the Housing and Urban Development Act of 1968 recognizes that the normal expenditure of certain HUD funds typically results in new jobs, contracts, and other economic opportunities
When these opportunities are created, low�and very low�income persons residing in the community in which the funds are spent (regardless of race and gender), and the businesses that substantially employ them, shall receive priority consideration.
HUD, Office of Block Grant Assistance Slide 272
SECTION 3 (cont.)
Develop a Section 3 Action Plan
Make good faith efforts to meet this plan
Outreach
Advertisements
HUD, Office of Block Grant Assistance Slide 273
Basically CDBG Slides - NSP2 Training 2010
SECTION 3 for NSP2
Section 3 for NSP A grantee’s combined investment in excess of
$200,000 of NSP funding into projects arising in connection with housing construction, demolition, rehab, or other public construction makes the requirements of Section 3 applicable to all individual properties that receive services with these funds – regardless of the actual amount that is spent on each individual unit/property.
HUD, Office of Block Grant Assistance Slide 274
ANY QUESTIONS?ANY QUESTIONS?