HomeMy WebLinkAboutRFP 19-09: Appendix 3 - 24 CFR Part 57098
(1) Conducting an analysis to identify impediments to fair housing choice within the State;
(2) Taking appropriate actions to overcome the effects of any impediments identified through that analysis;
(3) Maintaining records reflecting the analysis and actions in this regard; and
(4) Assuring that units of local government funded by the State comply with their certifications to affirmatively further
fair housing.
(c)Lead-Based Paint Poisoning Prevention Act.States shall devise, adopt and carry out procedures with respect to
CDBG assistance that fulfill the objectives and requirements of the Lead-Based Paint Poisoning Prevention Act (42
U.S.C. 4821–4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851–4856), and
implementing regulations at part 35, subparts A, B, J, K, and R of this title.
(d) States shall comply with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and the
implementing regulations in 24 CFR part 135. Section 3 requires that employment and other economic opportunities
arising in connection with housing rehabilitation, housing construction, or other public construction projects shall, to
the greatest extent feasible, and consistent with existing Federal, State, and local laws and regulations, be given to
low- and very low-income persons.
(e)Architectural Barriers Act and the Americans with Disabilities Act.The Architectural Barriers Act of 1968 (42
U.S.C. 4151–4157) requires certain Federal and Federally-funded buildings and other facilities to be designed,
constructed, or altered in accordance with standards that ensure accessibility to, and use by, physically handicapped
people. A building or facility designed, constructed, or altered with funds allocated or reallocated under this subpart
after November 21, 1996 and that meets the definition of residential structure as defined in 24 CFR 40.2, or the
definition of building as defined in 41 CFR 101–19.602(a), is subject to the requirements of the Architectural Barriers
Act of 1968 and shall comply with the Uniform Federal Accessibility Standards. For general type buildings, these
standards are in appendix A to 41 CFR part 101–19.6. For residential structures, these standards are available from
the Department of Housing and Urban Development, Office of Fair Housing and Equal Opportunity, Disability Rights
Division, Room 5240, 451 Seventh Street, SW, Washington, DC 20410; telephone (202) 708–2333 (voice) or (202)
708–1734 (TTY) (these are not toll-free numbers).
[57 FR 53397, Nov. 9, 1992, as amended at 59 FR 33894, June 30, 1994; 60 FR 1916, Jan. 5, 1995; 61 FR 54922,
Oct. 22, 1996; 64 FR 50225, Sept. 15, 1999]
§ 570.488 Displacement, relocation, acquisition, and replacement of housing.
The requirements for States and state recipients with regard to the displacement, relocation, acquisition, and
replacement of housing are in §570.606 and 24 CFR part 42.
[61 FR 11477, Mar. 20, 1996]
§ 570.489 Program administrative requirements.
(a)Administrative and planning costs —(1)State administrative costs.(i) The state is responsible for the
administration of all CDBG funds. The state shall pay from its own resources all administrative costs incurred by the
state in carrying out its responsibilities under this subpart, except that the state may use CDBG funds to pay such
costs in an amount not to exceed $100,000 plus 50 percent of such costs in excess of $100,000. States are therefore
required to match such costs in excess of $100,000 on a dollar for dollar basis. The amount of CDBG funds used to
pay such costs in excess of $100,000 shall not exceed 2 percent of the aggregate of the state's annual grant,
program income received by units of general local government (whether retained by the unit of general local
government or paid to the State) and funds reallocated by HUD to the state.
(ii) For determining the amount of CDBG funds available in past years for administrative costs incurred by the state,
the following schedule applies:
(A) $100,000 per annual grant beginning with FY 1984 allocations;
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(B) Two percent of program income returned by units of general local government to the State after August 21, 1985;
and
(C) Two percent of program income received by units of general local government after February 11, 1991.
(iii) The state has the option of selecting its approach for demonstrating compliance with this requirement. Regardless
of the approach selected by the state, the state will be required to pay its 50 percent of administrative costs in excess
of $100,000 in the same amount and at the same time at which it draws CDBG funds for such costs after the
expenditure of the $100,000. Any state for which it is determined that matching costs contributions are in arrears on
the use of CDBG funds for administrative costs will be required to bring matching cost expenditures up to the level of
CDBG expenditures for such costs within one year of the effective date of this subpart. A state grant may not be
closed out if the state's matching cost contribution is not at least equal to the amount of CDBG funds in excess of
$100,000 expended for administration. Funds from any year's grant may be used to pay administrative costs
associated with any other year's grant. The two approaches are:
(A) Cumulative accounting of administrative costs incurred by the state since its assumption of the Program. Under
this approach, the state will identify, for each grant it has received, the CDBG funds eligible to be used for
administrative costs as well as the maximum amount of matching funds which the state is required to pay. The
amounts will then be aggregated for all grants received. The state must keep records demonstrating the actual
amount of CDBG funds from each grant received which was used for administrative costs as well as matching
amounts paid by the state. These amounts will also be aggregated for all grants received. The state will be
considered to be in compliance with the requirement if the aggregate of actual amounts spent for administrative costs
does not exceed the maximum amount allowable and the amount which the state has paid in matching funds is at
least equal to the amount of CDBG funds in excess of $100,000 (for each applicable allocation) drawn for
administrative purposes. Any administrative amounts associated with a particular state grant shall be deducted from
the aggregate totals upon closeout of that state grant.
(B) An accounting process developed and implemented by the state which provides sufficient information to
demonstrate that the requirements of this subsection are met.
(2) The state may not charge fees of any entity for processing or considering any application for CDBG fund, or for
carrying out its responsibilities under this subpart.
(3) The state and its funded units of general local government shall not expend for planning, management and
administrative costs more than 20 percent of the aggregate amount of the annual grant, plus program income and
funds reallocated by HUD to the State which are distributed during the time the final Statement for the annual grant is
in effect. Administrative costs are those described at §570.489(a)(1) for states, and for units of general local
government those described at sections 105(a)(12) and (a)(13) of the Act.
(b)Reimbursement of pre-agreement costs.The state may permit, in accordance with such procedures as the State
may establish, a unit of local government to incur costs for CDBG activities before the establishment of a formal grant
relationship between the State and the unit of general local government and to charge these pre-agreement costs to
the grant, provided that the activities are eligible and undertaken in accordance with the requirements of this subpart
and 24 CFR part 58.
(c)Federal grant payments —(1)Payments.The state shall be paid in advance in accordance with Treasury Circular
1075 (31 CFR part 205). The State shall use procedures to minimize the time elapsing between the transfer of grant
funds and disbursement of funds by the State to units of general local government. Units of general local government
shall also use procedures to minimize the time elapsing between the transfer of funds by the State and disbursement
for CDBG activities.
(2)Interest on advances.Interest earned by units of general local government on grant funds before disbursement of
the funds for activities is not program income and must be returned to the Treasury, except that the unit of general
local government may keep interest amounts of up $100 per year for administrative expenses. However, the state
shall not be held accountable for interest earned on grants for which payments are made in accordance with
paragraph (c)(1) of this section pending disbursement for CDBG activities.
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(d)Fiscal controls and accounting procedures.(1) A state shall have fiscal and administrative requirements for
expending and accounting for all funds received under this subpart. These requirements must be available for
Federal inspection and must:
(i) Be sufficiently specific to ensure that funds received under this subpart are used in compliance with all applicable
statutory and regulatory provisions:
(ii) Ensure that funds received under this subpart are only spent for reasonable and necessary costs of operating
programs under this subpart; and
(iii) Ensure that funds received under this subpart are not used for general expenses required to carry out other
responsibilities of state and local governments.
(2) A state may satisfy this requirement by:
(i) Using fiscal and administrative requirements applicable to the use of its own funds;
(ii) Adopting new fiscal and administrative requirements; or
(iii) Applying the provisions in 24 CFR part 85 “Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments.”
(e)Program income.(1) For the purposes of this subpart, “program income” is defined as gross income received by a
state, a unit of general local government or a subrecipient of a unit of general local government that was generated
from the use of CDBG funds, except as provided in paragraph (e)(2) of this section. When income is generated by an
activity that is only partially assisted with CDBG funds, the income shall be prorated to reflect the percentage of
CDBG funds used (e.g., a single loan supported by CDBG funds and other funds; a single parcel of land purchased
with CDBG funds and other funds). Program income includes, but is not limited to, the following:
(i) Proceeds from the disposition by sale or long term lease of real property purchased or improved with CDBG funds;
(ii) Proceeds from the disposition of equipment purchased with CDBG funds;
(iii) Gross income from the use or rental of real or personal property acquired by the unit of general local government
or a subrecipient of a unit of general local government with CDBG funds; less the costs incidental to the generation of
the income;
(iv) Gross income from the use or rental of real property owned by the unit of general local government or a
subrecipient of a unit of general local government, that was constructed or improved with CDBG funds, less the costs
incidental to the generation of the income;
(v) Payments of principal and interest on loans made using CDBG funds;
(vi) Proceeds from the sale of loans made with CDBG funds;
(vii) Proceeds from the sale of obligations secured by loans made with CDBG funds;
(viii) Interest earned on funds held in a revolving fund account;
(ix) Interest earned on program income pending disposition of the income;
(x) Funds collected through special assessments made against properties owned and occupied by households not of
low and moderate income, where the special assessments are used to recover all or part of the CDBG portion of a
public improvement; and
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(xi) Gross income paid to a unit of general local government or subrecipient from the ownership interest in a for-profit
entity acquired in return for the provision of CDBG assistance.
(2) “Program income” does not include the following:
(i) The total amount of funds which is less than $25,000 received in a single year that is retained by a unit of general
local government and its subrecipients;
(ii) Amounts generated by activities eligible under section 105(a)(15) of the Act and carried out by an entity under the
authority of section 105(a)(15) of the Act;
(iii) Amounts generated by activities that are financed by a loan guaranteed under section 108 of the Act and meet
one or more of the public benefit criteria specified at §570.482(f)(3)(v) or are carried out in conjunction with a grant
under section 108(q) of the Act in an area determined by HUD to meet the eligibility requirements for designation as
an Urban Empowerment Zone pursuant to 24 CFR part 597, subpart B. Such exclusion shall not apply if CDBG funds
are used to repay the guaranteed loan. When such a guaranteed loan is partially repaid with CDBG funds, the
amount generated shall be prorated to reflect the percentage of CDBG funds used. Amounts generated by activities
financed with loans guaranteed under section 108 of the Act which are not defined as program income shall be
treated as miscellaneous revenue and shall not be subject to any of the requirements of this part. However, such
treatment shall not affect the right of the Secretary to require the section 108 borrower to pledge such amounts as
security for the guaranteed loan. The determination whether such amounts shall constitute program income shall be
governed by the provisions of the contract required at §570.705(b)(1).
(3) The state may permit the unit of general local government which receives or will receive program income to retain
the program income, subject to the requirements of paragraph (e)(3)(ii) of this section, or the state may require the
unit of general local government to pay the program income to the state. The state, however, must permit the unit of
general local government to retain the program income if the program income will be used to continue the activity
from which the program income was derived. The state will determine when an activity will be considered to be
continued.
(i)Program income paid to the state.Program income that is paid to the state is treated as additional CDBG funds
subject to the requirements of this subpart and must be distributed to units of general local government in accordance
with the method of distribution in the state's final Statement. To the maximum extent feasible, program income shall
be distributed before the state makes additional withdrawals from the Treasury, except as provided in paragraph (f) of
this section.
(ii)Program income retained by a unit of general local government.(A) Program income that is received and retained
by the unit of general local government before closeout of the grant that generated the program income is treated as
additional CDBG funds and is subject to all applicable requirements of this subpart.
(B) Program income that is received and retained by the unit of general local government after closeout of the grant
that generated the program income is not subject to the requirements of this subpart, except:
(1 ) If the unit of general local government has another ongoing CDBG grant from the state at the time of closeout,
the program income continues to be subject to the requirements of this subpart as long as there is an ongoing grant;
and
(2 ) If program income is used to continue the activity that generated the program income, the requirements of this
subpart apply to the program income as long as the unit of general local government uses the program income to
continue the activity;
(3 ) The state may extend the period of applicability of the requirements of this subpart.
(C) The state shall require units of general local government, to the maximum extent feasible, to disburse program
income that is subject to the requirements of this subpart before requesting additional funds from the state for
activities, except as provided in paragraph (f) of this section.
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(f)Revolving funds.(1) The state may permit units of general local government to establish revolving funds to carry
out specific, identified activities. A revolving fund, for this purpose, is a separate fund (with a set of accounts that are
independent of other program accounts) established to carry out specific activities which, in turn, generate payments
to the fund for use in carrying out such activities. These payments to the revolving fund are program income and must
be substantially disbursed from the revolving fund before additional grant funds are drawn from the Treasury for
revolving fund activities. Such program income is not required to be disbursed for non-revolving fund activities.
(2) The state may establish a revolving fund to distribute funds to units of general local government to carry out
specific, identified activities. A revolving fund, for this purpose, is a separate fund (with a set of accounts that are
independent of other program accounts) established to fund grants to units of general local government to carry out
specific activities which, in turn, generate payments to the fund for additional grants to units of general local
government to carry out such activities. Program income in the revolving fund must be disbursed from the fund before
additional grant funds are drawn from the Treasury for payments to units of general local government which could be
funded from the revolving fund.
(3) A revolving fund established by either the State or unit of general local government shall not be directly funded or
capitalized with grant funds.
(g)Procurement.When procuring property or services to be paid for in whole or in part with CDBG funds, the state
shall follow its procurement policies and procedures. The state shall establish requirements for procurement policies
and procedures for units of general local government, based on full and open competition. Methods of procurement
(e.g., small purchase, sealed bids/formal advertising, competitive proposals, and noncompetitive proposals) and their
applicability shall be specified by the state. Cost plus a percentage of cost and percentage of construction costs
methods of contracting shall not be used. The policies and procedures shall also include standards of conduct
governing employees engaged in the award or administration of contracts. (Other conflicts of interest are covered by
§570.489(h).) The state shall ensure that all purchase orders and contracts include any clauses required by Federal
statutes, executive orders and implementing regulations.
(h)Conflict of interest —(1)Applicability.(i) In the procurement of supplies, equipment, construction, and services by
the States, units of local general governments, and subrecipients, the conflict of interest provisions in paragraph (g) of
this section shall apply.
(ii) In all cases not governed by paragraph (g) of this section, this paragraph (h) shall apply. Such cases include the
acquisition and disposition of real property and the provision of assistance with CDBG funds by the unit of general
local government or its subrecipients, to individuals, businesses and other private entities.
(2)Conflicts prohibited.Except for eligible administrative or personnel costs, the general rule is that no persons
described in paragraph (h)(3) of this section who exercise or have exercised any functions or responsibilities with
respect to CDBG activities assisted under this subpart or who are in a position to participate in a decisionmaking
process or gain inside information with regard to such activities, may obtain a financial interest or benefit from the
activity, or have an interest or benefit from the activity, or have an interest in any contract, subcontract or agreement
with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or
business ties, during their tenure or for one year thereafter.
(3)Persons covered.The conflict of interest provisions for paragraph (h)(2) of this section apply to any person who is
an employee, agent, consultant, officer, or elected official or appointed official of the state, or of a unit of general local
government, or of any designated public agencies, or subrecipients which are receiving CDBG funds.
(4)Exceptions: Thresholds requirements.Upon written request by the State, an exception to the provisions of
paragraph (h)(2) of this section involving an employee, agent, consultant, officer, or elected official or appointed
official of the state may be granted by HUD on a case-by-case basis. In all other cases, the state may grant such an
exception upon written request of the unit of general local government provided the state shall fully document its
determination in compliance with all requirements of paragraph (h)(4) of this section including the state's position with
respect to each factor at paragraph (h)(5) of this section and such documentation shall be available for review by the
public and by HUD. An exception may be granted after it is determined that such an exception will serve to further the
purpose of the Act and the effective and efficient administration of the program or project of the state or unit of
general local government as appropriate. An exception may be considered only after the state or unit of general local
government, as appropriate, has provided the following:
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(i) A disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of
the conflict and a description of how the public disclosure was made; and
(ii) An opinion of the attorney for the state or the unit of general local government, as appropriate, that the interest for
which the exception is sought would not violate state or local law.
(5)Factors to be considered for exceptions.In determining whether to grant a requested exception after the
requirements of paragraph (h)(4) of this section have been satisfactorily met, the cumulative effect of the following
factors, where applicable, shall be considered:
(i) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program
or project which would otherwise not be available;
(ii) Whether an opportunity was provided for open competitive bidding or negotiation;
(iii) Whether the person affected is a member of a group or class of low or moderate income persons intended to be
the beneficiaries of the assisted activity, and the exception will permit such person to receive generally the same
interests or benefits as are being made available or provided to the group or class;
(iv) Whether the affected person has withdrawn from his or her functions or responsibilities, or the decisionmaking
process with respect to the specific assisted activity in question;
(v) Whether the interest or benefit was present before the affected person was in a position as described in
paragraph (h)(3) of this section;
(vi) Whether undue hardship will result either to the State or the unit of general local government or the person
affected when weighed against the public interest served by avoiding the prohibited conflict; and
(vii) Any other relevant considerations.
(i)Closeout of grants to units of general local government.The State shall establish requirements for timely closeout
of grants to units of general local government and shall take action to ensure the timely closeout of such grants.
(j)Change of use of real property.The standards described in this section apply to real property within the unit of
general local government's control (including activities undertaken by subrecipients) which was acquired or improved
in whole or in part using CDBG funds in excess of the threshold for small purchase procurement (24 CFR 85.36,
“Administrative Requirements for Grants and Cooperative Agreements to State, Local and Federally Recognized
Indian Tribal Governments”). These standards shall apply from the date CDBG funds are first spent for the property
until five years after closeout of the unit of general local government's grant.
(1) A unit of general local governments may not change the use or planned use of any such property (including the
beneficiaries of such use) from that for which the acquisition or improvement was made, unless the unit of general
local government provides affected citizens with reasonable notice of and opportunity to comment on any proposed
change, and either:
(i) The new use of the property qualifies as meeting one of the national objectives and is not a building for the general
conduct of government; or
(ii) The requirements in paragraph (j)(2) of this section are met.
(2) If the unit of general local government determines, after consultation with affected citizens, that it is appropriate to
change the use of the property to a use which does not qualify under paragraph (j)(1) of this section, it may retain or
dispose of the property for the changed use if the unit of general local government's CDBG program is reimbursed or
the state's CDBG program is reimbursed, at the discretion of the state. The reimbursement shall be in the amount of
the current fair market value of the property, less any portion of the value attributable to expenditures of non-CDBG
funds for acquisition of, and improvements to, the property, except that if the change in use occurs after grant
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closeout but within 5 years of such closeout, the unit of general local government shall make the reimbursement to
the State's CDBG program account.
(3) Following the reimbursement of the CDBG program in accordance with paragraph (j)(2) of this section, the
property no longer will be subject to any CDBG requirements.
(k)Accountability for real and personal property.The State shall establish and implement requirements, consistent
with State law and the purposes and requirements of this subpart (including paragraph (j) of this section) governing
the use, management, and disposition of real and personal property acquired with CDBG funds.
(l)Debarment and suspension . The requirements in 2 CFR part 2424 are applicable. CDBG funds may not be
provided to excluded or disqualified persons.
(m)Audits.Audits of the state and units of general local government shall be conducted in accordance with 24 CFR
part 44 which implements the Single Audit Act (31 U.S.C. 7501–07). States shall develop and administer an audits
management system to ensure that audits of units of general local government are conducted in accordance with 24
CFR part 44.
[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1952, Jan. 5, 1995; 61 FR 54922, Oct. 22, 1996; 67 FR 15112,
Mar. 29, 2002; 72 FR 73496, Dec. 27, 2007]
§ 570.490 Recordkeeping requirements.
(a)State records.(1) The state shall establish and maintain such records as may be necessary to facilitate review
and audit by HUD of the state's administration of CDBG funds under §570.493. The content of records maintained by
the state shall be as jointly agreed upon by HUD and the states and sufficient to enable HUD to make the
determinations described at §570.493. For fair housing and equal opportunity purposes, and as applicable, such
records shall include data on the racial, ethnic, and gender characteristics of persons who are applicants for,
participants in, or beneficiaries of the program. The records shall also permit audit of the states in accordance with 24
CFR part 85.
(2) The state shall keep records to document its funding decisions reached under the method of distribution described
in 24 CFR 91.320(j)(1), including all the criteria used to select applications from local governments for funding and the
relative importance of the criteria (if applicable), regardless of the organizational level at which final funding decisions
are made, so that they can be reviewed by HUD, the Inspector General, the Government Accountability Office, and
citizens pursuant to the requirements of §570.490(c).
(b)Unit of general local government's record.The State shall establish recordkeeping requirements for units of
general local government receiving CDBG funds that are sufficient to facilitate reviews and audits of such units of
general local government under §§570.492 and 570.493. For fair housing and equal opportunity purposes, and as
applicable, such records shall include data on the racial, ethnic, and gender characteristics of persons who are
applicants for, participants in, or beneficiaries of the program.
(c)Access to records.(1) Representatives of HUD, the Inspector General, and the General Accounting Office shall
have access to all books, accounts, records, reports, files, and other papers, or property pertaining to the
administration, receipt and use of CDBG funds and necessary to facilitate such reviews and audits.
(2) The State shall provide citizens with reasonable access to records regarding the past use of CDBG funds and
ensure that units of general local government provide citizens with reasonable access to records regarding the past
use of CDBG funds consistent with State or local requirements concerning the privacy of personal records.
(d)Record retention.Records of the State and units of general local government, including supporting
documentation, shall be retained for the greater of three years from closeout of the grant to the state, or the period
required by other applicable laws and regulations as described in §570.487 and §570.488.
[57 FR 53397, Nov. 9, 1992, as amended at 71 FR 6971, Feb. 9, 2006]
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§ 570.491 Performance and evaluation report.
The annual performance and evaluation report shall be submitted in accordance with 24 CFR part 91.
(Approved by the Office of Management and Budget under control number 2506–0117)
[60 FR 1916, Jan. 5, 1995]
§ 570.492 State's reviews and audits.
(a) The state shall make reviews and audits including on-site reviews, of units of general local government as may be
necessary or appropriate to meet the requirements of section 104(e)(2) of the Act.
(b) In the case of noncompliance with these requirements, the State shall take such actions as may be appropriate to
prevent a continuance of the deficiency, mitigate any adverse effects or consequences and prevent a recurrence. The
state shall establish remedies for units of general local government noncompliance.
§ 570.493 HUD's reviews and audits.
(a)General.At least on an annual basis, HUD shall make such reviews and audits as may be necessary or
appropriate to determine:
(1) Whether the state has distributed CDBG funds to units of general local government in a timely manner in
conformance to the method of distribution described in its action plan under part 91 of this title;
(2) Whether the state has carried out its certifications in compliance with the requirements of the Act and this subpart
and other applicable laws; and
(3) Whether the state has made reviews and audits of the units of general local government required by §570.492.
(b)Information considered.In conducting performance reviews and audits, HUD will rely primarily on information
obtained from the state's performance report, records maintained by the state, findings from on-site monitoring, audit
reports, and the status of the state's unexpended grant funds. HUD may also consider relevant information on the
state's performance gained from other sources, including litigation, citizens' comments, and other information
provided by the state. A State's failure to maintain records in accordance with §570.490 may result in a finding that
the State has failed to meet the applicable requirement to which the record pertains.
[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 54922, Oct. 22, 1996]
§ 570.494 Timely distribution of funds by states.
(a) States are encouraged to adopt and achieve a goal of obligating and announcing 95 percent of funds to units of
general local government within 12 months of the state signing its grant agreement with HUD.
(b) HUD will review each state to determine if the state has distributed CDBG funds in a timely manner. The state's
distribution of CDBG funds is timely if:
(1) All of the state's annual grant (excluding state administration) has been obligated and announced to units of
general local government within 15 months of the state signing its grant agreement with HUD; and
(2) Recaptured funds and program income received by the state are expeditiously obligated and announced to units
of general local government.
(c) HUD may collect necessary information from states to determine whether CDBG funds have been distributed in a
timely manner.
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§ 570.495 Reviews and audits response.
(a) If HUD's review and audit under §570.493 results in a negative determination, or if HUD otherwise determines that
a state or unit of general local government has failed to comply with any requirement of this subpart, the state will be
given an opportunity to contest the finding and will be requested to submit a plan for corrective action. If the state is
unsuccessful in contesting the validity of the finding to the satisfaction of HUD, or if the state's plan for corrective
action is not satisfactory to HUD, HUD may take one or more of the following actions to prevent a continuation of the
deficiency; mitigate, to the extent possible, the adverse effects or consequence of the deficiency; or prevent a
recurrence of the deficiency:
(1) Issue a letter of warning that advises the State of the deficiency and puts the state on notice that additional action
will be taken if the deficiency is not corrected or is repeated;
(2) Advise the state that additional information or assurances will be required before acceptance of one or more of the
certifications required for the succeeding year grant;
(3) Advise the state to suspend or terminate disbursement of funds for a deficient activity or grant;
(4) Advise the state to reimburse its grant in any amounts improperly expended;
(5) Change the method of payment to the state from an advance basis to a reimbursement basis;
(6) Based on the state's current failure to comply with a requirement of this subpart which will affect the use of the
succeeding year grant, condition the use of the succeeding fiscal years grant funds upon appropriate corrective
action by the state. When the use of funds is conditioned, HUD shall specify the reasons for the conditions and the
actions necessary to satisfy the conditions.
(b)(1) Whenever HUD determines that a state or unit of general local government which is a recipient of CDBG funds
has failed to comply with section 109 of the Act (nondiscrimination requirements), HUD shall notify the governor of
the State or chief executive officer of the unit of general local government of the noncompliance and shall request the
governor or the chief executive officer to secure compliance. If within a reasonable time, not to exceed sixty days, the
governor or chief executive officer fails or refuses to secure compliance, HUD may take the following action:
(i) Refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted;
(ii) Exercise the powers and functions provided by title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d–2000d–7);
(iii) Exercise the powers and functions provided for in §570.496; or
(iv) Take such other action as may be provided by law.
(2) When a matter is referred to the Attorney General pursuant to paragraph (b)(1)(i) of this section, or whenever
HUD has reason to believe that a State or unit of general local government is engaged in a pattern or practice in
violation of the provisions of section 109 of the Act, the Attorney General may bring a civil action in any appropriate
United States district court for such relief as may be appropriate, including injunctive relief.
§ 570.496 Remedies for noncompliance; opportunity for hearing.
(a)General.Action pursuant to this section will be taken only after at least one of the corrective or remedial actions
specified in §570.495 has been taken, and only then if the State or unit of general local government has not made an
appropriate or timely response.
(b)Remedies.(1) If HUD finds after reasonable notice and opportunity for hearing that a State or unit of general local
government has failed to comply with any provision of this subpart, until HUD is satisfied that there is no longer failure
to comply, HUD shall:
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(i) Terminate payments to the state;
(ii) Reduce payments for current or future grants to the state by an amount equal to the amount of CDBG funds
distributed or used without compliance with the requirements of this subpart;
(iii) Limit the availability of payments to the state to activities not affected by the failure to comply or to activities
designed to overcome the failure to comply;
(iv) Based on the state's failure to comply with a requirement of this subpart (other than the state's current failure to
comply which will affect the use of the succeeding year grant), condition the use of the grant funds upon appropriate
corrective action by the state specified by HUD; or
(v) With respect to a CDBG grant awarded by the state to a unit of general local government, withhold, reduce, or
withdraw the grant, require the state to withhold, reduce, or withdraw the grant, or take other action as appropriate,
except that CDBG funds expended on eligible activities shall not be recaptured or deducted from future CDBG grants
to such unit of general local government.
(2) HUD may on due notice suspend payments at any time after the issuance of a notice of opportunity for hearing
pursuant to paragraph (d) of this section, pending such hearing and a final decision, to the extent HUD determines
such action necessary to prevent a continuation of the noncompliance.
(c) In lieu of, or in addition to, the action authorized by paragraph (b) of this section, if HUD has reason to believe that
the state or unit of general local government has failed to comply substantially with any provision of this subpart, HUD
may:
(1) Refer the matter to the Attorney General of the United States with a recommendation that an appropriate civil
action be instituted; and
(2) Upon such a referral, the Attorney General may bring a civil action in any United States district court having venue
thereof for such relief as may be appropriate, including an action to recover the amount of the CDBG funds which
was not expended in accordance with this subpart, or for mandatory or injunctive relief.
(d)Proceedings.When HUD proposes to take action pursuant to this section, the respondent in the proceedings will
be the state. At the option of HUD, a unit of general local government may also be a respondent. These procedures
are to be followed before imposition of a sanction described in paragraph (b)(1) of this section:
(1)Notice of opportunity for hearing.HUD shall notify the respondent in writing of the proposed action and of the
opportunity for a hearing. The notice shall be sent to the respondent by first class mail and shall provide notice:
(i) In a manner which is adequate to allow the respondent to prepare its response, the basis upon which HUD
determined that the respondent failed to comply with a provision of this subpart;
(ii) That the hearing procedures are governed by these rules;
(iii) That the respondent has 14 days from receipt of the notice within which to provide a written request for a hearing
to the Docket Clerk, Office of Administrative Law Judges, and the address and telephone number of the Docket
Clerk;
(iv) Of the action which HUD proposes to take and that the authority for this action is §570.496 of this subpart;
(v) That if the respondent fails to request a hearing within the time specified, HUD's determination that the respondent
failed to comply with a provision of this subpart shall be final and HUD may proceed to take the proposed action.
(2)Initiation of hearing.The respondent shall be allowed 14 days from receipt of the notice within which to notify HUD
in writing of its request for a hearing. If no request is received within the time specified, HUD's determination that the
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respondent failed to comply with a provision of this subpart shall be final and HUD may proceed to take the proposed
action.
(3)Administrative Law Judge.Proceedings conducted under these rules shall be presided over by an Administrative
Law Judge (ALJ), appointed as provided by section 11 of the Administrative Procedure Act (5 U.S.C. 3105). The case
shall be referred to the ALJ by HUD at the time a hearing is requested. The ALJ shall promptly notify the parties of
the time and place at which the hearing will be held. The ALJ shall conduct a fair and impartial hearing and take all
action necessary to avoid delay in the disposition of proceedings and to maintain order. The ALJ shall have all
powers necessary to those ends, including but not limited to the power:
(i) To administer oaths and affirmations;
(ii) To issue subpoenas as authorized by law;
(iii) To rule upon offers of proof and receive relevant evidence;
(iv) To order or limit discovery before the hearing as the interests of justice may require;
(v) To regulate the course of the hearing and the conduct of the parties and their counsel;
(vi) To hold conferences for the settlement or simplification of the issues by consent of the parties;
(vii) To consider and rule upon all procedural and other motions appropriate in adjudicative proceedings; and
(viii) To make and file initial determinations.
(4)Ex parte communications.An ex parte communication is any communication with an ALJ, direct or indirect, oral or
written, concerning the merits or procedures of any pending proceeding which is made by a party in the absence of
any other party. Ex parte communications are prohibited except where the purpose and content of the communication
have been disclosed in advance or simultaneously to all parties, or the communication is a request for information
concerning the status of the case. Any ALJ who receives an ex parte communication which the ALJ knows or has
reason to believe is unauthorized shall promptly place the communication, or its substance, in all files and shall
furnish copies to all parties. Unauthorized ex parte communications shall not be taken into consideration in deciding
any matter in issue.
(5)The hearing.All parties shall have the right to be represented at the hearing by counsel. The ALJ shall conduct
the proceedings in an expeditious manner while allowing the parties to present all oral and written evidence which
tends to support their respective positions, but the ALJ shall exclude irrelevant, immaterial or unduly repetitious
evidence. HUD has the burden of proof in showing by a preponderance of evidence that the respondent failed to
comply with a provision of this subpart. Each party shall be allowed to cross-examine adverse witnesses and to rebut
and comment upon evidence presented by the other party. Hearings shall be open to the public. So far as the orderly
conduct of the hearing permits, interested persons other than the parties may appear and participate in the hearing.
(6)Transcripts.Hearings shall be recorded and transcribed only by a reporter under the supervision of the ALJ. The
original transcript shall be a part of the record and shall constitute the sole official transcript. Respondents and the
public, at their own expense, shall obtain copies of the transcript.
(7)The ALJ's decisions.At the conclusion of the hearing, the ALJ shall give the parties a reasonable opportunity to
submit proposed findings and conclusions and supporting reasons therefor. Generally, within 60 days after the
conclusion of the hearing, the ALJ shall prepare a written decision which includes a Statement of findings and
conclusions, and the reasons or basis therefor, on all the material issues of fact, law or discretion presented on the
record and the appropriate sanction or denial thereof. The decision shall be based on consideration of the whole
record or those parts thereof cited by a party and supported by and in accordance with the reliable, probative, and
substantial evidence. A copy of the decision shall be furnished to the parties immediately by first class mail and shall
include a notice that any requests for review by the Secretary must be made in writing to the Secretary within 30 days
of the receipt of the decision.
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(8)Record.The transcript of testimony and exhibits, together with the decision of the ALJ and all papers and requests
filed in the proceeding, constitutes the exclusive record for decision and, on payment of its reasonable cost, shall be
made available to the parties. After reaching the initial decision, the ALJ shall certify to the complete record and
forward the record to the Secretary.
(9)Review by the Secretary.The decision by the ALJ shall constitute the final decision of HUD unless, within 30 days
after the receipt of the decision, either the respondent or the Assistant Secretary for Community Planning and
Development files an exception and request for review by the Secretary. The excepting party must transmit
simultaneously to the Secretary and the other party the request for review and the bases of the party's exceptions to
the findings of the ALJ. The other party shall be allowed 30 days from receipt of the exception to provide the
Secretary and the excepting party with a written reply. The Secretary shall then review the record of the case,
including the exceptions and the reply. On the basis of such review, the Secretary shall issue a written determination,
including a Statement of the rationale therefor, affirming, modifying or revoking the decision of the ALJ. The
Secretary's decision shall be made and transmitted to the parties within 60 days after the decision of the ALJ was
furnished to the parties.
(10)Judicial review.The respondent may seek judicial review of HUD's decision pursuant to section 111(c) of the Act.
[74 FR 4636, Jan. 26, 2009]
§ 570.497 Condition of State election to administer State CDBG Program.
Pursuant to section 106(d)(2)(A)(i) of the Act, a State has the right to elect, in such manner and at such time as the
Secretary may prescribe, to administer funds allocated under subpart A of this part for use in nonentitlement areas of
the State. After January 26, 1995, any State which elects to administer the allocation of CDBG funds for use in
nonentitlement areas of the State in any year must, in addition to all other requirements of this subpart, submit a
pledge by the State in accordance with section 108(d)(2) of the Act, and in a form acceptable to HUD, of any future
CDBG grants it may receive under subpart A and this subpart. Such pledge shall be for the purpose of assuring
repayment of any debt obligations (as defined in §570.701), in accordance with their terms, that HUD may have
guaranteed in the respective State on behalf of any nonentitlement public entity (as defined in §570.701) or its
designated public agency prior to the State's election.
[59 FR 66604, Dec. 27, 1994]
Subpart J—Grant Administration
Source:53 FR 8058, Mar. 11, 1988, unless otherwise noted.
§ 570.500 Definitions.
For the purposes of this subpart, the following terms shall apply:
(a)Program income means gross income received by the recipient or a subrecipient directly generated from the use
of CDBG funds, except as provided in paragraph (a)(4) of this section.
(1) Program income includes, but is not limited to, the following:
(i) Proceeds from the disposition by sale or long-term lease of real property purchased or improved with CDBG funds;
(ii) Proceeds from the disposition of equipment purchased with CDBG funds;
(iii) Gross income from the use or rental of real or personal property acquired by the recipient or by a subrecipient
with CDBG funds, less costs incidental to generation of the income;
(iv) Gross income from the use or rental of real property, owned by the recipient or by a subrecipient, that was
constructed or improved with CDBG funds, less costs incidental to generation of the income;
110
(v) Payments of principal and interest on loans made using CDBG funds, except as provided in paragraph (a)(3) of
this section;
(vi) Proceeds from the sale of loans made with CDBG funds;
(vii) Proceeds from sale of obligations secured by loans made with CDBG funds;
(viii) [Reserved]
(ix) Interest earned on program income pending its disposition; and
(x) Funds collected through special assessments made against properties owned and occupied by households not of
low and moderate income, where the assessments are used to recover all or part of the CDBG portion of a public
improvement.
(2) Program income does not include income earned (except for interest described in §570.513) on grant advances
from the U.S. Treasury. The following items of income earned on grant advances must be remitted to HUD for
transmittal to the U.S. Treasury, and will not be reallocated under section 106(c) or (d) of the Act:
(i) Interest earned from the investment of the initial proceeds of a grant advance by the U.S. Treasury;
(ii) Interest earned on loans or other forms of assistance provided with CDBG funds that are used for activities
determined by HUD either to be ineligible or to fail to meet a national objective in accordance with the requirements of
subpart C of this part, or that fail substantially to meet any other requirement of this part; and
(iii) Interest earned on the investment of amounts reimbursed to the CDBG program account prior to the use of the
reimbursed funds for eligible purposes.
(3) The calculation of the amount of program income for the recipient's CDBG program as a whole (i.e., comprising
activities carried out by a grantee and its subrecipients) shall exclude payments made by subrecipients of principal
and/or interest on CDBG-funded loans received from grantees if such payments are made using program income
received by the subrecipient. (By making such payments, the subrecipient shall be deemed to have transferred
program income to the grantee.) The amount of program income derived from this calculation shall be used for
reporting purposes, for purposes of applying the requirement under §570.504(b)(2)(iii), and in determining limitations
on planning and administration and public services activities to be paid for with CDBG funds.
(4) Program income does not include:
(i) Any income received in a single program year by the recipient and all its subrecipients if the total amount of such
income does not exceed $25,000; and
(ii) Amounts generated by activities that are financed by a loan guaranteed under section 108 of the Act and meet
one or more of the public benefit criteria specified at §570.209(b)(2)(v) or are carried out in conjunction with a grant
under section 108(q) in an area determined by HUD to meet the eligibility requirements for designation as an Urban
Empowerment Zone pursuant to 24 CFR part 597, subpart B. Such exclusion shall not apply if CDBG funds are used
to repay the guaranteed loan. When such a guaranteed loan is partially repaid with CDBG funds, the amount
generated shall be prorated to reflect the percentage of CDBG funds used. Amounts generated by activities financed
with loans guaranteed under section 108 which are not defined as program income shall be treated as miscellaneous
revenue and shall not be subject to any of the requirements of this part, except that the use of such funds shall be
limited to activities that are located in a revitalization strategy area and implement a HUD approved area revitalization
strategy pursuant to §91.215(e) of this title. However, such treatment shall not affect the right of the Secretary to
require the section 108 borrower to pledge such amounts as security for the guaranteed loan. The determination
whether such amounts shall constitute program income shall be governed by the provisions of the contract required
at §570.705(b)(1).
(5) Examples of other receipts that are not considered program income are proceeds from fund raising activities
carried out by subrecipients receiving CDBG assistance (the costs of fundraising are generally unallowable under the
111
applicable OMB circulars referenced in 24 CFR 84.27), funds collected through special assessments used to recover
the non-CDBG portion of a public improvement, and proceeds from the disposition of real property acquired or
improved with CDBG funds when the disposition occurs after the applicable time period specified in §570.503(b)(8)
for subrecipient-controlled property, or in §570.505 for recipient-controlled property.
(b)Revolving fund means a separate fund (with a set of accounts that are independent of other program accounts)
established for the purpose of carrying out specific activities which, in turn, generate payments to the fund for use in
carrying out the same activities. Each revolving loan fund's cash balance must be held in an interest-bearing account,
and any interest paid on CDBG funds held in this account shall be considered interest earned on grant advances and
must be remitted to HUD for transmittal to the U.S. Treasury no less frequently than annually. (Interest paid by
borrowers on eligible loans made from the revolving loan fund shall be program income and treated accordingly.)
(c)Subrecipient means a public or private nonprofit agency, authority, or organization, or a for-profit entity authorized
under §570.201(o), receiving CDBG funds from the recipient or another subrecipient to undertake activities eligible for
such assistance under subpart C of this part. The term excludes an entity receiving CDBG funds from the recipient
under the authority of §570.204, unless the grantee explicitly designates it as a subrecipient. The term includes a
public agency designated by a unit of general local government to receive a loan guarantee under subpart M of this
part, but does not include contractors providing supplies, equipment, construction, or services subject to the
procurement requirements in 24 CFR 85.36 or 84.40, as applicable.
[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 27120, June 17, 1992; 60 FR 1952, Jan. 5, 1995; 60 FR 17445,
Apr. 6, 1995; 60 FR 56914, Nov. 9, 1995]
§ 570.501 Responsibility for grant administration.
(a) One or more public agencies, including existing local public agencies, may be designated by the chief executive
officer of the recipient to undertake activities assisted by this part. A public agency so designated shall be subject to
the same requirements as are applicable to subrecipients.
(b) The recipient is responsible for ensuring that CDBG funds are used in accordance with all program requirements.
The use of designated public agencies, subrecipients, or contractors does not relieve the recipient of this
responsibility. The recipient is also responsible for determining the adequacy of performance under subrecipient
agreements and procurement contracts, and for taking appropriate action when performance problems arise, such as
the actions described in §570.910. Where a unit of general local government is participating with, or as part of, an
urban county, or as part of a metropolitan city, the recipient is responsible for applying to the unit of general local
government the same requirements as are applicable to subrecipients, except that the five-year period identified
under §570.503(b)(8)(i) shall begin with the date that the unit of general local government is no longer considered by
HUD to be a part of the metropolitan city or urban county, as applicable, instead of the date that the subrecipient
agreement expires.
[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 27120, June 17, 1992]
§ 570.502 Applicability of uniform administrative requirements.
(a) Recipients and subrecipients that are governmental entities (including public agencies) shall comply with the
requirements and standards of OMB Circular No. A–87, “Cost Principles for State, Local, and Indian Tribal
Governments”; OMB Circular A–128, “Audits of State and Local Governments” (implemented at 24 CFR part 44); and
with the following sections of 24 CFR part 85 “Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments” or the related CDBG provision, as specified in this paragraph:
(1) Section 85.3, “Definitions”;
(2) Section 85.6, “Exceptions”;
(3) Section 85.12, “Special grant or subgrant conditions for ‘high-risk’ grantees”;
(4) Section 85.20, “Standards for financial management systems,” except paragraph (a);
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(5) Section 85.21, “Payment,” except as modified by §570.513;
(6) Section 85.22, “Allowable costs”;
(7) Section 85.26, “Non-federal audits”;
(8) Section 85.32, “Equipment,” except in all cases in which the equipment is sold, the proceeds shall be program
income;
(9) Section 85.33, “Supplies”;
(10) Section 85.34, “Copyrights”;
(11) Section 85.35, “Subawards to debarred and suspended parties”;
(12) Section 85.36, “Procurement,” except paragraph (a);
(13) Section 85.37, “Subgrants”;
(14) Section 85.40, “Monitoring and reporting program performance,” except paragraphs (b) through (d) and
paragraph (f);
(15) Section 85.41, “Financial reporting,” except paragraphs (a), (b), and (e);
(16) Section 85.42, “Retention and access requirements for records,” except that the period shall be four years;
(17) Section 85.43, “Enforcement”;
(18) Section 85.44, “Termination for convenience”;
(19) Section 85.51 “Later disallowances and adjustments” and
(20) Section 85.52, “Collection of amounts due.”
(b) Subrecipients, except subrecipients that are governmental entities, shall comply with the requirements and
standards of OMB Circular No. A–122, “Cost Principles for Non-profit Organizations,” or OMB Circular No. A–21,
“Cost Principles for Educational Institutions,” as applicable, and OMB Circular A–133, “Audits of Institutions of Higher
Education and Other Nonprofit Institutions” (as set forth in 24 CFR part 45). Audits shall be conducted annually. Such
subrecipients shall also comply with the following provisions of the Uniform Administrative requirements of OMB
Circular A–110 (implemented at 24 CFR part 84, “Uniform Administrative Requirements for Grants and Agreements
With Institutions of Higher Education, Hospitals and Other Non-Profit Organizations”) or the related CDBG provision,
as specified in this paragraph:
(1) Subpart A—“General”;
(2) Subpart B—“Pre-Award Requirements,” except for §84.12, “Forms for Applying for Federal Assistance”;
(3) Subpart C—“Post-Award Requirements,” except for:
(i) Section 84.22, “Payment Requirements.” Grantees shall follow the standards of §§85.20(b)(7) and 85.21 in making
payments to subrecipients;
(ii) Section 84.23, “Cost Sharing and Matching”;
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(iii) Section 84.24, “Program Income.” In lieu of §84.24, CDBG subrecipients shall follow §570.504;
(iv) Section 84.25, “Revision of Budget and Program Plans”;
(v) Section 84.32, “Real Property.” In lieu of §84.32, CDBG subrecipients shall follow §570.505;
(vi) Section 84.34(g), “Equipment.” In lieu of the disposition provisions of §84.34(g), the following applies:
(A) In all cases in which equipment is sold, the proceeds shall be program income (prorated to reflect the extent to
which CDBG funds were used to acquire the equipment); and
(B) Equipment not needed by the subrecipient for CDBG activities shall be transferred to the recipient for the CDBG
program or shall be retained after compensating the recipient;
(vii) Section 84.51 (b), (c), (d), (e), (f), (g), and (h), “Monitoring and Reporting Program Performance”;
(viii) Section 84.52, “Financial Reporting”;
(ix) Section 84.53(b), “Retention and access requirements for records.” Section 84.53(b) applies with the following
exceptions:
(A) The retention period referenced in §84.53(b) pertaining to individual CDBG activities shall be four years; and
(B) The retention period starts from the date of submission of the annual performance and evaluation report, as
prescribed in 24 CFR 91.520, in which the specific activity is reported on for the final time rather than from the date of
submission of the final expenditure report for the award;
(x) Section 84.61, “Termination.” In lieu of the provisions of §84.61, CDBG subrecipients shall comply with
§570.503(b)(7); and
(4) Subpart D—“After-the-Award Requirements,” except for §84.71, “Closeout Procedures.”
[53 FR 8058, Mar. 11, 1988, as amended at 60 FR 1916, Jan. 5, 1995; 60 FR 56915, Nov. 9, 1995]
§ 570.503 Agreements with subrecipients.
(a) Before disbursing any CDBG funds to a subrecipient, the recipient shall sign a written agreement with the
subrecipient. The agreement shall remain in effect during any period that the subrecipient has control over CDBG
funds, including program income.
(b) At a minimum, the written agreement with the subrecipient shall include provisions concerning the following
following items:
(1)Statement of work.The agreement shall include a description of the work to be performed, a schedule for
completing the work, and a budget. These items shall be in sufficient detail to provide a sound basis for the recipient
effectively to monitor performance under the agreement.
(2)Records and reports.The recipient shall specify in the agreement the particular records the subrecipient must
maintain and the particular reports the subrecipient must submit in order to assist the recipient in meeting its
recordkeeping and reporting requirements.
(3)Program income.The agreement shall include the program income requirements set forth in §570.504(c). The
agreement shall also specify that, at the end of the program year, the grantee may require remittance of all or part of
any program income balances (including investments thereof) held by the subrecipient (except those needed for
114
immediate cash needs, cash balances of a revolving loan fund, cash balances from a lump sum drawdown, or cash
or investments held for section 108 security needs).
(4)Uniform administrative requirements.The agreement shall require the subrecipient to comply with applicable
uniform administrative requirements, as described in §570.502.
(5)Other program requirements.The agreement shall require the subrecipient to carry out each activity in compliance
with all Federal laws and regulations described in subpart K of these regulations, except that:
(i) The subrecipient does not assume the recipient's environmental responsibilities described at §570.604; and
(ii) The subrecipient does not assume the recipient's responsibility for initiating the review process under the
provisions of 24 CFR part 52.
(6)Suspension and termination.The agreement shall specify that, in accordance with 24 CFR 85.43, suspension or
termination may occur if the subrecipient materially fails to comply with any term of the award, and that the award
may be terminated for convenience in accordance with 24 CFR 85.44.
(7)Reversion of assets.The agreement shall specify that upon its expiration the subrecipient shall transfer to the
recipient any CDBG funds on hand at the time of expiration and any accounts receivable attributable to the use of
CDBG funds. It shall also include provisions designed to ensure that any real property under the subrecipient's
control that was acquired or improved in whole or in part with CDBG funds (including CDBG funds provided to the
subrecipient in the form of a loan) in excess of $25,000 is either:
(i) Used to meet one of the national objectives in §570.208 (formerly §570.901) until five years after expiration of the
agreement, or for such longer period of time as determined to be appropriate by the recipient; or
(ii) Not used in accordance with paragraph (b)(7)(i) of this section, in which event the subrecipient shall pay to the
recipient an amount equal to the current market value of the property less any portion of the value attributable to
expenditures of non-CDBG funds for the acquisition of, or improvement to, the property. The payment is program
income to the recipient. (No payment is required after the period of time specified in paragraph (b)(7)(i) of this
section.)
[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988; 57 FR 27120, June 17, 1992; 60 FR 56915,
Nov. 9, 1995; 68 FR 56405, Sept. 30, 2003]
§ 570.504 Program income.
(a)Recording program income.The receipt and expenditure of program income as defined in §570.500(a) shall be
recorded as part of the financial transactions of the grant program.
(b)Disposition of program income received by recipients.(1) Program income received before grant closeout may be
retained by the recipient if the income is treated as additional CDBG funds subject to all applicable requirements
governing the use of CDBG funds.
(2) If the recipient chooses to retain program income, that program income shall be disposed of as follows:
(i) Program income in the form of repayments to, or interest earned on, a revolving fund as defined in §570.500(b)
shall be substantially disbursed from the fund before additional cash withdrawals are made from the U.S. Treasury for
the same activity. (This rule does not prevent a lump sum disbursement to finance the rehabilitation of privately
owned properties as provided for in §570.513.)
(ii) Substantially all other program income shall be disbursed for eligible activities before additional cash withdrawals
are made from the U.S. Treasury.
115
(iii) At the end of each program year, the aggregate amount of program income cash balances and any investment
thereof (except those needed for immediate cash needs, cash balances of a revolving loan fund, cash balances from
a lump-sum drawdown, or cash or investments held for section 108 loan guarantee security needs) that, as of the last
day of the program year, exceeds one-twelfth of the most recent grant made pursuant to §570.304 shall be remitted
to HUD as soon as practicable thereafter, to be placed in the recipient's line of credit. This provision applies to
program income cash balances and investments thereof held by the grantee and its subrecipients. (This provision
shall be applied for the first time at the end of the program year for which Federal Fiscal Year 1996 funds are
provided.)
(3) Program income on hand at the time of closeout shall continue to be subject to the eligibility requirements in
subpart C and all other applicable provisions of this part until it is expended.
(4) Unless otherwise provided in any grant closeout agreement, and subject to the requirements of paragraph (b)(5)
of this section, income received after closeout shall not be governed by the provisions of this part, except that, if at
the time of closeout the recipient has another ongoing CDBG grant received directly from HUD, funds received after
closeout shall be treated as program income of the ongoing grant program.
(5) If the recipient does not have another ongoing grant received directly from HUD at the time of closeout, income
received after closeout from the disposition of real property or from loans outstanding at the time of closeout shall not
be governed by the provisions of this part, except that such income shall be used for activities that meet one of the
national objectives in §570.901 and the eligibility requirements described in section 105 of the Act.
(c)Disposition of program income received by subrecipients.The written agreement between the recipient and the
subrecipient, as required by §570.503, shall specify whether program income received is to be returned to the
recipient or retained by the subrecipient. Where program income is to be retained by the subrecipient, the agreement
shall specify the activities that will be undertaken with the program income and that all provisions of the written
agreement shall apply to the specified activities. When the subrecipient retains program income, transfers of grant
funds by the recipient to the subrecipient shall be adjusted according to the principles described in paragraphs (b)(2)
(i) and (ii) of this section. Any program income on hand when the agreement expires, or received after the
agreement's expiration, shall be paid to the recipient as required by §570.503(b)(8).
(d)Disposition of certain program income received by urban counties.Program income derived from urban county
program activities undertaken by or within the jurisdiction of a unit of general local government which thereafter
terminates its participation in the urban county shall continue to be program income of the urban county. The urban
county may transfer the program income to the unit of general local government, upon its termination of urban county
participation, provided that the unit of general local government has become an entitlement grantee and agrees to
use the program income in its own CDBG entitlement program.
[53 FR 8058, Mar. 11, 1988, as amended at 60 FR 56915, Nov. 9, 1995]
§ 570.505 Use of real property.
The standards described in this section apply to real property within the recipient's control which was acquired or
improved in whole or in part using CDBG funds in excess of $25,000. These standards shall apply from the date
CDBG funds are first spent for the property until five years after closeout of an entitlement recipient's participation in
the entitlement CDBG program or, with respect to other recipients, until five years after the closeout of the grant from
which the assistance to the property was provided.
(a) A recipient may not change the use or planned use of any such property (including the beneficiaries of such use)
from that for which the acquisition or improvement was made unless the recipient provides affected citizens with
reasonable notice of, and opportunity to comment on, any proposed change, and either:
(1) The new use of such property qualifies as meeting one of the national objectives in §570.208 (formerly §570.901)
and is not a building for the general conduct of government; or
(2) The requirements in paragraph (b) of this section are met.
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(b) If the recipient determines, after consultation with affected citizens, that it is appropriate to change the use of the
property to a use which does not qualify under paragraph (a)(1) of this section, it may retain or dispose of the
property for the changed use if the recipient's CDBG program is reimbursed in the amount of the current fair market
value of the property, less any portion of the value attributable to expenditures of non-CDBG funds for acquisition of,
and improvements to, the property.
(c) If the change of use occurs after closeout, the provisions governing income from the disposition of the real
property in §570.504(b)(4) or (5), as applicable, shall apply to the use of funds reimbursed.
(d) Following the reimbursement of the CDBG program in accordance with paragraph (b) of this section, the property
no longer will be subject to any CDBG requirements.
[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988]
§ 570.506 Records to be maintained.
Each recipient shall establish and maintain sufficient records to enable the Secretary to determine whether the
recipient has met the requirements of this part. At a minimum, the following records are needed:
(a) Records providing a full description of each activity assisted (or being assisted) with CDBG funds, including its
location (if the activity has a geographical locus), the amount of CDBG funds budgeted, obligated and expended for
the activity, and the provision in subpart C under which it is eligible.
(b) Records demonstrating that each activity undertaken meets one of the criteria set forth in §570.208. (Where
information on income by family size is required, the recipient may substitute evidence establishing that the person
assisted qualifies under another program having income qualification criteria at least as restrictive as that used in the
definitions of “low and moderate income person” and “low and moderate income household” (as applicable) at
§570.3, such as Job Training Partnership Act (JTPA) and welfare programs; or the recipient may substitute evidence
that the assisted person is homeless; or the recipient may substitute a copy of a verifiable certification from the
assisted person that his or her family income does not exceed the applicable income limit established in accordance
with §570.3; or the recipient may substitute a notice that the assisted person is a referral from a state, county or local
employment agency or other entity that agrees to refer individuals it determines to be low and moderate income
persons based on HUD's criteria and agrees to maintain documentation supporting these determinations.) Such
records shall include the following information:
(1) For each activity determined to benefit low and moderate income persons, the income limits applied and the point
in time when the benefit was determined.
(2) For each activity determined to benefit low and moderate income persons based on the area served by the
activity:
(i) The boundaries of the service area;
(ii) The income characteristics of families and unrelated individuals in the service area; and
(iii) If the percent of low and moderate income persons in the service area is less than 51 percent, data showing that
the area qualifies under the exception criteria set forth at §570.208(a)(1)(ii).
(3) For each activity determined to benefit low and moderate income persons because the activity involves a facility
or service designed for use by a limited clientele consisting exclusively or predominantly of low and moderate income
persons:
(i) Documentation establishing that the facility or service is designed for the particular needs of or used exclusively by
senior citizens, adults meeting the Bureau of the Census' Current Population Reports definition of “severely disabled,”
persons living with AIDS, battered spouses, abused children, the homeless, illiterate adults, or migrant farm workers,
for which the regulations provide a presumption concerning the extent to which low- and moderate-income persons
benefit; or
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(ii) Documentation describing how the nature and, if applicable, the location of the facility or service establishes that it
is used predominantly by low and moderate income persons; or
(iii) Data showing the size and annual income of the family of each person receiving the benefit.
(4) For each activity carried out for the purpose of providing or improving housing which is determined to benefit low
and moderate income persons:
(i) A copy of a written agreement with each landlord or developer receiving CDBG assistance indicating the total
number of dwelling units in each multifamily structure assisted and the number of those units which will be occupied
by low and moderate income households after assistance;
(ii) The total cost of the activity, including both CDBG and non-CDBG funds.
(iii) For each unit occupied by a low and moderate income household, the size and income of the household;
(iv) For rental housing only:
(A) The rent charged (or to be charged) after assistance for each dwelling unit in each structure assisted; and
(B) Such information as necessary to show the affordability of units occupied (or to be occupied) by low and
moderate income households pursuant to criteria established and made public by the recipient;
(v) For each property acquired on which there are no structures, evidence of commitments ensuring that the criteria in
§570.208(a)(3) will be met when the structures are built;
(vi) Where applicable, records demonstrating that the activity qualifies under the special conditions at
§570.208(a)(3)(i);
(vii) For any homebuyer assistance activity qualifying under §570.201(e), 570.201(n), or 570.204, identification of the
applicable eligibility paragraph and evidence that the activity meets the eligibility criteria for that provision; for any
such activity qualifying under §570.208(a), the size and income of each homebuyer's household; and
(viii) For a §570.201(k) housing services activity, identification of the HOME project(s) or assistance that the housing
services activity supports, and evidence that project(s) or assistance meet the HOME program income targeting
requirements at 24 CFR 92.252 or 92.254.
(5) For each activity determined to benefit low and moderate income persons based on the creation of jobs, the
recipient shall provide the documentation described in either paragraph (b)(5)(i) or (ii) of this section.
(i) Where the recipient chooses to document that at least 51 percent of the jobs will be available to low and moderate
income persons, documentation for each assisted business shall include:
(A) A copy of a written agreement containing:
(1 ) A commitment by the business that it will make at least 51 percent of the jobs available to low and moderate
income persons and will provide training for any of those jobs requiring special skills or education;
(2 ) A listing by job title of the permanent jobs to be created indicating which jobs will be available to low and
moderate income persons, which jobs require special skills or education, and which jobs are part-time, if any; and
(3 ) A description of actions to be taken by the recipient and business to ensure that low and moderate income
persons receive first consideration for those jobs; and
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(B) A listing by job title of the permanent jobs filled, and which jobs of those were available to low and moderate
income persons, and a description of how first consideration was given to such persons for those jobs. The
description shall include what hiring process was used; which low and moderate income persons were interviewed for
a particular job; and which low and moderate income persons were hired.
(ii) Where the recipient chooses to document that at least 51 percent of the jobs will be held by low and moderate
income persons, documentation for each assisted business shall include:
(A) A copy of a written agreement containing:
(1 ) A commitment by the business that at least 51 percent of the jobs, on a full-time equivalent basis, will be held by
low and moderate income persons; and
(2 ) A listing by job title of the permanent jobs to be created, identifying which are part-time, if any;
(B) A listing by job title of the permanent jobs filled and which jobs were initially held by low and moderate income
persons; and
(C) For each such low and moderate income person hired, the size and annual income of the person's family prior to
the person being hired for the job.
(6) For each activity determined to benefit low and moderate income persons based on the retention of jobs:
(i) Evidence that in the absence of CDBG assistance jobs would be lost;
(ii) For each business assisted, a listing by job title of permanent jobs retained, indicating which of those jobs are
part-time and (where it is known) which are held by low and moderate income persons at the time the CDBG
assistance is provided. Where applicable, identification of any of the retained jobs (other than those known to be held
by low and moderate income persons) which are projected to become available to low and moderate income persons
through job turnover within two years of the time CDBG assistance is provided. Information upon which the job
turnover projections were based shall also be included in the record;
(iii) For each retained job claimed to be held by a low and moderate income person, information on the size and
annual income of the person's family;
(iv) For jobs claimed to be available to low and moderate income persons based on job turnover, a description
covering the items required for “available to” jobs in paragraph (b)(5) of this section; and
(v) Where jobs were claimed to be available to low and moderate income persons through turnover, a listing of each
job which has turned over to date, indicating which of those jobs were either taken by, or available to, low and
moderate income persons. For jobs made available, a description of how first consideration was given to such
persons for those jobs shall also be included in the record.
(7) For purposes of documenting, pursuant to paragraph (b)(5)(i)(B), (b)(5)(ii)(C), (b)(6)(iii) or (b)(6)(v) of this section,
that the person for whom a job was either filled by or made available to a low- or moderate-income person based
upon the census tract where the person resides or in which the business is located, the recipient, in lieu of
maintaining records showing the person's family size and income, may substitute records showing either the person's
address at the time the determination of income status was made or the address of the business providing the job, as
applicable, the census tract in which that address was located, the percent of persons residing in that tract who either
are in poverty or who are low- and moderate-income, as applicable, the data source used for determining the
percentage, and a description of the pervasive poverty and general distress in the census tract in sufficient detail to
demonstrate how the census tract met the criteria in §570.208(a)(4)(v), as applicable.
(8) For each activity determined to aid in the prevention or elimination of slums or blight based on addressing one or
more of the conditions which qualified an area as a slum or blighted area:
(i) The boundaries of the area; and
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(ii) A description of the conditions which qualified the area at the time of its designation in sufficient detail to
demonstrate how the area met the criteria in §570.208(b)(1).
(9) For each residential rehabilitation activity determined to aid in the prevention or elimination of slums or blight in a
slum or blighted area:
(i) The local definition of “substandard”;
(ii) A pre-rehabilitation inspection report describing the deficiencies in each structure to be rehabilitated; and
(iii) Details and scope of CDBG assisted rehabilitation, by structure.
(10) For each activity determined to aid in the prevention or elimination of slums or blight based on the elimination of
specific conditions of blight or physical decay not located in a slum or blighted area:
(i) A description of the specific condition of blight or physical decay treated; and
(ii) For rehabilitation carried out under this category, a description of the specific conditions detrimental to public
health and safety which were identified and the details and scope of the CDBG assisted rehabilitation by structure.
(11) For each activity determined to aid in the prevention or elimination of slums or blight based on addressing slums
or blight in an urban renewal area, a copy of the Urban Renewal Plan, as in effect at the time the activity is carried
out, including maps and supporting documentation.
(12) For each activity determined to meet a community development need having a particular urgency:
(i) Documentation concerning the nature and degree of seriousness of the condition requiring assistance;
(ii) Evidence that the recipient certified that the CDBG activity was designed to address the urgent need;
(iii) Information on the timing of the development of the serious condition; and
(iv) Evidence confirming that other financial resources to alleviate the need were not available.
(c) Records that demonstrate that the recipient has made the determinations required as a condition of eligibility of
certain activities, as prescribed in §§570.201(f), 570.201(i)(2), 570.201(p), 570.201(q), 570.202(b)(3), 570.206(f),
570.209, 570.210, and 570.309.
(d) Records which demonstrate compliance with §570.505 regarding any change of use of real property acquired or
improved with CDBG assistance.
(e) Records that demonstrate compliance with the citizen participation requirements prescribed in 24 CFR part 91,
subpart B, for entitlement recipients, or in 24 CFR part 91, subpart C, for HUD-administered small cities recipients.
(f) Records which demonstrate compliance with the requirements in §570.606 regarding acquisition, displacement,
relocation, and replacement housing.
(g) Fair housing and equal opportunity records containing:
(1) Documentation of the analysis of impediments and the actions the recipient has carried out with its housing and
community development and other resources to remedy or ameliorate any impediments to fair housing choice in the
recipient's community.
(2) Data on the extent to which each racial and ethnic group and single-headed households (by gender of household
head) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with
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CDBG funds. Such information shall be used only as a basis for further investigation as to compliance with
nondiscrimination requirements. No recipient is required to attain or maintain any particular statistical measure by
race, ethnicity, or gender in covered programs.
(3) Data on employment in each of the recipient's operating units funded in whole or in part with CDBG funds, with
such data maintained in the categories prescribed on the Equal Employment Opportunity Commission's EEO–4 form;
and documentation of any actions undertaken to assure equal employment opportunities to all persons regardless of
race, color, national origin, sex or handicap in operating units funded in whole or in part under this part.
(4) Data indicating the race and ethnicity of households (and gender of single heads of households) displaced as a
result of CDBG funded activities, together with the address and census tract of the housing units to which each
displaced household relocated. Such information shall be used only as a basis for further investigation as to
compliance with nondiscrimination requirements. No recipient is required to attain or maintain any particular statistical
measure by race, ethnicity, or gender in covered programs.
(5) Documentation of actions undertaken to meet the requirements of §570.607(b) which implements section 3 of the
Housing Development Act of 1968, as amended (12 U.S.C. 1701U) relative to the hiring and training of low and
moderate income persons and the use of local businesses.
(6) Data indicating the racial/ethnic character of each business entity receiving a contract or subcontract of $25,000
or more paid, or to be paid, with CDBG funds, data indicating which of those entities are women's business
enterprises as defined in Executive Order 12138, the amount of the contract or subcontract, and documentation of
recipient's affirmative steps to assure that minority business and women's business enterprises have an equal
opportunity to obtain or compete for contracts and subcontracts as sources of supplies, equipment, construction and
services. Such affirmative steps may include, but are not limited to, technical assistance open to all businesses but
designed to enhance opportunities for these enterprises and special outreach efforts to inform them of contract
opportunities. Such steps shall not include preferring any business in the award of any contract or subcontract solely
or in part on the basis of race or gender.
(7) Documentation of the affirmative action measures the recipient has taken to overcome prior discrimination, where
the courts or HUD have found that the recipient has previously discriminated against persons on the ground of race,
color, national origin or sex in administering a program or activity funded in whole or in part with CDBG funds.
(h) Financial records, in accordance with the applicable requirements listed in §570.502, including source
documentation for entities not subject to parts 84 and 85 of this title. Grantees shall maintain evidence to support how
the CDBG funds provided to such entities are expended. Such documentation must include, to the extent applicable,
invoices, schedules containing comparisons of budgeted amounts and actual expenditures, construction progress
schedules signed by appropriate parties (e.g., general contractor and/or a project architect), and/or other
documentation appropriate to the nature of the activity.
(i) Agreements and other records related to lump sum disbursements to private financial institutions for financing
rehabilitation as prescribed in §570.513; and
(j) Records required to be maintained in accordance with other applicable laws and regulations set forth in subpart K
of this part.
(Approved by the Office of Management and Budget under control number 2506–0077)
[53 FR 34454, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1916, 1953, Jan. 5, 1995; 60 FR
56915, Nov. 9, 1995; 61 FR 18674, Apr. 29, 1996; 64 FR 38813, July 19, 1999; 70 FR 76370, Dec. 23, 2005]
§ 570.507 Reports.
(a)Performance and evaluation report —(1)Entitlement grant recipients and HUD-administered small cities recipients
in Hawaii.The annual performance and evaluation report shall be submitted in accordance with 24 CFR part 91.
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(2)HUD-administered Small Cities recipients in New York, and Hawaii recipients for pre-FY 1995 grants —(i)
Content.Each performance and evaluation report must contain completed copies of all forms and narratives
prescribed by HUD, including a summary of the citizen comments received on the report.
(ii)Timing.The performance and evaluation report on each grant shall be submitted:
(A) No later than October 31 for all grants executed before April 1 of the same calendar year. The first report should
cover the period from the execution of the grant until September 30. Reports on grants made after March 31 of a
calendar year will be due October 31 of the following calendar year, and the reports will cover the period of time from
the execution of the grant until September 30 of the calendar year following grant execution. After the initial
submission, the performance and evaluation report will be submitted annually on October 31 until completion of the
activities funded under the grant;
(B) Hawaii grantees will submit their small cities performance and evaluation report for each pre-FY 1995 grant no
later than 90 days after the completion of their most recent program year. After the initial submission, the
performance and evaluation report will be submitted annually until completion of the activities funded under the grant;
and
(C) No later than 90 days after the criteria for grant closeout, as described in §570.509(a), have been met.
(iii)Citizen comments on the report.Each recipient shall make copies of the performance and evaluation report
available to its citizens in sufficient time to permit the citizens to comment on the report before its submission to HUD.
Each recipient may determine the specific manner and times the report will be made available to citizens consistent
with the preceding sentence.
(b)Equal employment opportunity reports.Recipients of entitlement grants or HUD-administered small cities grants
shall submit to HUD each year a report (HUD/EEO–4) on recipient employment containing data as of June 30.
(c)Minority business enterprise reports.Recipients of entitlement grants, HUD-administered small cities grants or
Urban Development Action Grants shall submit to HUD, by April 30, a report on contracts and subcontract activity
during the first half of the fiscal year and by October 31 a report on such activity during the second half of the year.
(d)Other reports.Recipients may be required to submit such other reports and information as HUD determines are
necessary to carry out its responsibilities under the Act or other applicable laws.
(Approved by the Office of Management and Budget under control numbers 2506–0077 for paragraph (a) and 2529–
0008 for paragraph (b) and 2506–0066 for paragraph (c))
[53 FR 34456, Sept. 6, 1988, as amended at 60 FR 1916, Jan. 5, 1995; 61 FR 32269, June 21, 1996]
§ 570.508 Public access to program records.
Notwithstanding 24 CFR 85.42(f), recipients shall provide citizens with reasonable access to records regarding the
past use of CDBG funds, consistent with applicable State and local laws regarding privacy and obligations of
confidentiality.
§ 570.509 Grant closeout procedures.
(a)Criteria for closeout.A grant will be closed out when HUD determines, in consultation with the recipient, that the
following criteria have been met:
(1) All costs to be paid with CDBG funds have been incurred, with the exception of closeout costs (e.g., audit costs)
and costs resulting from contingent liabilities described in the closeout agreement pursuant to paragraph (c) of this
section. Contingent liabilities include, but are not limited to, third-party claims against the recipient, as well as related
administrative costs.
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(2) With respect to activities (such as rehabilitation of privately owned properties) which are financed by means of
escrow accounts, loan guarantees, or similar mechanisms, the work to be assisted with CDBG funds (but excluding
program income) has actually been completed.
(3) Other responsibilities of the recipient under the grant agreement and applicable laws and regulations appear to
have been carried out satisfactorily or there is no further Federal interest in keeping the grant agreement open for the
purpose of securing performance.
(b)Closeout actions.(1) Within 90 days of the date it is determined that the criteria for closeout have been met, the
recipient shall submit to HUD a copy of the final performance and evaluation report described in 24 CFR part 91. If an
acceptable report is not submitted, an audit of the recipient's grant activities may be conducted by HUD.
(2) Based on the information provided in the performance report and other relevant information, HUD, in consultation
with the recipient, will prepare a closeout agreement in accordance with paragraph (c) of this section.
(3) HUD will cancel any unused portion of the awarded grant, as shown in the signed grant closeout agreement. Any
unused grant funds disbursed from the U.S. Treasury which are in the possession of the recipient shall be refunded
to HUD.
(4) Any costs paid with CDBG funds which were not audited previously shall be subject to coverage in the recipient's
next single audit performed in accordance with 24 CFR part 44. The recipient may be required to repay HUD any
disallowed costs based on the results of the audit, or on additional HUD reviews provided for in the closeout
agreement.
(c)Closeout agreement.Any obligations remaining as of the date of the closeout shall be covered by the terms of a
closeout agreement. The agreement shall be prepared by the HUD field office in consultation with the recipient. The
agreement shall identify the grant being closed out, and include provisions with respect to the following:
(1) Identification of any closeout costs or contingent liabilities subject to payment with CDBG funds after the closeout
agreement is signed;
(2) Identification of any unused grant funds to be canceled by HUD;
(3) Identification of any program income on deposit in financial institutions at the time the closeout agreement is
signed:
(4) Description of the recipient's responsibility after closeout for:
(i) Compliance with all program requirements, certifications and assurances in using program income on deposit at
the time the closeout agreement is signed and in using any other remaining CDBG funds available for closeout costs
and contingent liabilities;
(ii) Use of real property assisted with CDBG funds in accordance with the principles described in §570.505;
(iii) Compliance with requirements governing program income received subsequent to grant closeout, as described in
§570.504(b)(4) and (5); and
(iv) Ensuring that flood insurance coverage for affected property owners is maintained for the mandatory period;
(5) Other provisions appropriate to any special circumstances of the grant closeout, in modification of or in addition to
the obligations in paragraphs (c)(1) through (4) of this section. The agreement shall authorize monitoring by HUD,
and shall provide that findings of noncompliance may be taken into account by HUD, as unsatisfactory performance
of the recipient, in the consideration of any future grant award under this part.
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(d)Status of consolidated plan after closeout.Unless otherwise provided in a closeout agreement, the Consolidated
Plan will remain in effect after closeout until the expiration of the program year covered by the last approved
consolidated plan.
(e)Termination of grant for convenience.Grant assistance provided under this part may be terminated for
convenience in whole or in part before the completion of the assisted activities, in accordance with the provisions of
24 CFR 85.44. The recipient shall not incur new obligations for the terminated portions after the effective date, and
shall cancel as many outstanding obligations as possible. HUD shall allow full credit to the recipient for those portions
of obligations which could not be canceled and which had been properly incurred by the recipient in carrying out the
activities before the termination. The closeout policies contained in this section shall apply in such cases, except
where the approved grant is terminated in its entirety. Responsibility for the environmental review to be performed
under 24 CFR part 50 or 24 CFR part 58, as applicable, shall be determined as part of the closeout process.
(f)Termination for cause.In cases in which the Secretary terminates the recipient's grant under the authority of
subpart O of this part, or under the terms of the grant agreement, the closeout policies contained in this section shall
apply, except where the approved grant is cancelled in its entirety. The provisions in 24 CFR 85.43(c) on the effects
of termination shall also apply. HUD shall determine whether an environmental assessment or finding of
inapplicability is required, and if such review is required, HUD shall perform it in accordance with 24 CFR part 50.
[53 FR 8058, Mar. 11, 1988, as amended at 56 FR 56128, Oct. 31, 1991; 60 FR 1916, Jan. 5, 1995; 60 FR 16379,
Mar. 30, 1995]
§ 570.510 Transferring projects from urban counties to metropolitan cities.
Section 106(c)(3) of the Act authorizes the Secretary to transfer unobligated grant funds from an urban county to a
new metropolitan city, provided: the city was an included unit of general local government in the urban county
immediately before its qualification as a metropolitan city; the funds to be transferred were received by the county
before the qualification of the city as a metropolitan city; the funds to be transferred had been programmed by the
urban county for use in the city before such qualification; and the city and county agree to transfer responsibility for
the administration of the funds being transferred from the county's letter of credit to the city's letter of credit. The
following rules apply to the transfer of responsibility for an activity from an urban county to the new metropolitan city.
(a) The urban county and the metropolitan city must execute a legally binding agreement which shall specify:
(1) The amount of funds to be transferred from the urban county's letter of credit to the metropolitan city's letter of
credit;
(2) The activities to be carried out by the city with the funds being transferred;
(3) The county's responsibility for all expenditures and unliquidated obligations associated with the activities before
the time of transfer, including a statement that responsibility for all audit and monitoring findings associated with those
expenditures and obligations shall remain with the county;
(4) The responsibility of the metropolitan city for all other audit and monitoring findings;
(5) How program income (if any) from the activities specified shall be divided between the metropolitan city and the
urban county; and
(6) Such other provisions as may be required by HUD.
(b) Upon receipt of a request for the transfer of funds from an urban county to a metropolitan city and a copy of the
executed agreement, HUD, in consultation with the Department of the Treasury, shall establish a date upon which the
funds shall be transferred from the letter of credit of the urban county to the letter of credit of the metropolitan city,
and shall take all necessary actions to effect the requested transfer of funds.
(c) HUD shall notify the metropolitan city and urban county of any special audit and monitoring rules which apply to
the transferred funds when the date of the transfer is communicated to the city and the county.