Department of Planning
Division of Community Development
301-600-1499 ph ♦ 301-600-1837
fax ♦ www.cityoffrederick.com
Community Development Block Grant
(CDBG) Program
2008 Grant Year Guidelines & Funding
Policy
As an
entitlement community, The City of Frederick receives a Community Development
Block Grant annually from the U.S. Department of Housing and Urban Development
(HUD) to carry out a wide range of community development activities directed
toward revitalizing neighborhoods, increasing economic development
opportunities, and providing improved community facilities and services.
This
year, the City of
In the
2008 Grant Year, which begins July 1, 2008, the City expects to receive
approximately $398,000 in CDBG funds. Of this amount, the City will spend 15%
on public service activities, and the remaining 85% on housing and community
development-related activities.
NATIONAL
OBJECTIVES:
HUD
regulations for the use of CDBG funds are very specific. It is the responsibility of the City to
ensure that each activity approved for funding meets one of HUD’s national
objectives and is included in the list of activities eligible for funding. The
City of
• Benefit
Low and Moderate Income Persons
At
least 70% of project expenditures must benefit low and moderate-income
persons. These are persons whose
household income is equal to or less than 80% of the area median family income,
adjusted for family size; the handicapped; the homeless the elderly; or those
with other special needs.
• Aid
in the Prevention or Elimination of Slums or Blight
A
maximum of 30% of project expenditures can aid in the prevention or elimination
of blight. This is usually accomplished through building rehabilitation.
• Meet
Other Urgent Community Development Needs
Other
community development needs certified by the City as having a particular
urgency because existing conditions pose a serious and immediate threat to the
health or welfare of the community where other financial resources are not
available to meet such needs. An example of this would be a major catastrophe
such as a hurricane or earthquake.
ELIGIBLE ACTIVITIES
HUD
regulations specify the activities that are eligible for CDBG funding. These
fall into one of three general categories:
• Public
Services
(education
and recreation programs, public safety services, fair housing activities,
services for senior citizens and homeless persons, child and health care, job
training, and homebuyer down payment assistance);
• Capital Projects
(e.g.,
construction, rehabilitation, acquisition, demolition, clearance, etc);
• Economic
Development
(assistance
to profit-motivated businesses to carry out economic development and job
creation and retention activities). (For
a complete list of eligible activities, please refer to Appendix I)
The City
undertakes CDBG funded activities directly. Eligible community groups or
organizations may also apply for funding to carry out either a public service
or capital project activity. Applicants for such funding are referred to as
subrecipients. Subrecipients must be a registered non-profit organization
and MUST provide supporting documentation that confirms this status.
Subrecipients
requesting a grant for a community service must be either developing a new
public service, or proposing a quantifiable increase in service for an existing
program. There is a HUD imposed limit on the amount that the City can spend on
public service projects. This limit is 15% of the annual entitlement plus the
previous year’s program income.
Contractual
Requirements
Each
subrecipient selected to receive funds is required to sign a contract referred
to as a “Subrecipient Agreement” with the City of
No costs incurred prior to the
execution of an agreement with the City for services are reimbursable. Under
City, State and Federal laws and regulations, certain requirements must be met
in order to negotiate an agreement and disburse funds. These requirements
include the following:
- Applicants must demonstrate that they are a
private nonprofit organization, or a governmental agency.
- After an application is approved for funding, a
contract will be prepared and sent by the City to the person identified by
the applicant as the authorized official for signature. The contract will
specify the amount of the award, the period for which the project is
approved, the contract term, and administrative provisions. Special
conditions attached to the award also will be specified in the agreement.
Grantees will be required to file regular reports on expenditures,
progress toward goals, and beneficiaries. The Department of Planning staff
will provide forms for these reports.
- Grantees are required to obtain insurance as
specified by the City, and to comply with all applicable federal, state,
and local laws, codes, and regulations. The cost of insurance is
reimbursable as a project expense.
- As part of any contract, recipients will be
required to comply with affirmative action and equal opportunity laws. In
the event of non-compliance, the agreement may be terminated or suspended
in whole or in part.
- All recipients will be required to comply with
the federal government’s audit requirements as described in OMB Circular
A-133 (for HUD’s programs, these requirements are codified at 24 CFR Part
84.) Recipients receiving $500,000 in federal funds from all sources in a
single year must have an annual audit. The cost of an audit is an eligible
expense.
ELIGIBLE ACTIVITIES
ACQUISITION
Acquisition,
in whole or in part, by the subrecipient or other public or private nonprofit
entity, by purchase, long-term lease, donation, or otherwise, of real property
for any eligible public purpose. In
order to be considered acquisition, a permanent interest in the property must
be obtained. Long-term leases only qualify as acquisition if they are for 15
years or more. Acquisition of real property is subject to Section 570.606,
"Displacement, relocation, acquisition, and replacement of housing of the
CDBG regulations". Additionally, acquisition of real property is subject
to the requirements under the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601-4655).
DISPOSITION
Disposition,
through sale, lease, donation or otherwise, of any real property acquired with
CDBG funds or its retention for public purposes.
PUBLIC
FACILITIES AND IMPROVEMENTS
Acquisition,
construction, reconstruction, rehabilitation or installation of public
facilities and improvements, carried out by a public or private nonprofit
entity: including but, not limited to, streets, curbs, sidewalks, storm
drainage, sanitary sewers, parks and recreation facilities, community centers,
and libraries. Design features and improvements that promote energy efficiency
may be included. Activities may also include architectural design features, and
similar treatments intended to enhance the aesthetic quality of facilities and
improvements receiving CDBG assistance, such as decorative pavements, railing,
sculptures, pools of water and fountains, and other works of art. Facilities
containing both eligible and ineligible uses are subject to special policies
contained under 'Section 570.200(b)& (c) of the CDBG Regulations.
CLEARANCE
Clearance,
demolition, and removal of buildings and improvements, including movement of
structures to other sites. Demolition of HUD-assisted housing units may be
undertaken only with the prior approval of HUD.
PUBLIC
SERVICES
Provision
of public services (including labor, supplies, and materials) including but not
limited to those concerned with employment, crime prevention, child care,
health, drug abuse, education, fair housing counseling, energy conservation,
welfare (but excluding the provision of income payments), homebuyer down
payment assistance, or recreational needs. To be eligible for assistance, a
public service must be either a new service, or a quantifiable increase in the
level of an existing service above that which has been provided by or on behalf
of the unit of general local government (through funds raised by the unit, or
received by the unit from the State in which it is located) in the 12 calendar
months before the submission of the action plan. (An exception to this
requirement may be made if HUD determines that any decrease in the level of a
service was the result of events not within the control of the unit of general
local government).
INTERIM
ASSISTANCE
The
following activities may be undertaken on an interim basis in areas exhibiting
objectively determinable signs of physical deterioration where it has been
determined that immediate action is necessary to arrest the deterioration and
that permanent improvements will be carried out as soon as practicable.
(1)
The repairing of streets, sidewalks, parks, playgrounds, publicly-owned
utilities, and public buildings; and
(2)
The execution of special garbage, trash debris removal including neighborhood
cleanup campaigns, but not regular curbside collection of garbage or trash in
an area.
PAYMENT
OF NON-FEDERAL SHARE
Payment
of non-federal share required in connection with a Federal grant-in-aid program
undertaken as part of CDBG activities, provided that such payment shall be
limited to eligible activities and in compliance with application requirements.
URBAN
RENEWAL COMPLETION
Payment
of the costs of completing an urban renewal project funded under Title I of the
Housing Act of 1949 as amended.
RELOCATION
Relocation
payments and assistance for displaced individuals, families, businesses,
organizations and farm operations, where the assistance is (1) required under
the provisions of Section 570.606(b) or (c) of the CDBG Regulations; or (2) if
determined by DHCD to be appropriate.
LOSS
OF RENTAL INCOME
Payments
to housing owners for losses of rental income incurred in holding, for
temporary periods, housing units to be used for the relocation of individuals
and families displaced by program activities assisted under the CDBG program.
HOUSING
SERVICES
Housing
services as provided in Section 105(a)(20) which reflects that CDBG funds may
be used to pay costs in support of activities eligible for funding under the
HOME program. This include services such as housing counseling, energy
auditing, preparation of work specification, loan processing, inspections,
tenant selections, management of tenant-based rental assistance, and other
services related to assisting owners, tenants, contractors and others
participating or seeking to participate in the HOME program.
HOME
OWNERSHIP ASSISTANCE
CDBG
funds may be used to provide financial assistance to LMI households to assist
them in the purchase of a home. Specific purposes for which financial
assistance, using CDBG funds, may be provided are to:
(1) subsidize interest rates and
mortgage principal amounts for LMI homebuyers;
(2) finance the cost of acquiring
property already occupied by LMI households at terms needed to make the
purchase affordable;
(3) acquire guarantees for mortgage
financing obtained by LMI homebuyers from private lenders (except that amount
received under this title may not be used under this category to directly
guarantee such mortgage financing and grantees under this title may not
directly provide such guarantees);
(4) provide up to 50 percent of any down
payment required for LMI homebuyers; or
(5) pay reasonable closing costs
(normally associated with the purchase of a home) incurred by a LMI homebuyer.
PRIVATELY
OWNED UTILITIES
CDBG
funds may be used to acquire, construct, reconstruct, rehabilitate or install
the distribution lines and facilities of privately owned utilities, including
the placing underground of new or existing distribution facilities and lines.
CONSTRUCTION
OF HOUSING
CDBG
funds may be used in limited circumstances to finance the construction of new
permanent residential structures. These limited circumstances include:
construction of housing under a Housing Development Grant (HODAG); or
construction of housing of last resort under 24 CFR Part 42, Subpart I; or the
project is being carried out by a qualified Community-Based Development organization.
MICRO-ENTERPRISE
ASSISTANCE
CDBG
funds may be used to facilitate economic development through the establishment,
stabilization and expansion of micro-enterprises. "Micro-enterprises"
has been defined as a business having five or fewer employees, one or more of
whom owns the business; "persons developing a MICRO-ENTERPRISE" means
a person who has expressed an interest and who is, after an initial screening,
expected to be actively working towards developing a business that is expected
to be a MICRO-ENTERPRISE at the time it is formed.
TECHNICAL
ASSISTANCE
Provision
of technical assistance to public or nonprofit entities to increase the
capacity of such entities to carry out eligible neighborhood revitalization or
economic development activities.
ASSISTANCE
TO INSTITUTIONS OF HIGHER EDUCATION
Assistance
may be provided to an institution of higher education (i.e., secondary schools
or higher) when it has been determined that such an institution has
demonstrated a capacity to carry out activities that fall under one or more of
the basic eligibility categories under the CDBG program.
REHABILITATION
AND PRESERVATION ACTIVITIES
CDBG
funds may be used to finance rehabilitation and related costs for buildings and
improvements. Rehabilitation services, such as rehabilitation counseling,
housing counseling, energy auditing, preparation of work specification, loan
processing, inspection, tenant selection, management of tenant-based rental
assistance, and other services related to assisting owners, tenants,
contractors and other entities, participating or seeking to participate in
housing activities authorized under this section, or under Title II of the
Cranston-Gonzalez National Affordable Housing Act, except that activities under
this paragraph shall be subject to any limitation on administration expenses
imposed by law.
CODE
ENFORCEMENT
Costs
incurred for inspection of code violations and enforcement of codes in
deteriorating or deteriorated areas where such enforcement together with public
improvements, rehabilitation or services to be provided may be expected to
arrest the decline in the area.
HISTORIC
PRESERVATION
Rehabilitation
preservation or restoration of historic properties, whether publicly or privately
owned. Historic properties are those sites or structures that are either listed
in or eligible to be listed in the National Register or Historic Places, listed
in a State or local inventory of historic places, or designated as a State or
local landmark or historic district by appropriate law or ordinance. Historic Preservation,
however, is not authorized buildings for the general conduct of government.
RENOVATION
OF CLOSED BUILDINGS
Renovation
of closed buildings such as school buildings, for use as an eligible public
facility or to rehabilitate such buildings for housing.
LEAD-BASED
PAINT HAZARD EVALUATION AND REDUCTION
Lead-based
paint hazard evaluation and reduction as defined in Section 1004 of the
Residential Lead-Based Paint Hazard Reduction Act of 1992.
SPECIAL
ACTIVITIES BY COMMUNITY-BASED DEVELOPMENT ORGANIZATIONS (CBDO)
CDBG
funds may be provided to certain types of subrecipients to carry out several
types of community development activities. Such organizations must meet certain
qualifying characteristics outlined under Section 570.204©) of the CDBG
Regulations to carry out neighborhood revitalization, community economic
development or energy conservation projects.
SPECIAL
ECONOMIC DEVELOPMENT
Acquisition,
construction, reconstruction, rehabilitation or installation of commercial or
industrial buildings, structures and other real property, equipment and
improvements, including railroad spurs or similar extension. Such activities
may be carried out by the City or a public or private non-profit subrecipient.
Assistance to private for-profit businesses is eligible, where it is determined
that the assistance is appropriate to carry out an economic development
project. An analysis must be conducted to determine that the amount of any
financial assistance is not excessive, taking into account the actual needs of
the business in making the project financially feasible and the extent of
public benefit expected to be derived from the economic development project.
ELIGIBLE
PLANNING ACTIVITIES
CDBG funds
may be used for studies, analysis, data gathering, and preparation of plans and
identification of actions that will implement such plans. Types of plans that
may be paid for with CDBG funds include, but are not limited to: comprehensive
plans; individual project plans; community development plans; capital
improvement programs; small area and neighborhood plans; analysis of
impediments to fair housing choice; environmental and historical studies;
functional plans.
PROGRAM
ADMINISTRATION COSTS
Payment of
reasonable administrative costs and related carrying charges related to the
planning and execution of community development and housing activities,
including provision of information and resources to residents of areas in which
community development and housing activities are to be concentrated with
respect to the planning and execution of such activities.
INELIGIBLE ACTIVITIES
1. Buildings or portions thereof used
for the general conduct of government.
2. General government expenses.
3. Political activities. CDBG funds
shall not be used to finance the use of facilities or equipment for political
purposes or to engage in other partisan political activities, such as candidate
forums, voter transportation, or voter registration.
4. The purchase of equipment with CDBG
funds is generally ineligible.
5. Construction equipment is generally
ineligible.
6. The purchase of equipment, fixtures,
motor vehicles, furnishing, or other property not an integral structural
fixture is generally ineligible.
7. Expenses associated with repairing,
operating or maintaining public facilities, improvement and services is
ineligible. Examples include: maintenance and repair of publicly owned streets,
parks, playgrounds, water and sewer facilities, neighborhood facilities, senior
centers, centers for persons with disabilities, parking and other public
facilities and improvements; payment of salaries for staff, utility costs and
similar expenses necessary for the operation of public works and facilities.
8. New construction of low or
moderate-income housing is generally ineligible except under certain
circumstances as outlined under Section 570.207(b)(3) of the CDBG regulations.
9.
CDBG
funds shall not be used for income payments. Income payments means: a series of
subsistence-type grant payments made to an individual or family for items such
as food, clothing, housing (rent or mortgage) or utilities, but excludes
emergency grant payments made over a period of up to three consecutive months
on behalf of an individual or family.