4 “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average (rounded upwards, if necessary to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Bank from three Federal funds brokers of recognized standing selected by it. “Generally Accepted Accounting Principles” means generally accepted accounting principles in effect from time to time in the United States and applicable to entities such as the City. “Hazardous Materials” has the meaning set forth in Section 4.10 hereof. “Indenture” means the Indenture dated as of July 1, 2026, among the Authority, the City and the Trustee. “Laws and Regulations” has the meaning set forth in Section 4.10 hereof. “Lease Agreement” means the Lease Agreement, dated as of July 1, 2026, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Lease Documents” means the Ground Lease, the Lease Agreement, the Assignment Agreement, the Indenture, the Bond and this Supplemental Agreement. “Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business or operations of the City, (b) the ability of the City to carry out its business as of the Closing Date or as proposed in this Supplemental Agreement, the Lease Agreement or any other Lease Document to be conducted or to meet or perform its obligations under this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents on a timely basis, (c) the validity or enforceability of this Supplemental Agreement, the Lease Agreement or any other Lease Document, (d) the rights or remedies of the Bank under this Supplemental Agreement, the Lease Agreement or any other Lease Document, or (e) the exemption of interest components of Base Rental Payments from State personal income taxes. “Material Litigation” has the meaning assigned to such term in Section 4.05 hereof. “Maximum Rate” means the lesser of (i) twelve percent (12%) per annum and (ii) the maximum rate of interest allowed by applicable law. “Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City and approved by the Bank. “OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury. 1387
5 “Person” means an individual, corporation, firm, association, partnership, limited liability company, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Prime Rate” means an index for a variable interest rate which is quoted, published or announced by the Bank as its prime rate and as to which loans may be made by the Bank at, above or below such rate. “Rating Agencies” or “Rating Agency” means one or all of Moody’s or S&P or, in the event that Moody’s or S&P no longer maintains a City Long-Term Borrowing General Fund Obligation Rating, any other nationally recognized bond rating agency acceptable to the Bank, but, in each instance, only so long as Moody’s, S&P or such other nationally recognized rating agency then maintains a City Long-Term Borrowing General Fund Obligation Rating. “Release” has the meaning set forth in Section 4.10 hereof. “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City and approved by the Bank. “SOFR” means the secured overnight financing rate which is published by the Board of Governors of the Federal Reserve System and available at www.newyorkfed.org. “State” means the State of California. “Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States “Transactions” means the execution and delivery of the Lease Documents, the purchaser by the Bank of the Bond to finance the Project, the lease of the Property and the performance by the City of its obligations (including payment obligations) under the Lease Documents (including any amounts to reimburse the Bank for any advances or expenditures by it under any of the Lease Documents). Section 1.02 Construction. Unless the context of this Supplemental Agreement otherwise clearly requires, references to the plural include the singular, to the singular include the plural and to the part include the whole. The word “including” shall be deemed to mean “including but not limited to,” and “or” has the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereunder” and similar terms in this Supplemental Agreement refer to this Supplemental Agreement as a whole and not to any particular provision of this Supplemental Agreement. The Section headings contained in this Supplemental Agreement and the table of contents preceding this Supplemental Agreement are for reference purposes only and shall not control or affect the construction of this Supplemental Agreement or the interpretation thereof in any respect. Section, subsection and exhibit references are to this Supplemental Agreement unless otherwise specified. Each exhibit, schedule and annex attached hereto is incorporated by reference herein and is a constituent part of this Supplemental Agreement. 1388
6 Section 1.03 Incorporation of Certain Definitions by Reference. Any capitalized term used herein and not otherwise defined herein shall have the meaning provided therefor in the Indenture and the Lease Agreement, as applicable. Section 1.04 Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with Generally Accepted Accounting Principles consistently applied. In the event of changes to Generally Accepted Accounting Principles which become effective after the Closing Date, the City and the Bank agree to negotiate in good faith appropriate revisions of this Supplemental Agreement so as to perpetuate the meaning and effect of such provisions as originally negotiated and agreed upon. ARTICLE II THE CLOSING Section 2.01 Closing. Upon the terms and conditions set forth herein, subject to fulfillment of each of the conditions precedent set forth in Article III hereof, and upon the basis of the representations set forth herein, the Bank hereby agrees to purchase from the Authority the Bond in an aggregate principal amount equal to $3,225,000. The Bank shall transfer said purchase price ($3,225,000) to the Trustee on or before the Closing Date, and shall authorize release of such funds upon the terms and conditions set forth herein, subject to fulfillment of each of the conditions precedent set forth in Article III hereof, and upon the basis of the representations set forth herein, and shall be applied as provided in the Indenture. Section 2.02 Calculation of Interest. Computations of any interest rates payable hereunder or under the Lease Documents and the interest component of the Base Rental Payments shall be made as provided in the Indenture. ARTICLE III CONDITIONS PRECEDENT Section 3.01 Closing Conditions. The Bank has agreed to purchase the Bond in reliance upon the representations, warranties and agreements of the City contained herein, and in reliance upon the representations, warranties and agreements of the City and the Authority to be contained in the documents and instruments to be delivered on the Closing Date and upon the performance by the City of its obligations hereunder as of the Closing Date. Accordingly, the Bank’s obligations under this Supplemental Agreement to purchase the Bond shall be conditioned upon the performance by the City of its obligations to be performed hereunder and under such documents and instruments on or prior to the Closing Date, and shall also be subject to the following additional conditions, including the delivery by the City of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Bank and its counsel; provided that, unless set forth in a separate section of this Supplemental Agreement or in a Lease Document other than this Supplemental Agreement, the City’s obligation to satisfy any condition under this Section 3.01 shall exist only until the Closing Date and shall cease thereafter: (a) The following Authority documents:
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7 (i) A copy of the resolution of the Authority approving the execution and delivery of the Lease Documents to which the Authority is a party and the other matters contemplated hereby and thereby, certified by the Secretary of the Authority as being true and complete and in full force and effect on the Closing Date. (ii) Certified copies of the Authority’s joint exercise of powers agreement, notice of a joint powers agreement filed with the Secretary of State and roster of public agencies filing and acknowledgment from the Secretary of State. (iii) A certificate by the Secretary of the Authority certifying the names and signatures of the persons authorized to sign, on behalf of the Authority, the Lease Documents to which it is a party and the other documents to be delivered by it hereunder or thereunder. (b) The following City documents: (i) A copy of the resolution of City Council of the City approving the execution and delivery of the Lease Documents to which the City is a party and the other matters contemplated hereby and thereby, certified by the City Clerk of the City as being true and complete and in full force and effect on the Closing Date. (ii) A certificate by the City Clerk of the City certifying the names and signatures of the persons authorized to sign, on behalf of the City, the Lease Documents to which it is a party and the other documents to be delivered by it hereunder or thereunder. (iii) The following financing documents: (iv) The Indenture. (v) An executed original of each of the Ground Lease, the Lease Agreement, and the Assignment Agreement. . (vi) Recording instructions for the recordation of such of the Lease Documents as may be required by the Bank and prepared by the City and Bond Counsel. (vii) Certificates signed by an authorized representative of the City and an authorized representative of the Authority, respectively, stating that on and as of the Closing Date, copies of each of the Lease Documents to which it is a party furnished to the Bank are true, correct and complete copies of such documents, such documents were duly issued, adopted or executed and delivered, have not been modified, amended or rescinded and are in full force and effect on and as of the Closing Date, and such other customary matters as the Bank may reasonably request. (viii) A certificate signed by an authorized representative of the City, stating that on and as of the Closing Date: (i) all requirements and preconditions to the execution and delivery of the Lease Documents shall have been satisfied; (ii) the City has complied with all agreements and covenants and satisfied all conditions stated in this Supplemental Agreement on its part to be performed or satisfied at or prior to the Closing Date; (iii) each representation and warranty on the part of the City contained in this Supplemental Agreement and the other Lease Documents is true and correct as though made on and as of such date; (iv) no City Long-Term Borrowing General Fund Obligations are outstanding; (v) no Default or Event of Default 1390
8 has occurred and is continuing or would result from the execution or performance of this Supplemental Agreement or the other Lease Documents to which the City is a party; and (vi) and such other customary matters as the Bank may reasonably request. (ix) A certificate of the Authority, signed by an authorized representative of the Authority, stating that on and as of the Closing Date (i) the representations and warranties of the Authority contained in the Lease Documents to which the Authority is a party are true and correct on and as of the Closing Date as though made on and as of such date; (ii) no default or event of default under the Lease Documents to which the Authority is a party has occurred and is continuing, or would result from the Authority’s execution and performance of any of the Lease Documents to which the Authority is a party; (iii) all conditions precedent to the execution and delivery of the Lease Documents to which the Authority is a party have been satisfied; and (iv) and such other customary matters as the Bank may reasonably request. (x) Confirmation that no CUSIP number has been assigned to the Bond and Bond has been issued in a single denomination and shall not be transferable except to an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A promulgated under the Securities Act, in each case that has delivered a Purchaser Letter (in the form attached as Exhibit C to the Indenture) to the Authority, the City, the Trustee and Bond Counsel. (xi) Certificates of insurance evidencing the satisfaction of the insurance requirements as set forth in Article VI of the Lease Agreement in form and substance satisfactory to the Bank; each policy (other than for worker’s compensation) shall name the Bank as additional insured and loss payee. (xii) A commitment from a title insurance company acceptable to the Bank in respect of the Property meeting the requirements as set forth in Section 6.02 of the Lease Agreement. Without limiting the foregoing, the Title Policy shall: (i) be in the amount of not less than the initial principal amount of the Bond; (ii) shall insure the Bank’s interests in the leasehold estate established under the Lease Agreement; (iii) be subject only to such liens and other exceptions as shall be approved by the Bank; (iv) name the Bank as an insured party thereunder; and (v) contain such endorsements and affirmative insurance as the Bank may request. (xiii) The most recent adopted budget of the City and the audited financial statements of the City for the fiscal years ended June 30, 2023, 2024 and 2025. (xiv) True and correct copies of any and all governmental approvals necessary for the City to enter into this Supplemental Agreement and the City and the Authority to enter into the other Lease Documents to which it is a party and the transactions contemplated thereby and hereby and not otherwise covered by Section 3.01(a)(i) or Section 3.01(b)(i) hereof. (xv) Certificates and opinions related to the Trustee to the satisfactory of the Bank. (xvi) Such other certifications as to matters of fact, due authorization, execution and delivery by the parties thereto of the Lease Documents, evidence of corporate 1391
9 authority, copies of governmental consents, permits, licenses and approvals, and other documents as shall be reasonably requested by the Bank, and the form and substance of any order or other official action granting any consent, permit, license or approval shall be satisfactory to the Bank. (c) The following opinions, addressed to the Bank or on which the Bank is otherwise expressly authorized to rely: (i) From general counsel to the Authority, as to the due authorization, execution and delivery of each of the Lease Documents to which it is a party, their validity, binding effect and enforceability, and such other customary matters as the Bank may reasonably request. (ii) From the City Attorney of the City, as to the due authorization, execution and delivery of each of the Lease Documents to which it is a party, their validity, binding effect and enforceability, and such other customary matters as the Bank may reasonably request. (iii) From Bond Counsel, in customary form, an approving opinion to the effect that the Lease Documents have been duly authorized and validly executed and delivered, that the interest components of Base Rental Payments are exempt from State personal income taxes, and as to such other customary matters as the Bank may reasonably request. (iv) From counsel to the Trustee, standard opinions relating to the Trustee acceptable to the Bank. (d) Other conditions: (i) Each representation and warranty contained in this Supplemental Agreement and the other Lease Documents is true and correct. (ii) No Default or Event of Default has occurred and is continuing or would result from the execution or performance of this Supplemental Agreement or the other Lease Documents. (iii) Since the most current date of the information, financial or otherwise, supplied by the City to the Bank, there has been no change in the assets, liabilities, financial position or results of operations of the City which might reasonably be anticipated to cause a Material Adverse Effect and the City has not incurred any obligations or liabilities which might reasonably be anticipated to cause a Material Adverse Effect. (iv) The Bank shall be reasonably satisfied that the fee of the California Debt and Investment Advisory Commission shall have been paid and that payment will be made promptly after demand therefor after the Closing Date of the Bank’s upfront fees and expenses (consisting solely of the Bank’s outside counsel legal fees and expenses) incurred in connection with the execution and delivery of this Supplemental Agreement, the Lease Agreement and the other Lease Documents. (v) All other legal matters pertaining to the execution and delivery of each of the Lease Documents shall be reasonably satisfactory to the Bank and its counsel. 1392
10 (vi) The Bank shall have completed all due diligence with respect to the City, the Property, the Authority and the Lease Documents (including any earthquake and flood zone determinations) in scope and determination satisfactory to the Bank. (e) Such other instruments, documents and opinions as the Bank shall reasonably require to evidence and secure the obligations of the City under this Supplemental Agreement, the Lease Agreement and the other Lease Documents and to comply with the provisions of this Supplemental Agreement, the Lease Agreement and the other Lease Documents and the requirements of any governmental authority to which the Bank, the City or the Authority are subject. ARTICLE IV REPRESENTATIONS AND WARRANTIES All representations and warranties made herein to the Bank or incorporated herein for the benefit of the Bank are made with the understanding that the Bank is relying upon the accuracy of such representations and warranties. Notwithstanding that the Bank may conduct its own investigation as to some or all of the matters covered by the representations and warranties in this Supplemental Agreement, the Lease Agreement and the other Lease Documents, and any certificates, information, opinions or documents delivered in connection herewith and therewith, the Bank is entitled to rely on all representations and warranties as a material inducement to the Bank’s extension of the credit evidenced by this Supplemental Agreement, the Lease Agreement and the other Lease Documents. All representations and warranties made herein to the Bank or incorporated herein for the benefit of the Bank shall survive the making of and shall not be waived by the execution and delivery of this Supplemental Agreement, the Lease Agreement and the other Lease Documents. Section 4.01 Existence and Power. The City is a municipal corporation and general law city duly organized, validly existing and in good standing under the Constitution and the laws of the State and has the corporate power and authority to own its properties and to carry on its businesses as now being conducted and as currently contemplated to be conducted hereafter and is duly qualified to do business in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of any material portion of its business (as now conducted and as currently contemplated to be conducted) makes such qualification necessary. Section 4.02 Due Authorization. (a) The City has the corporate power, and has taken all necessary corporate action to authorize this Supplemental Agreement, the Lease Agreement and the other Lease Documents, to execute, deliver and perform its obligations under this Supplemental Agreement, the Lease Agreement and each of the other Lease Documents to which it is a party in accordance with their respective terms. The City has approved the form of the Indenture. (b) The City is duly authorized and licensed to own the Property under the laws of all governmental authorities having the jurisdiction to license or regulate the Property, and the City has obtained all requisite approvals of all such governmental authorities required to be obtained for such purposes. All authorizations and approvals necessary for the City to enter into this Supplemental Agreement, the Lease Agreement and the other Lease Documents and to perform the transactions contemplated hereby and thereby and to conduct its business activities and own the Property have been obtained and remain in full force and effect and are subject to no further administrative or judicial 1393
11 review. No other authorization or approval or other action by, and no notice to or filing with, any governmental authority is required for the due execution, delivery and performance by the City of this Supplemental Agreement, the Lease Agreement and the other Lease Documents. Section 4.03 Valid and Binding Obligations. This Supplemental Agreement, the Lease Agreement and each of the other Lease Documents to which the City is a party has been duly executed and delivered by one or more duly authorized officers of the City and are legal, valid and binding obligations of the City enforceable in accordance with their respective terms, except as such enforceability may be limited by (a) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally, (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (c) the exercise of judicial discretion in appropriate cases, or (d) the limitations on legal remedies against general law cities in the State. Section 4.04 Noncontravention; Compliance with Law. (a) The execution, delivery and performance of this Supplemental Agreement, the Lease Agreement and each of the other Lease Documents in accordance with their respective terms do not and will not (i) require any consent or approval of any creditor of the City, (ii) violate any applicable law, (iii) conflict in any material respect with, result in a material breach of or constitute a material default under any Contract to which the City is a party or by which it or any of its property may be bound or (iv) result in or require the creation or imposition of any lien upon or with respect to any property now owned or hereafter acquired by the City except such liens, if any, expressly created by any Lease Document. (b) The City is in compliance with all applicable laws, except for noncompliance that, singly or in the aggregate, has not caused and could not reasonably be expected to cause a Material Adverse Effect or an adverse effect on the City’s ability to perform its obligations hereunder and under the other Lease Documents. Section 4.05 Pending Litigation and Other Proceedings. There are no actions, suits or proceedings pending, nor are there any actions, suits or proceedings threatened in writing, against the City or any property of the City in any court or before any arbitrator of any kind or before or by any governmental or nongovernmental body, which, in any case, (i) directly or indirectly relates to the Property or the enforceability of this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents; or (ii) may have a Material Adverse Effect (any of the foregoing being herein referred to as “Material Litigation”). Section 4.06 Financial Statements. The balance sheet of the City as of June 30, 2025 and the related statement of revenues and expenses and changes in financial position for such Fiscal Year and the auditors’ reports with respect thereto, copies of which have heretofore been furnished to the Bank pursuant to this Supplemental Agreement, are complete and correct and fairly present the financial condition, changes in financial position and results of operations of the City at such date and for such Fiscal Year, and were prepared in accordance with Generally Accepted Accounting Principles consistently applied. Since the period of such statements, there has been no change which would have a Material Adverse Effect. Section 4.07 Defaults. No Event of Default and no Default has occurred and is continuing or exists. 1394
12 Section 4.08 Insurance. The City currently maintains insurance as required by Article VI of the Lease Agreement. Section 4.09 Accuracy of Information. All information, reports and other papers and data furnished by the City to the Bank were, at the time the same were so furnished, complete and correct in all material respects and insofar as necessary to give the Bank a true and accurate knowledge of the subject matter and were provided in expectation of the Bank’s reliance thereon in providing funds to finance the Project. No fact is known to the City which has had or, so far as the City can now reasonably foresee, may in the future have a Material Adverse Effect, which has not been set forth in the budget and financial statements previously furnished to the Bank or in other such information, reports, papers and data or otherwise disclosed in writing to the Bank prior to the Closing Date. Any financial, budget and other projections furnished to the Bank by the City or its agents were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair and reasonable in light of the conditions existing at the time of delivery of such financial, budget or other projections, and represented, and as of the Closing Date, represent the City’s best estimate of its future financial performance. No document furnished by the City or its agents nor any representation, warranty or other written statement made by the City or its agents to the Bank in connection with the negotiation, preparation or execution of this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents contains or will contain any untrue statement of a material fact or omits or will omit to state (as of the date made or furnished) any material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were or will be made, not misleading. Section 4.10 Environmental Matters. (a) The City has, after due inquiry, no knowledge and has not given or received any written notice indicating that the Property or the past or present use thereof or any practice, procedure or policy employed by it in the conduct of its business materially violates any applicable law, regulation, code, order, rule, judgment or consent agreement, including, without limitation, those relating to zoning, building, use and occupancy, fire safety, health, sanitation, air pollution, ecological matters, environmental protection, hazardous or toxic materials, substances or wastes, conservation, parking, architectural barriers to the handicapped, or restrictive covenants or other agreements affecting title to the Property (collectively, “Laws and Regulations”). Without limiting the generality of the foregoing, neither the City nor to the best of its knowledge, after due inquiry, any prior or present owner, tenant or subtenant of the Property has, other than as set forth in paragraphs (a) and (b) of this Section or as may have been remediated in accordance with Laws and Regulations, (A) used, treated, stored, transported or disposed of any material amount of flammable explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum products, asbestos or any Asbestos Containing Materials, methane, radioactive materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or regulated substances or related materials, as defined in CERCLA, RCRA, CWA, CAA, TSCA and Title III, and the regulations promulgated pursuant thereto, and in all other Environmental Regulations applicable to the Authority or the City, the Property or the business operations conducted by the Authority or the City thereon (collectively, “Hazardous Materials”) on, from or beneath the Property, (B) pumped, spilled, leaked, disposed of, emptied, discharged or released (collectively “Release”) any material amount of Hazardous Materials on, from or beneath the Property, or (C) stored any material amount of petroleum products at the Property in underground storage tanks. 1395
13 (b) Excluded from the representations and warranties in paragraph (a) of this subsection with respect to Hazardous Materials are those Hazardous Materials in those amounts ordinarily found in the inventory of, or used in the maintenance of public libraries, the use, treatment, storage, transportation and disposal of which has been and shall be in compliance with all Laws and Regulations. (c) No portion of the Property located in an area of high potential incidence of radon has an unventilated basement or subsurface portion which is occupied or used for any purpose other than the foundation or support of the improvements to the Property, respectively. (d) The City has not received any notice from any insurance company which has issued a policy with respect to the Property or from the applicable state or local government agency responsible for insurance standards (or any other body exercising similar functions) requiring the performance of any repairs, alterations or other work, which repairs, alterations or other work have not been completed at the Property, respectively. The City has not received any notice of default or breach which has not been cured under any covenant, condition, restriction, right-of-way, reciprocal easement, agreement or other easement affecting the Property which is to be performed or complied with by it. Section 4.11 [Reserved]. Section 4.12 OFAC. The City is not listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by OFAC, and any successor thereto, the Secretary of the Treasury, or included in any Executive Orders, that prohibits or limits the Bank from making any advance or extension of credit to the City or from otherwise conducting business with the City. Section 4.13 Sovereign Immunity. The City does not enjoy any rights of immunity on the grounds of sovereign immunity in respect of its obligations under the Lease Documents. To the extent the City has or hereafter may acquire under any applicable law any right to immunity from set-off or legal proceedings on the grounds of sovereignty, the City hereby waives, to the extent permitted by law, such rights to immunity for itself in respect of its obligations under the Lease Documents. Section 4.14 Usury. The terms of this Supplemental Agreement, the Lease Agreement and the other Lease Documents regarding the calculation and payment of interest and fees do not violate any applicable usury laws. Section 4.15 Fair Rental Value; Use and Occupancy. Base Rental Payments and Additional Payments payable under the Lease Agreement do not exceed the fair rental value of the Property for each period for which said rental is to be paid. In making such determination of fair rental value, consideration has been given to the uses and purposes which may be served by the Property and the benefits therefrom which will accrue to the City and the general public. The City currently has the use and occupancy of the Property and the City has the legal authority to pay Base Rental Payments and Additional Payments pursuant to the Lease Agreement for the use and occupancy of the Property. Section 4.16 Title to Property. The City has a valid and enforceable subleasehold interest in the Property, subject only to Permitted Encumbrances. [The City is not in violation of any rights, reservations, covenants, conditions or restrictions on the Property contained in the documents or instruments listed as title exceptions on Schedule B of the Title Policy.] 1396
14 ARTICLE V COVENANTS OF THE CITY So long as any Base Rental Payments or Additional Payments or other amounts required to be paid under the Lease Agreement or any obligation of the City hereunder or under the Lease Documents remains unpaid or unperformed, the City shall comply with the following covenants hereunder and as additional covenants under the Lease Agreement, unless waived in writing by the Bank: Section 5.01 Reporting Requirements. The City shall keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the City in accordance with Generally Accepted Accounting Principles consistently applied, and will furnish to the Bank each of the following: (a) As soon as available, and in any event within 270 days after the close of each Fiscal Year of the City, the financial statements of the City which shall be audited and reported on without qualification by independent certified public accountants reasonably acceptable to the Bank and shall be certified to the City by such accountants as (i) having been prepared in accordance with Generally Accepted Accounting Principles consistently applied, (ii) fairly presenting the financial condition of the City as at the end of such Fiscal Year and reflecting its operations during such Fiscal Year, and (iii) showing all material liabilities, direct or contingent, and disclosing the existence of any off-balance sheet transactions, and shall include, without limitation, balance sheets, profit and loss statements and statements of cash flows, together with notes and supporting schedules, all on a consolidated and consolidating basis and in reasonable detail and including a copy of any management letter or audit report provided to the City by such auditors; (b) As soon as available and in any event within 60 days after adoption, the annual operating budget of the City for such Fiscal Year; and (c) Such other information respecting the business, properties or the condition or operations, financial or otherwise, of the City or the Property as the Bank may from time to time reasonably request. Section 5.02 Notices. The City shall provide to the Bank: (a) immediate notice by telephone, promptly confirmed in writing, of any event, action or failure to take any action which constitutes a Default or an Event of Default; (b) prompt written notice of any Material Litigation; and (c) prompt written notice of any event which has or is reasonably anticipated to have a Material Adverse Effect. Section 5.03 Access to Property and Books, Records and Accounts; Communication with Accountant. The City shall permit the duly authorized representatives of the Bank, during the City’s normal administrative business hours, upon reasonable prior written notice to the City, to enter the Property or any parts thereof at reasonable hours and under reasonable conditions, to examine and copy the City’s books, records and accounts and to discuss the affairs, finances, business and accounts of the City with the members of the City Council and the City’s officers and employees. The City 1397
15 authorizes the Bank, upon reasonable prior written notice to the City, to communicate directly with the City’s accountants, and authorizes and shall instruct such accountants to communicate with, disclose and make available to the Bank, any and all financial statements and other supporting financial documents, schedules and information relating to the City with respect to the business, results of operations and financial condition and other affairs of the City. Section 5.04 Further Assurances. The City shall, and shall cause the Authority to, upon the request of the Bank, from time to time, execute and deliver and, if necessary, file, register and record such further financing statements, amendments, confirmation statements and other documents and instruments and take such further action as may be reasonably necessary to effectuate the provisions of this Supplemental Agreement, the Lease Agreement and the other Lease Documents. Except to the extent it is exempt therefrom, the City will pay or cause to be paid all filing, registration and recording fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgment of such instruments of further assurance, and all federal or state fees and other similar fees, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Supplemental Agreement, the Lease Agreement, the other Lease Documents and such instruments of further assurance. Section 5.05 Environmental Compliance. (a) Neither the City nor the Authority shall use or permit the Property or any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, in compliance with all Environmental Regulations, nor shall it permit, as a result of any intentional or unintentional act or omission on its part or by any tenant, subtenant, licensee, guest, invitee, contractor, employee or agent, the storage, transportation, disposal or use of Hazardous Materials or the Release or threat of Release of Hazardous Materials on, from or beneath the Property or onto any other property other than in compliance with all Environmental Regulations. Upon the occurrence of any Release or threat of Release of Hazardous Materials, the Authority or the City shall promptly commence and perform, or cause to be commenced and performed promptly, without cost to the Bank, all investigations, studies, sampling and testing, and all remedial, removal and other actions necessary to clean up and remove all Hazardous Materials so released on, from or beneath the Property or other property, in compliance with all Environmental Regulations. Notwithstanding anything to the contrary contained herein, underground storage tanks shall only be permitted subject to compliance with subsection (d) of this Section and only to the extent necessary to maintain the improvements on the Property. (b) The City and the Authority shall comply with, and shall cause all tenants, subtenants, licensees, guests, invitees, contractors, employees and agents on the Property to comply with, all Environmental Regulations, and shall keep the Property free and clear of any liens imposed pursuant thereto (provided, however, that any such liens, if not discharged, may be bonded). The City and the Authority shall cause each tenant under any lease, and use their best efforts to cause all of such tenant’s subtenants, agents, licensees, employees, contractors, guests and invitees and the guests and invitees of all of the foregoing to comply with all Environmental Regulations with respect to the Property; provided, however, that notwithstanding that a portion of this covenant is limited to the City’s and Authority’s use of its best efforts, the Authority and the City shall remain solely responsible for ensuring such compliance and such limitation shall not diminish or affect in any way the Authority’s or the City’s obligations contained in subsection (c) of this Section. Upon receipt of any notice from any person with regard to the Release of Hazardous Materials on, from or beneath the Property, the City or the Authority, as appropriate, shall give prompt written notice thereof to the City or the 1398
16 Authority, as appropriate, the Bank prior to the expiration of any period in which to respond to such notice under any Environmental Regulation. (c) Irrespective of whether any representation or warranty contained in Section 4.10 hereof is not true or correct, the Authority and the City shall, to the extent permitted by law, defend, indemnify and hold harmless the Bank and each of its employees, agents, officers, directors, trustees, successors and assigns, from and against any claims, demands, penalties, fines, attorneys’ fees (including, without limitation, attorneys’ fees incurred to enforce the indemnification contained in this Section), consultants’ fees, investigation and laboratory fees, liabilities, settlements (five Business Days’ prior notice of which the Authority or the Bank shall have delivered to the City), court costs, damages, losses, costs or expenses of whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in part, arising out of, or in any way related to, (i) the presence, disposal, Release, threat of Release, removal, discharge, storage or transportation of any Hazardous Materials on, from or beneath the Property, (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials, (iii) any lawsuit brought or threatened, settlement reached (five Business Days’ prior notice of which the Authority or the Bank shall have delivered to the City), or governmental order relating to Hazardous Materials on, from or beneath the Property, (iv) any violation of Environmental Regulations or subsection (a) or (b) of this Section by either of them or any of their agents, tenants, employees, contractors. licensees, guests, subtenants or invitees, and (v) the imposition of any governmental lien for the recovery of environmental cleanup or removal costs. To the extent that either the Authority or the City is strictly liable under any Environmental Regulation, its obligation to the Bank and the other indemnitees under the foregoing indemnification shall likewise be without regard to fault on its part with respect to the violation of any Environmental Regulation which results in liability to any indemnitee. The obligations and liabilities under this subsection shall survive the payment in full of all Base Rental Payments and the termination of the Lease Documents. (d) The City shall conform to and carry out a reasonable program of maintenance and inspection of all underground storage tanks, and shall maintain, repair and replace such tanks only in accordance with all Laws and Regulations, including but not limited to Environmental Regulations. Section 5.06 No Condemnation. The City shall not condemn, nor consent to the condemnation of, the Property or any interest of the City, the Authority or the Bank therein. Section 5.07 Maintenance of Existence. The City shall preserve and maintain its existence as a municipal corporation and general law city duly organized and validly existing under the Constitution and the laws of the State, and its rights, franchises and privileges material to the conduct of its business and shall not, without the prior written consent of the Bank, initiate proceedings to reorganize, merge or consolidate with or into any Person, wind up, liquidate or dissolve its affairs (or suffer any liquidation or dissolution) or convert, sell, assign, transfer, lease or otherwise dispose of (or agree to do any of the foregoing at any future time), whether in one transaction or a series of transactions, all or substantially all of its property or assets. Section 5.08 Substitute Property. If, as a result of material damage to, or destruction of condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use or occupy any portion of the Property and Base Rental Payments shall be abated pursuant to Section 3.06 of the Lease Agreement, the City shall use its best efforts to substitute alternate real property and improvements for the Property from among the City’s properties, if available, subject to this Lease Agreement and the Assignment Agreement and the Ground Lease 1399
17 satisfactory to the Bank on the basis of essentiality, fair rental value and insurance coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with respect thereto. Section 5.09 Disposition of the Property; Uses. (a) The City shall not sell, lease or otherwise dispose of any portion of the Property, other than as permitted under the Lease Agreement. (b) The City shall not abandon, vacate or close the Property, other than as permitted under the Lease Agreement. (c) Without the prior written consent of the Bank, the City shall not (i) seek, make or consent to any change in the zoning, any entitlements or conditions of use of the Property, (ii) grant any easement, license or other right in the Property or any portion thereof that may in any way impair the value of the Property or the validity, priority or security of this Lease Agreement or the coverage of any title insurance policy insuring the City’s leasehold interest under the Lease Agreement or that could cause a material adverse effect on the permissible uses of the Property, (iii) make any application for or record any tract map, parcel map, condominium plan, condominium declaration, or plat of subdivision with respect to the Property, or (iv) otherwise record or execute any documents or instruments affecting the Property that may in any material way impair the value of the Property or the validity, priority or security of the Lease Agreement or the coverage of any title insurance policy insuring the Bank’s interests in the leasehold estate established under the Lease Agreement or that could cause a material adverse effect on the permissible uses of the Property. (d) The City shall not use the Property or any portion thereof in violation of (i) any rights, reservations, covenants, conditions or restrictions on the Property contained in the documents or instruments listed as title exceptions in the Title Policy, or (ii) any other rights, reservations, covenants, conditions or restrictions on the Property contained in the documents or instruments listed as title exceptions in the Title Policy which use could in any way result in the loss of its fee simple interest in any portion of the Property. If the City receives notice that it is in violation of any of such rights, reservations, covenants, conditions or restrictions on the Property contained in the documents or instruments listed as title exceptions on Schedule B of the Title Policy, the City shall, prior to the loss of its fee simple interest in such portion of the Property, substitute alternate real property and improvements for such portion of the Property from among the City’s properties, if available, subject to this Lease Agreement and the Assignment Agreement and the Ground Lease satisfactory to the Bank on the basis of essentiality, fair rental value and insurance coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with respect thereto. Section 5.10 Increase of Base Rental Payments. Upon receipt of notice from the Bank pursuant to Section 6.02(b) hereof, as required by Section 6.02(b) hereof, the City shall amend the Lease Agreement to increase the Base Rental Payments payable by the City thereunder to an amount equal to the fair rental value of the Property for each period for which said rental is to be paid to the extent such fair rental value is greater than the Base Rental Payments which would otherwise be due under the Lease Agreement and amend Exhibit B to the Lease Agreement to increase the principal component of the Base Rental Payments in corresponding amounts, so as to cause the principal component of the Base Rental Payments remaining unpaid to be amortized over the shortest possible term supported by such fair rental value, such amendment of the Lease Agreement to be in form and substance satisfactory to the Bank. 1400
18 Section 5.11 Liens. Without the prior written consent of the Bank, the City shall not directly or indirectly, create, incur, assume or suffer to exist any lien (including without limitation any mortgage, pledge, lien, charge, encumbrance or claim) on or with respect to any portion of the Property or otherwise record or execute any documents or instruments affecting the Property that may in any material way impair the coverage of any title insurance policy insuring the Bank’s interests in the leasehold estate established under the Lease Agreement. The City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim if the same shall arise at any time. If the City is unable to promptly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim in a manner satisfactory to the Bank, the City shall substitute alternate real property and improvements for such portion of the Property from among the City’s properties, if available, subject to this Lease Agreement and the Assignment Agreement and the Ground Lease satisfactory to the Bank on the basis of essentiality, fair rental value and insurance coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with respect thereto. ARTICLE VI EVENTS OF DEFAULT Section 6.01 Events of Default. The occurrence of any of the following events (whatever the reason for such event and whether voluntary, involuntary, or effected by operation of law) shall be an “Event of Default” hereunder and an additional Event of Default under the Lease Agreement entitling the Bank to the rights and remedies available under the Lease Agreement, unless waived in writing by the Bank: (a) (i) the City shall fail to observe or perform any of the covenants, agreements or conditions on the part of the City set forth in Section 5.07, 5.09, 5.10 or 5.11 hereof or Section 3.05 (Appropriations Covenant), Article VI (Insurance) or Section 9.05 (Assignment and Subleasing) of the Lease Agreement, or (ii) the City fails to observe or perform any other of the covenants, agreements or conditions on the part the City in the Lease Agreement or in this Supplemental Agreement not otherwise described in clause (i) of this Section 6.01(a), and, solely in the case of clause (ii) of this Section 6.01(a), the City fails to remedy the same within 30 days or such additional time as is reasonably required to correct any such default after the Bank has provided the City with written notice thereof; (b) the City shall default in the payment of any amount when due in respect of any City Long-Term Borrowing General Fund Obligation, or default by the City under any City Long-Term Borrowing General Fund Obligation Issuing Document, and continuance of such default beyond the period of grace, if any, allowed with respect thereto; or the occurrence of any act or omission by the City under any such City Long-Term Borrowing General Fund Obligation Issuing Document which results in such City Long-Term Borrowing General Fund Obligation becoming, or being capable of becoming, immediately due and payable or being terminated early or being subject to early termination; (c) this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents or any material provision of this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents shall at any time, for any reason, cease to be the legal, valid and binding obligation of the City or the Authority or shall cease to be in full force and effect, or shall be declared to be unenforceable, invalid or void, or the validity or enforceability thereof shall be contested by the City or the Authority, or the City or the Authority shall renounce the same or deny that it has any 1401
19 further liability hereunder or thereunder, or any court of competent jurisdiction or other governmental authority with jurisdiction to rule on the validity of any provision of this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents shall find or rule that this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents are not valid or not binding on the City or the Authority; (d) the City or the Authority is dissolved or its existence is terminated; (e) any representation or warranty made by the City herein or by the Authority or the City in any Lease Document or in any certificate, financial or other statement furnished by it pursuant to this Supplemental Agreement, the Lease Agreement or any of the Lease Documents shall prove to have been untrue or incomplete in any material respect when made or deemed made; (f) the long-term unenhanced ratings assigned to any City Long-Term Borrowing General Fund Obligation shall be withdrawn or suspended or otherwise unavailable for credit-related reasons or reduced below Baa3 by Moody’s Investors Service, Inc., BBB- by Standard & Poor’s Rating Service or BBB- by Fitch, Inc.; or (g) an Event of Insolvency shall occur with respect to the City or the Authority; Section 6.02 Consequences of an Event of Default. In the case of any Event of Default, including any Event of Default specified in Section 6.01(h), that has occurred and is continuing, the Bank may, in its sole discretion, but shall not be obligated to, exercise all, or any of, the following rights and remedies in addition to any other rights or remedies available to the Bank under any other Lease Documents or under applicable law: (a) deliver a notice to the City that an Event of Default has occurred and is continuing and that, upon the occurrence of such Event of Default, the interest components of the Base Rental Payments began to accrue at the Default Rate; and/or (b) by notice to the City, require the City to amend the Lease Agreement to increase the Base Rental Payments payable by the City thereunder to an amount equal to the fair rental value of the Property for each period for which said rental is to be paid to the extent such fair rental value is greater than the Base Rental Payments which would otherwise be due under the Lease Agreement and amend Exhibit B to the Lease Agreement to increase the principal component of the Base Rental Payments in corresponding amounts, so as to cause the principal component of the Base Rental Payments remaining unpaid to be amortized over the shortest possible term supported by such fair rental value, such amendment of the Lease Agreement to be in form and substance satisfactory to the Bank; and/or (c) cure any Default, Event of Default or event of nonperformance hereunder or under any other Lease Document; provided, however, that the Bank shall have no obligation to effect such a cure; and/or (d) exercise, or cause to be exercised, any and all remedies as it may have under the other Lease Documents and as otherwise available at law and at equity. 1402
20 The City and the Bank hereby acknowledge that the City’s obligations under the Lease Agreement are not subject to acceleration. Except as expressly provided in this Section 6.02, procurement, demand, protest and all other notices of every kind are hereby expressly waived. Section 6.03 Remedies Cumulative; Solely for the Benefit of Bank. To the extent permitted by, and subject to the mandatory requirements of, applicable law, each and every right, power and remedy herein specifically given to the Bank in the Lease Documents shall be cumulative, concurrent and nonexclusive and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy (whether specifically herein given or otherwise existing) may be exercised from time to time and as often and in such order as may be deemed expedient by the Bank, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. The rights and remedies of the Bank specified herein are for the sole and exclusive benefit, use and protection of the Bank, and the Bank is entitled, but shall have no duty or obligation to the City or any other Person or otherwise, to exercise or to refrain from exercising any right or remedy reserved to the Bank hereunder or under any of the other Lease Documents. Section 6.04 Waivers or Omissions. No delay or omission by the Bank in the exercise of any right, remedy or power or in the pursuit of any remedy shall impair any such right remedy or power or be construed to be a waiver of any default on the part of the Bank or to be acquiescence therein. No express or implied waiver by the Bank of any Event of Default shall in any way be a waiver of any future or subsequent Event of Default. No delay or omission on the part of the Bank in exercising any right granted to the Bank hereunder in any one or more instances, or the acceptance by the Bank of any partial payment on account of the Obligations shall constitute a waiver of any such Event of Default and each such option shall remain continuously in full force and effect. Section 6.05 Discontinuance of Proceedings. In case the Bank shall proceed to invoke any right, remedy or recourse permitted hereunder or under the Lease Documents and shall thereafter elect to discontinue or abandon the same for any reason, the Bank shall have the unqualified right so to do and, in such event, the City and the Bank shall be restored to their former positions with respect to the Obligations, the Lease Documents and otherwise, and the rights, remedies, recourse and powers of the Bank hereunder shall continue as if the same had never been invoked. Section 6.06 Injunctive Relief. The City recognizes that in the event an Event of Default occurs, any remedy of law may prove to be inadequate relief to the Bank; therefore, the City agrees that the Bank, if the Bank so requests, shall be entitled to temporary and permanent relief in any such case. ARTICLE VII INDEMNIFICATION; COSTS, EXPENSES AND TAXES; INCREASED PAYMENTS Section 7.01 Indemnification. In addition to any and all other rights of reimbursement, indemnification, subrogation and other similar rights pursuant to the Lease Agreement, the other Lease Documents or under law or equity, the City hereby covenants and agrees, to the fullest extent permitted by law, to defend, indemnify and hold harmless the Bank and its affiliates, officers, directors, employees, representatives and agents (each, an “Indemnitee”) from and against any and all claims, 1403
21 causes of action, judgments, fines, penalties, damages, losses, liabilities, and expenses whatsoever (including reasonable attorneys’ fees) which may be incurred by an Indemnitee or which may be claimed against an Indemnitee by any Person whatsoever by reason of or directly or indirectly in connection with any of the Transactions; provided that the City shall not be required to indemnify an Indemnitee for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the willful misconduct or gross negligence of such Indemnitee as determined in a final, non-appealable judgment. Nothing under this Section 7.01 is intended to limit the City’s payment of its obligations under this Supplemental Agreement, the Lease Agreement or other Lease Documents. Section 7.02 Costs, Expenses and Taxes. The City shall pay, as Additional Payments under the Lease Agreement, within 30 days after demand: (a) if an Event of Default shall have occurred, all costs and expenses of the Bank in connection with the enforcement (whether by means of legal proceedings or otherwise) of any of its rights under this Supplemental Agreement, the Lease Agreement, the other Lease Documents and such other documents which may be delivered in connection therewith; and (b) the reasonable fees and out of pocket expenses for counsel to the Bank in connection with the execution and delivery of this Supplemental Agreement, the Lease Agreement and the other Lease Documents; (c) the reasonable fees and out of pocket expenses for counsel or other reasonably required consultants to the Bank in connection with advising the Bank as to its rights and responsibilities under this Supplemental Agreement, the Lease Agreement and the other Lease Documents or in connection with responding to requests from the City for approvals, consents, amendments and waivers; and (d) any Excess Interest Fee payable pursuant to the Lease Agreement, any amounts payable pursuant to the Lease Agreement and any fee set forth in the definition of “Default Rate” herein. In addition, if at any time any governmental authority shall require revenue or other documentary stamps or any other tax in connection with the execution or delivery of this Supplemental Agreement, the Lease Agreement or the other Lease Documents, then, if the City lawfully may pay for such stamps, taxes or fees, the City shall pay, when due and payable, for all such stamps, taxes and fees, including interest and penalties thereon, and the City agrees to save the Bank harmless from and against any and all liabilities with respect to or resulting from any delay or omission of the City in paying, such stamps, taxes and fees hereunder. Section 7.03 [Reserved]. Section 7.04 Late Payment. Any Lease Payment or Additional Payment or any other amount required to be paid under the Lease Agreement or hereunder which shall not be paid by the City when due and payable under the Lease Agreement or hereunder shall accrue interest until the same shall be paid at a rate equal to the Default Rate, and the City hereby agrees to pay such amounts to the Bank upon demand. Section 7.05 Survival. The obligations of the City under this Article VII shall survive the payment in full of the Base Rental Payments and the Additional Payments and the termination of the Lease Documents. ARTICLE VIII MISCELLANEOUS Section 8.01 Amendments. No amendment or waiver of any provision of this Supplemental Agreement nor consent to any departure by the parties hereto shall in any event be effective unless the 1404
22 same shall be in writing and signed by such parties, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 8.02 Severability. The provisions of this Supplemental Agreement are intended to be severable. If any provision of this Supplemental Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. Section 8.03 Governing Law; Consent to Jurisdiction; Waiver Of Jury Trial. (a) This Supplemental Agreement shall be governed by, and construed and interpreted in accordance with the laws of the State. (b) The City and the Bank each consents to and submits to in personam jurisdiction and venue in a court of record in the State of California located in the City and County of San Bernardino or in the United States District Court for the Central District of California located in the County of San Bernardino. The City and the Bank each asserts that it has purposefully availed itself of the benefits of the laws of the State of California and waives any objection to in personam jurisdiction on the grounds of minimum contacts, waives any objection to venue, and waives any plea of forum non conveniens. This consent to and submission to jurisdiction is with regard to any action related to this Supplemental Agreement, the Lease Agreement and the other Lease Documents. Regardless of whether the party’s actions took place in the State of California or elsewhere in the United States, this submission to jurisdiction is nonexclusive, and does not preclude either party from obtaining jurisdiction over the other in any court otherwise having jurisdiction. (c) The City and the Bank each, to the fullest extent permitted by law, waives its respective right to a trial by jury in any legal proceeding arising out of or relating to this Supplemental Agreement or any other Lease Document or the transactions contemplated hereby or thereby. The City warrants and represents that such waiver has been intentionally, knowingly and voluntarily made, following consultation with its legal counsel. If the waiver of jury trial as set forth in this Section shall be declared void or unenforceable, the City and the Bank each agrees to refer the dispute to a judicial referee in accordance with the provisions of Section 638 et seq. of the California Code of Civil Procedure. Section 8.04 No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated by this Supplemental Agreement, the Lease Agreement or the other Lease Documents (including in connection with any amendment, waiver or other modification hereof or of any other Lease Document), the City acknowledges and agrees that: (a) (i) the arranging, structuring and other services regarding this Supplemental Agreement, the Lease Agreement and the other Lease Documents provided by the Bank are arm’s length commercial transactions between the City on the one hand, and the Bank on the other hand, (ii) the City has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the City is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Supplemental Agreement, the Lease Agreement and the other Lease Documents; (b)(i) the Bank is and has been acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the City, or any other Person and (ii) the Bank does not have any obligation to the City with respect to the transactions contemplated by this Supplemental 1405
23 Agreement, the Lease Agreement and the other Lease Documents, except those obligations expressly set forth herein and therein; and (c) the Bank may be engaged in a broad range of transactions that involve interests that differ from those of the City, and the Bank does not have any obligation to disclose any of such interests to the City. To the fullest extent permitted by applicable laws, the City hereby waives and releases any claims that it may have against the Bank with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by this Supplemental Agreement, the Lease Agreement and the other Lease Documents. Section 8.05 Counterparts. This Supplemental Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. Section 8.06 Successors and Assigns. This Supplemental Agreement is a continuing obligation and shall be binding upon the City, its permitted successors and assigns and shall inure to the benefit of the Bank and its permitted successors, transferees and assigns. The City may not assign or otherwise transfer or delegate any of its rights or obligations hereunder or under the other Lease Documents without the prior written consent of the Bank. The Bank may, in accordance with applicable law, from time to time and without the consent of the City or any other Person assign, sell or transfer in whole or in part, this Supplemental Agreement and any of its rights or interests hereunder and all or any part of its interest in the Lease Documents, subject to the limitations set forth in the Assignment Agreement. In addition, the Bank may at any time pledge or grant a security interest in all or any portion of its rights under the Lease Documents to secure obligations of the Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the Bank from any of its obligations hereunder or substitute any such pledgee or assignee for the Bank as a party hereto. Section 8.07 Tax Identification Number. The City’s tax identification number is 95-0930239. [Signatures begin on the following page.] 1406
S-1
[Signature page of Supplemental Agreement] IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Agreement to be duly executed and delivered as of the date first above written. CITY OF CHINO By: ________________________________ Name: Dr. Linda Reich Title: City Manager BMO BANK N.A. By: _____________________________________ Name: Edward C. Neu Title: Managing Director 1407
June 17, 2026
Up to $3,225,000 in the form of a
Tax-Exempt Bank Purchase Bond
PROVIDED BY
EDWARD C. (TED) NEU
MANAGING DIRECTOR, INSTITUTIONAL MARKETS
BMO BANK N.A.
FOR THE BENEFIT OF
CITY OF CHINO PUBLIC
FINANCING AUTHORITY
1408
180 Montgomery Street, San Francisco, CA 94104
Institutional Markets
180 Montgomery Street
San Francisco, CA 94104
June 17, 2026
Delivery via Email
Jose Vera
Managing Director
Raymond James
[email protected]
RE: City of Chino Public Financing Authority Lease Revenue Bond (Series 2026) – Request for Bid / Term Sheet Updated and final terms submitted 6/16/26
Dear Mr. Jose Vera:
Thank you for the opportunity to respond to the proposal request for the City of Chino Public Financing Authority (the “Authority”). BMO Bank N.A. (“BMO”) is very interested in furthering our relationship with the City of Chino by providing this credit facility. We believe BMO is an excellent business partner for the City for the following reasons:
• Our deep presence and support of local governments in California • The willingness to make a significant commitment of our balance sheet • Strong and stable credit ratings from Moody’s, S&P, and Fitch • Broad capabilities through BMO Financial Group
The primary contact for these financings will be Ted Neu. Thach Vang, VP, Relationship Manager, will provide assistance on deal matters prior to closing and will continue to be part of the City’s team post-closing.
Should any part of this proposal conflict with the City’s structuring parameters, we would be happy to discuss mutually acceptable alternatives. If you have any questions or concerns, please feel free to contact me directly at (212) 748-9879 or Thach at (949) 255-5090. Once again, thank you for the opportunity and we look forward to hearing from you.
Sincerely,
Edward C. (Ted) Neu
Managing Director
Public Finance
[email protected]
Thach “Tot” Vang
Vice President, Relationship
Manager
Government Banking
[email protected]
1409
Tax-Exempt Bank Purchase Lease
Summary of Terms and Conditions
(For discussion purposes only – not a commitment to lend)
Borrower(s):
City of Chino Public Financing Authority on behalf of the City of Chino Bank:
BMO Bank N.A. or affiliate (“BMO” or the “Bank”).
Lease:
A $3,225,000 2026 Lease Financing in the form of Tax-Exempt Lease Revenue Bond, Series 2026
Purpose:
This financing will be used to finance the acquisition of real estate property adjacent to Chino City Hall through the issuance of the Authority’s 2026 Lease Revenue Bond and to pay related costs of issuance.
Interest Rates:
The interest rate on the Bond, based on the option selected by the Borrower, and Other Fees are set forth in Exhibit II.
Security:
Description of the
Leased Facilities:
The 2026 Lease Financing is secured by pledged Base Rental Payments payable by the City of Chino pursuant to the Lease Agreement, from any source of legally available funds, including but not limited to unrestricted monies of the City. Lease payments are subject to abatement and annual appropriation in each fiscal year.
The leased asset for the 2026 Lease Revenue Bond consists of the City of Chino Senior Center, a recently renovated municipal facility located at 13170 Central Avenue, Chino, California 91710. The facility is approximately 12,980 square feet and has an estimated replacement cost of approximately $5.7 million, exclusive of land value. Pursuant to the financing documents, the leased asset will secure the City’s lease payment obligations under the Lease Agreement
Principal &
Interest
Payments:
Interest shall be calculated on a 30/360 basis. The first interest payment shall be due October 1, 2026.
Principal and interest payments shall be made in accordance with the amortization schedule applicable to the selected financing option and the terms of the Bond documents
Reporting
Requirements:
The City shall deliver its audited financial statements within 270 days after the close of each fiscal year and its Annual Adopted Budget within 60 days of adoption. Other information shall be provided upon request of the Bank.
Key Documents: The financing shall be documented through customary lease revenue bond documentation, including but not limited to the Lease Agreement, Indenture, Supplemental Agreement, and related closing documents, together with customary opinions of counsel and certificates. All documents shall be in form and substance acceptable to the Bank and consistent with the requirements of the City’s Request for Bids and applicable law.
Conditions
Precedent:
Customary for transactions of this nature and as needed for the Bank’s standard underwriting, including execution of the key documents and other documents, delivery of legal opinions of counsel on validity, resolution, no litigation and tax-exemption, and other customary conditions precedent.
1410
180 Montgomery Street, San Francisco, CA 94104
Events of Default: Usual and customary for facilities of this type, including, without limitation, failure to pay when due, inaccurate or false representations or warranties, cross default to other debt, insolvency, bankruptcy, pension defaults, violation of covenants, invalidity or repudiation, unsatisfied judgments and material adverse change in the Department’s financial condition or business.
Legal Counsel: The Bank will engage Nixon Peabody LLP as the Bank's legal counsel. Rudy S. Salo, Partner, will be acting in the capacity of lead attorney representing the Bank. Absent extraordinary issues, legal fees are $15,000 assuming that Bond Counsel drafts all documents.
This Summary of Terms and Conditions, together with any accompanying transmittal letter, should be viewed as an outline intended for discussion purposes only and are for the Borrower’s confidential use and may not be disclosed to any other person other than its employees, attorneys, board members and/or financial advisors. It should not in any way be viewed as a commitment by BMO Bank N.A., or any other entity to extend credit to the Borrower. Rates, fees, and terms are subject to market conditions at all times until the Bank shall commit in writing otherwise. In any event, this term sheet should not be regarded as indicative after two weeks after proposal date.
Exhibit I
1411
180 Montgomery Street, San Francisco, CA 94104
Information on BMO Bank N.A.
Public Ratings for BMO Bank N.A.
S&P Moody’s Fitch
Long Term Ratings: A+ A1 AA+
Short Term Ratings: A-1 P-1 F1+
Outlook: Stable Stable Stable
The Bank's most recent annual report can be accessed via the following website:
http://www.bmo.com/home/about/banking/investor-relations/annual-reports-proxy-circulars
1412
180 Montgomery Street, San Francisco, CA 94104
Exhibit II
Pricing and Other Fee Information
Interest Rates
Fixed Rate
Option:
Fixed Rate of interest is equal to the Bank’s Reference Rate times the Tax Factor plus the Adjusted Credit Spread as set forth in the table below and payable on a 360-day basis. The Bank will honor the quoted rate absent any extraordinary moves in market rates. The rate may be definitively locked two weeks prior to closing.
.
Initial
Put (yrs) Amortization Fixed Rate
10 10 4.15%
15 15 4.25%
10 20 4.33%
Other Fees and Rates
Other Fees: Bank reserves the right to assess fees for amendments, substitutions, renewals, waivers, any payment default and other expenses. Amount to be determined based on the complexity of the request.
Default Rate: Base Rate + 4.00%
Appropriate market standard cure periods will be added for non-payment defaults
Base Rate: Defined as the higher of (i) Prime Rate, (ii) Fed Funds plus 2%, (iii) Daily Simple SOFR Rate plus 3% or (iv) 7%
Prepayment: The Lease Financing may be prepaid in whole or in part at any time and from time to time with the following restrictions/premiums:
Year 1: No prepayment
Year 2: No prepayment
Year 3: 3% premium
Year 4: 3% premium
Year 5: 2% premium
Prepayments may be made following the 5th anniversary with no premium.
1413
301 N Lake Ave Ste 1150 // Pasadena, CA 91101 // T 818.489.6836 // raymondjames.com Raymond James & Associates, Inc., member New York Stock Exchange/SIPC July 1, 2026 Kim Sao Director of Finance City of Chino 13220 Central Avenue Chino, CA 91710 Re: Placement Agreement for City of Chino Public Financing Authority 2026 Lease Revenue Bond Dear Kim: Raymond James & Associates, Inc. (“Raymond James”) is pleased to submit this agreement (the “Agreement”) to the City of Chino (“Client”) to serve as placement agent (the “Placement Agent”) for the proposed placement of tax-exempt 2026 lease revenue bond (the “Bonds”) in the approximate principal amount of $2,650,000 to finance the acquisition of real estate property adjacent to the Chino City Hall (the “Financing”). 1) During the term of this Agreement, in our capacity as Placement Agent, Raymond James proposes to undertake certain activities, including, as appropriate, the following: (a) Advising Client as to the form and structure of the Bonds and prevailing interest rates and market conditions for comparable securities. (b) Assisting in the preparation of a request for bids and summary of terms and conditions or other applicable information and offering material (the “Term Sheet”). Responsibility for the contents of such Term Sheet as it relates to Client shall be solely that of Client and any issuer of the Bonds. (c) Managing, structuring, arranging for and participating in all discussions with nationally recognized rating agencies for obtaining ratings on the Bonds, if appropriate. (d) Introducing Client to potential investors that may serve as the purchaser of the Bonds. 1414
2 (e) Participating in meetings with transaction participants, including potential investors for the Bonds. (f) Articulating, explaining or defending negotiating proposal or positions adopted by Client regarding the placement of the Bonds with potential investors. 2) In order that Client and the Placement Agent can best coordinate efforts to effect a financing satisfactory to Client, Client grants Raymond James sole and exclusive right and authority to perform the services described herein and agrees that it will not initiate or participate in any discussions relating to the financing with any person other than Raymond James. As compensation for Raymond James’ placement agent’s services hereunder Client will pay $25,000. Client and Raymond James expressly agree that Raymond James’ services will be fully performed and such fee will be due and payable only upon issuance of the Bonds, whether or not the issuance of the Bonds was arranged by Raymond James or such issuance occurs subsequent to the expiration of this Agreement. 3) In addition, Client agrees to pay Placement Agent’s out-of-pocket expenses, which shall include, but not be limited to, travel, delivery and similar charges. 5) Client understands that the consummation of the transaction will be based upon, among other things, the truth, accuracy and completeness of the information included in the Term Sheet or otherwise provided to the Placement Agent. Client agrees that all such information will be true, correct and complete, and that it will update such information during the course of the placement, as appropriate, and that all projections provided to Placement Agent will have been prepared in good faith and based upon reasonable assumptions. Client acknowledges and agrees that Raymond James will rely upon such information and projections without independent verification. 6) Client acknowledges and agrees that this Agreement does not constitute a guarantee by Raymond James to arrange the placement of the Bonds. It is understood that Raymond James’ obligations under this Agreement are to use reasonable efforts throughout the term of this Agreement to perform the services described herein. Client acknowledges and agrees that Raymond James is being retained to act solely as placement agent for the Bonds, and not as an agent, advisor or fiduciary to Client, and that this Agreement is not intended to confer rights or benefits on any member, affiliate, shareholder or creditor of Client or any other person or entity or to provide Client or any other person with any assurances that the transaction will be consummated. Placement Agent shall act as an independent contractor under this Agreement, and not in any other capacity, including as a fiduciary. Client acknowledges and agrees that: (i) the transaction 1415
3 contemplated by this Agreement is an arm’s length, commercial transaction between Client and the Placement Agent in which Placement Agent is acting solely as a principal and is not acting as a municipal advisor, financial advisor or fiduciary to Client; (ii) Placement Agent has not assumed any advisory or fiduciary responsibility to Client with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether Raymond James has provided other services or is currently providing other services to Client on other matters); (iii) the only obligations Placement Agent has to Client with respect to the transaction contemplated hereby expressly are set forth in this Agreement; and (iv) Client has consulted its own legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate. 7) Client should be aware that the Placement Agent or its affiliates may have trading and other business relationships with other participants in the proposed transaction, including with potential purchasers of the Bonds. These relationships include, but may not be limited to, trading lines, frequent purchases and sales of securities and other engagements through which the Placement Agent may have, among other things, an economic interest. In addition, Client should be aware that the primary role of a placement agent is to arrange for the placement of securities in an arm’s-length commercial transaction between the issuer and the purchaser and that the Placement Agent has financial and other interests that differ from those of the issuer. Notwithstanding the foregoing, the Placement Agent will not receive any compensation with respect to the Bonds other than as disclosed above or otherwise disclosed to Client. The Placement Agent is involved in a wide range of activities from which conflicting interests or duties may arise. Information which is held elsewhere within Raymond James, but of which none of the Placement Agent’s personnel involved in the proposed transaction actually has knowledge, will not for any purpose be taken into account in determining the Placement Agent’s responsibilities to Client. 9) No opinion or advice of Raymond James shall be reproduced, disseminated, quoted or referred to at any time without the prior written consent of Raymond James. Upon the completion of the financing, we will be entitled to advertise the transaction in publications and at times selected by us at our own expense. 1416
4 Sincerely, RAYMOND JAMES & ASSOCIATES, INC. By: ________________________________ Confirmed and Acknowledged: City of Chino By: Kim Sao, Director of Finance Date:
1417
MEMORANDUM
CITY OF CHINO
FINANCE DEPARTMENT
CITY COUNCIL MEETING DATE: JULY 7, 2026
TO: LINDA REICH, CITY MANAGER
FROM: KIM SAO, DIRECTOR OF FINANCE
SUBJECT
..titl e
Issuance of Bonds for Community Facilities District (CFD) 2023-1 (Sage Cedar). ..end
RECOMMENDATION
..recommendation
Adopt Resolution No. 2026-045 of the City Council of the City of Chino, acting as the legislative body for Community Facilities District No. 2023 -1 of the City of Chino (the “District) approving the issuance of the bonds and the substantially final forms of the Preliminary Official St atement, Fiscal Agent Agreement, Bond Purchase Agreement, Continuing Disclosure Agreement, and Appraisal Report (collectively, the “Bond Documents”).
..body
FISCAL IMPACT
1) The Preliminary Official Statement relates to limited obligation special tax bonds (the “Bonds”) of the District. The Bonds will be special obligations of the District, payable solely from special taxes levied on the taxable property within the District, and amounts held by the Fiscal Agent under the Fiscal Agent Agreement. There are no City of Chino funds pledged to the repayment of the Bonds; and 2) there is no financial impact to the City in the approval of the Bond Counsel Agreement as the cost is paid from the Bond proceeds of the District contingent upon the Bonds being issued.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
Financial Stability
Revenue:
Expenditure:
Transfer In: Transfer Out:
1418
CITY COUNCIL MEETING DATE: JULY 7, 2026
TITLE: ISSUANCE OF BONDS FOR COMMUNITY FACILITIES DISTRICT (CFD) 2023 -1 (SAGE CEDAR).
PAGE: 2
BACKGROUND
After receiving a petition from ARROYO CAP II -1, LLC ( the “Merchant Builder”), the City Council initiated proceedings to form the District on April 18, 2023 with the adoption of Resolution Nos. 2023 -023 and 2023 -024 (the “Resolutions of Intention”). The Resolutions of Intention called for a public hearing on the formation of the District on June 6, 2023. Following the noticed public hearing, the City Co uncil formed the District with the adoption of Resolution Nos. 2023 -029 and 2023 -030 and held an election on June 6, 2023 at which election the Merchant Builder, the qualified electors within the District, approved the establishment of the District, the Rate and Method of Apportionment, and the issuance of Bonds by the District in an amount not to exceed $17,000,000. On June 20, 2023 the City Council approved Ordinance No. 2023-013, which authorized the levy of the special taxes within the District in acco rdance with the Mello-Roos Act and the formation proceedings for the District that secure the payment of principal and interest with respect to the Bonds.
The property within the District is part of the City’s Preserve Specific Plan (the “Specific Plan”), adopted on March 25, 2003 in conjunction with the City’s General Plan Amendment 2000 -02, and as amended several times thereafter. The District is comprised of approximately 23.60 gross acres (or approximately 18.46 net taxable acres) of land located at The Preserve at Chino near Pine Avenue in the City.
The District is planned for the development of 188 single-family attached condominium units being developed by The Developer is developing the District in two neighborhoods: “Sage Court” and “Cedar Row.” The Sage Court neighborhood is planned to be developed into 112 single-family attached condominiums. The Cedar Row neighborhood is planned to be developed into 76 single-family attached condominiums.
As of June 1, 2026, of the 188 single-family attached condominiums planned to be developed within the District, 125 completed condominiums had been conveyed to individual homeowners and 63 completed condominiums were completed and owned by Tri Pointe. As of June 1, 2026, 19 of the remaining condominiums owned by the Developer were in escrow to individual homebuyers. Furthermore, as of June 1, 2026, Tri Pointe had obtained all building permits required to complete the development within the District The Developer is now ready for the District to issue the Bonds pursuant to the terms of the Bond Documents to finance the infrastructure cost relating to the Project. (see attached map).
The City and the Developer have entered into an Acquisition Agreement, dated as of April 18, 2023 (the “Acquisition Agreement”), w hich provides, among other things, the means by which the Developer will construct the Facilities to be acquired with the proceeds of the Bonds and other bonds issued by the District on behalf of the Improvement Areas therein.
The Facilities eligible to be financed with the proceeds of the Bonds consist of backbone infrastructure needed for new development, such as roadway, bridge, sewer, water, reclaimed water, dry utilities, storm drain, street and parkway landscaping, curb an d gutter, medians, median landscaping, traffic signals, entry signage, parks, trails, fire facilities, library facilities and public community facilities, and appurtenances and appurtenant work, and development impact fees that are used by the City to construct infrastructure.
ISSUES/ANALYSIS
Staff has retained Urban Futures as the City’s financial advisor; Raymond James, as the 1419
CITY COUNCIL MEETING DATE: JULY 7, 2026
TITLE: ISSUANCE OF BONDS FOR COMMUNITY FACILITIES DISTRICT (CFD) 2023 -1 (SAGE CEDAR).
PAGE: 3
underwriter; Webb Municipal Finance as the special tax consultant; BTI Appraisal as the appraiser; BNY Mellon as the fiscal agent; and the law firm of Stradling, Yocca, Carlson & Rauth as bond and disclosure counsel. The financing team has prepared the necessary documents to implement the issuance of the special tax bonds of the District.
The estimated Cost of Issuance ( COI) and Underwriter’s Discount for the proposed $11.295 million Community Facilities District No. 2023-1 Bonds total approximately $467,482.50 and are to be paid from bond proceeds contingent upon successful bond issuance. These costs reflect the standard services required to structure, market, and close the bonds and do not result in a financial obligation to the City should the bonds not close.
The following documents have been prepared for the District’s approval and are available for review in the Finance Department:
1. Resolution No. 2 026-045 of the City Council of the City of Chino, acting as the legislative body of Community Facilities District No. 2023 -1 of the City of Chino, authorizing the preparation and distribution of a Preliminary Official St atement for the District, appointing a Fiscal Agent, and taking certain other actions in connection therewith;
2. The Preliminary Official Statement (P.O.S.) will serve as the District’s disclosure document, which summarizes the legal documents and discloses all material financial and demographic information relating to the District and the Bonds. The underwriter will use the P.O.S. to generate investor interest in the Bonds;
3. The Fiscal Agent Agreement pursuant to which the Bonds will be issued and which establishes the District’s obligations and the Bondholder’s rights concerning the payment of the Bonds and the annual special tax levy and collection within the District;
4. Bond Purchase Agreement that will serve as the commitment by the underwriter to purchase the Bonds and the commitment by the District to sell the Bonds on the closing date to the underwriter, on the terms contained therein; and
5. Continuing Disclosure Agreement that will serve as the District’s obligation to provide certain annual data regarding the District and its special tax levy and annual report, and to provide notice of certain events regarding the District to Bond investors and the marketplace; and
6. Appraisal Report is intended to be used to assist bond purchasers in reviewing the asset value of the taxable property within the District.
Copies of these documents are available for review in the Finance Department. It is anticipated that the Bonds will be sold and closed by July 30, 2026.
Attachments: Resolution No. 2026-045
Boundary Map
Bond Counsel Agreement
1420
1 RESOLUTION NO. 2026-045
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHINO,
ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES
DISTRICT NO. 2023-1 (SAGE CEDAR ) OF THE CITY OF CHINO , AUTHORIZING THE ISSUANCE OF ITS 2026 SPECIAL TAX BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $12,000,000
AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN
OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the City Council (the “City Council,” and sometimes referred to as the “legislative body of the District”) of the City of Chino, California (the “City ”), located in San Bernardino County, California , has heretofore undertaken proceedings and declared the necessity to issue bonds by Community Facilities District No. 2023-1 (Sage Cedar) of the City of Chino (the “District”) pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Governmen t Code of the State of California (the “Act”); and
WHEREAS, pursuant to a resolution adopted by the District on June 6, 2023, a bond proposition was submitted to the qualified electors within the District and was approved by more than two-thirds of the votes cast at the election held within the District of the District on June 6, 2023; and
WHEREAS, based upon the aforesaid resolution s and election s, the District is now authorized pursuant to the Act to issue bonds in an aggregate principal amount not to ex ceed $17,000,000; and
WHEREAS, the District expects to issue bonds in an aggregate principal amount not to exceed $12,000,000; and
WHEREAS, in order to effect the issuance of bonds in an aggregate principal amount not to exceed $12,000,000 to be designated as the “Community Facilities District No. 2023-1 (Sage Cedar) of the City of Chino 2026 Special Tax Bonds” (the “Bonds”) , the legislative body of the District desires to approve the forms, and authorize the execution and delivery, of a Fiscal Agent Agreement, a Continuing Disclosure Agreement and a Bond Purchase Agreement for the Bonds; and
WHEREAS, in accordance with Government Code Section 53360.4, the legislative body of the District determines that a negotiated sale of the Bonds to Raymond James & Associates, Inc. (the “Underwriter”) in accordance with the terms of the Bond Purchase Agreement for the Bonds to be entered into by the District and the Underwriter (the “ Bond Purchase Agreement”) will result in a lower overall cost to the District than a public sale; and WHEREAS, the legislative body of the District determines that it is prudent in the management of its fiscal affairs to issue the Bonds; and WHEREAS, pursuant to Section 53345.8 of the Act and the District’s Local Goals and Policies, unless the bonds are escrowed or otherwise credit enhanced, the District may sell bonds if the legislative body of the District determines prior to the award of the sale of such bonds that the value of the real property that would be subject to the special tax to pay debt service on the bonds will be at least four (4) times the principal amount of the bonds to be sold and the principal 1421
2 amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on taxable property within the District; and WHEREAS, the District desires to approve and authorize the distribution of a Preliminary Official Statement (the “Preliminary Official Statement”) and a final Official Statement (the “Official Statement”) in connection with the Bonds; and
WHEREAS, in connection with the formation of the District, the City and Tri Pointe Homes Holdings, Inc., a Delaware corporation (the “Developer”) entered into an Acquisition Agreement, dated as of April 18, 2023 (the “Acquisition Agreement”); and WHEREAS, the City and Developer desire to amend the description of eligible Facilities (as defined in the Acquisition Agreement) as set forth in Exhibits A and B to the Acquisition Agreement; and
WHEREAS, in accordance with the requirements of Section 53345.8 of the Act and the policies of the City, the legislative body of the District shall determine that the value of the real property in the District subject to the special tax to pay debt service on the Bonds (the “Taxable Property”) be at least four (4) times the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District; and WHEREAS, BTI Appraisal (the “Appraise r”), a state -certified real estate appraiser as defined in Section 11340 of the California Business and Professions Code, has prepared an appraisal report of the Taxable Property, titled “Appraisal Report for Community Facilities District No. 2023-1 of the City of Chino Covering Tract 20312-1” (the “Appraisal”); and WHEREAS, the Appraisal states that the appraised value of the Taxable Property within the District is $105,947,612, which is not less than four (4) times the sum of the maximum principal amount of the Bonds ($12,000,000) plus the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act on the Taxable Property or a special assessment levied on the Taxable Property ($0); and
WHEREAS, set forth below are good faith estimates of Urban Futures Inc., the municipal advisor, as required under Section 5852.1 of the California Government Code (the “Code”). The following estimates have no bearing on, and should not be misconstrued as, any not to exceed financial parameters authorized by this resolution.
(a) The true interest cost of the Bonds is estimated at 4.9409% calculated as provided in Section 5852.1(a)(1)(A) of the Code.
(b) The finance charge of the Bonds, including all fees and charges paid to t hird parties, is estimated at $467,483.
(c) Proceeds of the Bonds received by the District for the sale of the Bonds are equal to $10,331,496.
(d) The total payment amount calculated as provided in Section 5852.1(a)(1)(D) of the Code is estimated at $21,302,631.
The foregoing estimates and the final costs will depend on market conditions and can be expected to vary from the estimated amounts set forth above. 1422
3 NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE CITY
COUNCIL OF THE CITY OF CHINO, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2023-1 (SAGE CEDAR) OF THE CITY OF CHINO, AS FOLLOWS:
Section 1. Each of the above recitals is true and correct, as is each of the findings and determinations set forth therein, and each of said recitals, findings and determinations is adopted by the legislative body of the District.
Section 2. The issuance of the Bonds in a n aggregate principal amount not to exceed $12,000,000 is hereby authorized; and the exact principal amount to be issued shall be determined by the officer signing the Bond Purchase Agreement in accordance with Section 5 below. The Bonds shall mature on the dates and bear interest at the rates set forth in the Bond Purchase Agreement to be executed on behalf of the District in accordance with Section 5 hereof.
The Bonds shall be governed by the terms and conditions of the Fiscal Agent Agreement between the District and The Bank of New York Mellon Trust Company, N.A. (the “Fiscal Agent”) dated as of July 1, 2026 (the “Fiscal Agent Agreement”). The Fiscal Agent Agreement shall be executed by one or more of the Mayor, City Manager or Director of Finance of the City (collectively, the “Authorized Officers”) and attested to by the City Clerk, substantially in the form presented at this meeting, with such additions thereto and changes therein as the officer or officers executing the same deem necessary (a) to cure any ambiguity or defect therein, if such addition or change does not materially alter the substance or content thereof, (b) to insert the offering price(s), interest rate(s), selling compensation, principal amount per maturity, redemption dates and prices and such other related terms and provisions as limit ed by Section 4 hereof, or (c) to conform any provisions therein to the Bond Purchase Agreement or the Official Statement delivered to the purchasers of the Bonds. Approval of such changes shall be conclusively evidenced by the execution and delivery of t he Fiscal Agent Agreement by one or more Authorized Officers.
Capitalized terms used in this Resolution which are not defined herein have the meanings ascribed to them in the Fiscal Agent Agreement.
Section 3. The Bonds shall be executed on behalf of the District by the manual or facsimile signature of the Mayor and attested with the manual or facsimile signature of the City Clerk, and by the Fiscal Agent for the Bonds.
Section 4. The covenants set forth in the Fiscal Agent Agreement are hereby approved and shall be deemed to be covenants of the City Council, in its capacity as the legislative body of the District, and shall be complied with by the District and its officers.
Section 5. The form of the Bond Purchase Agreement presented at this meeting and the sale of the Bonds pursuant thereto are hereby approved, provided that the true interest cost on the Bonds does not exceed 6.00% and the discount at which the Underwriter purchases the Bonds (exclusive of original issue discount) does not exceed 1.35% of the principal amount thereof. Any one of the Authorized Officers is hereby authorized to execute the Bond Purchase Agreement, with such additions thereto and changes therein as the officer executing it may approve, such approval to be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement. Each of the Mayor, or his designee, and the City Manager, or her designee, or the Director of Finance, or her designee, is authorized to determine the day on which the Bonds are to be priced in order to attempt to produce the lowest borrowing cost for the District and may reject any terms presented by the Underwriter if determined not to be in the best interest o f the District.
Section 6. The form of the Continuing Disclosure Agreement presented at this meeting is hereby approved; and any one of the Authorized Officers is hereby authorized and directed to 1423
4 execute the Continuing Disclosure Agreement in the form hereby approve d, with such additions therein and changes thereto as the Authorized Officer or Authorized Officers executing the same deem necessary to cure any defect or ambiguity therein if such change does not materially alter the substance or content thereof, with su ch approval to be conclusively evidenced by the execution and delivery of such Continuing Disclosure Agreement.
Section 7. The form of Amendment to the Acquisition Agreement presented at this meeting is hereby approved; and any one of the Authorized Officers is hereb y authorized and directed to execute the Amendment to the Acquisition Agreement in the form hereby approved, with such additions therein and changes thereto as the Authorized Officer or Authorized Officers executing the same deem necessary to cure any defect or ambiguity therein if such change does not materially alter the substance or content thereof, with such approval to be conclusively evidenced by the execution and delivery of such Amendment to the Acquisition Agreement.
Section 8. The Preliminary Official Statem ent, in substantially the form presented to this meeting and made a part hereof is hereby approved, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, and the use of the Preliminary Official Statement in connection with the offering and sale of the Bonds is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the District that the Preliminary Official Statement is deemed final as of its date, within the meani ng of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12).
Section 9. The preparation and delivery of the Official Statement, and its use in connection with the offering and sale of the Bonds is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evid enced by the execution and delivery thereof. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the District, to execute the final Official Statement and any amendment or supplement thereto.
Section 10. The Director of Finance , or her designee, is authorized to provide for all services necessary to effect the issuance of the Bonds. Such services shall include, but not be limited to, obtaining legal services, fiscal agent services and a ny other services deemed appropriate by the Director of Finance, or her designee. The Director of Finance, or her designee, is authorized to pay for the cost of such services, together with other costs of issuance for the Bonds from the proceeds of the Bonds.
Section 11. The Mayor, City Manager, Director of Finance and the officers and staff of the City and the District who are responsible for the fiscal affairs of the District are hereby authorized and directed to take any actions and to execute and deliver any and all documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution and the fulfillment of the purposes of the Bonds as described in the Fiscal Agent Agreement. Any document authorized herein to be signed by the City Clerk may be signed by a duly-appointed deputy city clerk or assistant city clerk.
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5 PASSED AND ADOPTED by the City Council at a regular meeting held on the 7th day of July 2026.
CITY COUNCIL OF THE CITY OF CHINO
By:_______________________________
Eunice M. Ulloa,
Mayor of the City of Chino
ATTEST:
________________________________
Natalie Gonzaga
City Clerk of the City of Chino
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6 STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO )ss.
CITY OF CHINO )
I, Natalie Gonzaga, City Clerk of the City of Chino, do hereby certify that the foregoing Resolution was duly adopted by the City Council of the City of Chino at a regular meeting held on the 7th day of July 2026, by the following votes:
AYES: COUNCIL MEMBERS
NOES: COUNCIL MEMBERS
ABSENT: COUNCIL MEMBERS
NATALIE GONZAGA, CITY CLERK
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4901-2472-6965v2/022141-0061
BOND COUNSEL AGREEMENT
COMMUNITY FACILITIES DISTRICT NO. 2023-1 (SAGE CEDAR)
OF THE CITY OF CHINO 2026 SPECIAL TAX BONDS
THIS AGREEMENT, made as of this __ day of June, 2026, by and between the CITY OF CHINO, a public body organized and existing under the laws of the State of California (herein the “City”) and STRADLING YOCCA CARLSON & RAUTH, a professional corporation (herein “Bond Counsel”):
R E C I T A L S :
A. The City desires to issues bonds of Community Facilities District No. 2023-1 (Sage Cedar) of the City of Chino (the “District”) formed pursuant to the Mello-Roos Community Facilities Act of 1982, Chapter 2.5 of Division 2, Title 5 (commencing at Section 55312) of the Governme nt Code of the State of California, to finance the acquisition and construction of certain capital improvements for the District; and
B. The City desires to retain Bond Counsel to do the necessary legal work hereinafter outlined, upon the terms and condit ions hereinafter set forth, for financing the acquisition and construction of said capital improvements, and to act as disclosure counsel (“Disclosure Counsel”) upon the terms described below; and
C. Bond Counsel represents that it is ready, willing and able to perform said legal work; NOW, THEREFORE, in consideration of the premises, and of the mutual covenants, terms and conditions herein contained, the parties agree as follows:
I. Bond Counsel Services
1. The City retains Bond Counsel to provide and Bond Counsel will provide legal services in connection with the issuance of bonds by the District in connection with the financing described above (hereinafter called “Bonds”).
The work shall include for the District, but not be limited to, the drafting of all resolutions, notices and documents relating to the issuance of Bonds and the rendering of a legal opinion (hereinafter called “the opinion”) pertaining to the issuing of the Bonds to the effect that:
(a) The Bonds have been properly authorized and issued and are valid and binding obligations;
(b) The essential sources of security for the Bonds have been legally provided; (c) All interest on the Bonds is exempt from federal and State income taxation; and
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Bond Counsel’s services will also include compiling a sufficient record justifying the opinion by:
(a) Researching applicable laws relating to the proposed Bond issue; (b) Participating with any financial advisors, underwriters or other experts retained by the City in structuring the issuance of the Bonds;
(c) Supervising and preparing documentation of all steps to be taken through the issuance of the Bonds including:
(i) Assisting in planning of the financing schedule;
(ii) Drafting all resolutions, notices, trust agreements, and other legal documents required for the financing, an d all other basic documents relating to the security of the Bonds, in consultation with City, its counsel, financial advisors, underwriters and other experts; (iii) Assisting in the preparation of the official statement and supporting documentation relating to the offering for sale of the Bonds; (iv) Reviewing the bond purchase contract and participating in the related negotiations;
(v) Attending informational meetings and other conferences scheduled by the City, the financial advisors or the underwriter;
(vi) Consulting with prospective purchasers, their legal counsel and rating agencies, if any;
(vii) Consulting with counsel to City concerning any legislation or litigation during the course of the financing;
(viii) Consulting with the trustee, if any, and counsel to the trustee; (ix) Preparing the form of the Bonds, and supervising their production or printing, signing, authentication and delivery;
(x) Rendering the final approving opinion as to the validity of the Bonds for use and distribution upon their issuance; and
(xi) Preparing transcripts of the proceedings.
2. City agrees to accept and Bond Counsel agrees to provide the aforementioned services primarily through Bradley R. Neal and Carol Lew.
3. For the services to be rendered, the City agrees to pay a fee of $50,000. Said fee shall be paid upon the s uccessful sale of the Bonds to which it relates and shall be payable from the Bond proceeds.
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4. In the event Bond Counsel is requested to perform additional work outside of its services as Bond Counsel, such as registration of the Bonds in States other than California (Blue Sky), litigation or other work, Bond Counsel will be paid additional compensation therefor at the customary hourly rate of the attorney performing such services; provided, however, there shall be no additional compensation due Bond Counsel under this paragraph without the prior approval of City.
5. In addition to the foregoing, Bond Counsel shall be reimbursed by City for the actual cost, excluding any indirect cost, such as Bond Counsel’s overhead, of any out -of-pocket expenses reasonably incurred by Bond Counsel in the course of this employment, such as reproduction and printing costs, filing fees, express mail, long distance telephone calls, travel, messenger services and other document delivery services, and similar items of expense incurred by Bond Counsel. Said costs will be paid at closing based upon the estimated costs incurred to date of closing and to be incurred after closing. In the event Bonds are not issued and the proceedings are abandoned, the above costs shall be paid following the abandonment. Notwithstanding the foregoing, such costs shall not exceed $3,000.
6. It is recognized by the parties that Bond Counsel may, from time to time, have clients with interests adverse to City. Bond Counsel reserves the right to represent said clients except on matters relating to the issuance and sale of the Bonds.
7. As a matter of disclosure required by State Law, Bond Counsel hereby represents that it carries malpractice insurance.
II. Disclosure Counsel Services
1. Scope of Services
City hereby retains Disclosure Counsel to act as disclosure counsel in connection with the issuance of the Bonds. Disclosure Counsel will: (1) prepare the Preliminary Official Statement, final Official Statement and Continuing Disclosure Agreement for the Bonds, (2) render to the City and Raymond James & Associates, Inc. (the “Underwriter”) as the purchaser of the Bonds an opinion to the effect that (a) the Bonds are exempt from the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended, and (b) based upon the information made available to Disclosure Counsel in the course of its participation in the preparation of the Official Statement and without havin g undertaken to determine independently or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, but based on the basis of its participation in conferences with representatives of the City, the City Attorney, the Underwriter and others, and its examination of certain documents, nothing has come to its attention which would lead it to believe that the Official Statement, as of its date and as of the date of issuance of the Bonds, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or be lief need be expressed as to any appendices and any other financial and statistical data contained in the Official Statement); and (3) attend meetings with City staff, the Underwriter or other experts retained by City in structuring the sale, execution and delivery of the Bonds;
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2. Special Services
Special Services are defined as services in addition to the scope of the services defined in Section II(1) under Disclosure Counsel Services. Special Services will include, but not be limited to, services rendered after the issuance of the Bonds, such as work related to future disclosure service; litigation; amendment of bond documents or agreements; and special studies or analyses. Special Services shall be undertaken only at the request of the City Manager.
3. Contract Administration
This contract shall be administered by the City Manager or his designee. The City Manager, or his designee, will provide overall coordination and guidance of the services to be performed hereunder and will address policy issues as necessary and appropriate.
4. Assignment of Named Individuals
City agrees to accept, and Disclosure Counsel agrees to provide, the aforementioned services primarily through Bradley R. Neal. City reserves the right to review and approve all staff changes proposed by Disclosure Counsel which will affect key personnel and positions assigned to provide services to City under this Agreement. City’s approval of such staff changes shall not be unreasonably withheld.
5. Compensation
(a) For the services to be rendered unde r Section II(1) of Disclosure Counsel Services, City agrees to pay Disclosure Counsel for each series a fee of $25,000.
(b) For the satisfactory performance of the Special Services specified in Section (2) of Disclosure Counsel Services, City shall pay Disclosure Counsel as compensation a fee based upon the actual hours spent by Disclosure Counsel. Rates for Special Services of Disclosure Counsel shall be paid by City in accordance with Exhibit A attached hereto and incorporated herein. (c) All fees to be paid to Disclosure Counsel by City for services rendered under Section II(a) of Disclosure Counsel Services are to be billed upon the sale, execution and delivery of the series of Bonds to which it relates and will be payable from Bond proceeds.
(d) In addition to the fees set forth in (a) and (b) above, Disclosure Counsel shall be reimbursed by City for the actual cost of any out -of-pocket expenses reasonably incurred by Disclosure Counsel in the course of its employment, such as document reproduction, overnight del ivery and messenger charges, telecommunications charges, printing costs, filing fees, long -distance telephone calls, travel at the request of City, and similar items of expense incurred by Disclosure Counsel with respect to third parties who are not parties to this Agreement. The expenses shall be paid from Bond proceeds, unless the sale of the Bonds is abandoned in which case, expenses shall be paid by City following abandonment of the issuance of the Bonds.
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6. Notices
All notices and required reports shall be written and hand -delivered or mailed by first class, postage prepaid, addressed to City or Bond/Disclosure Counsel at the addresses below, or at any other address City or Bond/Disclosure Counsel shall provide in writing to each other:
(a) If to City:
City of Chino
City Manager
13220 Central Avenue
Chino, CA 91710
(b) If to Bond/Disclosure Counsel:
Bradley R. Neal, Esq.
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660-6441
7. Assignment
(a) No part of this Agreement or any right or obligation arising from it is assignable without City’s written consent.
(b) Any attempt by Bond/Disclosure Counsel to assign or subcontract services relating to this Agreement without City’s consent shall constitute a material breach of this Agreement.
(c) However, Bond/Disclosure Counsel may retain consultants and experts as Bond/Disclosure Counsel deems appropriate after receiving City’s written approval.
8. Consent to Other Representations
Disclosure Counsel and Bond Counsel have advised City that Disclosure Counsel and Bond Counsel act as legal counsel to the Underwriter on matters unrelated to the Bonds. City hereby consents to Disclosure Counsel’s and Bond Counsel’s representation of (a) the Underwriter on financings other than the Bonds; and (b) other underwriters who may be engaged by City from time to time (but not in matters related to any financing in which Bond/Disclosure Counsel has been retained by City or in matters adverse to City). City acknowledges that Disclosure Counsel and Bond Counsel are providing notice of their representation of the Underwriter pursuant to Rule 3-310 of the California Rules of Professional Conduct.
9. Termination
This Agreement may be terminated without cause by City or Bond/Disclosure Counsel upon thirty (30) days’ advance written notice to the other party or may be terminated immediately by City upon determination of non-compliance by Bond/Disclosure Counsel with the terms of this Agreement. 1432
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Such notification shall state the effective date of the termination of this Agreement and, if done by City for cause, shall state the reason(s) for the termination.
Upon receiving a notice of termination, Bond/Disclosure Counsel shall take immediate steps to reduce the incurrence of costs. Bond/Disclosure Counsel shall be en titled to payment for all satisfactory work performed and all uncancellable obligations allowable under the terms of this Agreement incurred up to the effective date of termination in an amount based on the hourly rates set forth in Exhibit A, but, not to exceed the amount allowable under this Agreement. In addition, all documents and materials relating to this Agreement, produced by Bond/Disclosure Counsel, and/or obtained by it or on behalf of City shall, at the option of City, become the property of City.
10. Complete Agreement
This Agreement shall constitute the complete and exclusive statement of understanding between City and Bond Counsel and Disclosure Counsel which supersedes all previous written or oral agreements, and all prior communications between the parties. 1433
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IN WITNESS WHEREOF, as of the date first hereinabove written, City has caused this instrument to be executed by the City Manager and the City Clerk of the City of Chino, and Bond Counsel and Disclosure Counsel have caused this instrument to b e executed on its behalf and in its name by an authorized officer of Bond/Disclosure Counsel.
CITY OF CHINO
By:
City Manager of the City of Chino
ATTEST:
City Clerk of the City of Chino
STRADLING YOCCA CARLSON & RAUTH,
a Professional Corporation
By:
Bradley R. Neal
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4901-2472-6965v2/022141-0061 A-1
EXHIBIT A
RATES FOR SPECIAL SERVICES
Shareholders $550.00
Associates $290.00
Paralegals $170.00
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MEMORANDUM
CITY OF CHINO
POLICE DEPARTMENT
CITY COUNCIL MEETING DATE: JULY 7, 2026
TO: LINDA REICH, CITY MANAGER
FROM: KEVIN MENSEN, CHIEF OF POLICE
SUBJECT
..titl e
Introduction Ordinance 2026-010 adding Chapter 9.90 to the Chino Municipal Code. ..end
RECOMMENDATION
..recommendation
Approve the i ntroduction of Ordinance 2026 -010, adding Chapter 9.90 to the CMC prohibiting the sale of flavored tobacco products, nitrous oxide products, and certain kratom products within the City of Chino, to be read by number and title only, and waiving future readings ; and provide direction to staff regarding implementation, public education, and enforcement strategies associated with the ordinance.
..body
FISCAL IMPACT
There is no immediate fiscal impact associated with this report.
Future costs associated with education materials, compliance inspections, and enforcement activities would be evaluated during implementation and incorporated into future budget considerations if necessary.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
Positive City Image
Superior Customer Service
Responsible Long-Range Planning
Public Service Excellence through Internal and External Partnerships
Revenue:
Expenditure:
Transfer In: Transfer Out:
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CITY COUNCIL MEETING DATE: JULY 7, 2026
TITLE: INTRODUCTION ORDINANCE 2026 -010 ADDING CHAPTER 9.90 TO THE CHINO MUNICIPAL CODE.
PAGE: 2
BACKGROUND
The use and availability of flavored tobacco products, nitrous oxide products, and kratom products have become increasing public health and safety concerns throughout California and across the nation. These products are frequently marketed in ways that appeal to youth and young adults and have been associated with nicotine addiction, substance abuse, and other harmful health consequences.
In response to growing public concern and statewide trends, many California cities have adopted local ordinances regulating or prohibiting the sale of flavored tobacco products and other substances associated with youth access and recreational misuse.
The proposed ordinance would establish a comprehensive regulatory framework within the City of Chino prohibiting the sale of flavored tobacco products, restricting the sale and distribution of nitrous oxide and nitrous oxide devices, a nd regulating kratom and 7 -hydroxymitragynine (7- OH) products. The ordinance is intended to protect public health and safety, reduce youth access to addictive products, and provide local enforcement authority consistent with state law.
ISSUES/ANALYSIS
The proposed ordinance would establish local regulations governing flavored tobacco products, nitrous oxide products, and kratom products. The ordinance is intended to reduce youth access to addictive substances, address public health and safety concerns as sociated with recreational misuse, and provide the City with clear enforcement authority.
Key provisions include prohibiting the sale of flavored tobacco products and tobacco flavor enhancers; restricting the sale and distribution of nitrous oxide products except for legitimate medical, culinary, industrial, pharmaceutical, and automotive uses; and establishing age restrictions and product standards for kratom and 7 -hydroxymitragynine (7-OH) products. The ordinance would also prohibit the sale of oil burners commonly associated with illicit drug use.
The ordinance authorizes administrative, civil, and criminal enforcement remedies, including administrative citations, business license actions, and nuisance abatement proceedings. Staff anticipates prioritizing education and voluntary compliance during the initial implementation phase while coordinating enforcement efforts among the Police Department, Code Enforcement, and the City Attorney’s Office.
Attachment: Draft Ordinance 2026-010
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ORDINANCE NO. 2026-010
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHINO,
CALIFORNIA, ADDING CHAPTER [ 9.90] (“FLAVORED
TOBACCO; NITROUS OXIDE; KRATOM PRODUCTS ”) TO TITLE
[9] (“PUBLIC PEACE, MORALS AND WELFARE”) OF THE CHINO
MUNICIPAL CODE, PROHIBITING THE SALE OF FLAVORED
TOBACCO, NITROUS OXIDE, AND KRATOM PRODUCTS WITHIN
THE CITY OF CHINO
WHEREAS, pursuant to the authority granted to the City of Chino (“City”) by Article XI , Section 7 of the California Constitution, the City has the police power to regulate matters affecting public health, welfare, and safety within the City; and WHEREAS, under Federal and State law, the City is authorized to regulate the sale of tobacco products and related retail products; and
WHEREAS, a primary mission of the City Council is to preserve public health and safety, and the sale of flavored tobacco products, nitrous oxide, and certain kratom products presents a significant threat to public health and safety; and
WHEREAS, according to the World Health Organization (WHO), tobacco-related use causes more than 8 million deaths per year worldwide, making it one of the most significant preventable public health threats; and
WHEREAS, the California Legislature has recognized the danger of tobacco use and has made reducing youth access to tobacco products a high priority, declaring that smoking is the single most important source of preventable disease and premature death in California (CA Health & Safety Code § 104350(a)(1); and
WHEREAS, in 2020, the California Legislature enacted Senate Bill 793 (“SB 793”), which prohibits the sale of flavored tobacco products to persons under 21 years of age, and permits local agencies to adopt and implement local ordinances that impose greater restrictions on access to tobacco products; and
WHEREAS, flavored tobacco products, including menthol, fruit, candy, and dessert flavors, including flavored electronic smoking devices, are attractive to youth and increase the likelihood of nicotine addiction; and
WHEREAS, nitrous oxide is an odorless, colorless gas sometimes used in medical or dental procedures, industrial processes, and as a food propellant, but is also subject to recreational misuse and abuse; and
WHEREAS, recreational misuse of nitrous oxide can cause severe vitamin deficiencies, neurological damage, paralysis, and death; and
WHEREAS, possession of nitrous oxide with the intent to breathe, inhale, or ingest for the purpose of causing intoxication is a misdemeanor under California Penal Code § 381(b); and 1438
WHEREAS, selling, furnishing, administering, distributing, or giving away nitrous oxide, or offering to do so, to a person under 18 years of age is a misdemeanor under California Penal Code § 381(c);
WHEREAS, despite state regulations, nitrous oxide is often sold in small canisters or devices that are not reasonably intended for legitimate medical, industrial, or culinary purposes, and are instead marketed in ways that facilitate recreational misuse often in brightly colored canisters; and WHEREAS, kratom (Mitragyna speciosa) is a tropical plant whose leaves and extracts contain psychoactive compounds, including mitragynine and 7 -hydroxymitragynine (7-OH), which are often consumed in powdered or ext ract form to produce stimulant, sedative, and opioid -life effects; and
WHEREAS, numerous local governments across California and the United States have adopted regulations or prohibitions on flavored tobacco, nitrous oxide, and kratom products to protect public health and safety; and
WHEREAS, the City of Chino desires to adopt reasonable regulations prohibiting the sale of flavored tobacco products, nitrous oxide, and kratom products in order to protect public health, reduce youth access, and deter harmful business practices; and WHEREAS, prior to adoption, the City provided all required public notice and conducted a duly noticed public hearing at which members of the public were given the opportunity to comment; WHEREAS, all prerequisites to the adoption of this Ordinance have occurred.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHINO DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. The City Council finds that the above recitals are true and correct and are incorporated herein by this reference.
SECTION 2. The Chino Municipal Code is hereby amended to add a new Chapter [ 9.90] (“Flavored Tobacco; Nitrous Oxide; Kratom Products”) to Title [ 9] (“Public Peace, Morals and Welfare”) to state, in full, as follows:
“CHAPTER [9.90]: FLAVORED TOBACCO; NITROUS OXIDE; KRATOM PRODUCTS Sections:
9.90.010 - Definitions.
For purposes of this Chapter, unless otherwise apparent from the context, certain words and phrases used in this Chapter are defined as follows:
A. “7-OH product” means a product containing 7-hydroxymitragynine.
B. “Attractive to children” means any of the following:
1. Use of images that are attractive to children, including, but not limited to, images of any of the following, except as part of required health warnings:
a) Cartoons, toys, or robots.
b) Any real or fictional humans.
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c) Fictional animals or creatures.
d) Fruits or vegetables, except when used to accurately describe ingredients or flavors contained in a product.
2. Likeness to images, characters, or phrases that are popularly used to advertise to children.
3. Imitation of candy packaging or labeling, or other packaging and labeling of cereals, sweets, chips, or other food products typically marketed to children.
4. Use of the terms “candy” or “candies” or variants in spelling such as “kandy” or “kandee.”
5. Brand names or close imitations of brand names of candies, cereals, sweets, chips, or other food products typically marketed to children.
6. Any packaging or labeling that is easily confused with commercially available foods that do not contain kratom and are typically marketed to children.
7. Anything else that is attractive to children in light of all relevant facts and circumstances.
C. “Characterizing Flavor” means a taste or aroma, other than the taste or aroma of tobacco, imparted either prior to or during consumption of a tobacco product or any byproduct produced by the tobacco product, including, but not limited to, tastes or aromas relat ing to menthol, mint, wintergreen, fruit, chocolate, vanilla, honey, candy, cocoa, dessert, alcoholic beverage, herb, or spice; provided, however, that a tobacco product shall not be determined to have a characterizing flavor solely because of the use of additives or flavorings or the provision of ingredient information.
D. “Flavored Tobacco Product” means any tobacco product that impa rts a Characterizing Flavor.
E. “Kratom leaf” means the leaf of the kratom plant, also known as Mitragyna speciosa, in any form.
F. “Kratom leaf extract” means material obtained by extraction of kratom leaf, kratom leaf extract, or both.
G. “Kratom product” means a product consisting of kratom leaf, kratom leaf extract, or both.
H. “Labeling” means written, printed, or graphic matter upon any Tobacco Product, Nitrous Oxide Device, or any kratom product, or any of its packaging, or accompanying such product.
I. “Nitrous Oxide” mean s the colorless, nonflammable gas sometimes identified as N₂O, which is used in aerosols and sometimes used as an anesthetic, and which, when inhaled, produces loss of sensibility to pain, often preceded by exhilaration and laughter and often used as an anesthetic in dentistry. Nitrous oxide is often informally or colloquially referred to as “laughing gas,” “NOX,” “Galaxy Gas,” “whippits,” and similar terms.
J. “Nitrous Oxide Device” means any cartridge, compressed gas cylinder, apparatus, container, balloon, attachment, nozzle, or other object used to contain, dispense, or administer nitrous oxide.
K. “Oil Burner” means a glass smoking device that allows users to inhale vaporized oils or other concentrates.
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L. “Package” or “Packaging” means a pack, box , carton, or container of any kind or, if no other container, any wrapping (including cellophane) in which a tobacco product is sold or offered for sale to a consumer.
M. “Person” means any natural person, partnership, cooperative association, corporation, personal representative, receiver, trustee, assignee, or any other legal entity.
N. “Sale” or “Sell” means any transfer, exchange, barter, gift, offer for sale, or distribution for a commercial purpose, in any manner or by any means whatsoever.
O. “Tobacco Product” means:
1. any product containing, made, or derived from tobacco or nicotine that is intended for human consumption, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including, but not limited to, cigarettes, cigars, little cigars, chewing tobacco, pipe tobacco, and snuff.
2. any electronic device that delivers nicotine or other substances to the person inhaling from the device, including, but not limited to, an electronic cigarette, electronic cigar, electronic pipe, or electronic hookah.
3. notwithstanding any provision of subsections (1) and (2) to the contrary, “Tobacco Product” includes any component, part, or accessory intended or reasonably expected to be used with a Tobacco Product, whether or not sold separately. “Tobacco Product” does not include drugs, devices, or combination products authorized for sale by the United States Foo d and Drug Administration, as those terms are defined in the Federal Food, Drug, and Cosmetic Act.
P. “Tobacco Product Flavor Enhancer” means a product designed, manufactured, produced, marketed, or sold to provide a characterizing flavor when added to a tobacco product.
Q. “Tobacco Retailer” means any person who sells, offers for sale, or does or offers to exchange for any form of consideration, tobacco, tobacco products, or tobacco paraphernalia. “Tobacco retailing” shall mean the doing of any of these things. This definition is without regard to the quantity of tobacco products or tobacco paraphernalia sold, offered for sale, exchanged, or offered for exchange.
R. “Total kratom alkaloids” means the sum of mitragynine, speciociliatine, speciogynine, paynantheine, and 7-hydroxymitragynine in a kratom product.
9.90.020 – Sale of Flavored Tobacco Products Prohibited.
A. It shall be a violation of this Chapter for any person to sell or offer for sale, to display for sale, or to possess with intent to sell or offer for sale, any flavored tobacco product or tobacco product flavor enhancer.
B. There shall be a rebuttable presumption that a Tobacco Retailer in possession of four or more flavored tobacco products, including, but not limited to, individual fla vored tobacco products, packages of flavored tobacco products, or any combination thereof, possesses such flavored tobacco products with intent to sell or offer for sale.
C. There shall be a rebuttable presumption that a tobacco product is a flavored toba cco product if a Tobacco Retailer, manufacturer, or any employee or agent of a Tobacco Retailer or manufacturer has:
1. made a public statement or claim that the tobacco product imparts a Characterizing Flavor;
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2. used text and/or images on the tobac co product’s labeling or packaging to explicitly or implicitly indicate that the tobacco product imparts a Characterizing Flavor; or
3. taken action directed to consumers that would be reasonably expected to cause consumers to believe the tobacco product imparts a Characterizing Flavor.
9.90.030 – Sale of Oil Burners Prohibited
A. It shall be a violation of this Chapter for any Tobacco Retailer or any of the Tobacco Retailer’s agents or employees to sell or offer for sale, to display for sale, or to pos sess with intent to sell or offer for sale, any oil burners or colored glass oil burner pipes.
9.90.040 – Sale or Distribution of Nitrous Oxide Prohibited A. Except as otherwise authorized by law or allowed under this Chapter, it shall be unlawful for any person to sell, attempt to sell, offer for sale, permit to be sold, display for sale, distribute or otherwise provide Nitrous Oxide, a Nitrous Oxide Device, or any device that contains any quantity of Nitrous Oxide.
B. This Section does not prohibit the sale, attempt to sell, offer for sale, permit to be sold, display for sale, distribution, or any other manner of providing Nitrous Oxide or a Nitrous Oxide Device, in the following circumstances:
1. If the nitrous oxide is contained in a food product for use as a propellant.
2. If the nitrous oxide or device is being sold, attempted to be sold, offered, or distributed in a wholesale capacity, for uses similar to those described in subsection (D) of Section
9.90.050, provided the wholesaler does not know or have reason to know that the recipient intends to use the Nitrous Oxide or Nitrous Oxide Device in violation of subsection (A) above.
3. If the Nitrous Oxide or Nitrous Oxide Device being sold or offered is specifically designed for use in a vehicle to enhance the performance of the vehicle.
4. If the Nitrous Oxide is being sold or offered specifically for the purpose of providing medical or dental care, by or at the direction of, and under the supervision of, a medical or dental practitioner licensed by the State of California, and in accordance with all applicable rules and regulations.
5. If the Nitrous Oxide or Nitrous Oxide Device is being sold, attempted to be sold, offered, distributed, or dispensed by a pharmacist, pharmacist intern, or pharmacy as defined by Sections 4030, 4036, and 4037 of the California Business & Professions Code, as may be amended, in the course of their duties as a pharmacist or pharmacist intern, or by wholesalers licensed by the Board of Pharmacy.
6. Any other circumstances exempted under law.
9.90.050 — Prohibition on Sale and Distribution of Kratom and 7-OH Products A. Except as otherwise authorized by law, it shall be unlawful for any person to sell, attempt to sell, offer for sale, permit to be sold, display for sale, distribute, or otherwise provide to any person a kratom product or 7-OH product to any person under 21 years of age.
B. Except as otherwise authorized by law, it shall be unlawful for any person to sell, attempt to sell, offer for sale, permit to be sold, display for sale, distribute, or otherwise provide to any person a kratom product or 7 -OH product with a level of 7 -OH that is greater than 2 percent of the total kratom alkaloids in the product.
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C. Except as otherwise authorized by law, it shall be unlawful for any person to sell, attempt to sell, offer for sale, permit to be sold, display for sale, distribute, or otherwise provide to any person a kratom product or 7-OH product that is attractive to children.
D. No person or entity shall offer for sale any kratom product that contains or is adulterated with synthesized or semi-synthesized kratom alkaloids or kratom constituents.
9.90.060 — Violations and Penalties
A. The remedies provided by this Chapter are cumulative and in additio n to any other remedies available at law or in equity.
B. Any person violating any provision of this Chapter shall be guilty of a misdemeanor, as defined by Section 1.12.010 of the Chino Municipal Code, for each day such violation continues.
C. In addition to other remedies provided by this Chapter or by other law, any violation of this Chapter may be remedied by a civil action brought by the City Attorney, including, for example, administrative or judicial nuisance abatement proceedings, civil code enforcement proceedings, and suits for injunctive relief.
D. Any person violating the provisions of this Chapter shall also be liable for civil penalties of not less than two hundred fifty dollars ($250) and not exceeding one thousand dollars ($1,000) for each day the violation continues , and may also be subject to administrative citations and civil fines pursuant to Chapter 1.15 of the Chino Municipal Code.
E. A violation of this Chapter shall additionally be grounds for revocation of a business license, if applicable, pursuant to the relevant licensing provisions of the Chino Municipal Code.
F. Causing, permitting, aiding, abetting, or concealing a violation of any provision of this Chapter shall also constitute a violation of this Chapter.
G. In addition to the penalties provided by this Chapter, any condition caused, maintained, allowed, or permitted to exist in violation of any provision of this Chapter shall be deemed a public nuisance and may be abated by the City through all legal means available, including but not limited to injunctive relief, as provided by Section 1.12.010 of the Chino Municipal Code.” SECTION 3. Section 20.24.020 (“Definitions”) of the Chino Municipal Code is hereby revised as follows (additions in underline; deletions in strikethrough):
“Hookah bar. An establishment where patrons communally smoke flavored tobacco. or other legal substances through a water pipe.”
SECTION 4. CEQA. The City Council finds that adoption of this Ordinance is exempt from the California Environm ental Quality Act (“CEQA”) pursuant to State CEQA Guidelines Section 15061(b)(3) in that the Ordinance is not anticipated to result in a direct or reasonably foreseeable indirect physical change in the environment, nor will the proposed changes have the po tential for causing a significant effect on the environment. Additionally, the proposed action is not a “project” under State CEQA Guidelines Section 15378(b)(5), which excludes the “organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment,” as this Ordinance is not anticipated to result in a direct or indirect physical change in the environment.
SECTION 5. Severability. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of the Ordinance. The City Council hereby declares that it would have adopted this 1443
Ordinance and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases or portions thereof be declared invalid or unconstitutional.
SECTION 6. Effective Date. This ordinance shall be in full force and effect thirty (30) days after its second reading and adoption.
SECTION 7. Certification. The City Clerk of the City of Chino shall certify as to the passage of this Ordinance and shall cause the same to be published and/or posted at the designated locations in the City of Chino.
PASSED, APPROVED, AND ADOPTED this ___ day of _______, 2026
Eunice M. Ulloa, Mayor
ATTEST:
City Clerk
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STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO ) §
CITY OF CHINO )
I, Natalie Gonzaga, City Clerk of the City of Chino do hereby certify that the foregoing Ordinance of the City of Chino was duly adopted by said City Council at a regular meeting held on the ___ day of ____ 2026 by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
By:
NATALIE GONZAGA, CITY CLERK
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MEMORANDUM
CITY OF CHINO
DEVELOPMENT SERVICES DEPARTMENT
CITY COUNCIL MEETING DATE: JULY 7, 2026
TO: MAYOR AND CITY COUNCIL MEMBERS, CITY OF CHINO
FROM: WARREN MORELION, AICP, DIRECTOR OF DEVELOPMENT SERVICES
SUBJECT
..titl e
Cooperation Agreement with the County of San Bernardino for Housing and Urban Development Community Planning and Development Grants.
..end
RECOMMENDATION
..recommendation
1) Adopt Resolution No. 2026 -041 approving the Cooperation Agreement between the City of Chino and the County of San Bernardino for Housing and Urban Development Community Planning and Development grants for Program Years 2027-28, 2028-29, and 2029-30, including one automatic three -year renewal for Program Years 2030 -31, 2031-32, and 2032 -33, unless terminated in accordance with the agreement; 2) approve the accompanying Community Development Block Grant City -County Delegate Agency Agreement; and 3) authorize the City Manager or designee, to execute all related documents.
..body
FISCAL IMPACT
The net fiscal impact over the three-year term of this agreement is difficult to quantify. The City will recognize a reduction in CDBG administrative funds, however, w ill benefit from increased funding opportunities to HOME and ESG-funded programs such as the County’s rapid - rehousing program.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES The recommendation detailed above furthers the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
Public Service Excellence through Internal and External Partnerships
Revenue:
Expenditure:
Transfer In: Transfer Out:
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CITY COUNCIL MEETING DATE: JULY 7, 2026
TITLE: COOPERATION AGREEMENT WITH THE COUNTY OF SAN BERNARDINO FOR
HOUSING AND URBAN DEVELOPMENT COMMUNITY PLANNING AND DEVELOPMENT GRANTS.
PAGE: 2
BACKGROUND
The City of Chino currently receives Community Development Block Grant (CDBG) funds directly from the U.S. Department of Housing and Urban Development (HUD) as an entitlement community but does not receive direct HOME Investment Partnerships Program (HOME) or Emergency Solutions Grant (ESG) allocations.
San Bernardino County qualifies as a HUD Urban County and receives direct CDBG, HOME, and ESG funding. The proposed Cooperation Agreement would allow Chino to participate in the County’s Urban County program beginning in Program Year 2027 –28. Under the agreement, the County would administer the City’s HUD Community Planning and Development grants, including CDBG, and provide access to County-administered HOME and ESG resources.
Information on the Urban County program was shared with the City Council Housing Committee at their April meeting.
ISSUES/ANALYSIS
Participation in the Urban County program would shift primary HUD program administration responsibilities from the City to the County. The County would be responsible fo r preparing and submitting required HUD planning and reporting documents, including the Consolidated Plan, Annual Action Plans, Citizen Participation Plan, Consolidated Annual Performance and Evaluation Reports (CAPERs), and related documents. The County w ould also provide technical assistance, compliance support, and oversight for City -implemented CDBG projects including consultant support to ensure compliance with federal prevailing wage requirements.
Although the County would become the formal grantee and administrator, and the County Board of Supervisors would retain final authority over the disposition and distribution of funds, the Cooperation Agreement preserves meaningful local input over Chino’s priorities. The Cooperation Agreement provides that, to the greatest extent feasible, CDBG funds will be allocated to the City based on proportional demographics for eligible activities and projects prioritized by the City. Staff anticipate that the City Council would continue to revi ew and approve proposed CDBG projects and public service allocations before those recommendations are submitted to the County.
The City would remain responsible for selecting local projects and programs, implementing approved CDBG -funded activities, tracki ng outcomes for reporting purposes, and complying with applicable federal requirements. County authorization would be required before funds are obligated or project costs are incurred.
Additionally, participation in the Urban County program would provide t he City with access to County-administered HOME and ESG resources. HOME funds would not be guaranteed , but eligible affordable housing projects could compete for funding through the County’s local Notice of Funding Availability process. Chino residents and service providers may also benefit from County ESG -funded homelessness programs, which include homelessness prevention, rapid rehousing, emergency shelter, street outreach, and related services.
The primary benefit of participating in the Urban County pro gram is reduced administrative burden. The City would no longer be responsible for preparing its HUD Consolidated Plan, Annual Action Plans, CAPERs, and related entitlement documents. The City may also benefit 1447
CITY COUNCIL MEETING DATE: JULY 7, 2026
TITLE: COOPERATION AGREEMENT WITH THE COUNTY OF SAN BERNARDINO FOR
HOUSING AND URBAN DEVELOPMENT COMMUNITY PLANNING AND DEVELOPMENT GRANTS.
PAGE: 3
from the County’s experience administering HUD programs and the efficiencies of a larger regional program.
The primary drawback of participating in the Urban County program is reduced direct control.
During the term of the Cooperation Agreement, Chino would no longer receive its CDBG allocation directly from HUD, and City -prioritized projects would be subject to County approval.
However, the City would continue to identify local funding priorities.
The Cooperation Agreement covers Program Years 2027-28 through 2029-30 and automatically renews for one additional three-year period, through Program Year 2032 -33, unless either the City or County elects to terminate at the conclusion of the initial three -year term. The Cooperation Agreement may not be terminated during the term.
Staff believes th at participation in the Urban County program will provide administrative efficiencies and regional funding opportunities that support the City’s housing, community development, and homelessness response goals. The Cooperation A greement has been reviewed and approved by the City Attorney’s Office.
If approved, the City’s CDBG allocation would be administered through the County’s Urban County program beginning in Program Year 2027-28. The County may use allowable planning and administrative fees and project implementation fees for program administration.
The City w ould continue to incur staff costs associated with local project selection, public service funding recommendations, project implementation, reporting, reimbursement processing, and compliance. Eligible administrative and project delivery costs may be reimbursable with CDBG funds, subject to program requirements and approval.
Attachment – Resolution 2026-041
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RESOLUTION NO. 2026-041
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHINO,
CALIFORNIA, APPROVING A COOPERATION AGREEMENT WITH THE
COUNTY OF SAN BERNARDINO FOR HOUSING AND URBAN
DEVELOPMENT COMMUNITY PLANNING AND DEVELOPMENT
GRANTS FOR PROGRAM YEARS 2027-28, 2028 -29, AND 2029 -30,
INCLUDING ONE AUTOMATIC THREE -YEAR RENEWAL FOR
PROGRAM YEARS 2030-31, 2031-32, AND 2032-33, AND APPROVING
THE ACCOMPANYING COMMUNITY DEVELOPMENT BLOCK GRANT
CITY-COUNTY DELEGATE AGENCY AGREEMENT
WHEREAS, the United States Department of Housing and Urban Development (“HUD”) provides Community Planning and Development grant funds to eligible jurisdictions, including Community Development Block Grant (“CDBG”), HOME Investment Partnerships Program (“HOME”), and Emergency Solutions Grant (“ESG”) funds; and
WHEREAS, the City of Chino (“City”) is currently a CDBG entitlement community and receives CDBG funds directly from HUD; and
WHEREAS, the City is not currently a HOME participating jurisdiction and does not receive ESG funds directly from HUD; and
WHEREAS, San Bernardino County (“County”) is a qualified Urban County for purposes of receiving and administering HUD Community Planning and Development grant funds; and WHEREAS, HUD requires Urban Counties to periodically requalify and to enter into cooperation agreements with participating cities in order to administer HUD Community Planning and Development grant programs within those jurisdictions; and WHEREAS, the County has invited the City to participate in the County’s Urban County program beginning with Program Year 2027-28 through a Cooperation Agreement for Housing and Urban Development Community Development and Planning Grants; and WHEREAS, the proposed Cooperation Agreement would authorize the County to administer HUD Community Planning and Development grant funds on behalf of the City for Program Years 2027- 28, 2028 -29, and 2029 -30, beginning July 1, 2027, and would automatically renew for one additional three-year Urban County qualification period covering Program Years 2030-31, 2031- 32, and 2032-33, unless terminated in accordance with the agreement; and WHEREAS, under the proposed Cooperation Agreement, the County would be responsible for preparing and submitting required HUD planning and reporting documents, including the County Consolidated Plan, Annual Action Plans, Citizen Participation Plan, and related HUD submissions; and
WHEREAS, the proposed Cooperation Agreement provides that, to the greatest extent feasible, CDBG funds will be allocated by the County to the City base d on proportional demographics for 1449
eligible activities and projects prioritized by the City, subject to the County ’s final authority over the disposition and distribution of funds; and
WHEREAS, the proposed Cooperation Agreement would also allow the City to participate in the County’s HOME and ESG programs, providing potential access to County -administered affordable housing and homelessness resources; and
WHEREAS, the proposed Community Development Block Grant City -County Delegate Agency Agreement would allow the City to continue implementing approved CDBG -funded projects and programs within the City, subject to County authorization, oversight, reimbursement procedures, and applicable federal requirements; and
WHEREAS, the City Council desires to approve the Cooperation Agreement and accompanying Delegate Agency Agreement in order to reduce administrative burden, improve coordination with the County, preserve meaningful local input regarding CDBG priorities, and expand access to County-administered housing and homelessness resources.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHINO DOES HEREBY RESOLVE AS FOLLOWS:
1. The foregoing recitals are true and correct and are incorporated herein by this reference.
2. The City Council hereby approves the Cooperation Agreement between the City of Chino and the County of San Bernardino for Housing and Urban Development Community Development and Planning Grants for Program Years 2027 -28, 2028-29, and 2029 -30, including one automatic three -year renewal for Program Years 2030 -31, 2031-32, and 2032-33, unless terminated in accordance with the agreement.
3. The City Council hereby approves the accompanying Community Development Block Grant City-County Delegate Agency Agreement, which establishes the process by which the City may im plement approved CDBG -funded projects and programs under the County’s Urban County program.
4. The City Manager, or designee, is hereby authorized to execute the Cooperation Agreement, the Community Development Block Grant City -County Delegate Agency Agreement, and any related documents necessary to effectuate the City’s participation in the County’s Urban County program, subject to review and approval as to form by the City Attorney.
5. The City Manager, or designee, is hereby authorized to provide the County wi th all documents, certifications, City Council minutes, correspondence, and other materials reasonably required for the County’s Urban County requalification submission to HUD.
6. The City Council hereby authorizes City staff to take all administrative actions necessary to implement this Resolution and the agreements approved herein, including coordination with the County regarding CDBG project selection, public service funding recommendations, program reporting, reimbursement processing, and compliance requirements.
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7. The City Clerk shall certify the adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED THIS 7th DAY OF JULY 2026.
EUNICE M. ULLOA, MAYOR
ATTEST:
NATALIE GONZAGA, CITY CLERK
I, Natalie Gonzaga, City Clerk of the City of Chino, do hereby certify that the foregoing resolution was duly adopted by the City Council of the City of Chino at their regular meeting on the 7th day of July 2026, by the following votes:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
IN WITNESS WHEREOF , I have hereunto set my hand and affixed the official seal of said City on this 7th day of July 2026.
NATALIE GONZAGA, CITY CLERK
ATTACHMENTS:
Exhibit A – Cooperation Agreement for Housing and Urban Development Community Development and Planning Grants for Program Years 2027 -28, 2028 -29, 2029 -30 and Subsequent Renewal for Program Years 2030-31, 2031-32, and 2032-33 1451
COOPERATION AGREEMENT FOR
HOUSING AND URBAN DEVELOPMENT COMMUNITY DEVELOPMENT AND PLANNING GRANTS FOR PROGRAM YEARS 2027-28, 2028-29, 2029-30 AND SUBSEQUENT RENEWAL FOR PROGRAM YEARS 2030-31, 2031-32, AND 2032-33, UNLESS TERMINATED
WHEREAS, This Agreement is made and entered into this day of , 2026, by and between San Bernardino County, of the State of California, hereinafter referred to as "COUNTY", and the City of Chino, a city within COUNTY, hereinafter referred to as "CITY."
WHEREAS, the U.S. Department of Housing and Urban Development, hereinafter called HUD, provides Community Development Block Grant, Catalog of Federal Domestic Assistance (CFDA) #14.218, HOME Investment Partnerships, CFDA #14.239, and Emergency Solutions Grants, CFDA #14.231, funds and other grants directly to qualified Metropolitan Cities, and Urban Counties via their Community Planning and Development (CPD) Division; and,
WHEREAS, the Housing and Community Development Act of 1974, as amended (Public Law 93-383), hereinafter referred to as ACT, provides that Community Development Block Grant, hereinafter referred to as "CDBG", funds may be used for the support of activities that pro vide decent housing and suitable living environments and expanded economic opportunities principally for persons of low- and moderate-income; and,
WHEREAS, the Congress of the United States has enacted the Cranston-Gonzalez National Affordable Housing Act, Title II of this Act created the HOME Investment Partnerships Program, hereinafter called “HOME”, that provides funds to states and local governments for the purpose of increasing the number of affordable housing opportunities for low- and moderate income families; and,
WHEREAS, the Congress of the United States provides funding for the Emergency Solutions Grant Program, hereinafter called “ESG”, for the purpose of assisting individuals and families in quickly regaining stability in permanent housing after experiencing a housing crisis or homelessness; and,
WHEREAS, this Cooperation Agreement covers CDBG, HOME, ESG and other HUD entitlement grants; and,
WHEREAS, the COUNTY is a qualified Urban County and hereinafter COUNTY PROGRAM will refer to the COUNTY’s CDBG, HOME, ESG and other CPD grants program as well as to the legislation and regulations that created and funded these programs; and,
WHEREAS, HUD requires Metropolitan Cities and Urban Counties to re-qualify every three (3) years in order to receive an allocation of various grant funds from HUD; and,
WHEREAS, the CITY and COUNTY both desire for the CITY to be a part of the COUNTY PROGRAM so both entities can benefit from increased efficiencies though economies of scale created by having the City’s funding allocation of these grants be added and be a part of the COUNTY PROGRAM for 2027-28, 2028-29, 2029-30 and every three (3) years thereafter; and,
WHEREAS, the CITY and COUNTY agree that the COUNTY shall be solely responsible for administering, managing and directing the COUNTY PROGRAM, including but not limited to the preparation of the Consolidated Plan that is required to be submitted to HUD in order for the COUNTY to have access to COUNTY PROGRAM funds and as such the COUNTY has final authority for selecting activities that will be funded with COUNTY PROGRAM funds; and,
WHEREAS, the execution of this Cooperation Agreement hereinafter referred to as AGREEMENT, is necessary in order to meet the desires of both the CITY and COUNTY of having the CITY be a part of COUNTY PROGRAM; and,
WHEREAS, the Chief Executive Officer of the COUNTY is authorized to execute this AGREEMENT on the 1452
COUNTY’s behalf; and,
WHEREAS, the City Manager of the CITY is authorized to execute this AGREEMENT on the CITY’s behalf.
NOW THEREFORE, in consideration of the mutual covenants herein set forth and the mutual benefits to be derived therefrom, the parties agree as follows:
1. DEFINITIONS
A. Amendment: A change, correction, clarification, or deletion to an auto-renewal cooperation agreement. An amendment may be necessary due to shifting requirements over time at the federal, state, or local government level.
B. Auto-Renewal Cooperation Agreement: A Cooperation Agreement or Joint Agreement containing an “auto-renewal” provision stating the agreement will automatically renew for one additional three- year qualification period after the initial three-year qualification period (enabling the agreement to be in effect for a total of six years).
C. CDBG Entitlement Program: HUD grant program which provides annual CDBG grants on a formula basis to Metropolitan Cities and Urban Counties to develop viable urban communities, provide decent housing and suitable living environments, and expand economic opportunities for low- and moderate- income people.
D. CITY: An incorporated area that is operated by a local governing body (for example, a city council).
E. Cooperation Agreement: Legal agreement between an Urban County and participating cities, which explains roles and responsibilities, restrictions, and CDBG program requirements. Cooperation agreements between the county and participating cities are required in counties that do not have essential powers in cities (most counties). Cooperation agreements are also required – even for counties that have essential powers in their cities – if the Urban County plans to award CDBG funds to participating cities or to carry out activities within the jurisdictional boundaries of those cities.
F. CPD: HUD’s Office of Community Planning and Development.
G. Delegate Agency Agreement: A legal agreement between an Urban County and a Metropolitan City in the Urban County. A delegate agency agreement allows an Urban County to manage and administer the Metropolitan City’s CDBG grant in addition to the county’s own CDBG grant.
H. Emergency Solutions Grant Program (ESG): Authorized under Subtitle B of Title IV of the McKinney-Vento Homeless Assistance Act, as amended. ESG funds are allocated by HUD to support local jurisdictions in addressing homelessness through eligible activities, including street outreach, emergency shelter, homelessness prevention, rapid re-housing, and HMIS administration.
I. Entitlement Communities Division: The division at CPD Headquarters responsible for administering the CDBG Entitlement Program and preparing the Urban County Notice. This division can address any questions about the Urban County qualification process and provide extensions for deadlines in this Notice.
J. Essential Powers: When an Urban County has legal authority to conduct “essential community development and housing assistance activities” in its unincorporated areas and/or in its participating cities (without consent from cities’ governing bodies). These essential activities include actions like acquiring property for reuse as low- and moderate-income housing, directly rehabilitating or providing financial assistance for housing, supporting low -rent housing activities, disposing of land to private developers for redevelopment, and condemning property for low -income housing. Most states only grant counties essential powers in unincorporated areas, but not in incorporated areas (cities).
K. HOME Consortium: A method for local governments that would not otherwise qualify for HOME funding to join with other contiguous units of local government to directly participate in the HOME program.
L. Incorporated Areas: areas that have been incorporated as an official entity under state law. These areas have a legally defined boundary and an active, functioning government.
M. Letter: A signed letter on official city or county government letterhead. An attached signed PDF letter on official city or county government letterhead may be sent via email.
N. Metropolitan City: A city within a metropolitan area which is the principal city of such area, as defined by the Office of Management and Budget (OMB), or any other city, within a metropolitan area, which 1453
has a population of 50,000 or more. Any city that was classified as a Metropolitan City for at least two years shall remain classified as a Metropolitan City. Metropolitan Cities are eligible to directly receive CDBG grant funding on a formula basis.
O. State: The State of California is the state government that provides funding, oversight, and programs to support housing, community development, and services for residents in California.
P. Unincorporated Areas: Areas in a county that have not been incorporated as cities, towns, townships, or villages. These areas may have a name, but they don’t have legally defined boundaries or governments.
Q. Urban County: A county that has met population thresholds to qualify to directly receive CDBG , HOME and ESG funds from HUD. Urban Counties are Entitlement communities under the CDBG , HOME and ESG Entitlement Program. Refer to the official definition of Urban Counties at Section 102(a)(6) of the HCDA for more information.
R. U.S. Department of Housing and Urban Development (HUD): The federal agency that provides funding and guidance to support housing, community development, and programs that assist low - and moderate-income individuals and families.
2. GENERAL
This AGREEMENT gives the COUNTY authority to undertake or assist in activities starting on July 1, 2027 for Program Years 2027-2028, 2028-29, 2029-30, which will be funded from COUNTY PROGRAM funds, which will include the CITY’s funding allocations, and from any program income generated from the expenditure of such funds. COUNTY and CITY agree to cooperate to undertake, or assist in undertaking, essential community development and housing assistance activities . This AGREEMENT shall automatically renew for one successive three-year Urban County qualification period, until such time as the City Council for the CITY or the COUNTY Board of Supervisors elects to terminate this AGREEMENT at the conclusion of the preceding three-year term. This AGREEMENT covers all COUNTY PROGRAM funds and other associated grants administered by HUD through its CPD Division or its successor.
By executing this AGREEMENT, CITY understands that it may not apply for grants under the Small Cities or State CDBG Programs from appropriations for program years during the term of this AGREEMENT, and CITY may not participate in a HOME consortium other than the COUNTY HOME program, regardless of whether COUNTY receives a HOME formula allocation. The CITY may only participate in the COUNTY’s ESG program and cannot receive funds directly from HUD or the State.
The purpose of the Delegate Agency Agreement (Exhibit 1), which accompanies this AGREEMENT, and its subsequent ATTACHMENTS, is to enable CITY to implement projects and or programs funded with CDBG funds as described in SECTION 16 OTHER AGREEMENTS.
3. TERM
The term of this AGREEMENT shall be for program years 2027-28, 2028-29, 2029-30 and shall commence as of July 1, 2027. This AGREEMENT will renew automatically for participation for one successive three-year Urban County qualification period, unless an earlier date of termination is fixed by HUD pursuant to COUNTY PROGRAM or until such time as the City Council for CITY or COUNTY Board of Supervisors elects to terminate this AGREEMENT at the conclusion of a three-year term. This AGREEMENT shall remain in effect until all COUNTY PROGRAM grant funds covered under the terms of this AGREEMENT, and any program income generated from the expenditure of such funds, are expended, and the funded activities are completed. This AGREEMENT may not be terminated or withdrawn by the parties for any circumstance or reason during the term of this AGREEMENT.
In order for the automatic renewal provisions of this AGREEMENT to be approved, HUD mandates that this AGREEMENT include a stipulation that requires CITY and COUNTY to adopt any amendment(s) necessary to meet the requirements for cooperation agreements set forth in an Urban County Qualification Notice applicable for a subsequent three-year urban c ounty qualification period, and to submit such amendment to HUD as provided in the Urban County Qualification Notice and that such 1454
failure to comply will void the automatic renewal for such qualification period.
In addition, as part of the Urban County re-qualification process the COUNTY goes through every three (3) years, COUNTY will notify CITY, via a letter, that CITY has the ability to terminate this AGREEMENT and not be included as part of the submission by COUNTY to HUD for re-qualifying as an Urban County for the subsequent three (3) year qualification period. CITY agrees to send a timely response letter to COUNTY stating its intentions to either continue to be a part the COUNTY PROGRAM or to elect to terminate this AGREEMENT and not be a part of the COUNTY’s upcoming submission to HUD to re-qualify as an Urban County for the subsequent three (3) year renewal period.
If COUNTY is due to reauthorize and re-execute the Cooperation Agreement at the end of the six -year maximum but experiences an emergency preventing timely renewal, the Cooperation Agreement may auto-renew for one additional three year qualification period (maximum total of nine years) only upon prior written approval by HUD’s CPD Field Office, following COUNTY’s written request explaining the emergency and the need for the exception.
The COUNTY will submit to HUD the letter notifying CITY of its ability to terminate this AGREEMENT as well as the CITY’s response letter. COUNTY will also submit to HUD a written legal opinion provided by COUNTY Counsel stating that the terms and provisions continue to be authorized under state and local law and that the AGREEMENT continues to provide full legal authority for COUNTY.
This automatic renewal procedure will remain the same even if the CITY is recognized by HUD as a Metropolitan City and therefore could receive CDBG funds directly from HUD.
The CITY will provide CITY Council minutes approving the CITY being a part of the COUNTY Urban County program and to the automatic renewal procedure.
4. PREPARATION OF APPLICATION
COUNTY, by and through its Community Development and Housing Department (CDH), shall be responsible for preparing and submitting to HUD all necessary applications , subject to approval of the COUNTY Board of Supervisors, for the COUNTY PROGRAM entitlement grants. This duty shall include the preparation and processing of COUNTY Housing, Community and Economic Development Needs Identification Report, Citizen Participation Plans, the County Consolidated Plan, and other related items associated with COUNTY PROGRAM grants, which satisfy its associated application requirements and regulations. All documents will include information provided by CITY.
5. COMPLIANCE WITH FINAL PROGRAMS AND PLANS
COUNTY and CITY shall comply in all respects with final Community Development plans and programs and the Consolidated Plan which are developed through mutual cooperation pursuant to the application requirements of COUNTY PROGRAM and their regulations and approved by HUD.
6. COMPLIANCE WITH LEGISLATION AND REGULATIONS
COUNTY and CITY shall comply with all applicable requirements of COUNTY PROGRAM and associated regulations, in utilizing grant funds under legislation that created and governs these grants, and shall take all actions necessary to assure compliance with COUNTY certifications required by Section 104(b) of Title I of the Housing and Community Development Act of 1974, and that all grants will be conducted and administered in conformity with all federal laws and regulations specified in HUD’s Urban County Notice, including but not limited to:
A. Title VI of the Civil Rights Act of 1964 (and implementing regulations at 24 CFR Part 1); B. Fair Housing Act (and implementing regulations at 24 CFR Part 100), including the duty to affirmatively further fair housing (AFFH);
C. Section 109 of Title I of the Housing and Community Development Act of 1974 (and implementing regulations at 24 CFR Part 6), which incorporates:
a. Section 504 of the Rehabilitation Act of 1973 (24 CFR Part 8); 1455
b. Title II of the Americans with Disabilities Act of 1990 (28 CFR Part 35); c. Age Discrimination Act of 1975 (24 CFR Part 146);
d. Section 3 of the Housing and Urban Development Act of 1968; e. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (49 CFR Part 24)
f. Section 104(d) of Housing and Community Development Act of 1974 (24 CFR Part 42) D. National Environmental Policy Act of 1969;
E. Executive Order 11988;
F. and all other applicable federal laws and regulations.
COUNTY shall not fund activities in, or in support of, any participating unit of general local government (CITY) that impedes the COUNTY’s ability to comply with its fair housing certification required under Section 104(b) of Title I of the Housing and Community Development Act of 1974, including the obligation to affirmatively further fair housing.
CITY acknowledges that failure to comply with fair housing requirements may constitute noncompliance by the COUNTY and may result in funding sanctions or other remedial actions by HUD.
To ensure compliance with applicable regulations, CITY shall maintain appropriate records and provide documentation upon request.
CITY agrees to adhere to the Delegate Agency Agreement (Exhibit 1 of this AGREEMENT) and its accompanying Attachments.
In order for COUNTY to avoid the risk of losing CDBG funds as a result of CITY not spending CITY CDBG funds in a timely manner as required by the ACT, COUNTY and CITY both agree that COUNTY has the authority to transfer CITY CDBG funds to any CDBG -eligible project/program at COUNTY’s sole discretion if CITY is not spending its CDBG funds in a timely manner. Prior to transferring CITY CDBG funds, COUNTY will notify CITY in writing that CITY is at risk of not meeting this timeliness requirement, and therefore, COUNTY will transfer CITY CDBG funds if timeliness is not met. As referred to in SECTION 12 DISPOSITION OF FUNDS, CITY and COUNTY both agree that CITY CDBG funds will be spent, to the greatest extent feasible in a manner CITY desires but COUNTY shall have the final and sole decision as to how CITY CDBG funds are spent.
Furthermore, CITY hereby covenants by and for itself, its successors and assigns, and all persons claiming under or through it that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, familial status, disability, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of any project funded by HOME or CDBG funds, nor shall CITY itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in any project funded as a result of this AGREEMENT.
CITY shall refrain from restricting the rental, sale or lease of any project funded as a result of this AGREEMENT on the basis of race, color, creed, religion, sex, marital status, familial status, disability, national origin or ancestry of any person.
CITY and COUNTY agree to cooperate to undertake, or assist in undertaking, community renewal and lower-income housing assistance activities.
CITY and COUNTY understand and agree that they may not sell, trade, or otherwise transfer all or any portion of HUD funds to a Metropolitan City, Urban County, unit of general local government, or insular area that directly or indirectly receives HUD funds in exchange for any funds, credits, or non-Federal considerations, but must use such funds for activities eligible under Title I of the Housing and Community 1456 Development Act of 1974, as amended.
7. USE OF FORCE
CITY certifies that it has adopted and is enforcing within its jurisdiction:
A. A policy prohibiting the use of excessive force by law enforcement agencies against any individuals engaged in non-violent civil rights demonstrations; and B. A policy of enforcing applicable State and local laws against physically barring entrance to or exit from a facility or location that is the subject of such non-violent civil rights demonstrations.
CITY further agrees that it shall maintain and enforce these policies as a condition of receiving funds under this AGREEMENT and in compliance with certifications required under Section 104(b) of Title I of the Housing and Community Development Act of 1974.
8. DRUG AND ALCOHOL FREE WORKPLACE
In recognition of individual rights to work in a safe, healthful and productive workplace, as a material condition of this AGREEMENT, CITY agrees that CITY employees, while performing services under this AGREEMENT:
A. Shall not be in any way impaired because of being under the influence of alcohol or an illegal or controlled substance.
B. Shall not possess an open container of alcohol or consume alcohol or possess or be under the influence of an illegal or controlled substance.
C. Shall not sell, offer, or provide alcohol or an illegal or controlled substance to another person, except where CITY or CITY’s employee who, as part of the performance of normal job duties and responsibilities, prescribes or administers medically prescribed drugs.
CITY shall inform all employees that are performing service for the COUNTY on COUNTY property, or using COUNTY equipment, of the COUNTY’s objective of a safe, healthful and productive work place and the prohibition of drug or alcohol use or impairment from same while performing such service for the COUNTY.
COUNTY may terminate for default or breach of this AGREEMENT and any other Contract the CITY has with the COUNTY, if the CITY or CITY’s employees are determined by the COUNTY not to comply with the above.
9. CONFLICT OF INTEREST
CITY shall make all reasonable efforts to ensure that no conflict of interest exists between its officers, employees, or subcontractors and the COUNTY. CITY shall make a reasonable effort to prevent employees, contractors, or members of governing bodies from using their positions for purposes that are, or give the appearance of being motivated by a desire for private gain for themselves or others , such as those with whom they have family business or other ties. Officers, employees, and agents of cities, counties, districts, and other local agencies are subject to applicable conflict of interest codes and state law. In the event the COUNTY determines a conflict of interest situation exists, any increase in costs associated with the conflict of interest situation may be disallowed by the COUNTY , and such conflict may constitute grounds for termination of the AGREEMENT . This provision shall not be construed to prohibit employment of persons with whom CITY’s officers, employees, or agents have family, business, or other ties so long as the employment of such persons does not result in increased costs over those associated with the employment of any other equally qualified applicant.
10. INDEMNIFICATION
CITY agrees to indemnify, defend (with counsel reasonably approved by COUNTY) and hold harmless the COUNTY and its authorized officers, employees, agents and volunteers from any and all claims, actions, losses, damages and/or liability arising out of this Contract from any cause whatsoever, including the acts, errors or omissions of any person and for any cost s or expenses incurred by the COUNTY on account of any claim except where such indemnification is prohibited by law. This indemnification 1457
provision shall apply regardless of the existence or degree of fault of indemnities. The CITY indemnification obligation applies to the COUNTY’s “active” as well as “passive” negligence but does not apply to the COUNTY’s “sole negligence” or “willful misconduct” within the meaning of Civil Code section 2782.
COUNTY agrees to indemnify, defend and hold harmless the CITY, its officers, agents, volunteers, and employees, from any and all claims, actual losses, damages and or liability that may result from the negligent acts, errors or omissions of the COUNTY, its authorized officers, employees, agents, or volunteers arising out of this Contract.
If the Parties are determined to be comparatively at fault for any claim, action, loss, or damage which results from their respective obligations under this Agreement, each Party shall indemnify the others to the extent of its comparative fault as determined in a legal action.
11. SELF-INSURANCE
CITY and COUNTY are authorized self-insured public entities for purposes of general liability, automobile liability, professional liability and workers’ compensation. CITY and COUNTY warrant that through their respective programs of self-insurance, they have adequate coverage or resources to protect against any liabilities arising out of their performance regarding the terms and conditions of this AGREEMENT.
12. DISPOSITION OF FUNDS
Unless prohibited by Federal Regulations, COUNTY and CITY agree that, to the greatest extent feasible, CDBG funds will be allocated by COUNTY to CITY out of the funds received pursuant to ACT, according to its proportional demographics, for activities and/or projects prioritized by CITY to alleviate its identified community development needs eligible under ACT. COUNTY , though its Board of Supervisors, shall be responsible for determining the final disposition and distribution of all funds received by COUNTY under ACT and other related grants and for selecting the projects for which such funds shall be used. Both parties agree that COUNTY has the authorization to redistri bute such funds when said projects are not implemented in a timely manner as described in SECTION 6, COMPLIANCE WITH LEGISLATION AND REGULATIONS.
HOME funds will be allocated by COUNTY to Developer(s) based on a competitive Notice of Funding Available process to address affordable housing needs by funding activities that are eligible under HOME regulations and COUNTY, by its Board of Supervisors, shall be responsible for determining the final disposition and distribution of all funds received by COUNTY under the HOME program as well as the other COUNTY PROGRAM funds and for selecting the projects for which such funds shall be used.
COUNTY shall be compensated for administering COUNTY PROGRAM and other related grants by utilizing allowable planning and administrative fee(s) and a project implementation fee.
13. DISPOSITION OF PROGRAM INCOME
CITY shall inform COUNTY regarding any income generated by the expenditure of COUNTY PROGRAM funds received by CITY. All said income, even if it is received after this AGREEMENT has expired, shall promptly be paid to COUNTY. COUNTY shall be responsible for monitoring and reporting to HUD on the use of any such program income; CITY is required to keep appropriate records and provide reports to COUNTY regarding program income. In the event of COUNTY PROGRAM funds close-out or change in status of CITY under COUNTY PROGRAM funds, any program income that is on hand or received subsequent to the close-out or change in status shall be paid to COUNTY. Any income generated from the disposition or transfer of real property prior to any such close-out or change of status shall be treated the same as program income. Any income generated from the disposition or transfer of real property subsequent to any such close-out or change of status shall promptly be paid to COUNTY.
14. DISPOSITION OF REAL PROPERTY
This section sets forth the standards which shall apply to real property acquired or improved in whole or 1458 in part using CDBG and HOME funds that are allocated to (within the control of) CITY. Prior to any modification or change in the use of said real property from the use or ownership planned at the time of its acquisition or improvements, CITY shall notify COUNTY and obtain authorization for said modification or change. CITY shall reimburse COUNTY with non-CDBG and non-HOME funds in an amount equal to the current fair market value (less any portion thereof attributable to expenditures of non-CDBG or non- HOME funds) of property acquired or improved with CDBG or HOME funds that is sold or transferred for a use, which does not qualify under CDBG and HOME regulations.
15. EFFECTIVE DATES
This AGREEMENT shall be initially effective for all purposes for the period beginning July 1, 2027 and ending June 30, 2030. Thereafter, this AGREEMENT will automatically renew for one successive three- year Urban County qualification period, commencing July 1, 2030 through June 30, 2033 when the COUNTY re-qualifies as an Urban County, until such time as the CITY or COUNTY elects to terminate the AGREEMENT at the conclusion of the preceding term. This AGREEMENT will be executed by COUNTY and CITY, properly submitted to HUD, the grantor, by the designated deadline, and approved by HUD.
16. OTHER AGREEMENTS
Pursuant to federal regulations at 24 CFR 570.501(b), CITY is subject to the same requirements applicable to subrecipients, including the requirement of a written agreement set forth in federal regulations at 24 CFR 570.503 and other related regulations. COUNTY and CITY as part of this AGREEMENT are also entering into a Delegate Agency Agreement (Exhibit 1 of this AGREEMENT) and its accompanying ATTACHMENTS, for the purpose of having CITY implement CDBG-funded projects and/ or programs.
COUNTY and CITY both agree it would be more effective and efficient if CITY implements projects and or programs funded with CITY CDBG funds. The purpose and intent of the Delegate Agency Agreement is to create a mechanism whereby COUNTY delegates its authority, under its Urban County agreement with HUD to CITY, thereby enabling CITY to implement projects and programs funded with CITY CDBG funds while the COUNTY ensures all associated rules and regulations are followed. Prior to disbursing any CDBG funds to CITY, COUNTY, shall execute and adhere to the Delegate Agency Agreement and related documents with CITY. Said agreement shall remain in effect during any period that CITY has control over CDBG funds, including program income.
The Delegate Agency Agreement provides a detailed account of the policies and procedures on how a project is officially assigned by COUNTY to CITY for implementation and the steps that need to be completed by both CITY and COUNTY (above and beyond the approval of this AGREEMENT) prior to any obligation or expenditure of funds whereby the CITY will seek reimbursement from COUNTY. Any obligation and or expenditure made by CITY without the expressed written approval by COUNTY may result in CITY not being able to utilize CDBG funds.
17. ELECTRONIC SIGNATURES
This AGREEMENT may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts shall together constitute one and the same AGREEMENT. The parties shall be entitled to sign and transmit an electronic signature of this AGREEMENT (whether by facsimile, PDF or other mail transmission), which signature shall be binding on the party whose name is contained therein. Each party providing an electronic signature agrees to promptly execute and deliver to the other party an original signed AGREEMENT upon request.
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IN WITNESS WHEREOF, COUNTY and CITY have each caused this AGREEMENT to be subscribed by its respective duly authorized officers, on its behalf.
FOR COUNTY USE ONLY
Approved as to Legal Form Reviewed for Contract Compliance Reviewed/Approved by Department
Suzanne Bryant, Deputy County Counsel Robert Gilliam, Acting Director Date Date Date
SAN BERNARDINO COUNTY
CITY OF CHINO
By:
Luther Snoke, Chief Executive Officer (Authorized signature - sign in blue ink)
Name:
Linda Reich
Dated:
Title: City Manager
(Print or Type)
Dated:
Address:
P.O Box 667
Chino, CA 91708-0667
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EXHIBIT 1
COMMUNITY DEVELOPMENT BLOCK GRANT
CITY-COUNTY DELEGATE AGENCY AGREEMENT
FOR PROGRAM YEARS 2027-28, 2028-29, 2029-30 AND SUBSEQUENT RENEWAL FOR PROGRAM YEARS 2030-31, 2031-32, AND 2032-33, UNLESS TERMINATED
WHEREAS, this Delegate Agency Agreement, herein after referred to as DA AGREEMENT, accompanies the Cooperation Agreement, made and entered into, by and between San Bernardino County, a political subdivision of the State of California, referred to as "COUNTY", and the City of Chino, a municipal corporation located within the boundaries of San Bernardino County, referred to as "CITY"; and
WHEREAS, COUNTY has been designated an "Urban County" by the United States Department of Housing and Urban Development, hereinafter referred to as "HUD", as that term is defined in Title I of the Housing and Community Development Act of 1974 as amended, hereinafter referred to as "ACT"; and
WHEREAS, COUNTY will administer a Community Development Block Grant (CDBG) program (CFDA No.
14.218) that includes the development of a Consolidated Submission of the HUD Housing and Community Development Grant programs, hereinafter referred to as "CONSOLIDATED PLAN", which constitutes COUNTY's application for federal assistance under said ACT; and,
WHEREAS, CITY and COUNTY have entered into a Cooperation Agreement so as to enable CITY to be a part of COUNTY's CDBG program, commencing with Program Years 2027-28, 2028-29, 2029-30 and set to automatically renew for one successive three- year Urban County qualification period while the COUNTY is designated as an Urban County, to which this DA AGREEMENT is subordinate and supplementary agreement per SECTION 16 of Cooperation Agreement; and,
WHEREAS, COUNTY administers a CDBG program for a number of cooperating cities, and in the unincorporated areas of San Bernardino County, through its Community Development and Housing Department, hereinafter referred to as "CDH"; and,
WHEREAS, CITY has the ability, expertise and resources to manage and administer CDBG -funded projects/programs and agrees to adhere to all rules, regulations and related requirements associated with the utilization of CDBG funds; and,
WHEREAS, CITY desires to assume the responsibility of project implementation within its corporate limits in cooperation with COUNTY; and,
WHEREAS, both COUNTY and CITY seek to coordinate their community development and neighborhood revitalization efforts in order to fully utilize all available resources while increasing efficiencies though economies of scale associated with the planning and administration of a large scale CDBG program; and NOW, THEREFORE, it is understood and agreed by and between the parties hereto as follows:
1. DEFINITONS
A. Amendment: A change, correction, clarification, or deletion to an auto-renewal cooperation agreement. An amendment may be necessary due to shifting requirements over time at the federal, state, or local government level.
B. Auto-Renewal Delegate Agency Agreement: A delegate agency agreement which contains an “auto-renewal” provision stating the agreement will automatically renew for one additional three- year qualification period after the initial three-year qualification period (enabling the agreement to be in effect for a total of six years).
C. CDBG Entitlement Program: HUD grant program which provides annual CDBG grants on a formula basis to Metropolitan Cities and Urban Counties to develop viable urban communities, provide decent housing and suitable living environments, and expand economic opportunities for low- and moderate- income people.
D. CITY: An incorporated area that is operated by a local governing body (for example, a city council).
E. Cooperation Agreement: Legal agreement between an Urban County and participating CITYs, which explains roles and responsibilities, restrictions, and CDBG program requirements. Cooperation 1461
agreements between the county and participating citie s are required in counties that do not have essential powers in cities (most counties). Cooperation agreements are also required – even for counties that have essential powers in their cities – if the Urban County plans to award CDBG funds to participating cities or to carry out activities within the jurisdictional boundaries of those cities.
F. CPD: HUD’s Office of Community Planning and Development.
G. Delegate Agency Agreement: A legal agreement between an Urban County and a Metropolitan City in the Urban County. A delegate agency agreement allows an Urban County to manage and administer the Metropolitan City’s CDBG grant in addition to the county’s own CDBG grant.
H. Entitlement Communities Division: The division at CPD Headquarters responsible for administering the CDBG Entitlement Program and preparing this Urban County Notice. This division can address any questions about the Urban County qualification process and provide extensions for deadlines in this Notice.
I. Essential Powers: When an Urban County has legal authority to conduct “essential community development and housing assistance activities” in its unincorporated areas and/or in its participating CITYs (without consent from CITYs’ governing bodies). These essential activities include actions like acquiring property for reuse as low- and moderate-income housing, directly rehabilitating or providing financial assistance for housing, supporting low -rent housing activities, disposing of land to private developers for redevelopment, and condemning property for low -income housing. Most states only grant counties essential powers in unincorporated areas, but not in incorporated areas (CITYs).
J. Incorporated Areas: Areas that have been incorporated as an official entity under state law. These areas have a legally defined boundary and an active, functioning government.
K. Letter: A signed letter on official city or county government letterhead. An attached signed PDF letter on official city or county government letterhead may be sent via email.
L. Metropolitan City: A city within a metropolitan area which is the principal city of such area, as defined by the Office of Management and Budget (OMB), or any other city, within a metropolitan area, which has a population of 50,000 or more. Any city that was classified as a Metropolitan City for at least two years shall remain classified as a Metropolitan City. Metropolitan Cities are eligible to directly receive CDBG grant funding on a formula basis.
M. State: The State of California is the state government that provides funding, oversight, and programs to support housing, community development, and services for residents in California.
N. Unincorporated Areas: Areas in a county that have not been incorporated as cities, towns, townships, or villages. These areas may have a name, but they don’t have legally defined boundaries or governments.
O. Urban County: A county that has met population thresholds to qualify to directly receive CDBG, HOME and ESG funds from HUD. Urban Counties are Entitlement communities under the CDBG, HOME and ESG Entitlement Program. Refer to the official definition of Urban Counties at Section 102(a)(6) of the HCDA for more information.
P. U.S. Department of Housing and Urban Development (HUD): The federal agency that provides funding and guidance to support housing, community development, and programs that assist low- and moderate-income individuals and families.
2. PURPOSE
This DA AGREEMENT, which is Exhibit 1 to the Cooperation Agreement, is made pursuant to the provisions of Article 1, Chapter 5, Division 7, Title I of the Government Code of the State of California (commencing with Section 6500), relating to public agencies. The purpose of this DA AGREEMENT is to enable CITY to implement CITY-CDBG funded projects or programs while adhering to the provisions of the Cooperation Agreement in carrying out CDBG activities that have been approved by COUNTY for CITY in accordance with the CONSOLIDATED PLAN. The purpose will be accomplished pursuant to the requirements of the ACT, its regulations and other federal, state and county laws and policies in the manner hereinafter set forth. This DA AGREEMENT is not a standalone agreement and is only valid as a component of the Cooperation Agreement; whereas the Cooperation Agreement is a standalone agreement and will be valid even if this DA AGREEMENT no longer exists. In absence of this DA AGREEMENT, the CITY would not be able to implement any CDBG -funded projects or programs; however the COUNTY would still be able to implement CITY or COUNTY CDBG-funded projects and or programs as authorized under the Cooperation Agreement.
Unless specified otherwise, CDH shall have the authority to represent COUNTY regarding the terms and conditions of this DA AGREEMENT and the administration thereof.
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3. TERM
This DA AGREEMENT shall become initially effective starting Program Years 2027-2028, 2028-29, 2029- 30, beginning on July 1, 2027 and ending June 30, 2030. Thereafter, commencing July 1, 2030 this DA AGREEMENT, as part of the Cooperation Agreement, will automatically renew for one successive three- year Urban County qualification period for Program Years 2030-31, 2031-32 and 2032-33, when the COUNTY re-qualifies as an Urban County, until such time as the CITY or COUNTY elects to terminate at the conclusion of a 3-year term. Even though this DA AGREEMENT does not stand alone, it may be extended beyond the 3-year term in order to complete the construction of a previously funded project(s).
COUNTY, through its Chief Executive Officer or CDH Deputy Executive Officer, or Director , may grant an extension of up to six (6) months to the term of this DA AGREEMENT for the purpose of completing CITY's projects/activities that are underway and which cannot be completed during the term of this DA AGREEMENT. CITY must request any such extension in writing. Any extension will only be effective if granted in writing by COUN TY. Maintenance and operation and monitoring requirements for facilities developed under the terms of this DA AGREEMENT, as described in SECTION 10 MAINTENANCE AND OPERATION OF FACILITIES and SECTION 1 6 MONITORING, shall be in effect and continue in full force as prescribed in this section of the Cooperation Agreement and continue even if the Cooperation Agreement is terminated or has expired.
4. AUTHORIZATION OF PROJECT/ACTIVITY
CITY shall not initiate nor incur expenses for any CDBG -funded project or activity covered under the terms of this DA AGREEMENT prior to receiving written authorization from COUNTY. Written authorization will be accomplished when Attachments A (Request to Initiate Project or Activity) and B (Project or Activity Description) to this DA AGREEMENT have been completed for a CDBG -funded project or activity and signed by CITY and countersigned by CDH. Any such authorized Project or Activity shall hereinafter be referred to as an "AUTHORIZED PROJECT."
5. IMPLEMENTATION OF AUTHORIZED PROJECT
CITY agrees to implement AUTHORIZED PROJECTS in the manner prescribed in the Delegate Agency Coordination Procedures (Attachment C), using the forms and language contained in the Delegate Agency Construction Contract Provisions (Attachment D), and agrees to comply with all applicable local, county, state and federal regulations associated with the implementation of CDBG projects and with DA AGREEMENT.
CITY may contract for all necessary services to complete AUTHORIZED PROJECTS described on its executed Attachments A and B provided that contracts are submitted to and approved in writing by CDH prior to their execution. CITY Attorney is responsible for assuring and certifying that the AUTHORIZED PROJECT undertaken by CITY’s contracting party complies with all applicable regulations and statutes, as amended, listed in Attachment C, the Delegate Agency Construction Contract, Section IV.
6. MODIFICATION OF AUTHORIZED PROJECTS
All modifications to AUTHORIZED PROJECT must be pre-approved by COUNTY in order to be considered a part of AUTHORIZED PROJECT and eligible for reimbursement by COUNTY. CITY may request modification(s) to CDBG funding levels authorized by Attachment A or the pertinent Project Description (i.e., Scope of Activity) authorized by Attachment B. Upon receipt of a written request from CITY, and approval by COUNTY, COUNTY will revise Attachments A and B.
7. CONSOLIDATED PLAN AMENDMENT
Requests by CITY to add, delete or substantially modify an activity listed in CONSOLIDATED PLAN must be made in writing to COUNTY. Requests to add new activity(ies) must be accompanied by a CDBG project proposal application.
Substantial modifications are defined as follows: 1) an increase in funding for a CDBG public service- type activity in an amount greater than $100,000 over the current funded amount; or 2) an increase in the funding for other activities (public facility improvements, code enforcement, acquisition, etc.) in an amount greater than $500,000 over the current funded amount; or 3) a new activity not previously listed and described in the CONSOLIDATED PLAN/Annual Action Plan; or 4) a change in the type of activity; or 5) a change in the location of the activity; or 6) a change in the beneficiaries of the activity.
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Requests for additions and substantial modifications will be reviewed by COUNTY for eligibility and compatibility with CONSOLIDATED PLAN. Additions, deletions and substantial modifications must be approved by CITY Council action and supportive documentation for said action must be sent to COUNTY.
CITY shall comply with the requirements of and participate in the implementation of the citizen participation portion of CONSOLIDATED PLAN.
8. COUNTY RESPONSIBILITIES
COUNTY, through CDH , is empowered to enforce all federal regulations pertaining to CDBG -funded projects undertaken by CITY under Cooperation Agreement. CITY recognizes that COUNTY, as the formal grantee of the CDBG, has full responsibility and obligations to HUD for undertaking the CDBG Program and has full authority in administering and allocating funds. CITY will have no direct responsibilities or obligations to HUD, except as identified, under Cooperation Agreement. COUNTY will provide technical assistance to CITY in a timely and expeditious manner upon written request to CDH Administrator.
9. CONFORMANCE TO COUNTY PROCEDURES
Under this DA AGREEMENT, CITY elects to be responsible for implementing CDBG-funded projects.
However, in implementing said projects, CITY must perform all services and activities in accordance with federal and state statutory requirements and with the policies and procedures established by the COUNTY Board of Supervisors, and shall comply with the following:
A. COMMUNITY DEVELOPMENT ADMINISTRATOR
Upon COUNTY and CITY's mutual assent to this DA AGREEMENT , CITY will designate a "Community Development Administrator" and submit to CDH written notification from CITY. The Community Development Administrator is the responsible authority for all correspondence with COUNTY, and is the signatory on AUTHORIZED PROJECT Attachments A and B and shall advise the CITY Council, CITY administration and CITY staff, as appropriate, regarding the CDBG program. CITY may, by written notification as set forth below, change the Community Development Administrator.
B. FISCAL CONTACT PERSON
For purposes of this DA AGREEMENT, CITY shall also designate a fiscal contact through written notification to CDH. The fiscal contact person shall be responsible for billing and fiscal procedures regarding the CDBG program and will serve as the primary contact for technical fiscal matters.
CITY may, by written notification as set forth below, change the fiscal contact person.
CITY shall be responsible for maintaining complete and separate fiscal accounts for CDBG funds which come under its control in such manner as to permit the reports required by COUNTY to be prepared therefrom and to permit the tracing of CDBG funds to their final expenditure. CITY will submit to CDH complete and detailed project descriptions, budgets, and expenses for each project that CITY implements with CDBG funds along with monthly reports of grant expenditures.
10. MAINTENANCE AND OPERATION OF FACILITIES
CITY shall provide maintenance and operation for the life of any and all facilities constructed with CDBG funds under Cooperation Agreement that are CITY owned or operated, for the life of the facility, not less than 10 years. This Section shall survive the termination of this DA AGREEMENT and/ or Cooperation Agreement.
11. FUNDING LIMITS
CDBG funding of AUTHORIZED PROJECTS is limited to the amount allocated to CITY as listed in the Attachment A (Request to Initiate Project or Activity).
12. DISBURSEMENT OF FUNDS
All CDBG funds allocated to CITY'S AUTHORIZED PROJECT(S) shall be received from the federal government by COUNTY under ACT. CDH will disburse the funds to CITY on a cost reimbursement basis. Billing shall be accompanied by all pertinent source documentation to be presented to CDH by CITY on or about the first day of each month, allowing 30 days for payment on the part of CDH. COUNTY shall be entitled to retain from such funds such amount as is calculated as the direct costs (including, but not limited to, salaries, benefits, mileage, actual cost of materials, meals and other authorized expenses incurred by COUNTY in implementing CITY's AUTHORIZED PROJECTS, in accordance with applicable federal regulations, including 2 CFR Part 200, and San Bernardino County policies and procedures 1464 governing travel and reimbursement.
13. WITHHOLDING OF FUNDS
COUNTY shall retain the right to withhold funds for any programs carried out by CITY, CITY's Contractor, or CITY's subcontractor upon giving written notice to CITY indicating that COUNTY has determined that CITY has not performed its obligations as stated in this Delegate Agency Agreement and or Cooperation AGREEMENT in a satisfactory or timely manner consistent with federal regulations or policy. COUNTY shall notify CITY in writing of this determination, specifying the objection(s) to CITY's performance. CITY shall then have a maximum of ten (10) days in which to remedy said deficiencies. Should said deficiencies not be remedied within the above mentioned ten (10) day period, COUNTY shall have full authority to reallocate CITY's CDBG program funding to any other eligible activity(ies), which can be implemented or to assume sole responsibility for carrying out any and/or all AUTHORIZED PROJECTS, upon written notice to CITY. Upon such notice, CITY agrees to cease all activity provided hereunder, as specified in said notice.
14. PROGRAM INCOME
Program income represents net income directly generated from the use of CDBG funds by CITY as a result of the activity funded under the terms of DA AGREEMENT. When such income is generated by an activity only partially assisted with CDBG funds, the income shall be prorated to reflect the percentage of CDBG funds used. CITY shall return program income to COUNTY even if it is received after this DA AGREEMENT has expired. COUNTY shall have full authority to reallocate program income funding to any other eligible activity(ies), which can be implemented in a satisfactory or timely manner consistent with federal regulations or policy. Program income shall be returned to COUNTY within 30 days after: a) disposition or sale of real or personal property occurs or; b) cumulative program income reaches increments of $1,000; or c) the end of each program year. CITY shall include in the reports required by Section 15, PROGRAM REPORTING AND RETENTION OF RECORDS, all sources and amounts of program income on a monthly and year-to-date basis.
Program income returned by COUNTY to CITY will be spent by CITY on only those costs authorized under this DA AGREEMENT. All provisions of DA AGREEMENT shall apply to said use of program income funds. CITY shall account for the receipt and use of program income in such a way that program income is spent on AUTHORIZED PROJECTS before additional CDBG funds are spent.
Any program income on-hand when this DA AGREEEMENT expires or received after such expiration will be paid to COUNTY within thirty (30) days.
15. PROGRAM REPORTING AND RETENTION OF RECORDS
CITY agrees to prepare and submit financial, program progress, and other reports as required by HUD or COUNTY directives. CITY shall maintain such program, property, personnel, financial, statistical, and other records, supporting documents, and accounts as are considered necessary by HUD or COUNTY to assure proper accounting for all DA AGREEMENT funds.
Said records, documents, and accounts shall be retained by CITY for a minimum of three (3) years, unless a longer period is required by COUNTY policy. The retention period shall begin from the date the COUNTY submits its annual performance and evaluation r eport, as prescribed in 24 CFR 91.520, in which the activities under this DA AGREEMENT are reported for the final time. Said COUNTY submission will follow CITY’s final submission of required reports to COUNTY.
Records and accounts subject to litigation, audit, or monitoring findings shall be retained until all issues are resolved and final action taken, even if this extends beyond the retention period.
Records that pertain to real property and equipment shall be retained for the period required under 2 CFR Part 200 and applicable HUD regulations. The retention period for records relating to program income shall begin at the end of the COUNTY program year in which the income is earned.
All CITY records, with the exception of confidential client information, shall be made available to representatives of COUNTY and appropriate federal agencies. CITY shall submit all data necessary for COUNTY to complete required reports in accordance with HUD regulations, in the format and within the timeframes specified by the Director of CDH or designee.
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All records relating to CITY’s personnel, consultants, subcontractors, services, and expenditures under this DA AGREEMENT shall be maintained in accordance with generally accepted accounting principles (GAAP) and in compliance with 2 CFR Part 200. Records shall include sufficient source documentation to support all costs.
16. MONITORING
CDH Administrator or designee will conduct periodic monitoring of CITY administration of AUTHORIZED PROJECTS. Monitoring will focus on the extent to which the CONSOLIDATED PLAN has been implemented, measurable goals achieved and effectiveness of project management, and impact of AUTHORIZED PROJECTS. Authorized COUNTY and HUD representatives shall have the right of access to all activities and facilities operated by CITY under this DA AGREEMENT. Facilities include all files, records, and other documents related to the performance of this DA AGREEMENT. CITY will permit on-site inspection by COUNTY and HUD representatives, and ensure that its employees furnish such information, as in the judgment of COUNTY and HUD representatives, may be relevant to a question of compliance with contractual conditions and HUD directives, or the effectiveness, legality, and achievements of the program.
17. ACCOUNTING
CITY shall establish and maintain, on a current basis, a financial management system in accordance with GAAP and in compliance with 2 CFR Part 200. The system shall provide for accurate, current, and complete disclosure of financial results of federally funded activities.
18. AUDITS
CITY is required to arrange and pay for an independent financial and compliance audit annually for each program year during which federal funds are received under this DA AGREEMENT as required by Circular A-128 pursuant to the Single Audit Act of 1984, Public Law 98-502. The results of the single audit must be submitted to COUNTY within 30 days of completion. Within 30 days of the submittal of said audit report, CITY shall provide a written response to all conditions or findings reported in said audit report.
The response must examine each condition or finding and explain a proposed resolution, including a schedule for correcting any deficiency. All condition or finding correction actions shall take place within six months after CDH's receipt of the audit report. An audit may also be conducted by federal, state or local funding source agencies as part of the COUNTY's audit responsibilities. COUNTY and its authorized representatives shall, at all times, have access for the purpose of audit or inspection to any and all books, documents, papers, records, property, and premises of CITY. CITY's staff will cooperate fully with authorized auditors when they conduct audits and examinations of CITY's program. If indications of misappropriation or misapplication of the funds of this DA AGREEMENT cause COUNTY to require a special audit, the cost of the audit will be encumbered and deducted from funds allocated to CITY’s CDBG AUTHORIZED PROJECTS. Should COUNTY subsequently determine that the special audit was not warranted, the amount encumbered will be restored to said CDBG AUTHORIZED PROJECT allocations.
Should the special audit confirm misappropriation or misapplication of funds, CITY shall reimburse COUNTY the amount of misappropriation or misapplication from non-CDBG funding sources.
19. REVERSION OF ASSETS
Upon DA AGREEMENT termination, CITY shall transfer to COUNTY all CDBG funds on-hand (including, but not limited to, program income) at the time of expiration and any accounts receivable attributable to the use of CDBG funds.
All real property acquired or improved in whole or in part with CDBG funds in excess of $25,000 under this DA AGREEMENT must continue in the use that provides the service benefits and national objectives, for which it was funded until five (5) years after expiration of this DA AGREEMENT as set forth in 24 CFR 570.503, or such longer period of time as determined by COUNTY; or it must be disposed of in a manner resulting in a reimbursement to COUNTY in the amount of the current fair market value of the property, as determined by COUNTY, less any portion thereof attributable to expenditures of non-CDBG funds for the acquisition of, or improvement to the property. This Section 19 shall survive the termination of this DA AGREEMENT.
20. TERMINATION AND TERMINATION COSTS
This DA AGREEMENT may be terminated in whole or in part at any time by either party upon giving sixty (60) days’ notice in writing to the other party if for whatever reason either party no longer desires to have 1466 CITY implement CDBG-funded projects/programs. If the DA AGREEMENT is terminated, the DA AGREEMENT shall continue in full force until such time as described in SECTION 2 PURPOSE and SECTION 3 TERM of DA AGREEMENT. An agreement must be reached by both parties as to conditions for termination in compliance with the provisions of federal regulations at 24 CFR Part 85.44, Termination for Convenience. CDH is hereby empowered to give said notice, subject to ratification by the COUNTY Board of Supervisors.
COUNTY may immediately terminate this DA AGREEMENT upon the termination, suspension, discontinuation or substantial reduction in HUD CDBG funding for the DA AGREEMENT activity or if for any reason the timely completion of the work under this DA AGREEMENT is rendered improbable, infeasible or impossible. If CITY materially fails to comply with any term of this DA AGREEMENT, COUNTY may take one or more of the actions provided under the federal regulation at 24 CFR Part 85.43, Enforcement, which includes temporarily withholding cash, disallowing non-compliant costs, wholly or partly terminating the award, withholding future awards, and other remedies that are legally available. In such an event, CITY shall be compensated for all services rendered and all necessarily incurred costs performed in good faith in accordance with the terms of this DA AGREEMENT that have been previously reimbursed, to the date of said termination to the extent that CDBG funds are available from HUD.
21. PROJECT ACKNOWLEDGMENT
Should CITY determine that the funding sources or the names of responsible public officials be displayed on a completed building or significant project, such identification should be acknowledged on a plaque, permanently mounted in an appropriate location, made of bronze or other appropriate material, acknowledging the funding source as the “Department of Housing and Urban Development, San Bernardino County Community Development Block Grant .” The current Board of Supervisors and the members of the CITY Council shall also be identified. When multiple funding sources are utilized to construct a project, all funding sources shall be identified. The listing order of multiple funding sources identified on the plaque shall be the largest dollar amount first, the second largest dollar amount second, etc.
22. CONTRACT COMPLIANCE
When possible, CITY should ensure that small businesses, minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms are considered in compliance with provisions of 2 CFR § 200.321.
CITY shall comply with all applicable federal, state, and local laws, regulations, and policies relating to equal employment opportunity and nondiscrimination in employment and contracting, including, but not limited to, Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, and applicable HUD requirements.
To the extent required by applicable federal law and funding requirements, CITY shall comply with Executive Order requirements related to equal employment opportunity, as may be amended, superseded, or replaced from time to time.
In addition, CITY shall make every effort to employ residents of the area and shall keep a report of CITY staff positions that have been funded directly by, or as a result of this program.
23. CONFIDENTIALITY
CITY shall protect from unauthorized use or disclosure the names and other identifying information concerning persons receiving services pursuant to this DA AGREEMENT, except for statistical information not identifying any participant. CITY shall not use or disclose any identifying information for any purpose other than carrying out the C ITY's obligations under this DA AGREEMENT , except as may otherwise be required by law. This provision will remain in force even after the termination of the DA AGREEMENT.
24. DISCRIMINATION
During the term of the DA AGREEMENT, CITY shall not discriminate against any employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, sexual orientation, age, or military and veteran status.
CITY shall comply with all applicable federal, state, and local laws, regulations, and policies relating to 1467
nondiscrimination, equal employment opportunity, and contracting, including, but not limited to, Title VI of the Civil Rights Act of 1964, Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, and applicable HUD requirements, as such laws and regulations may be amended, superseded, or replaced from time to time.
25. ENVIRONMENTAL REQUIREMENTS
In accordance with County Policy 11-08, the COUNTY prefers to acquire and use products with higher levels of post-consumer recycled content. Environmentally preferable goods and materials must perform satisfactorily and be available at a reasonable price. The COUNTY requires CITY to use recycled paper for any printed or photocopied material created as a result of this DA AGREEMENT. CITY is also required to use both sides of paper sheets for reports submitted to the COUNTY whenever practicable.
To assist the COUNTY in meeting the reporting requirements of the California Integrated Waste Management Act of 1989 (AB 939), CITY must be able to annually report the COUNTY’s environmentally preferable purchases. CITY must also be able to report on envi ronmentally preferable goods and materials used in the provision of their service to the COUNTY, utilizing a COUNTY-approved form.
26. IMPROPER INFLUENCE
CITY shall make all reasonable efforts to ensure that no COUNTY officer or employee, whose position in the COUNTY enables him/her to influence any award of the DA AGREEMENT or any competing offer, shall have any direct or indirect financial interest resulting from the award of the DA AGREEMENT or shall have any relationship to the CITY or officer or employee of the CITY.
27. IMPROPER CONSIDERATION
CITY shall not offer (either directly or through an intermediary) any improper consideration such as, but not limited to cash, discounts, service, the provision of travel or entertainment, or any items of value to any officer, employee or agent of the COUNTY in an attempt to secure favorable treatment regarding this Contract.
COUNTY, by written notice, may immediately terminate this DA AGREEMENT if it determines that any improper consideration as described in the preceding paragraph was offered to any officer, employee or agent of the COUNTY with respect to the proposal and award process. This prohibition shall apply to any amendment, extension or evaluation process once a contract has been awarded.
CITY shall immediately report any attempt by a C OUNTY officer, employee or agent to solicit (either directly or through an intermediary) improper consideration from C ITY. The report shall be made to the supervisor or manager charged with supervision of the employee or the County Administrative Office. In the event of a termination under this provision, COUNTY is entitled to pursue any available legal remedies.
28. STANDARDS OF CONDUCT
Pursuant to 2 CFR Part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards) and 24 CFR 570.611 (Conflict of Interest), CITY shall maintain a written code or standards of conduct governing the performance of its officers, employees, or agents engaged in the award and administration of contracts supported by federal funds.
No employee, officer, or agent of the CITY shall participate in the selection, award, or administration of a contract supported by federal funds if a real or apparent conflict of interest would be involved. Such a conflict would arise when:
A. The employee, officer or agent;
B. Any member of his immediate family;
C. His or her partner; or
D. An organization, which employs, or is about to employ, any of the above, has financial or other interest in the firm selected for award.
CITY officers, employees or agents shall neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to sub-Agreements.
CITY may set minimum rules where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value.
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To the extent permitted by state or local law or regulations, such standards of conduct shall provide for penalties, sanctions, or other disciplinary actions for violations of such standards by CITY’s officers, employees, or agents, or by contractors or their agents.
29. FORMER COUNTY OFFICIALS
CITY agrees to provide or has already provided information on former County Administrative Officials (as defined below) who are employed by or represent CITY. The information required includes a list of former County Administrative Officials, who terminated COUNTY employment within the last five (5) years and are now officers, or employees of CITY. The information includes the employment with or representation of CITY. For purposes of this provision, " County Administrative Official" is defined as a member of the Board of Supervisors or such Officer's staff, Chief Executive Officer or member of such Officer's staff, Department or Group Head, Assistant Department or Group Head, or any employee in the Exempt Group, Management Unit or Safety Management Unit.
30. RELIGIOUS PROSELYTIZING OR POLITICAL ACTIVITIES
CITY agrees that it will not perform or permit any religious proselytizing or political activities in connection with the performance of this DA AGREEMENT . Funds under this DA AGREEMENT will be used exclusively for performance of the work required under this DA AGREEMENT and no funds made available under this AGREEMENT shall be used to promote any religious or political activities.
31. INDEMNIFICATION
CITY agrees to indemnify, defend and hold harmless COUNTY and its respective authorized officers, employees, agents and volunteers from any and all claims, actions, losses, damages, and/or liability arising out of this DA AGREEMENT, resulting from the negligent acts, errors or omissions of the CITY, its authorized officers, employees, agents or volunteers, including, but not limited to, such liability, claims, losses, demands, and actions incurred by COUNTY as a result of the determination by HUD or its successor that activities undertaken by CITY under the program(s) fail to comply with any laws, regulations or policies applicable thereto or that any funds billed by and disbursed to CITY under this DA AGREEMENT were improperly expended.
COUNTY agrees to indemnify, defend and hold harmless CITY, its officers, agents, volunteers, and employees, from any and all claims, actual losses, damages and or liability that may result from the negligent acts, errors or omissions of the COUNTY, its authorized officers, employees, agents, or volunteers arising out of this DA AGREEMENT.
If the Parties are determined to be comparatively at fault for any claim, action, loss, or damage which results from their respective obligations under this DA AGREEMENT, each Party shall indemnify the others to the extent of its comparative fault as determined in a legal action.
This SECTION 31 INDEMNICATION shall survive the termination of this DA AGREEMENT.
32. INFORMAL DISPUTE RESOLUTION
In the event the COUNTY determines that service is unsatisfactory, or in the event of any other dispute, claim, question or disagreement arising from or relating to this DA AGREEMENT or breach thereof, the parties hereto shall use their best efforts to settle the dispute, claim, question or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both parties.
33. LEGALITY AND SEVERABILITY
The parties’ actions under the DA AGREEMENT shall comply with all applicable laws, rules, regulations, court orders and governmental agency orders. The provisions of this DA AGREEMENT are specifically made severable. If a provision of the DA AGREEMENT is terminated or held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall remain in full effect.
34. LICENSES,PERMITS AND/OR CERTFICIATIONS
CITY shall ensure that it has all necessary licenses, permits and/or certifications required by the laws of federal, state, county, and municipal laws, ordinances, rules and regulations. CITY shall maintain these licenses, permits and/or certifications in effect for the duration of this DA AGREEMENT. CITY will notify COUNTY immediately of loss or suspension of any such licenses, permits and/or certifications. Failure 1469 to maintain a required license, permit and/or certification may result in immediate termination of this DA AGREEMENT.
35. MATERIAL MISSTATEMENT/MISREPRESENTATION
If during the course of the administration of this DA AGREEMENT, the COUNTY determines that CITY has made a material misstatement or misrepresentation or that materially inaccurate information has been provided to the C OUNTY, this DA AGREEMENT may be immediately terminated. If this DA AGREEMENT is terminated according to this provision, the COUNTY is entitled to pursue any available legal remedies.
36. MUTUAL COVENANTS
The parties to this DA AGREEMENT mutually covenant to perform all of their obligations hereunder, to exercise all discretion and rights granted hereunder, and to give all consents in a reasonable manner consistent with the standards of “good faith” and “fair dealing”.
37. NONDISCLOSURE
CITY shall hold as confidential and use reasonable care to prevent unauthorized access by, storage, disclosure, publication, dissemination to and/or use by third parties of, confidential information that is either: (1) provided by the COUNTY to CITY or an agent of CITY or otherwise made available to CITY or CITY’s agent in connection with this DA AGREEMENT; or, (2) acquired, obtained, or learned by CITY or an agent of CITY in the performance of this DA AGREEMENT. For purposes of this provision, confidential information means any data, files, software, information or materials in oral, electronic, tangible or intangible form and however stored, compiled or memorialize and includes, but is not limited to, technology infrastructure, architecture, financial data, trade secrets, equipment specifications, user lists, passwords, research data, and technology data.
38. NOTICE OF DELAYS
Except as otherwise provided herein, when either party has knowledge that any actual or potential situation is delaying or threatens to delay the timely performance of this DA AGREEMENT , that party shall, within five (5) business days, give notice thereof, including all relevant information with respect thereto, to the other party.
39. SELF-INSURANCE
CITY and the COUNTY are authorized self-insured public entities for purposes of general liability, automobile liability, professional liability and workers’ compensation. CITY and COUNTY warrant that through their respective programs of self-insurance, they have adequate coverage or resources to protect against any liabilities arising out of their performance regarding the terms and conditions of this DA AGREEMENT.
40. OWNERSHIP OF DOCUMENTS
All documents, data, products, graphics, computer programs and reports prepared by CITY pursuant to the DA AGREEMENT shall be considered property of the COUNTY upon payment for services (and products, if applicable). All such items shall be delivered to C OUNTY at the completion of work under the DA AGREEMENT. Unless otherwise directed by COUNTY, CITY may retain copies of such items.
41. AMENDMENTS: VARIATIONS
This writing, with attachments, embodies the whole of this DA AGREEMENT of the parties hereto. There are no oral agreements contained herein. Except as herein provided, additions or variations of the terms of this DA AGREEMENT shall not be valid unless made in the form of a written amendment to this DA AGREEMENT formally approved and executed by both parties.
42. AIR, WATER POLLUTION CONTROL, SAFETY AND HEALTH
CITY shall comply with all air pollution control, water pollution, safety and health ordinances and statutes, which apply to the work performed pursuant to this DA AGREEMENT.
43. RELATIONSHIP OF THE PARTIES
Nothing contained in this DA AGREEMENT shall be construed as creating a joint venture, partnership, or employment arrangement between the parties hereto, nor shall either p arty have the right, power or authority to create an obligation or duty, expressed or implied, on behalf of the other party hereto. 1470
44. RELEASE OF INFORMATION
No news releases, advertisements, public announcements or photographs arising out of the DA AGREEMENT or CITY’s relationship with COUNTY may be made or used without prior written approval of the COUNTY.
45. REPRESENTATION OF THE COUNTY
In the performance of this DA AGREEMENT, CITY, its agents and employees, shall act in an independent capacity and not as officers, employees, or agents of the COUNTY.
46. STRICT PERFORMANCE
Failure by a party to insist upon the strict performance of any of the provisions of this DA AGREEMENT by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by the other party with the terms of this DA AGREEMENT thereafter.
47. SUBCONTRACTING
CITY shall obtain COUNTY’s written consent, which C OUNTY may withhold in its sole discretion, before entering into agreements with or otherwise engaging any subcontractors who may supply any part of the Services to this Agreement. At C OUNTY’s request, C ITY shall provide information regarding the subcontractor’s qualifications and a listing of the subcontractor’s key personnel including, if requested by the COUNTY, resumes of proposed subcontractor personnel. C ITY shall remain directly responsible to COUNTY for its subcontractors and shall indemnify C OUNTY for the actions or omissions of its subcontractors under the terms and conditions specified in Section 31 INDEMNIFICATION. All approved subcontractors shall be subject to the provisions of this DA AGREEMENT applicable to Contractor Personnel.
A. For any subcontractor, CITY shall:
a. Be responsible for subcontractor compliance with the DA AGREEMENT and the subcontract terms and conditions; and
b. Ensure that the subcontractor follows COUNTY’s reporting formats and procedures as specified by COUNTY.
Upon expiration or termination of this DA AGREEMENT, COUNTY will have the right to enter into direct agreements with any of the subcontractors. CITY agrees that its arrangements with subcontractors will not prohibit or restrict such subcontractors from entering into direct agreements with COUNTY.
48. SUBPOENA
In the event that a subpoena or other legal process commenced by a third party in any way concerning the goods or s ervices provided under this DA AGREEMENT is served upon C ITY or COUNTY, such party agrees to notify the other party in the most expeditious fashion possible following receipt of such subpoena or other legal process. CITY and COUNTY further agree to cooperate with the other party in any lawful effort by such other party to contest the legal validity of such subpoena or other legal process commenced by a third party as may be reasonably required and at the expense of the party to whom the legal process is directed, except as otherwise provided herein in connection with defense obligations by CITY for COUNTY.
49. TIME IS OF THE ESSENCE
Time is of the essence in performance of this DA AGREEMENT and of each of its provisions.
50. VENUE
The parties acknowledge and agree that this DA AGREEMENT was entered into and intended to be performed in San Bernardino County, California. The parties agree that the venue of any action or claim brought by any party to this DA AGREEMENT will be the Superior Court of California, San Bernardino County, San Bernardino District. Each party hereby waives any law or rule of the court, which would allow them to request or demand a change of venue. If any action or claim concerning this DA AGREEMENT is brought by any third party and filed in another venue, the parti es hereto agree to use their best efforts to obtain a change of venue to the Superior Court of California, San Bernardino County, San Bernardino District.
51. CONFLICT OF INTEREST
CITY shall make all reasonable efforts to ensure that no conflict of interest exists between its officers, 1471 employees, or subcontractors and the COUNTY . CITY shall make a reasonable effort to prevent employees, contractors, or members of governing bodies from using their positions for purposes that are, or give the appearance of being motivated by a desire for private gain for themselves or others, such as those with whom they have family business or other ties. Officers, employees, and agents of cities, counties, districts, and other local agencies are subject to applicable conflict of interest codes and state law. In the event the COUNTY determines a conflict of interest situation exists, any increase in costs associated with the conflict of interest situation may be disallowed by the COUNTY, and such conflict may constitute grounds for termination of the DA AGREEMENT . This provision shall not be construed to prohibit employment of persons with whom CITY’s officers, employees, or agents have family, business, or other ties so long as the employment of such persons does not result in increased costs over those associated with the employment of any other equally qualified applicant.
52. DISCLOSURE OF CRIMINAL AND CIVIL PROCEDURES
COUNTY reserves the right to request the information described herein from the CITY. Failure to provide the information may result in a termination of the DA AGREEMENT . COUNTY also reserves the right to obtain the requested information by way of a background check performed by an investigative firm. CITY also may be requested to provide information to clarify initial responses. Negative information discovered may result in DA AGREEMENT termination.
CITY is required to disclose whether the firm, or any of its partners, principals, members, associates or key employees (as that term is defined herein), within the last ten (10) years, has been indicted on or had charges brought against it or them (if still pending) or convicted of any crime or offense arising directly or indirectly from the conduct of the firm’s business, or whether the firm, or any of its partners, principals, members, associates or key employees, has within the last ten (10) years, been indicted on or had charges brought against it or them (if still pending) or convicted of any crime or offense involving financial misconduct or fraud. If the response is affirmative, the CITY will be asked to describe any such indictments or charges (and the status thereof), convictions and the surrounding circumstances in detail.
In addition, CITY is required to disclose whether the firm, or any of its partners, principals, members, associates or key employees, within the last ten years, has been the subject of legal proceedings as defined herein arising directly from the provision of services by the firm or those individuals. “Legal proceedings” means any civil actions filed in a court of competent jurisdiction, or any matters filed by an administrative or regulatory body with jurisdiction over the firm or the individuals. If the response is affirmative, the CITY will be asked to describe any such legal proceedings (and the status and disposition thereof) and the surrounding circumstances in detail.
For purposes of this provision “key employees” includes any individuals providing direct service to the COUNTY. “Key employees” do not include clerical personnel providing service at the firm’s offices or locations.
53. FISCAL PROVISIONS
CITY shall accept all payments from COUNTY via electronic funds transfer (EFT) directly deposited into the CITY’s designated checking or other bank account. C ITY shall promptly comply with directions and accurately complete forms provided by COUNTY required to process EFT payments.
COUNTY is exempt from Federal excise taxes and no payment shall be made for any personal property taxes levied on Contractor or on any taxes levied on employee wages. COUNTY shall only pay for any state or local sales or use taxes on the services rendered or equipment and/or parts supplied to the COUNTY pursuant to the DA AGREEMENT.
CITY shall adhere to the COUNTY’s Travel Management Policy (8- 02 and 08-02SP1) when travel is pursuant to this DA AGREEMENT and for which reimbursement is sought from the C OUNTY. In addition, Contractor is encouraged to utilize local transportation services, including but not limited to, the Ontario International Airport.
54. CORRECTION OF PERFORMANCE
Failure by CITY to comply with any of the provisions, covenants, requirements or conditions of this DA AGREEMENT shall be a material breach of this DA AGREEMENT. 1472
In the event of a non-cured breach, COUNTY may, at its sole discretion and in addition to any other remedies available at law, in equity, or otherwise specified in this DA AGREEMENT:
A. Afford CITY thereafter a time period within which to cure the breach, which period shall be established at the sole discretion of COUNTY; and/or
B. Discontinue reimbursement to CITY for and during the period in which C ITY is in breach, which reimbursement shall not be entitled to later recovery; and/or C. Withhold funds pending duration of the breach; and/or D. Offset against any monies billed by CITY but yet unpaid by COUNTY those monies disallowed pursuant to Item “b” of this paragraph; and/or
E. Terminate this DA AGREEMENT immediately and be relieved of the payment of any consideration to CITY. In the event of such termination, COUNTY may proceed with the work in any manner deemed proper by COUNTY. The cost to the COUNTY shall be deducted from any sum due to the CITY under this DA AGREEMENT and the balance, if any, shall be paid by the CITY upon demand.
55. ENTIRE AGREEMENT
This DA AGREEMENT , including all Exhibits and other attachments, which are attached hereto and incorporated by reference, and other documents incorporated herein, represents the final, complete and exclusive agreement between the parties hereto. Any prior agreement, promi ses, negotiations or representations relating to the subject matter of this DA AGREEMENT not expressly set forth herein are of no force or effect. This DA AGREEMENT is executed without reliance upon any promise, warranty or representation by any party or any representative of any party other than those expressly contained herein.
Each party has carefully read this DA AGREEMENT and signs the same of its own free will.
56. ELECTRONIC SIGNATURES
This DA AGREEMENT may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts shall together constitute one and the same Agreement. The parties shall be entitled to sign and transmit an electronic signature of this DA AGREEMENT (whether by facsimile, PDF or other mail transmission), which signature shall be binding on the party whose name is contained therein. Each party providing an electronic signature agrees to promptly execute and deliver to the other party an original signed DA AGREEMENT upon request.
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IN WITNESS WHEREOF, the COUNTY and the CITY have each caused this DA AGREEMENT to be subscribed by its respective duly authorized officers, on its behalf.
FOR COUNTY USE ONLY
Approved as to Legal Form Reviewed for Contract Compliance Reviewed/Approved by Department
Suzanne Bryant, Deputy County Counsel Robert Gilliam, Acting Director Date Date Date
SAN BERNARDINO COUNTY
CITY OF CHINO
By:
Luther Snoke, Chief Executive Officer (Authorized signature - sign in blue ink)
Name:
Linda Reich
Dated:
Title: City Manager
(Print or Type)
Dated:
Address:
P.O. Box 667
Chino, CA 91708-0667
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ATTACHMENT A - REQUEST TO INITIATE PROJECT/ACTIVITY
PROJECT/CASE NUMBER: DATE OF ORIGINAL ISSUE:
CFDA No.: 14.218 ORIGINAL: REVISION No.:
TARGET AREA: DATE OF REVISION:
Pursuant to the terms of the Delegate Agency Agreement between Department of Community Development and Housing (CDH), and the City of Chino, effective July 1 , 2027, CDH hereby requests that the following project/activity be initiated. There will be no changes in Project/Activity Title, Activity Budget (Attachment A) or in the Activity Description (Attachment B) without written approval of CDH Director.
PROJECT/ACTIVITY TITLE:
ACTIVITY LOCATION: TOTAL PROJECT FUNDING: $
CITY CDBG ALLOCATION
RELEASED: $
CITY CDBG FUNDS
EXPENDED AS OF : $
DATE OF RELEASE OF FUNDS:
SCHEDULE OF CITY CDBG ALLOCATION:
BALANCE OF FUNDS AVAILABLE: $
Year 52 Year 53 Year 54 Year 55 Year 56 Year 57 Year 58 # # # # # # # TOTAL OF
(75-2027) (2027-28) (2028-29) (2029-30) (2030-31) (2031-32) (2032-33) 58 YEARS $ N/A $ $ $ $ $ $ $
MAINTENANCE AND OPERATION BUDGET/AGREEMENT:
OTHER PERTINENT INFORMATION:
ACCEPTANCE OF REQUEST TO INITIATE PROJECT/ACTIVITY
I hereby acknowledge the receipt of the Request to Initiate the above Project/Activity and agree to implement the activity described in Attachment B (Project/Activity Description) in accordance with the above Allocation and Balance of Funds Available subject to necessary approvals of the Board of Supervisors. The proposed budget for this project is as follows:
LAND ACQUISITION: $ PURCHASE OF EQUIPMENT: $
STAFF COST RELATED CONSTRUCTION COST: $
TO LAND ACQUISITION: $ CITY STAFF COST: $
DESIGN: $ CONTINGENCY: $
CONSULTANT SERVICES: $
TOTAL CITY CDBG ALLOCATION AVAILABLE: $
IMPLEMENTING CITY: DATE:
SIGNATURE: TITLE:
SAN BERNARDINO COUNTY
DATE:
CDH Director
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ATTACHMENT B - PROJECT/ACTIVITY DESCRIPTION
PROJECT/CASE NUMBER: DATE OF ORIGINAL ISSUE:
CFDA No.: 14.218 ORIGINAL: REVISION No.:
TARGET AREA: DATE OF REVISION:
PROJECT/ACTIVITY TITLE:
ACTIVITY LOCATION:
ACTIVITY DESCRIPTION:
IMPLEMENTING CITY: DATE:
SIGNATURE: TITLE:
SAN BERNARDINO COUNTY
DATE:
CDH Director
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Attachment C
SAN BERNARDINO COUNTY
DEPARTMENT OF COMMUNITY DEVELOPMENT AND HOUSING
DELEGATE AGENCY
COORDINATION PROCEDURES
I. Introduction
The following procedures identify the actions, responsibilities, and sequence of events for Community Development Block Grant, hereinafter referred to as “CDBG”, funded projects being implemented by a coordinated effort between the San Bernardino County Department of Community Development and Housing, hereinafter referred to as "CDH," and the Delegate Agency (City), hereinafter referred to as "DA". For each action or event listed in Section III of this attachment, the entity responsible for carrying out that action or event is referenced beside it. Section IV contains regulations and statutes applicable to CDBG funded activities.
II. Authorization to Proceed
The DA is not authorized to expend funds or to initiate CDBG projects until authorized to do so in writing by CDH. Contract procurement shall be governed by all Federal regulations and statutes, as amended, listed in Section IV of the Attachment. CDH payments of DA Requests for Reimbursement will be subject to DA submittal of a complete reimbursement report package as listed in Section III, D-20.
A. Project/Activity Budget
Each project activity is initiated by an Attachment "A". The Attachment "A" is released when the project/activity is ready to be implemented and subsequent to environmental clearance and release of funds from HUD. It specifies the total funding allocation for the project/activity, the portions currently released and available to expend, the budget categories, the allocation will be expended under, and the entity responsible for maintenance and operation of the completed project.
In accepting the Attachment "A" the DA is to complete an estimated budget showing the allocation distribution to design costs, staff costs, construction costs, etc. This breakdown may also include a contingency or inflation factor not to exceed 10% of the total activity allocation.
Approval to change the project/activity budget/funds available will come from CDH in the form of a revised Attachment "A" (and corresponding Attachment "B", if appropriate).
B. Activity Description
The activity description is forwarded to the DA as Attachment "B". The preparation of the project description, both preliminary and final, is the responsibility of the CDH Community Development Division.
The description should be specific enough for use as the scope of work funded by CDBG money in a Request for Proposal (RFP) for architectural or engineering services or for a vendor in preparing a bid. It will contain, but is not limited to, the following:
1. Title of Project/Activity
2. Activity Number
3. Specific site description
4. On- and off-site improvement description
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5. Size of building
6. Fixtures list (such as stove, built-in equipment)
7. Water and sewer requirements
8. Utilities
9. Specific zoning and planning requirements
10. Specific uses of the site and/or building
11. Equipment
12. Functions
Approval to change the project/activity description will come from CDH in the form of a revised Attachment "B" (and corresponding Attachment "A", if appropriate).
CDH will complete the Attachments "A" and "B" and will send two copies each to DA for signature.
Once signed and fully completed, they must be returned to CDH for signature. An original of each will be returned to DA signifying authorization to proceed with actions outlined in the following sections:
III. Actions and Responsibilities
A. Property Acquisition
The DA can pursue the acquisition of real property (and related relocation requirements, if necessary) through its jurisdiction or request the County's Real Estate Services Department, hereinafter referred to as "RES", to handle the acquisition and/or relocation. If relocation is required, initiate a 90-day notice to occupant(s).
1. If DA wishes to purchase the property, the following procedures should be followed:
a. DA: Refers to HUD Handbook 1378 which implements the Uniform Relocation Assistance and Real Property Acquisition regulations including the Federal Relocation Assistance and Real Property Acquisition Policies Act of 1970, the Braithwaite Act of the State of California and any subsequent amendments to these acts and regulations. If relocation is required, the appropriate notices will be issued in accordance with the "Timely Notices" (49 CFR 24.203) provision of the Relocation Handbook 1378.
b. DA: Obtains required appraisals.
c. DA: Reviews required appraisals and/or leases to determine if property can be acquired within the project allocation.
d. DA: Sends all lease documents to CDH for approval.
e. DA: Sends any requests for adjustments of funds for property acquisition and/or relocation to CDH for approval.
f. CDH: Issues approvals in relation to "d" above and sends them to DA.
g. DA: Initiates lease or purchase.
h. DA: Sends Request for Advance of Funds to CDH, 20 working days prior to expected close of escrow, with all appropriate documentation attached.
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2. If DA desires to have RES handle acquisition and/or relocation activities, the DA should follow this procedure:
a. DA: Submits a letter to CDH requesting that RES handle the project/activity describing in detail what property is to be acquired, giving all pertinent information, and identifying who the DA contact person is to be. If relocation is required, initiate a 90-day notice to occupant(s).
b. CDH: Initiates appraisal process.
c. RES: Obtains required appraisals.
d. RES: Forwards appraisals to DA.
e. DA: Reviews appraisals and/or leases to determine if property should be acquired and/or leased. Prepares and forwards request to CDH.
f. CDH: Reviews request from DA, and forwards Authorization to Proceed to RES (Note: all leases and all adjustments in project allocations must be requested and approved by CDH).
g. RES: Initiates purchase or lease of property. If relocation is required, the appropriate notices will be issued in accordance with the "Timely Notices" (49 CFR 24.203) provision of the Relocation Handbook 1378.
RES will work with the designated DA contact person throughout the acquisition/relocation process to assure that the DA is aware of the activities and can make any necessary decisions in relation to the activity.
B. Architect and/or Engineer Selection
1. The usual procedure for the selection of an architect or engineer involves a Request for Proposal (RFP) for professional services, following this process:
a. DA: Prepares an RFP for architectural and engineering or other consultant services.
b. DA: Submits draft RFP to CDH for review for contract compliance and consistency with Federal Title 24 CFR, Part 85 Section 85.36, (Procurement Standards).
c. DA: Incorporates CDH revisions, if any, into RFP and reviews RFPs for compliance with State, Federal, Local and CDH regulations. Requests CDH "Approval to Proceed” to Issue “RFP".
d. CDH: Issues to DA an "Approval to Proceed” to issue an “RFP".
e. DA: Advertises RFP, receives responses, interviews, requests CDH representation on selection committee and makes selection.
f. DA: Notifies CDH of selection. Sends back-up documentation and draft contract to CDH. Submits to CDH a "Request for Approval to Proceed” to award a “Consultant Services Contract".
g. CDH: Reviews final contract for compliance and issues an "Approval to Proceed” to 1479 award a “Consultant Services Contract".
h. DA: Awards Consultant Services Contract.
2. Architectural and engineering services may also be negotiated under certain situations; i.e., obtained through a sole source procurement. This is an eligible alternative requiring the following steps:
a. DA: Determines that the situation warrants noncompetitive procurement (sole source) and that such procurement will comply with applicable federal requirements, including 2 CFR Part 200, specifically 2 CFR §200.320(c) (noncompetitive procurement), and all applicable HUD requirements.
b. DA: Selects architect, engineer or other consultants.
c. DA: Submits to CDH a “Request for Approval to Proceed” to award a “Sole Source Consultant Services Contract" to CDH explaining why the DA has chosen the consultant and why the competitive RFP procedure is not being used.
d. CDH: Reviews the request and approves or denies sole source procurement request based on explanation and backup.
e. CDH: Issues "Approval to Proceed” to award a “Sole Source Consultant Services Contract" authorization or denial of request.
f. DA: Negotiates and awards the sole source contract.
C. Design Phase
1. DA: Monitors preparation of preliminary plans by architect.
2. DA: Notifies CDH of all public meetings with architect, five working days before event.
3. CDH/
DA:
Reviews and approves preliminary design.
4. DA: Secures all required permits and regulatory approvals.
5. DA: Secures plans, check of plans and specifications from the appropriate Building and Safety Authority.
D. Construction Phase
1. DA: Reviews and approves plans and specifications, and obtains current Federal Wage Decision from CDH or online at
https://sam.gov/search?index=wd&date_filter_index=0&date_rad_selection=d ate&wdType=dbra&state=CA&county=16328&page=1, to be included in bid package.
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2. DA: Forwards construction bid package and approved plans to CDH for review and approval along with a “Request for Approval to Proceed” to issue an “Invitation to Bid” for construction services. Attachment “D” - "Construction Contract Labor Compliance Provisions" must be part of the complete bid package submitted to CDH for approval.
3. CDH: Reviews and approves construction bid package for compliance with Federal and local regulations and forwards “Approval to Proceed” to invite bids with changes (if any) to DA.
4. DA: Determines that the bid solicitation process is permitted in accordance with applicable CDBG requirements and federal procurement standards, including 2 CFR Part 200 (specifically 2 CFR §200.320), and County contracting regulations. CITY shall advertise an “Invitation to Bid” and receive bids in accordance with such requirements.
5. DA: Ten days prior to bid opening, DA makes contact with CDH and requests from CDH or obtains online at
https://sam.gov/search?index=wd&date_filter_index=0&date_rad_selection=d ate&wdType=dbra &state=CA&county=16328&page=1 the current Federal Wage Decision. If the Federal Wage Decision is in any way different from that issued in the original bid package, DA w ill issue a bid addendum and immediately forward the latest wage decision to all bidding contractors who, in turn, submit revised bids prior to the bid opening. DA shall notify CDH of any change in the Federal Wage Decision should DA use the online option above.
6. DA: Conducts bid opening and reviews bid documents submitted by the low bidder to assure compliance with County Policy 15-01, if applicable, and applicable federal requirements regarding the participation of minority, women-owned, and labor surplus area firms, including 2 CFR Part 200 (specifically 2 CFR §200.321), in the proposed construction contract. If DA has its own plan that meets such requirements, it may use this plan for bid document reviews.
During the term of the DA AGREEMENT, CITY shall not discriminate against any employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic informa tion, marital status, sex, gender, gender identity, gender expression, sexual orientation, age, or military and veteran status.
CITY shall comply with all applicable federal, state, and local laws, regulations, and policies relating to nondiscrimination, equal employment opportunity, and contracting, including, but not limited to, Title VI of the Civil Rights Act of 1964, Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, and applicable U.S. Department of Housing and Urban Development (HUD) requirements, as such laws, regulations, and federal directives may be amended, superseded, or replaced and as in effect at the time of contract performance.
7. DA: Submits the low -bidder information and list of subcontractors to CDH and a “Request for Approval to Proceed” to award a “Construction Services Contract".
If adjustment of funds or project description is needed, the written request for reallocation of funds (revised Attachment "A") or change in project description (revised Attachment "B") should be sent at this time.
8. CDH: Prepares revisions to Attachment "A" and/or "B" as requested (if necessary). 1481
9. CDH: Reviews Contractor/Subcontractor's eligibility to receive Federal contracts.
10. CDH: Issues "Approval to Proceed" to award a “Construction Services Contract” to DA.
11. DA: Insures completeness of contract documents prior to award of contract. Prime and Sub- Contractor Construction contracts must contain the Labor Compliance Contract Addendum (LCCA) , applicable Federal Wage Determination, and a copy of restrictions on public buildings and public works projects provisions.
12. DA: Awards Contract.
13. DA: Notifies CDH of pre-construction conference at least five (5) working days prior to event. Prime and Sub-Contractor’s labor compliance personnel must attend pre-construction conference. Submits required CDH documents (Ex:
completed bid package) prior to pre-
construction meetings, including
Contractor Information Sheet.
14. DA: Conducts pre -construction conference (CDH attendance mandatory). CDH sets up prime contractor on LCPtracker.
15. DA/
CDH:
DA provides CDH with a copy of signed contract which incorporates the LCCA prior to start of construction. DA ensures completion of bonds and all required labor compliance documentation is accepted in LCPtracker. CDH obtains Project Wage Rate Sheet from Prime Contractor which includes all federal labor classifications that will be utilized on the project by the Prime Contractor as well as ALL Sub-Contractors.
16. DA: Keeps an up-to-date record of all encumbrances and obligations, including staff costs incurred, to assure that the remaining balance of funds is known.
17. CDH/
DA:
Ongoing observation and monitoring of projects.
18. DA: Conducts on-site interviews with contractor employees for each trade regarding their wages. Sends original signed Record of Employee Interview (HUD-11) to CDH. CDH may require Record of Employee Interview to be entered on LCPtracker.
19. DA: Ensures contractor’s submission of Weekly Certified Payroll in LCPtracker.
20. DA: Receives Contractor requests for progress payments and any other documentation of expenditures and work accomplished. DA reviews labor compliance reports in LCPtracker.
21. CDH: Reviews Contractor Weekly Certified Payroll on LCPtracker during the term of construction, including non-performance payrolls.
22. CDH: Checks wages reported on Certified Payroll forms against employee interview forms for consistency between wage rates reported by contractor and wages received by employees.
23. DA: Submits to CDH during the term of the construction contract, a report package 1482 containing:
- Request for Reimbursement and accompanying documentation.
Payments on said requests are subject to complete compliance with Federal Labor Standards.
24. DA: Notifies CDH of all meetings regarding CDH projects, such as Design Conferences, Public Meetings, meetings with Community Development Advisory Commission, and DA at least five working days before event occurs.
25. DA: Processes change orders and sends copy(ies) of proposed change order(s) along with a “Request for Approval to Proceed” to issue a “Contract Change Order” to CDH. Must obtain approval from CDH regarding all change orders prior to authorizing the contractor to proceed with said changes.
26. DA: Notifies CDH of proposed changes in the list of subcontractor(s) and submits a “Request for Approval to Proceed" to add or delete subcontractor(s) from the approved list.
27. CDH: Revises Attachments "A" or "B", if necessary, and issues an "Approval to Proceed” to issue a “Change Order(s)" to DA.
28. DA: Notifies CDH of final inspections at least five working days before inspection date.
29. DA: Attends final inspections (CDH attendance optional).
30. DA: Secures its governing body's acceptance of completed project and filing of Notice of Completion and submits "Notice of Completion" to CDH.
31. CDH: Monitors project progress and contract compliance and issues, as necessary, "Notice to Submit Final Activity Costs" notices to DA.
32. DA: Takes necessary actions to comply with said notices.
33. CDH: Conducts "Annual Certification of Use of Facilities".
IV. DA must ensure compliance with the following regulations and statutes, as amended, in carrying out CDBG funded activities:
A. Community Development Block Grant Regulations of the Housing and Community Development Act of 1974, as amended (24 CFR 570).
B. Applicable Uniform Administrative Requirements:
1) 2 CFR Part 200, including all applicable subparts (Administrative Requirements, Cost Principles, and Audit Requirements), and applicable U.S. Department of Housing and Urban Development (HUD) regulations and guidance.
C. Applicable Uniform Administrative Requirements for Subrecipients that are not Governmental Entities:
D. 2 CFR Part 200, including all applicable subparts (Administrative Requirements, Cost Principles, and Audit Requirements), and applicable U.S. Department of Housing and Urban Development (HUD) regulations and guidance. Federal Labor Standards Compliance Handbook No. 1344.1 REV-3 including: 1483
1) Davis-Bacon and Related Acts (40 USC §3141 et seq.; 29 CFR Parts 1, 3, 5, 6 and 7) 2) Contract Work Hours and Safety Standards Act (40 U.S.C. §3701-3708; 29 CFR part 5) 3) Copeland (Anti-Kickback) Act (18 U.S.C. 874; 29 CFR Part 3)
E. All applicable federal, state, and local laws, regulations, and policies relating to equal employment opportunity and nondiscrimination in employment and contracting, including, but not limited to, Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, and applicable U.S. HUD requirements, as such laws and regulations may be amended, superseded, or replaced and as in effect at the time of contract performance.
F. Environmental Protection Agency Regulations (40 CFR Part 1500-1508)
G. Flood Disaster Protection Act of 1973 (42 U.S.C. 4001-4128)
H. Archaeological and Historic Preservation Act of 1974
I. Rehabilitation Act of 1973, as amended
J. Americans with Disabilities Act of 1990, as amended
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K. Clean Air Act (42 U.S.C. 7401 et. seq.)
L. Clean Water Act (33 U.S.C. 1368)
M. Section 3 Regulations of the Housing and Urban Development Act of 1968, Title 24 CFR, Part 135 (12 U.S.C. 1701u)
N. Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C. 2000d et. seq.)
O. Fair Housing Act (42 U.S.C. 3601-20)
P. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601-4655)
Q. The Hatch Act of 1939
R. Lead Based Paint Poisoning Prevention Act 24 CFR Part 35 1485
Attachment D
SAN BERNARDINO COUNTY
DEPARTMENT OF COMMUNITY DEVELOPMENT AND HOUSING
DELEGATE AGENCY
CONSTRUCTION CONTRACT LABOR COMPLIANCE PROVISIONS
NOTICE TO BIDDERS
PROJECT FUNDING SUBJECT TO FEDERAL PREVAILING WAGE REQUIREMENTS Bidders are advised that federal funds are being used for this project and that as a result, certain requirements are to be imposed, depending upon the source of the federal funds. Sources may include Community Development Block Grant (CDBG) funds, and/or HOME Investment Partnerships Program (HOME) funds. The utilization of these federal funds on a project will require the payment of federal prevailing wages under the Davis-Bacon and Related Acts (“DBRA”) (40 USC §3142, 40 USC §§ 276a- 276a-7, 29 CFR Part 5), which will be enforced when the contract amount for the Prime Contract exceeds $2,000. The Prime Contractor is responsible for ensuring all Subcontractor(s) and lower tier Subcontractor(s) comply with DBRA. Also, Federal Labor Standards Provisions (HUD-4010) apply and are attached.
A copy of the Federal Prevailing Wage Decision, the date of which reflects the latest applicable modification at the time of the bid advertisement, shall be included. Bidders shall be notified, via Addendum, of modifications, if any, which supersede that modification included herein, up until a minimum of ten days prior to the actual Bid Opening for this project. Bidder can obtain Davis-Bacon Act Wage Decision(s) at: https://sam.gov/content/home.
Equal Employment Opportunity. The bidder’s attention is called to the Equal Opportunity requirements contained in the contract documents. The Contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin, and shall comply with all applicable federal, state, and local laws and regulations relating to equal employment opportunity, including, but not limited to, Title VII of the Civil Rights Act of 1964, applicable U.S. Department of Housing and Urban Development (HUD) requirements, and all requirements as may be amended, superseded, or replaced and as in effect at the time of contract performance.
The Contractor shall take affirmative steps to ensure equal opportunity in employment, including outreach and recruitment efforts consistent with applicable federal and state requirements.
PROJECT FUNDING SUBJECT TO STATE PREVAILING WAGE REQUIREMENTS Bidder is advised and certify by bidding on this project that bidder (including any and all sub-contractors) is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq. as well as California Code of Regulations, Title 8, Section 16000 et seq. (“Prevailing Wage Laws”), which require the payment of prevailing wage rates and the performance of other requirements on certain “public works” and “maintenance” projects. Section 1720 of the California Labor Code states in part:
“For purposes of this paragraph, ‘construction’ includes work performed during the design, site assessment, feasibility study, and other preconstruction phases of construction including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, and work performed during the post-construction phases of construction, including, but not limited to, all cleanup work at the jobsite.” If the Services/Scope of Work are being performed as part of an applicable “public works” or “maintenance” project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Contractor agrees to fully comply with such Prevailing Wage Laws. Contractor shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services/Scope of Work available to interested parties upon request and shall post copies at the Contractor’s principal place of business and at the project site. Contractor will also adhere to any other applicable requirements, including but not limited 1486
to, those regarding the employment of apprentices, travel and subsistence pay, retention and inspection of payroll records, workers compensation and forfeiture of penalties prescribed in the Labor Code for violations. Contractor shall defend, indemnify and hold the COUNTY , its elected officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with Prevailing Wage Laws.
Upon request by bidder a copy of the Director’s General Prevailing Wage Determination(s), the date of which reflects the latest applicable modification at the time of this bid advertisement will be furnished.
Bidders shall be notified, via Addendum, of modifications, if any, which supersede that wage determination. Bidder can obtain a copy of the Director’s General Prevailing Wage Determination(s) at:
http://www.dir.ca.gov/OPRL/dprewagedetermination.htm.
PROJECT(S) SUBJECT TO FEDERAL AND STATE PREVAILING WAGE REQUIREMENTS When the project(s) is subject to both the State (CA) and Federal (Davis -Bacon) prevailing wage rate laws, and when federal funds trigger prevailing wage requirements as determined under the Davis Bacon Act, the higher of the two, the State prevailing wage rate and the Davis-Bacon (federal) wage rate and the most restricted prevailing wage regulation(s) will apply to each job classification, and the project(s), unless applicable law requires otherwise.
PROJECT(S) SUBJECT TO BUILD AMERICA, BUY AMERICA ACT REQUIREMENTS Bidder is advised and certify by bidding on this project that bidder (including any and all sub-contractors) is aware of the requirements for the Buy America Preference, imposed by the Build America, Buy America Act (BABA), under Division G, Title IX of the Infrastructure Investment and Jobs Act (IIJA, PUB. L. No. 117-58 and 2 CFR 184) signed into law on November 15, 2021. 1487
TABLE OF CONTENTS
• CONSTRUCTION CONTRACT PROVISIONS – DEFINITIONS
• BUILD AMERICA, BUY AMERICA ACT
• LABOR COMPLIANCE REQUIREMENTS
• REQUIRED DOCUMENTS (including eDocuments)
• FEDERAL LABOR STANDARDS PROVISIONS (HUD 4010)
• SECTION 3 24 CFR 75 PART, SUBPART A-D
• AFFIRMATIVE ACTION COMPLIANCE GUIDELINES FOR CONSTRUCTION AND NON-
CONSTRUCTION CONTRACTORS
• EQUAL OPPORTUNITY CLAUSES
• CERTIFICATION OF COMPLIANCE WITH AIR AND WATER ACTS
• SAMPLE DOCUMENTS
• DAVIS-BACON WAGE DETERMINATION
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CONSTRUCTION CONTRACT PROVISIONS - DEFINITIONS
The following are definitions of State and federal provisions/documents for federally-assisted projects.
NOTE: Please refer to the “Required Documents” table for any documents to be completed and submitted for this project. The term “Contractor” or “Contractor’s” are used throughout this document and may refer to the Prime Contractor, Subcontractor and/or lower tier Subcontractor. See the “Required Documents” table for information on which Contractor(s) are required to submit each document.
Affirmative Action Compliance Guidelines for Construction or Non-Construction Contractors – Generally, affirmative action requirements apply to contracts and subcontracts in excess of $10,000. This document provides guidelines to assist all Contractors, as identified on the “Required Documents” table, meet affirmative action and Equal Employment Opportunity requirements set forth in federal regulations 41 CFR 60.
Affirmative Action Compliance Form For Construction Contracts Over $10,000 (LCF DB16-2.2) – eDocument affirming all Contractors, as identified on the “Required Documents” table, understanding and implementation of Affirmative Action Compliance requirements.
Authorization For Payroll Deduction(s) (LCF 16-1.4) – eDocument signed by any employee of the Contractor, as identified on the “Required Documents” table, who has “Other/Garnish” payroll deduction.
Bid Bond − A bid guarantee of at least 10% of the contract price is required from each bidder and must be submitted with the Bid.
Build America, Buy America Act (BABA) - Requires that all iron and steel, construction materials, and manufactured products used in federally-funded infrastructure projects are produced in the Unites States.
The Prime Contractor is responsible to include Build America, Buy America language in all executed Subcontractor/Sub-Tier contracts for the project(s).
Business Certification – Business certification includes Disadvantaged Business Enterprise (DBE) - Disadvantaged Veteran Business Enterprise (DVBE) – Local Business Enterprise (LBE) – Minority Business Enterprise (MBE) – Small Business Enterprise (ESBE) – Women Business Enterprise (WBE).
Certificate of Owner’s Attorney − This certificate is to be completed by the owner’s attorney when applicable.
Certificate of Understanding and Authorization Form (LCF 16-1.2) – eDocument signed by all Contractors, as identified on the “Required Documents” table, certifying the most current “Davis-Bacon Labor Standards” has been read and understood.
Certification of Bidder Regarding Equal Employment Opportunity (LCF DB16-2.1) – eDocument certification required by all Contractors, as identified on the “Required Documents” table, by federal regulations (41 CFR 60).
Certification of Compliance with Air and Water Acts − All Contractors, as identified on the “Required Documents” table, must comply with this certification when the contract exceeds $100,000.
Checklist of Labor Law Requirements (LCF CA16-3.1) – eDocument signed by all Contractors, as identified on the “Required Documents” table, acknowledging awareness of the applicable labor law requirements.
Contractor’s Certification of Compliance with Davis-Bacon and Related Acts (LCF DB16 -2.0) – eDocument certification required by all Contractors, as identified on the “Required Documents” table, by federal law (29 CFR 5).
Davis-Bacon Act Wage Decision − The Davis-Bacon Act Wage Decision contains the wage rates for construction projects within San Bernardino County. A copy of the Davis-Bacon Act Wage Decision is 1489
included in the bid package and can also be found at https://www.sam.gov/portal/public/SAM/. The wage decision that applies to the project is the one in effect ten days prior to the bid opening date. eDocuments – Labor compliance documents required to be submitted by all Contractors, as identified on the “Required Documents” table, electronically prior to Certified Payroll submission. Each eDocument is listed by name in the definitions herein.
Equal Employment Opportunity Clauses/Equal Employment Opportunity Construction Contract Provisions − These provisions are to be inserted in all applicable federally assisted contracts and subcontracts.
E-signature Authorization (LCF 16-1.0) – eDocument signed by an owner, partner, executive officer, and all duly authorized “Designee” employee(s) of all Contractors, as identified on the “Required Documents” table, who have authority to enter into agreements on behalf of Contractor and who will be uploading eDocuments and/or certified payroll records (CPR)s into LCPtracker. This document must be notarized with an “Acknowledgment” form and will be valid for a period of one (1) calendar year from the signature date.
Federal Labor Standards Provisions (HUD -4010 form) − These provisions set forth the federal labor requirements for Contractors working on federally assisted construction projects in which the prime contract exceeds $2,000. Contractors are required to pay their laborers and mechanics working onsite a wage as specified in the FEDERALLY FUNDED PROJECTS section of this provision. The Prime Contractor is responsible to include the Labor Compliance Contract Addendum in all executed Subcontractor/Sub- Tier contracts for the project(s).
Fringe Benefit Statement (LCF 16-1.3) – eDocument signed by all Contractors, as identified on the “Required Documents” table, identifying bona fide Fringe Benefits in which their employees are participating.
Labor and Materials Bond − This payment bond guarantees that employees/Subcontractors, and suppliers are paid for services rendered and materials supplied. The Labor and Materials Bond must be at least 100% of the contract price and must be submitted to the CITY/COUNTY upon award of the contract.
LCPtracker – Online Certified Payroll System.
Performance Bond − This bond guarantees the Contractor's performance under the terms of the construction contract and must be at least 100% of the contract price and submitted to the CITY/COUNTY following award of the contract.
Project Wage Rate Sheet (LCF 16-1.1) – eDocument used by all Contractors, as identified on the “Required Documents” table, to list all labor classifications and wage rate(s) applicable for the project to be set up in LCPtracker for CPR submittal.
Section 3 (24 CFR Part 75, Subpart A-D) − This law applies to all housing rehabilitation, housing construction and other public construction projects contract exceeding $200,000 or more of housing and community development financial assistance from one or more U.S. Department of Housing and Urban Development (HUD) programs.
Section 3 Resource Participation Certificate (LCF DB16-2.4) – eDocument to certify that all Contractors, as identified on the “Required Documents” table, have read the County’s Section 3 Plan and contacted the resources provided for information on participating in the program.
Section 3 Actions and Outcomes (LCF DB16-2.5) – eDocument signed by all Contractors, as identified on the “Required Documents” table, to certify how the Contractor will implement Section 3 hiring practices for the project.
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1 Special Attention of: NOTICE: CPD-25-01
All CPD Division Directors
HUD Field Offices Issued: January 13, 2025
HUD Regional Offices Supersedes: CPD-2023-12
All CDBG Grantees
All CoC Grantees Expires: This Notice remains in effect until All HOME Participating Jurisdictions amended, superseded, or rescinded.
All HTF Grantees All
ESG Grantees
All HOPWA Grantees
Cross Reference:
Sections 70901-52 of Pub. L. No. 117-58
Subject: CPD Implementation Guidance for the Build America, Buy America Act’s Buy America Preference.
Overview
This updated Community Planning and Development (CPD) Notice supersedes CPD Notice 2023-12 to provide clarified implementation guidance for the “Buy America Preference” (BAP) imposed by the Build America, Buy America Act (BABA) enacted under Division G, Title IX of the Infrastructure Investment and Jobs Act (IIJA, Pub. L. No. 117-58) signed into law on November 15, 2021. It describes how grantees can use covered CPD program funds for public infrastructure projects to bolster America’s industrial base, protect national security, and support high-paying jobs.
The refreshing of this Notice is intended to provide greater clarity to grantees implementing BABA.
Specifically, the Notice clarifies how the BAP applies to public infrastructure for housing projects.
Projects with one- to four-units should be classified as private and not subject to BABA. Housing projects with five or more units should be considered as public infrastructure subject to BABA unless another BABA waiver or exemption applies. In addition, the Notice includes a reclassification of HOME-ARP to CPD programs not covered by the BAP, clarification on determining a project scope, BAP applicability to program income, additional recordkeeping considerations, guidance on using HUD’s online project-specific waiver application website, and new resources to assist with compliance and determining when a project-specific waiver is appropriate.
This Notice also highlights issues that grantees will want to consider when preparing for 1491
2 HUD’s full implementation of the BAP in FY2025, as described in “Public Interest Phased Implementation Waiver for FY 2022 and 2023 of Build America, Buy America Provisions as Applied to Recipients of HUD Federal Financial Assistance” (88 Fed. Reg. 17001, effective March 15, 2023 (“Phased Implementation Waiver”), which establishes BAP implementation points according to a schedule across HUD programs.
More in-depth technical assistance related to both BABA compliance and best practices is available on the HUD Exchange and hud.gov websites. HUD also encourages grantees to contact their assigned local field offices to discuss issues and concerns within the regulatory framework. This Notice uses the term “grantee” generically to also include HOME participating jurisdictions. The guidance provided in this Notice is subject to change if the Office of Management and Budget (OMB) updates guidance on the application of BABA for Federal financial assistance (FFA) programs for infrastructure.
Contents
Overview ................................................................................................................................................ 1 I. The Build America, Buy America Act (BABA) .................................................................... 3 A. Federal Government-wide Guidance on BABA ........................................................ 3 B. HUD Actions and Guidance on BABA ..................................................................... 4 II. Definitions ............................................................................................................................ 4 III. Applicability of the BAP to CPD Programs and Projects ...................................................... 9 IV. CPD Programs and Funding Not Covered by the BAP ........................................................ 10 V. HUD’s General Waivers Applicable to Covered CPD Programs ......................................... 11 VI. Understanding HUD’s Public Interest Phased Implementation General Waiver .................. 13 VII. Applying the BAP and HUD General Waivers to Covered CPD Programs ......................... 15 VIII. Federal Government-wide Guidance on Project-/Product-Specific Waivers ........................ 18 A. Waivers for Infrastructure Projects Funded by Multiple Federal Agencies ............... 18 IX. Applying for a HUD Specific Waiver ................................................................................. 19 X. Documentation of Compliance with the BAP ...................................................................... 20 XI. Subrecipient Compliance with BABA Requirements .......................................................... 22 XII. Contact Information ............................................................................................................ 22 Appendix 1 - Frequently Asked Questions ............................................................................................ 23 Appendix 2 - Optional Buy America Preference Applicability Checklist ............................................... 25 Appendix 3 - Optional Buy America Preference Certification ............................................................... 30 1492
3 I. The Build America, Buy America Act (BABA)
The Build America, Buy America Act (BABA) was signed into law by President Biden on November 15, 2021, as part of the Infrastructure Investment and Jobs Act (IIJA) as Sections 70901-52 of Pub. L.
No. 117-58. In addition to providing funding for roads, bridges, rails, and high-speed internet access, it created an incentive to increase domestic manufacturing across the country through the inclusion of BABA’s “Buy America Preference” (BAP). In general, the BAP requires that all iron, steel, manufactured products, and construction materials used in public infrastructure projects funded with Federal financial assistance (FFA), as outlined in Section 70914(a) of BABA, must be produced in the United States. The intent of the BAP is to stimulate private-sector investments in domestic manufacturing, bolster critical supply chains, and support the creation of well-paying jobs for people in the United States. The preference is also intended to bolster American firms’ ability to compete and lead globally for years to come by requiring entities that receive Federal infrastructure funds to use American materials and products.
The BAP applies to all spending on public infrastructure projects by Federal agencies, including HUD.
In BABA, and for purposes of this Notice, the Federal infrastructure spending with a BAP is referred to as “Federal financial assistance” or “FFA.” Under Section 70912(7), FFA for public infrastructure "projects” includes the “construction, alteration, maintenance, or repair of infrastructure in the United States”. Under Section 70914(a), the use of American iron and steel, construction materials, and manufactured products generally applies to funding from CPD programs for public infrastructure projects. However, the BAP does not apply to “pre and post disaster or emergency response expenditures” under Section 70912(4)(B). A list of CPD disaster or emergency funding meeting these criteria can be found in Section IV.
Effective May 14, 2022, the BAP applies to infrastructure spending unless an agency issues a waiver in three limited situations: 1) when applying the domestic content procurement preference would be inconsistent with the public interest, 2) when types of iron, steel, manufactured products or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality, or 3) where the inclusion of those products and materials will increase the cost of the overall project by more than 25 percent. Before issuing a waiver, HUD, must make a detailed written explanation for the proposed determination to issue the waiver publicly available and provide a period of not less than 15 days for public comment on the proposed waiver.
Additional details on waivers can be found in Sections VIII and IX of this Notice.
A. Federal Government-wide Guidance on BABA
As a part of the Federal government’s support of domestic production and manufacturing through infrastructure investments, OMB and HUD have taken several steps to implement the BAP by providing guidance and issuing HUD general waivers.
On August 23, 2023, OMB issued final rules for 2 CFR Parts 184 and 200 and provided further guidance on implementing the statutory requirements and improving FFA management and transparency (88 Fed. Reg. 57750, effective October 23, 2023). These government-wide regulations apply to HUD programs and provide direction on implementing a BAP waiver process. The new and revised regulations also provide additional guidance on construction material standards, the cost 1493
4 components of manufactured products, and their definitions.
On October 25, 2023, OMB issued guidance to all Federal agencies on how to implement BABA consistently across the government. The “Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure” (M-24-02) (OMB Guidance) directs Federal agencies, including HUD, on how to apply the BAP and provides an overview of the BAP waiver requirements. OMB may also issue additional or updated guidance in the future, and HUD will update its guidance as necessary.
B. HUD Actions and Guidance on BABA
BABA is a new and complex statute that became effective in 2022. As such, establishing governmentwide guidance on these new statutory requirements has been an iterative process. Since the passage of BABA, HUD has worked diligently to implement the BAP for all HUD programs.
Before the law became effective on May 14, 2022, HUD established a Department-wide BABA leadership committee. On June 1, 2022, HUD issued a Request for Information (RFI) to collect public comments on potential BABA implications for HUD grantees (87 FR 33193). To ease the transition in complying with the BAP, HUD proposed and received several general applicability waivers for covered FFA, which includes CPD programs. These waivers and other BABA information are available on HUD’s website at https://www.hud.gov/baba. Further details on these waivers and their application to CPD programs are provided in Section V of this Notice.
CPD has taken several actions to notify and communicate with stakeholders and grantees on BABA requirements and their impact on CPD programs. Since Fiscal Year (FY) 2022, all grant transmittal letters and notices of funding opportunities (NOFOs) have included a reference to the BAP under BABA. For the FY2023 and FY2024 funding allocations, all CPD grant agreements with covered FFA included a clause to require that the grantee must comply with BABA, as applicable, which will remain in place for future allocations. Throughout 2023 and 2024, CPD has held BABA information sessions for CPD grantees and operates a dedicated email box at [email protected] to answer questions from individual grantees and stakeholders. In October 2023, CPD established a HUD Exchange page (hudexchange.info/programs/baba/) as a central resource for grantees. CPD has developed technical assistance products, including quick guides, webinars, and frequently asked questions (FAQs), that are available to CPD grantees on this site.
II. Definitions
CPD has aligned its definitions regarding policy interpretations of BABA with regulations at 2 CFR part 184 and Appendix 1 of OMB guidance M-24-02 as stated below.
1. Build America, Buy America Act is defined in 2 CFR § 184.3 and means division G, title IX, subtitle A, parts I–II, sections 70901 through 70927 of the Infrastructure Investment and Jobs Act (Pub. L. No. 117-58).
2. Buy America Preference is defined in 2 CFR § 184.3 and means the “domestic content procurement preference” set forth in section 70914 of BABA, which requires the head of each Federal agency to ensure that none of the funds made available for a Federal award for 1494
5 an infrastructure project may be obligated unless all of the iron, steel, manufactured products, and construction materials incorporated into the project are produced in the United States.
3. Categorization of Articles. The term “categorization of articles” refers to the requirement that articles, materials, and supplies should only be classified into one of the following categories:
i. Iron or steel products;
ii. Manufactured products;
iii. Construction materials; or
iv. Section 70917(c) materials.
Each article, material, or supply should be classified in only one of the categories listed above. In some cases, an article, material, or supply may not fall under any of the categories listed in this paragraph.
The classification of an article, material, or supply as falling into one of the categories listed in this paragraph must be made based on its status at the time it is brought to the work site for incorporation into an infrastructure project. In general, the work site is the location of the infrastructure project at which the iron, steel, manufactured products, and construction materials will be incorporated.
4. Component is defined in 2 CFR § 184.3 and means an article, material, or supply, whether manufactured or unmanufactured, incorporated directly into: a manufactured product; or, where applicable, an iron or steel product.
5. Construction Materials is defined in 2 CFR § 184.3 and means articles, materials, or supplies that consist of only one of the items listed in paragraph (1) of this definition, except as provided in paragraph (2) of this definition. To the extent one of the items listed in paragraph (1) contains as inputs other items listed in paragraph (1), it is nonetheless a construction material.
(1) The listed items are:
i. Non-ferrous metals;
ii. Plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables); iii. Glass (including optic glass);
iv. Fiber optic cable (including drop cable);
v. Optical fiber;
vi. Lumber;
vii. Engineered wood, and
viii. Drywall.
(2) Minor additions of articles, materials, supplies or binding agents to a construction material do not change the categorization of the construction material.
6. Covered Materials includes the following when used in connection with an Infrastructure Project:
(A) all iron and steel;
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6 (B) all Manufactured Products; and
(C) all Construction Materials.
7. Covered CPD Programs. The term “covered CPD programs” means any Federal financial assistance administered by CPD that is used for public infrastructure projects, excepting expenditures related to pre and post disaster or emergency response.
8. Grantee. The term “grantee,” as defined at 24 CFR 5.100, means the person or legal entity to which a grant is awarded and that is accountable for the use of the funds provided.
9. Federal Financial Assistance (FFA) has the meaning given to the term in 2 CFR 200.1 (or successor regulations) and includes all expenditures by a Federal agency to a Non- Federal Entity for an Infrastructure Project, except that it does not include:
(A) expenditures for assistance authorized under section 402, 403, 404, 406, 408, or 502 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170a, 5170b, 5170c, 5172, 5174, or 5192) relating to a major disaster or emergency declared by the President under section 401 or 501, respectively, of such Act (42 U.S.C. 5170, 5191); or
(B) pre and post disaster or emergency response expenditures.
10. Infrastructure as described in 2 CFR 184.4(c), encompasses public infrastructure projects in the United States, which includes, at a minimum: the structures, facilities, and equipment for roads, highways, and bridges; public transportation; dams, ports, harbors, and other maritime facilities; intercity passenger and freight railroads; freight and intermodal facilities; airports; water systems, including drinking water and wastewater systems; electrical transmission facilities and systems; utilities; broadband infrastructure; and buildings and real property; and structures, facilities, and equipment that generate, transport, and distribute energy including electric vehicle (EV) charging. See also 2 CFR 184.4(d).
11. Infrastructure Project The term “infrastructure project” is defined in 2 CFR 184.3 and means any activity related to the construction, alteration, maintenance, or repair of public infrastructure in the United States regardless of whether infrastructure is the primary purpose of the project. See also 2 CFR 184.4(c) and (d).
12. Iron and Steel Products The term “iron and steel products” is defined in 2 CFR 184.3 and means articles, materials, or supplies that consists wholly or predominantly of iron or steel, or a combination of both.
13. Predominantly of iron or steel or a combination of both is defined in 2 CFR 184.3 and means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components. 1496
7 14. Made in America Office. The term “Made in America Office” or “MIAO” means the office at the Office of Management and Budget, established by section 70923 of BABA, that is charged with implementing the BAP and establishing the procedures to review waiver requests.
15. Manufactured Products is defined in 2 CFR 184.3 and means:
(1) Articles, materials, or supplies that have been:
(i) Processed into a specific form and shape; or
(ii) Combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies.
(2) If an item is classified as an iron or steel product, a construction material, or a section 70917(c) material under 2 CFR 184.4(e) and the definitions set forth in this section, then it is not a manufactured product. However, an article, material, or supply classified as a manufactured product under 2 CFR 184.4(e) and paragraph (1) of this definition may include components that are construction materials, iron or steel products, or section 70917(c) materials.
16. Manufacturer is defined in 2 CFR 184.3 and means the entity that performs the final manufacturing process that produces a manufactured product.
17. Non-Federal Entity means a State, local government, Indian tribe, Institution of Higher Education (IHE), or nonprofit organization that carries out a Federal award as a recipient or subrecipient., as provided in 2 CFR 200.1.
18. Not Listed Construction Materials The term “not listed construction materials” refers to the category of construction materials that are subject to the BAP, but not included in HUD’s specifically listed construction materials, as defined in the Phased Implementation Waiver.
This includes:
i. plastic and polymer-based products other than composite building materials or plastic and polymer-based pipe or tube;
ii. glass (including optic glass); and
iii. drywall.
19. Obligate means an action taken by HUD that creates a legal liability of the government for the payment of goods and services ordered or received or that administratively recognizes a legal duty on the part of the Agency that could mature into a legal liability by virtue of actions outside of HUD’s control. The milestone in the federal assistance award process that establishes the obligation date varies for each program, but for many CPD programs the obligation date occurs upon HUD’s execution of the grant agreement.
20. OMB Guidance . The term “OMB guidance” refers to 2 CFR Part 184, the "Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure” (M-24-02), issued October 25, 2023, by the Office of Management and Budget, and any subsequent guidance to rescind or replace M-24-02. This 1497
8 guidance is applicable to the heads of all Federal agencies for the implementation of BABA’s Buy America Preference.
21. Pre and Post Disaster or Emergency Response Expenditures. The term “pre and post disaster or emergency response expenditures” means Federal funding authorized under section 402, 403, 404, 406, 408, or 502 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) relating to a major disaster or emergency declared by the President under section 401 or 501, respectively. The BAP does not apply to pre- and post-disaster or emergency response expenditures authorized by statutes other than the Stafford Act and made in anticipation of or in response to an event that qualifies as an emergency or major disaster within the meaning of the Stafford Act.
22. Produced in the United States is defined in 2 CFR 184.3 and means:
i. In the case of iron or steel products, all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.
ii. In the case of manufactured products:
1. The product was manufactured in the United States; and
2. The cost of components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, unless another standard that meets or exceeds this standard has been established under applicable law or regulation for determining the minimum amount of domestic content of the manufactured product. See 2 CFR 184.2(a). The costs of
components of a manufactured product are determined according to 2 CFR 184.5.
iii. In the case of construction materials, all manufacturing processes for the construction material occurred in the United States. See 2 CFR 184.6 for more information on the meaning of “all manufacturing processes” for specific construction materials.
23. Section 70917(c) Materials. The term “section 70917(c) materials” is defined in 2 CFR 184.3 and means cement and cementitious materials; aggregates such as stone, sand, or gravel, or aggregate binding agents or additives.
The Federal Register Notice implementing new BABA regulations at 2 CFR 184 (88 FR 57787) clarifies that all categorizations of Covered Materials should be made based on the status of the material when it arrives at the work site. Section 70917(c) materials that are used at the work site, such as wet concrete or hot asphalt, are not subject to the BAP. However, Section 70917(c) materials may be components of manufactured products if, for example, they are used to produce precast concrete products before being transported to the work site.
24. Specifically listed construction materials. The term “specifically listed construction materials” for HUD programs includes:
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9 a. non-ferrous metals;
b. lumber;
c. composite building materials; and
d. plastic and polymer-based pipe and tube.
III. Applicability of the BAP to CPD Programs and Projects
The BAP applies to the purchase of iron, steel, manufactured products, and construction materials for Covered CPD Programs when funds are used for the construction, alteration, maintenance, or repair of public infrastructure, as defined by BABA. This list of Covered CPD Programs is subject to change if there are any changes to the eligible uses of funds or the establishment of new programs that fund public infrastructure projects and are covered by BABA. Covered CPD Programs currently include:
• Community Development Block Grant Formula Programs (CDBG) • Section 108 Loan Guarantee
• HOME Investment Partnerships Program (HOME)
• Housing Trust Fund (HTF)
• Recovery Housing Program (RHP)
• Emergency Solutions Grants (ESG)
• Continuum of Care (CoC)
• Housing Opportunities for Persons With AIDS (HOPWA)
• Self-Help Homeownership Opportunity Program (SHOP)
• Special NOFA for unsheltered and rural homeless
• Veterans Housing Rehabilitation and Modification Program (VHRMP) • Community Project Funding (CPF)/Economic Development Initiatives (EDI) • Section 4 Capacity Building
• Rural Capacity Building
• Pathways to Removing Obstacles to Housing (PRO Housing) • Preservation and Reinvestment Initiative for Community Enhancement (PRICE) • Continuum of Care Builds Notice of Funding Opportunity (CoCBuilds NOFO) BABA applies to any project that involves the construction, alteration, maintenance, or repair of public infrastructure, regardless of whether infrastructure is the primary purpose of the project. Since the term “infrastructure” includes the structures, facilities, and equipment for “buildings and real property”, the BAP generally applies to Covered CPD Program funds provided for housing projects.
OMB acknowledged at 2 CFR 184.4(d) that some projects may be “private” in nature and are not considered public infrastructure subject to BABA. An example OMB provided in M-24-02 is a project consisting solely of the purchase, construction, or improvement of a private single-family home for personal use.
Through this notice, CPD provides further clarification on when grantees should apply BABA’s requirements to housing projects as described in M-24-02.
1. Housing projects with one to four units are considered “private,” consistent with HUD’s definition of single-family housing. Housing projects with one to four units, including 1499
10 onsite utilities and related activities are therefore not considered public infrastructure and are not subject to the BAP.
2. Housing projects with five or more units are considered public infrastructure. Housing projects with five or more units are therefore subject to the BAP unless another BABA waiver or exemption applies.
Covered Materials incorporated into the public infrastructure project are subject to the BAP, regardless of the specific project costs for which Covered CPD Program funds are expended. To determine the scope of an individual public infrastructure project for BABA purposes, grantees should use the definition of a project as determined by the Covered CPD Program in question. For example, 24 CFR
92.2 defines a HOME project as “a site or sites together with any building (including a manufactured housing unit) or buildings located on the site(s) that are under common ownership, management, and financing and are to be assisted with HOME funds as a single undertaking under this part. The project includes all the activities associated with the site and building.”1
Where no program-specific definition of a project exists, grantees should use the definition of a “project” at 24 CFR 58 to assist with determining project scope: “an activity or group of integrally related activities designed by the recipient to accomplish, in whole or in part, a specific objective.” Grantees cannot split an infrastructure project to avoid application of the BAP to the project, such as by dividing procurements, subgrants, cooperative agreements, etc., into separate and smaller awards or contracts, particularly where the procurements, subgrants, cooperative agreements, etc., are integrally and proximately related to the whole.
IV. CPD Programs and Funding Not Covered by the BAP
The BAP does not apply to Federal funds for “pre and post disaster or emergency response.” The following list of CPD funds are administered for disaster or emergency-related purposes and therefore the BAP does not apply to them.
• Community Development Block Grant – Disaster Recovery Funds (CDBG-DR) • Community Development Block Grant – Mitigation (CDBG-MIT) • Community Development Block Grant – National Disaster Resilience Competition (CDBG- NDR)
• Community Development Block Grant CARES Act (CDBG-CV) • HOME Investment Partnerships American Rescue Plan Program (HOME-ARP) • Housing Opportunities for Persons With AIDS CARES Act (HOPWA-CV) • Emergency Solutions Grants CARES Act (ESG-CV)
• Rapid Unsheltered Survivor Housing (RUSH)
In addition to the funding sources listed above, the BAP does not apply to projects funded solely with program income generated through any Covered CPD Program. Program income is not considered FFA.
1 See also 24 CFR 93.2 for HTF, 24 CFR 578.3 for CoC, etc. 1500
11 BABA does not apply to projects that do not include any construction, alteration, maintenance, or repair of public infrastructure. Equipment, tools, and supplies that are brought to a construction site and removed upon completion of the project or furnishings used within the finished project that are not permanently affixed to the public infrastructure project are not covered by the BAP.
V. HUD’s General Waivers Applicable to Covered CPD Programs BABA requirements may be waived by HUD and OMB when applying the BAP would be inconsistent with the public interest, when Covered Materials are not reasonably available in sufficient quantities or quality, or if the inclusion of Covered Materials produced in the United States will increase the overall project by more than 25 percent. The term “general applicability waiver” refers to waivers that have broad applicability across multiple HUD programs. The general applicability waivers for HUD FFA that are currently in effect for all Covered CPD Programs as of publication of this Notice are listed below.
General public interest waivers may be applied to all or a portion of a project without prior approval from HUD when a project meets the conditions established by the waiver. Grantees should maintain documentation demonstrating that the project meets the conditions of each general waiver applied to the project. HUD is responsible for processing and reviewing all waivers, which may only apply prospectively to future expenditures incurred after the effective date of the final waiver. The table below is current as of the publication of this Notice. Details of all proposed and approved waivers can be found at HUD’s website at https://www.hud.gov/baba.
General Waiver
Type
Purpose Effective Dates
Public Interest
Phased
Implementation
HUD issued a public interest waiver,
“Public Interest Phased Implementation
Waiver for FY 2022 and 2023 of Build
America, Buy America Provisions as
Applied to Recipients of HUD Federal
Financial Assistance” to allow for
orderly implementation of the BAP
across HUD programs. The Phased
Implementation Waiver establishes a
schedule for the phased implementation
of the BAP across CPD programs and
infrastructure materials.
The public interest waiver was
issued in March 2023 and
established a phased
implementation schedule for the
application of the BAP to HUD
programs through FY2025. The
BAP has been in effect since
November 15, 2022, for the use of
iron and steel for infrastructure
projects funded with newly
obligated FFA through the CDBG
program.
Exigent
Circumstances
HUD issued a public interest waiver for
exigent circumstances, “Public Interest
Waiver of Build America, Buy America
Provisions for Exigent Circumstances as
Applied to Certain Recipients of HUD
Federal Financial Assistance”. This
waiver applies when there is an urgent
need by a CPD grantee to immediately
The public interest waiver for
exigent circumstances is effective
from November 23, 2022, until
November 23, 2027, or such shorter
time as HUD may announce via
Notice.
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12 General Waiver
Type
Purpose Effective Dates
complete an infrastructure project
because of a threat to life, safety, or
property of residents and the
community.
De Minimis and
Small Grants
HUD issued a public interest titled
“Public Interest De Minimis and Small
Grants Waiver of Build America, Buy
America Provisions as Applied to
Certain Recipients of HUD Federal
Financial Assistance”. This waives the
BAP for all infrastructure projects
whose total cost (from all funding
sources) is equal to or less than the
simplified acquisition threshold at 2
CFR 200.1, which is currently $250,000.
This Notice also waives the application
of the BAP for a de minimis portion of
an infrastructure project, meaning a
cumulative total of no more than five
percent of the total cost of the iron, steel,
manufactured products, and construction
materials used in and incorporated into
the infrastructure project, up to a
maximum of $1 million.
The public interest de minimis, and
small grants waiver is effective
from November 23, 2022, until on
November 23, 2027, or such shorter
time as HUD may announce via
Notice.
Tribal
Recipients
Waiver
HUD issued a public interest waiver, “
Extension of Public Interest, General
Applicability Waiver of Build America,
Buy America Provisions as Applied to
Tribal Recipients of HUD Federal
Financial Assistance” for the BAP as it
applies to Tribal recipients.
The waiver of the BAP as it
applies to Tribal recipients was
effective for FFA obligated by
HUD from May 23, 2023, until
September 30, 2024.
Pacific Island
Territory Waiver
HUD issued a “Public Interest, General
Applicability Waiver of Build America,
Buy America Provisions as Applied to
Pacific Island Territory Recipients of
HUD Federal Financial Assistance:
Final Notice” which waives the BAP
for any FFA used for infrastructure
projects in the Commonwealth of the
Northern Mariana Islands, Guam, and
American Samoa.
The waiver is effective from
November 15, 2023, until
February 15, 2025.
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13 VI. Understanding HUD’s Public Interest Phased Implementation General Waiver
Under Section 70914(a), the BAP was required to be in effect for all FFA for public infrastructure projects no later than 180 days after it was signed into law. Thus, starting May 14, 2022, all new awards of covered FFA for infrastructure projects obligated by HUD would have been required to comply with the BAP. Due to the short implementation period of 180 days, and to allow for the domestic industry and FFA recipients to have the time and notice necessary to implement BABA efficiently and effectively, HUD issued a Phased Implementation Waiver. This waiver enabled HUD to implement the BAP in an incremental process, resulting in full compliance with the BAP for all HUD obligations in FY 2025.
Covered CPD Programs began applying the BAP to public infrastructure projects beginning with CDBG funds obligated by HUD on and after November 15, 2022. The table below outlines the timeline for applicability of the BAP to each classification of Covered Materials incorporated into public infrastructure projects undertaken with Covered CPD Program funds. The columns identify categories of Covered Materials subject to the BAP and the rows identify covered HUD FFA, some of which are Covered CPD Programs and some of which are FFA from other HUD offices that may contribute funding to CPD-funded projects. Note that HUD’s Phased Implementation Waiver divides the statutorily defined category of construction materials into two separate buckets for purposes of applying the BAP. See definitions of specifically listed and not listed construction materials in Section II.
To use the table, find the program(s) that funds the project under consideration, then identify which Covered Materials will be used in the project. The cell in the table where the applicable row and column intersect indicates the date on which the BAP will begin applying to each classification of Covered Materials used in the project. It is important to note that the date of obligation is typically the date on which HUD executed the legal instrument creating the relationship between HUD and the grantee for an award of FFA, commonly the date the grant agreement is signed by HUD. The date on which the grantee commits funds to a project or awards funds to a subrecipient does not impact applicability of the BAP.
For example, a grantee uses FY24 CDBG funding to build a new senior center and the HUD grant agreement was signed by the CPD Director on September 15, 2024. The grantee would use the phased implementation table to determine that:
• Since the funds were from FY24 appropriations and HUD executed the grant agreement after November 15, 2022, the BAP applies to all iron or steel materials and any specifically listed construction materials incorporated into the public infrastructure project; and
• Any not listed construction materials and manufactured products incorporated into the project are not subject to the BAP.
• However, if the grantee were to add funds from an FY25 CDBG grant in the future, then the BAP would apply to all Covered Materials used in the public infrastructure project.
A public infrastructure project may use funding from multiple Covered CPD Programs that impose the BAP to Covered Materials at different points in time. In that case, the procurement of Covered Materials for the project must comply with the program that applies the BAP most broadly. 1503
14 For example, a public infrastructure project uses FY23 CDBG funding and FY24 HOME funding in the construction of a new multifamily housing development with 12 total units. HUD executed the CDBG grant agreement on September 15, 2023, and HUD executed the HOME grant agreement on September 12, 2024. The phased implementation table is used to determine that:
• HUD executed the CDBG grant agreement after November 15, 2022, but prior to FY24 appropriations. The BAP would apply to iron and steel products incorporated in the public infrastructure project.
• HUD executed the HOME grant agreement after August 23, 2024. The BAP would apply to iron and steel products, construction materials, and manufactured products (all Covered Materials) incorporated into the public infrastructure project. • In this case, the HOME requirements are broader. Therefore, the procurement of all iron and steel products, construction materials, and manufactured products incorporated in the public infrastructure project must comply with the BAP.
Grantees who are considering adding Covered CPD Program funds for construction, maintenance, alteration, or repair of an infrastructure project that was not previously subject to BABA should contact their local CPD Field Office for technical assistance.
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15 BAP will apply to… Iron and
Steel
Construction
Materials –
Specifically Listed
Construction
Materials – Not
Listed
Manufactured
Products
CDBG Formula Grants All funds
obligated on or
after
November 15,
2022
As of the date HUD
obligates new FFA
from Fiscal Year
2024 appropriations
As of the date HUD
obligates new FFA
from Fiscal Year 2025
appropriations
As of the date
HUD obligates
new FFA from
Fiscal Year
2025
appropriations
Choice Neighborhood,
Lead Hazard Reduction,
and Healthy Homes
Production Grants
New FFA
obligated by
HUD on or
after
February 22,
2023
New FFA obligated
by HUD on or after
August 23, 2024
New FFA obligated
by HUD on or after
August 23, 2024
New FFA
obligated by
HUD on or after
August 23, 2024
Recovery Housing
Program (RHP) Grants
New FFA
obligated by
HUD on or
after August
23, 2023
As of the date HUD
obligates new FFA
from Fiscal Year
2024 appropriations
As of the date HUD
obligates new FFA
from Fiscal Year 2025
appropriations
As of the date
HUD obligates
new FFA from
Fiscal Year
2025
appropriations
All other HUD FFA
except HOME, Housing
Trust Fund, and Public
Housing FFA used for
maintenance projects
New FFA
obligated by
HUD on or
after
February 22,
2024
New FFA obligated
by HUD on or after
August 23, 2024
New FFA obligated
by HUD on or after
August 23, 2024
New FFA
obligated by
HUD on or after
August 23, 2024
HOME, Housing Trust
Fund, and Public Housing
FFA used for
maintenance projects
New FFA
obligated by
HUD on or
after August
23, 2024
New FFA obligated
by HUD on or after
August 23, 2024
New FFA obligated
by HUD on or after
August 23, 2024
New FFA
obligated by
HUD on or after
August 23, 2024
VII. Applying the BAP and HUD General Waivers to Covered CPD Programs
Grantees should assess each project undertaken with Covered CPD Program funds to determine which Covered Materials incorporated into the project are subject to the BAP based on the effective dates in the Phased Implementation Waiver described above. This section describes the process grantees should follow to determine whether a project is subject to the BAP and if the project may be exempted in whole or in part by one of HUD’s general waivers.
As a part of its record-keeping, a CPD grantee should document its process to analyze if the 1505
16 BAP applies to a public infrastructure project using the approach described below. An optional “Buy America Preference Applicability Checklist” is included in Appendix 2 of this Notice.
Grantees may choose to use or adapt the tool to serve as a record of the analysis completed for each project.
Step 1: Type of project/activity
Determine if the project is a public infrastructure project as defined in Sections II and III of this Notice.
If the project is a public infrastructure project, the analysis continues to step 2.
Step 2: Funding sources
Identify the source(s) of the project funding, including Covered CPD Programs, other HUD funds, or other Federal agency funding. If the project includes funding from a Covered CPD Program listed in this Notice, the analysis continues to Step 3.
Step 3: Covered Materials
Identify and classify all the materials that will be incorporated into the project. Each material should be classified into only one category: iron and steel, specifically listed construction materials, not listed construction materials, or manufactured products. It is important to classify all Covered Materials used in the project to accurately determine BAP applicability because the BAP may only apply to some Covered Materials used in the project under the Phased Implementation Waiver.
The classification must be made based on the material’s status at the time it is brought to the location for incorporation into a public infrastructure project. If the project contains any Covered Materials, continue to Step 4.
Step 4: Date of obligation
Use the phased implementation table provided in Section VI of this Notice to determine when the BAP applies to each classification of Covered Materials, based on the obligation date for the Covered CPD Program funds. If the project uses any Covered CPD Program funds subject to the BAP based on the HUD obligation date, identify which Covered Materials must be produced in the United States.
The obligation date is generally the date that HUD makes a legal commitment for Covered CPD Program funds to the grantee. The date on which a grantee commits funds to a specific project does not impact the applicability of the BAP.
The obligation date is typically when HUD executes the grant agreement, but this may vary by program. For example, the obligation date for CDBG funds can be found in the CDBG grant agreement. Refer to Appendix 1 or contact your local CPD Field Office for assistance regarding the obligation date. If the project needs a waiver of the BAP for any Covered Materials, continue the analysis to Step 5.
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17 Step 5: General waivers
Analyze each available HUD general waiver, based upon the specific requirements of that waiver.
Public infrastructure projects that meet the conditions of a general waiver may be exempt in whole or in part from the BAP. Most HUD general waivers provide exemptions for an entire public infrastructure project that meets the waiver’s conditions. Grantees that apply a general waiver to an entire project should maintain documentation in their project records.
The De Minimis and Small Grants Waiver is uniquely useful for public infrastructure projects that are not covered in their entirety by the other general waivers. The De Minimis and Small Grants Waiver offers flexibility to incorporate Covered Materials of foreign or unknown origin up to 5% of the total cost of Covered Materials used in the project or $1 million, whichever is less. The total cost of Covered Materials includes all classifications of materials, regardless of whether they are subject to the BAP based on HUD’s Phased Implementation Waiver. This waiver advances compliance with the BAP by reducing the administrative burden to grantees where the costs of compliance with the BAP could distract from the focus on higher value BAP-compliant items. When using the De Minimis waiver, the grantee should document which Covered Materials the waiver was applied to in the project records.
For example, if the total cost of Covered Materials in a project is $100,000, then the grantee should calculate 5% of that total, which equals $5,000. The grantee may use the De Minimis waiver to use Covered Materials from foreign or unknown sources up to $5,000. This flexibility can be used towards a specific high-value item or multiple items with lesser values, up to a total of $5,000.
Grantees should calculate this limit for all public infrastructure projects and maximize this flexibility before seeking project-/product-specific waivers. For projects where general waivers do not provide relief for Covered Materials that cannot be procured from domestic sources, a project- /product-specific waiver may be appropriate. Continue the analysis in Step 6.
Step 6: Project-/Product-Specific Waivers
If the BAP applies to a project and all general waiver flexibilities have been utilized, but there are remaining Covered Materials that can only be sourced from foreign or unknown sources, then a grantee may apply for a project-/product-specific waiver. Prior to submitting a project-/product- specific waiver, the grantee must conduct market research to demonstrate its efforts to procure domestic products. One optional resource for conducting market research is the National Institute of Standards and Technology Manufacturing Extension Partnership (NIST MEP) center in the grantee’s state. Grantees are encouraged to collaborate with relevant members of the project team to identify Covered Materials that cannot be obtained from domestic sources as early as possible in the project life cycle. NIST MEP’s free supplier scouting resources can attempt to identify a domestic manufacturer that can supply the necessary materials or conduct the necessary market research to support the need for a project-/product-specific waiver.
As a part of its record-keeping, a grantee should document its process to analyze how the 1507
18 BAP applies to a public infrastructure project using the approach described in this section and in Appendix 2. Grantees may also consult their local CPD Field Office for assistance in confirming the analysis completed for a specific project before applying for a project-/product-specific waiver.
VIII. Federal Government-wide Guidance on Project-/Product-Specific Waivers
Once a grantee has completed the analysis described in Section VII and determined that a project- /product-specific waiver is required, the grantee should consider which type of project/product- specific waiver is appropriate, as described below.
The three types of project-/product-specific waivers for which a grantee may apply are described below.
1. A nonavailability waiver may be requested if the types of iron, steel, manufactured products, or construction materials required for the project are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality
2. An unreasonable cost waiver may be requested when the inclusion of iron, steel, manufactured products, or construction materials produced in the United States will increase the cost of the overall project by more than 25 percent.
3. A public interest waiver may be requested if the use of American made products would be inconsistent with the public interest. Grantees should explain how waiving the BABA requirement for this project or covered material will serve the public interest and demonstrate definite impacts on the community if specific items, products, or materials are not utilized in an infrastructure project to support this waiver type.
A. Waivers for Infrastructure Projects Funded by Multiple Federal Agencies
If a waiver is required for a public infrastructure project funded by multiple Federal agencies, the Federal agency contributing the greatest amount of Federal funds for the project may be considered the Cognizant Agency for Made in America (“Cognizant Agency”) and may take responsibility for coordinating with the other Federal awarding agencies. Each Federal agency waiving the BAP must make its own waiver determination. A Cognizant Agency cannot independently issue a waiver that applies to other agencies. Grantees that fund public infrastructure projects with other Federal agencies should contact the local CPD office as early as possible to coordinate review with other Federal agencies in the event a project-/product-specific waiver is needed.
OMB guidance outlined the waiver review process for agencies to follow before issuing a waiver.
Based on this guidance, HUD has developed a Department-wide project-/product-specific waiver submission process, described in Section IX.
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19 IX. Applying for a HUD Specific Waiver
This section describes the process a grantee should follow to request a project-/product-specific waiver. Only the direct HUD recipient should submit a waiver request. Subrecipients and/or subcontractors may not submit a waiver request. The direct recipient should work with project partners to obtain necessary information. Project-/product-specific waivers cannot be approved retroactively for items that have already been purchased or incorporated into a project, so grantees should determine if a project-/product-specific waiver is needed as early as possible in the planning process.
1. Complete the BAP analysis described in Section VII of this Notice to confirm that the project is subject to the BAP and that the grantee has maximized the flexibility provided by HUD general waivers. Grantees may use the optional recordkeeping tool in Appendix 2 and contact the local CPD Field Office if technical assistance is needed.
a) This step should always include calculating the De Minimis limit allowed by HUD’s De Minimis waiver and applying that flexibility to the products used in the project that cannot be procured from domestic manufacturers, as described in Section VII, Step 5.
2. Complete the necessary market research to support the need for a waiver. Market research may be completed by the grantee or the subrecipient/contractor who has been awarded funds and is purchasing the materials that will be incorporated into the infrastructure project. Acceptable market research strategies may include one or more of the following:
b) Document the report showing results of supplier scouting services provided by the NIST MEP, or similar supplier scouting service. For more information about the supplier scouting process, contact the local MEP center. c) Document that the purchaser has made a good faith effort to contact a minimum of three (3) manufacturers or suppliers to determine if a BABA- compliant material is available in sufficient quantity and satisfactory quality.
Documentation may include PDF files or screenshots of Internet searches or email communications, or documentation of phone conversations that notes the date and time of the call, the contact person with whom the purchaser spoke, and a summary of the information received.
3. Collect the required information to complete a waiver application using HUD’s BABA Waiver Submission Site (https://babawaiver.hud.gov/s/). Access the PDF version of the application form to see questions ahead of time to assist with preparation. Once started, the application cannot be saved, so make sure all information has been collected in advance.
4. Submit a BABA waiver application through the BABA Waiver Submission Site. For help with completing the application, access the Grantee User Manual or view the BABA Waiver System Training video. For additional technical assistance navigating the waiver system, please email [email protected].
5. HUD may contact the grantee for additional information as part of a review of the waiver application to validate the need for a waiver.
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20 6. If an application is approved, HUD will post the proposed waiver in the Federal Register for a minimum 15-day public comment period and submit the request to the Made In America Office (MIAO). The MIAO will then review the proposed waiver and public comments for final approval, and communicate a final decision to HUD, which will communicate it to the grantee.
X. Documentation of Compliance with the BAP
This section describes documentation that grantees should maintain to demonstrate compliance with the BAP for Covered Materials, including required terms and conditions of subawards. Project records should describe the public infrastructure project, identify the Covered Materials subject to the BAP, and include documentation that all iron and steel, manufactured products, and construction materials were produced in the United States or evidence of how a waiver was applicable.
Grantees are encouraged to coordinate with relevant members of the public infrastructure project team to ensure that the Covered Materials delivered to the project site are accompanied by documentation that demonstrates compliance with the BAP. Early and frequent coordination, such as pre-bid meetings to identify any Covered Materials that may be a challenge to source domestically, are recommended.
Grantees must maintain documentation of compliance with the BAP in hard copy or electronic formats, or in grant management software and must make it available to HUD upon request for monitoring purposes. Records should be consistent with existing records retention requirements for each of the Covered CPD programs. If there are no CPD program-specific records requirements, the CPD grantee may follow “retention requirements for records,” under 2 CFR § 200.334 as applicable to Federal grants. The compliance documentation must support the following:
• Documentation of the determination of BAP applicability to the Covered Materials used in the public infrastructure project. Even if the project is determined to be exempt, documentation of that determination should be retained in the grant files to support the determination. See Section VII and the optional BAP Applicability Checklist in Appendix 2. • If a project is subject to the BAP, documentation that all Covered Materials subject to the BAP were procured from BABA-compliant sources, as determined by HUD’s Phased Implementation Waiver.
• If a general waiver was applied to the project, documentation that supports that the project meets the conditions of the waiver.
• If a project-/product-specific waiver was obtained for the project, a copy of the approved waiver and market research supporting the need for the waiver.
CPD grantees are required to identify whether an activity is an infrastructure project, as defined by BABA, in the Integrated Disbursement and Information System (IDIS) or the Disaster Recovery Grant Reporting System (DRGR), depending on the covered CPD program. Grantees will be prompted to answer a question regarding BAP applicability when creating a new activity or adding new funds to an existing activity. Grantees should answer the question based on the analysis in Section VII. 1510
21 If the project is subject to the BAP requirements, the following are examples of information and documentation that the grantee may retain to demonstrate compliance. This is not an exhaustive or mandatory list and simply provides examples of documentation that can be maintained to support the conditions outlined above.
A. Project budget specifying the total project cost and the cost of Covered Materials.
B. Procurement list(s) of Covered Materials purchased for the public infrastructure project, either by the grantee, subrecipient, or contractor. This list(s) should reflect, for example:
a. Type of covered material, (iron, steel, manufactured product, or construction material);
b. Product or Material;
c. FFA Source(s);
d. FFA Obligation Date(s);
e. Costs per unit;
f. Total cost of product purchase or contract;
g. Manufacturer or Vendor;
h. Actual purchaser (grantee, sub-recipient, contractor); i. Special Quality Standards, if applicable; and
j. U.S. Made verification, if available (Made in the USA label, product specifications, vendor or contractor certification, etc.).
C. Documentation supporting the Covered Materials incorporated into the public infrastructure were made in the United States, for example:
a. A copy of the label indicating the product was made in the United States; b. A copy of the product description or technical specifications that provides sufficient detail to conclude that the Covered Materials comply with BABA; c. A certificate or other documentation from the manufacturer demonstrating that the Covered Materials comply with BABA;
d. A signed certification from the contractor of a project certifying compliance with BABA. (See Appendix 3 for an example.);
e. A signed certification from the manufacturer of the Covered Materials certifying compliance with BABA.
D. Results of market research and product sourcing to include, for example, the following:
a. Results of a supplier scouting search conducted by NIST MEP or another supplier scouting service;
b. Copies of web searches used (e.g., PDF/JPEG copies of web pages showing search terms and results including sources considered, eliminated, and chosen for further research);
c. Copies of email, fax, or mail correspondence with Covered Materials manufacturers or suppliers; and
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22 d. Records of phone communications with Covered Materials manufacturers or suppliers, including:
i. Dates and times of phone calls,
ii. Phone numbers used,
iii. Whether the phone communication was successful in making it possible to reach a staff person manufacturer or supplier able to respond to questions about BABA compliance, or whether the attempt at communication was 14 unsuccessful (e.g., left a message, phone line was busy, or phone line was disconnected),
iv. If the phone communication resulted in reaching someone, the name of the person contacted,
v. Notes describing the substance of the conversation (e.g., manufactured product is assembled in U.S., but the manufacturer is uncertain whether 55% of the value of the materials/components are sourced in the United States).
XI. Subrecipient Compliance with BABA Requirements
The terms and conditions of Federal awards attach to the FFA and flow down to subrecipients at all tiers. This means that all subgrantees, contractors, developers, etc., who receive Covered CPD Program funds through a CPD grantee must comply with BABA requirements. Language notifying subrecipients that the procurement of materials for public infrastructure projects must comply with the BAP must be included in all subawards, contracts, purchase orders, requests for proposals, and all other relevant procurement and bid documents. Sample language that grantees may use for this purpose is included below.
“Pursuant to the Build America, Buy America Act (BABA), enacted as part of the Infrastructure Investment and Jobs Act (IIJA). Pub. L. 117-58, 41 U.S.C. § 8301 note, the Federal Financial Assistance used to fund this infrastructure project is required to apply a domestic content procurement preference (the “Buy America Preference” or “BAP”) for all construction, alteration, maintenance, or repair of infrastructure, including buildings and real property, unless application of the BAP has been waived by HUD. Additional details on fulfilling the BABA requirements can be found at https://www.hud.gov/baba.
XII. Contact Information
Grantees that have questions on this Notice should contact their assigned CPD Field Office Representative or request technical assistance from CPD staff at [email protected]. 1512
23 Appendix 1 - Frequently Asked Questions
This Notice includes CPD-specific frequently asked questions (FAQs). For additional FAQs, please view the BABA HUDExchange site, hudexchange.info/programs/baba.
1. What projects or activities does the BAP apply to?
The BAP applies to the Covered Materials used in construction, alteration, maintenance, or repair of public infrastructure projects funded by Covered CPD Programs. The term “infrastructure” includes the structures, facilities, and equipment for projects traditionally considered infrastructure, and buildings and real property. For CPD programs, this may include, but is not limited to, certain funding for:
• road and sidewalk improvement projects;
• water, sewer, and other utility projects;
• broadband infrastructure;
• affordable housing construction and rehabilitation of buildings with five or more units;
• community facility construction and rehabilitation;
• homeless shelter construction and rehabilitation; and • other activities that are defined as public infrastructure according to BABA.
2. What projects or activities are not subject to the BAP?
The BAP does not apply to projects undertaken with Covered CPD Program funds that do not involve any construction, alteration, maintenance, or repair of public infrastructure.
Examples of CPD-funded projects to which the BAP does not apply include planning, capacity building, program administration, public services, training, counseling, short-term rental assistance, land acquisition and demolition projects where there are no articles, materials or supplies that are consumed in, incorporated into, or affixed to infrastructure.
The BAP does not apply to affordable housing development projects with one to four units.
3. How can I find products that are Made in the USA?
The Federal Trade Commission requires that products advertised or labeled as “Made in the USA” are generally assembled with parts and materials made of U.S. origin. Some manufacturers provide certification letters available on their website or upon request. HUD encourages grantees to coordinate with their local NIST Manufacturing Extension Partnership (MEP) center or similar supplier scouting service to find potential domestic manufacturers of items that cannot readily be sourced domestically.
4. If a project is already underway with funds not subject to the BAP and new funding is added that is subject to the BAP, does the entire project need to comply with the BAP? Yes, if any funds subject to the BAP are included in a project, the entire project must comply with the BAP for Covered Materials based on HUD’s and any other applicable 1513
24 general waivers, regardless of when the project was originally funded. Grantees who are considering adding Covered CPD Program funds for construction, maintenance, alteration or repair of an infrastructure project that was not previously subject to BABA requirements, should contact the local CPD Field Office for technical assistance.
5. How do I find the obligation date of my grant?
The obligation date is, in most cases, the date the grant agreement was signed by the CPD Director.
You can locate this date by looking at the original grant agreement or navigating to IDIS or DRGR. For grants managed in IDIS, navigate to the View Grant screen and locate the date in the Obligation Date field. For grants managed in DRGR, navigate to the View Grant screen and locate the Contract Effective Date.
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25 Appendix 2 - Optional Buy America Preference Applicability Checklist
This checklist is an optional tool that may be used or adapted to assist with determining if the Buy America Preference (BAP) applies to a public infrastructure project funded by a covered CPD program. This checklist follows the analysis steps as described in Section VII of Notice CPD-25-01 and may be retained for recordkeeping purposes.
Project Information
Grantee
Grant Number
Activity Name
Activity Number
(IDIS/DRGR)
Step 1. Determine if the project is a public infrastructure project as defined in Sections II and III of Notice CPD-25-01.
☐ Yes Continue to Step 2.
☐ No The BAP does not apply. The BAP only applies to public infrastructure projects. Stop here.
Step 2. Is the project funded using a Covered CPD Program? Check the box below for each CPD program funding this project.
Group A: Covered CPD Programs
☐ CDBG ☐ SHOP
☐ Section 108 ☐ VHRMP
☐ HOME ☐ CPF/EDI
☐ HTF ☐ Section 4
☐ RHP ☐ Rural Capacity Building
☐ ESG ☐ PRO Housing
☐ CoC ☐ PRICE
☐ HOPWA ☐ FY23 PSH Funds
Group B: CPD Programs Not Covered by the BAP
☐ CDBG-DR ☐ CDBG-CV
☐ CDBG-MIT ☐ HOPWA-CV
☐ CDBG-NDR ☐ ESG-CV
☐ HOME-ARP
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26 If you selected any Group A programs (even if Group B programs are also selected), answer yes. If you selected only Group B programs, answer no.
☐ Yes Continue to Step 3.
☐ No The BAP does not apply to this project because it is not funded by a covered CPD program. Stop here.
Step 3. Will the project use Covered Materials?
Each material should be classified into only one category: iron and steel, specifically listed construction materials, not listed construction materials, or manufactured products. This classification is necessary to apply HUD’s Phased Implementation Waiver.
Check the box below for each type of covered material incorporated into this infrastructure project. ☐ Iron or steel
☐ Specifically Listed Construction materials
☐ Not Listed Construction materials
☐ Manufactured products
If you checked any boxes above, answer yes.
☐ Yes Continue to Step 4.
☐ No The BAP does not apply to this project because it will not incorporate any Covered Materials. Stop here.
Analysis continues on next page.
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27 Step 4. Based on the obligation date of the covered CPD program funds, does the BAP apply to the funding source and Covered Materials that will be used in the project?
Use the phased implementation table to determine whether the BAP applies based on the obligation date for the covered CPD program funds and classification of materials. The BAP may only apply to some Covered Materials used in the project.
The obligation date is generally the date that HUD executed the grant agreement for covered CPD program funds to the grantee. This date may be found in the grant agreement. The obligation date is not the date when the grantee commits funds to a project under a subrecipient agreement.
BAP will apply
to…
Iron and Steel
Specifically
Listed
Construction
Materials
Not Listed
Construction
Materials
Manufactured
Products
CDBG
CDBG funds
obligated on or
after 11/15/22
Projects using
FY24 CDBG
funds
Projects using
FY25 CDBG
funds
Projects using
FY25 funds.
RHP
RHP funds
obligated on or
after 8/23/23
RHP funds
obligated on or
after 8/23/24
RHP funds
obligated on or
after 8/23/24
RHP funds
obligated on or
after 8/23/24
All other CPD
programs
except HOME
and HTF
Funds obligated
on or after
2/22/24
Funds obligated
on or after
8/23/24
Funds obligated
on or after
8/23/24
Funds obligated
on or after
8/23/24
HOME and
HTF
HOME or HTF
funds obligated on
or after 8/23/24
HOME or HTF
funds obligated on
or after 8/23/24
HOME or HTF
funds obligated on
or after 8/23/24
HOME or HTF
funds obligated on
or after 8/23/24
☐ Yes Indicate here which Covered Materials the BAP applies to and continue to Step 5:
☐ Iron and steel
☐ Specifically listed construction materials
☐ Not listed construction materials
☐ Manufactured products
☐ No The BAP does not apply to this project because the funds were obligated before the effective date for the program/materials used in the project.
Stop here.
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28 Step 5. HUD has issued several general waivers. Check the box next to any conditions that apply to the project.
Public infrastructure projects that meet the conditions of a general waiver may be exempt in whole or in part from the BAP.
☐ The total cost of the project from all sources (Federal and non-Federal) is $250,000 or less. If checked, the Small Grants Waiver applies, and the project is exempt from the BAP.
☐ There is an urgent need to immediately complete the project because of a threat to life, safety, or property. If checked, the Exigent Circumstances Waiver applies, and the project is exempt from the BAP. ☐ The project is in Guam, American Samoa, or the Northern Mariana Islands. If checked, the Pacific Island Territories Waiver applies, and the project is exempt from the BAP.
☐ The project is being funded by a Tribal recipient. If checked, the Tribal Recipients Waiver applies, and the project is exempt from the BAP.
If you checked any of the boxes above, answer yes below. ☐ Yes The HUD general waiver selected above is being applied to this project, so the BAP does not apply to the entire project. Attach documentation of the conditions of the waiver and then stop here.
☐ No Proceed to Step 5a.
Step 5a. Calculate the De Minimis limit for the project:
The total cost of all Covered Materials includes all iron and steel, construction materials, and manufactured products used in the project, regardless of whether the BAP currently applies under the Phased Implementation Waiver.
Enter the total cost of all Covered Materials:
Multiply that amount by 0.05 (5%):
Enter the lower of the number calculated in the
row above or $1,000,000:
The amount in the third row above is the De Minimis limit for this project. The BAP can be waived for Covered Materials from foreign or unknown sources at a cost not to exceed the De Minimis limit of 5% of the total cost of materials or $1,000,000 (whichever is less). The BAP 1518
29 will still apply to other Covered Materials used in the project. Attach a list of Covered Materials and their associated costs to which the De Minimis limit has been applied.
Step 6. Is there a need for a project-/product-specific waiver?
If the BAP applies to a project and all general waiver flexibilities have been utilized, but there are remaining Covered Materials that can only be sourced from foreign or unknown sources, then a grantee may apply for a project-/product-specific waiver.
☐ Yes Refer to guidance in Section VII Step 6 of Notice CPD 25-01. ☐ No Stop here and retain this analysis in project records.
Completed by Date Completed
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30 Appendix 3 - Optional Buy America Preference Certification Project Information
This “Optional Buy America Preference Certification” is used to certify that, as required by the Build America, Buy America (BABA) Act, all of the iron, steel, manufactured products, and construction materials incorporated into a public infrastructure project are produced in the United States, unless exempted by a HUD general waiver or a project-/product-specific waiver approved by HUD and the Made in America Office (MIAO) at the Office of Management and Budget (OMB).
For Covered Materials not otherwise exempted from the Buy America Preference (BAP), the undersigned certifies the following:
• All iron and steel used in the project are produced in the United States. This means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States;
• All manufactured products used in the project are produced in the United States. This means the manufactured product was manufactured in the United States, and the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, unless another standard that meets or exceeds this standard has been established under applicable law or regulation for determining the minimum amount of domestic content of the manufactured product; and • All construction materials used in the project are manufactured in the United States. This means that all manufacturing processes for the construction material occurred in the United States.
Attach a list of all Covered Materials procured by the signatory and used in the project.
I/We, the undersigned, certify under penalty of perjury that the information provided above is true and correct.
WARNING: Anyone who knowingly submits a false claim or makes a false statement is subject to criminal and/or civil penalties, including confinement for up to 5 years, fines, and civil and administrative penalties. (18 U.S.C. §§ 287, 1001, 1010, 1012, 1014; 31 U.S.C. §§ 3729, 3802).
Signature Title/Organization Date
Grantee
Grant Number
Activity Name
Activity Number
(IDIS/DRGR)
1520
LABOR COMPLIANCE REQUIREMENTS
Project Bidding
1. Borrower, Prime Contractor, Subcontractor, and every Sub-Tier contractor shall include this CONSTRUCTION CONTRACT LABOR COMPLIANCE PROVISIONS (Attachment D) in all bid documents for Prime Contractor(s), Subcontractor(s) and every Sub-Tier contractor(s) and must clearly state the appropriate prevailing wage rate(s) (i.e., Federal, State, commercial and/or residential and the date of the appropriate wage schedule) for the project(s).
Construction
1. Borrower, Prime Contractor, Subcontractor, and every Sub-Tier contractor shall include the Davis Bacon/California LABOR COMPLIANCE CONTRACT ADDENDUM (DB/CA LCCA) attachment and must clearly state the appropriate prevailing wage rate(s) (i.e., Federal, State, commercial and/or residential and the date of the appropriate wage schedule) for the project(s) in every executed agreement (i.e., contract, purchase order, on-call, etc.) on the project(s).
2. Borrower shall ensure that the Prime Contractor, prior to accepting prospective Subcontractor(s) bid(s) and any Subcontractor accepting prospective lower tier Subcontractor(s) bid(s), has confirmed that each Subcontractor’s and lower tier Subcontractor bid is based on the appropriate prevailing wage rate(s) and the correct job classifications for the work to be performed on the project(s) under the subcontract.
3. Prime Contractor, Subcontractor, and every lower tier Subcontractor shall maintain copies of their executed contract(s) for the project(s) and shall provide to CDH a copy of such executed contract(s) upon request within no more than three (3) business days.
4. Prior to construction start, CDH will conduct a mandatory Labor Compliance Pre-Construction Meeting(s).
Prime Contractor, Subcontractor, and every lower tier Subcontractor working on the project(s) shall have, in attendance from their office, a representative responsible for managing the duties of prevailing wage labor compliance. Items to be discussed include, but are not limited to, Federal and State labor law requirements applicable to the project(s), prevailing wage requirements, respective record-keepi ng responsibilities, the requirement for submittal of certified payroll records to CDH, compliance documents and the prohibition against discrimination in employment, required signage, sign -in sheets/daily logs, contract language, reporting, employee reporting, possible audits, etc. The meeting will be canceled and rescheduled if Prime Contractor, Subcontractor, and/or every lower tier Subcontractor working on the project(s) representative responsible for managing the duties of prevailing wage labor compliance fail to attend the meeting unless authorized to do so by CDH in writing prior to the meeting.
5. Prime Contractor shall maintain at project site(s) daily log/sign-in sheets. Daily log/sign-in sheets shall be separated by company. Sheets shall be written in English and Spanish (and other languages, as appropriate) and shall include CDH and any project labor consultant name and phone number of the current wage monitor, for any worker to contact if there are any questions or concerns about their wages or any other concerns about the project. Prime Contractor shall enforce that all workers employed on site must sign in at the job site daily including time-in, time-out and lunch period (including any applicable travel time to and from project site). The workers must identify the Prime Contractor, Subcontractor and any lower tier Subcontractor for whom they are working and their job classification. Daily log/sign-in sheets shall be emailed to CDH no more than seven (7) days from the end of the scheduled project work week. If requested in writing by CDH, Prime Contractor shall provide to CDH any requested daily log/sign-in sheet copies within no more than three (3) business days of request. Workers who are subject to split- classifications during their tour of duty on the project(s) site shall edit the daily log/sign -in sheets on day’s worker duties triggered split-classifications assignment to reflect their actual hours worked in each classification. 1521
6. Prime Contractor, Subcontractor, and every lower tier Subcontractor shall complete in its entirety a Project ID Card for each worker employed on the worksite of the project(s). The Project ID Card shall be completed within five (5) days of execution of contract award for project(s) or before worker(s) begins employment on the project(s) site. The Project ID Card template shall be downloaded from LCPtracker. Prime Contractor, Subcontractor, and every lower tier Subcontractor may use an equivalent Project ID form if approved by CDH in advance and in writing. Prime Contractor, Subcontractor, and every lower tier Subcontractor shall be responsible for furnishing and requiring each worker employed on the worksite to have in possession and/or display such identification card as may be approved and directed by CDH or its designee. Any worker(s) employed on project(s) site found to be without their Project ID Card may be removed from site until Project ID Card is restored. Any Prime Contractor, Subcontractor, and every lower tier Subcontractor who falsifies information on a Project ID Card and/or knowingly reports incorrect information regarding a worker employed on project(s) site shall be dismissed and removed from the project and barred from conducting further business on the project. Workers need to consider wearing heavy duty ID card holders, as they work in extremely physical environments.
7. CDH and/or its designee shall conduct employee interviews and Prime Contractor, Subcontractor, and every lower tier Subcontractor agrees to have their employees interviewed for the purposes of prevailing wage compliance. Employee interviews should be conducted at a frequency and number sufficient to establish the degree of adequacy and accuracy of the CPR, and the nature and extent of any violations.
They should also be representative of all classifications of employees on the project. (29 CFR 5.6 (a) (3)).
In doubtful compliance situations, interviews with former employees may be appropriate. Employee interviews are intended to be private from their employer and Prime Contractor agrees allow CDH and/or its designee to conduct such interviews. Each employee s hould be informed that the information given is confidential, and that his/her identity will not be disclosed to the employer without the employee’s written permission. CDH and/or its designee shall conduct at least one set of wage interviews with a representative group of workers during the project construction (PWRB 2013, Investigative Procedures Under Davis Bacon Related Act/Contract Work Hours and Safety Standards Act). CDH and/or its designee must conduct additional interviews if there is any reason to suspect a Contractor or their Subcontractor is at risk for violating wage requirements. As provided in 29 CFR 5.6(a)(5), all interviews must be conducted in confidence.
8. As permitted by Department of Labor, HUD, projects subject to DBRA and Title 8, section 16404 of the California Code of Regulations, allows Prime Contractor, Subcontractor and every lower tier Subcontractor to submit a weekly CPR electronically. Prime Contractor, Subcontractor, and every lower tier Subcontractor agrees to use LCPtracker and shall submit weekly CPR’s as required during the term of construction on the project(s). LCPtracker is a web- based software CDH utilizes to collect, verify and manage prevailing wage certified payrolls and related labor compliance documentation.
Prime Contractor, Subcontractor and every Sub-Tier shall submit, via electronic submission, documents as required by CDH, which may include, but is not limited to Certified Payroll Records (CPR)s, Statements of Compliance and other required documents. Prime Contractor, Subcontractor and every Sub-Tier and/or their designee shall sign the E(Electronic) -Signature Authorization Agreement, which must be notarized with an “Acknowledgment”, and establish a Personal Identification Number (PIN), on LCPtracker. Prime Contractor, Subcontractor and every Sub-Tier will electronically sign, by use of their established PIN, all documents requiring a signature that are submitted to CDH via LCPtracker. Prime Contractor, Subcontractor and every lower tier Subcontractor agree that their PIN, once established on LCPtracker, constitutes their electronic signature and understands that any information and documents submitted using their PIN is electronically certifying their signature. Prime Contractor, Subcontractor and every lower tier Subcontractor understand that they are legally bound, obligated, and responsible by use of their PIN/electronic signature as much as would be by their handwritten signature.
9. To meet labor compliance requirements, CDH requires that each Prime Contractor, Subcontractor, and every lower tier Subcontractor agrees to complete and submit all required eDocuments on LCPtracker. 1522
All eDocuments are accessed, submitted and approved through LCPtracker. All eDocuments are submitted through CDH’s Online Certified Payroll System using a PIN. If requested in writing by CDH, Prime Contractor, Subcontractor, and every lower tier Subcontractor shall provide to CDH any additional requested compliance documentation within no more than three (3) business days of request.
One of the documents that will be required to be uploaded in LCPtracker as part of the eDocuments, is a City business license or a letter stating the reasons why no business license is required. All contractors performing work on a project site located within an incorporated city must possess or obtain that city’s business license. However, if the project is located in an unincorporated area of the County, and the contractor’s business is located in an incorporated city, the contractor must possess or obtai n a business license within the city where their business is located. An exception to the business license requirement will be aA letter explaining the exception to the business license requirement, if the contractor’s business and the project work site are both located in an unincorporated area of the County.
Prime Contractor, Subcontractor, and every lower tier Subcontractor agree to do the following on project(s):
A. Submit a hard copy of the Electronic Signature Authorization form within five (5) working days of executed contract - to establish a Personal Identification Number (PIN)) Form must be completed and signed by a company owner, partner, executive officer or designee (if applicable) before a contractor may establish a PIN and electronically sign documents online.
B. Complete Project ID cards as specified.
C. Submit required eDocuments online within ten (10) working days of executed contract.
D. Submit *non-required eDocuments and other documentation online as specified.
E. Submit CPRs online within ten (10) working days of the work week’s ending date.
F. Submit one CPR online per project, per week.
G. Report all workers, including owners, partners and superintendents, who were onsite.
H. All contractors must submit CPRs online from the start of the project until the time that they finish their work on the project.
I. All contractors must submit a Statement of Non-Performance online to certify that no work was performed by their company for any week of the project they are not working.
J. All contractors must submit a final CPR online for the last week they are working on-site.
K. All contractors must pay every worker on a weekly basis (if applicable).
L. All CPRs must indicate check number or direct deposit transaction number.
(*Non-required eDocuments are those eDocuments which are not mandatory per LCPtracker; however, which may be required for a particular job on a case-by-case basis as specified.)
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REQUIRED DOCUMENTS
DOCUMENT QUICK REFERENCE
Document Name/Number
Prime Contractor – Due prior to Pre-Construction Conference Executed Contract/Purchase Order (FLCCA and/or SLCCA must be attached) Bonds (Performance/payment or labor and material bonds) Prime/Subcontractor – Due prior to Start of Work
Contractor Information Form2 (LCF 16-100)
Copy of all executed Sub-Contractor contracts (FLCCA and/or SLCCA must be attached) 2 Business Certification (LCF 16-SAM 2) 2
E-Signature Authorization Annual Form (Must be notarized) (LCF 16-1.0) 2 Affirmative Action Compliance Form for Construction Contracts over $10,000 (LCF DB16-2.2)*3 Affidavit of Compliance with California Prevailing Wage Law (LCF CA16-3.4) 5 Apprentice and Trainees Acknowledgement (LCF 16-XX) 4
Certification of Bidder Regarding Equal Opportunity (LCF DB16-2.1)*3 Certification of Understanding and Authorization Form (LCF 16-1.2)*3|4 Checklist of Labor Law Requirements (LCF CA16-3.1) 5
City Business License/Exception Letter2
Contractor’s Certification of Compliance with Davis-Bacon and Related Act Requirements (LCF DB16-2.0)*3 Fringe Benefit Statement Form (LCF 16-1.3)* 4
Labor Compliance Contract Addendum – LCCA2
Project Wage Rate Sheet*2(LCF -16-1.1)
Public Works Contract Award Information (DAS 140) (LCF CA16-3.2) 5 Request for Dispatch of an Apprentice (DAS 142) (LCF CA16-3.3) 5 Section 3 Actions and Outcomes (LCF DB16-2.5) 3
Section 3 Resource Participation Certificate (LCF DB16-2.4)3 Section 3 Business Certification (LCF DB 16-2.6)
Section 3 Worker/Targeted Worker Eligibility Form (LCF DB 16-2.7) Section 3 Cumulative Report (LCF DB 16-2.8)
Prime/Subcontractor – Due Progression of Work – Weekly
Authorization for Payroll Deduction (LCF 16-1.4)*3
Department of Industrial Relations – Apprentice Certification (LCF 16-SAM 5) 5 Department of Labor Apprenticeship Certification (LCF 16-SAM 4)* 3 Apprenticeship Program Appendix A*3
Prime/Subcontractor – Due Progression of Work – Monthly Training Fund Contribution (LCF 16-SAM 8) 4|5
DIR – eCPR Submission Confirmation (LCF 16-SAM 9) 5
Ready-Mix Concrete Driver Certified Time Record (LCF 16-SAM 10)5 Prime/Subcontractor – Due Progression of Work – As Needed C-10 Electrical Certification /Electrical Trainee (LCF 16-SAM 11)5 Employee CPR Certified Documentation1|2
*These forms are located on the LCPtracker online database discussed in, “Electronic Submission of Certified Payrolls” section and will be discussed by County CDH staff at the preconstruction conference. 1 If applicable to contractor
2 Applies to all regardless of Funding
3 Federal Funds ONLY (Davis-Bacon)
4 Federal and State Funds
5 State Funds ONLY
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STATE PREVAILING WAGE REQUIREMENTS
A. All or a portion of the Scope of Work in the Contract or Purchase Order (as applicable) requires the payment of prevailing wages and compliance with the following requirements. (1) Determination of Prevailing Rates
Pursuant to Labor Code sections 1770, et seq., the County has obtained from the Director of the Department of Industrial Relations (DIR) pursuant to the California Labor Code, the general prevailing rates of per diem wages and the prevailing rates for holiday and overtime work in the locality in which the Scope of Work is to be performed. Copies of said rates are on file with the County, will be made available for inspection during regular business hours, may be included elsewhere in the specifications for the Scope of Work, and are also available online at www.dir.ca.gov. The wage rate for any classification not listed, but which may be required to execute the Scope of Work, shall be commensurate and in accord with specified rates for similar or comparable classifications for those performing similar or comparable duties. In accordance with Labor Code section 1773.2, the Contractor shall post, at appropriate and conspicuous locations on the jobsite, a schedule showing all applicable prevailing wage rates and shall comply with the requirements of Labor Code sections 1773, et seq.
(2) Payment of Prevailing Rates
Each worker of the Contractor, Subcontractor, lower tier Subcontractor engaged in the Scope of Work, shall be paid not less than the general prevailing wage rate, regardless of any contractual relationship which may be alleged to exist between the Contractor, Subcontractor, lower tier Subcontractor and their respective worker(s). California law prohibits the use of credits for Employer Payments to reduce the obligation to pay the hourly straight time or overtime wages specified as the Basic Hourly Rate in the general prevailing wage determination.
(3) Prevailing Rate Penalty
The Contractor shall, as a penalty, forfeit two hundred dollars ($200.00) to the County for each calendar day or portion thereof, for each worker paid less than the prevailing rates as determined by the Director of the DIR for such work or craft in which such worker is employed by the Contractor, Subcontractor or lower tier Subcontractor in connection with the Scope of Work. Pursuant to California Labor Code section 1775, the difference between such prevailing wage rates and the amount paid to each worker for each calendar day, or portion thereof, for which each worker was paid less than the prevailing wage rate, shall be paid to each worker by the Prime Contractor, Subcontractor or lower tier Subcontractor. (4) Ineligible Contractors
Pursuant to the provisions of Labor Code section 1777.1, the Labor Commissioner publishes and distributes a list of contractors ineligible to perform work as a Prime Contractor, Subcontractor, or lower tier Subcontractor on a public works project. This list of debarred contractors is available from the DIR website at http://www.dir.ca.gov/Public-Works/PublicWorks.html. Any contract entered into between a Prime Contractor and a debarred subcontractor is void as a matter of law. A debarred Subcontractor may not receive any public money for performing work as a Subcontractor on a public works contract, and any public money that may have been paid to a debarred Subcontractor by a Prime Contractor on the project shall be returned to the County. The Prime Contractor shall be responsible for the payment of wages to workers of a debarred Subcontractor or lower tier Subcontractor who has been allowed to work on the Scope of Work. (5) Payroll Records
Pursuant to California Labor Code section 1776, the Prime Contractor, Subcontractor, and lower tier Subcontractor shall keep accurate certified payroll records showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker or other employee employed by them in connection with the Scope of Work. Each payroll record enumerated herein shall contain or be verified by a 1525
written declaration that it is made under penalty of perjury stating both of the following: (1) the information contained in the payroll record is true and correct and (2) the Prime Contractor, Subcontractor, or lower tier Subcontractor has complied with the requirements of California Labor Code sections 1771, 1811, and 1815 for any Scope of Work performed by his or her employees. The payroll records shall be available for inspection at all reasonable hours at the principal office of the Prime Contractor on the following basis:
(1) A certified copy of an employee's payroll record shall be made available for inspection or furnished to such employee or his/her authorized representative on request; (2) A certified copy of all payroll records shall be made available for inspection or furnished upon request to the County or the Division of Labor Standards Enforcement of the DIR; (3) A certified copy of payroll records shall be made available upon request to the public for inspection or copies thereof made; provided, however, that a request by the public shall be made through either the County or the Division of Labor Standards Enforcement. If the requested payroll records have not been previously provided to the County or the Division of Labor Standards Enforcement, the requesting party shall, prior to being provided the records, reimburse the cost of preparation by the Prime Contractor, Subcontractor, or lower tier Subcontractor and the entity through which the request was made. The public shall not be given access to such records at the principal office of the Prime Contractor;
(4) The Prime Contractor shall file a certified copy of the payroll records with the entity that requested such records within ten (10) days after receipt of a written request; and (5) Copies provided to the public, by the County or the Division of Labor Standards Enforcement shall be marked or obliterated to prevent disclosure of an individual's name, address and social security number. The name and address of the Prime Contractor, Subcontractor, or lower tier Subcontractor performing a part of the Scope of Work shall not be marked or obliterated. The Prime Contractor shall inform the County of the location of payroll records, including the street address, city and county and shall, within five (5) working days, provide a notice of a change of location and address.
The Prime Contractor shall have ten (10) days from receipt of the written notice specifying in what respects they must comply with the above requirements. In the event Prime Contractor does not comply with the requirements of this section within the ten (10) day period, the Prime Contractor shall, as a penalty to the County, forfeit one-hundred dollars ($100.00) for each calendar day, or portion thereof, for each worker, until strict compliance is effectuated. Upon the request of the Division of Labor Standards Enforcement, such penalty shall be withheld from any portion of the payments then due or to become due to the Prime Contractor. (6) Limits on Hours of Work
Pursuant to California Labor Code section 1810, eight (8) hours of labor shall constitute a legal day's work.
Pursuant to California Labor Code section 1811, the time of service of any worker employed at any time by the Prime Contractor, Subcontractor, or lower tier Subcontractor, upon the Scope of Work or upon any part of the Scope of Work, is limited and restricted to eight (8) hours during any one calendar day and forty (40) hours during any one calendar week, except as provided for under Labor Code section 1815. Notwithstanding the foregoing provisions, work performed by employees of the Prime Contractor, Subcontractor, or lower tier Subcontractor in excess of eight (8) hours per day and forty (40) hours during any one week, shall be permitted upon compensation for all hours worked in excess of eight (8) hours per day at not less than one and one-half (1½) times the basic rate of pay.
(7) Penalty for Excess Hours
The Prime Contractor shall pay to the County a penalty of twenty-five dollars ($25.00) for each worker employed on the Scope of Work by the Prime Contractor, Subcontractor, or lower tier Subcontractor for 1526
each calendar day during which such worker is required or permitted to work more than eight (8) hours in any calendar day and forty (40) hours in any one calendar week, in violation of the provisions of the California Labor Code, unless compensation to the worker so employed by the Prime Contractor, Subcontractor or lower tier Subcontractor is not less than one and one-half (1½) times the basic rate of pay for all hours worked in excess of eight (8) hours per day.
(8) Senate Bill 854 (Chapter 28, Statutes of 2014) Requirements:
1) Prime Contractor, Subcontractors and lower tier Subcontractors shall comply with Senate Bill 854 (signed into law on June 20, 2014). The requirements include, but are not limited to, the following:
a. No Prime Contractor, Subcontractor, or lower tier Subcontractor may be listed on a bid proposal for a public works project unless registered with the DIR pursuant to Labor Code section 1725.5, with limited exceptions from this requirements for bid purposes only as allowed under Labor Code section 1771.1(a).
b. No Prime Contractor, Subcontractor, or lower tier Subcontractor may be awarded a contract for public work or perform work on a public works project unless registered with the DIR pursuant to Labor Code section 1725.5.
c. This project is subject to compliance monitoring and enforcement by the DIR. d. As required by the DIR, Prime Contractor is required to post job site notices, as prescribed by regulation, regarding compliance monitoring and enforcement by the DIR. e. Prime Contractor, Subcontractors, and lower tier Subcontractors must submit certified payroll records online to the Labor Commissioner for all public works projects, new or ongoing, on or after January 1, 2016.
a. The certified payroll must be submitted at least monthly to the Labor Commissioner. b. The County reserves the right to require Prime Contractor, Subcontractors, and lower tier Subcontractor to submit certified payroll records more frequently than monthly to the Labor Commissioner.
c. The certified payroll records must be in a format prescribed by the Labor Commissioner.
2) Labor Code section 1725.5 states the following:
A Prime Contractor, Subcontractors, and lower tier Subcontractors shall be registered pursuant to this section to be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any public work contract that is subject to the requirements of this chapter. For the purposes of this section, "contractor" includes a subcontractor as defined by Section 1722.1.
(a) To qualify for registration under this section, a Prime Contractor shall do all of the following:
(1) Beginning July 1, 2014, register with the Department of Industrial Relations in the manner prescribed by the Department and pay an initial nonrefundable application fee of four hundred dollars ($400) to qualify for registration under this section and an annual renewal fee on or before July 1
st of each year thereafter. The annual renewal fee shall be in a uniform amount set by the Director of Industrial Relations, and the initial registration and renewal fees may be adjusted no more than annually by the Director to support the costs specified in Section 1771.3. (2) Provide evidence, disclosures, or releases as are necessary to establish all of the following:
(A) Workers' Compensation coverage that meets the requirements of Division 4 (commencing with Section 3200) and includes sufficient coverage for any worker whom the Prime Contractor, Subcontractor or lower tier Subcontractor employs to 1527
perform work that is subject to prevailing wage requirements other than a contractor who is separately registered under this section. Coverage may be evidenced by a current and valid certificate of Workers' Compensation Insurance or certification of self- insurance required under Section 7125 of the Business and Professions Code. (B) If applicable, the Prime Contractor, Subcontractor, or lower tier Subcontractor is licensed in accordance with Chapter 9 (commencing with Section 7000) of the Business and Professions Code.
(C) The Prime Contractor, Subcontractor or Sub-Tier does not have any delinquent liability to an employee or the state for any assessment of back wages or related damages, interest, fines, or penalties pursuant to any final judgment, order, or determination by a court or any federal, state, or local administrative agency, including a c onfirmed arbitration award. However, for purposes of this paragraph, the contractor shall not be disqualified for any judgment, order, or determination that is under appeal, provided that the contractor has secured the payment of any amount eventually found due through a bond or other appropriate means.
(D) The contractor is not currently debarred under Section 1777.1 or under any other federal or state law providing for the debarment of contractors from public works. (E) The contractor has not bid on a public works contract, been listed in a bid proposal, or engaged in the performance of a contract for public works without being lawfully registered in accordance with this section, within the preceding 12 months or since the effective date of the requirements set forth in subdivision (e), whichever is earlier. If a contractor is found to be in violation of the requirements of this paragraph, the period of disqualification shall be waived if both of the following are true:
(i) The contractor has not previously been found to be in violation of the requirements of this paragraph within the preceding 12 months. (ii) The contractor pays an additional nonrefundable penalty registration fee of two thousand dollars ($2,000).
(b) Fees received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section. (c) A contractor who fails to pay the renewal fee required under paragraph (1) of subdivision (a) on or before the expiration of any prior period of registration shall be prohibited from bidding on, or engaging in the performance of, any contract for public works until once again registered pursuant to this section.
If the failure to pay the renewal fee was inadvertent, the contractor may renew its registration retroactively by paying an additional nonrefundable penalty renewal fee equal to the amount of the renewal fee within 90 days of the due date of the renewal fee. (d) If, after a body awarding a contract accepts the contractor's bid or awards the contract, the work covered by the bid or contract is determined to be a public work to which Section 1771 applies, either as the result of a determination by the director pursuant to Section 1773.5 or a court decision, the requirements of this section shall not apply, subject to the following requirements:
(1) The body that awarded the contract failed, in the bid specification or in the contract documents, to identify as a public work that portion of the work that the determination or decision subsequently classifies as a public work.
(2) Within 20 days following service of notice on the awarding body of a determination by the Director of Industrial Relations pursuant to Section 1773.5 or a decision by a court that the contract was for public work as defined in this chapter, the contractor and any subcontractors 1528
are registered under this section or are replaced by a contractor or subcontractors who are registered under this section.
(3) The requirements of this section shall apply prospectively only to any subsequent bid, bid proposal, contract, or work performed after the awarding body is served with notice of the determination or decision referred to in paragraph (2) of this subdivision. (e) The requirements of this section shall apply to any bid proposal submitted on or after March 1, 2015, and any contract for public work, as defined in this chapter, entered into on or after April 1, 2015. 3) Labor Code section 1771.1 states the following:
(a) A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal subject to the requirements of Section 4104 of the Public Contract Code or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded. (b) Notice of the requirement described in subdivision (a) shall be included in all bid invitations and public works contracts, and a bid shall not be accepted, nor any contract or subcontract entered into without proof of the contractor or subcontractor's current registration to perform public work pursuant to Section 1725.5.
(c) An inadvertent error in listing a subcontractor who is not registered pursuant to Section 1725.5 in a bid proposal shall not be grounds for filing a bid protest or grounds for considering the bid nonresponsive, provided that any of the following apply:
(1) The subcontractor is registered prior to the bid opening. (2) Within 24 hours after the bid opening, the subcontractor is registered and has paid the penalty registration fee specified in subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(3) The subcontractor is replaced by another registered subcontractor pursuant to Section 4107 of the Public Contract Code.
(d) Failure by a subcontractor to be registered to perform public work as required by subdivision (a) shall be grounds under Section 4107 of the Public Contract Code for the contractor, with the consent of the awarding authority, to substitute a subcontractor who is registered to perform public work pursuant to Section 1725.5 in place of the unregistered subcontractor. (e) The department shall maintain on its Internet Web site a list of contractors who are currently registered to perform public work pursuant to Section 1725.5.
(f) A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for public work shall not be unlawful, void, or voidable solely due to the failure of the awarding body, contractor, or any subcontractor to comply with the requirements of Section 1725.5 or this section.
(g) If the Labor Commissioner or his or her designee determines that a contractor or subcontractor engaged in the performance of any public work contract without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5(h). 1529
(h)(1) In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered public works contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any public work in violation of the requirements of Section 1725.5 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000). 1) The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time viol ation that was unintentional and did not hinder the Labor Commissioner’s ability to monitor and enforce compliance with the requirements of this chapter.
2) A higher tiered public works contractor or subcontractor shall not be liability for penalties assessed pursuant to paragraph (1) if the lower tier subcontractor’s performance is in violation of the requirements of Section 1725.5 due to the revocation of a previously approved registration.
3) A subcontractor shall not be liable for any penalties assessed against a higher tiered public works contractor or subcontractor pursuant to paragraph (1). A higher tiered public works contractor or subcontractor may not require a lower tiered subcontractor to indemnity or otherwise be liable for any penalties pursuant to paragraph (1).
(i) The Labor Commissioner or his or her designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (g) and subparagraph (B) of paragraph (1) of subdivision (h). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply. (j) (1) Where a contractor or subcontractor engages in the performance of any public work contract without having been registered in violation of the requirements of Section 1725.5 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on all public works until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the public work.
2) A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
a) Manual delivery of the order to the contractor or subcontractor personally. b) Leaving signed copies of the order with the person who is apparently in charge at the site of the public work and by thereafter mailing copies of the order by first class mail, postage prepaid to the contractor or subcontractor at one of the following:
a. The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors’ State License Board.
b. If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors’ State License Board, the address of the site of the public work.
3) The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered 1530
contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
4) Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at his or her regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(k) Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon him or her pursuant to subdivision (j) is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days or by a fine not exceeding ten thousand dollars ($10,000), or both. (l) This section shall apply to any bid proposal submitted on or after March 1, 2015, and any contract for public work entered into on or after April 1, 2015. This section shall also apply to the performance of any public work, as defined in this chapter, on or after January 1, 2018, regardless of when the contract for public work was entered.
(m) Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section. (n) This section shall not apply to work performed on a public works project of twenty-five thousand dollars ($25,000) or less when the project is for construction, alteration, demolition, installation, or repair work or to work performed on a public works project of fifteen thousand dollars ($15,000) or less when the project is for maintenance work.
4) Labor Code section 1771.4 states the following:
(a) All of the following are applicable to all public works projects that are otherwise subject to the requirements of this chapter:
(1) The call for bids and contract documents shall specify that the project is subject to compliance monitoring and enforcement by the Department of Industrial Relations. (2) The awarding body shall post or require the prime contractor to post job site notices, as prescribed by regulation.
(3) (A)Each contractor and subcontractor shall furnish the records specified in Section1776 directly to the Labor Commissioner, in the following manner:
(i) At least monthly or more frequently if specified in the contract with the awarding body. For purposes of this clause, “monthly” means that a submission of records shall be made at least once every 30 days while work is being performed on the project and within 30 days after the final day of work performed on the project.
(ii) In an electronic format, in the manner prescribed by the Labor Commissioner, on the department's internet website.
(B) A contractor or subcontractor who fails to furnish records pursuant to subparagraph (A), relating to its employees, shall be subject to a penalty by the Labor Commissioner of one hundred dollars ($100) per each day in which that party was in violation of s ubparagraph (A), not to exceed a total penalty of five thousand dollars ($5,000) per project. Penalties received pursuant to this paragraph shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section. (C) The Labor Commissioner shall not levy a penalty pursuant to subparagraph (B) until a contractor or subcontractor fails to furnish the records pursuant to subparagraph (A) 14 days after the requirement set forth in clause (i) of subparagraph (A). 1531
(D) Penalties pursuant to subparagraph (B) may only accrue to the actual contractor or subcontractor that failed to furnish the records pursuant to subparagraph (A). (4) If the contractor or subcontractor is not registered pursuant to Section 1725.5 and is performing work on a project for which registration is not required because of subdivision (f) of Section 1725.5, the unregistered contractor or subcontractor is not required to furnish the records specified in Section 1776 directly to the Labor Commissioner but shall retain the records specified in Section 1776 for at least three years after completion of the work. (5) The department shall undertake those activities it deems necessary to monitor and enforce compliance with prevailing wage requirements.
(b) The Labor Commissioner may exempt a public works project from compliance with all or part of the requirements of subdivision (a) if either of the following occurs:
(1) The awarding body has enforced an approved labor compliance program, as defined in Section 1771.5, on all public works projects under its authority, except those deemed exempt pursuant to subdivision (a) of Section 1771.5, continuously since December 31, 2011. (2) The awarding body has entered into a collective bargaining agreement that binds all contractors performing work on the project and that includes a mechanism for resolving disputes about the payment of wages.
(1) The requirements of paragraph (1) of subdivision (a) shall only apply to contracts for public works projects awarded on or after January 1, 2015.
(d) The requirements of paragraph (3) of subdivision (a) shall apply to all contract for public work, whether new or ongoing, on or after January 1, 2016.
(9) Compliance with California Labor Code section 1720.9 (1) Labor Code section 1720.9 expanded the definition of “public works” under the California Prevailing Wage Law to include the following:
(a) Hauling and delivery of ready -mixed concrete to carry out a public works, contract, with respect to contracts involving any state agency, including the California State University and the University of California, or any pollical subdivision of the state.
(2) Section 1720.9 defines the term “ready -mixed concrete” and specifies that rate of pay shall be the current prevailing wage “for the geographic area in which the factory or batching plant is located” as determined by the DIR. The entity hauling or delivering ready-mixed concrete to carry out a public works contract shall enter into a written subcontract agreement with the party that engaged the entity to supply the ready -mixed concrete. The written agreement shall require compliance with Prevailing Wage Law. (3) Section 1720.9 requires that the entity hauling or delivering ready-mixed concrete to carry out a public works contract shall submit a certified copy of the payroll records required by subdivision (a) of Section 1776 to the party that engaged the entity and to the general contractor within five working days after the employee has been paid, accompanied by a written time record that shall be certified by each driver for the performance of job duties in Section 1720.9(c).
(4) Section 1720.9(e) the entity hauling or delivering ready -mixed concrete for public works project shall be considered subcontractors and must register with the DIR as per Labor Code 1725.5.
(c)
1532
B. STATE PUBLIC WORKS APPRENTICESHIP REQUIREMENTS
1. State Public Works Apprenticeship Requirements:
The Contractor is responsible for compliance with Labor Code section 1777.5 and the California Code of Regulations, title 8, sections 230 – 230.2 for all apprenticeable occupations (denoted with “#” symbol next to craft name in DIR Prevailing Wage Determination), whether employed by the Contractor, subcontractor, vendor or consultant. Included in these requirements is (1) the Contractor’s requirement to provide notification (i.e.
DAS-140) to the appropriate apprenticeship committees; (2) pay training fund contributions for each apprenticeable hour employed on the Contract; and (3) utilize apprentices in a minimum ratio of not less than one apprentice hour for each five journeyman hours by completion of Contract work (unless an exception is granted in accordance with Labor Code section 1777.5) or request for the dispatch of apprentices.
Any apprentices employed to perform any of the Scope of Work shall be paid the standard wage to apprentices under the regulations of the craft or trade for which such apprentice is employed, and such individual shall be employed only for the work of the craft or trade to which such individual is registered. Only apprentices, as defined in California Labor Code section 3077, who are in training under apprenticeship standards and written apprenticeship agreements under California Labor Code sections 3070 et seq. are eligible to be employed for the Scope of Work. The employment and training of each apprentice shall be in accordance with the provisions of the apprenticeship standards and apprentice agreements under which such apprentice is training.
2. Compliance with California Labor Code section 1777.5 requires all public works contractors to:
(1) Submit Contract Award Information (DAS-140)
a. Although there are a few exemptions (identified below), all Contractors, regardless of union affiliation, must submit contract award information when performing on a California public works project. b. The DAS-140 is a notification “announcement” of the Contractor’s participation on a public works project—it is not a request for the dispatch of an apprentice. c. Contractors shall submit the contract award information (you may use form DAS 140) within 10 days of the execution of the prime contract or subcontract, but in no event later than the first day in which the Contractor has workers employed on the public work project. d. Contractors who are already approved to train apprentices (i.e. check “Box 1” on the DAS-140) shall only be required to submit the form to their approved program. e. Contractors who are NOT approved to train apprentices (i.e. those that check either “Box 2” or “Box 3” on the DAS-140) shall submit the DAS-140 TO EACH of the apprenticeship program sponsors in the area of your public works project. For a listing of apprenticeship programs see http://www.dir.ca.gov/Databases/das/pwaddrstart.asp.
(2) Employ Registered Apprentices
a. Labor Code section 1777.5 requires that a contractor performing work in an “apprenticeable” craft must employ one (1) hour of apprentice work for every five (5) hours performed by a journeyman.
This ratio shall be met prior to the Contractor’s completion of work on the project. “Apprenticeable” crafts are denoted with a pound symbol “#” in front of the craft name on the prevailing wage determination.
b. All Contractors who do not fall within an exemption category (see below) must request for dispatch of an apprentice from an apprenticeship program (for each apprenticeable craft or trade) by giving the program actual notice of at least 72 hours (business days only) before the date on which apprentices are required.
c. Contractors may use the “DAS-142” form for making a request for the dispatch of an apprentice. d. Contractors who are participating in an approved apprenticeship training program and who did not receive sufficient number of apprentices from their initial request must request dispatch of apprentices from ALL OTHER apprenticeship committees in the project area in order to fulfill this requirement. e. Contractor should maintain and submit proof (when requested) of its DAS -142 submittal to the apprenticeship committees (e.g. fax transmittal confirmation). A Contractor has met its requirement 1533
to employ apprentices only after it has successfully made a dispatch request to all apprenticeship programs in the project area.
f. Only “registered” apprentices may be paid the prevailing apprentice rates and must, at all times work under the supervision of a Journeyman (Cal. Code Regs., tit 8, § 230.1). (3) Make Training Fund Contributions
a. Contractors performing in apprenticeable crafts on public works projects, must make training fund contributions in the amount established in the prevailing wage rate publication for journeymen and apprentices.
b. Contractors may use the “CAC-2” form for submittal of their training fund contributions. c. Contractors who do not submit their training fund contributions to an approved apprenticeship training program must submit their contributions to the California Apprenticeship Council (CAC), PO Box 420603, San Francisco, CA 94142-0603.
d. Training fund contributions to the CAC are due and payable on the 15th day of the month for work performed during the preceding month.
e. The “training” contribution amount identified on the prevailing wage determination shall not be paid to the worker, unless the worker falls within one of the exemption categories listed below.
3. Exemptions to Apprenticeship Requirements:
The following are exempt from having to comply with California apprenticeship requirements. These types of contractors do not need to submit a DAS-140, DAS-142, make training fund contributions, or utilize apprentices. a. When the Contractor holds a sole proprietor license (“Owner -Operator”) and no workers were employed by the Contractor. In other words, the contractor performed the entire work from start to finish and worked alone.
b. Contractors performing in non-apprenticeable crafts. “Apprenticeable” crafts are denoted with a pound symbol “#” in front of the craft name on the prevailing wage determination. c. When the Contractor has a direct contract with the Public Agency that is under $30,000. d. When the project is 100% federally -funded and the funding of the project does not contain any city, county, and/or state monies (unless the project is administered by a state agency in which case the apprenticeship requirements apply).
e. When the project is a private project not covered by the definition of public works as found in Labor Code section 1720.
4. Exemption from Apprenticeship Ratios:
The Joint Apprenticeship Committee shall have the discretion to grant a certificate, which shall be subject to the approval of the Administrator of Apprenticeship, exempting the Contractor from the 1-to-5 ratio set forth in this Section when it finds that any one of the following conditions are met:
(1) Unemployment for the previous three-month period in such area exceeds an average of fifteen percent (15%); or
(2) The number of apprentices in training in such area exceeds a ratio of 1-to-5 in relation to journeymen; or
(3) The Apprenticeable Craft or Trade is replacing at least one-thirtieth (1/30) of its journeymen annually through apprenticeship training, either on a statewide basis or on a local basis; or (4) If assignment of an apprentice to any work performed under the Contract Documents would create a condition which would jeopardize such apprentice's life or the life, safety or property of fellow employees or the public at large, or if the specific task to which the apprentice is to be assigned is of such a nature that training cannot be provided by a journeyman.
When such exemptions from the 1-to-5 ratio between apprentices and journeymen are granted to an organization which represents contractors in a specific trade on a local or statewide basis, the member contractors will not be required to submit individual applications for approval to local Joint Apprenticeship Committees, provided they are already covered by the local apprenticeship standards. 1534
5. Contractor’s Compliance:
The responsibility of compliance with this Section for all Apprenticeable Trades or Crafts is solely and exclusively that of the Contractor. All decisions of the Joint Apprenticeship Committee(s) under this Section are subject to the provisions of California Labor Code section 3081 and penalties are pursuant to Labor Code section 1777.7 and the determination of the Labor Commissioner. 1535
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44 HUD-4010 U.S. Department of Housing and Urban Development Federal Labor Standards Provisions Office of Davis-Bacon and Labor Standards
A. APPLICABILITY
The Project or Program to which the construction work covered by this Contract pertains is being assisted by the United States of America, and the following Federal Labor Standards Provisions are included in this Contract pursuant to the provisions applicable to such Federal assistance.
1. Minimum wages and fringe benefits
i. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. As provided in 29 CFR 5.5(d) and (e), the appropriate wage determinations are effective by operation of law even if they have not been attached to the contract. Contributions made or co sts reasonably anticipated for bona fide fringe benefits under the Davis -Bacon Act (40 U.S.C. 3141(2)(B)) on behalf of laborers or mechanics are considered wages paid to such laborers or mechanics, subject to the provisions of paragraph (a)(1)(v) of these contract clauses; also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs which cover the particular weekly period, are deemed to be constructively made or incurred during such weekly period. Such laborers and mechanics must be paid the appropriate wage rate and fringe benefits on the wage determination for the classification(s) of work actually performed, without regard to skill, except as provided in 29 CFR 5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein: Provided, That the employer’s payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination (including any additional classifications and wage rates conformed under 29 CFR 5.5(a)(1)(iii)) and the Davis-Bacon poster (WH-1321) must be posted at all times by the contractor and its subcontractors at the site of the work in a prominent and accessible place where it can be easily seen by the workers. ii. Frequently recurring classifications
A. In addition to wage and fringe benefit rates that have been determined to be prevailing under the procedures set forth in 29 CFR part 1, a wage determination may contain, pursuant to § 1.3(f), wage and fringe benefit rates for classifications of laborers and mechanics for which conformance requests are regularly submitted pursuant to 29 CFR
5.5(a)(1)(iii), provided that:
1. The work performed by the classification is not performed by a classification in the wage determination for which a prevailing wage rate has been determined;
2. The classification is used in the area by the construction industry; and
3. The wage rate for the classification bears a reasonable relationship to the prevailing wage rates contained in the wage determination.
B. The Administrator will establish wage rates for such classifications in accordance with 29 CFR 5.5(a)(1)(iii)(A)(3). Work performed in such a classification must be paid at no less than the wage and fringe benefit rate listed on the wage determination for such classification.
iii. Conformance
A. The contracting officer must require that any class of laborers or mechanics, including 1536
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45 helpers, which is not listed in the wage determination and which is to be employed under the contract be c lassified in conformance with the wage determination. Conformance of an additional classification and wage rate and fringe benefits is appropriate only when the following criteria have been met:
1. The work to be performed by the classification requested is not performed by a classification in the wage determination; and
2. The classification is used in the area by the construction industry; and
3. The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination.
B. The conformance process may not be used to split, subdivide, or otherwise avoid application of classifications listed in the wage determination.
C. If the contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and the contracting officer agree on the classification and wage rate (including the amount designated for fringe benefits where appropriate), a report of the action taken will be sent by the contracting officer by email to [email protected]. The Administrator, or an authorized representative, will approve, modify, or disapprove every additional classification action within 30 days of receipt and so advise the contracting officer or will notify the contracting officer within the 30–day period that additional time is necessary.
D. In the event the contractor, the laborers or mechanics to be employed in the classification or their representatives, and the contracting officer do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where appropriate), the contracting officer will, by email to [email protected], refer the questions, including the views of all interested parties and the recommendation of the contracting officer, to the Administrator for determination. The Administrator, or an authorized representative, will issue a determination within 30 days of receipt and so advise the contracting officer or will notify the contracting officer within the 30–day period that additional time is necessary.
E. The contracting officer must promptly notify the contractor of the action taken by the Wage and Hour Division under 29 CFR 5.5 (a)(1)(iii)(C) and (D). The contractor must furnish a written copy of such determination to each affected worker or it must be posted as a part of the wage determination. The wage rate (including fringe benefits where appropriate) determined pursuant to 29 CFR 5.5 (a)(1)(iii)(C) or (D) must be paid to all workers performing work in the classification under this contract from the first day on which work is performed in the classification.
iv. Fringe benefits not expressed as an hourly rate
Whenever the minimum wage rate prescribed in the contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the contractor may either pay the benefit as stated in the wage determination or may pay another bona fide fringe benefit or an hourly cash equivalent thereof.
v. Unfunded plans
If the contractor does not make payments to a trustee or other third person, the contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program, Provided, That the Secretary of Labor has found, upon the written request of the contractor, in accordance with the criteria set forth in 29 CFR 5.28, that the applicable standards of the Davis-Bacon Act have been met. The Secretary of Labor may require the contractor to set aside in a separate account assets for the meeting of obligations under the plan or program. vi. Interest In the event of a failure to pay all or part of the wages required by the contract, the contractor will be required to pay interest on any underpayment of wages. 1537
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46 2. Withholding
i. Withholding requirements
The U. S. Department of Housing and Urban Development may, upon its own action, or must, upon written request of an authorized representative of the Department of Labor, withhold or cause to be withheld from the contractor so much of the accrued payments or advances as may be considered necessary to satisfy the liabilities of the prime contractor or any subcontractor for the full amount of wages and monetary relief, including interest, required by the clauses set forth in 29 CFR 5.5(a) for violations of this contract, or to satisfy any such liabilities required by any other Federal contract, or federally assisted contract subject to Davis-Bacon labor standards, that is held by the same prime contractor (as defined in 29 CFR
5.2). The necessary funds may be withheld from the contractor under this contract, any other Federal contract with the same prime contractor, or any other federally assisted contract that is subject to Davis -Bacon labor standards requirements and is held by the same prime contractor, regardless of whether the other contract was awarded or assisted by the same agency, and such funds may be used to satisfy the contractor liability for which the funds were withheld. In the event of a contractor’s failure to pay any laborer or mechanic, including any apprentice or helper working on the site of the work (or otherwise working in construction or development of the project under a development statute) all or part of the wages required by the contract, or upon the contractor’s failure to submit the required records as discussed in 29 CFR 5.5(a)(3)(iv), HUD may on its own initiative and after written notice to the contractor, sponsor, applicant, owner, or other entity, as the case may be, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased.
ii. Priority to withheld funds
The Department has priority to funds withheld or to be withheld in accordance with 29 CFR
5.5(a)(2)(i) or (b)(3)(i), or both, over claims to those funds by:
A. A contractor’s surety(ies), including without limitation performance bond sureties and payment bond sureties;
B. A contracting agency for its reprocurement costs;
C. A trustee(s) (either a court-appointed trustee or a U.S. trustee, or both) in bankruptcy of a contractor, or a contractor’s bankruptcy estate;
D. A contractor’s assignee(s);
E. A contractor’s successor(s); or
F. A claim asserted under the Prompt Payment Act, 31 U.S.C. 3901-3907.
3. Records and certified payrolls
i. Basic record requirements
A. Length of record retention. All regular payrolls and other basic records must be maintained by the contractor and any subcontractor during the course of the work and preserved for all laborers and mechanics working at the site of the work (or otherwise working in construction or development of the project under a development statute) for a period of at least 3 years after all the work on the prime contract is completed.
B. Information required Such records must contain the name; Social Security number; last known address, telephone number, and email address of each such worker; each worker’s correct classification(s) of work actually performed; hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in 40 U.S.C. 3141(2)(B) of the Davis-Bacon Act); daily and weekly number of hours actually worked in total and on each covered contract; deductions made; and actual wages paid.
C. Additional records relating to fringe benefits. Whenever the Secretary of Labor has found under 29 CFR 5.5(a)(1)(v) that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in 40 U.S.C. 3141(2)(B) of the Davis-Bacon Act, the contractor must maintain 1538
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47 records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual cost incurred in providing such benefits.
D. Additional records relating to apprenticeship Contractors with apprentices working under approved programs must maintain written evidence of the registration of apprenticeship programs, the registration of the apprentices, and the ratios and wage rates prescribed in the applicable programs.
ii. Certified payroll requirements
A. Frequency and method of submission The contractor or subcontractor must submit weekly, for each week in which any DBA - or Related Acts-covered work is performed, certified payrolls to HUD if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to HUD. The prime contractor is responsible for the submission of all certified payrolls by all subcontractors. A contracting agency or prime contractor may permit or require contractors to submit certified payrolls through an electronic system, as long as the electronic system requires a legally valid electronic signature; the system allows the contractor, the contracting agency, and the Department of Labor to access the certified payrolls upon request for at least 3 years after the work on the prime contract has been completed; and the contracting agency or prime contractor permits other methods of submission in situations where the contractor is unable or limited in its ability to use or access the electronic system
B. Information required The certified payrolls submitted must set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i)(B), except that full Social Security numbers and last known addresses, telephone numbers, and email addresses must not be included on weekly transmittals. Instead, the certified payrolls need only include an individually identifying number for each worker (e.g., the last four digits of the worker’s Social Security number). The required weekly certified payroll information may be submitted using Optional Form WH -347 or in any other format desired. Optional Form WH-347 is available for this purpose from the Wage and Hour Division Web site at https://www.dol.gov/
sites/dolgov/files/WHD/legacy/files/wh347.pdf or its successor website. It is not a violation of this section for a prime contractor to require a subcontractor to provide full Social Security numbers and last known addresses, telephone numbers, and email addresses to the prime contractor for its own records, without weekly submission by the subcontractor to the sponsoring government agency (or the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records).
C. Statement of Compliance Each certified payroll submitted must be accompanied by a “Statement of Compliance,” signed by the contractor or subcontractor, or the contractor’s or subcontractor’s agent who pays or supervises the payment of the persons working on the contract, and must certify the following:
1. That the certified payroll for the payroll period contains the information required to be provided under 29 CFR 5.5(a)(3)(ii), the appropriate information and basic records are being maintained under 29 CFR 5.5 (a)(3)(i), and such information and records are correct and complete;
2. That each laborer or mechanic (including each helper and apprentice) working on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in 29 CFR part 3; and
1539
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48 3. That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification(s) of work actually performed, as specified in the applicable wage determination incorporated into the contract.
D. Use of Optional Form WH -347 The weekly submission of a properly executed certification set forth on the reverse side of Optional Form WH -347 will satisfy the requirement for submission of the “Statement of Compliance” required by 29 CFR
5.5(a)(3)(ii)(C).
E. Signature The signature by the contractor, subcontractor, or the contractor’s or subcontractor’s agent must be an original handwritten signature or a legally valid electronic signature.
F. Falsification The falsification of any of the above certifications may subject the contractor or subcontractor to civil or criminal prosecution under 18 U.S.C. 1001 and 31 U.S.C. 3729.
G. Length of certified payroll retention The contractor or subcontractor must preserve all certified payrolls during the course of the work and for a period of 3 years after all the work on the prime contract is completed.
iii. Contracts, subcontracts, and related documents The contractor or subcontractor must maintain this contract or subcontract and related documents including, without limitation, bids, proposals, amendments, modifications, and extensions. The contractor or subcontractor must preserve these contracts, subcontracts, and related documents during the course of the work and for a period of 3 years after all the work on the prime contract is completed. iv. Required disclosures and access
A. Required record disclosures and access to workers The contractor or subcontractor must make the records required under 29 CFR 5.5(a)(3)(i) –(iii), and any other documents that HUD or the Department of Labor deems necessary to determine compliance with the labor standards provisions of any of the applicable statutes referenced by 29 CFR 5.1, available for inspection, copying, or transcription by authorized representatives of HUD or the Department of Labor, and must permit such representatives to interview workers during working hours on the job.
B. Sanctions for non-compliance with records and worker access requirements If the contractor or subcontractor fails to submit the required records or to make them available, or refuses to permit worker interviews during working hours on the job, the Federal agency may, after written notice to the contractor, sponsor, applicant, owner, or other entity, as the case may be, that maintains such records or that employs such workers, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds. Furthermore, failure to submit the required records upon request or to make such records available, or to permit worker interviews during working hours on the job, may be grounds for debarment action pursuant to 29 CFR 5.12. In addition, any contractor or other person that fails to submit the required records or make those records available to WHD within the time WHD requests that the records be produced will be preclu ded from introducing as evidence in an administrative proceeding under 29 CFR part 6 any of the required records that were not provided or made available to WHD. WHD will take into consideration a reasonable request from the contractor or person for an extension of the time for submission of records. WHD will determine the reasonableness of the request and may consider, among other things, the location of the records and the volume of production.
C. Required information disclosures Contractors and subcontractors must maintain the full Social Security number and last known address, telephone number, and email address of each covered worker, and must provide them upon request to HUD if the agency is a party to the contract, or to the Wage and Hour Division of the Department 1540
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49 of Labor. If the Federal agency is not such a party to the contract, the contractor, subcontractor, or both, must, upon request, provide the full Social Security number and last known address, telephone number, and email address of each covered worker to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to HUD, the contractor, or the Wage and Hour Division of the Department of Labor for purposes of an investigation or other compliance action.
4. Apprentices and equal employment opportunity
i. Apprentices
A. Rate of pay Apprentices will be permitted to work at less than the predetermined rate for the work they perform when they are employed pursuant to and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Office of Apprenticeship (OA), or with a State Apprenticeship Agency recognized by the OA. A person who is not individually registered in the program, but who has been certified by the OA or a State Apprenticeship Agency (where appropriate) to be eligible for probationary employment as an apprentice, will be permitted to work at less than the predetermined rate for the work they perform in the first 90 days of probationary employment as an apprentice in such a program. In the event the OA or a State Apprenticeship Agency recognized by the OA withdraws approval of an apprenticeship program, the contractor will no longer be permitted to use apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved.
B. Fringe benefits Apprentices must be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator determines that a different practice prevails for the applicable apprentice classification, fringe benefits must be paid in accordance with that determination.
C. Apprenticeship ratio The allowable ratio of apprentices to journeyworkers on the job site in any craft classification must not be greater than the ratio permitted to the contractor as to the entire work force under the registered program or the ratio applicable to the locality of the project pursuant to 29 CFR 5.5(a)(4)(i)(D). Any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated in 29 CFR 5.5(a)(4)(i)(A), must be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under this section must be paid not less than the applicable wage rate on the wage determination for the work actually performed.
D. Reciprocity of ratios and wage rates Where a contractor is performing construction on a project in a locality other than the locality in which its program is registered, the ratios and wage rates (expressed in percentages of the journeyworker’s hourly rate) applicable within the locality in which the construction is being performed must be observed. If there is no applicable ratio or wage rate for the locality of the project, the ratio and wage rate specified in the contractor’s registered program must be observed. ii Equal employment opportunity The use of apprentices and journeyworkers under this part must be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended, and 29 CFR part 30.
1541
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ref. Handbook 1344.1
50 5 Compliance with Copeland Act requirements. The contractor shall comply with the requirements of 29 CFR part 3, which are incorporated by reference in this contract. 6 Subcontracts. The contractor or subcontractor must insert in any subcontracts the clauses contained in 29 CFR 5.5(a)(1) through (11), along with the applicable wage determination(s) and such other clauses or contract modifications as the U.S. Department of Housing and Urban Development may by appropriate instructions require, and a clause requiring the subcontractors to include these clauses and wage determination(s) in any lower tier subcontracts. The prime contractor is responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in this section. In the event of any violations of these clauses, the prime contractor and any subcontractor(s) responsible will be liable for any unpaid wages and monetary relief, including interest from the date of the underpayment or loss, due to any workers of lower-tier subcontractors, and may be subject to debarment, as appropriate.
7 Contract termination: debarment. A breach of the contract clauses in 29 CFR 5.5 may be grounds for termination of the contract, and for debarment as a contractor and a subcontractor as provided in 29 CFR 5.12.
8 Compliance with Davis-Bacon and Related Act requirements. All rulings and interpretations of the Davis-Bacon and Related Acts contained in 29 CFR parts 1, 3, and 5 are herein incorporated by reference in this contract.
9 Disputes concerning labor standards. Disputes arising out of the labor standards provisions of this contract shall not be subject to the general disputes clause of this contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR parts 5, 6, and 7. Disputes within the meaning of this clause include disputes between the contractor (or any of its subcontractors) and the contracting agency, the U.S. Department of Labor, or the employees or their representatives.
10. Certification of eligibility.
i. By entering into this contract, the contractor certifies that neither it nor any person or firm who has an interest in the contractor’s firm is a person or firm ineligible to be awarded Government contracts by virtue of 40 U.S.C. 3144(b) or 29 CFR 5.12(a). ii. No part of this contract shall be subcontracted to any person or firm ineligible for award of a Government contract by virtue of 40 U.S.C. 3144(b) or 29 CFR 5.12(a). iii. The penalty for making false statements is prescribed in the U.S. Code, Title 18 Crimes and Criminal Procedure, 18 U.S.C. 1001. 11 Anti-retaliation It is unlawful for any person to discharge, demote, intimidate, threaten, restrain, coerce, blacklist, harass, or in any other manner discriminate against, or to cause any person to discharge, demote, intimidate, threaten, restrain, coerce, blacklist, harass, or in any other manner discriminate against, any worker or job applicant for:
i. Notifying any contractor of any conduct which the worker reasonably believes constitutes a violation of the DBA, Related Acts, or 29 CFR parts 1, 3, or 5; ii. Filing any complaint, initiating or causing to be initiated any proceeding, or otherwise asserting or seeking to assert on behalf of themselves or others any right or protection under the DBA, Related Acts, or 29 CFR parts 1, 3, or 5; iii. Cooperating in any investigation or other compliance action, or testifying in any proceeding under the DBA, Related Acts, or 29 CFR parts 1, 3, or 5; or iv. Informing any other person about their rights under the DBA, Related Acts, or 29 CFR parts 1, 3, or 5.
B. Contract Work Hours and Safety Standards Act (CWHSSA) The Agency Head must cause or require the contracting officer to insert the following clauses set forth in 29 CFR 5.5(b)(1), (2), (3), (4), and (5) in full, or (for contracts covered by the Federal Acquisition Regulation) by reference, in any contract in an amount in excess of $100,000 and subject to the overtime provisions of the Contract Work Hours and Safety 1542
Previous editions obsolete Form HUD-4010, (10/2023)
ref. Handbook 1344.1
51 Standards Act. These clauses must
be inserted in addition to the clauses required by 29 CFR 5.5(a) or 4.6. As used in this paragraph, the terms “laborers and mechanics” include watchpersons and guards.
1. Overtime requirements. No contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek.
2. Violation; liability for unpaid wages; liquidated damages. In the event of any violation of the clause set forth in 29 CFR 5.5(b)(1) the contractor and any subcontractor responsible therefor shall be liable for the unpaid wages and interest from the date of the underpayment. In addition, such contractor and subcontractor shall be liable to the United States (in the case of work done under contract for the District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchpersons and guards, employed in violation of the clause set forth in 29 CFR 5.5(b)(1), in the sum of $31 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours without payment of the overtime wages required by the clause set forth in 29 CFR 5.5(b)(1).
3. Withholding for unpaid wages and liquidated damages
i. Withholding process The U.S Department of Housing and Urban Development or the recipient of Federal assistance may, upon its own action, or must, upon written request of an authorized representative of the Department of Labor, withhold or cause to be withheld from the contractor so much of the accrued payments or advances as may be considered necessary to satisfy the liabilities of the prime contractor or any subcontractor for any unpaid wages; monetary relief, including interest; and liquidated damages required by the clauses set forth in 29 CFR 5.5(b) on this contract, any other Federal contract with the same prime contractor, or any other federally assisted contract subject to the Contract Work Hours and Safety Standards Act that is held by the same prime contractor (as defined in 29 CFR 5.2). The necessary funds may be withheld from the contractor under this contract, any other Federal contract with the same prime contractor, or any other federally assisted contract that is subject to the Contract Work Hours and Safety Standards Act and is held by the same prime contractor, regardless of whether the other contract was awarded or assisted by the same agency, and such funds may be used to satisfy the contractor liability for which the funds were withheld. ii Priority to withheld funds The Department has priority to funds withheld or to be withheld in accordance with 29 CFR 5.5(a)(2)(i) or (b)(3)(i), or both, over claims to those funds by:
A. A contractor’s surety(ies), including without limitation performance bond sureties and payment bond sureties;
B. A contracting agency for its reprocurement costs;
C. A trustee(s) (either a court-appointed trustee or a U.S. trustee, or both) in bankruptcy of a contractor, or a contractor’s bankruptcy estate;
D. A contractor’s assignee(s);
E. A contractor’s successor(s); or
F. A claim asserted under the Prompt Payment Act, 31 U.S.C. 3901-3907.
4. Subcontracts. The contractor or subcontractor must insert in any subcontracts the clauses set forth in 29 CFR 5.5(b)(1) through (5) and a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor is responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in 29 CFR 5.5(b)(1) through (5). In the event of any violations of these clauses, the prime contractor and any subcontractor(s) responsible will be liable for any unpaid wages and monetary relief, including interest from the date of 1543
Previous editions obsolete Form HUD-4010, (10/2023)
ref. Handbook 1344.1
52 the underpayment or loss, due to any workers of lower -tier subcontractors, and associated liquidated damages and may be subject to debarment, as appropriate. 5 Anti-retaliation It is unlawful for any person to discharge, demote, intimidate, threaten, restrain, coerce, blacklist, harass, or in any other manner discriminate against, or to cause any person to discharge, demote, intimidate, threaten, restrain, coerce, blacklist, harass, or in any other manner discriminate against, any worker or job applicant for:
i. Notifying any contractor of any conduct which the worker reasonably believes constitutes a violation of the Contract Work Hours and Safety Standards Act (CWHSSA) or its implementing regulations in 29 CFR part 5; ii. Filing any complaint, initiating or causing to be initiated any proceeding, or otherwise asserting or seeking to assert on behalf of themselves or others any right or protection under CWHSSA or 29 CFR part 5;
iii. Cooperating in any investigation or other compliance action, or testifying in any proceeding under CWHSSA or 29 CFR part 5; or
iv. Informing any other person about their rights under CWHSSA or 29 CFR part 5.
C. CWHSSA required records clause In addition to the clauses contained in 29 CFR 5.5(b), in any contract subject only to the Contract Work Hours and Safety Standards Act and not to any of the other laws referenced by 29 CFR 5.1, the Agency Head must cause or require the contracting officer to insert a clause requiring that the contractor or subcontractor must maintain regular payrolls and other basic records during the course of the work and must preserve them for a period of 3 years after all the work on the prime contract is completed for all laborers and mechanics, including guards and watchpersons, working on the contract. Such records must contain the name; last known address, telephone number, and email address; and social security number of each such worker; each worker’s correct classification(s) of work actually performed; hourly rates of wages paid; daily and weekly number of hours actually worked; deductions made and actual wages paid. Further, the Agency Head must cause or require the contracting officer to insert in any such contract a clause providing that the records to be maintained under this paragraph must be made available by the contractor or subcontractor for inspection, copying, or transcription by authorized representatives of the (write the name of agency) and the Department of Labor, and the contractor or subcontractor will permit such representatives to interview workers during working hours on the job.
D. Incorporation of contract clauses and wage determinations by reference Although agencies are required to insert the contract clauses set forth in this section, along with appropriate wage determinations, in full into covered contracts, and contractors and subcontractors are required to insert them in any lower-tier subcontracts, the incorporation by reference of the required contract clauses and appropriate wage determinations will be given the same force and effect as if they were inserted in full text.
E. Incorporation by operation of law The contract clauses set forth in this section (or their equivalent under the Federal Acquisition Regulation), along with the correct wage determinations, will be considered to be a part of every prime contract required by the applicable statutes referenced by 29 CFR 5.1 to include such clauses, and will be effective by operation of law, whether or not they are included or incorporated by reference into such contract, unless the Administrator grants a variance, tolerance, or exemption from the application of this paragraph.
Where the clauses and applicable wage determinations are effective by operation of law under this paragraph, the prime contractor must be compensated for any resulting increase in wages in accordance with applicable law.
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ref. Handbook 1344.1
53 F. HEALTH AND SAFETY
The provisions of this paragraph (F) are applicable where the amount of the prime contract exceeds $100,000.
1. No laborer or mechanic shall be required to work in surroundings or under working conditions which are unsanitary, hazardous, or dangerous to his or her health and safety, as determined under construction safety and health standards promulgated by the Secretary of Labor by regulation.
2. The contractor shall comply with all regulations issued by the Secretary of Labor pursuant to 29 CFR Part 1926 and failure to comply may result in imposition of sanctions pursuant to the Contract Work Hours and Safety Standards Act, (Public Law 91-54, 83 Stat 96), 40 U.S.C. § 3701 et seq.
3. The contractor shall include the provisions of this paragraph in every subcontract, so that such provisions will be binding on each subcontractor. The contractor shall take such action with respect to any subcontractor as the Secretary of Housing and Urban Development or the Secretary of Labor shall direct as a means of enforcing such provisions. 1545
Section 3 Purpose
SECTION 3
(Information for the Section 3 Report will be input on LCPtracker)
Section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701(u)) (“Section 3”) requires the San Bernardino County Community Development and Housing Department (“County”) to ensure that employment, training, contracting and other economic and business opportunities generated by certain United States Department of Housing and Urban Development (“HUD”) financial assistance, to the greatest extent feasible, is directed to public housing residents and other low- and very low-income persons, particularly recipients of government housing assistance, and business concerns.
Applicability
As a federal participating jurisdiction, the County receives Community Development Block Grant (“CDBG”) funds and Home Investment Partnerships Program (“HOME”) funds on an annual basis from HUD. These funds activate Section 3 which applies to any such jurisdiction, and any of its organizations, subrecipients, or other entities receiving in excess of $200,000 combined from HUD in any one year. The County occasionally may receive additional funding that may contain a Section 3 requirement.
If developers, contractors, and subcontractors and every Sub-tier need to hire new personnel or subcontract portions of Section 3 covered work, they must, to the greatest extent feasible, ensure that employment and other economic opportunities are directed to low -and very low - income persons (Section 3 workers and Targeted Section 3 workers) and to eligible businesses (Section 3 Business) and requires the same of its contractors.
Prime Contractor, Subcontractor and every Sub-tier shall agree to do the following on project(s) that are subject to Section 3 rules as described in 24 CFR Part 75:
A. Prior to the beginning of work and upon completion of a project, contractors, subcontractors and every Sub-tier will be required to certify that they will make or have made best efforts to follow the prioritization of efforts requirements for Section 3 wor kers, Targeted Section 3 workers, and Section 3 business concerns as described in 24 CFR Part 75.
B. After completion of the project contractors, subcontractors and every Sub-tier will be required to certify that they have followed the prioritization of effort requirements. If the Safe Harbor benchmark requirements as described in 24 CFR Part 75 (see below) were not met, evidence of efforts made to assist low and very low -income persons with employment and training opportunities will need to be provided.
1. Twenty-five (25) percent or more of the total number of labor hours worked by all workers on a Section 3 project are Section 3 workers; and
2. Five (5) percent or more of the total number of labor hours worked by all workers on a Section 3 project are Targeted Section 3 workers, as defined at 24 CFR Part 75.
C. Contractor will be responsible to implement efforts to achieve Section 3 compliance. Contractors submitting bids or proposals will be required to certify that they will comply with prioritization of efforts for employment, training and contracting as described in 24 CFR Part 75.
D. Contractors, Subcontractors and every Sub-tier must make their best efforts to award contracts and subcontract to business concerns that provide economic opportunities to Section 3 workers in the following priority:
1. Business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area (or non-metropolitan county) 1546
in which assistance is located in the following order of priority (where feasible).
a. Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the service area or the neighborhood of the project; and
b. YouthBuild programs.
E. Contractors, Subcontractor and every Sub- tier will provide a Self -Certification Section 3 Worker and Targeted Worker Eligibility Form for qualified Section 3 worker and Targeted Section 3 workers as defined in 24 CFR Part 75. For the purpose of Section 3 worker eligibility, the Contractor, Subcontractor and sub- tier will use the individual income to determine eligibility. The income limits will be determined annually using the guideline published at
https://www.huduser.gov/portal/datasets/il.html.
F. In the event Section 3 covered projects include multiple sources of funds, including public housing financial assistance and housing and community development assistance, the Contractor, Subcontractor and Sub-tier may be required to follow the definition of Section 3 worker and Targeted Section 3 worker as defined in subpart B or subpart C of 24 CFR Part 75.
G. Contractors, Subcontractor and every Sub-tier that feel that they meet the Section 3 business requirements may self -register in the HUD Business Registry, here:
http://www.hud.gov/Sec3Biz. Business may seek Section 3 business concern preference by demonstrating that it meets one or more of the following criteria:
1. At least 51 percent of the business is owned and controlled by low- or very low- income persons; or
2. At least 51 percent of the business is owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing; or
3. Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers.
H. Contractor, Subcontractor and every Sub- tier agree to collect, at the time of bid/proposal, a Self -Certification Section 3 Business Concern Eligibility form from any business that seeks a Section 3 preference and that meets the Section 3 business criteria as described above and in 24 CFR Part 75.
I. Contractors, Subcontractor and every Sub- tier will incorporate the Section 3 language in all Section 3 covered contracts or agreements to ensure contractors meet the requirements of 24 CFR Part 75.
J. Contractors agree to submit a Section 3 Cumulative Report monthly, annually and upon the completion of a project. Monthly reporting will need to be submitted at the beginning of each month for the preceding month. Additionally, reporting shall be submitted on an annual basis and at the end of each project.
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67 FR 77141, 3 CFR, 2002 Comp., p. 258; and
E.O. 13559, 75 FR 71319, 3 CFR 2010 Comp.,
p. 273.
§ 5.105 [Amended]
■ 2. Amend § 5.105(a) by removing ‘‘;
section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C.
1701u) and implementing regulations at
24 CFR part 135.’’
P
ART 14—IMPLEMENTATION OF THE
EQUAL ACCESS TO JUSTICE ACT IN
ADMINISTRATIVE PROCEEDINGS
■ 3. The authority for part 14 continues
to read as follows:
Authority: 5 U.S.C. 504(c)(1); 42 U.S.C.
3535(d).
§ 14.115 [Amended]
■ 4. Amend § 14.115 by removing and
reserving paragraph (a)(5).
■ 5. Add part 75 to read as follows:
P
ART 75—ECONOMIC
OPPORTUNITIES FOR LOW- AND
VERY LOW-INCOME PERSONS
Subpart A—General Provisions
Sec.
75.1 Purpose.
75.3 Applicability.
75.5 Definitions.
75.7 Requirements applicable to HUD
NOFAs for Section 3 covered programs.
Subpart B—Additional Provisions for Public
Housing Financial Assistance
75.9 Requirements.
75.11 Targeted Section 3 worker for public
housing financial assistance.
75.13 Section 3 safe harbor.
75.15 Reporting.
75.17 Contract provisions.
Subpart C—Additional Provisions for
Housing and Community Development
Financial Assistance
75.19 Requirements.
75.21 Targeted Section 3 worker for housing
and co mmunity development financial
assistance.
75.23 Section 3 safe harbor.
75.25 Reporting.
75.27 Contract provisions.
Subpart D—Provisions for Multiple Funding
Sources, Recordkeeping and Compliance
75.29 Multiple funding sources.
75.31 Recordkeeping.
75.33 Compliance.
Authority: 12 U.S.C. 1701u; 42 U.S.C.
3535(d).
Subpart A—General Provisions
§ 75.1 Purpose.
This part establishes the requirements to
be followed to ensure the objectives of
Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C.
1701u) (Section 3) are met. The purpose
of Section 3 is to ensure that economic
opportunities, most importantly
employment, generated by certain HUD
financial assistance shall be directed to
low- and very low-income persons,
particularly those who are recipients of
government assistance for housing or
residents of the community in which the
Federal assistance is spent.
§ 75.3 Applicability.
(a) General applicability. Section 3
applies to public housing f inancial
assistance and Section 3 projects, as
follows:
(1) Public housing financial
assistance. Public housing financial
assistance means:
(i) Development assistance provided
pursuant to section 5 of the United States
Housing Act of 1937 (the 1937 Act);
(ii) Operations and management
assistance provided pursuant to section
9(e) of the 1937 Act;
(iii) Development, modernization, and
management assistance provided pursuant
to section 9(d) of the 1937 Act; and
(iv) The entirety of a mixed-finance
developm ent project as described in 24
CFR 905.604, regardless of whether the
project is fully or partially assisted with
public housing financial assistance as
defined in paragraphs (a)(1)(i) through
(iii) of this section.
(2) Section 3 projects. (i) Section 3
projects means housing rehabilitation,
housing construction, and other public
construction projects assisted under
HUD programs that provide housing and
community development financial
assistance when the total amount of
assistance to the project exceeds a
threshold of $200,000. The threshold is
$100,000 where the assistance is from
the Lead Hazard Control and Healthy
Homes programs, as authorized by
Sections 501 or 502 of the Housing and
Urban Development Act of 1970 (12
U.S.C. 1701z–1 or 1701z–2), the Lead-
Based Paint Poisoning Prevention Act (42
U.S.C 4801 et seq.); and the Residential
Lead-Based Paint Hazard Reduction Act of
1992 (42 U.S.C. 4851 et seq.). The project
is the site or sites together with any
building(s) and improvements located on
the site(s) that are under common
ownership, management, and financing.
(ii) The Secretary must update the
thresholds provided in paragraph
(a)(2)(i) of this section not less than once
every 5 years based on a national
construction cost inflation factor through
Federal Register notice not subject to
public comment. When the Secretary finds
it is warranted to ensure
compliance with Section 3, the
Secretary may adjust, regardless of the
national construction cost factor, such
thresholds through Federal Register
notice, subject to public comment.
(iii) The r equirements in this part
apply to an entire Section 3 project,
regardless of whether the project is fully
or partially assisted under HUD
programs that provide housing and
community development financial
assistance.
(b) Contracts for materials. Section 3
requirements do n ot apply to material
supply contracts.
(c) Indian and Tribal preferences.
Contracts, subcontracts, grants, or
subgrants subject to Section 7(b) of the
Indian Self-Determination and
Education Assistance Act (25 U.S.C.
5307(b)) o r subject to tribal preference
requirements as authorized under 101(k)
of the Native American Housing
Assistance and Self-Determination Act
(25 U.S.C. 4111(k)) must provide
preferences in employment, training,
and business opportunities to Indians
and Indian organizations, and are
therefore not subject to the requirements
of this part.
(d) Other HUD assistance and other
Federal assistance. Recipients that are
not subject to Section 3 are encouraged
to consider ways to support the purpose
of Section 3.
§ 75.5 Definitions.
The terms HUD, Public housing, and
Public Housing Agency (PHA) are
defined in 24 CFR part 5. The following
definitions also apply to this part:
1937 Act means the United States
Housing Act of 1937, 42 U.S.C. 1437 et
seq.
Contractor means any entity entering into a
contract with:
(1) A recipient to pe rform work in
connection with the expenditure of
public housing financial assistance or
for work in connection with a Section
3 project; or
(2) A subrecipient for work in
connection with a Section 3 project.
Labor hours means the number of paid
hours worked by persons on a Section
3 project or by persons employed with
funds that include public housing
financial assistance.
Low-income person means a person as
defined in Section 3(b)(2) of the 1937 Act.
Material supply contracts means contracts
for the purchase of products and
materials, including, but not limited to,
lumber, drywall, wiring, concrete, pipes,
toilets, sinks, carpets, and office supplies.
Professional services means non-
construction services that require an
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advanced degree or professional licensing,
including, but not limited to, contracts for
legal services, financial consulting,
accounting services, environmental
assessment, architectural services, and
civil engineering services.
Public housing financial assistance
means assistance as defined in
§ 75.3(a)(1).
Public housing project is defined in 24
CFR 905.108.
Recipient means any entity that receives
directly from HUD public housing financial
assistance or housing and community
development a ssistance that funds
Section 3 projects, including, but not
limited to, any State, local government,
instrumentality, PHA, or other public
agency, public or private nonprofit
organization.
Section 3 means Section 3 of the Housing
and Urban Development Act of 1968, as
amended (12 U.S.C. 1701u).
Section 3 business concern means:
(1) A business concern meeting at
least one of the following criteria,
documented within the last six-month
period:
(i) It is at least 51 percent owned and
controlled by low- or very low-income
persons;
(ii) Over 75 percent of the labor hours
performed for the business over the prior
three-month period are performed by
Section 3 workers; or
(iii) It is a business at least 51 percent
owned and controlled by current public
housing residents or residents who
currently live in Section 8-assisted
housing.
(2) The status of a Section 3 business
concern shall not be negatively affected by
a prior arrest or conviction of its owner(s)
or employees.
(3) Nothing in this part shall be
construed to require the contracting or
subcontracting of a Section 3 business
concern. Section 3 business concerns are
not exempt from meeting the
specifications of the contract.
Section 3 project means a project
defined in § 75.3(a)(2).
Section 3 worker means:
(1) Any worker who currently fits or
when hired within the past five years fit
at least one of t he following categories,
as documented:
(i) The worker’s income for the
previous or annualized calendar year is
below the income limit established by
HUD.
(ii) The worker is employed by a
Section 3 business concern.
(iii) The worker is a YouthBuild
participant.
(2) The status of a Section 3 worker
shall not be negatively affected by a prior
arrest or conviction.
(3) Nothing in this part shall be
construed to require the employment of
someone who meets this definition of a
Section 3 worker. Section 3 workers are
not exempt from meeting the
qualifications of the position to be
filled.
Section 8-assisted housing refers to
housing receiving project-based rental
assistance or tenant-based assistance
under Section 8 of the 1937 Act.
Service area or the neighborhood of the
project means an area within one mile
of the Section 3 project or, if fewer than
5,000 people live within one mile of a
Section 3 project, within a circle
centered on the Section 3 project that is
sufficient to encompass a population of
5,000 people according to the most
recent U.S. Census.
Small PHA means a public housing
authority that manages or operates fewer
than 250 public housing units.
Subcontractor means any entity that has
a contract with a contractor to
undertake a portion of the contractor’s
obligation to perform work in
connection with the expenditure of
public housing financial assistance or for
a Section 3 project.
Subrecipient has the meaning provided
in the applicable program regulations or
in 2 CFR 200.93.
Targeted Section 3 worker has the
meanings provided in §§ 75.11, 75.21, or
75.29, and does not exclude an
individual that has a prior arrest or
conviction.
Very low-income person means the
definition for this term set forth in
section 3(b)(2) of the 1937 Act.
YouthBuild programs refers to
YouthBuild programs receiving
assistance under the Workforce
Innovation and Opportunity Act (29
U.S.C. 3226).
§ 75.7 Requirements applicable to HUD
NOFAs for Section 3 covered programs.
All notices of funding availability
(NOFAs) issued by HUD that announce
the availability of funding covered by
§ 75.3 will include notice that this part is
applicable to the funding and may
include, as appropriate for the specific
NOFA, points or bonus points for the
quality of Section 3 plans.
Subpart B—Additional Provisions for
Public Housing Financial Assistance
§ 75.9 Requirements.
(a) Employment and training. (1)
Consistent with existing Federal, state,
and local laws and regulations, PHAs or
other recipients rec eiving publ ic
housing financial assistance, and their
contractors a nd s ubcontractors, must
make their best efforts to provide
employment and training opportunities
generated by the public housing
financial assistance to Section 3
workers.
(2) PHAs or other recipients, and their
contractors and subcontractors, must
make their best efforts described in
paragraph (a)(1) of this section in the
following order of priority:
(i) To residents of the public housing
projects for which the public housing
financial assistance is expended;
(ii) To residents of other public
housing projects m anaged by the PHA
that is providing the assistance or for
residents of Section 8-assisted housing
managed by the PHA;
(iii) To participants in YouthBuild
programs; and
(iv) To low- and very low-income
persons residing within the
metropolitan area ( or nonmetropolitan
county) in which the assistance is
expended.
(b) Contracting. (1) Consistent with
existing Federal, state, and local laws
and regulations, PHAs and other
recipients of public housing financial
assistance, and th eir contractors and
subcontractors, must make their best
efforts to award contracts and
subcontracts to business concerns that
provide economic opportunities to
Section 3 workers.
(2) PHAs and other recipients, and
their c ontractors and subcontractors,
must make their best efforts described in
paragraph (b)(1) of this section in the
following order of priority:
(i) To Section 3 business concerns
that provide economic opportunities for
residents of the public housing projects
for which the assistance is provided;
(ii) To Section 3 business concerns
that provide economic opportunities for
residents of other public housing
projects or Section-8 assisted housing
managed by the PHA that is providing
the assistance;
(iii) To YouthBuild programs; and
(iv) To Section 3 business concerns
that provide economic opportunities to
Section 3 workers residing within the
metropolitan area (or nonmetropolitan
county) in which the assistance is
provided.
§ 75.11 Targeted Section 3 worker for
public housing financial assistance.
(a) Targeted Section 3 worker. A
Targeted Section 3 w orker for public
housing financial assistance means a
Section 3 worker who is:
(1) A worker employed by a Section
3 business concern; or
(2) A worker who currently fits or
when hired fit at least o ne of the
following categories, as do cumented
within the past five years:
(i) A resident of public housing or
Section 8-assisted housing;
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(ii) A resident of other public housing
projects or Section 8- assisted housing
managed by the PHA that is providing
the assistance; or
(iii) A YouthBuild participant.
(b) [Reserved]
§ 75.13 Section 3 safe harbor.
(a) General. PHAs and other
recipients will be considered to have
complied with requirements in this part,
in the absence of evidence to the
contrary, if they:
(1) Certify that they have followed the
prioritization of effort in § 75.9; and
(2) Meet or exceed the applicable
Section 3 benchmarks as described in
paragraph (b) of this section.
(b) Establishing benchmarks. (1) HUD
will establish Section 3 benchmarks for
Section 3 workers or Targeted Section 3
workers or both through a document
published in the Federal Register. HUD
may establish a single nationwide
benchmark for Section 3 workers and a
single nationwide benchmark for
Targeted Section 3 workers, or may
establish multiple benchmarks based on
geography, the type of public housing
financial assistance, or other variables.
HUD will update the benchmarks through
a document published in the Federal
Register, subject to public comment, not
less frequently than once every 3 years.
Such notice shall include aggregate data
on labor hours and the proportion of
PHAs and other recipients meeting
benchmarks, as well as other metrics
reported pursuant to § 75.15 as deemed
appropriate by HUD, for the 3 most
recent reporting years.
(2) In establishing the Section 3
benchmarks, HUD may consider the
industry averages for labor hours
worked by specific categories of workers
or in different localities or regions;
averages for labor hours worked by
Section 3 workers and Targeted Section
3 workers as reported by recipients
pursuant to t his section; and any other
factors HUD deems important. In
establishing the Section 3 benchmarks,
HUD will exclude professional services
from the total number of labor hours as
such hours are excluded from the total
number of labor hours to be reported per
§ 75.15(a)(4).
(3) Section 3 benchmarks will c onsist
of the following two ratios:
(i) The number of labor hours worked
by Section 3 workers divided by the
total number of labor hours worked by
all workers funded by public housing
financial assistance in the PHA’s or
other recipient’s fiscal year.
(ii) The number of labor hours worked
by Targeted Section 3 workers, as
defined in § 75.11(a), divided by the
total number of labor hours worked by
all workers funded by public housing
financial assistance in the PHA’s or
other recipient’s fiscal year.
§ 75.15 Reporting.
(a) Reporting of l abor h ours. (1) For
public housing financial assistance,
PHAs and other recipients must report
in a manner prescribed by HUD:
(i) The total number of labor hours
worked;
(ii) The total number of labor hours
worked by Section 3 workers; and
(iii) The total number of labor hours
worked by Targeted Section 3 workers.
(2) Section 3 workers’ and Targeted
Section 3 workers’ labor hours may be
counted for five years from when their
status as a Section 3 worker or Targeted
Section 3 wo rker is established pursuant
to § 75.31.
(3) The labor hours reported under
paragraph (a)(1) of this section must
include the total number of labor hours
worked with public housing financial
assistance in the fiscal year of the PHA or
other recipient, including labor hours
worked by any contractors and
subcontractors that the PHA or other
recipient is required, or elects pursuant
to paragraph (a)(4) of this section, to
report.
(4) PHAs and other recipients
reporting under this section, as well as
contractors and subcontractors who
report to PHAs and recipients, may report
labor hours by Section 3 workers, under
paragraph (a)(1)(ii) of this section, and
labor hours by Targeted Section 3
workers, under paragraph (a)(1)(iii) of
this section, from professional services
without including labor hours from
professional services in the total number
of labor hours worked under paragraph
(a)(1)(i) of this section. If a contract
covers both professional services and
other work and the PHA, other recipient,
contractor, or subcontractor chooses not
to report labor hours from professional
services, the labor hours under the
contract that are not from professional
services must still be reported.
(5) PHAs and other recipients may
report on the labor hours of the PHA, the
recipient, a contractor, or a subcontractor
based on the employer’s good faith
assessment of the labor hours of a full-
time or part-time employee informed by
the employer’s existing salary or time
and attendance based payroll systems,
unless the project or activity is otherwise
subject to requirements specifying time
and attendance reporting.
(b) Additional reporting if Section 3
benchmarks are not met. If the PHA’s or
other recipient’s reporting under
paragraph (a) of this section indicates
that the PHA or other recipient has not
met the Section 3 b enchmarks described
in § 75.13, the PHA or other recipient
must report in a form prescribed by HUD
on the qualitative nature of its Section 3
compliance activities and those of its
contractors and subcontractors. Such
qualitative efforts may, for example,
include but are not limited to the
following:
(1) Engaged in outreach efforts to
generate job applicants who are
Targeted Section 3 workers.
(2) Provided training or
apprenticeship opportunities.
(3) Provided technical assistance to
help Section 3 workers compete for jobs
(e.g., resume assistance, coaching).
(4) Provided or connected Section 3
workers with assistance in seeking
employment including: drafting resumes,
preparing for interviews, and finding job
opportunities connecting residents to job
placement services.
(5) Held one or more job fairs.
(6) Provided or referred Section 3
workers to services supporting work
readiness and retention ( e.g., work
readiness activities, interview clothing,
test fees, transportation, child care).
(7) Provided assistance to apply for/or
attend community college, a four-yea r
educational institution, or vocational/
technical training.
(8) Assisted Section 3 workers to
obtain financial literacy training and/or
coaching.
(9) Engaged in outreach efforts to
identify and secure bi ds from Section 3
business concerns.
(10) Provided technical assistance to
help Section 3 business concerns
understand and bid on contracts.
(11) Divided contracts into smaller
jobs to facilitate participation by Section
3 business concerns.
(12) Provided bonding assistance,
guaranties, or other efforts to support
viable bids from Section 3 business
concerns.
(13) Promoted use of business
registries designed to create
opportunities for disadvantaged and
small businesses.
(14) Outreach, engagement, or
referrals with the state one-stop system as
defined in Section 121(e)(2) of the
Workforce Innovation and Opportunity
Act.
(c) Reporting frequency. Unless
otherwise provided, PHAs or other
recipients must report annually to HUD
under paragraph (a) of this section, and,
where required, under paragraph (b) of
this section, in a manner consistent w ith
reporting requirements for the
applicable HUD program.
(d) Reporting by Small PHAs. Small
PHAs may elect not to report under
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paragraph (a) of this section. Small PHAs
that make such election are required to
report on their qualitative efforts, as
described in paragraph (b) of this section,
in a manner consistent with reporting
requirements for the applicable HUD
program.
§ 75.17 Contract provisions.
(a) PHAs or other recipients must
include language in any agreement or
contract to apply Section 3 to
contractors.
(b) PHAs or other recipients must
require contractors to include language
in any contract or agreement to apply
Section 3 to subcontractors.
(c) PHAs or other recipients must
require all contractors and
subcontractors to meet the requirements
of § 75.9, regardless of whether Section
3 language is included in contracts.
Subpart C—Additional Provisions for
Housing and Community Development
Financial Assistance
§ 75.19 Requirements.
(a) Employment and training. (1) To
the greatest extent feasible, and
consistent with existing Federal, state,
and local laws and regulations,
recipients covered by this subpart shall
ensure that employment and training
opportunities arising in connection with
Section 3 projects are provided to
Section 3 workers within the
metropolitan area (or nonmetropolitan
county) in which the project is located.
(2) Where feasible, priority for
opportunities and training described in
paragraph (a)(1) of this section should
be given to:
(i) Section 3 workers residing within
the service area or the neigh borhood of
the project, and
(ii) Participants in YouthBuild
programs.
(b) Contracting. (1) To the greatest
extent feasible, and consistent with
existing Federal, state, and l ocal laws
and regulations, recipients covered by
this s ubpart shall ensure contracts f or
work awarded in connection with
Section 3 projects are provided to
business concerns that provide
economic opportunities to Section 3
workers residing within the
metropolitan area (or nonmetropolitan
county) in which the project is located.
(2) Where feasible, pr iority for
contracting opportunities described in
paragraph (b)(1) of this section should
be given to:
(i) Section 3 business concerns that
provide economic opportunities to
Section 3 workers residing within the
service area or the neighborhood of the
project, and
(ii) YouthBuild programs.
§ 75.21 Targeted Section 3 worker for housing
and community development financial
assistance.
(a) Targeted Section 3 worker. A
Targeted Section 3 worker for housing
and community development financial
assistance means a Section 3 worker
who is:
(1) A worker employed by a Section
3 business concern; or
(2) A worker who currently fits or
when hired fit at least one of the
following categories, as documented
within the past five years:
(i) Living within the service area or
the neighborhood of the project, as defined
in § 75.5; or
(ii) A YouthBuild participant.
(b) [Reserved]
§ 75.23 Section 3 safe harbor.
(a) General. Recipients will be
considered to have complied with
requirements in this part, in the absence
of evidence to the contrary if they:
(1) Certify that they have followed the
prioritization of effort in § 75.19; and
(2) Meet or exceed the applicable
Section 3 benchmark as described in
paragraph (b) of this section.
(b) Establishing benchmarks. (1) HUD
will establish Section 3 benchmarks for
Section 3 workers or Targeted Section 3
workers or both through a document
published in the Federal Register. HUD
may establish a single nationwide
benchmark for Section 3 workers and a
single nationwide benchmark for
Targeted Section 3 workers, or may
establish multiple benchmarks based on
geography, the nature of the Section 3
project, or other variables. HUD will
update the benchmarks through a
document published in the Federal
Register, subject to public comment, not
less frequently than once every 3 y ears.
Such notice shall i nclude aggregate data
on labor hours and the proportion of
recipients meeting benchmarks, as well
as other metrics reported pursuant to
§ 75.25 as deemed appropriate by HUD, for
the 3 most recent reporting years.
(2) In establishing the Section 3
benchmarks, HUD may consider the
industry averages for labor hours worked
by specific categories of workers or in
different localities or regions; averages for
labor hours worked by Section 3 workers
and Targeted Section 3 workers as
reported by recipients pursuant to this
section; and any other factors HUD deems
important. In establishing the Section 3
benchmarks, HUD will exclude
professional services from the total
number of labor hours as such hours are
excluded from the total number of labor
hours to be reported per
§ 75.25(a)(4).
(3) Section 3 benchmarks will consist
of the following two ratios:
(i) The number of labor hours worked
by Section 3 workers divided by the total
number of labor hours worked by all
workers on a Section 3 project in the
recipient’s program year.
(ii) The number of labor hours worked
by Targeted Section 3 workers as defined
in § 75.21(a), divided by the total
number of labor hours worked by all
workers on a Section 3 project in the
recipient’s program year.
§ 75.25 Reporting.
(a) Reporting of labor h ours. (1) For
Section 3 projects, recipients must
report in a manner prescribed by HUD:
(i) The total number of labor hours
worked;
(ii) The total number of labor hours
worked by Section 3 workers; and
(iii) The total number of labor hours
worked by Targeted Section 3 workers.
(2) Section 3 workers’ and Targeted
Section 3 workers’ labor hours may be
counted for five years from when their
status as a Section 3 worker or Targeted
Section 3 worker is established pursuant
to § 75.31.
(3) The labor hours reported under
paragraph (a)(1) of this section must
include the total number of labor hours
worked on a Section 3 project, including
labor hours worked by any subrecipients,
contractors and subcontractors that the
recipient is required, or elects pursuant
to paragraph (a)(4) of this section, to
report.
(4) Recipients reporting under this
section, as well as subrecipients,
contractors and subcontractors who
report to recipients, may report labor
hours by Section 3 workers, under
paragraph (a)(1)(ii) of this section, and
labor hours by Targeted Section 3
workers, under paragraph (a)(1)(iii) of
this section, from professional services
without including labor hours from
professional services in the total number
of labor hours worked under paragraph
(a)(1)(i) of this section. If a contract
covers both professional services and
other work and the recipient or contractor
or subcontractor chooses not to report
labor hours from professional services, the
labor hours under the contract that are
not from professional services must still
be reported.
(5) Recipients may report their own
labor hours or that of a subrecipient,
contractor, or subcontractor based on the
employer’s good faith assessment of the
labor hours of a full-time or part- time
employee informed by the employer’s
existing salary or time and attendance
based payroll systems, unless the project
or activity is
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otherwise subject to requirements
specifying time and attendance
reporting.
(b) Additional reporting if Section 3
benchmarks are not m et. If the
recipient’s reporting under paragraph (a)
of this section indicates that the
recipient has not met the Section 3
benchmarks described in § 75.23, the
recipient must report in a form
prescribed by HUD on the qualitative
nature of its activities and those its
contractors and subcontractors pursued.
Such qualitative efforts may, for
example, include but are not limited to
the following:
(1) Engaged in outreach efforts to
generate job applicants who are
Targeted Section 3 workers.
(2) Provided training or
apprenticeship opportunities.
(3) Provided technical as sistance to
help Section 3 workers compete for jobs
(e.g., resume assistance, coaching).
(4) Provided or connected Section 3
workers with assistance in seeking
employment including: drafting
resumes, preparing for interviews, and
finding job opportunities connecting
residents to job placement services.
(5) Held one or more job fairs.
(6) Provided or referred Section 3
workers to services supporting work
readiness and retention ( e.g., work
readiness activities, interview clothing,
test fees, transportation, child care).
(7) Provided assistance to apply for/or
attend community college, a four -year
educational institution, or vocational/
technical training.
(8) Assisted Section 3 workers to
obtain financial litera cy training a nd/or
coaching.
(9) Engaged in outreach efforts to
identify and secure bids from Section 3
business concerns.
(10) Provided technical assistance to
help Section 3 business concerns
understand and bid on contracts.
(11) Divided contracts into smaller
jobs to facilitate p articipation by Section
3 business concerns.
(12) Provided b onding assistance,
guaranties, or other efforts to support
viable bids from Section 3 business
concerns.
(13) Promoted use of business
registries designed to create
opportunities for disadvantaged and
small businesses.
(14) Outreach, engagement, or
referrals with the state one-stop system
as defined in Section 121(e)(2) of the
Workforce Innovation and Opportunity
Act.
(c) Reporting frequency. Unless
otherwise provided, recipients must
report annually to HUD under
paragraph (a) of this section, and, where
required, under paragraph (b) of this
section, on all projects completed within
the reporting year in a manner
consistent with reporting requirements
for the applicable HUD program.
§ 75.27 Contract provisions.
(a) Recipients must incl ude language
applying Section 3 requirements in any
subrecipient agreement or contract for a
Section 3 project.
(b) Recipients of Section 3 funding
must require subrecipients, contractors,
and subcontractors to meet the
requirements of § 75. 19, regardless of
whether Section 3 language is included
in recipient or subrecipient agreements,
program regulatory agreements, or
contracts.
Subpart D—Provisions for Multiple
Funding Sources, Recordkeeping, and
Compliance
§ 75.29 Multiple funding sources.
(a) If a housing rehabilitation, housing
construction or other public
construction project is subject to Section
3 pursuant to § 75.3(a)(1) and (2), the
recipient must follow subpart B of this
part for the public housing financial
assistance and may foll ow either
subpart B or C of this part for the
housing a nd c ommunity development
financial assistance. For such a project,
the following applies:
(1) For housing and community
development financial assistance, a
Targeted Section 3 worker is any worker
who meets the definition of a Targeted
Section 3 worker in either subpart B or
C of this part; and
(2) The recipients of both sources of
funding shall report on the housing
rehabilitation, housing construction, or
other public construction project as a
whole and shall identify the multiple
associated recipients. PHAs and o ther
recipients must report the following
information:
(i) The total number of labor hours
worked on the project;
(ii) The total number of labor hours
worked by Section 3 workers on the
project; and
(iii) The total n umber of labor hou rs
worked by Targeted Section 3 workers
on the project.
(b) If a housing rehabilitation, housing
construction, or other public
construction project is subject to Section
3 because the project is assisted w ith
funding from multiple sources of
housing and community development
assistance that exceed the thresholds in
§ 75.3(a)(2), the recipient or recipients
must follow subpart C of this part, and
must report to the applicable HUD
program office, as prescribed by HUD.
§ 75.31 Recordkeeping.
(a) HUD shall have access to all
records, reports, and other documents or
items of the recipient that are
maintained to demonstrate compliance
with the requirements of this part, or
that are maintained in accordance with
the regulations governing the specific
HUD program by which the Section 3
project is governed, or the public
housing financial assistance is provided
or otherwise made available to the
recipient, subrecipient, contractor, or
subcontractor.
(b) Recipients must maintain
documentation, or ensure that a
subrecipient, contractor, or
subcontractor that employs t he worker
maintains documentation, to ensure that
workers meet the definition of a Section
3 worker or Targeted Section 3 worker,
at the time of hire or the first reporting
period, as follows:
(1) For a worker to qualify as a
Section 3 worker, one of the following
must be maintained:
(i) A worker’s self-certification that
their income is below the income limit
from the prior calendar year;
(ii) A worker’s self-certification of
participation in a means-tested program
such as public housing or Section 8-
assisted housing;
(iii) Certification from a PHA, or the
owner or property manager of project-
based Section 8-assisted housing, or the
administrator of tenant-based Section 8-
assisted housing that the worker is a
participant in one of their programs;
(iv) An employer’s certification that
the worker’s income from that employer
is below the income limit when based
on an employer’s calculation of what
the worker’s wage rate would translate
to if annualized on a full-time basis; or
(v) An employer’s certification that
the worker is employed by a Section 3
business concern.
(2) For a worker to qualify as a
Targeted Section 3 worker, one of the
following must be maintained:
(i) For a worker to qualify as a
Targeted Section 3 worker under
subpart B of this part:
(A) A worker’s self-certification of
participation in public housing or
Section 8-assisted housing programs;
(B) Certification from a PHA, or the
owner or property manager of project-
based Section 8-a ssisted housing, or the
administrator of tenant-based Section 8-
assisted housing that the w orker is a
participant in one of their programs;
(C) An employer’s certification that
the worker is employed by a Section 3
business concern; or
(D) A worker’s certification that the
worker is a Y outhBuild participant.
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(ii) For a worker to qua lify as a
Targeted Section 3 worker under
subpart C of this part:
(A) An employer’s confirmation that a
worker’s residence is within one mile of
the work site or, if fewer than 5,000
people live within one mile of a work
site, within a circle centered on the work
site that is sufficient to encompass a
population of 5,000 people according to
the most recent U.S. Census;
(B) An employer’s certification that
the worker is employed by a Section 3
business concern; or
(C) A worker’s self-certification that
the worker is a YouthBuild participant.
(c) The documentation described in
paragraph (b) of this section must be
maintained for the time period required
for record retentions in accordance with
applicable program regulations or, in
the absence of applicable program
regulations, in accordance w ith 2 CFR
part 200.
(d) A PHA or recipient may report on
Section 3 workers and Targeted Section 3
workers for five years from when their
certification as a Section 3 worker or
Targeted Section 3 worker is established.
§ 75.33 Compliance.
(a) Records of compliance. Each
recipient shall maintain adequate
records demonstrating compliance with
this part, consistent with other
recordkeeping requirements in 2 CFR
part 200.
(b) Complaints. Complaints alleging
failure of compliance with this part may
be reported to the HUD program office
responsible for the public housing
financial assistance or the Section 3
project, or to the local HUD field office.
(c) Monitoring. HUD will monitor
compliance with the requirements of
this part. The applicable HUD program
office will determine appropriate methods
by which to oversee Section 3 compliance.
HUD may impose appropriate remedies
and sanctions in accordance with the laws
and regulations for the program under
which the violation was found.
PART 91—CONSOLIDATED
SUBMISSIONS FOR COMMUNITY
PLANNING AND DEVELOPMENT
PROGRAMS
■ 6. The authority citation for part 91
continues to read as follows:
Authority: 42 U.S.C. 3535(d), 3601–3619,
5301–5315, 11331–11388, 12701–12711,
12741–12756, and 12901–12912.
§ 91.215 [Amended]
■ 7. Amend § 91.215(j) by removing ‘‘24
CFR part 135’’ and adding, in its place
‘‘24 CFR part 75’’.
§ 91.225 [Amended]
■ 8. Amend § 91.225(a)(7) by removing
‘‘24 CFR part 135’’ and adding, in its
place ‘‘24 CFR part 75’’.
§ 91.325 [Amended]
■ 9. Amend § 91.325(a)(7) by removing
‘‘24 CFR part 135’’ and adding, in its
place ‘‘24 CFR part 75’’.
§ 91.425 [Amended]
■ 10. Amend § 91.425(a)(1)(vii) by
removing ‘‘24 CFR part 135’’ and
adding, in its place ‘‘24 CFR part 75’’.
PART 92—HOME INVESTMENT
PARTNERSHIPS PROGRAM
■ 11. The authority citation for part 92
continues to read as follows:
Authority: 42 U.S.C. 3535(d), 12 U.S.C.
1701x and 4568.
■ 12. Amend § 92.508 as follows:
■ a. Remove paragraph (a)(7)(i)(B);
■ b. Redesignate paragraph (a)(7)(i)(C) as
(a)(7)(i)(B); and
■ c. Add paragraph (a)(7)(xi).
The addition reads as follows:
§ 92.508 Recordkeeping.
(a) * * *
(7) * * *
(xi) Documentation of actions
undertaken to meet the requirements of
24 CFR part 75 which implements
section 3 of the Housing Development
Act of 1968, as amended (12 U.S.C.
1701u).
* * * * *
PART 93—HOUSING TRUST FUND
■ 13. The authority citation for part 93
continues to read as follows:
Authority: 42 U.S.C. 3535(d), 12 U.S.C.
4568.
■ 14. Amend § 93.407 as follows:
■ a. Redesignate paragraphs (a)(5)(ii)
through (ix) as paragraphs (a)(5)(iii)
through (x);
■ b. Remove paragraph (a)(5)(i)(B);
■ c. Redesignate paragraph (a)(5)(i)(A)
as paragraph (a)(5)(ii);
■ d. In newly redesignated paragraph
(a)(5)(iv), remove ‘‘24 part 35’’ and add
in its place ‘‘24 CFR part 35’’; and
■ e. Add paragraph (a)(5)(xi).
The addition reads as follows:
§ 93.407 Recordkeeping.
(a) * * *
(5) * * *
(xi) Documentation of actions
undertaken to meet the requirements of
24 CFR part 75, which implements
section 3 of the Housing and Urban
Development Act of 1968, as amended
(12 U.S.C. 1701u).
* * * * *
CHAPTER I—OFFICE OF ASSISTANT
SECRETARY FOR EQUAL OPPORTUNITY,
DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT [AMENDED]
■ 15. Under the authority of 42 U. S.C.
3535(d), in chapter I, remove designated
subchapter headings A and B.
PART 135 —[REMOVED]
■ 16. Remove part 135.
PART 266—HOUSING FINANCE
AGENCY RISK-SHARING PROGRAM
FOR INSURED AFFORDABLE
MULTIFAMILY PROJECT LOANS
■ 17. The authority citation for part 266
continues to read as follows:
Authority: 12 U.S.C. 1707; 42 U.S.C.
3535(d).
§ 266.220 [Amended]
■ 18. Amend § 266.220(c) by removing
‘‘; section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C.
1701u), as implemented by 24 CFR part
135’’.
PART 570—COMMUNITY
DEVELOPMENT BLOCK GRANTS
■ 19. The authority citation for part 570
continues to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x–1; 42 U.S.C.
3535(d) and 5301–5320.
§ 570.487 [Amended]
■ 20. Amend § 570.487(d) by removing
‘‘24 CFR part 135’’ and adding in its
place ‘‘24 CFR part 75’’.
§ 570.607 [Amended]
■ 21. Amend § 570.607(b) by removing
‘‘24 CFR part 135’’ and adding in its
place ‘‘24 CFR part 75’’.
PART 574—HOUSING OPPORTUNITIES
FOR PERSONS WITH AIDS
■ 22. The authority citation for part 574
continues to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x–1; 42 U.S.C.
3535(d) and 5301–5320.
§ 574.600 [Amended]
■ 23. Amend § 574.600 by adding ‘‘and
part 75’’ after the phrase ‘‘24 CFR part
5’’.
PART 576—EMERGENCY SOLUTIONS
GRANTS PROGRAM
■ 24. The authority citation for part 576
continues to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x–1; 42
U.S.C. 11371 et seq., 42 U.S.C. 3535(d).
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§ 576.407 [Amended]
■ 25. Amend § 576.407(a) by removing
‘‘24 CFR part 135’’ and adding in its
place ‘‘24 CFR part 75’’.
PART 578—CONTINUUM OF CARE
PROGRAM
■ 26. The authority citation for part 578
continues to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x–1; 42
U.S.C. 11381 et seq., 42 U.S.C. 3535(d).
§ 578.99 [Amended]
■ 27. Amend § 578.99 by removing
‘‘federal’’ in the section heading and
adding in its place ‘‘Federal’’ and
removing ‘‘24 CFR part 135’’ in
paragraph (i) and adding in its place ‘‘24
CFR part 75’’.
PART 905—THE PUBLIC HOUSING
CAPITAL FUND PROGRAM
■ 28. The authority citation for part 905
continues to read as follows:
Authority: 42 U.S.C. 1437g, 42 U.S.C. 1437z–2,
42 U.S.C. 1437z–7, and 3535(d).
§ 905.308 [Amended]
■ 29. Amend § 905.308(b)(10) by
removing ‘‘24 CFR part 135’’ and adding
in its place ‘‘24 CFR part 75’’.
PART 964—TENANT PARTICIPATION
AND TENANT OPPORTUNITIES IN
PUBLIC HOUSING
30. The authority citation for part 964
continues to read as follows:
Authority: 42 U.S.C. 1437d, 1437g, 1437r,
3535(d).
■ 31. Revise § 964.320 to read as
follows:
§ 964.320 HUD Policy on training, employment,
contracting and subcontracting of public
housing residents.
In accordance with Section 3 of the
Housing and Urban Development Act of
1968 and the implementing regulations
at 24 CFR part 75, PHAs, their contractors
and subcontractors shall make best
efforts, consistent with existing Federal,
State, and local laws and regulations, to
give low and very low-income persons
the training and employment
opportunities generated by Section 3
covered assistance (as this term is
defined in 24 CFR 75.3) and to give
Section 3 business concerns the
contracting opportunities generated by
Section 3 covered assistance.
PART 983—PROJECT-BASED
VOUCHER (PBV) PROGRAM
■ 32. The authority citation for part 983
continues to read as follows:
Authority: 42 U.S.C. 1437f and 3535(d).
§ 983.4 [Amended]
33. Amend § 983.4 by removing the
definition of ‘‘Section 3—Training,
employment and contracting
opportunities in development’’.
§ 983.154 [Amended]
■ 34. Amend § 983.154 by removing (c)
introductory text and paragraph (c)(1)
and redesignating paragraph (c)(2) as
paragraph (c).
PART 1000—NATIVE AMERICAN
HOUSING ACTIVITIES
■ 35. The authority citation for part
1000 continues to read as follows:
Authority: 25 U.S.C. 4101 et seq.; 42
U.S.C. 3535(d).
■ 36. Revise § 1000.42 to read as
follows:
§ 1000.42 Are the requirements of Section 3
of the Housing and Urban Development Act
of 1968 applicable?
No. Recipients shall comply with Indian
preference requirements of Section 7(b)
of the Indian Self- Determination and
Education Assistance Act (25 U.S.C.
5307(b)), or employment and contract
preference laws adopted by the
recipient’s tribe in accordance with
Section 101(k) of NAHASDA.
Benjamin S. Carson, Sr.,
Secretary.
[FR Doc. 2020–19185 Filed 9–28–20; 8:45 am]
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