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CONSULTATION ................................................................................................................................................... 41 GENERAL CONSULTATION ................................................................................................................................... 41 HOMELESS ........................................................................................................................................................... 42 LEAD-BASED PAINT HAZARDS ............................................................................................................................. 42 NON-HOUSING COMMUNITY DEVELOPMENT .................................................................................................... 42 PUBLIC HOUSING ................................................................................................................................................ 42
3. ACTIVITY SELECTION ........................................................................................................................................ 44 OVERVIEW ............................................................................................................................................................... 44 CATEGORICAL ANNUAL SPENDING LIMITS .............................................................................................................. 44 PUBLIC SERVICES ................................................................................................................................................. 44 ADMINISTRATION ............................................................................................................................................... 45 PROPOSALS ............................................................................................................................................................. 46 THRESHOLD CRITERIA .............................................................................................................................................. 46 STATUTORY ELIGIBILITY ...................................................................................................................................... 46 MEETING A NATIONAL OBJECTIVE ...................................................................................................................... 47 OVERALL LMI BENEFIT ........................................................................................................................................ 48 PRIORITY NEED .................................................................................................................................................... 48 MEANS OF CARRYING OUT THE ACTIVITY ........................................................................................................... 49 RANKING CRITERIA .................................................................................................................................................. 49 CAPACITY ............................................................................................................................................................. 49 SCOPE AND BUDGET ........................................................................................................................................... 50 COST/BENEFIT ..................................................................................................................................................... 50 TIMELINESS ......................................................................................................................................................... 50 TRACK RECORD ................................................................................................................................................... 51 LEVERAGE ............................................................................................................................................................ 51 GENERAL POLICIES ................................................................................................................................................... 51 CDBG PROGRAM GOALS .......................................................................................................................................... 51 PUBLIC SERVICES "NON-SUPPLANTING" RULE ........................................................................................................ 52 REQUEST FOR PROPOSALS (RFP) CONTENTS AND PROPOSAL REQUIREMENTS ...................................................... 52 RFP PROCESS ........................................................................................................................................................... 54 PREPARATION ..................................................................................................................................................... 54 PUBLICATION ...................................................................................................................................................... 54 WORKSHOP AND Q&A ........................................................................................................................................ 54 SUBMISSION ........................................................................................................................................................ 55 EVALUATION AND RECOMMENDATIONS ........................................................................................................... 55 AWARDS .............................................................................................................................................................. 56 DOCUMENTATION .............................................................................................................................................. 56
4. CONSOLIDATED ANNUAL PERFORMANCE AND EVALUATION REPORT (CAPER) ............................................... 57 OVERVIEW ............................................................................................................................................................... 57 CAPER CONTENTS .................................................................................................................................................... 58 320
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GENERAL ............................................................................................................................................................. 58 CDBG ................................................................................................................................................................... 59 CAPER OUTLINE ....................................................................................................................................................... 59 THE CAPER AND INFORMATION DISBURSEMENT AND INFORMATION SYSTEM (IDIS) ............................................ 61 CAPER AND CITIZEN PARTICIPATION [24 CFR 91.105(D)]......................................................................................... 61 A GUIDE TO HUD GUIDANCE ON THE CAPER ...................................................................................................... 62
5. SUB-RECIPIENT MANAGEMENT ........................................................................................................................ 63 OVERVIEW ............................................................................................................................................................... 63 REPORTING REQUIREMENTS ................................................................................................................................... 63 MONITORING .......................................................................................................................................................... 63 DESK REVIEWS .................................................................................................................................................... 64 ON-SITE REVIEWS ................................................................................................................................................ 64 TECHNICAL ASSISTANCE/CAPACITY DEVELOPMENT ............................................................................................... 65 MANAGING NON-PERFORMING SUB-RECIPIENTS ................................................................................................... 66 FORMS ..................................................................................................................................................................... 66 Resources ............................................................................................................................................................ 67
6. PERFORMANCE MEASURES .............................................................................................................................. 68 OVERVIEW ............................................................................................................................................................... 68 OBJECTIVES.............................................................................................................................................................. 68 CREATING A SUITABLE LIVING ENVIRONMENT ................................................................................................... 68 PROVIDING DECENT HOUSING............................................................................................................................ 69 CREATING ECONOMIC OPPORTUNITIES .............................................................................................................. 69 OUTCOMES .............................................................................................................................................................. 69 AVAILABILITY/ACCESSIBILITY............................................................................................................................... 69 AFFORDABILITY ................................................................................................................................................... 69 SUSTAINABILITY .................................................................................................................................................. 69 INDICATORS ........................................................................................................................................................ 69
7. ELIGIBLE ACTIVITIES ......................................................................................................................................... 71 OVERVIEW ............................................................................................................................................................... 71 PUBLIC FACILITIES AND IMPROVEMENTS [570.201(C)] ........................................................................................... 73 PUBLIC SERVICES [570.201(E)] ................................................................................................................................. 73 HOUSING ................................................................................................................................................................. 74 HOUSING SERVICES ............................................................................................................................................. 74 CODE ENFORCEMENT [570.202(C)] ......................................................................................................................... 77 Service Area ........................................................................................................................................................ 78 Marketing and Outreach ..................................................................................................................................... 79 Client Tracking and Code Compliance Process .................................................................................................... 79 Common Violations ............................................................................................................................................. 80 Eligible CDBG Program Costs .............................................................................................................................. 80 321
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FAIR HOUSING ......................................................................................................................................................... 80 HOMELESS ............................................................................................................................................................... 81 PROGRAM ADMINISTRATION [570.206] ................................................................................................................. 82 PLANNING/CAPACITY BUILDING [570.205] ............................................................................................................. 82 A NOTE ABOUT PRESUMPTION AND OVERALL LOW AND MODERATE INCOME (LMI) BENEFIT. ............................. 83
8. MEETING A NATIONAL OBJECTIVE ................................................................................................................... 85 OVERVIEW ............................................................................................................................................................... 85 LOW-AND-MODERATE INCOME BENEFIT [570.209(A)] ........................................................................................... 85 LOW AND MODERATE AREA [570.209 (A)(1)] ..................................................................................................... 85 LIMITED CLIENTELE [570.209(A)(2)] .................................................................................................................... 86 LOW- AND MODERATE-INCOME HOUSING ........................................................................................................ 87 ELIMINATION OF SLUM AND BLIGHT ....................................................................................................................... 87 URGENT NEED ......................................................................................................................................................... 88
9. FINANCIAL MANAGEMENT .............................................................................................................................. 89 Financial Management ....................................................................................................................................... 89 OVERVIEW ............................................................................................................................................................... 90 Policies Regarding Cash Management .............................................................................................................. 90 Procedures for Reflecting Prior Period Adjustments and Accruals ................................................................... 91 Policy Regarding Rebates, Refunds and Credits to Federally Funded Programs .............................................. 92 Procedures for Evaluating Travel and Training Costs Charged to the CDBG Program ..................................... 92 Procedures for Allocating and Documenting Personnel Costs Char ged to CDBG Admin Account ................... 92 Procedures for Allocating and Documenting Personnel Costs Charged to CDBG Rehab Account .............. 92 Procedures for Allocating and Documenting Personnel Costs Charged to CDBG Microenterprise Activities (18-305-300) ..................................................................................................................................................... 93 Procedures for Determining Cost Reasonableness ............................................................................................ 94 Process for Approval of Subrecipient Reimbursement Requests for Public Services ........................................ 95 Process for Approval of Reimbursement Requests for Consultant Services ..................................................... 96 Process for Approval of Reimbursement Requests for Construction Activities (Including Public Facilities) .... 96 Process for Approval of Payments and Reimbursement Requests ................................................................... 97 Process for Approval of Total Expenditure of a Subrecipient Grant Prior to the Third Quarter of the Fiscal Year ..................................................................................................................................................................... 97 FINANCIAL REPORTING ........................................................................................................................................ 98 FFATA Reports .................................................................................................................................................... 98 Open Balance Review ......................................................................................................................................... 98 Monthly Reconciliation ...................................................................................................................................... 98 Federal Financial Report .................................................................................................................................... 98 Policy Regarding Rebates, Refunds and Credits to HUD CPD Programs ........................................................... 99 Procedures for Evaluating Travel and Training Costs Charged to the CDBG Program ..................................... 99 Schedule of Federal Expenditures .................................................................................................................... 100 322
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ASSET MANAGEMENT .......................................................................................................................................... 101 Real Property .................................................................................................................................................... 102 Recordkeeping .................................................................................................................................................. 103 Program Income ............................................................................................................................................... 103 TIMELINESS REVIEW ............................................................................................................................................. 104 REIMBURSEMENT REQUESTS ................................................................................................................................ 104 IDIS DRAWS ........................................................................................................................................................... 105 PROGRAM INCOME ............................................................................................................................................... 106 LUMP SUM DRAWS [570.513] ............................................................................................................................... 108 REVOLVING LOAN FUNDS [570.5OO(B)] ................................................................................................................ 108 ESCROW ACCOUNTS .............................................................................................................................................. 108 INTEREST ON FEDERAL FUNDS .............................................................................................................................. 109 FEDERAL FINANCIAL REPORT [STANDARD FORM 425] .......................................................................................... 109
10. INTEGRATED DISBURSEMENT AND INFORMATION SYSTEM (IDIS) ............................................................... 110 OVERVIEW ............................................................................................................................................................. 110 WHAT IS IDIS? ........................................................................................................................................................ 110 IDIS IN CONTEXT ................................................................................................................................................ 110 IDIS STRUCTURE: PLAN, PROJECT, AND ACTIVITY .................................................................................................. 111 INTEGRATION INTO IDIS ONLINE ................................................................................................................................... 111 IDIS FACTS ............................................................................................................................................................... 112 IDIS ACCESS ............................................................................................................................................................ 112 REQUESTING IDIS ACCESS ................................................................................................................................. 112 SELECTING THE CORRECT “ACTION” ................................................................................................................. 113 AUTHORIZED FUNCTIONS IN IDIS ...................................................................................................................... 113 THE AUTHORIZATION PACKET........................................................................................................................... 114 GOING INTO IDIS ....................................................................................................................................................... 114 Draw Down Funds ............................................................................................................................................. 114
11. ENVIRONMENTAL ........................................................................................................................................ 117 OVERVIEW ............................................................................................................................................................. 117 LEVEL OF REVIEW DETERMINATION ...................................................................................................................... 117 LEVELS OF REVIEW ................................................................................................................................................. 117 Exempt .............................................................................................................................................................. 117 Categorically Excluded, not subject to 58.5 ...................................................................................................... 118 Categorically Excluded, subject to 58.5 ............................................................................................................. 119 Environmental Assessment "EA" ....................................................................................................................... 121 Environmental Impact Statement "EIS" ............................................................................................................ 121 EXTRAORDINARY CIRCUMSTANCES ...................................................................................................................... 122 "58.6" REVIEW ....................................................................................................................................................... 122 STATUTORY REVIEW "58.5" ................................................................................................................................... 122 CONVERSION TO EXEMPT ...................................................................................................................................... 123 323
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PUBLIC NOTICE .................................................................................................................................................. 123 RELEASE OF FUNDS ........................................................................................................................................... 124 MRER ..................................................................................................................................................................... 124 PROCESS/FLOW ................................................................................................................................................. 124 BEST PRACTICES AND GENERAL PRINCIPLES ..................................................................................................... 124 IDIS .................................................................................................................................................................... 124
12. PROCUREMENT ............................................................................................................................................ 126 OVERVIEW ............................................................................................................................................................. 126 TYPES OF PROCUREMENT ...................................................................................................................................... 126 SMALL PURCHASES ........................................................................................................................................... 127 SEALED BID ........................................................................................................................................................ 127 COMPETITIVE PROPOSAL (RFP/RFQ) ................................................................................................................. 128 NONCOMPETITIVE PROPOSALS......................................................................................................................... 129 IN GENERAL ........................................................................................................................................................... 129
13. OTHER FEDERAL REQUIREMENTS ................................................................................................................. 132 LABOR STANDARDS (570.603) ............................................................................................................................... 132 FAIR HOUSING (570.601) ....................................................................................................................................... 132 NON-DISCRIMINATION (570.602—SECTION 109) ................................................................................................. 132 RELOCATION/DISPLACEMENT (570.606) ............................................................................................................... 133 EQUAL OPPORTUNITY (570.607) ........................................................................................................................... 133 LEAD-BASED PAINT (570.608) ................................................................................................................................ 133 SECTION 504/REASONABLE ACCOMMODATION ................................................................................................... 133 LIMITED ENGLISH PROFICIENCY ............................................................................................................................ 134
14. APPENDICES ................................................................................................................................................. 135 UNITED STATES DEPARTMENT OF HOUSING & URBAN DEVELOPMENT (HUD) ....................................................................... 135 THE LOS ANGELES HUD FIELD OFFICE .................................................................................................................... 135 HUD WEB SITE ....................................................................................................................................................... 135 TRAINING ............................................................................................................................................................... 135 HUD EXCHANGE – CDBG: COMMUNITY DEVELOPMENT BLOCK GRANTS ............................................................................... 135 THE CODE OF FEDERAL REGULATIONS (CFR) ......................................................................................................... 135 PROGRAM RELATED DOCUMENTS ........................................................................................................................ 135 Request for Reimbursement .............................................................................................................................. 136 Public Service Application ................................................................................................................................. 137 Subgrantee On-Site Monitoring Checklist ......................................................................................................... 147 Determination of Exemption ............................................................................................................................. 153 Determination of Categorical Exclusion ............................................................................................................ 156
15. GLOSSARY .................................................................................................................................................... 161
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1. INTRODUCTION AND CDBG GRANT ADMINISTRATION
PURPOSE OF THIS MANUAL
The purpose of this manual is to assist staff to obtain a basic and clear understanding of the program's fundamental requirements. As staff members of a local entitlement jurisdiction begin working with federal programs such as the Community Development Block Grant, one of the first challenges is gaining a comfortable understanding of the all the related acronyms. Throughout this manual, the federal Commun ity Development Block Grant program will be referred to as CDBG. This policies and procedures manual also provides an understanding of the overall grant administration responsibilities of the City, identification of assigned staff to meet these responsibilities, and instructional policies and procedures to provide guidance to staff.
Please note, that despite being designed as an educational tool for staff of an entitlement jurisdiction, this manual is not intended to be the sole reference or an authoritati ve source on the CDBG program. In fact, a substantial section of the manual is devoted to guiding staff to where they can find the answers to questions and further details about CDBG. This manual in no way is intended to act as a substitute for staff train ing sponsored by the federal Department of Housing and Urban Development (HUD) Community Planning and Development division (CPD) field office.
WHAT IS CDBG?
The Community Development Block Grant (CDBG) program is flexible program that provides communities with resources to address a wide range of unique community development needs.
Beginning in 1974, the CDBG program is one of the longest continuously run programs at HUD.
The CDBG program provides annual grants on a formula basis to approximately 1180 gene ral units of local government and States. (www.hud.gov)
The program is authorized under Title 42 US Code, Chapter 69, Section 5301, and the regulations that govern the CDBG program are at Title 24, Chapter 570 of the Code of Federal Regulations (CFR). (https://www.ecfr.gov/cgi-bin/text-
idx?SID=a478864825fbeb76f67160e3f0522f7a&mc=true&node=pt24.3.570&rgn=div5).
The CDBG program was enacted in 1974 with the passage of the Housing and Community Development Act of the same year. The program originated out of the consolidation several previous federal grant programs that aimed at to address similar comm unity issues targeted by CDBG.
NATIONAL OBJECTIVES
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In its most broad and general definition, the intent of the program is to help local communities improve the quality of life for residents. To this end, the program has what are called three "National Objectives”. In order to use CDBG funds, the proposed use must meet one of these three National Objectives. These are:
1. to benefit low- or moderate-income persons;
2. to aid in the prevention or elimination of slums or blight; or
3. to meet an urgent community development need.
The Code of Federal Regulations ("CFR" or "regulations" or "regs") and published HUD guidance go in to detail about how one determines whether a jurisdiction is meeting a National Objective.
WHO GETS CDBG AND HOW MUCH?
The annual CDBG appropriation is allocated between States and local jurisdictions called “non - entitlement” and “entitlement” communities respectively. Entitlement communities are comprised of central cities of Metropol itan Statistical Areas (“MSAs”); metropolitan cities with populations of at least 50,000; and qualified urban counties with a population of 200,000 or more (excluding the populations of entitlement cities). States distribute funds to non -entitlement localities not qualified as entitlement communities.
HUD determines the amount of each grant by using a formula comprised of several measures of community need, including the extent of poverty, population, housing over -crowding, age of housing, and population growth lag in relationship to other metropolitan areas. (www.hud.gov)
Each year, the US Congress appropriates funds to the CDBG program as part of the budget for the Department of Housing and Urban Development, known as HUD. More specifically, the CDBG program is funded f rom the Community Development Fund (the "Fund"). Although there are a number of smaller programs funded from the Fund, the CDBG program is by far the largest.
PROGRAM AREAS
The funding allocated to the CDBG program is then further distributed among eight "program areas" according to a statutory formula. These programs are:
1. Entitlement Communities – annual grants to larger cities and urban counties
2. State Administered CDBG – the "Small Cities" program. States award grants to smaller units of general local government
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3. Section 10 8 Loan Guarantee Program – for e ntitlement communities and nonentitlement. HUD provides financing for CDBG -funded activities using future CDBG awards to repay the loan
4. Neighborhood Stabilization Program – This Program was establi shed to stabilize communities that have suffered from foreclosures and abandonment. Through the purchase and redevelopment of foreclosed and abandoned homes and residential properties, the goal of the program is being realized
5. Insular Areas – grants to four designated insular areas: American Samoa; Guam; Northern Mariana Islands; and the Virgin Islands
6. Disaster Recovery Assistance – grants to help cities, counties, and States recover from disasters
7. Colonias – Texas, Arizona, California, and New Mexico set a side a portion of state CDBG funds to improve living conditions in under -developed settlements along the US -Mexico border
8. Non-Entitlement CDBG Grants in Hawaii – The Non-Entitlement CDBG Grants in Hawaii offer a source of financing allotted for the Community Development , housing rehabilitation, public facilities rehab, construction or installation for the benefit of low- to moderate-income persons, or to aid in the prevention of slums.
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD)
HUD’s mission is to create strong, sustainable, inclusive communities and quality, affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality, affordable rental homes; u tilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.
HUD is a large federal department with a broad range of responsibility. HUD has fiv e main divisions or "program offices": Housing, Community Planning/Development, Fair Housing/Equal Opportunity, Public/Indian Housing and Ginnie Mae.
As a CDBG recipient, the City will be working with the Community Planning/Development office, which is re ferred to as CPD. The City will also have a field representative assigned to the jurisdiction from the local field office. This person can be viewed as a gateway to HUD. Any questions regarding the CDBG program that cannot be answered internally can be dir ected to the field representative. It is key to establish an open and effective line of communication with the field representative so he/she are kept informed on the status of the jurisdictions programs and entitlement.
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HUD has 81 field offices distributed across the country with at least one in each state. Located at these field offices are representatives of the various HUD divisions or program offices. HUD has also divided up the nation into regions. Each region has a Regional Office and a Regional Of fice Director. You will also have minor interactions with other HUD offices including Labor Relations and Policy Development and Research (PDR).
THE CODE OF FEDERAL REGULATIONS (CFR)
The Code of Federal Regulations (CFR) is the codification of the gener al and permanent rules published in the Federal Register by the executive departments and agencies of the Federal Government. It is divided into 50 titles that represent broad areas subject to Federal regulation.
There are several federal laws, regulat ions and rules that guide and impact the CDBG program.
The most important is the enabling regulation, which can be found in Part 570 of Tit le 24 of the Code of Federal Regulations or "24 CFR 570”. This is where the "how to" and the “dos and don’ts” of the CDBG program are located.
Every April, the regulations affecting HUD, and therefore the CDBG program, are updated. Any changes to the regulations are published in the Federal Register as they are being considered and as they are implemented. The m ost current version of the regulation s can be found on the website of the US Government Printing Office (GPO) . ( https://www.ecfr.gov/cgi-bin/text- idx?SID=a478864825fbeb76f67160e3f0522f7a&mc=true&node=pt24.3.570&rgn=div5#sp24.3.5
70.a). In addition to accessing the GPO website for the most current Regulations, HUD will typically notify grantees when changes are being considered and when they are implemented.
HUD will also occasionally publish memoranda or notices that are collectively referred to as "guidance”. These letters generally serve to clarify common misunderstandings or explain how to interpret program regulati ons considering new federal requirements or changing circumstances. HUD will also publish "handbooks" and "guides" that offer more comprehensive guidance for grant recipients.
Some of the other regulations that impact the CDBG program are:
• Lead Safe Housing;
• Environmental Review;
• General Administration; and
• 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
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It is often difficult to locate HUD guidance after it has been issued. A good resource that can be utilized are assembled links to all the relevant documents at CDBG Laws and Regulations (https://www.hudexchange.info/programs/cdbg/cdbg-laws-and-regulations/).
CDBG GRANT ADMINISTRATION
CDBG funds are received from HUD as grants to States and local communities, known as grantees, to carry out a wide range of community development activities directed toward revitalizing neighborhoods, Community Development and providing improved community facilities and services.
The City of Lynwood, as an e ntitlement community, is responsible for developing its own programs and funding priorities. As a grantee, the City must ensure one of the three national objectives is met when funding activities including benefitting low - and moderate -income persons, aid in the prevention or elimination of slums or blight, or meeting other community development needs having a particular urgency. This is discussed further in Chapter 8.
Consolidated Plan
Recipients of CDBG funds must engage in a planning process to identify priority needs in the community and then develop goals and objectives to address these needs. The Consolidated Plan process produces a 3- to 5-year Consolidated Plan which describes the jurisdiction's community development priorities and multi-year goals based on an assessment of housing and community development needs, an analysis of housing and economic market cond itions and available resources (see Chapter 2 for a further discussion). The Consolidated Plan is carried out through Annual Action Plans, which provide a concise summary of the actions, activities, and the specific federal and non-federal resources that will be used each year to address the p riority needs and specific goals ident ified by the Consolidated Plan ( see Chapter 3 for a discussion on Activity Selection and Chapter 7 on Eligible Activities).
Citizen Participation
An essential part of the Consolidated Plan process is consultation and citizen participation.
Through the Consolidated Plan grantee jurisdictions engage the community, both in the process of developing and reviewing the proposed plan, and as partners and stakeholders in the implementation of CPD programs. By consulting and c ollaborating with other public and private entities, grantees can align and coordinate community development programs with a range of other plans, programs and resources t o achieve greater impact (see Chapter 2 and the City 's Citizens Participation Plan).
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Consolidated Annual Performance and Evaluation Report (CAPER)
Grantees are required to submit a Consolidated Annual Performance and Evaluation Report (CAPER) at the end of each program year to report on the prior year program accomplishments.
By providing detailed financial and beneficiary information, the CAPER explains how a jurisdiction is carrying out its housing and community development strategies, projects, and activities (see Chapter 4). In addition to writing general and program narratives, grant ees must use IDIS to capture the information needed to meet CAPER requirements. As IDIS users set up activities, draw funds, and report accomplishments, they are creating a database that contains information required for the CAPER. Grantees can retrieve th is data from IDIS at the end of their program year. By keeping information current in IDIS throughout the year, there is no need to collect and gather large amounts of data required for the CAPER (see Chapter 10).
Sub-Recipients
One way of implementing the local CDBG program is through the use of sub -recipients. Chapter 5 provides an overview of identifying, selecting, and monitoring a CDBG sub -recipient. The management and oversight of sub-recipients is a critical task of the entitlement jurisdiction. Using a sub-recipient to implement the local CDBG program does not relieve the original grantee of its responsibilities under CDBG and other federal rules and regulations. Another essential requirement necessary to administer a CDBG grant is to have policies and procedures in place for financial management of the grant. Chapter 9 covers the financial responsibilities of a grantee when funds are requested, money is committed, and drawdowns occur. It is important for entitlement jurisdiction staff to understand the process and regulations pertaining to the CDBG program even after they are committed to a specific activity or project through a contract or agreement. Other program requirements which must be met in the administration of the CDBG program include meeting environmental regulations under the National Environmental Policies Act (NEPA), addressing federal requirements for procurement under 2 CFR Part 200.317-326, in addition to meeting other federal requirements [24 CFR 570.600].
Planning Suite
HUD's Office of Community Planning and Development (CPD) introduced the eCon Planning Suite, including the Consolidated Plan template in IDIS Online and the CPD Maps website. The eCon Planning Suite supports grantees and the public to assess their needs and make strategic investment decisions by creating a more cohesive planning and grants management framework and providing better data and a tool for analysis. The Consolidated Plan template in IDIS facilitates the planning process by making critical data on housing and community development needs readily accessible to grantees in the format required by HUD. By providing detailed and timely demographic, housing affordability and economic data, the template frees up time 330
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formerly spent searching out and compiling data to allow grantees to focus on understanding the data, further boosting the process beyond simple compliance with reporting and budgeting requirements. Moreover, by providing a standard format for all the required Consolidated Plan elements, HUD is providing clear guidance on when requirements will be met.
Internal Controls
These policies and procedures are developed to ensure that the CDBG grant is operated in compliance with Federal statutes, regulations, and all terms and conditions established as part of the grant award. As such the City will ensure that it:
1. Complies with U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.
i. Should new guidance, regulations, statutes, terms, or conditions be issued, the City will perform its due diligence and review the information and work to update (if applicable) its program documents and implement the guidance.
2. Evaluate and monitor its compliance with statutes, regulations and terms and conditions of the CDBG grant.
i. The City will work with consultants to regularly monitor its CDBG award for compliance. This includes regular meetings between City staff and consultants, monitoring subrecipient files, reimbursement request reviews, regular check -ins with Finance to confirm draws, monitoring of IDIS data entry and activities.
3. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings.
i. The City will comply with deadlines and respond to HUD when there are instances of noncompliance are identified including noncompliance identified in audit findings.
4. Safeguard protected personally identifiable information (PII) i. The City will take steps necessary to ensure the privacy of PII obtained from participants.
ii. PII data w ill be stored in areas that are always safe from access by unauthorized persons and processed in a manner to that will protect the confidentiality of the record. This typically means that information is always kept in a locked file, when not actively working on the file. Records containing PII should never be left open and unattended.
iii. Access to PII will be restricted to only those staff (including program staff, City staff, Consultants, HUD staff) who need it in their official capacity to perform duties in connection with the scope of work in the agreement with the City, or as part of monitoring visit in the case of HUD.
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iv. Documents containing PII will only be retaining for the period required to use it for assessment and/or to satisfy applicable Federal records retentions requirements.
FINANCIAL MANAGEMENT PROCEDURES
1. Payment/Drawdown Procedure
CDBG funds are available on a reimbursement basis only based on documentation of incurred expenses and the payment of the expenses.
i. The City of Lynwood will reimburse funds based upon information submitted by the Recipient. Any expenditures occurring after the effective date of the contractual agreement between the City of Lynwood and the Recipient are eligible for reimbursement.
ii. Expenditures must be con sistent with the approved budget as stated in the contractual agreement between the City of Lynwood and the Recipient. Only eligible expenses will be reimbursed.
iii. Payments will be adjusted by the City in accordance with program income balances available in sub-recipient accounts, if applicable.
iv. In order to ensure accurate billing and fund management sub-recipients should keep track of the following information for activities funded:
a. Funds budgeted.
b. Funds received from the City of Lynwood.
c. Reimbursements to-date.
d. Funds obligated in the most recent period and to-date. e. Funds expended in the most recent period and to-date. f. Cash on hand (including program income identified as such), if applicable. g. Previous reimbursements requested but not yet received, if applicable. v. All requests for final reimbursements must be submitted to the Finance Department within 30 days after the last sale of the contract.
To request reimbursement:
a. The "Request f or Reimbursement" form ( see Appendix) must be completed and signed by either the Finance Director or another authorized personnel. b. Provide original invoices for all expenditures to be reimbursed. c. Payment receipts, copies of checks, and/or all documentation proving that payment has been made prior to requesting reimbursement. d. For salary reimbursement, time sheets must include total time worked and a breakdown of funding sources covering the salary and benefits associated.
All reimbursements will be made within thirty ( 30) days of receipt of the request, if proper documentation has been submitted. Please be advised that the City of Lynwood will not provide reimbursements if quarterly reports have not been 332
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submitted within the time limits stated in the contractual agreement between the City of Lynwood and the Recipient.
2. Internal Controls
The City of Lynwood internal controls include a combination of procedures, specified job responsibilities, qualified personnel, and records that together create accountability in an organization's financial system and safeguard its cash, property, and other assets. The City's internal controls make sure that:
i. Resources are used for authorized purposes and in a manner consistent with applicable laws, regulations, and policies,
ii. Resources are protected against waste, mismanagement, or loss, and iii. Reliable information on source, amount, and use of resources are secured up-to-date, and recorded.
Additionally, internal controls will ensure that no one individual has authority of an entire financial transaction.
Specifically, that the City has a separation of power for the following three responsibilities:
i. Authorization to execute a transaction,
ii. Recording of the transaction, and
iii. Custody of assets involved in the transaction. This type of separ ation of responsibilities will create a system of checks and balances for grant and general organization expenditures.
The City will periodically reconcile its financial records to actual assets and liabilities which will safeguard resources as well as detect instances of fraud or misuse.
3. Record-Keeping
The CDBG Program has recordkeeping and reporting requirements to document that CDBG funds are used appropriately and that CDBG Program objectives are being met.
i. Requirements
Under the CDBG Program regulations, the City of Lynwood is required to meet certain recordkeeping and reporting requirements that are designed to:
a. Ensure consistency with CDBG program requirements;
b. Clarify the record retention periods; and
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c. Include new records that exercise any of the three new options allowed in the Final Rule (i.e., multi -family refinancing, presumption of affordability for homebuyer assistance, and locally -established 95 percent of area median purchase price limits).
ii. The City of Lynwood will maintain records that include:
a. Program records;
(a) Written agreement with the City of Lynwood and documentation of compliance with the written agreement;
(b) A copy of the application originally submitted to the City of Lynwood; and (c) Forms of assistance used.
b. Project records;
c. CHDO records;
d. Financial records;
e. Program administration records; and
f. Records concerning other Federal requirements.
CONFLICT OF INTEREST
The City of Lynwood will comply with the following conflict of-interest provisions:
1. 24 CFR Parts 84 and 85, and CFR 85.36 and 24 CFR 84.42.
2. Provisions not covered by 24 CFR Parts 84 and 85, set forth in the CDBG regulations.
Additionally, the CDBG regulations include conflict of interest provisions for nonprofit, for profit owners/developers/sponsors and CHDOs.
3. No employee, officer, or agent of the city shall participate in the selection, award , or administration of a contract supported by CDBG if a conflict -of interest, either real or apparent, would be involved;
4. City employees, officers , and agents shall not accept gratuities, favors , or anything of monetary value from contractors, potential contractors , or parties to sub -agreements; and
5. Enforce provisions for penalties, sanctions or other disciplinary actions for violations of standards.
6. No person who exercises or has exercised any functions or responsibilities with respect to CDBG activities or who is in a position to participate in decisions or gain inside information:
a. May obtain a financial interest or benefit from a CDBG activity; or the City of Lynwood CDBG Program Operations;
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b. Have an interest in any contract, subcontract, or agreement for themselves or for persons with business or family ties.
NOTE: This requirement applies to covered persons during their tenure and for one year after leaving the Recipient entity.
7. Include the conflict -of-interest provision in written agreements and other documents with owners, developers, and sponsors.
8. Monitoring of projects will include necessary actions to ensure that the conflict of Interest provision is adhered to.
CDBG PROGRAM STAFFING PLAN
It is the intentions of the City to have City staff provide management oversight of the administration of the CDBG program. To the extent necessary, the City will utilize other resources including consultants to assist with the administration of the CDBG Programs. Provided below is a brief staffing plan identifying roles and responsibilities of City staff and program consultants.
ORGANIZATION ROLES AND RESPONSIBILITIES
City staff will provide program management ov ersight of the CDBG programs and will utilize consultants to provide program -related expertise to implement the CDBG funded programs.
Provided below is a staffing plan identifying roles and responsibilities of City staff and program consultants.
The table below briefly summarizes the City of Lynwood staff roles and responsibilities, and those of program consultants, in administering the City's CDBG Programs. Following the table are more complete job descriptions for each of the positions along with an organizational chart.
CITY OF LYNWOOD STAFFING PLAN
Title
Program Responsibilities
Phone Number E-Mail Address
City Manager
(310) 603-0220 [email protected]
Director of Community Development
Overall Program Management Oversight
(310) 603-0220
x605
[email protected]
Director of Finance
Overall Financial Management Oversight
(310) 603-0220
x202
[email protected]
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Administrative Analyst II
CDBG and HOME Program Administrative
Oversight
(310) 603-0220
x601
[email protected]
Senior Accountant
Supervisor of Program Financial Operations
(310) 603-0220
x243
[email protected]
Lissette Montoya, CDBG and HOME
Program Consultant
(310) 603-0220 [email protected]
City Manager – City of Lynwood certifying officer responsible for overall functions of the City of Lynwood, including the functions of the Community Services Department and Finance Department. The City Manager shall have the authority to make minor modifications to the manual that are not in conflict with federal regulations.
Director of Community Development – Responsible for overall program management and evaluation of the operation of the program, facilitate the adoption of program policies and procedures and assign the necessary staff resources to carry out the program. As the as the City of Lynwood certifying officer, signs CDBG Program certifications, grant documents, loan agreements, and wiring requests.
Director of Finance – Key City staff member responsible for overall financial operations of the City and serving to evaluate and make recommendations on program financi al operations such as the City's CDBG Program.
Administrative Analyst II – Responsible for the CDBG program administrative oversight, including managing pr ogram consultants to ensure programs are being carried out in compliance with CDBG program requirements. Oversees and assists with the preparation of required reports and IDIS voucher preparation. Assists with the implementation of housing and community development programs including the implementation of CDBG projects. Working with program consultants, the Administrative Analyst II is responsible for selection of program applicants, monitoring of the programs for regulatory compliance, program marketing/outreach.
Senior Accountant – Responsible for approving IDIS drawdowns, evaluating/approving financial requisitions and supporting documentation, works with the City Administrator and Administrative Analyst II to implement financial operations related to th e CDBG program and works with auditors for the completion of City audits.
CDBG Program Consultant – Responsible with ensuring the administration and implementation of the CDBG program t o ensure it is being carried out in compliance with CDBG program requirements. Assist, as assigned, with the preparation of required reports . Sets up activities in IDIS and prepare vouchers . Reviews the program to ensure compliance with CDBG regulatory 336
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commitment and expenditure requirements ; ensures file documentation is maintained. Assists with the implementation of CDBG activities.
City of Lynwood
- CDBG Program
City Manager
Director of
Community
Development
Administrative
Analyst II
CDBG Program
Consultant
Director of
Finance
Senior
Accountant
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2. CONSOLIDATED PLANNING
OVERVIEW
This section will inform staff of the purpose and guide staff through the requirements of the Consolidated Plan and processes. Recipients of federal CDBG funds must prepare a Consolidated Plan, often referred to as the "Con Plan". The Consolidate d Plan is intended to act as a consolidated planning document that describes the housing and community development needs of the grantee community, the resources available to meet those needs, and the proposed actions to meet those needs. The Con Plan must cover a minimum period of at least 3 years, but not exceed more than 5 years.
The consolidated plan serves the following functions [24 CFR 91]:
1. A planning document for the jurisdiction, which builds on a participatory process among citizens, organizations, businesses, and other stakeholders;
2. A submission for federal funds under HUD’s formula grant programs for jurisdictions;
3. A strategy to be followed in carrying out HUD programs; and
4. A management tool for assessing performance and tracking results.
A Consolidated Plan is also required for grantees under the federal Housing Investm ent Partnerships Program (HOME), Emergency Shelter Grant program (ESG) , and Housing Opportunity for Persons with AIDS (HOPWA) Program. The Con Plan should address all of these programs if the grantee receives these funds. The Plan should also describe other resources that will be made available to meet the community's identified needs.
The Consolidated Plan must also include an Action Plan that is submitted each year. The annual Action Plan provides HUD with more details regarding the entitlement jurisdiction's plan to allocate funds through programs and projects that will meet the current needs of the community.
In other words, where the Action Plan speaks to the specific activities that will be undertaken over the following year, the Consolidated Plan delivers a general outline and is considered to be a guiding document rather than a commitment to certain actions.
The Consolidated Planning requirements of 24 CFR 91 are not only requirements for documentation but also require the grantee to involve the public. HUD sees the Consolidated 338
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Plan and Action Plans as much as proces ses as they are documents, if not more so. From HUD's perspective, the document serves as evidence of the process.
Unless cited otherwise, quotes from HUD in this section are from "GUIDELINES FOR PREPARING A CONSOLIDATED PLAN SUB MISSION FOR LOCAL JURISDIC TIONS", "FY 2007 Implementation:
New Local Regulatory Provisions for 3 -5 Year Consolidated Plan Amendments ", and "New Local Action Plan Submission Provisions" . They all are available on the HUD website. The FY2007 and "new" requirements were released following the update and revision of 24 CFR 91 adopted in 2006 and implemented in federal fiscal year 2007.
PROGRAM YEAR
The program year for the City of Lynwood coincides with the Fiscal year, which begins on July 1 and ends on June 30.
PLAN SUBMISSION AND REVIEW
Consolidated Plans and annual Action Plans must be submitted 45 days prior to the start of the program year which they cover.
In May 2012, HUD's Office of Community Planning and Development (CPD) introduced the eCon Planning Suite , including the Consolidated Pl an template in IDIS Online and t he CPD Maps website. By creating a more cohesive planning and grants management framework and providing better data and a tool for analysis, the econ Planni ng Suite supports grantees and t he public to assess their needs and make strategic investment decisions.
The Consolidated Plan template in IDIS facilitates the planning process by making c ritical data on housing and community development needs readily accessible to grantees in the format required by HUD. By providing detailed and timely demographic, housing affordability and economic data, the template frees up time formerly spent searching out and compiling data to allow grantees to focus on understanding the data, further boosting the process beyond simple compliance with reporting and budgeting requirements. Moreover, by providing a standard format for all the required Consolidated Plan elements, HUD is providing clear guidance on when requirements will be met.
With the incorporation of the Consolidated Pla n and Annual Action Plans into I DIS Online, the key reporting elements of the grants management cycle are integrated into a single system. This will help ensure cohesiveness among
the goals described in the Consolidated Plan and Action Plan, 339
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the activities and accomplishments tracked in IDIS, and the outcomes reported in the Consolidated Annual Performance and Evaluation Report (CAPER).
This integrated system makes the Consolidated Plan a more useful planning and management tool.
CPD Maps is an online data mapping tool for place-based planning. Grantees and the public can use CPD Maps to analyze and compare housing and economic conditi ons across their jurisdictions. The CPD Maps tool is publicly available, giving all community stakeholders access to the same data. The Consolidated Plan template allows grantees to insert maps and data tables from CPD Maps with ease, throughout their plan.
CONSOLIDATED PLAN CONTENTS
The regulations require that the Consolidated Plan include certain information about the community, that it answer certain questions about the community and the grantee jurisdiction, and that it tell HUD how the grantee intend s to comply with certain program and HUD requirements.
In general, the following components are required [24 CFR 91.200]:
description of the lead agency
description of the planning process
description of those who participated in the process
description of consultations with other agencies and entities executive summary of the plan
summary of the public planning process
housing and homeless needs assessment
housing market analysis
Strategic Plan
annual Action Plan
required certifications
monitoring plan
citizen participation plan
The regulations specify the form and content of these components to varying degrees. It is key that those staff members who assist in the development of entitlement jurisdiction pay particular attention to those requirements identified in the regulations. In addition to 24 CFR 91, HUD has also provided additional guidance resources regarding the development of a Consolidated Plan. 340
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HUD provides links to "model" Consolidated Plans and best planning practices on its web site at http://www.hud.gov/offices/cpd/about/conplan/
BACKGROUND AND GENERAL INFORMATION
The first four requirements above are typically presented in a background section that includes general information about the community. Details on what HUD is looking for in these sections are summarized below. ·
DESCRIBE THE LEAD AGENCY
From HUD: "The jurisdiction must identify the lead agency or entity for overseeing the development of the plan and the major public and private agencies responsible for administering programs covered by the consolidated plan”.
The "lead agency" is going to be the grantee jurisdiction except in the rare case that the plan covers more than one jurisdiction. In this case, the lead agency is the City of Lynwood.
DESCRIBE THE PLANNING PROCESS
HUD wants a general description of the planning process that identifies those steps taken by the jurisdiction to prepare for the development of the consolidated plan in a way that meets the federal requirements. This can be in the form of a narrative timeline of the planning process.
TELL HUD WHO WAS INVOLVED
HUD wants to know about the public and private agencies involved in planning for the use of funds. This can be as simple as a list of agencies.
TELL HUD WHO YOU "CONSULTED"
HUD requires that you "consult" with agencies that have knowledge of housing and community development needs. There are certain required consultations. These are described in more detail in the following section. You need to list those agencies you consulted in the preparation of the plan. HUD encourages entitlement jurisdictions to consult with dynamic pool of community representatives that can include local businesses, developers, non -profit agencies, faith -based organizations, the general public and other parties that carry an interest in the community.
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EXECUTIVE SUMMARY
Grantees must provide a separate "executive summary" of the Consolidated Plan. This should be a short description of the Consolidated Plan. HUD wants the executive summary to include the objectives and outcomes that have been identified in the plan and for it to discuss the past performance of the grantee.
PUBLIC PROCESS SUMMARY
Jurisdictions need to summarize the "citizen participation process" that was implemented to gain public input. This is often a separate section or an appendix to the plan. This section describes the various public workshops, public hearings, and public meetings of elected or appointed bodies. The public process summar y should specifically mention when and how the public was informed of these meetings and should provide a summary of the public comment captured at the meetings. In addition to the public meetings, HUD wants to know when and how the public was informed of the planning process; when and how they were given an opportunity to review the plan document.
Please note: HUD want s draft documents to be made available on -line at the entitlement jurisdiction's web site.
Copies of all public notices with evidence of when they were posted should be captured.
COMMUNITY NEEDS
HUD requires that the Consolidated Plan discuss the community's needs in general and specifically discuss those identified housing needs, homeless needs, and provide an analysis of the local housing market.
GENERAL COMMUNITY NEEDS
Although the regulations and HUD are not specific about the discussion of general needs there should be substantial presentation of the community's demographics including current characteristics and trends in population, age, education, employment, race/ethnicity, household characteristics, and characteristics of special needs populations (elderly, disabled, large households, single parent households, persons addicted to drugs and alcohol, persons with HIV/AIDS, victims of domestic violence, and persons receiving public assistance).
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HOUSING NEEDS
The requirements for the discussion of Housing and Homeless Needs are much more specific.
Housing needs must be projected for the Consolidated Plan period. Housing needs must be discussed by income group and by renters vs. owners. Data from the US Census must be used.
Census data may be complemented by other reliable data sources and local surveys. Consultation with local service providers and advocates should also be refl ected in the discussion of housing needs.
The housing needs of the following special needs groups must be discussed:
elderly
disabled
single persons
large families
public housing residents
families on the public housing waiting list
persons with HIV/AIDS and their families
The discussion of housing needs must also include:
housing cost burden
over-crowding (especially for large families)
housing conditions
The discussion must provide specific information by income group and tenure. The needs assessment must also include an analysis of how any particular ethnic or racial group has disproportionate housing needs.
DATA SOURCES
Special US Census data tabulations for the preparation of Consolidated Plans including data on housing needs are available from HUD's Policy Development and Research Information Service or "PD&R" from the "HUD User" website:
https://www.huduser.gov/PORTAL/pdrdatas_landing.html.
CHAS DATA
One special data set that can be a useful tool in developing an effective Consolidated Plan is called "CHAS Data". This source of data is a collection of custom tabulations that were once used in the 343
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preparation of what was known as a "Comprehensive Housing Affordability Study" (CHAS), which has since been replaced by the Consolidated Plan. It, along with other data sources, can be accessed through what is called the "State of the Cities Data System" (SOCDS) at https://www.huduser.gov/portal/datasets/socds.html . CHAS Data can be pulled at this website:
https://www.huduser.gov/portal/datasets/cp.html.
Consolidated Plan Template in IDIS
The Consolidated Plan Template in IDIS makes data on housing and community development needs readily accessible to grantees in the format required by HUD. The provision of detailed and timely demographic, housing affordability and economic data in the template frees up staff time to allow grantees to focus on understanding the data, further boosting the process beyond simple compliance with reporting and budgeting requirements.
Both the Consolidated Plan Template in IDIS Online and CPD Maps draw on multiple data sources to produce data tables, populate maps and create reports. The following data sources are used by both tools.
American Community Survey (ACS)
eCon Planning Suites data
Fair Market Rents (FMR)
HOME Program Rent Limits
HOME Income Limits
Homeless Data Exchange/Annual Homeless Assessment Report Data Homeless Data Exchange Public Report
Assisted Housing (IMS/PIC)
Physical Inspection Reports
Data sources from HUD and others are listed on HUD's Consolidated Plan Data Sources page https://www.hudexchange.info/resource/3179/consolidated-planning-data-sources/ .
The Consolidated Plan must include a concise summary of the extent and nature of the community's homeless population including chronically homeless individuals and rural homelessness. It must include a distinct analysis of need for services and facilities for homeless individuals, families, families with children, sheltered, unsheltered and other homeless subpopulations. The summary should provide the characteristics and needs of low - and very low-income families that are threatened by homelessness. This s ection should also present a brief narrative on the racial and ethnic characteristics of the homeless population to the greatest extent possible. HUD requires the Cons olidated Plan include "Table 1 A" to present this information.
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SUPPORTIVE HOUSING NEEDS
The discussion must include an estimate of non -homeless persons with special needs and a discussion of their needs. These populations include elderly, frail elderly, persons with disabilities (mental, physical, developmental), persons with alcohol or drug a ddictions, persons with HIV/AIDS and their families, public housing residents, and any other population the grantee believes have a need for supportive housing. HUD requir es jurisdictions to use "Table 1 B" to present this information.
LEAD-BASED PAINT HAZARDS
The Consolidated Plan must include an estimate of housing units occupied by low -income households that may contain lead-based paint. The Plan must also discuss the incidence of actual lead poisonings attributable to lead-based paint in the grantee jurisdiction.
HOUSING MARKET ANALYSIS
GENERAL SUPPLY AND DEMAND
The Consolidated Plan must discuss the supply of, demand for, condition and cost of housing in the grantee jurisdiction. This must include specific discussion of housing serving persons with special needs and low-income households. (See Housing Needs.) Condition of housing units must estimate the number of vacant and abandoned housing units and the suitability of these units for rehabilitation and occupancy.
INCOME, RACE AND ETHNIC CONCENTRATION
The Consolidated Plan must identify and describe any areas with concentrations of low -income households and areas of racial or ethnic concentration. A low -income concentration area is a primarily residential area where 51% or more of the hou sing units are occupied by low -income households. The grantee must determine and justify the threshold for race/ethnic concentration.
These areas should be illustrated using maps in the plan.
PUBLIC HOUSING AND AFFORDABLE HOUSING
The Plan must discuss the needs of public housing and other subsidized affordable housing. This must include an identification of the developments, number and type of units, condition, physical needs, and the results of any recent Section 504 evaluation. The Plan should discuss the local 345
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Public Housing Authority's (PHA) management plan and identify if the PHA is operating under an HUD-approved PHA Plan.
Discussion of privately-owned affordable housing must include the target income levels, source of assistance, term of affordabi lity and an evaluation of the likelihood of conversion to market rate.
HOUSING FOR THE HOMELESS
The Plan must describe the services and facilities available to meet the needs of the homeless and chronically homeless. This must include separate mention of emergency shelter, transitional housing, and supportive and non-supportive housing for the homeless. The percentage available to and currently serving the chronically homeless should be estimated.
SPECIAL NEEDS HOUSING—NON-HOMELESS
The Consolidated Plan must describe services and facilities available to special needs populations who are not homeless. The Plan must also describe services and faculties for those discharged from hospitals and institutions.
BARRIERS TO AFFORDABLE HOUSING
The Plan must describe barriers to the development of affordable housing including the general cost of construction and other public or private factors that may pose a barrier to the development, maintenance or improvement of affordable housing. This includes local tax policy, land use controls, building codes, fees, growth limits or other factors.
STRATEGIC PLAN
The Strategic Plan section of the Consolidated Plan discusses the priority needs of the grantee jurisdiction and the allocation of resources to meet those needs as well as strategies to meet specific HUD-mandated goals.
PRIORITY NEEDS
Staff will need to discuss the general priorities for allocating resources both geographically and amongst activities. Use the tables provided by HUD to summarize priority given to various needs and resources allocated.
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A description of the rationale used to determine the allocation of resources with particular attention to distribution across income groups will need to be provided.
OBSTACLES TO MEETING UNDER-SERVED NEEDS
This se ction should describe any identified obstacles to meeting under -served needs in the grantee jurisdiction.
SPECIFIC OBJECTIVES
Summarize the specific objectives the grantee has for the planning period including resources available and which identified nee ds will be met. Each objective must include proposed quantified accomplishments for the planning p eriod and measurable outcomes. (See performance measurement guidance from HUD.) Use Tables “1C” and “2C”.
AFFORDABLE HOUSING
Describe the strategy for meeting affordable housing needs by income group and tenure. Discuss the allocation of resources made available for rental assistance, production of new units, rehabilitation, acquisition and preservation. Enumerate the number of households under the plan who will receive assistance by income group. Use Table 2A.
PUBLIC HOUSING
This section will need to discuss the strategy for meeting the needs of public housing and the needs of public housing residents including homeownership. If the local PHA has been designated as "troubled" by HUD, the grantee must describe the resources it will make available to the PHA.
You should contact your local PHA or HUD Field Representative to determine if the PHA has a "troubled" designation and if so, why.
HOMELESSNESS
Identify and describe the grantee jurisdiction's strategies for the following:
Helping low-income families avoid/prevent homelessness; Homeless outreach and needs assessment;
Meeting emergency shelter and transitional housing needs of the homeless; and Helping homeless and chronically homeless transition to permanent housing and independent living.
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NON-HOMELESS SPECIAL NEEDS
Summarize the priority needs for special needs populations not related to housing and strategy for meeting those needs. Use “Table 1B”.
NON-HOUSING COMMUNITY DEVELOPMENT (CDBG ONLY)
Describe the non -housing community development needs that will be met. These must be provided by CDBG eligibility category. Use Table 2B.
NEIGHBORHOOD REVITALIZATION
This section will need to present any geo graphically targeted revitalization efforts. This includes any HUD-approved or proposed Neighborhood Revitalization Strategy Areas (NRSAs).
BARRIERS TO AFFORDABLE HOUSING
Describe any barriers to the development of affordable housing including the genera l cost of construction and other public or private factors that may pose a barrier to the development, maintenance or improvement of affordable housing. This includes local tax policy, land use controls, building codes, fees, growth limits or other factors.
LEAD HAZARD REDUCTION
The grantee's strategy to reduce lead-based paint poisoning hazards will need to be summarized.
The grantee must discuss how the federal Lead-Safe Housing Rule and local lead hazard reduction strategy will be integrated into the grantee's housing programs.
ANTI-POVERTY
Describe the grantee's strategy to reduce the number of poverty-level families. Describe how the grantee's housing programs will reduce poverty and how they will be coordinated with the other programs and services available to relieve and reduce poverty in the grantee jurisdiction.
GAPS IN INSTITUTIONAL STRUCTURE
Describe the grantee's strategy to reduce gaps in institutional structure that impair the ability to implement the Strategic Plan.
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COORDINATION
This section will need to provide a description of the grantee's strategy to enhance coordination between public and assisted housing providers, private and public service agencies in order to implement the Strategic Plan. Homeless coordination must address the needs of the chronically homeless. Community Development coordination should describe coordination with private industry.
ANNUAL ACTION PLAN CONTENTS
The Action Plan discusses the specific activities planned for each year and the resources available.
It implements the Consolidated Plan on a more detailed level. It must be submitted annually and approved by HUD before funds are released. The first-year Action Plan for the Consolidated Planning period is submitted with the Consolidated Plan.
The required elements of the Action Plan and a brief discussion of each follow.
EXECUTIVE SUMMARY
An executive summary of the Action Plan is required. This element should briefly outline the Action Plan and planning process. It must include a summary of objectives and outcomes for the plan year and discuss past performance.
RESOURCES
Staff needs to provide a summary of all funds that will be available in the year to meet identified needs. These resources may be insufficient to meet needs or in excess of need. This should include all formula grants expected, loan payments and program income, and un-expended prior year funds. Any significant assets or real property that is available should also be discussed.
The availability of funds not directly controlled by the grantee should also be discussed in general.
This would include federal homeless funds (Mc Kinney-Vento) and funding for the local housing authority, especially funds for the Housing Choice Voucher program.
Other funds from all sources should be summarized. These would include reserved Low -Income Housing Tax Credits and other state and local funds and programs.
Where there is a matching requirement or there is significant local support for specific activities or the CDBG program in general, this should be mentioned in this discussion. 349
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The discussion of CDBG funds must include:
• Program income expected to be received in the upcoming plan year. • The amount expected to be generated by and deposited into revolving loan funds in the current plan year.
• The amounts expected to be received by "float-funded" activities in the current plan year and all prior plan years.
• Prior year program income, Section 108 loan proceeds or funds returned to the line -of credit that have not previously been programmed.
SPECIFIC ANNUAL OBJECTIVES
The Action Plan must summarize the specific objectives and priority needs that will be met during the plan year. This is often done by summ arizing the planned activities under each specific objective.
The relationship between a planned activity and specific objective(s) and priority need(s) should be discussed when describing the activity. The priority need and specific objective are also included in HUD "Table 3C - Consolidated Plan Projects ". The proposed accomplishments and outcome of the annual activity should be related back to meeting the planned accomplishments and objectives of the Strategic Plan section of the Consolidated Plan.
DESCRIPTION OF ACTIVITIES
Staff should ensure the Action Plan includes a general narrative description of each planned activity, relate each activity to a priority need and specific objective; and the Action Plan must describe the proposed accomplishments for each. The Action Plan must also estimate the number and type of beneficiaries including income level. A start and completion date must be provided for each activity. Each activity must have an outcome measure associated with it. This information is also included in "Table 3C”.
There are specific requirements for the description of "f loat-funded" CDBG activities. ( A "float funded" activity is an activity that will re-pay the CDBG grant line of credit in the short-term.)
ALLOCATION PRIORITIES
The Action Plan must explain why certain activities were funded over others and how the levels of funding were determined. If there were any particular obstacles to meeting under -served needs, they should be discussed.
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GEOGRAPHIC DISTRIBUTION AND LOW/MODERATE INCOME (LMI) BENEFIT
The Action Plan must show and describe the geographic distribution of planned activities. An estimate of funding directed to target areas should be provided.
The Action Plan must estimate the percentage of annual CDBG funding that wi ll benefit Low/Moderate Income (LMI) persons and households. The specific location of CDBG activities must be identified and shown in relation to LMI areas. For activities that do not have a specific location or where there is a need to maintain secrecy the Action Plan should describe the general location or the general area that will likely benefit. Where there are CDBG -funded activities for which locations have yet to be determined such as business assistance or housing rehabilitation loans the Action Plan must describe who may apply and how recipients will be selected.
The use of funds in Neighborhood Revitalization Strategy Areas or as part of a coordinated effort focused on improving conditions within a specific area should be discussed.
ANNUAL AFFORDABLE HOUSING GOALS
Much as the Strategic Plan section of the Consolidated Plan has five -year goals for housing, the Action Plan must describe the annual goals for homeless, non -homeless and special needs. The number of households assisted via rental assis tance, construction, rehabilitation and/or acquisition must be specified.
HOMELESS
Staff will need to ensure the Action Plan identifies activities that meet the needs of the homeless for emergency shelter and transitional housing or that provide supporti ve services that prevent homelessness or assist the homeless to be placed in housing or remain in housing. This includes un-related individuals, families with children and the chronically homeless.
SPECIAL NEEDS
HUD requires the Action Plan discuss how activities meet the needs of populations having special needs such as the disabled and persons living with HIV/AIDS.
PUBLIC HOUSING
The Action Plan will need to inc lude a description on how the planned activities w ill assist the local public housing authority. If the local PHA is "troubled" the Action Plan must describe the efforts the grantee will take to help the PHA remove that designation' 351
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ANTI-POVERTY STRATEGY
A brief discussion on how the planned activities will help to reduce the poverty level in the jurisdiction will need to be provided.
LEAD-BASED PAINT HAZARD REDUCTION
The Action Plan will need to include a section that discusses the extent of lead -based paint hazards and how planned activities will reduce the hazard. If there are specific activities that may have the potential to effect lead -paint hazards these should be discussed. The annual implementation of the grantee' s Lead Hazard Reduction plan should be discussed. Activities that have the potent ial to disturb lead -based paint should be mentioned and specific efforts or program design elements that reduce lead exposure or abate lead hazards should be described.
"OTHER ACTIONS"
The Action Plan must discuss the following "other actions" the grantee will undertake in the plan year to meet various grant and general HUD grantee requirements.
Address obstacles to meeting under-served needs
Foster and maintain affordable housing
Remove barriers to affordable housing
Develop institutional structure
Enhance coordination between public and private housing, health and social services agencies
Encourage public housing residents to become more involved in management and participate in home ownership
FAIR HOUSING
There should be a discussion of actions related to the grantee's obligation to affirmatively further fair housing. This should relate to the implementation of the grantee's Analysis of Impediments to Fair Housing Choice. Any changes in the grantee jurisdiction that impact fair housing should be discussed along with any appropriate changes to the grantee' s fair housing program.
MONITORING
This section should describe the policies and practices in place to monitor activities and assure long-term compliance. This includes any specific sub-grant requirements and the administrative requirements of federal funds in general. The monitoring discus sion should include plans to 352
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assure affordable housing compliance, the timely expenditure of funds, site inspections to determine housing code compliance and on-site sub-recipient monitoring. Labor compliance and the verification of environmental mitigation requirements should also be mentioned.
Grantees should also discuss the local implementation of performance measurements.
CITIZEN PARTICIPATION PLAN CONTENTS
HUD has very specific requirements for how the public is to be informed and involved in the planning process. HUD requires that the grantee spell out exactly how it will meet these requirements by developing and adopting a Citizen Participation Plan as part of the consolidated planning process. This plan only needs to be updated as the practices o f the grantee change or as HUD changes requirements for public participation.
There are also certain minimal public participation requirements for the development of the consolidated plan, the annual action plan and the annual performance report.
The min imal public participation requirements for the consolidated plan are buried in the regulations for the citizen participation plan. It is helpful to look at them separate from plan requirements.
MINIMUM PUBLIC PARTICIPATION REQUIREMENTS
ENCOURAGEMENT OF CITIZEN PARTICIPATION IN GENERAL
HUD wants the grantee to involve those who are most likely to be impacted and therefore potentially benefit from the use of CDBG funds. This includes low and moderate income persons and those living in CDBG target areas. HUD "expects" the grantee to encourage the participation of minorities, non-English-speaking persons and disabled persons.
The grantee is required to involve local and regional agencies in plan preparation specifically businesses, developers, and community and faith-based organizations.
HUD encourages the use of "alternative techniques" to involve the public such as internet based applications and small group consultations.
The grantee is required to make a specific effort to involve residents of public and other forms of assisted housing. This effort is to be coordinated with the local PHA. The grantee should share its plans for planned activities with the PHA.
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CITIZEN PARTICIPATION DURING PLAN DEVELOPMENT
At least one public hearing must be held duri ng plan development, prior to publication of the plan. The public hearing should discuss housing and community development needs and proposed activities. Many grantees have two separate hearings, one on needs and one on proposed activities.
Public hearing s must have "adequate advance notice ”. HUD does not provide a statutory definition but it does state in the regulations that "small print notices ... a few days before the hearing" are not adequate. HUD also offers that it considers two weeks’ prior notice as adequate.
Public hearings must also be held in such a place and at such a time as to facilitate the participation of actual or intended beneficiaries. The grantee must offer accommodations to the disabled and those with limited English proficiency.
Before adoption, the grantee must make available to the public information regarding:
The amount of assistance expected (new grant funds and income) The range of activities planned to be undertaken
The estimated amount planned to be expended to benefit to low and moderate income persons.
The proposed plan must be published to allow time for the public to review and comment. The publication requirement can be met by publishing a summary of the plan in at least one newspaper of general circulation and by mak ing copies of the plan available in local libraries, government offices and public places such as community centers. A "reasonable number" of copies of the plan must be made available free to the public. The summary must at a minimum describe the contents and purpose of the plan and tell the reader where copies of the entire plan may be reviewed. The plan must be made available in a form accessible to persons with disabilities when requested.
The grantee must allow for a public comment period of not less than 30 days.
HUD requires that all public comment be considered during plan development and that a summary of public comment be included in the plan document. The grantee's response to all comments must be documented in the plan. Comments that are not acc epted must have the reason they were not accepted included in the plan.
The plan document, related documents and records related to plan development must be made available to the public in a "reasonable and timely manner”. 354
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PLAN AMENDMENTS
During the approved Consolidated Plan period, decisions by the jurisdiction to make changes to certain programmatic items may result in the grantee having to amend its plan. Changes that would require an amendment to the Consolidated Plan include:
Allocation priority changes or changes to the jurisdictions method of distribution; A change in activities to be carried out by the jurisdiction that were not originally included in the approved Action Plan; and/or
Changes to an activity that will affect the purpose, scope, location, or beneficiaries
The jurisdiction is required to establish criteria for substantial amendments in the development of their Citizen Participation Plan. The criteria identified will be utilized to determine whether any changes will be considered a substantial amendment. Substantial amendments are subject to citizen participation requirements followed during the preparation of the Consolidated Plan and must follow the jurisdictions Citizen Participation Plan developed in accordance with 24 CFR Part 91 requirements. Substantial amendments require a public comment period and citizens must be provided reasonable notice and an opportunity to comment on amendments. The amended Consolidated Plan or Action Plan will have to be re-adopted by Council.
Upon completion of the amendment and after a comment period, HUD must be notified of amendments to the plan and the jurisdiction is required to submit the amendments to HUD for approval.
PERFORMANCE REPORTS
The grantee must describe how the public will be aff orded an opportunity to comment on performance reports and that those comments will be considered. A summary of the public comments must be attached to the performance report.
PUBLIC HEARINGS
The regulations state the grantee must hold at least two public hearings per year at two different times during the year, with one being conducted prior to the adoption of the Consolidated Plan.
These hearings should address housing and community development needs, proposed activities, and program performance. This section must describe how "adequate advance" notice of public hearings will be given to the public and how the hearings will be held in places and at times convenient to actual and potential beneficiaries. A description of how the needs of nonEnglish- speaking persons and people with disabilities will be accommodated needs to be provided.
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In practice, most communities conduct one or two public hearings when the consolidated plan and annual Action Plans are being developed and one when the annual report (CAP ER) is presented to the governing body.
HUD does not define "adequate advance" notice but it is quite specific in the regulations about inadequate notice, ''Publishing small print notices in the newspaper a few days before hearing does not constitute adeq uate notice. Although HUD is not specifying the length of notice required, it would consider two weeks [to be] adequate”. [24 CFR 91.1 10 (e)(2)]
PUBLIC ACCESS
Describe how residents will be provided with "reasonable and timely" access to meetings and to public records related to the use of CDBG funds for the preceding 5 years. Identify the steps taken to assure the Consolidated Plan, amendments an d performance reports will be m ade available, and how they will be made available in a form accessible to the disabled.
HUD does expect the public will have relatively easy access to the grantee's records. Many grantees maintain one or more public information binders that are available in public places or on request. Availability on the grantee's website in electronic form is also generally expected.
TECHNICAL ASSISTANCE
The grantee must describe how technical assistance will be given to low and moderate -income groups or persons who wish to develop proposals for the use of grant funds.
COMPLAINTS
A brief desc ription must be provided on how the grantee will handle complaints and deliver a written response in "timely and substantive" manner.
HUD expects CDBG grantees to respond to complaints within 15 working days. It is not specific with other types of grantees.
Moreover, the Citizen Participation Plan must require that the grantee follow the plan. It must commit the grantee to meeting the requirements of the Plan and be adopted as official policy and practice of the grantee jurisdiction.
CITIZEN COMMENT ON THE CITIZEN PARTICIPATION PLAN
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The Citizen Participation Plan document must be made available for public review and comment before it is adopted and if it is ever amended. If you take the Citizen Participation Plan through the same review process as the Consolidated Plan you will meet the review requirements.
THE CONSOLIDATED PLANNING PROCESS
CONSULTATION
As mentioned in the previous section, HUD requires the grantee to consult with certain agencies when preparing the plan. These consultations are both general and specific to certain topics.
What HUD means by "consultation" are meaningful interactions with these agencies that result in "collaboration and collective problem -solving”. HUD wants the grantee to develop, "partnerships among government agencies and between government and private groups ...[that]...marshal government and private resources to achieve intended public purposes”.
HUD wants the plan to be a comprehensive document that reports on the needs of the community. The assumption is t hat the grantee does not have a sufficient breadth or depth of knowledge to represent the complete needs of the community.
GENERAL CONSULTATION
In preparation of the plan in genera/, the grantee must consult with public and private agencies that provide:
Assisted housing
Health services
Social services
Fair housing services
HUD also requires that among those agencies, ones that focus on meeting the needs of certain specific groups be consulted. These groups are:
Children
Elderly persons
Persons with disabilities
Persons with HIV/AIDS and their families
Homeless persons
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Adjacent units of local government should be consulted. I n particular, agencies having planning areas that cross local jurisdictional boundaries or concern regional matters (e.g., transportation, air quality) should be consulted.
HOMELESS
In preparation of the section on homeless needs, the grantee must consult with public and private agencies that provide assisted housing, health services and social services to determine what resources are available to meet the needs of the chronically homeless.
LEAD-BASED PAINT HAZARDS
In preparation of the section on lead-based paint hazards the grantee must consult with state or local health and child welfare agencies regarding the degree of lead -based paint hazard to children in the community. The grantee must also consider data on lead hazards and actual cases of childhood lead poisoning in the community including residential locations of cases believed to be related to lead-paint poisoning.
NON-HOUSING COMMUNITY DEVELOPMENT
The regulations require that adjacent units of general local government be notified that the grantee is preparing a consolidated plan and that the non-housing community development plan be submitted to the state and the local county. Providing notification to these agencies along with the public is usually sufficient to meet this requirement.
PUBLIC HOUSING
The grantee shall consult with the local public housing agency (PHA). In most cases this will be the local housing authority, the agency that implements federal housing programs. HUD requires consultation regarding "public housing needs and planned programs and activities”.
This consultation is relatively meaningful in preparation of the plan as one of the required pl an certifications is that the PHA plan is consistent with the consolidated plan. The Consolidated Plan must also describe how the grantee will meet the needs of the local PHA, and if it is a "troubled PHA" how the grantee will assist the agency. HUD also expects that the grantee and the PHA will coordinate efforts to address common needs.
If a PHA is under a Section 504 Voluntary Compliance Agreement with HUD, the grantee should identify how it will assist the PHA with compliance, if the grantee is plannin g to assist the PHA. 358
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CDBG funds can be used to assist the PHA with accessibility requirements if the PHA is under a compliance agreement and needs are discussed in the plan. 359
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3. ACTIVITY SELECTION
OVERVIEW
When working with the Community Development Block program, there several steps to consider when selecting an activity to fund. This section of the manual will guide staff through those steps in a manner and order that are efficient and effective.
CATEGORICAL ANNUAL SPENDING LIMITS
When determining the activities to be funded and planning for the use of CDBG funds the two major categorical limits on the use of CDBG funds must be considered – public services and administration.
PUBLIC SERVICES
In any program year, the grantee may not "obligate" more than 15% of the current year's entitlement and 15% of the previous year's program income to publ ic services activities [570.201(e)].
Current
Program Year
Award (or
Anticipated
Award)
Prior Year
Program
Income
Total Public
Services Cap
"Basis"
Total Public
Services Cap
"Basis"
15%
Maximum
Annual
Obligation for
Public Services
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It is important to understand the term "obligation ”. This means that no more than the public services cap can be allocated to public services activities or otherwise committed each year. It is also important to realize that the cap amount is re-calculated each year, and if all funds obligated to public services are not expended wit hin the program year, the remaining obligated but un - expended funds are not available to obligate in subsequent years. This scenario is often referred to as "use-it-or lose-it”.
ADMINISTRATION
The limit on planning and administrative activities [570.205 and 570.206] is similar to public services with the exception that it is calculated at 20% and uses the current year award and current year program income. [570.200(g)]
The annual cap on planning and admin is also "use -it-or lose-it" Scenario. It is recommended to over-allocate staffing and overhead costs to the CDBG program (assuming that they are accurate and reasonable) and back them out at the end of the year. Otherwise a grantee will not be able to take advantage of the provision to use 20% of program income.
Note: Re-Payments of principal and interest that go into a Revolving Loan Fund are NOT included in the calculation of the annual caps for public services or planning and administration. Interest on RLF balances or other “advances of federal funds” are also not program income. Such interest must be remitted to the U.S. Treasury.
Current
Program Year
Award (or
Anticipated
Award)
Current Year
Program
Income
Total Planning
and
Administration
Cap "Basis"
Total Planning
and
Administration
Cap "Basis"
20%
Maximum
Annual
Obligation for
Planning and
Administration
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PROPOSALS
The first step is to solicit proposals for the use of CDBG funds. This process occurs as part of the annual planning process discussed more fully in the annual Action Plan section. There are several ways that proposals can be generated and typically several are used in the same planning process. There is no process or limit required by HUD other than the public must be involved in determining the use of funds as described in the Citizen Participation portion of the manual.
City staff is often consulted to determine if there are city projects appropriate for CDBG funding.
City staff should also internally determine how much funding will be needed for administrative and planning purposes.
An external request for proposals (commonly referred to RFPs) can be made of specific organizations who serve the community or be targeted at certain types of organizations that provide services or can undertake projects that would meet hig h priority needs. A request for proposals has the flexibility to solicit only a select type of services or can request a broad range of CDBG-eligible services and projects.
THRESHOLD CRITERIA
There are several "threshold criteria" against which any prop osed CDBG activity should be evaluated. These are:
• statutory eligibility
• national objective
• overall low-to-moderate income benefit
• non-supplanting
• priority need
• eligible means
Every activity must also comply with HUD environmental review requirements.
STATUTORY ELIGIBILITY
A proposed activity must fit within the activities described in the CDBG regulations at 24 CFR 570.201 through 570.206. They may not be among those described in 24 CFR 570.207 as "specifically ineligible" even if they otherwise appear to be eligible.
There are six broad categories of eligible activities:
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"Basic eligible activities" (570.201)
"Rehabilitation and Preservation" (570.202)
"Special Community Development" (570.203)
"Special Community Based Development Organizations (CBDO) " (570.204) "Planning, design and capacity-building" (570.205)
"Program Administration" (570.206)
If an activity is being considered that does not fit within the description of eligible activities, it cannot be considered to be eligible. If grantee is uncertain as to the eligibility of an activity staff should consult the local HUD Field Representative as mentioned earlier in the manual. Once discussions are held and a result is produced, staff should document the determination in writing in the form of a formal request for or statement of determination of eligibility.
Another general rule of eligibility is that an activity should be qualified as eligible under the sub section that it best fits. If there is more than one possibility, the most accurate and common sense possibility should be used.
Staff should examine the eligibility of each activity within the context of the specific sub -section under which it is eligible - planning under the terms of 570.205, public services under 570.201(c), etc.
The section regarding specifically -ineligible activities describes three categories of activities for which CDBG may not be used:
Buildings used for the general conduct of government
General government e xpenses (except eligible direct planning and admin and indirect costs allowed under federal rules)
Political activities
The regulations also provide guidance on several categories of activities that are only eligible under specific circumstances or when carried out by specific entities such as:
Purchase of equipment, furnishings and personal property Operating and maintenance expenses
Construction of new housing
Income payments
MEETING A NATIONAL OBJECTIVE
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The proposed activity must be able to meet one of the three National Objectives. In review, these are:
Primarily benefiting low-and moderate-income persons
Preventing or eliminating blight
Addressing an urgent need
See the section "Meeting a National Objective" and the CDBG "Desk Guide" for a more detailed description and discussion of National Objectives. The activity should be reviewed in light of its ability to meet the proposed National Objective.
It is rare that an activity will be proposed that would meet a National Objective other than that of "primarily benefitting low and moderate income persons”. This objective is also known as the "LMI Benefit”.
In the case of meeting the "LMI benefit" National Objective, special attention should be paid to the match between type of activity and the way that the LMI benefit test is met. If the proposal includes a method for determining and documenting LMI benefit, the method should be evaluated for its appropriateness to the particular LMI benefit test being applied and the general efficacy of the method in regards to practice and documentation of results.
Activities that have an area benefit should have the determination of service area and the determination of that area as a low-to moderate-income area documented in the file.
OVERALL LMI BENEFIT
The activity should be evaluated for its potential impact on the requirement that not less than 70% of aggregate CDBG expenditures benefit low-to moderate-income persons.
In general, it is best to only select activities that will or are likely to primarily be nefit low -to moderate-income persons/households. This allows some flexibility should the documentation of income benefit be faulty.
PRIORITY NEED
The activity must meet a priority need identified in the Consolidated Plan. This is why it is important that the Consolidated Plan be comprehensive and broadly define community needs.
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The activity does not need to meet a high priority need to be selected. If it is meeting a need identified as low priority, it is recommended internal discussion be held amongst staff to why it has/should be selected.
If an activity that meets a lower priority need is selected over one that meets a higher priority need the reasons should be clearly documented.
MEANS OF CARRYING OUT THE ACTIVITY
CDBG activities may only be carried-out by the following types of entities:
grantee using grantee employees
grantee through contractors
loans or grants to sub-recipients
public agency
qualified Community-Based Development Organization (CBDO)
In the last three instances, the entities are acting as sub -grantees. Any entity can act as a contractor but only certain entities can be sub-grantees.
The use of contractors must be done following federal procurement rules. The selection of a sub recipient, a public agency or a CBDO (acting as a sub-grantee) does not need to follow procurement rules but should nonetheless be deliberate, fair and transparent. The use of contractors by any type of sub-grantee must' be done following federal procurement rules.
RANKING CRITERIA
In addition to the threshold criteria, each proposed use of funds should be ranked on the quality of the proposal, the feasibility of the proposed project and how well it meets the identified needs of the grantee community.
CAPACITY
The proposed activity should be measured against the capacity of the proposer. The proposer should have a successful background in similar projects of similar scale. If not, how does the proposer plan to create capacity? Review the proposer's level of staff with the skills and experience appropriate to the activity.
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In addition to the capacity to undertake the proposed activity, does the proposer have the capacity to meet the administrative requirements of the CDBG program? Verify they can adequately document income eligibility, maintain records, and provide accurate reports in a timely manner.
A sub -grantee must also have some financial capacity to provide services and meet the administrative requirements of the CDBG grant independent of the grant itself. Does the proposer have other resources?
The proposer should have an organizational structure that assures integrity and internal controls.
Is there an independent governing board? Staff should request and be able to review audited financial statements the proposer.
Finally, the quality of the proposal document and its attachments is revealing as to capacity. Are the proposal requirements accurately and completely met? Are the questions answered? Is the document neat and legible? Does it reflect an organization that will take a sub -award of federal funds with the gravity it should?
SCOPE AND BUDGET
Analyze if the scope of the project is reasonable to accomplish within the CDBG program and within the proposed budget. The scope should be complete in light of the proposed accomplishments.
Verify the budget is complete and it considers all reasonable costs. Review the income assumptions and all funding sources for levels of security.
COST/BENEFIT
Evaluate the potential impact the project will have on the community on a priority need against the overall cost of the project. It is helpful to break down the cost per accomplishment unit. It should be noted that different types of projects will have widely different unit costs.
TIMELINESS
HUD regulations require CDBG funds must be used in a timely m anner. The balance of funds at the end of the program year may not exceed 1.50 times the most recent annual entitlement amount. In the case of pub lic services the annual limit ( 15%) does not rollover. Public services projects that do not use funds in a tim ely manner will impact the overall ability of local CDBG 366
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program to fund other public services. It is recommended that all projects have a time limit after which funds may be re-allocated.
The proposal should be evaluated for how likely it is that funds will be used in the time required.
The proposal should include a schedule for when the project will hit performance milestones and when it will be complete. The proposed schedules should meet deadlines and be realistic.
TRACK RECORD
If the proposer has performed a similar project for the requesting grantee before, how did they do? When applicable, staff should consider previous experience when selecting a proposer.
If they have not done a similar project, have they done other projects for the grantee or similar projects for other grantees/entitlement jurisdictions? How did they do? Ask for references and call them.
LEVERAGE
Analyze how many other sources are being used to fund the project and/or support the proposing agency. Grantees should look for proposals that leverage additional funding sources. When other funding sources are being leveraged, it is recommended staff determine if the outside funds are secure or unsecure.
GENERAL POLICIES
Grantees should also be aware that there are several "special policies" in the regulations that apply to certain uses of CDBG funds. These are:
570.200(b) special policies governing facilities
570.200(c) special assessments under the CDBG program 570.200(d) consultant activities
570.200(j) faith-based activities
570.200(e) lists certain categories of activities that must have a written determination of eligibility made and retained in the file. These local determinations must be documented and retained. It is, however, good practice to do this for all activities.
CDBG PROGRAM GOALS
In the Consolidated Plan and annual Action Plan grantees are required to tell HUD how they will meet several overall CDBG program goals. The program goals are developed to help address the following needs:
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Affordable housing goals including homeless and special needs Homeless needs including shelter, transitional housing and services Special needs populations including the disabled and persons with AIDS Public housing
Anti-poverty
Lead-based paint hazard reduction
Fair housing
Action Plans that do not address these needs, especially fair housing and homelessness, may be questioned by HUD.
PUBLIC SERVICES "NON-SUPPLANTING" RULE
A public service funded by CDBG must be "either a new service or a quantifiable increase in an existing service”. This is known as the "non-supplanting" rule. [570.201(e)] The idea is that CDBG funds should enhance or increase the level of local services provided to low -and-moderate income persons and not provide budgetary relief to local governments. Federa l CDBG funds should not "supplant" local funds.
This rule applies to services that "have been provided by or on behalf of" the grantee using local or state funds. The grantee may not use CDBG funds to "supplant" an allocation of funds or a commitment to provide services that implies an a/location of funds that has been made in the 12 months preceding the submission of the Action Plan.
The grantee may be given an exception to this rule if HUD determines that the decrease in the level of service being made up using CDBG is "the result of events not within the control" of the grantee.
REQUEST FOR PROPOSALS (RFP) CONTENTS AND PROPOSAL REQUIREMENTS
When making a formal request for proposals, also known as an RFP, it is critical that submitted proposals have all the information required to make a decision. It is also important to have standardized responses to facilitate comparison of proposals. (See Appendix for sample RFP)
The request for proposals should include:
Community and program background
When, where, and to whom the proposal should be submitted Who to contact with questions
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Available funds
Eligible use of funds
Contracting requirements
Conditions of funding (e.g., contracting requirements, insurance, monitoring, labor compliance)
Proposal process timeline
Evaluation criteria
When and by whom award decisions will be made
Number of copies, binding, certifications and attachments Proposal contents checklist (forms and attachments)
Instructions for any required forms
The proposal requirements should include:
General information on the applicant and proposal
General description of the proposed project
o Location
o Statement of need and how project will meet that need o Beneficiaries (type, location, and number)
Proposed accomplishments
o Total persons/households
o LMI persons/households
Method to assure eligibility of beneficiaries
Performance schedule with milestones
Discussion of any similar programs or projects
Performance measurement
Organizational structure
o General description of organization
o Governing structure and board members
o Evidence of incorporation and tax status/public benefit status o Articles of incorporation/bylaws
Relevant experience
Staffing
Partners or co-applicants
Budget (program and agency)
Current financial statements
Audited financial statements (if audited)
Leverage
Evidence of insurability
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Governing board authorization to apply and contract if awarded Federal lobbying disclosure (SF-LLL)
Conflict of interest certification (Byrd amendment)
RFP PROCESS
The RFP process begins with publication of the RFP and ends with the award of funds. The steps in between vary somewhat by grantee. What follows are a general description and a suggested process.
PREPARATION
Well in advance of the date when allocation and award decisions need to be made, preparation for the RFP begins. The first step is the schedule. Although it will likely follow the same general schedule from year to year, actual dales may need to be adjusted to accommodate holidays and governing board and/or committee calendars.
The means of publication and distribution should also be decided. If mailing and or e-mailing will be done, a list of addresses should be prepared. There is often interest in the CDBG program expressed throughout the year. A list of intereste d agencies and persons should be maintained year-round in anticipation of the annual planning process.
The RFP documents need to be prepared. This includes notices, the RFP itself, RFP forms, evaluation/ranking forms, governing board and/or committee repo rt templates, award/deny letters and a record-keeping system.
PUBLICATION
The RFP may be widely publicized or narrowly targeted. Many grantees include a notice of RFP in the annual planning notice for CDBG that meets the public participation requirements of the Action Plan. A notice and the RFP itself are commonly sent to recent recipients and previous applicants.
There is no HUD requirement for publication when using sub-grantees. In the case of contractors, formal procurement rules must be followed.
Grantees often publicize the RFP on their website and make RFP materials available via the web.
WORKSHOP AND Q&A
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After the RFP is published, it is recommended the grantee hold a workshop/conference for prospective proposers. This serves several purposes including increasing the likelihood of receiving quality applications, reducing the number of errors, fulfilling the obligation to provide technical assistance to non-profits, and to get an understanding of the interested organizations.
It is important to be available for and to respond promptly to questions regarding the request for proposals. Occasionally an applicant will spot an error in the RFP or have a question that would pertain to the request in general. When this occurs, it is important to publis h a correction, revision or clarification immediately so all interested applicants have equal access to any new information.
If a correction the RFP needs to be made after proposals have already been received, applicants should be given adequate time to r evise in light of the correction. If you are aware of pending applications, it is recommended the applicants be contacted immediately and in person. The correction should be publicized by the same means the RFP was publicized.
Grantees may decide whether or not to accept draft proposals for review and guidance. If this process is elected, it is recommended a deadline be posted for early submission.
SUBMISSION
The proposal should have clear instructions regarding to whom, where, when and how to submit.
Instructions should be given for delivery by USPS, courier or other acceptable means. If electronic submissions are acceptable the format should be specified.
The location for submission should be accessible and the hours noted. There should be a means of assuring that proposal submissions are logged, the proposal is date -stamped and there is a process for acknowledging submission.
EVALUATION AND RECOMMENDATIONS
Each proposal should be carefully evaluated. The first step in the evaluation should be to determine if the application is complete. The grantee should have an established policy in place to address incomplete applications. Generally, a proposal is accepted if it is "substantially complete”. Rejecting a proposal for a minor omission or error might be perceived as punitive and potentially exclusive.
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If a proposal is incomplete or contains an obvious error the applicant should be notified immediately and may be given a deadline to provide the missing component or documentation.
The next step is a cursory review of the application. If there is anything unclear in the application this is the point at which the applicant should have the opportunity to clarify.
The final step is the complete evaluation and ranking of the proposals.
Once proposals have been evaluated and ranked a summary should be prepared for the decision- makers/review committee. This should summarize the proposal and how it aligns with the RFP criteria.
AWARDS
Once decisions are made regarding the award of funds, each applicant should be formally notified in writing in a timely manner.
DOCUMENTATION
The entire proposal and decision -making process should be carefully and completely documented. Complete written records should be retained including original submissions and all records of applicant contact and decision-making. These records should be retained in the annual CDBG file.
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4. CONSOLIDATED ANNU AL PERFORMANCE AND E VALUATION
REPORT (CAPER)
OVERVIEW
This section will deliver a brief, yet detailed summary of the process and requirements tied to the annual performance report required from each jurisdiction that receives funds under a Consolidated Plan program. This yearly report is known by HUD as the " Consolidated Annual Performance and Evaluation Report" or by another commonly used acronym, CAPER.
This report must be submitted to HUD within 90 days of the close date of the grantee's program year. For most jurisdictions (those on a July 1-June 30 program year) this will be September 30 of each year.
HUD is required to review the CAPER and may suspend funding if "a satisfactory report is not submitted in a timely manner”. There is no statutory review period, and it is not uncommon for HUD to lag on getting review letters out by six months or more.
The regulations specify certain contents in the CAPER but provide grantees with little guidance.
Over the years, HUD has provided some guidance on form and content. At this time, the guidance has not found its way into the regulations, nor is it available in a formal guidebook. It is however available on HUD's website www.hud.gov. It has been consolidated and appended to this manual.
Beginning in May 2012, HUD grantees will be able to submit their Consolidated Plan using the Consolidated Plan template in IDIS Online. The Consolidated Plan template will be required for all Consolidated Plans submitted on or after November 15, 2012.
With the incorporation of the Consolidated Plan and Annual Action Plan into IDIS Online, all key elements of the grants management cycle are integrated into a single system. This will ensure consistency a mong the goals described in the Consolidated Plan and Action Plan and the outcomes tracked in IDIS and reported in the Consolidated Annual Performance and Evaluation Report (CAPER), making the Consolidated Plan a more useful management tool.
• Many of the d ata tables within the Consolidated Plan template are pre -populated with the most up -to-date housing and economic data available. The data is provided to help grantees develop their funding priorities in the Strategic Plan and save time in searching out, entering and compiling the data.
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• The Consolidated Plan template is integrated with the CPD Maps tool. Together, the maps and data can help grantees to assess market conditions in many different ways, and to present this information in a clear and compelling fashion.
o The data that pre -populates tables in the template comes from the CPD Maps database, ensuring consistency between the data grantees use to make planning decisions and data that is available to the public;
o Grantees can also insert maps and data fables from CPD Maps throughout the document.
CAPER CONTENTS
The CAPER has several sections of requirements:
• General
• Affordable Housing
• CDBG
• Home Investment Partnership Program (HOME)
• Housing Opportunities for Persons with AIDS (HOPWA)
The general and affordable housing sections must be provided by all grantees despite the source of federal funds received. The other sections only apply to recipients of those respective funding sources. This manual will only discuss the CAPER requirements for CDBG grantees:
Although the regulations call for a repo rt "in a form prescribed by HUD ", there is no specified form for the CAPER. (The Consolidated Plan Management Process tool does provide an optional form.)
GENERAL
The CAPER must discuss the following:
1. Resources made available in the report year
2. The investment of available resources
3. The geographic distribution and location of investments
4. The persons assisted
5. Actions taken to affirmatively further fair housing
6. Other actions taken by the grantee
7. Affordable Housing
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8. Assessment of Three to Five Year Goals and Objectives
9. Continuum of Care (Homeless)
10. Leveraging Resources
11. Citizen Comments
12. Self-Evaluation
13. Performance Measurement
CDBG
Recipients of CDBG must discuss the following in their CAPER:
1. How the activities undertaken and persons/households benefitted related to the priority needs and specific objectives identified in the Consolidated Plan
2. Any changes in program objectives during the report year and future changes that may be made as the result of experiences during the report year
3. Compliance with Consolidated Plan certifications
4. Compliance with National Objectives and overall low and moderate income household benefits ·
5. Anti-displacement efforts (if report year activities involved acquisition, demolition or rehabilitation of real property)
6. Low- and moderate-income jobs (if report year activities involved Community Development)
7. Limited clientele benefit activities/beneficiaries
8. Rehabilitation
9. Activities in Neighborhood Revitalization Strategy Areas and Enterprise Zones/Empowerment Communities
CAPER OUTLINE
As stated earlier, there is no specified form for the CAPER. HUD has provided an optional form as part of the Consolidated Plan Management Process (CPMP) tool and has also suggested that the CAPER follow the format of the "CAPER Checklist”. It is suggested the grantee utilize the following outline for the CDBG CAPER:
• Introduction
• General Narratives
o Highlights of Accomplishments
o Summary of Accomplishments
Table: Progress Meeting 3-5 Year Goals
Housing Activities
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Infrastructure and Public Facilities
Public Services
Planning and Administration
Non-CDBG Housing Activities
o Geographic Distribution of Activities
o Progress Meeting Consolidated Plan Goals and Priority Needs o Actions Taken to Affirmatively Further Fair Housing
o Affordable Housing
o Continuum of Care
o Other Actions
Address Obstacles to Meeting Under-served Needs
Foster, Maintain and Eliminate Barriers to Affordable Housing Overcoming Gaps in the Institutional Structure and Enhancing Coordination Public Housing Needs
Reduction of Lead-Based Paint Hazards
Actions Taken to Assure Compliance
Anti-Poverty Strategy
o Leveraging
o Citizen Participation
o Self-Evaluation
o Plan Amendments
o Implementation of Performance Measurement
• CDBG-specific Narratives
o Priority Needs and Specific Objectives
o Changes in Program Objectives
o Compliance with Consolidated Plan Certifications
o Compliance with National Objectives and Overall Low-Mod Benefit o Limited Clientele Benefit
o Anti-displacement efforts
o Low-mod Income Jobs
o Rehabilitation
o Neighborhood Revitalization Strategy Areas and Enterprise Zones/Empowerment Communities
o Program Income
• Appendices
o Evidence of Public Notice
o Public Comment
o Evidence of Submission to Governing Body
o IDIS Reports
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THE CAPER AND INFORMATION DISBURSEMENT AND INFORMATION SYSTEM (IDIS)
In addition to providing HUD with a written CAPER submission, grantees must report annual accomplishments on -line via the Integrated Disb ursement and Information System , wh ich is commonly referred to as I DIS. Although the statutory deadline of 90 days after the end of the program year does not technically apply to IDIS reporting, HUD has made it clear that reporting in the In tegrated Disbursement and Information System in a timely manner is an obligation of the grantee, including year -end reporting. IDIS will also not allow the reporting of prior year expenditures more than 90 days after the end of the program year.
IDIS reports must be submitted to HUD along with the CAPER narrative report. The required reports are:
All grantees
Summary of Activities (PR03)
• Consolidated Annual Performance and Evaluation Report (PR06) • Summary of Accomplishments Report (PR23)
CDBG grantees
• Rehabilitation Activities (PR10)
• Financial Summary Report (PR26)
There are also reports that provide useful information for the CAPER and that should be pulled and retained as part of the CAPER file. These are:
• HUD Grants and Program Income (PR01)
• List of Activities by Program Year and Project (PR02) • Grantee Summary Activity Report (PR08)
• Drawdown Report by Voucher Number (PR07)
• CDBG Timeliness Report (PR56)
CAPER AND CITIZEN PARTICIPATION [24 CFR 91.105(D)]
The section on Citizen Participation discuss es the general requirements in greater detail. The grantee's adopted Citizen Participation Plan will outline the particular process the jurisdiction has decided to follow.
The grantee does need to provide an opportunity for public review of the CAPER and allow for a public comment period of at least 15 days. Any comments received by the grantee must receive 377
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a response from the grantee. A summary of the comments and the responses must be submitted with the CAPER.
Grantees are required to hold two public hearings each year. Submitting the CAPER to the City Council and holding a public hearing is a convenient way to meet this requirement.
A GUIDE TO HUD GUIDANCE ON THE CAPER
HUD has issued guidance regarding the CAPER over the years. The most current "set" of materials is always available on their website. It is not always easy to navigate for the novice. It has been assembled and appended to this manual.
The most comprehensi ve current guidance is a 21-page document posted on the HUD website titled "Guide for Consolidated Plan Performance Report Narratives”. In February 1998 HUD sent out a formal memorandum, "Consolidated Annual Performance and Evaluation Reporting for Entitlement Grantees for 1997 Program Year ”. This guidance overlaps the previous guidance. It also requires grantees to use IDIS and specifies the IDIS reports that must be included in the CAPER submitted to HUD.
Additionally, in 2003 the San Francisco CPD Offic e published a memo (CPD 04 -16) that offered guidance on the CAPER based on common problems the field office was encountering.
Then on March 7, 2006, HUD published implementing rules in the Federal Register that required all CAPERs submitted after 10/01 /06 to include a discussion of the implementation of performance measures and discuss the program year activities using the performance measurement framework provided by HUD for CPD programs.
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5. SUB-RECIPIENT MANAGEMENT
OVERVIEW
One way of implementing the local CDBG program is through the use of sub -recipients. This section will provide an overview of identifying, selecting, and monitoring a CDBG sub-recipient.
Simply, sub -recipients are sub -grantees of the CDBG grantee. The term sub -recipient has a specific meaning in the CDBG regulations. More specifically, a sub-recipient must be a non-profit public benefit corporation or a public agency. A sub-recipient agreement should be used to pass CDBG requirements to the sub -recipient. The management and overs ight of sub -recipients is a critical task of the entitlement jurisdiction. Using a sub -recipient to implement the local CDBG program does not relieve the original grantee of its responsibilities under CDBG and other federal rules and regulations.
REPORTING REQUIREMENTS
The grantee should establish reporting requirements for the sub-recipient throughout the project term. Sub -recipients should be required to submit quarterly progress reports to the grantee jurisdiction reporting on funding activity, milest ones reached in accordance with the project schedule, and accomplishments.
It is the sole responsibility of the grantee jurisdiction to conduct any sub -recipient audits or reviews necessary by federal rules and regulations. The entitlement jurisdiction is responsible for the preparation of the Consolidated Plan, annual Action Plan, and Consolidated Annual Performance and Evaluation Report (CAPER) using the information collected through any sub recipient reporting requirements established.
MONITORING
It is the responsibility of the grantee to monitor sub -recipients for performance and program compliance. To accomplish this, grantees will have to develop and implement a monitoring strategy. Sub -recipients need to be monitored to ensure activities are bein g carried out in a timely manner, in accordance with federal and other regulations, to ensure productivity, and to ensure that the sub-recipient continues to have the capacity to administer the project or program successfully. Sub-recipients can be monitored through desk reviews or on-site reviews. 379
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DESK REVIEWS
Desk monitoring is a key component of monitoring a sub -recipient's performance on a regular basis without conducting an on-site review. Desk monitoring includes the review of:
Progress reports;
Compliance reports;
Financial information;
Information and material submitted from the sub-recipient regarding the funded grantee.
Desk monitoring is an efficient and effective way to gather additional information regarding any questions, concerns or identified potential problem areas without having to spend staff time with on-site visits. However, on-site visits may be performed because of desk monitoring findings.
ON-SITE REVIEWS
An on-site review allows the jurisdicti on to monitor sub -recipient performance and make sure that record retention requirements are being followed. It also allows for the jurisdiction to identify and address areas of concern with property or sub-recipient facilities. On-site monitoring can include the review of:
Progress reports;
Labor standards documentation;
Requests for payments;
Bid documents;
Contract agreements;
Facilities and projects sites; and
Other project related documentation.
Jurisdictions should also conduct project specific monitoring and should monitor project schedule, accomplishments, and compliance with National Objectives (see Appendix for sample monitoring checklist).
It is recommended that the grantee monitoring schedule allow for all sub -recipients to be monitored once a year. With limited staffing, this is not always possible. In general, sub-recipients who have received funding for the first time should be monitored in the first year. Sub-recipients who have had a history of "clean" monitoring visits and are usually found to be in compliance of 380
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the regulations are candidates for less frequent monitoring. Reports and progress should be regularly reviewed throughout the program year for signs of non-compliance or difficulty making progress.
Sub-recipients who consistently provide complete, well -organized reports, adhere to performance goals and schedules, expend funds in a timely manner and have a history of compliance are can be candidates for desk review.
Sub-recipients who show the following signs of "distress" should be monitored more closely and more frequently:
Incomplete, incorrect, or late beneficiary reports;
Incomplete, incorrect, or late disbursement requests; and/or Falling short of goals or performance timelines.
Sub-recipients who exhibit these "symptoms" may require immediate intervention:
Expenditure of funds on other than the approved scope of work; Failure or refusal to document Low and moderate income household benefit; and/or Failure to make progress and/or request funds more than 6 months after award of funds.
TECHNICAL ASSISTANCE/CAPACITY DEVELOPMENT
Monitoring a sub -recipient is an opportunity to identify any concerns or capacity issues. It also provides an opportunity to offer the sub -recipient technical assistance. Technical assistance should be on-going throughout the project term and include various techniques exercised by the grantee.
To assist in limiting inadequate performance of sub -recipients and to help build capacity, it is recommended the grantee implement occasional orientation sessions and/or application workshops. This type of technical assistance is typically held at the beginning of a funding cycle.
A grantee jurisdiction m ay want to provide technical assistance on a more one -on-one basis rather than in a workshop setting aimed at a larger audience. M eeting with a sub -recipient individually can provide the opportunity for the entitlement jurisdiction to work with the sub recipient on specific weaknesses or to improve performance regarding a particular project underway. It is common for jurisdictions t o utilizes staff time efficiently and provide such technical assistance in conjunction with a monitoring visit.
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MANAGING NON-PERFORMING SUB-RECIPIENTS
When performance problems arise with sub -recipients, it is the responsibility of the grantee to take corrective action. The type and degree of the corrective action will vary with the extent of the problem. It is recommended that any corrective action be measured, incremental, documents and with the goal of guiding the sub -recipient back into compliance. C orrective actions a grantee jurisdiction may consider include:
A letter advising the recipient of deficiencies or performance issues requiring them t o correct any unresolved issues;
Provide technical assistance or training to assist in resolving issues; Implement more reporting requirements the sub-recipient must meet; Conduct more frequent monitoring visits;
Restrict payment requests;
Disallow specific expenses; and/or
Implement a probationary status.
More serious corrective actions that could be impleme nted as a result of unresolved issues or continuous poor performance include:
Suspending the sub-recipient from participation in the program; Terminating the sub-recipient agreement or re-capturing funds; and/or Legal action if necessary.
FORMS
Standard forms may be required by the grantee from the sub -recipient to ensure compliance with HUD requirements. The grantee can create their own forms for application, payment, and reporting purposes. Grantees should always have a sub -recipient agreement or contract as a standard form to be signed by both parties. However, if a sub-recipient agreement or contract is in effect, this does not relieve the grantee from complying with HUD requirements and ensuring that the sub -recipient also stays in compliance. Other standard forms that may be provided to the sub-recipient to submit to the grantee include:
Application forms;
Requests for Payments;
Progress Report forms;
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Monitoring forms; and
Project close-out forms.
RESOURCES
HUD has published several useful guidebooks on sub-recipient management. These are available on the web at https://www.hudexchange.info/programs/cdbg-entitlement/guides/#guides-and- training-manuals.
They are the following:
"Managing CDBG: A Guidebook for Grantees on Sub-Recipient Oversight" "Playing by the Rules: A Handbook for CDBG Sub-recipients on Administrative Systems" "Training CDBG Sub-recipients in Administrative Systems"
The "Playing by the Rules" handbook is particularly useful. Sections of the book and the entire publication are often given to sub-recipients.
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6. PERFORMANCE MEASURES
OVERVIEW
This section of the manual will provide a summary of the grantee's requirements to implement a local performance measurement system. This system should serve as a tool to allow the grantee to collect data, track progress, and report on results in a way that demonstrates the impact of the CDBG program on the community. The performance measurement system should provide the grantee with specifi c beneficiary data and help to determine how well a program is performing in the community and if the program is meeting proposed goals.
The implementation of the outcome performance measurement system and its use by grantees will enable HUD to collect information on the outcomes of activities funded with Community and Planning Development formula grant assistance. This data will be entered into the Integrated Disbursement and Information System (IDIS) and will be aggregated at the national level to provide HUD with the information necessary to show the national results and benefits of the expenditure of federal CDBG funds.
HUD has issued guidance on the required components of a local performance measurement system with the goal of providing standardized performance data to the federal government.
The three components of a performance measurement system are:
1. Objectives;
2. Outcomes; and
3. Indicators.
OBJECTIVES
Objectives are based on the statutory objectives for the CDBG program. Objectives are broad categories to capture the range of community impact an activity, program or project might have.
CREATING A SUITABLE LIVING ENVIRONMENT
This objective is designed for activities that will benefit communities, families, and individuals by addressing issues within their living environment. This objective relates to a wide range of issues faced by low-and-moderate income persons from poor infrastructure to social issues.
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PROVIDING DECENT HOUSING
This objective covers a wide range of housing activities meant to meet individual family or community housing needs.
CREATING ECONOMIC OPPORTUNITIES
This objective is designed for activities that will assist with Community Development opportunities, commercial revitalization, or job creation.
OUTCOMES
The outcome component helps to further refine the objective the grantee chose for the activity and is designed to identify the expected result of the objective. Outcomes assist in describing the expected impact of the activity on the community.
AVAILABILITY/ACCESSIBILITY
This outcome will be chosen for activities that will make services, infrastructure, public facilities, housing, or shelter available or accessible to low-and-moderate income persons.
AFFORDABILITY
This outcome applies to activities that will provide for affordability in a variety of ways to low and-moderate-income persons. Activities under this outcome could include the creation or maintenance of affordable housing, infrastructure hook -ups, or specific services that are to be affordable such as transportation.
SUSTAINABILITY
Activities falling under this outcome have the purpose of improving communities or neighborhoods, and assisting in making them livable by providing benefit to persons of low -and moderate-income, removing slum and blight and sustaining communities and neighborhoods.
INDICATORS
Once the grantee has established program objectives and intended results (outcomes), the grantee will establish a means of measuring progress towards achieving those results. Indicators are already determined by HUD and inputted into the Integrated Disbursement and Information 385
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System (IDIS). Grantees are required to report on indicators that are applicable to the specific activity being carried out.
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7. ELIGIBLE ACTIVITIES
OVERVIEW
This section will discuss the most commonly -undertaken activities and some of the common issues with each. Like previous sections of the manual, this one is not intended to act an exhaustive review of or sole resource for eligible activities.
There are six broad categories of eligible activities:
1. “Basic eligible activities" (570.201)
2. "Rehabilitation and Preservation" (570.202)
3. "Special Community Development" (570.203)
4. "Special Community Based Development Organizations (CBDO)" (570.204)
5. "Planning, design, and capacity-building" (570.205)
6. "Program Administration" (570.206)
a. "Basic eligible activities" include:
acquisition of real property
disposition of real property
public facilities and improvements
clearance and remediation
public services
interim assistance
payment of non-federal share
urban renewal completion
relocation and relocation assistance
housing services
privately-owned utilities
construction of housing
home ownership
Community Development
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technical assistance
assistance to institutions of higher learning
b. "Rehabilitation and Preservation" includes:
rehabilitation of residential structures
rehabilitation of public housing
rehabilitation of commercial or industrial structures code enforcement
historic preservation
renovation and re-use of closed buildings
lead-based paint activities
c. "Special Community Development" includes:
acquisition, construction of or improvements to structures and real property
business assistance
Community Development services
d. "Special Community Based Development Organizations (CBDO)" includes:
Neighborhood revitalization project
Community Development project
Energy conservation project
Directly carries out project activity funded by CDBG
e. "Planning, design and capacity-building" includes:
Planning activities
Policy management
Markel studies
Strategies and action plans
Analysis of Impediments to Fair Housing Choice
f. "Program Administration" includes:
Salaries, wages and other costs of staff
Travel costs
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Third party administration costs
Goods and services
PUBLIC FACILITIES AND IMPROVEMENTS [570.201(C)]
In general, public facilities or improvements may be acquired, constructed, installed or rehabilitated.
The grantee or any public, private or non-profit entity may undertake the activity.
Public facilities for the general conduct of government may not be assisted [570.207(a)]. The one exception is the "removal of architectural barriers" to the elderly and severely disabled persons.
There has been a great deal of contusion and misunderstanding about this exception. It you are thinking about doing this, consult the Desk Guide and your HUD rep.
The construction of "facilities" that serve to shelter or house persons with special needs are not subject to the prohibition on constructing new housing with CDBG. This includes those that serve the homeless, seniors, the disabled, victims of domestic violence, addicts and alcoholics, drug offenders and parolees, "retarded" persons and victims of federally-declared disasters.
When a facility has both ineligible and eligible uses, there are special rules that apply to assistance [570.200(b)]. The eligible use area or component must be "separate and distinct" and the cost of assistance attributable to that area or component can be clearly determined. The CDBG share of costs must be limited to the costs attributed to the eligible use.
Fees for the use of facilities assisted with CDBG may be changed but they may not have the effect of restricting low and moderate income persons from using or accessing the entire facility. They must be nominal or waived for low and moderate income persons.
PUBLIC SERVICES [570.201(E)]
Public services are broadly defined in the regulations. Generally, the direct costs of providing a service are eligible including the costs of labor, supplies and materials. The purchase of equipment is generally ineligible and problematic when it can be made eligible. Indirect costs can be allowed but they must comply w ith federal rules for cost allocation [2 CFR Part 200, Subpart E – Cost Principles].
Public services include (but are not limited to) those concerned with:
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Employment;
Crime prevention;
Child care;
Health;
Drug abuse prevention and treatment;
Education;
Fair housing counseling (general fair housing education is not a public service); Energy conservation
Welfare (excluding income payments);
Home buyer down payment assistance; and
Recreation.
The beneficiaries of public services may "attest" or "self-certify" as to low- and moderate-income status.
HOUSING
The HUD regulations allow entitlement jurisdictions to allocate CDBG funds toward privately own single- family residences. More specifical ly, grantees can develop first -time homebuyer assistance products for low and moderate income families and can create single -family rehabilitation programs to assist privately owned residences address emergency needs.
HOUSING SERVICES
HOME PURCHASE ASSISTANCE
There are several ways that CDBG can be used to assist home ownership as a housing activity 570.201(n).
Direct down-payment assistance (up to 50% of required down-payment); Payment of reasonable non-recurring closing costs;
Principal write-down;
Interest buy-down; and
Mortgage guarantees and mortgage insurance (PMI, FHA, or VA).
Home purchase can also be undertaken as a public service under 570.201(e) or by a Community Based Development Organization. Done this way, there are far fewer limitations on the use of funds. However, the 15% cap on public services would apply. 390
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It can also be done within a Neighborhood Revitalization Strategic Area ( NRSA). See the section on NRSAs for more detail on forming a NRSA. A few of the issues are:
A Community Bas ed Development Organization providing homeownership assistance within an NRSA under 570.201(e) is exempt from the public services cap. Non-low and moderate income households may be assisted since the low and moderate income test is met on an area basis within the NRSA.
When determining eligibility, the income of the entire household is examined. Income eligibility must be documented using third party verification.
SINGLE FAMILY OWNER-OCCUPIED HOUSING REHABILITATION 570.202
The rehabilitation of owner-occupied single-family homes is one of the most commonly -funded CDBG activities. CDBG allows a variety of approaches to program design and type of assistance.
Programs ca n be focused on single issues (e.g., roof repair, heating, weatherization) or be comprehensive. Assistance can be in the form of grants or loans and there is no long -term affordability requirement.
Eligible costs are generally the labor and materials to complete the work. Related "delivery costs" are also eligible. These are the costs to provide assistance to the home owner. These include but are not limited to:
Energy audits;
Inspections to determine scope of work;
Appraisal;
Title and recording;
Loan or grant document preparation;
Work specifications;
Bidding;
Construction management; and
Assistance to the homeowner.
If acquisition is being done along with rehabilitation, the costs of acquisition are also eligible.
Eligible work includes:
Repair of deferred maintenance;
Repair or replacements of major systems;
Weatherization;
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Installation of safety and security equipment (such as deadbolt l ocks, smoke detectors, fire escape ladders [burglar alarms are not generally considered to be eligible]); Abatement of asbestos hazards;
Addressing lead-based paint hazards;
Insulation and energy efficiency including solar energy equipment; Water conservation equipment and devices;
Connection to municipal water supply or sewer systems; and Accessibility.
In general, the costs of general property improvements should be limited to those made necessary by other work and limited in overall scope. For example, painting would be funded only if repairs were being made to the exterior or if required to protect the exterior.
The grade of finishes should be the most basic possible while still assuring durab ility. The occupants of the household should be considered when making this determination. For example, vinyl flooring and wainscoting in the traffic areas would be reasonable for a wheelchair user. The cost of "luxury" finishes can be considered reasonable and eligible when replacing a portion with a similar grade would be less than replacing the entire finish with a lesser grade or in the interest of historic preservation.
Equipment, furnishings and appliances are not eligible unless they are integral to the structure and meet a basic need. Stoves, ovens, cook tops, disposers, dishwashers, refrigerators and built in microwaves are eligible. "Portable" items such as clothes washers, dryers, televisions, space heaters are not eligible. "Luxury" items such as trash compactors and water softeners, and freezers are not eligible. In general, the most basic grade and smallest adequate capacity should be specified.
Enlargement of living spaces other than to address over -crowding is also not generally eligible.
Second units may not be constructed or rehabilitated.
The repair or construction of accessory structures is not generally considered to be eligible. Two common exceptions are structures and improvements related to accessibility improvements for the elderly and severely disabled.
There are many considerations when designing a housing rehab program. While t he scope is beyond this document, t here are a number of good references available. The use of lump sum draw downs, revolving loan funds and escrow accoun ts are key financial tools to understand when creating a housing rehabilitation program. See the Financial Management section for more information.
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When determining eligibility for single-family rehabilitation, the income of the entire household is examined. Income eligibility must be documented using third party verification.
Accomplishments for single-family rehabilitation are reported in housing units assisted.
CODE ENFORCEMENT [570.202(C)]
The CDBG program considers code enforcement to be a "rehabilitation and preservation" activity. Code Enforcement programs funded with CDBG funds is intended to arrest the decline of primarily residential areas which have been deemed deteriorated of deterio rating. CDBG - funded code enforcement activities are designed to enforce the Lynwood Municipal Code, California Fire Code, Los Angeles County Health and Safety Code, California Building Code, and Uniform Housing Code through inspections for code violations and enforcement of the codes.
The following examples of violations that reflect deteriorated of deteriorating conditions:
Overgrown vegetation;
Dead, decayed, diseased or hazardous trees;
Weeds or vegetation that may harbor rats or vermin and may be fire hazard; Abandoned, wrecked, dismantled or imperative vehicles; Illegal storage or storage for an unreasonable period of time; Keeping animals, reptiles or insects that pose a threat, disturbance danger or menace to person or property;
Attractive nuisances including unprotected and/or hazardous pools, ponds, refrigerators or excavations;
Garbage or trash can or containers that cause offensive odors or visible blight; Overflow of sewage or grease from clogged sewer lines; Maintenance of premises in such manner as to constitute a danger to public health; Structures or buildings with unpermitted construction and/or are unsafe, constitute a fire hazard, or have faulty weather protection;
Structures or buildings that have not been completed within a reasonable period of time, that are unoccupied and unsecure or are marked or defaced with spray paint or dye; Illegal signs;
Fences or walls which violate zoning regulations;
Maintenance or establishes a prevalence of depreciated values; and Allowing an unlawful condition or activity to exist in a structure.
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A neighborhood area is deemed to be deteriorating if it is in a low - or moderate-income census tract block group and 50% or more of hous ing units are built prior to 1960 or ten (10) to 25 percent of residential properties exhibit conditions of deterioration. In accordance with 24 CFR 570 Part 208(b)(1)(ii)(A), an area is deemed deteriorated, and eligible to qualify under slum and blight when outside of a low - and moderate- income area, if at least 25 percent of residential properties in the area experience one or more of the conditions which define deteriorated or deteriorating based on local standards. To address issues related to housing units that share common areas which may exhibit conditions of deterioration, a property is defines as a residential parcel of land which may include one or more housing units. The City is reasonable for delineating an area deemed to be deteriorated or dete riorating under State or local law and the City is responsible for maintaining documentation on the boundaries of the area and the conditions which qualified the area at the time of it designation [24 CFR 570 Part 208(b)(1)].
CDBG-funded code enforcement activities must not only be restricted to primarily residential areas deemed to be deteriorated or deteriorating but operated in areas where code enforcement along with improvements to the area, such as those provided through a housing rehabilitation program, may be expected to arrest the decline of the area [24 CFR 570 Par t 570.202(c)].
Furthermore, these activities must also meet a National Objective, such as an activity benefiting low- and moderate -income persons and the benefits of the program are avail able to all the residents in the area [24 CFR 570 Part 208(a)(1)(i)], or in designated slum or blight areas.
Areas designated as slum and blight areas as defined in these guidelines are also eligible under the CDBG Slum and Bright National Objective. The City will re -assess the areas within the City every five years, in correspondence with the completion of the Consolidated Plan to again identify census tracts and block groups delineated as deteriorated and deteriorating. At the time the City will also assess these areas to identify the degree to which programs like the City’s HOME funded housing rehabilitation program has served to arrest the decline in these areas as a result of deteriorated or deteriorating conditions.
SERVICE AREA
The CDBG funded Cod e Enforcement Program provides for code enforcement services in the City’s primarily low- and moderate-income neighborhoods that are residential and deemed to be deteriorating and deteriorated. Any excluded areas that are not deemed to be deteriorated or deteriorating are identified in the table by census tract/block group and by low/moderate percentage identifying eligible areas under the Low-Mod Income National Objective. Therefore, the beneficiaries of the Program are the City’s primarily low - and moderate-income residents who reside in the census track/block groups.
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MARKETING AND OUTREACH
Code enforcement activities are predominantly conducted as a complaint -based code enforcement program. Code enforcement officers are regularly working in the City’s low- and moderate-income and slum and blighted neighborhoods that are deemed to be deteriorating or deteriorated to ensure that the City’s applicable codes as they related to primarily residential areas are under compliance.
CLIENT TRACKING AND CODE COMPLIANCE PROCESS
The program beneficiaries are the residents within the defined code enforcement service area.
However, the performance measure for this Program is the number of properties served and violation abated by the CDBG-funded code enforcement activities.
Below is a summary of the code compliance process for all cases:
1. Initial Complaint (Initiated by City resident property owner or City Staff) A case is opened and the report violation(s) is documents in the Code Enforcement data base when a compliant is received via telephone, email, or at the public counter.
2. First Inspection (Inspect and verify violation field inspection) Seek voluntary compliance with property -owner within established time frame through an issued written notice. Minor viol ations may warrant only a verbal notice, while some more serious violation may result in the issuance of a citation instead of a warning notice.
3. Re-Inspection
If Compliance is not achieved, a second notice is issued. If no effort to abate the violations have been made or a time frame for compliance has not been established with the code enforcement officer, a re -inspection fee will be issued for cost recovery or citation may be issued.
4. Public Hearing
In extreme cases, the Code Enforcement Manger will rev iew the case to determine if it should be heard by City Council at a public hearing. A formal Order to abate the violation will be presented to the property owner.
5. City Prosecutor
If compliance is not achieved, the case will be forwarded to the City Pros ecutor upon referral by the Code Enforcement Manager . In extreme cases compliance is sought 395
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through an office conference with the property owner. If compliance is not achieved, the City Prosecutor will prosecute the case or file for Receivership.
COMMON VIOLATIONS
The most common violations that are addressed through the Code Enforcement Program include:
Overgrown vegetation
Weeds
Trash cans in public view
Unpermitted vegetation in parkway
Lack of live landscaping
Imperative vehicle
Trash and debris
Temporary/Non-fire-retardant canopy structures
Garage conversion (Unpermitted use)
Outdoor storage in public view
Excessive pavement
Illegal construction
Cloths drying in public view
Unpermitted fencing material
Faulty weather prot ection – (Weathered and peeling paint, missing screens, broken windows, missing vent covers, leaking roof, gaps around doors, etc.) Lack of address display
Obstructing access to off-street parking
Fences in disrepair
Vehicles parked on unpaved surfaces
Holiday lighting in excess of 90 days
ELIGIBLE CDBG PROGRAM COSTS
Code Enforcement personnel charge time to the CDBG Program for activity tied to eligible low - and moderate -income or slum and blight primarily residential neighborhoods that are deteriorated or deteriorating within the City. Code Enforcement activities conducted outside these eligible areas are charged to the City’s General Fund.
FAIR HOUSING
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Fair housing is one of the few activities that can be categorized as either a public service [570.201(e)] or conducted as an eligible planning and administration activity [570.207]. There are several reasons a grantee should choose one over the other.
Because fair housing can be administration or public service, it can "fit" under either annual obligations "cap”. It can also be split across the two caps.
There are also certain fair housing activities that clearly benefit low and moderate income persons such as advising persons of their fair housing rights or counseling them to resolve a fair housing dispute and others that fall more into the grantee meetin g its general obligation to further fair housing (e.g., publications, surveys, analysis of impediments).
When conducting fair housing as a public service, the grantee should be thinking of how the level of low- and moderate-income benefit will be determined and the potential impact of the fair housing activity' s impact on the overall low- and moderate-income benefit. If it is not clear how low- and moderate-income persons will benefit it may be best to undertake the activity under planning and admin.
HOMELESS
The homeless may be served several ways using CDBG:
Services that benefit the homeless
Services that serve to prevent homelessness
Construction of shelters
Operation of shelters
Construction of housing for the homeless (by a Community Based Development Organization)
Cases of services that benefit the homeless or prevent homelessness, or the operational costs of a shelter, fall under p ublic services and under the 15% allocation cap. Homeless persons are a "presumed benefit" population. If the person attests to being homeless, the LMI test is met.
Construction of shelters or the conversion of existing non -residential structures to shelters is eligible under public facilities 570.201(c) as are transitional housing facilities,
Conversion of existing residential structures into shelter or transitional housing is eligible under rehabilitation.
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The construction of new permanent supporting housing (not conversion of existing) is eligible as a Community Based Development Organization activity.
PROGRAM ADMINISTRATION [570.206]
CDBG allows for the entitlement grant to pay for the reasonable administrative costs associated with the planning and implementation of CDBG -funded activities and the overall local CDBG program. This includes reporting, compliance, monitoring, record -keeping, accounting , and annual planning.
Costs associated directly with carrying out eligible activities are eligible under those activity categories.
The costs of program administration include but are not limited to:
Salaries, wages, and related costs;
Travel;
Third-party services;
Equipment and overhead:
Public information, public notice, publication;
Fair housing;
Indirect costs;
Preparation of the annual CDBG submission;
Preparation of other applications for federal funds; and Program management costs associated with a federally-designated Empowerment Zone or Enterprise Zone or with the federal HOME Investment Partnership Program.
PLANNING/CAPACITY BUILDING [570.205]
Although program administration (570.206) and planning/capacity building (570.205) are both under the "planning and administration" cap, they are distinct in the regulations. The difference is academic.
Eligible costs are those associated with:
Data gathering;
Studies;
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Analysis;
Preparations of plans; and
Identification of actions to implement plans
Eligible planning activities include, but are not limited to:
Housing needs;
Land use and design;
Community Development;
Parks;
Floodplain and wetlands management;
Environmental studies (not associated with a CDBG-funded project); and Analysis of impediments to fair housing choice.
Please note these activities are not required to meet a National Objective but should further the CDBG program goals.
A NOTE ABOUT PRESUMPTION AND OVERALL LOW AND MODERATE INCOME (LMI) BENEFIT.
It is certainly acceptable to have every beneficiary of a presumed benefit activity self -certify as to membership in that class. It is also acceptable to have every beneficiary of an LM -LC activity self-certify that their income is below a certain level. The danger is that you as the grantee will not have an accurate picture of overall LMI benefit if you do not collect income data. You will not have an accurate picture of the population you are actually benefitting.
CDBG-FUNDED ACTIVITY
The City of Lynwood will use its CDBG Program funds for the following program:
CDBG Housing Rehabilitation Emergency Grant Program: The intent this housing is to provide financial assistance to low- and moderate-income owner-occupants of detached single-family homes for the preservation of decent, safe, and sanitary housing; to correct hazardous structural conditions; to make improvements considered necessary to eliminate blight; and, to correct building and health code violations by awarding emergency grants. All property to be repaired must be eligible residential property located within the city limits of the City of Lynwood.
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CDBG Housing Rehabilitation Emergency Grant Program grants are available to homeowners requiring emergency repairs estimated to cost $25,000 or less, provided that the homeowner has not previously received a program grant.
In order to participate, family income may not exceed those listed in the table below.
Family income includes all income from ALL adults living in the property to be repaired.
2021 ELIGIBILITY INCOME LIMITS FOR CDBG FUNDED PROJECTS Effective June 1, 2021
Household Size Moderate Income
80% of Area Median
1 $66,250
2 $75,700
3 $85,150
4 $94,600
5 $102,200
6 $109,750
7 $117,350
8 $124,900
Based on the 2021 Median Family Income for Los Angeles County of $80,000 400
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8. MEETING A NATIONAL OBJECTIVE
OVERVIEW
This section of the manual will provide staff with a more in -depth understanding of the three CDBG National Objectives as determined by HUD. As mentioned earlier in the manual. there are specific criteria that must be met in order for the activity to be eligible for CDBG funding including benefiting low -and moderate-income persons, preventing or eliminating blight, or addressing urgent needs. An activity that fails to meet the criteria set forth in 24 570.209 of the C ode of Federal Regulations (CFRs) will be in non-compliance with CDBG rules.
LOW-AND-MODERATE INCOME BENEFIT [570.209(A)]
To meet the low -and moderate- income national objective the activity to be undertaken must benefit persons that are at or below 80% of the area medium income (AMI) for the area where the activity is taking place. The area median income is calculated and determined by HUD and available on the HUD website (www.hud.gov). An activity can qualify under this national objective as a direct benefit or as a benefit on an area basis. As a direct benefit, the activity will directly benefit a low-and moderate-income person, such as a housing rehabilitation activity. Benefit on an area basis or low -and moderate-area (LMA) benefit. refers to activities that will benefit all persons in that area and not just low-and moderate- income persons. In cases such as these, the targeted area where the activity will take place must include at least 51% low-and moderate- income persons. An example of an activity qualifying under the low -and moderate area benefit would be infrastructure activities such as water/sewer lines.
LOW AND MODERATE AREA [570.209 (A)(1)]
The low-and moderate-area (LMA) objective is designed for activities undertaken in a primarily residential area that will benefit all residents and not just low-and moderate-income persons.
TARGET AREA
The target area is defined as the service area proposed where the activity will take place. The service area must be the entire area served by the activity and cannot be defined only by a particular low-and-moderate income portion that is part of the target area. For example, if the activity is a grocery store, the target area must include all residents that will benefit from that grocery store and not just low-and-moderate income residents. 401
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QUALIFYING THE TARGET AREA
Low-and moderate-area benefit of a specific service area must meet the criteria of qualifying as at least 51% low -and moderate -income households. A grantee may use HUD census data providing low-and moderate -income percentage information for each census tract and block group within the jurisdiction to determine if the service area qualifies. Often, a service area may not be coterminous with the census tracts or block groups defined by HUD. In this case the grantee can conduct a survey of the determined service area to confirm that the area is 51% low- and moderate income.
UPPER QUARTILE
In some ins tances, HUD will make an exception to a low-and moderate-area activity having to meet the criteria of having at least 51% low-and moderate-income persons within the determined service area. If the degree of concentration of low -and moderate-income persons within the service area is considered the highest quartile of low -and moderate-income persons of all areas within the community, there may be an exception to qualifying the activity under the 51% criteria. HUD will determine the lowest proportion a grantee may use to qualify an area based on the upper quartile exception.
LIMITED CLIENTELE [570.209(A)(2)]
Limited clientele activities are designed to benefit particular groups of people within the proposed service area rather than everyone. Limited clientele activities still must meet the 51% low-and moderate-income criteria. To meet the limited clientele objective one of the following tests must be met:
• Benefit clientele who are presumed by HUD to be low -and moderate -income persons including:
o Abused children;
o Elderly persons;
o Battered spouses;
o Homeless persons;
o Severely disables adults;
o Illiterate adults;
o Persons with AIDS; and
o Migrant farm workers.
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• Require information on family size and income to evidence that at least 51% of the clientele are low-and moderate-income;
• Have the activity be of a nature and location that it can reasonably be presumed that the beneficiaries are low-and moderate-income; or
• Be an activity that will remove architectural or material obstacles to improve accessibility for the elderly or severely disabled as determine by HUD.
LOW- AND MODERATE-INCOME HOUSING
The low- and moderate-income housing objective is designed to ensure that an activity assisting in the acquisition, construction, or improvement of permanent residential housing benefits low and moderate-income persons directly. To qualify under this objective the activity must result in housing that is occupied by low -and moderate -income persons. The housing can be owner occupied or renter occupied can be single family housing or multi-family housing. Rental housing must be occupied at affordable rents. Occupancy qualifying criteria includes:
• Single unit structures must be occupied by low-and moderate-income persons; • Two-unit structures must have at least one occupant that is low -and moderate-income; and
• More than two units must have at least 51% of the units occupied by low-and moderate income persons.
LOW- AND MODERATE-INCOME JOBS
This objective is meant to assist with Community Development activities that intend to create or retain permanent jobs of which at least 51% are held by or available to low - and moderate- income persons.
ELIMINATION OF SLUM AND BLIGHT
This National Objectives include activities which help to prevent or eliminate slums or blighted conditions. These activities must meet the criteria of one of the three following categories:
• Prevent or eliminate slum and blight on an area basis; • Prevent or eliminate slum and blight on a spot basis; or • Be in an urban renewal area.
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URGENT NEED
Use of this National Objective is rare. It is designed only for activities that alleviate emergency conditions. Urgent need activities must meet the following qualifying criteria:
• The existing conditions must pose a serious and immediate threat to the health or welfare of the community;
• The existing conditions are of recent origin or recently became urgent (generally within the last 18 months);
• The recipient is unable to finance the activity in its own; and • Other sources of funding are not available.
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9. FINANCIAL MANAGEMENT
The City of Lynwood will comply with the following financial management requirements:
FINANCIAL MANAGEMENT (2 CFR 200.302)
1. Compliance with Applicable Laws and Award Terms
a. The City will expend and account for all federal awards in accordance with local laws and procedures that govern the City’s own funds . The City’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to:
i. Permit the preparation of reports required by the terms and conditions; ii. Track expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.(see 2 CFR 200.450)
2. The City’s financial management system must include the following (2 CFR 200.334 – 2 CFR 200.337):
a. Identification of Federal Awards
i. Identification of all Federal awards received and expended and the Federal programs under which they were received.
ii. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
b. Financial Reporting Accuracy
i. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in 2 CFR 200.328 and 2 CFR 200.329.
ii. If the City does not maintain its records on an accrual b asis and a federal agency or pass-through entity requires reporting on that basis, the City will develop the necessary accrual data using reasonable estimates based on existing documentation, rather than adopting a new accrual accounting system.
c. Recordkeeping and Documentation
i. Maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records will contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records will be supported by source documentation.
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d. Internal Controls and Asset Management
i. Establish and maintain effective control over and accountability for all funds, property, and assets. The City will safeguard all assets and ensure they are used solely for authorized purposes. See 2 CFR 200.303. e. Budgetary Oversight
i. Conduct comparisons of expenditures with budget amounts for each Federal award.
f. Federal Payment
i. Implement written procedures for the drawdown, disbursement, and management of federal funds in compliance with 2 CFR 200.305. g. Cost Allowability Review
i. Apply written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award
OVERVIEW
This section will cover the financial responsibilities of a grantee when funds are requested, money is committed, and drawn downs occur. It is important for entitlement jurisdiction staff to understand the process and regulations tied the CDBG program even after they are committed to a specific activity or project through a contract or agreement.
Policies Regarding Cash Management
All payments under City of Lynwood’s Federal programs will be on a reimbursement basis, AFTER costs have been incurred. No cash advances will be allowed. Reimbursements will not exceed actual cash outlays.
All payments to sub-recipients and for in-house activities will be monitored for compliance with federal regulations and applicable 2 CFR Part 200 requirements. Prior to payment, sub-recipient requests for program funds shall be properly evaluated. The following will be monitored:
a. Bi-weekly employee timesheets
b. Payroll records
c. Cost per capita served
d. Portion of clientele served that is low-income
e. Eligibility of activity
f. Allowable costs
g. Non-Federal funds leveraged (if applicable)
h. Proper allocation of costs to City of Lynwood
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Drawdown of federal funds through federal reporting system is subject to review and approval by Finance staff. Variances between expected and actual cash disbursements of federal awards and drawdowns of federal funds are reported to an appropriate level of management.
Since federal funds will only be provided on a reimbursement basis, it is anticipated that no interest earnings will accrue to the City or to sub-recipients. In the unlikely event interest earnings on federal funds are accrued, they must be paid back to that federal department.
Program income funds will be generated primarily by housing rehab loan repayments and occasionally, housing development activities. Program income received by the City must be deducted from reimbursement requests before drawing down entitlement grant funds.
The federal financial reporting system is capable of scheduling payments for accounts payable and requests for funds from Treasury that enables the City to avoid a time-lapse between drawdown of funds and the actual disbursement of funds. Lynwood’s accounting program, shall be reconciled by the following steps:
1) Invoices are received by Finance Department via email, mail, etc. 2) Twice per month, invoices are coded by purchase order accounting number (account waiting for the money so accounts payable will know where to take it from), where money has been allocated to those activities; codes by stamping invoice with stamp that includes: vendor number, PO # dollar; after filling out info on stamp, it goes to finance; 3) At the end of the month all expenditures are totaled and drawdowns for the particular activities are reported to the Government agency; Finance Analyst reviews drawdowns for accuracy and compiles data in a spreadsheet
4) One Community Development Grants Consultant inputs drawdowns into IDIS 5) The Director of Administrative Services (or Designee) approves vouchers in federal system
Staff will carry out periodic independent evaluation (e.g., by internal audit, top management) of entity cash management, budget and actual results, repayments of excess interest earnings, and federal drawdown.
Procedures for Reflecting Prior Period Adjustments and Accruals
In preparation of the CAPER, City staff review the following reports:
- PR09- Program Income Details by Fiscal Year and Program (report generated by IDIS) - PR26- CDBG Financial Summary Report (report generated by IDIS) - Analysis of CDBC Funds- City of Lynwood Sources & Uses of Funds spreadsheet (report generated by the City's Consultant)
Director of Administrative Services or Designee reconciles discrepancies between the IDIS reports and the City's Budget and makes the ne cessary adjustments in the PR26 report. These adjustments are explained as Notes to the PR26, which is included as an appendix to the CAPER.
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Policy Regarding Rebates, Refunds and Credits to Federally Funded Programs
All rebates, refunds, and credits to HUD CPD programs will be properly reported. Bid bond forfeiture funds that are not offset by additional costs to select another bidder will be credited to HUD CPD programs at their pro-rata share.
Procedures for Evaluating Travel and Training Costs Charged to the CDBG Program
All travel and training expenses charged to the HUD programs must be approved by the Community Development Manager or a Department Director. Prior to approval, travel and training expenses are evaluated based on the following criteria:
- Compliance with 2 CFR 200.472
- Applicability/relevance to CDBG program goals and objectives - Eligibility under Federal programs
- Within the allocated budget for that program
Procedures for Allocating and Documenting Personnel Costs Charged to CDBG Admin Account
1. Personnel costs charged to HUD programs will follow Section 200.430, of 2 CFR 200.
Prior to the beginning of the fiscal year, City of Lynwood Gate Staff and the Community Development Director will evaluate available funding as well as the Admin workload, scope of work and staffing assignments. This evaluation will produce an estimate of staffing needed including percent allocation of each Admin staff member's time dedicated to HUD Programs. These allocation factors will be noted on the employee's action form and transmittal to the City Payroll Department for the affected employee. Compensation (including salary and benefits, if eligible) will be allocated accordingly to the Admin account.
2. All employees whose compensation is charged to Admin will maintain bi weekly timecards documenting the number of hours charged to various programs.
Timecards will represent an after-the-fact distribution of the actual activity of each employee and will account for the total activity for which the employee is compensated. Time cards will be signed by the employee and approved by their Supervisor.
3. Admin staff will conduct a quarterly reconciliation to confirm that employee timecards are consistent with actual time charged to HUD-funded programs. If inconsistencies are found, the costs charges to HUD-funded programs will be adjusted.
Procedures for Allocating and Documenting Personnel Costs Charged to CDBG Rehab Account
1. Personnel costs charged to the Housing Rehab program will follow Section 200.430, of 2 CFR 200 (including CFDA 14.218 Part Ill)
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2. Prior to the beginning of the fiscal year, City of Lynwood staff and the Community Development Director will evaluate available funding as well as the Rehab work loan, scope of work and staffing assignments. This evaluation will produce an estimate of staffing needed including percent allocation of each Rehab staff member's time dedicated to Rehab. These allocation factors will be noted on the employee's action form and transmittal to the City Payroll Department for the affected employee. Compensation (including salary and benefits) will be allocated accordingly to the Rehab account.
3. All employees whose compensation is charged to Rehab will maintain bi-weekly timecards documenting the number of hours charged to various programs. Time cards will represent an after-the-fact distribution of the actual activity of each employee and will account for the total activity for which the employee is compensated. Time cards will be signed by the employee and approved by their Supervisor.
4. Rehab staff will conduct a quarterly reconciliation to confirm that employee time cards are consistent with actual time charged to Rehab programs. If inconsistencies are found, the costs charged to HUD-Rehab programs will be adjusted.
Procedures for Allocating and Documenting Personnel Costs Charged to CDBG Microenterprise Activities (18-305-300)
1. Personnel costs charged to the CDBG Microenterprise program will follow Section 200.430, of 2 CFR 200 (including CFDA 14.218 Part Ill)
2. Prior to the beginning of the fiscal year, City of Lynwood Community Development staff and the Community Development Director will evaluate available funding as well as the CDBG Microenterprise workload, scope of work and staffing assignments.
This evaluation will produce an estimate of staffing needed including percent allocation of each CDBG Microenterprise staff member's time dedicated to CDBG Microenterprise. These allocation factors will be noted on the employee's action form and transmittal to the City Payroll Department for the affected employee.
Compensation (including salary and benefits) will be allocated accordingly to the CDBG Microenterprise account.
3. All employees whose compensation is charged to CDBG Microenterprise will maintain bi-weekly timecards documenting the number of hours charged to various programs. Timecards will represent an after-the-fact distribution of the actual activity of each employee and will account for the total activity for which the employee is compensated. Timecards will be signed by the employee and approved by their Supervisor.
4. CDBG Microenterprise staff will conduct a quarterly reconciliation to confirm that employee timecards are consistent with actual time charged to CDBG Microenterprise programs. If inconsistencies are found, the costs charged to CDBG- 409
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microenterprise programs will be adjusted.
Procedures for Determining Cost Reasonableness
The City's annual allocation process includes an analysis of the reasonableness of costs charged by sub-recipients to the City's CPD Programs. This analysis includes an evaluation of whether costs associated with a proposed service are in accordance with 2 CFR 200.404 – Reasonable Costs. Every activity considered by CDBG funding is evaluated by a variety of criteria, including:
Cost per capita served
Portion of clientele to be served that is low-income or presumed benefit Eligibility of proposed activity
Allowability of costs associated with proposed activity Timeliness of expenditures in prior year(s)
Severity of need for proposed service
Number of City of Lynwood residents to be served
Accessibility of service to be provided to City of Lynwood residents, particularly for services offered outside of City of Lynwood
Duplication/uniqueness of service
Non-HUD funds leveraged
Costs for training and travel are evaluated on a case-by-case basis and consideration of their eligibility, applicability and reasonableness is made before they are charged to the CDBG program. CDBG Admin staff must approve all training and travel costs charged to the CDBG program.
Activities are determined eligible and reasonable for CDBG funding if all the criteria identified above are satisfied.
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Process for Approval of Subrecipient Reimbursement Requests for Public Services
Based on the terms of the written agreement with the sub-recipient, city staff will review reimbursement requests for allowability, eligibility, and reasonableness. All reimbursement requests by public service subrecipients shall include a summary detailing expenses by project budget line item and the amount being charged to the City's CDBG program.
The table below outlines what supporting documentation must accompany reimbursement requests.
COST ITEM SUPPORTING DOCUMENTS
Salaries Documented payrolls approved by a responsible official of the organization
Signed personnel activity reports (timesheets)
summarizing the distribution of activity of each
employee. Timesheets should identify the amount of
time spent on serving City of Lynwood clients, or
directly on the program.
Refer to 2 CFR Part 200, Subpart E – Cost
Principles (200.430)
Fringe Benefits Proof of payment of fringe benefits including health insurance statements, life insurance statements, etc.
Fringe benefits will be calculated as a percentage of
salaries. This percentage may generally not exceed 30
percent of salaries.
Materials and Supplies Copies of invoices/receipts
Utilities Copies of invoices/receipts
Other expenses Copies of invoices/receipts/billing statements
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Process for Approval of Reimbursement Requests for Consultant Services
Based on the terms of the written agreement with the contractor, city staff reviews reimbursement requests for allowability, eligibility, and reasonableness. All reimbursement requests by the contractor shall include a summary detailing expenses and the amount being charged to the City's HUD programs.
The table below outlines what supporting documentation must accompany reimbursement requests.
COST ITEM SUPPORTING DOCUMENTS
Salaries Requests for reimbursement shall include a summary of the position(s) billed to the contract, the dates that
services were provided, total number of hours billed by each position per clay, and the hourly billing rate of each position charged to the City of Montebello activity.
Materials and Supplies Copies of invoices/receipts
Other expenses Copies of invoices/receipts/billing statements
Process for Approval of Reimbursement Requests for Construction Activities (Including Public Facilities)
City staff shall work with staff from the Public Works Department and Finance Department to coordinate project management activities and invoice review, approval, and draw down of funds related to construction activities using CDBG funds. At the onset of each construction proje ct, each staff person's responsibilities related to the project will be determined.
All reimbursement requests by the contractor shall include a summary detailing the work performed, the dates such work was performed, and the amount being charged to the activity.
Staff will review all invoices prior to approval for payment and draw down of CDBG funds from IDIS.
Prior to approving payment, staff will confirm with the Public Works Department that all items billed by the contractor have been completed. Staff will not approve any invoice if the contractor has not complied with applicable federal rules and regulations that the construction activity is subject to, such as Davis-Bacon and prevailing wage requirements.
If retention payments have been held by the City, the contractor will not be paid by the City until the City Council has certified completion of the project. Staff will work with the Finance Department to ensure that retention payments are not paid to the contractor and drawn down in IDIS until the project has been certified as complete.
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Process for Approval of Payments and Reimbursement Requests
Step Department Person/Position
Project Set Up
AAP Approved Administration City Council
Agreements Executed Administration City Manager
PO established Planning & Community
Dev
Admin Analyst
Payment and
Reimbursement Process
Invoice intake Finance Account Payable (under
direction of Deputy
Director of Finance)
Invoice Review for
eligibility
Planning & Community
Development
Sr. Management Analyst
Invoice Approved –
Signature
Planning & Community
Development
Planning & Community
Development Director
Updated in New World
System (PO/Acct number
assigned)
Planning & Community
Development
Admin Analyst
Signed Invoice back to
Finance
Finance Accounts Payable
Check Run and Mailed Finance Accounts Payable
Warrant Register
Approved
Administration City Council
Process for Approval of Total Expenditure of a Subrecipient Grant Prior to the Third Quarter of the Fiscal Year
Situations may arise where a subrecipient expends their entire CDBG grant prior to the third quarter of the fiscal year. This may occur particularly when a CDBG grant is small allowing for funds to be drawn down quickly and/or when a subrecipient devotes significant energy and time serving City of Montebello residents in the first and/or second quarter.
The City will allow the complete expenditure of a CDBG grant in the first or second quarter if a subrecipient can provide full documentation of allowable and eligible costs incurred during the respective time. When a subrecipient expends the entirety of their grant in the first or second quarter of the fiscal year, the subrecipient is still required to complete the entire fiscal year's contractual obligations, including quarterly and annual performance reporting.
The City will not allow for the expenditure of all grant funds in the first or second quarter if full documentation of eligible and allowable costs as required by the subre cipient's CDBG contract is not provided by the subrecipient for the relevant time.
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FINANCIAL REPORTING
In addition to the budgeting, payment processing, and oversight actions described in other sections, the City will undertake the following actions to ensure accurate, current, and complete disclosure of the financial results of HUD-assisted activities in accordance with the financial reporting requirements of the CDBG Programs.
FFATA Reports
At the end of each month, the Accounting Manager will report on all awards in excess of $25,000 using the FFATA sub-award reporting system (FSRS) in order to comply with the Federal Funding Accountability and Transparency Act of 2006. For guidance on data entry, refer to the guidance material on www.onecpd.info entitled “FFATA Subaward Reporting System Webinar for CDBG Grantees”.
Open Balance Review
On a quarterly basis, the Community Development Director, Grants Consultant and Accounting Manager will review the Annual Expenditure Work Plan with IDIS PR 08 to identify slow-moving projects. The review will include an assessment of the project’s progress and its effectiveness of meeting its objectives. If a project is not on schedule or not effective, staff will develop a work plan and timeline for corrective actions.
Monthly Reconciliation
At the close of each month, the Accounting Manager will work with the Grants Consultant to reconcile General Ledger expenditures and IDIS drawdowns for all HUD accounts. The information in IDIS, the PR07 Drawdown by Voucher Number, will also be compared to the local Project Report to ensure the IDIS system accurately reflects expenditures and cash balances. All discrepancies will be reported directly to the Administrative Services Director and Community Development Director who will jointly oversee corrective action.
Federal Financial Report
Quarterly, the Housing Manager will prepare and submit the Federal Financial Report SF-425.
The Housing Manager will take the following steps to reconcile IDIS with the City’s local internal financial records:
STEP 1: DETERMINE DRAWS PER IDIS
1. From IDIS, generate the PR07 Drawdown y Boucher Number Submitted to LOCCS . Limit the report to the time period in question (i.e. Initial Date: 01/01/2014 and End Date:
06/30/2014 for Q2 of 2014).
2. Import the report into Excel.
3. Filter the report to show Entitlement Draws (EN Fund Type) with a Complete Status. 414
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4. Verify the total amount of Entitlement funds drawn during the quarter by totaling all line items. This is the amount to enter on line 10a. Cash Receipts of the SF-425.
5. If it is requested by the local HUD field office, the Federal Financial Report attachment can be used to report the amount disbursed from each grant allocation. Sort the PR 07 report by the Grant Number field to determine the amou nt disbursed from each allocation.
STEP 2: DETERMINE EXPENDITURES PER LOCAL SYSTEM
1. From City’s Accounting System, generate the Accounts Payable Invoice Report for the CDBG Fund. When selecting the date range, include the three months prior to the quarter in question. The City works on a reimbursement basis, meaning a draw that occurred in the current quarter may have been paid in the previous quarter.
2. For each drawdown listed on the PR07, identify the corresponding record on the Accounts Payable Invoice Report and initial the line item. Please note that it will not always be a one to one relationship. One IDIS draw could represent several claims and vice versa. To help with the identification process, reference the Voucher for IDIS Drawdown forms processed during the quarter.
3. Verify that each draw has a corresponding claim. If so, enter the same amount from 10a. on line 10b. of the SF-425 report and enter 0 on line 10c. If there is a discrepancy, report the matter to the Administrative Services Director for correction.
STEP 3: FILING
1. Complete the remainder of the SF-425 Report and submit it to the local HUD Field Office within 15 days of the close of the quarter.
2. Maintain a copy of the completed and signed SF -425 Report, the PR07 Report, th e Accounts Payable Invoice Report, and any notes or related correspondence in a folder labeled Federal Financial Reports.
Policy Regarding Rebates, Refunds and Credits to HUD CPD Programs
All rebates, refunds, and credits to HUD CPD programs will be properly reported. Bid bond forfeiture funds that are not offset by additional costs to select another bidder will be credited to HUD CPD programs at their pro-rata share.
Procedures for Evaluating Travel and Training Costs Charged to the CDBG Program
All travel and training expenses charged to HUD programs must be approved by the Community Development Director or a Department Director. Prior to approval, travel and training expenses are evaluated based on the following criteria:
Compliance with 2 CFR Part 200, Subpart E – Cost Principles; specifically 200.474 (Travel Costs) and 200.475 (Training and Education Costs)
Applicability/relevance to CDBG program goals and objectives Eligibility under CPD programs
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Within the allocated budget for that program
Schedule of Federal Expenditures
The Finance Department is responsible for preparing, based on information provided by the Community Development Department, the Schedule of Federal Expenditures (SEFA) as part of the annual auditing process. Regarding CDBG, the following procedures will be followed to ensure that the SEFA is reconciled:
1. Department of Finance staff will prepare the SEFA in preparation for the annual audit.
Expenditures shall be determined using the following guidelines:
a. Use the same accounting basis as the City’s Financial Statements. b. Include all expenditures of federal awards for the year, including but not limited to
i. transactions associated with grants, cost -reimbursement contracts, cooperative agreements, and direct appropriations;
ii. federal awards received directly from a federal agency and indirectly from a state agency;
iii. disbursement of funds passed through to sub-recipients; iv. receipt of loan proceeds under loan and loan guarantee programs; receipt of federal property and surplus property;
v. receipt and use of program income.
c. List all financial assistance from the same federal agency together on the schedule.
d. Within each federal agency section, list all direct awards first followed by indirect awards.
e. Provide subtotals for programs with the same Catalog of Federal Domestic Assistance (CFDA) number.
f. Provide subtotals for assistance received directly and assistance received indirectly.
g. Provide a total for each federal agency.
2. Accountant will provide any and all underlying records, claims, and vouchers needed to verify CDBG expenditures and draws.
3. Director of Administrative Services or his designee will review the draft SEFA for:
a. reported expenditures against information from the Eden system; b. the correct CDFA and agency information is provided, including identification of pass-through entities.
c. that the draft version presents the minimum data elements required by 2 CFR 200 Subpart F.
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4. Director of Administrative Services will provide the draft SEFA to the outside auditing firm for review.
5. Director of Administrative Services will work with staff and outside auditing firm to address any errors, omissions or weaknesses.
ASSET MANAGEMENT
Any property, personal or real, is limited in use to serving the objectives of HUD programs. All property purchased with HUD funds must be adequately controlled and safeguarded. In general, it is the responsibility of the Community Development Director to ensure staff take appropriate day-to-day actions to prevent loss, damage, or theft of the property. It is also the responsibility of the Community Development Director to ensure all equipment and property is adequately maintained on a regular, as-needed basis. Any loss, damage, or theft must be reported to the Mayor and City Manager.
Regarding asset management, property can be generally divided into three categories: supplies, equipment, and real property. Supplies are all tangible personal property other than Equipment. A computing device is a supply if the acquisition cost is less than $5,000, regardless of the length of its useful life. Equipment is tangible personal property having a useful life of more than one year and a per-unit acquisition cost more than $5,000. Examples include office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles.
Equipment must be used by the City and/or its subrecipients for the purpose which it was acquired whether or not the project or program continues to be supported by CDBG. When no longer needed for the original program or project, the equipment may be used in other activities. However, CDBG-purchased equipment cannot be used to provide services for a fee that is less than private companies charge for equivalent services unless the service meets all of the CDBG rules and regulations.
When original or replacement equipment acquired with HUD funds is no longer needed for the original project or program or for other activities currently or previously supported by HUD funds, the City shall request disposition instructions from HUD. In most cases, items of equipment with a current per unit fair market value of $5,000 or less may be retained, sold or otherwise disposed of with no further obligation. Some portion of the proceeds may be considered program income. If replacement equipment is necessary, the City may use the existing equipment as a trade-in or sell the property and use the proceeds to offset the cost of the replacement property.
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Real Property
All real property, such as buildings, should be protected by using reasonable security measures.
Equipment and supplies should be reasonably protected from possible theft. Short-term supplies, such as office supplies, do not need to be controlled through a perpetual inventory system, but must still be adequately safeguarded.
When the City or its subrecipients wish to dispose of property acquired or improved with HUD Funds, the disposition is subject to the regulations at 24 CFR 570.505 (see below). If the property is changed to a non-eligible use within the five-year period, the funds returned to the City are treated as returned funds (as opposed to program income). After the five-year period, any funds returned to the City are considered program income.
When selling the property, the City and or its sub-recipient shall follow its local procedure to ensure the highest possible return.
The standards described in this section apply to real property within the recipient's control which was acquired or improved in whole or in part using CDBG funds in excess of $25,000. These standards shall apply from the date CDBG funds are first spent for the property until five years after closeout of an entitlement recipient's participation in the entitlement CDBG program or, with respect to other recipients, until five years after the closeout of the grant from which the assistance to the property was provided. (a) A recipient may not change the use or planned use of any such property (including the beneficiaries of such use) from that for which the acquisition or improvement was made unless the recipient provides affected citizens with reasonable notice of, and opportunity to comment on, any proposed change, and either:
(1) The new use of such property qualifies as meeting one of the national objectives in §570.208 (formerly §570.901) and is not a building for the general conduct of government; or
(2) The requirements in paragraph (b) of this section are met. (b) If the recipient determines, after consultation with affected citizens, that it is appropriate to change the use of the property to a use which does not qualify under paragraph (a)(1) of this section, it may retain or dispose of the property for the changed use if the recipient's CDBG program is reimbursed in the amount of the current fair market value of the property, less any portion of the value attributable to expenditures of non-CDBG funds for acquisition of, and improvements to, the property.
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§570.504(b)(4) or (5), as applicable, shall apply to the use of funds reimbursed.
(d) Following the reimbursement of the CDBG program in
accordance with paragraph (b) of this section, the property no longer will be subject to any CDBG requirements.
Recordkeeping
Property records must be maintained that include:
- a description of the property,
- a serial number or other identification number,
- cost of property, including percentage paid for with HUD Funds, - who holds title,
- the acquisition date,
- the location, use, and condition of the property, and - any ultimate disposition data including the date and sale price.
The Community Development Director shall take inventory of all property and reconcile inventory with property records at least once every two years. Any difference between quantities determined by the physical inspection and those shown in the accounting records shall be investigated to determine the causes of the difference. The inventory shall include verification of the existence, current use and condition, and continued need for the property.
Program Income
Drawdowns of funds through IDIS will occur at least monthly. It is anticipated that monthly IDIS drawdowns of expenditures will greatly exceed monthly program income. Interest earnings on program income that are not offset by monthly expenditures will be credited to the appropriate program.
There are currently two sources of CDBG program income.
Program income from the home rehabilitation program. The loan servicer receives loan repayments and creates a monthly report to the City. The repayments are forwarded to the City and deposited into different accounts used for loan repayments. As described above, this program income is drawn down first when funds are drawn down for any appropriate activity.
Program income from housing activity. A few housing development projects received funds and loan repayments are made when there is surplus cash or residual receipts at the end of the year, as evidenced by the developments' annual financial audits. The amount of program income is determined by the loan terms indicated in the promissory note or appropriate funding agreement. The Community Development Director records the loan repayment and forwards it to Finance to deposit. As above, the program income is drawn down first when funds are drawn down for any appropriately funded activity. 419
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Reimbursement Process in IDIS
The City will adhere to the following procedure to pay CDBG-related claims monthly:
- Within IDIS, the Accountant creates program income receipts based on monies received since the last drawdown
- Accountant reconciles Invoice Report with Draw Schedule and alerts Accounting Manager to any discrepancies
- Within IDIS, Grants Consultant will create IDIS draw voucher based on the actual expenditures incurred by the City. Once the drawdown voucher is created, the Grants Consultant will print a screenshot of the voucher creatio n screen from IDIS, record the Voucher Number on the Departmental Budget, and alert the Accounting Manager that the drawdown is ready for approval
- Accounting Manager approves drawdown voucher in IDIS. Funds will wire transfer to City designated account in two to three business days
- Upon receipt of wire transfer from the U.S. Treasury, the Finance Department Accountant will alert the Accounting Manager of receipt by forwarding the report with the CDBG disbursements identified. The General Fund will be reim bursed for the CDBG costs that were advanced
TIMELINESS REVIEW
On a monthly basis, the Grants Consultant will generate and review with Accounting Manager, the CDBG Timeliness Report and evaluate the timeliness of CDBG expenditures.
REIMBURSEMENT REQUESTS
One of the most common steps that follow entering a contract with a sub-recipient or other third party is when that sub -recipient or other sub -grantee (or contractor) has completed work as specified in the agreement, and they submit request for funds. This request is applicable to activities held internally with the entitlement jurisdiction.
A request for reimbursement should include:
• The amount requested
• The date requested
• Clear description of the work completed
• The date range of the work completed
• A beneficiary report if the activity is Limited Clientele
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Requests should be submitted at least quarterly and a final request should be submitted within 15-days of the end of the fiscal year. (See Appendix for Public Services Request for Reimbursement.)
NOTE: CDBG Grantee staff who are responsible for compliance with the CDBG grant agreement with HUD should review all uses of CDBG funds. It is not recommended that you give a subgrantee or even another City department "carte blanche" to expend CDBG funds. It is highly recommended that the grantee requires an internal review and authorized signature for all disbursement of CDBG funds.
IDIS DRAWS
Once funds have been paid to the sub-recipient, sub-grantee, or contractor, the City must request reimbursement from HUD. Funds can only be advanced from HUD under special circumstances. (See below.)
Funds are held by the US Treasury in what is called a Line of Credit. Funds are disbursed by the US Treasury through what is called the Line of Credit Control System or LOCCS. It is often referred to as “locks”.
The Integrated Disbursement and Information System (IDIS) is the online system set up by HUD to tell HUD what you are doing with CDBG funds and to request funds from the Line of Credit Control System.
When funds are requested via the Integrated Disbursement and Information System (IDIS) and approved, they are wired directly to the grantee.
The chapter on IDIS includes detailed instructions on making draws in the system.
The request for funds should originate from the entitlement jurisdiction's Finance Department based on records of expended funds. The draw is then created in IDIS by one staff person and approved by another. The Integrated Disbursement and Information System does not allow the same login ID to be used to both create and approve a draw.
Once a draw has been created and approved, the grantee's Finance Department should be informed and the amounts confirmed.
When the entitlement jurisdiction receives funds, as the CDBG administrator, the grantee should be notified in the case there is a discrepancy.
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City financial reports and IDIS records should be regularly reconciled.
PROGRAM INCOME
The receipt and expenditure of program income shall be recorded as part of the financial transactions of the grant program.
(b) Disposition of program income received by recipients.
(1) Program income received before grant closeout may be retained by the recipient if the income is treated as additional CDBG funds subject to all applicable requirements governing the use of CDBG funds.
(2) If the recipient chooses to retain program income, that program income shall be disposed of as follows:
(i) Program income in the form of repayments to, or interest earned on, a revolving fund as defined in Sec. 570.500(b) shall be substantial ly disbursed from the fund before additional cash withdrawals are made from the U.S. Treasury for the same activity. (This rule does not prevent a lump sum disbursement to finance the rehabilitation of privately owned properties as provided for in Sec. 570.513.)
(ii) Substantially all other program income shall be disbursed for eligible activities before additional cash withdrawals are made from the U.S.
Treasury.
(iii) At the end of each program year, the aggregate amount of program income cash balances and any investment thereof (except those needed for immediate cash needs, cash balances of a revolving loan fund, cash balances from a lump -sum drawdown, or cash or investments held for section 108 loan guarantee security needs) that, as of the last day of the program year, exceeds one -twelfth of the most recent grant made pursuant to Sec. 570.304 shall be remitted to HUD as soon as practicable thereafter, to be placed in the recipient's line of credit. This provision applies to program income cash balances and investments thereof held by the grantee and its sub-recipients.
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(3) Program income on hand at the time of closeout shall continue to be subject to the eligibility requirements in subpart C and all other applicable provisions of this part until it is expended.
(4) Unless otherwise provided in any grant closeout agreement, and subject to the requirements of paragraph (b)(5) of this section, income received after closeout shall not be governed by the provisions of this part, except that, if at the time of closeout, the recipient has another ongoing CDBG grant received directly from HUD, funds received after closeout shall be treated as program income of the ongoing grant program.
(5) If the recipient does not have another ongoing grant received directly from HUD at the time of closeout, income received after closeout from the disposition of real property or from loans outstanding at the time of closeout shall not be governed by the provisions of this part, except that such income shall be used for activities that meet one o f the national objectives in Sec. 570.901 and the eligibility requirements described in section l05 of the Act.
(c) Disposition of program income received by sub -recipients. The written agreement between the recipient and the sub -recipient, as required by Sec . 570.503, shall specify whether program income received is to be returned to the recipient or retained by the sub-recipient. Where program income is to be retained by the sub -recipient, the agreement shall specify the activities that will be undertaken wi th the program income and that all provisions of the written agreement shall apply to the specified activities.
When the sub-recipient retains program income, transfers of grant funds by the recipient to the sub-recipient shall be adjusted according to the principles described in paragraphs (b)(2)(i) and (ii) of this section. Any program income on hand when the agreement expires, or received after the agreement's expiration, shall be paid to the recipient as required by Sec. 570.503(b)(8).
(d) Disposition of c ertain program income received by urban counties. Program income derived from urban county program activities undertaken by or within the jurisdiction of a unit of general local government which thereafter terminates its participation in the urban county shall continue to be program income of the urban county. The urban county may transfer the program income to the unit of general local government, upon its termination of urban county participation, provided that the unit of general local government has become an entitlement grantee and agrees to use the program income in its own CDBG entitlement program.
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LUMP SUM DRAWS [570.513]
CDBG regulations allow the grantee to draw down a lump sum for planned housing rehabilitation activities. The grantee can draw down up to two years’ amount. The lump-sum must be deposited in a financial institution and there must be a specific agreement with that institution. This allows the grantee to provide funds to a project much quicker without having to advance local funds and be reimbursed.
Interest earned on the balance of funds must be remitted to the US Treasury.
REVOLVING LOAN FUNDS [570.5OO(B)]
CDBG allows the grantee to set up a revolving loan fund (RLF). This is a fund that is set up to that receives program income (principal and interest) from a certain use (single -family housing rehabilitation, business assistance, homebuyer assistance) and re -loans monies for that same use.
The advantage of a revolving loan fund is that funds can be allowed to accumulate. Monies in the revolving loan fund are not subject to the "first-in, first-out" rule of typical program income.
A revolving loan fund must be an interest-bearing account and interest earned on the balance of funds must be remitted to the US Treasury.
ESCROW ACCOUNTS
In order to facilitate the timely availability of funds for projects such as housing rehabilitation, a grantee may draw down and deposit funds into an escrow account. This account can be held by the grantee or in trust by a local escrow company.
The main advantage is ease of disbursement. A simple faxed form or e-mail can typically serve to release funds to the contractor or other entities within a timely manner.
The greatest disadvantage is some loss of control. The grantee does not have possession of the funds. There is also often a cost associated with escrow accounts. The loss of control can be mitigated by creating a good working relationship with a local escrow officer and writing clear and detailed escrow instructions. The cost can be financed with CDBG funds.
It should be noted that escrow accounts are intended to fund hard costs only. They cannot be used to fund "soft" costs or the grantee's administrative or delivery costs.
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INTEREST ON FEDERAL FUNDS
Interest earned on federal funds must be remitted to the US Treasury.
FEDERAL FINANCIAL REPORT [STANDARD FORM 425]
(See Appendix for Standard Form 425.)
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10. INTEGRATED DISBURSEME NT AND INFORMATION S YSTEM
(IDIS)
OVERVIEW
This section is intended to provide an introductory tour through the Integrated Disbursement and Information System and offer concise explanations of the most common tasks to be performed in the system. It is not intended as a substitute for the Disbursement and Information System Reference Guide or other reference material listed at the end of this section.
WHAT IS IDIS?
IDIS stands for "Integrated Disbursement and Information System ”. It is an on -line system that HUD developed to manage the four Commun ity and Planning Development formula programs:
CDBG, HOME Investment Partnership Program (HOME), ESG , and Hosing Opportunities for Persons with AIDS (HOPWA).
IDIS allows recipients of formula grant funds to report on the use of funds as well as to request funds from the US Treasury.
IDIS does have a reference manual and other reference materials. You should have a copy of the reference manual. Where to find the reference manual (available on the HUD web site in PDF) and other resources are in the IDIS resources section at the end of this chapter.
IDIS IN CONTEXT
IDIS is one of four management systems envisioned by HUD as supporting the formula grant programs. The other three are:
• The Consolidated Plan Management Process (CPMP) system organizes and repor ts information regarding the projects and activities conducted by the grantee. It is designed to provide consistent information in a consistent format to the public, to HUD, and ultimately to the US Congress. It also may be used to upload project and activ ity information into IDIS. See the section on CPMP for more information.
• The Line of Credit and Control System (LOCCS) interacts with IDIS to disburse funds from the US Treasury and report information to IDIS on the availability of funds and grant balances. The grantee has no direct access to LOCCS.
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• The Grants Management Process system (GMP) is the system employed by HUD field offices to manage formula grants and review the performance of grantees. HUD field staff use IDIS to view the performance of grantees. Grantees are not involved in GMP.
IDIS STRUCTURE: PLAN, PROJECT, AND ACTIVITY
IDIS is intended to "mirror" the Consolidated Plan and the annual Action Plan. Projects represent the undertakings identified in the Consolidated Plan as meeting the community's needs. Projects are organized into Plan Years that coincide with the annual Action Plan. Activitie s represent the individual tasks that contribute to the goals of the Project.
INTEGRATION INTO IDIS ONLINE
Beginning in May 2012, HUD grantees will be able to submit their Consolidated Plan using the Consolidated Plan template in IDIS Online. The Consolidated Plan template will be required for all Consolidated Plans submitted on or after November 15, 2012. Grantees that are scheduled to submit Consolidated Plans to HUD after this date will use the template for both the Consolidated Plan and each Annual Action Plan.
With the incorporation of the Consolidated Plan, Annual Action Plan, and CAPER into IDIS Online, all the key reporting elements of the grants are integrated into one system. This will help ensure cohesiveness between the goals described in the Consolidated Plan and Action Plan and the outcomes tracked in IDIS and reported in the Consolidated Annual Performance and Evaluation Report (CAPER). The reports in IDIS Online can be run throughout the program year to monitor progress and performance agai nst the goals established in the Consolidated Plan and Annual Action Plan.
To access IDIS Online, a grantee must have an active IDIS Online User ID. To add new users, grantees should follow the instructions on the IDIS Log On page:
https://www.hudexchange.info/programs/idis/idis-technical-assistance/#how
Before a grantee user can add or edit a Consolidated Plan or Action Plan, the local IDIS Administrator for t he grantee must edit the user's profil e to provide that functionality . Local administrators can use these steps to edit a user's profile to provide access to the Consolidated Plan, Action Plan, and CAPER templates:
1. All grantees have a local administrator. To determine who has local administrator privileges, run the Security
2. Click on Admin in the Main Menu bar (only local administrators will see this option). 427
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3. By default, the system will display the Search User Profiles screen. Use the fields provided, such as User ID or First Name and Last Name to search for the user profile that needs to be revised, then click Search.
IDIS FACTS
• Each activity must be associated with a project, each project with a Plan Year • A Project may have one or more Activities associated with it. • Reporting and disbursement happens at the Activity level.
Once the initial structure of Plan Year, Projects and Activities has been established in IDIS, nearly all future activity in IDIS is at Activity level.
When would there be more than one Activity under a Project?
• When there is a single undertaking that has several distinct components or stages. o Community Center – acquisition, design, construction, operations o Homeless Shelter – bus tickets, counseling, meal vouchers, clothing operations
IDIS ACCESS
The starting place for IDIS is the main IDIS webpage:
https://idis.hud.gov/sm/login.fcc?TYPE=33554433&REALMOID=06-eae4ea74-a3e2-434b-b5d6- 8d53a1239c82&GUID=&SMAUTHREASON=0&METHOD=GET&SMAGENTNAME=-SM- wbH8M2mr07my7yZH72clysrc77f7BkAug%2b8aQTlKBkjZftP3%2bxPKdTMJ%2bVxxFk2E&TARGE T=-SM-https%3a%2f%2fidis%2ehud%2egov%2fidis%2f
REQUESTING IDIS ACCESS
The first thing to do is to request IDIS access by submitting an IDIS Online Access Request Form https://www.hud.gov/sites/dfiles/OCHCO/documents/27055.pdfhttps://www.hud.gov/sites/dfi les/OCHCO/documents/27055.pdf .
Be sure to follow the instructions carefully and note:
• Check the correct action box
• Check the correct “authorized function” box(es) (more on this below) • Check the program area box(es) for the programs for which you need access to IDIS • The person who is requesting access signs under “authorized user” • Leave “field office approval” blank
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• Under “approved by”, enter the information for your jurisdiction’s chief executive or other authorized official (this will be the same person who signs your grant agreements with HUD)
• You must notarize the signature of the “approving” official Submit the form to your HUD field office (not to IDIS Security). Send it attention to your Program Representative. Let your representative know it is on the way.
If you do not receive your IDIS authorization within 4 weeks, follow-up with your representative.
A call to IDIS Security might also be required.
IDIS Access is specific to the person. A person may have access to one or more jurisdictions. Once you have an IDIS ID you will never have a new one issued to you. It's important to let IDIS Security know (via the form) if you have had IDIS access in the past, as they will simply "renew" your ID.
SELECTING THE CORRECT “ACTION”
Your choices for "Action" on the form and when to tick them are:
• New Request - You have never had an IDIS ID.
• Renew Lapsed ID - You had an IDIS ID but you let it lapse. (Call IDIS technical assistance to confirm.)
• Drop from IDIS - You no longer want access to IDIS, or more likely , you want to remove someone's access to IDIS.
• Add Access to Another Grantee - You currently have IDIS access for one grantee and you want authorization for another. This is uncommon for most grantee staff. You will see consultants with this sort of access or the staff of Consortia or Urban Counties. • Change Name/Functions/Grantee - Self-explanatory. Seldom used.
AUTHORIZED FUNCTIONS IN IDIS
In general, it is best to select all authorized functions unless there is a specific reason not to. Such a reason might be that you only want certain staff to approve draws or certain staff to be able to perform administrative functions in IDIS.
It is recommended that if this is desired, two levels be created: those that can only set -up activities and request (create) draw -downs and those that can perform all functions including administration.
It is important to remember that the same user cannot both create and approve a draw request.
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THE AUTHORIZATION PACKET
When your IDIS authorization is complete you will receive an authorization "packet" from IDIS Security. The items you want to focus your attention on are your WEB390 ID or "wi" number, your IDIS ID or "c" number and your IDIS temporary password. Keep this packet in a safe place.
When monitoring, some HUD staff will want to see that you have your IDIS authorizati on documents in order and in a secure location.
GOING INTO IDIS
To access IDIS, start at the IDIS page
https://idis.hud.gov/sm/login.fcc?TYPE=33554433&REALMOID=06-eae4ea74-a3e2-434b-b5d6- 8d53a1239c82&GUID=&SMAUTHREASON=0&METHOD=GET&SMAGENTNAME=-SM- wbH8M2mr07my7yZH72clysrc77f7BkAug%2b8aQTlKBkjZftP3%2bxPKdTMJ%2bVxxFk2E&TARGE T=-SM-https%3a%2f%2fidis%2ehud%2egov%2fidis%2f. This page is also where HUD will post news related to IDIS. From this page, you can login to the IDIS practice area as well as the IDIS "production" area.
If you enter the correct credentials, you will go to what some call the "house" screen.
DRAW DOWN FUNDS
Four basic steps are necessary to draw down funds for CDBG, HOME, ESG, or HOPWA. These four steps must be followed in order. A helpful way to remember this order is the acronym "JAID ", which refers to the letters on the IDIS Main Menu that access these functions.
STEP 1: CREATE A PROJECT
Projects serve as an organizational structure under which activities can be set up in IDIS. They connect activities with a specific Consolidated Plan year. In many cases, HUD automatically loads projects into IDIS from Annual Action Plans at the beginning of each grantee's program year. If the grantee chooses to load its own projects, it must create them at the start of its program year.
The IDIS Reference Manual provides more detailed explanation of Setting Up, Approving, and Revising Projects (see website below):
https://www.hudexchange.info/resource//2685/idis-online-for-cdbg-entitlement-communities- training-manual/.
STEP 2: SET UP AN ACTIVITY
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Setting up an activity in IDI S is a prerequisite to committing and drawing down funds and reporting on the progress of your program initiatives throughout the year. Activities provide a way to report on the work underway for a project and are the level wh ere funds are committed and drawn. Setting up an activity is a two -part process. The first part involves entering data on four activity setup screens , often called the "Common Path ", that are similar regardless of the program. On the fourth screen (called the "money screen"), enter the budgeted amount and indicate the formula grant program(s) that will fund this activity. The second part of setting up an activity involves entering information on screens in the "Program Path ", which are different for each grant program.
The IDIS Reference Manual provides a more detailed explanation of Setting Up the Activity Common Path in Chapter 4.
IDIS MATRIX CODES
Assigning correct matrix codes and national objectives to activities is important, not only in recording the eligibility of activities, but also in accurately reporting accomplishment data. The matrix code and national objective selected for an activity generally identify the purpose for which assistance is provided and determine the type of accomplishment uni ts that should be reported. The IDIS Reference Manual provides definitions of matrix codes in Appendix B.
• CDBG Cross Reference Matrix
All CDBG activities must be assigned a matrix code and a national objective code. Grantees across the country must be co nsistent in uniformly applying matrix codes and national objectives to activities.
STEP 3: FUND THE ACTIVITY
This step consists of committing the funds budgeted for the activity from the program(s) that will fund it. The Activity Funding process allows you to fund an activity from grants, subfunds, receipt funds, or subgrants. You identify each grant, subfund, receipt fund, or subgrant and the amount of funds to be committed from the funding source to an activity.
The IDIS Reference Manual provides a more detailed explanation of Activity Funding in Chapter
5. STEP 4: DRAW DOWN FUNDS
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A drawdown, also called a voucher, is a request for payment against a grantee's line of credit for services performed in support of one or more activities. Grantees draw funds as required to pay for work that has occurred for an activity. A separation of duties policy is applicable under certain circumstances.
The IDIS Reference Manual provides a more detailed explanation of Creating and Approving Drawdowns in Chapter 7.
STEP 5: REPORT ACCOMPLISHMENTS
HUD requires reliable, comprehensive information regarding program performance in order to comply with the Government Performance and Results Act of 1993, fulfill reporting requirements for Congress and other stakeholders, measure progress made in meeting Business and Operating Plan goals, monitor grantee performance, and evaluate overall program results.
For detailed reporting instructions, CDBG grantees may refer to Guidance for Reporting CDBG Accomplishments in IDIS.
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11. ENVIRONMENTAL
OVERVIEW
This section of the manual will provide an overview of the HUD environmental review and National Environmental Policy Acts (NEPA) requirements. There is an entire part of federal regulations (24 CFR 58) dedicated to describing these requirements and compliance with them.
There are also several "related acts" and Executive Orders that impose environmental requirements on recipients of CDBG funds.
LEVEL OF REVIEW DETERMINATION
The initial step of the pr ocess is to determine which "level of review" is appropriate for the activity being considered. There is a model form for this provided by the HUD San Francisco field office.
LEVELS OF REVIEW
EXEMPT
The following activities are by their nature not considered by HUD to have a significant environmental impact. (See Appendix for sample Exempt Activities Checklist).
• Environmental and other studies, resource identification , and the development of plans and strategies;
• Information and financial services;
• Administrative and management activities;
• Public services that will not have a physical impact or result in any physical changes, including but not limited to services concerned with employment, crime prevention, child care, health, drug abuse , education, counseling, energy conservation and welfare or recreational needs;
• Inspections and testing of properties for hazards or defects; • Purchase of insurance;
• Purchase of tools;
• Engineering or design costs;
• Technical assistance and training;
• Assistance for tempo rary or permanent improvements that do not alter environmental conditions and are limited to protection, repair or restoration activities necessary only to 433
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control or arrest the effects from disasters or imminent threats to public safety including those resulting from physical deterioration; and
• Payment of principal and interest on loans made or obligations guaranteed by HUD.
The only requirement is to review compliance with flood hazards, flood insurance/disaster assistance, coastal barriers, and airport clear zones. These are referred to as "the authorities listed at 24 CFR 58.6”.
The level of review determination form includes a section to address 24 CFR 58.6. No further review is necessary.
CATEGORICALLY EXCLUDED, NOT SUBJECT TO 58.5
These "categorically excluded" activities do not require an EIS or EA except under "extraordinary circumstances" as defined at 58.2(a) (3) (see Appendix for sample Categorically Excluded Checklist).
These following activities are by their nature not considered to have an impact that would require environmental review:
• Tenant-based rental assistance;
• Supportive services including, but not limited to, health care, housing services, permanent housing placement, day care, nutritional services, short -term payments for rent/mortgage/utility costs, and assistance in gaining access to local, State, and Federal government benefits and services;
• Operating costs including maintenance, security, operation, utilities, furnishings, equipment, supplies, staff training and recruitment and other incidental costs; • Community Development activities, including but not limited to, equipment purchase, inventory financing, interest subsidy, operating expenses and similar costs not associated with construction or expansion of existing operations;
• Activities to assist homebuyers to purchase existing dwelling units or dwelling units under construction, including dosing costs and down payment assistance, interest buydowns, and similar activities that result in the transfer of title; • Affordable housing pre -development costs including legal, consulting, developer and other costs related to obtaining site options, project financing, administrative costs and fees for loan commitments, zoning approvals, and other related activities whic h do not have a physical impact; and
• Approval of supplemental assistance (including insurance or guarantee) to a project previously approved under this part, if the approval is made by the same responsible 434
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entity that conducted the environmental review on the original project and reevaluation of the environmental findings is not required under Sec. 58.47.
The only requirement is to review compliance with flood hazards, flood insurance/disaster assistance, coastal barriers, and airport clear zones. These are referred t o as "the authorities listed at 24 CFR 58.6”.
The level of review determination form includes a section to address 24 CFR 58.6. No further review is necessary.
The only significant difference between "exempt" and "categorically excluded, not subject to
58.5" is that the latter are subject to further review if It is determined that there are "extraordinary circumstances and conditions" that would have an environmental effect. [24 CFR
58.35(c)].
CATEGORICALLY EXCLUDED, SUBJECT TO 58.5
Categorically exclu ded activities do not require an EIS or EA except under "extraordinary circumstances" as defined at 58.2(a)(3).
The following activities are by their nature not considered to have an impact that would require review under NEPA:
(1) Acquisition, repair, impro vement, reconstruction, or rehabilitation of public facilities and improvements (other than buildings) when the facilities and improvements are in place and will be retained in the same use without change in size or capacity of more than 20 percent (e.g., replacement of water or sewer lines, reconstruction of curbs and sidewalks, repaving of streets).
(2) Special projects directed to the removal of material and architectural barriers that restrict the mobility of and accessibility to elderly and handicapped persons.
(3) Rehabilitation of buildings and improvements when the following conditions are met:
(i) In the case of a building for residential use (with one to four units), the density is not increased beyond four units, the land use is not changed, and the foot print of the building is not increased in a floodplain or in a wetland;
(ii) In the case of multifamily residential buildings:
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(A) Unit density is not changed more than 20 percent;
(B) The project does not involve changes in land use from residential to non- residential; and
(C) The estimated cost of rehabilitation is less than 75 percent of the total estimated cost of replacement after rehabilitation.
(iii) In the case of non-residential structures, including commercial, industrial, and public buildings:
(A) The facilities and improvements are in place and will not be changed in size or capacity by more than 20 percent; and
(B) The activity does not involve a change in land use, such as from non -residential to residential, commercial to industrial, or from one industrial use to another.
(4) [blank]
(i) An individual action on up to four dwelling units where there is a maximum of four units on any one site. The units can be four one-unit buildings or one four-unit building or any combination in between; or
(ii) An individual action on a project of five or more housing units developed on scattered sites when the sites are more than 2,000 feet apart and there are not more than four housing units on any one site.
(iii) Paragraphs (a)(4)(i) and (ii) of this section do not apply to r ehabilitation of a building for residential use (with one to four units) (see paragraph (a)(3)(i) of this section).
(5) Acquisition (including leasing) or disposition of, or equity loans on an existing structure, or acquisition (including leasing) of vacant l and provided that the structure or land acquired, financed, or disposed of will be retained for the same use.
(6) Combinations of the above activities.
Review of compliance with flood hazards, flood insurance/disaster assistance, coastal barriers, and airport clear zones is required (58.6).
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Review of the factors under 24 CFR 58.5 is required for these activities. These are referred to as "the related laws and authorities ”. The HUD San Francisco Fie ld Office has provided a model “statutory review checklist”.
ENVIRONMENTAL ASSESSMENT "EA"
An Environmental Assessment or "EA" is required if a project is not found to be categorically excluded or exempt.
The regulations specify how to prepare an Environmental Assessment and the public notices and public review periods that must be followed. These are in "Sub-part E" of Section 58.
The HUD San Francisco Field Office has provided a model Environmental Assessment form.
ENVIRONMENTAL IMPACT STATEMENT "EIS"
An Environmental Impact Statement or "EIS" is required when "the project is determined to have a potentially significant impact on the human environment”.
There are also several specific circumstances that require the preparation of an Environmental Impact Statement. These are listed at 58.37(b).
Below is a table summarizing the various levels of review.
Level of Review Definitions Required Review Documents
Exempt 58.34 58.6 • Level of Review
Determination/58.6
Review
Categorically Excluded,
not subject to 58.5
58.35(b)
58.6 • Level of Review
Determination/58.6
Review
Categorically Excluded,
subject to 58.5
58.35(a) 58.6
58.6 • Level of Review
Determination/58.6
Review
• Statutory Worksheet
Environmental
Assessment
58.36 58.5
58.6 EA
• Level of Review
Determination/58.6
Review
• Statutory Worksheet
• EA
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Environmental Impact
Statement
58.37 58.5
58.6 EIS
• Level of Review
Determination/58.6
Review
• Statutory Worksheet
• EIS
EXTRAORDINARY CIRCUMSTANCES
The "extraordinary circumstances" referred to above are defined in the regulations at 24 CFR
58.2(a)(3).
(3) Extraordinary Circumstances means a situation in which an environmental assessment (EA) or environmental impact statement (EIS) is not normally required, but due to unusual conditions, an EA or EIS is appropriate. Indicators of unusual conditions are:
(i) Actions that are unique or without precedent;
(ii) Actions that are substantially similar to those that normally require an EIS;
(iii) Actions that are likely to alter existing HUD policy or HUD mandates; or
(iv) Actions that, due to unusual physical conditions on the site or in the vicinity, have the potential for a significant impact on the environment or in which the environment could have a significant impact on users of the facility
"58.6" REVIEW
The model “Level of Review Determination" workshe et provided walks you through the review for the "58.6" requirements. It is a "yes/no ”, “if/then" format. You proceed until you have hit a line that indicates "the review of this factor is complete”.
STATUTORY REVIEW "58.5"
Using the Statutory Review che cklist. the review of the 58.5 requirements is documented. For each requirement or "factor" the status is indicated as follows:
“A” "will not result in a violation of this statute or authority, nor requires a special permit or
license"
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“B” "may result in a violation of any of the cited statute or authority, or requires a special permit or license"
“N/A” because of the location of the project this factor is not applicable. This would be true in an inland area for the Coastal Zone Management Act.
CONVERSION TO EXEMPT
PUBLIC NOTICE
Grantees must provide the public with the following minimum comment periods:
• Notice of Findings of No Significant Impact - 15 days when published or, if Impact (FONSI).
No publication, 18 days when mailing and posting
• Notice of Intent to Request Release of Funds - 7 days when publishe d or, if no of Funds (NOI-RROF) Publication, 10 days when mailing and posting • Concurrent or combined notices 15 days when published or, if no publication, 18 days when mailing and posting
FONSI/RROF
(a) If the responsible entity makes a finding of no significant impact, it must prepare a FONSI notice, using the current HUD-recommended format or an equivalent format. As a minimum, the responsible entity must send the FONSI notice to individuals and groups known to be interested in the activities, to the local news media, to the appropriate tribal, local, State and Federal agencies; to the Regional Offices of the Environmental Protection Agency having jurisdiction and to the HUD Field Office (or the State where applicable). The responsible entity may also publish the FONSI notice in a newspaper of general circulation in the affected community. If the notice is not published, it must also be prominently displayed in public buildings, such as the local Post Office and within the project area or in accordance with procedures established as part of the citizen participation process.
(b) The responsible entity may disseminate or publ ish a FONSI notice at the same t ime it disseminates or publishes the NOI /RROF required by Sec. 58.70. If the notices are released as a combined notice, the combined notice shall:
(i) Clearly indicate that it is intended to meet two separate procedural requirements:
and
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(ii) Advise the public to specify in their comments which "notice" their comments address.
(c) The responsible entity must consider the comments and make modifications, if appropriate, in response to the comments, before it completes its environmental certification and before the recipient submits its RROF. If funds will be used in Presidentially declared disaster areas, modifications resulting from public comment, if appropriate, must be made before proceeding with the expenditure of funds.
RELEASE OF FUNDS
The certification form executed by the responsible entity's certifying officer shall be sent to the recipient that is to receive the assistance along with a description of any special environmental conditions that must be adhered to in carrying out the project. The recipient is to submit the RROF and the certification of the responsible entity to HUD (or the State, if applicable) requesting the release of funds.
MRER
PROCESS/FLOW
Level of review – Make it clear from project description and LOR determination why this LOR is appropriate.
BEST PRACTICES AND GENERAL PRINCIPLES
The most important thing to remember about the environmental review process is to never expend funds or contract to expend funds before the review process is completed.
IDIS
In the Integrated Disbursement and Information System ( IDIS) activity set up path there is a screen (C04MA03) that has a place to indicate the “environmental assessment code”. If the activity is set up in IDIS before the environmental review is complete, this field should be left blank. The field must be completed before the activity can be funded.
Note that a complete environmental review may be when the record is complete or later when a release of funds has been received from HUD. It will depend on the particular level of review.
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For all activities except those requiring an Environmental Assessment (EA) or Environmental Impact Statement (EIS), an "A" should be entered in the field to indicate the activity does not require an EA or EIS. IDIS will show the project as "exempt.'' This is the case even for those that are categorically excluded.
If an EA or EIS is required, a "D" may be entered for "underway" while the EA or EIS is being conducted. It is not required.
Once the EA or EIS is completed, a "C" is entered for "completed”.
Status Enter into “environmental
assessment code” field
ER incomplete Leave Blank
ER completed, finding of exempt or categorically excluded (Anything but EA or EIS)
“A” for exempt
EA or EIS required, but not completed “D” for underway
EA or EIS completed “C” for completed
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12. PROCUREMENT
OVERVIEW
This section will provide an overview of the HUD standards for Federal procurement requirements located at “Procurement Standards” at 2 CFR Part 200.317-326. In addition to these requirements, the "other program requirements" in Sub-Part K of the Part 570 should be reviewed when procuring goods and services. For example, the rules regarding contracting opportunities, the Americans with Disabilities Act (ADA) and environmental standards may be relevant.
The regulations that specif ically address procurement include 2 CFR Part 200.317 -326.
Procurement of goods and services by both the grantee and any sub -grantees or sub-recipients are all controlled by federal regulation. These requirements pass through with federal funds.
Any state or local regulations should also be considered. The most stringent requirement should be followed.
Although there are very specific requirements for procurement using CDBG, there are a few general guidelines that apply to assure a quality process:
• Provide dear standards for the quality and nature of the goods and services to be provided;
• Assure a competitive process that results in the best possible product for a reasonable price;
• Provide a purchase agreement or contract that clearly states the obligations of each party; • Maintain adequate records of the process; and
• Have a system in place to verify that the goods or services provided are as specified.
TYPES OF PROCUREMENT
In general, procurement processes can be grouped into four types:
1. Small purchases;
2. Sealed bid;
3. Competitive proposal (RFP/RFQ); and
4. Non-competitive.
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SMALL PURCHASES
This is the most common form of procurement that most grantees, sub -grantees and sub recipients will use. It is the least formal and the most flexible. It is permissible only for purchases that fall under $100,000. Publication of a formal request for proposals (RFP) or an invitation to bid is not requir ed. This is most often used to procure materials, equipment or professional services. It is not typically used for construction contracts nor is it recommended.
The purchaser identifies several potential vendors and solicits quotes or bids from those vendors.
The purchaser reviews the received quotes or bids and selects the best one.
SEALED BID
This method is characterized by a formal bid notice, the submission of sealed bids, and the award of a fixed-price contract. Sealed bidding is preferred for construction.
Bids are solicited through formal public notice or advertisement. Solicitations should be circulated to trade groups, unions, and builders' exchanges.
The contract is awarded to the lowest responsible bid. As the regulations state, the contract is awarded to the lowest bid which, "[conforms] with all the material terms and condit ions of the invitation for bids. ..” If there is a "sound documented reason" , one or even all bids may be rejected.
• The sealed bid process works when there are:
o A clear well-defined and detailed scope of work or product specification(s); o At least two bidders able to offer competitive pricing; and o The good or service lends itself to a fixed-price contract and selection can best be made based on competitive pricing.
HUD has set forth the following minimum requirements for sealed bid procurement:
• The bid solicitation must be publicly advertised;
• Bids must be solicited from an "adequate" number of potential vendors; • Bidders must be given "sufficient" time to develop a bid; • The bid solicitation must include all the specifications, background information, and a definition of the goods or services required for the bidder to be able to develop and submit a complete bid; and
• The solicitation must state the place, time and date of the public bid opening. 443
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Although not specifically mentioned in the regulations, late bids should not be accepted. Bids must be opened at the time and place stated. Bid results must be made public.
The contract or purchase agreement must be awarded to the "lowest responsive and responsible bidder”. As stated before, any or all bids may be rejected for a "sound" reason that is well - documented. Bids that are incomplete or that fail to consider the entire scope of work or provide goods or services that are not those specified may be considered "not res ponsive”. Bids that propose a price that is judged to be grossly insufficient to complete the scope of work or from bidders who appear to lack the basic qualifications to complete the work can be considered to be "not responsible”. In all cases, the evalua tion of the bids received must be documented and the selection of the bidder justified.
COMPETITIVE PROPOSAL (RFP/RFQ)
Competitive sealed proposals are used in two instances:
1. The acquisition of any engineering or architecture services, or
2. The purchase of other professional services where the total cost will exceed $100,000.
Under this procurement method, the Recipient must publish a written request for submissions and then review these submissions based on established selection criteria. This method of procurement differs from the small purchases method in that the solicitation must be published and cannot be restricted to a smaller or limited number of bidders. Under this approach, there are two possible methods of soliciting proposals:
1. A Request for Proposals asks that officers submit both qualifications and cost information.
2. A Request for Qualifications only asks for information on the offeror’s expertise/experience and not on cost.
When acquiring any service that is not architecture or engineering, the full RFP process must be used. For example, if the City were to hire a for-profit HOME Program contract administrator and that contract exceeded $100,000, an RFP would be required.
When acquiring architectural or engineering services, either a RFP or a RFQ may be used. The City recommends the use of an RFP process when feasible or practical, since it provides the recipient additional information.
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Request for Proposals (RFP): When a RFP process is required, the City must develop a writ ten document outlining the scope of the services and the selection criteria. The scope must be sufficiently detailed so that potential bidders are able to develop effective pricing proposals and submit appropriate qualifications.
Request for Qualifications (RFQ): The RFQ process may only be used in two instances:
1. For complicated architectural or engineering services, or When the RFQ is used to narrow a pool of potential bidders and a formal RFP will follow. In any other competitive proposal instance, the RFP must be used. The RFQ process does not request cost information at the time of solicitation.
NONCOMPETITIVE PROPOSALS
Procurement by noncompetitive proposals is procurement through solicitations of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate.
Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids, or competitive proposals and one of the following circumstances applies:
a. The item is available only from a single source;
b. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
c. The City authorizes noncompetitive proposals; or
d. After solicitation of a number of sources, competition is determined inadequate.
IN GENERAL
The form specified for the quote or bid should allow the purchaser to accurately compare the cost of the goods or services.
Single purchases that would logicall y follow in sequence or typically be a single service, good or "work" may not be broken down into parts to be procured separately to avoid a formal procurement process.
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The goal is to obtain a reasonable and responsible price. The lowest price does not ne ed to be taken if the selected vendor's price can be considered to be reasonable in comparison to others.
If the lowest price is not considered to be "responsible" it should not be accepted. Such a price would be considered to be infeasible or would for so me reason have been determined to have failed to consider the full scope of work or the desired quality of product.
Let your bidders know how you will decide and when. This not only includes your decision criteria, but the process that will be used. Will there be interviews or follow-up questions?
Make your process transparent. If they ask, let your bidders know who respo nded. After the selection process, you should be willing to reveal the responses and discuss your selection decision. If you are not, some firms may request this information through a formal public information request. This is much more expensive and time-consuming for all involved. Your goal is to always get better bids. Letting an un -successful bidder know how they came up short may make for a better bid next time.
Document the procurement process. This includes when actions were taken to solicit, when responses were received, when decisions were made and why.
If a bidder asks a clarifying question, the question and response should be shared with all bidders.
Each vendor should be given the same information on the desired goods or services. The request should be made at the same time and each potential vendor should be required to return the quote or bid on the same date and time.
Aside from selecting the method of procurement, there are several other considerations the City of Lynwood adhere to when procuring goods or services with Federal funds including:
Conflict of Interest
1. A written code of conduct must be maintained to help prevent conflicts of interest in procurement.
2. The written code of conduct must apply to all employees, officers, agents of the City or its Recipient, and members of their immediate family, and partners.
3. The code shall prevent financial interest or other benefits earned for any of these persons due to a HOME Program-related procurement action. These persons also cannot solicit or accept gratuities, favors or other items of monetary value from contractors.
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Excluded Parties
1. The City must adhere to the prohibitions in 2 CFR Part 24 24 on the use of debarred, suspended, or ineligible contractors. A person who is debarred or suspended shall be excluded from Federal financial and non -financial assistance and benefits under Federal programs and activities.
2. Federal funds may not be used to directly or indirectly employ, award contracts to, or otherwise engage the services of any contractor during any period of debarment, suspension, or placement on ineligibility status.
3. The City should regularly check all contractors, subcontractors, and lower-tier contractors against the Federal publication that lists debarred, suspended, and ineligible contractors.
4. In addition, the City should check this list before signing any contract with contractors or subcontractors.
5. Information on parties excluded from Federal procurement and non -procurement programs is available at www.sam.gov.
Minority/Woman Owned Business Enterprises
1. The City of Lynwood is required by Federal law to ensure that minority and women-owned business have information about and the opportunity to bid on fed erally funded competitive contracts.
2. The City is required by law to use minority and women’s businesses whenever possible.
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13. OTHER FEDERAL REQUIREMENTS
This final section of the manual is designed to deliver a brief overview of some related federal requirements that will need to be considered by a grantee when working with federal CDBG funds.
LABOR STANDARDS (570.603)
To ensure that employment standards are maintained and workers are being compensated fairly for their labor, grantees using federal funds through HUD must comply with required labor standards, otherwise known as Davis -Bacon. The Davis -Bacon and Related Acts, apply to contractors and sub -contractors working on federally funded or assisted contracts in excess of $2,000 for the construction or repair of public buildings or public works. Contractors are required to pay their employees no less than the local prevailing wages and fringe benefits determined by the Department of Labor. Refer to http://www.wdol.gov to find prevailing wage rates.
FAIR HOUSING (570.601)
Under the Fair Housing Act, HUD is obligated to uphold fair housing laws and requires grantees of HUD CDBG funding to commit to furthering fair housing within their community. As part of this commitment grantees are required to conduct an Analysis of Impedi ments to Fair Housing Choice (AI) and take appropriate actions to overcome any impediments to fair housing identified through the AI process. Fair housing laws assist in eliminating racial and ethnic segregation, illegal physical barriers, barriers to persons with disabilities, and discriminatory practices in housing.
The grantee is encouraged to complete an AI with the update of their Consolidated Plan or every five years.
Fair Housing regulations can be found on HUD’ s website at www.hud.gov. There is also a Fair Housing Planning Guide available on the website that provides fair housing information and assists in the completion of an AI.
NON-DISCRIMINATION (570.602—SECTION 109)
Grantees receiving federal funding through HUD are required to certify that no person will be denied access or participation in a program based on the grounds of race, national origin, religion, sex, age, or disability status. When submitting the Consolidated Plan and annual Action Plan the 448
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grantee will have to sign the required certifications to attest that the grantee will commit to the non-discrimination requirements.
RELOCATION/DISPLACEMENT (570.606)
Grantees of HUD funding are required to certify and assure that all reasonable steps will be taken to minimize the displacement of persons, families, businesses, non -profit organizations, and farms from their homes or place of business as a result of activities undertaken by the grantee, such as rehabilitation or demolition activities. The grantee must adopt an anti-displacement and relocation plan that the jurisdiction will follow in cases where relocation is necessary.
See HUD Handbook 1378, Tenant Assistance, Relocation and Real Property Acquisition on HUD's website for further information and requirements on relocation/displacement.
EQUAL OPPORTUNITY (570.607)
CDBG regulations stale that no person shall be subject to discrimination under any program funded in whole or in part by CDBG funds. CDBG grantees/sub-grantees must take measures to ensure non-discriminatory treatment, outreach and access to program resources. This applies to employment and contracting, as well as to marketing and selection of program participants.
The Office of Fair Housin g and Equal Opportunity also enforces federal laws to create equal housing opportunities for all persons. HUD implements and enforces the Fair Housing Act, the Civil Rights Act, the Housing and Community Development Act and others to ensure equal opportunity.
LEAD-BASED PAINT (570.608)
Grantees are required to identify and mitigate lead hazards when undertaking housing rehabilitation or homeownership activities for homes built before 1978. These regulations must be carefully followed to ensure that expos ure to lead hazards is reduced in any residential property to be rehabilitated or purchased. The regulation can be found at https://www.hudexchange.info/programs/lead-based-paint/regulations/.
SECTION 504/REASONABLE ACCOMMODATION
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Recipients are required to take affirmative steps to ensure that qualified persons with disabilities are informed of the availability of program services and activities, and the Recipient's activities or services are readily accessible to, and usable by, individuals with disabilities. Recipients must provide handicapped persons with benefits and services that are as effective as those provided to non -handicapped individuals. They must ensure that CDBG programs and activities are accessible, both structurally and administratively, to handicapped and disabled persons.
Recipients are responsible for providing access to handicapped/disabled persons in four areas:
communications, employment opportunitie s, program benefits, and physically accessible housing. Section 504 regulations can be found on HUD's website at https://www.hud.gov/helping-americans/disabilities.
LIMITED ENGLISH PROFICIENCY
HUD funded recipients should ensure that if working with Limited English Proficient (LEP) populations that guidance is provided to make sure that LEP persons have sufficient access to HUD programs and activities.
For further information on Limited English Proficiency please see HUD's website at https://www.hud.gov/stat/fheo/limited-english-proficiency. 450
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14. APPENDICES
UNITED STATES DEPARTMENT OF HOUSING & URBAN DEVELOPMENT (HUD)
THE LOS ANGELES HUD FIELD OFFICE
300 North Los Angeles Street
Suite 4054
Los Angeles, California 90012
Phone: (213) 894-8000
Fax: (213) 894-8107
Laurie Cannady Udit, Field Office Director
Region: IX; San Francisco
HUD WEB SITE
http://www.hud.gov
TRAINING
"Basically CDBG" Course Training Manual
https://www.hudexchange.info/trainings/basically-cdbg/
HUD EXCHANGE – CDBG: COMMUNITY DEVELOPMENT BLOCK GRANTS CDBG: Community Development Block Grants
https://www.hudexchange.info/programs/cdbg/
THE CODE OF FEDERAL REGULATIONS (CFR)
https://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title24/24cfr570_main_02.tpl
PROGRAM RELATED DOCUMENTS
Request for Reimbursement
Public Service Application
Subgrantee On-Site Monitoring Checklist
Determination of Exemption
Determination of Categorical Exclusion
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REQUEST FOR REIMBURSEMENT
City of Lynwood
Community Development Block Grant
REQUEST FOR REIMBURSEMENT
NON-PROFIT NAME:
ADDRESS:
CITY, STATE, ZIP:
DATE OF
INVOICE
DESCRIPTION
(ITEMIZED INVOICES & EXPENSES)
AMOUNT DUE
TOTAL:
$
NOTE: Please attach proof of expenditure: receipts, invoices, statements, program requirement data, etc. The City will not process any reimbursement request without proof of expenditure. In addition to this form, please submit an original invoice to the City of Lynwood. Invoice should have your company logo, address, and contact information for remittance.
Acknowledgement and Disclaimer
I certify that this nonprofit has not previously billed the City of Lynwood for the costs covered in this invoice.
Signature: _________________________________
Name & Title Date
When completed mail original form and if necessary fax form to meet payment deadline:
City of Lynwood, Community Development Dept.,11330 Bullis Road, Lynwood, CA 90262
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PUBLIC SERVICE APPLICATION
Public Service Application
Request for Funding
Fiscal Year 2025-26
DEADLINE
Deadline for returning completed applications is 5:30 p.m., Thursday, February 6, 2025. Appli cations may be return via email to [email protected] or through US Postal Service to the below address.
Postmarks and late applications will not be accepted.
Suzanne Trejo, Administrative Analyst II
City of Lynwood
Community Development Department
11330 Bullis Road,
Lynwood, CA 90262
REQUIRED REVIEW
Prior to submitting a proposal, it is required that you review "Playing by the Rules: A Handbook for CDBG Sub-recipients on Administrative Systems". Please pay special attention to chapters two and five. The handbook can be located at the following link: https://www.hudexchange.info/resource/687/playing-by-the- rules-a-handbook-for-cdbg-subrecipients-on-administrative-systems/
REQUIRED DOCUMENTS
Please submit the following information along with your completed application by the abovementioned deadline.
☐ Completed and Signed Application – Parts I-VI
☐ Articles of Incorporation
☐ Non-Profit Determination – 501(c)3 IRS Letter
☐ List of Board of Directors
☐ Organizational Chart
☐ Most Recent Audited Financials
☐ Resumes of Key Administrators
☐ Job Descriptions for Personnel/Positions Listed in Application ☐ Most Recent Certificates of Insurances
☐ System for Award Management Report – www.sam.gov. Search and save as PDF.
CONTACT
If you have any questions regarding the City of Lynwood’s Community Development Block Grant (CDBG) funded program, please contact:
Contact: Suzanne Trejo, Administrative Analyst II
Email: [email protected]
Phone: (310) 603-0220, Ext. 601
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I. APPLICANT AND PROJECT/ACTIVITY INFORMATION
Legal Name of
Organization/Agency
Program/Activity Title
Physical Address
City, State, ZIP
Type of Organization ☐ Non-Profit ☐ Government ☐ For-Profit Tax ID
DUNS Number
Name of Workers’ Compensation
Insurance (Government exempt)
Coverage Amount
Expiration Date
Name of General Liability and
Property Damage Insurance
(Government exempt)
Coverage Amount
Expiration Date
Name of Applicant Contact
Title
Mailing Address
City, State, ZIP
Email
Phone
Fax
Amount of CDBG Funds Received
in FY 2024-25 from Lynwood ($)
Amount of CDBG Funds
Requested for FY 2025-26 ($)
Approximate Total Number of
Unduplicated Beneficiaries
(Persons or Households) to be
Served
Type of Beneficiary ☐ Persons ☐ Households Groups that the Program/Activity
will Serve
(Check all that apply)
☐ Youth
☐ Adults
☐ Seniors
☐ Homeless Persons
☐ Disabled Persons
☐ Battered Spouses
☐ Abused/Neglected Children
☐ Households
☐ Community
☐ Housing Units
☐ Public Facilities
☐ Businesses
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II. CDBG ELIGIBILITY
CDBG Eligible Activity Categories
Please choose the CDBG Eligible
Activity Category for your
proposed project.
☐ Public Service. Improves community public services and facilities, including but not limited to those concerned with employment, fair housing and homeownership, homelessness, crime prevention, child care, health, drug abuse, education or recreational needs. ☐ Public Facilities/Improvements
☐ Housing/Special Activities by Subrecipients
☐ Economic Development
☐ Acquisition and/or rehabilitation of real property
☐ Other.
CDBG National Objective
Compliance
Your proposed project/activity
must meet at least one of HUD’s
CDBG National Objectives.
Please check all that apply to
your proposal.
☐ Benefits Low and Moderate Income (LMI) Individuals/Households. ☐ Addresses the prevention or elimination of slums or blight.
Meetings National Objectives
Check all statements that
describe how your proposed
project/activity meets one of the
National Objectives above:
☐ Low/Moderate Area Benefit – The project serves only a limited area which is proven by current Census data or survey to be a low-income area. By choosing this category you must be able to prove your project/activity primarily benefits low/moderate income households. ☐ Low/Moderate Limited Clientele – The project/activity benefits a specific group of people (rather than all areas in a particular area), at least 51% of whom are low/moderate income persons. Income verification for clients must be provided for this category. The following groups are presumed to be low/moderate: abused children, elderly persons (62 or older), battered spouses, homeless persons, adults meeting the Census definition of severely disabled, illiterate adults, persons living with AIDS and migrant farm workers.
☐ Slum or Blight on an Area Basis – Area basis activities must be within an officially designated area as defined under State or local law, and addresses one or more of the conditions that contributed to the deterioration of the area.
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III. PROJECT NARRATIVE (If more space is needed for any section, please attach on separate sheet.)
PROJECT/PROGRAM DESCRIPTION. Briefly describe the proposed service/activity/project to be carried out with the funds requested.
COMMUNITY NEED. Does your proposed project/activity address an identified gap in service or current need in the community? Document the need for the project/program.
BENEFIT. Discuss how the project/program provides benefit to low-income persons.
COLLABORATION. Has your organization/agency developed this project in collaboration with other groups/organizations? If so, please list the groups/organizations and describe their roles in this project.
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SIMILAR RESOURCES. Is a similar service provided by another agency/organization? If so, how will your program/activity differ?
OUTREACH. Discuss outreach efforts for the proposed service/activity/project.
PERFORMANCE SCHEDULE. Prepare a Work Plan for implementation/completion of the services and activities.
Identify activities and completion dates below.
Activity Completion Date
OTHER SOURCES OF FUNDS. List all other funding sources that will be used to undertake the proposed project/program and status of each source.
Source Name Committed or
Pending
Fund Amount ($) Current Status
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IV. PROPOSED PUBLIC SERVICE BUDGET
Scope of work and use of CDBG funds must be directly related. The CDBG funds requested must be used to provide a direct benefit/service to low- or moderate-income residents of the City of Lynwood. Proof of income eligibility and current residence must be acquired from all recipients. Adequate documentation must also be provided by the Agency to support costs associated with the services provided. This includes such support as timesheets to demonstrate the amount of time spent on each service, cancelled checks to demonstrate payment, client intake forms to demonstrate who received the service and any other documentation deemed necessary to show a direct correlation between the service provided and the costs associated with them.
Please use the following format to present your proposed line item budget:
Column A: List the items for which you anticipate the need for CDBG Funds during FY 2024 -25.
Column B: Provide the projected request for CDBG funds.
Column C: Provide the total of other funds to be used.
Column D: List the name of the other funding source.
Column E: List the total line budget. Please round your request to the nearest ten.
Column A Column B Column C Column D Column E
BUDGET ITEM CDBG REQUEST
($)
OTHER SOURCES
($)
NAMES OF
OTHER SOURCES
TOTAL BUDGET
($)
Personnel*
Personnel Total
Non-Personnel
Rent/Lease
Supplies
Utilities
Equipment
Services
Printing
Admission/Enrollment
Other:
Other:
Other:
Other:
Other:
Other:
Non-Personnel Total
TOTAL PROJECT BUDGET
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CDBG-FUNDED PERSONNEL
☐ Check this box if CDBG funds will NOT be used to fund personnel.
If CDBG funds will be used to fund personnel, complete the following tables, as appropriate. Only list personnel that will be paid with CDBG funds.
AGENCY ADMINISTRATION
Job Title Annual Salary
($)
Annual Benefits
($)
Total
Compensation
($)
CDBG Funds
Budgeted ($)
Time Position is
Dedicated to
CDBG Activity
(%)
PROPOSED PROGRAM STAFF
Job Title Annual Salary
($)
Annual Benefits
($)
Total
Compensation
($)
CDBG Funds
Budgeted ($)
Time Position is
Dedicated to
CDBG Activity
(%)
KEY PERSONNEL DUTIES. Provide a list of the duties of key personnel listed above.
Job Title Duties
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COST RATIONALE. If you consider it necessary, explain why your program/activity costs is reasonable.
PROGRAM CHANGES. If you received CDBG funding last year, has there been an increase in service that you will provide during FY 2025-26? Explain why there is a new demand or an unmet need in the community for this service.
IMPACT OF NO CDBG FUNDING. Describe the effect of partial or no CDBG funding on your project/activity.
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V. CONFLICT OF INTEREST QUESTIONNAIRE
Federal, State, and City law prohibits employees and public officials of the City of Lynwood from participating on behalf of the City in any transaction in which they have a financial interest.
This questionnaire must be completed and submitted by each applicant for CDBG program funding. The purpose of this questionnaire is to determine if the applicant, or any of the applicant’s staff, or any of the applicant’s Board of Directors would be in conflict of interest.
1. Is there any member(s) of the applicant’s staff or governing body who is or has been, within one year of the date of this questionnaire, (a) a City Employee or (b) a City Councilmember?
☐ Yes ☐ No
If Yes, please list the name(s) and information requested below:
Name of Person Job Title Relationship
(City Employee/Councilmember)
City Department
2. Will the CDBG funds requested by the applicant be used to award a subcontract to any individual(s) or business affiliate(s) who is currently or has been, within one year of the date of this questionnaire, (a) a City Employee or Consultant or (b) a City Councilmember?
☐ Yes ☐ No
If Yes, please list the name(s) and information requested below:
Name of Person Job Title Relationship
(City Employee/Councilmember)
City Department
3. Is there any member(s) of the applicant’s staff or member(s) of the applicant’s Board of Directors or other governing body who are business partners or family members of (a) a City Employee or (b) a City Councilmember?
☐ Yes ☐ No
If Yes, please list the name(s) and information requested below:
Name of Person Relationship
(City Employee/
Councilmember)
Tie
(Family/Business)
If Family, Indicate
Relationship
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VI. SIGNATURES
Authorized Signature
To the best of my knowledge, the information provided on this application is true, and I am authorized to submit this application on behalf of the applicant agency.
Print Name Title
Signature Date
Email:
Authorized Signature
I have read "Playing by the Rules: A Handbook for CDBG Subrecipients on Administrative Systems" with special attention to chapters two and five.
Print Name Title
Signature Date
Email:
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SUBGRANTEE ON-SITE MONITORING CHECKLIST
SUB-RECIPIENT ON-SITE MONITORING CHECKLIST
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
Sub-recipient Name: ________________________________________________________ Project Name/Agreement No.: ________________________________________________ Project Director: ___________________________________________________________
In-house review and general oversight conducted on: ________________ On-site monitoring visit(s) conducted on: _________________________
Monitoring letter sent on: ___________________________________ Follow-up monitoring visit conducted/letter sent on: ______________
A. National Objective and Eligibility
1. Which National Objective does this project meet (570.208)*?
Benefit to Low- and Moderate-Income Persons
____ Low/Mod Area Benefit
____ Limited Clientele Benefit
____ Low/Mod Housing Benefit
____ Job Creation or Retention
Aid in the Prevention or Elimination of Slums or Blight ____ on an Area Basis
____ on a Spot Basis
An Urgent Need
____ Needs having a Particular Urgency
2. Which eligibility category does the project meet? (570.201-6)
3. Is key reporting data obtained and verified? (e.g., ethnicity, disability, elderly, female, head of household)
4. Is the Sub-Recipient using current HUD income guidelines to determine eligibility of beneficiaries?
B. Conformance to the Sub-Recipient Agreement
1. Contract Scope of Services – Is the full scope of services listed in the Agreement being undertaken? List any deviation.
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2. Levels of Accomplishments – Compare actual accomplishments at the point of monitoring with planned accomplishments. Is the project achieving the expected levels of performance (number of persons served, number of units rehabbed, etc.) and reaching the intended client group? Explain any problem the sub -recipient may be experiencing. Acknowledge major accomplishments.
3. Time of Performance Is the work being performed in a timely manner (i.e., meeting the schedule as shown in the Agreement)? Explain.
4. Budget Compare actual expenditures versus planned expenditures. Verify maximum budget has not been exceeded and ensure all expenditures have occurred during the performance period. Note any discrepancies or possible deviations.
5. Requests for Payment Are requests for payment being submitted in a timely manner and are they consistent with the level of work accomplished? Is program income properly accounted for and recorded? Explain.
6. Progress Reports Have progress reports been submitted with pay ment requests (where required) on time and were they complete and accurate?
7. Special Conditions Does the project conform to any special terms and conditions included in the Sub-Recipient Agreement? Explain.
8. Litigation - Are there any legal actions or litigation against the Sub-Recipient? If yes, please explain.
9. Board Meetings - Does the Board of Directors meet on a regular basis? When? a. Are the Board Meetings available for review? When are the review dates?
C. Record-Keeping Systems (570.506)
Records should demonstrate that each activity undertaken meets the criteria for National Objectives compliance. Such records should be found in both the grantee’s project file and the sub-recipient file.
1. Filing System – Are the sub -recipient’s files orderly, comprehensive, secured for confidentiality where necessary, and up-to-date? Note any areas of deficiency.
2. Documentation (activities, costs and beneficiaries ) – Do the HCD project file and sub - recipient records have the necessary documentation supporting the National Objective being met, eligibility, and program costs as they relate to 570.506? Do the project files support the data the sub-recipient has provided for the CAPER? (i.e. Income verification documents for all assisted clients).
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3. Record Retention Is there a process for determining which records need to be retained and for how long? Have records been retained as required by the Agreement?
4. Site Visit (where applicable) Is the information revealed by a site visit consistent with the records maintained by the sub -recipient and with data previously provided to the grantee? Explain any discrepancies.
a. Is the project manager located on-site and running the day-to-day operations? Does the staff seem fully informed about program requirements and project expectations? Explain.
b. Is the project accomplishing what it was designed to do? Explain any problems.
D. Financial Management Systems [85.20 (local governments) and 84.2128 (non-profits)]
1. Systems for Internal Control – Are systems in compliance with accounting policies and procedures for cash, real and personal property, equipment and other assets (85.20(b)(3) and
84.20(b)(3))?
2. Components of a Financial Management Syst em – Review the chart of accounts, journals, ledgers, reconciliation, data processing, and reporting system. Note any discrepancies.
3. Accounting – Compare the latest performance report, drawdown requests, bank records, payroll records, receipts/disbursements, etc. Note any discrepancies.
4. Eligible, Allocable, and Reasonable Costs – See 2 CFR Part 200, Subpart E – Cost Principles; specifically 200.403-200.405 and 200.419. Pay particular attention to the time distribution records where the sub -recipient has employees who work on both CDBG and non -CDBG funded activities. Note any discrepancies.
5. Cash Management/Drawdown Procedures – See Treasury Circular 1075, 85.20(b)( 7), and
84.20. Has all cash been promptly drawn down and deposited? Are all drawdowns of Federal funds properly recorded? Note any discrepancies.
6. Management of Program Income – If the sub-recipient generates program income, refer to 570.504 and the Sub-Recipient Agreement about its use. Note any discrepancies.
7. IPA Audit Reports/Follow -up – (2 CFR Part 200, Subpart F – Audit Requirements ) Determine if the sub -recipient has expended $500,000 or more in Federal funds for the subject program year.
IPA Audit Required: Yes ____ No ____ N/A ____
Date Conducted: ____________
Any findings related to CDBG activity? Status? Explain.
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8. Maintenance of Source Documentation – (85.20(b) and 84.20(b)) Note any discrepancies in sample records, invoices, vouchers and time records traced through the system.
9. Budget Control – Do actual expenditures match the line item budget? Refer to 85.20(b)(4) and 84.20. Note any discrepancies.
E. Insurance
1. Has the sub-recipient submitted a current copy of its Certificate of Insurance?
2. Is the City named as an additional insured?
3. Workers Compensation - Has the sub-recipient submitted proof of Worker’s Compensation for all of its employees involved in the performance of this Agreement?
F. Procurement
1. Procurement Procedu res – Do the procedures the sub -recipient uses for procurement of goods and services meet CDBG requirements? Review a sample number of procurements. a. Are CDBG funds used to pay for consultant services?
i. If yes, what is the method for selecting consultants? ii. If yes, what types of services are provided by consultants?
2. Conflict of Interest – How does the sub-recipient assure there was no conflict of interest, real or apparent? Review the process and comment.
G. Equipment and Real Property
1. Has the sub-recipient acquired or improved any property it owns in whole or in part with CDBG funds in excess of $25,000? If yes, review for compliance with 570.503(b)(7).
2. Has the sub -recipient purchased equipment with CDBG funds in excess of $1,000? Does the sub-recipient maintain the records required at 84.34?
3. Was any equipment purchased, leased, or rented with CDBG funds? If yes:
a. Does the sub-recipient have procedures to adequately identify and safeguard CDBG property?
b. Was equipment essential to the program?
c. Is there documentation for the acquisition?
d. Were at least three (3) bids secured? If not, why?
e. Was the lowest bidder accepted? If not, why?
f. What method is implemented to prevent property loss?
4. Has a physical inventory taken place and the results reconciled with property records within the last two years?
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5. If the sub-recipient disposed of equipment/property that was purchased with Federal funds within the last five years:
a. Were proceeds from the sale reported as program income? b. Did the grantee approve expenditure of program income? c. Was the program income returned to the grantee?
H. Non-Discrimination and Actions to Further Fair Housing
1. Equal Employment Opportunity – Refer to 570.506, 601 and 602. Note any deficiencies.
2. Section 3 – Opportunities for Training and Employment for Local Residents – Refer to 570.506(g)(5) and 570.607(a) (affirmative action). Note any deficiencies.
a. Has the required Section 3 language been included in all subcontract agreements as required on p.12 (3)(a) of the prime sub-recipient agreement with the City?
3. Fair Housing Compliance – Refer to 570.904 and 570.601(b). Note any deficiencies.
4. Requirements for Disabled Persons – Refer to 8.6. Note any concerns.
5. Women and Minority Business Enterprises – Refer to 570.506(g), 85.36(e), and 84.44, affirmative steps documentation. Note any concerns.
6. Affirmative Action – Has the sub -recipient submitted a plan for an Affirmative Action Program for approval prior to the award of funds? (See p.10 (B)(1) of City/Sub-recipient agreement).
7. Is there any evidence of religious or political activities in CDBD projects?
I. City/Sub-recipient Agreement Compliance
A. City Recognition - Verify sub-recipient has recognized the role of the City in providing services through the agreement. All activities, facilities and items utilized pursuant to this agreement shall be prominently labeled as to funding source.
B. Staffing - Have there been any changes to key personnel assigned or their general responsibilities under this project? Were they approved prior to implementation as required by the Agreement?
C. Notification - Was each labor union and representative of workers with which the sub- recipient has a collective bargaining agreement or other contract or understanding, notified of the sub-recipient’s commitments as provided in the Agreement?
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D. Subcontracts and Assignability – Has the sub -recipient obtained approval for all subcontracts with any agency or individual created in relation to the performance of the agreement?
a. Have all of the provisions of the original sub-recipient agreement been included in all subcontract agreements?
b. Have all subcontractors been monitored on a regular basis as required?
J. Conclusion and Follow-up
1. Is the sub -recipient meeting the terms of the Sub -Recipient Agreement and HUD regulations? Discuss both positive conclusions and any weaknesses identified.
2. Identify any follow-up measures to be taken by the grantee and/or the sub-recipient as a result of this monitoring review.
a. List the required schedule for implementing corrective actions or making improvements.
b. List the schedule for any needed technical assistance or training and identify who will provide the training.
Project Monitor Date
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DETERMINATION OF EXEMPTION
Environmental Review for Activity/Project that is
Exempt or Categorically Excluded
Not Subject to Section 58.5
Pursuant to 24 CFR Part 58.34(a) and 58.35(b)
Project Information
Project Name:
Responsible Entity:
Grant Recipient (if different than Responsible Entity):
State/Local Identifier:
Preparer:
Certifying Officer Name and Title:
Consultant (if applicable):
Project Location:
Description of the Proposed Project [24 CFR 58.32; 40 CFR 1508.25]:
Level of Environmental Review Determination:
Activity/Project is Exempt per 24 CFR 58.34(a): _____________ Activity/Project is Categorically Excluded Not Subject To §58.5 per 24 CFR 58.35(b):
____________________
Funding Information
Grant Number HUD Program Funding Amount
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Estimated Total HUD Funded Amount:
This project anticipates the use of funds or assistance from another Federal agency in addition to HUD in the form of (if applicable):
Estimated Total Project Cost (HUD and non-HUD funds) [24 CFR 58.32(d)]:
Compliance with 24 CFR §50.4 and §58.6 Laws and Authorities Record below the compliance or conformance determinations for each statute, executive order, or regulation. Provide credible, traceable, and supportive source documentation for each authority. Where applicable, complete the necessary reviews or consultations and obtain or note applicable permits of approvals. Clearly note citations, dates/names/titles of contacts, and page references. Attach additional documentation as appropriate.
Compliance Factors:
Statutes, Executive Orders,
and Regulations listed at 24
CFR 50.4 and 58.6
Are formal
compliance
steps or
mitigation
required?
Compliance determinations
STATUTES, EXECUTIVE ORDERS, AND REGULATIONS LISTED AT 24 CFR §58.6 Airport Runway Clear Zones
and Accident Potential Zones
24 CFR Part 51 Subpart D
Yes No
Coastal Barrier Resources
Coastal Barrier Resources Act, as
amended by the Coastal Barrier
Improvement Act of 1990 [16
USC 3501]
Yes No
Flood Insurance
Flood Disaster Protection Act of
1973 and National Flood
Insurance Reform Act of 1994
[42 USC 4001-4128 and 42 USC
5154a]
Yes No
Mitigation Measures and Conditions [40 CFR 1505.2(c)]
Summarize below all mitigation measures adopted by the Responsible Entity to reduce, avoid, or eliminate adverse environmental impacts and to avoid non-compliance or non-conformance with the above-listed authorities and factors. These measures/conditions must be incorporated into project contracts, development agreements, and other relevant documents. The staff responsible for implementing and monitoring mitigation measures should be clearly identified in the mitigation plan.
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Law, Authority, or Factor
Mitigation Measure
Preparer Signature: Date:
Name/Title/Organization:
Responsible Entity Agency Official Signature:
Date:
Name/Title: _____________________________________________________________
This original, signed document and related supporting material must be retained on file by the Responsible Entity in an Environmental Review Record (ERR) for the activity/project (ref: 24 CFR Part 58.38) and in accordance with recordkeeping requirements for the HUD program(s).
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DETERMINATION OF CATEGORICAL EXCLUSION
Environmental Review for Activity/Project that is
Categorically Excluded
Subject to Section 58.5
Pursuant to 24 CFR 58.35(a)
Project Information
Project Name:
Responsible Entity:
Grant Recipient (if different than Responsible Entity):
State/Local Identifier:
Preparer:
Certifying Officer Name and Title:
Grant Recipient (if different than Responsible Entity):
Consultant (if applicable):
Direct Comments to:
Project Location:
Description of the Proposed Project [24 CFR 50.12 & 58.32; 40 CFR 1508.25]:
Level of Environmental Review Determination:
Categorically Excluded per 24 CFR 58.35(a), and subject to laws and authorities at §58.5:______________________________________________________________
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Funding Information
Grant Number HUD Program Funding Amount
Estimated Total HUD Funded Amount:
Estimated Total Project Cost (HUD and non-HUD funds) [24 CFR 58.32(d)]:
Compliance with 24 CFR 50.4, 58.5, and 58.6 Laws and Authorities Record below the compliance or conformance determinations for each statute, executive order, or regulation. Provide credible, traceable, and supportive source documentation for each authority. Where applicable, complete the necessary reviews or consultations and obtain or note applicable permits o f approvals. Clearly note citations, dates/names/titles of contacts, and page references. Attach additional documentation as appropriate.
Compliance Factors:
Statutes, Executive Orders,
and Regulations listed at 24
CFR §58.5 and §58.6
Are formal
compliance
steps or
mitigation
required?
Compliance determinations
STATUTES, EXECUTIVE ORDERS, AND REGULATIONS LISTED AT 24 CFR 50.4 & 58.6
Airport Hazards
24 CFR Part 51 Subpart D
Yes No
Coastal Barrier Resources
Coastal Barrier Resources Act, as
amended by the Coastal Barrier
Improvement Act of 1990 [16
USC 3501]
Yes No
Flood Insurance
Flood Disaster Protection Act of
1973 and National Flood
Insurance Reform Act of 1994
[42 USC 4001-4128 and 42 USC
5154a]
Yes No
STATUTES, EXECUTIVE ORDERS, AND REGULATIONS LISTED AT 24 CFR 50.4 & 58.5
Clean Air Yes No
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Clean Air Act, as amended,
particularly section 176(c) & (d);
40 CFR Parts 6, 51, 93
Coastal Zone Management
Coastal Zone Management Act,
sections 307(c) & (d)
Yes No
Contamination and Toxic
Substances
24 CFR Part 50.3(i) & 58.5(i)(2)
Yes No
Endangered Species
Endangered Species Act of 1973,
particularly section 7; 50 CFR
Part 402
Yes No
Explosive and Flammable
Hazards
24 CFR Part 51 Subpart C
Yes No
Farmlands Protection
Farmland Protection Policy Act
of 1981, particularly sections
1504(b) and 1541; 7 CFR Part
658
Yes No
Floodplain Management
Executive Order 11988,
particularly section 2(a); 24 CFR
Part 55
Yes No
Historic Preservation
National Historic Preservation
Act of 1966, particularly sections
106 and 110; 36 CFR Part 800
Yes No
Noise Abatement and Control
Noise Control Act of 1972, as
amended by the Quiet
Communities Act of 1978; 24
CFR Part 51 Subpart B
Yes No
Sole Source Aquifers
Safe Drinking Water Act of 1974,
as amended, particularly section
1424(e); 40 CFR Part 149
Yes No
Wetlands Protection
Executive Order 11990,
particularly sections 2 and 5
Yes No
Wild and Scenic Rivers
Wild and Scenic Rivers Act of
1968, particularly section 7(b)
and (c)
Yes No
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ENVIRONMENTAL JUSTICE
Environmental Justice
Executive Order 12898
Yes No
Field Inspection (Date and completed by):
Summary of Findings and Conclusions:
Mitigation Measures and Conditions [40 CFR 1505.2(c)]
Summarize below all mitigation measures adopted by the Responsible Entity to reduce, avoid, or eliminate adverse environmental impacts and to avoid non -compliance or non-conformance with the above-listed authorities and factors. These measures/conditions must be incorporated into project contracts, development agreements, and other relevant documents. The staff responsible for implementing and monitoring mitigation measures should be clearly identified in the mitigation plan.
Law, Authority, or Factor
Mitigation Measure
Determination:
This categorically excluded activity/project converts to Exempt, per 58.34(a)(12) because there are no circumstances which require compliance with any of the federal laws and authorities cited at §58.5. Funds may be committed and drawn down after certification of this part for this (now) EXEMPT project; OR
This categorically excluded activity/project cannot convert to Exempt because there are circumstances which require compliance with one or more federal laws and authorities cited at §58.5. Complete consultation/mitigation protocol requirements, publish NOI/RROF and obtain “Authority to Use Grant Funds” (HUD 7015.16) per Section 58.70 and 58.71 before committing or drawing down any funds; OR
This project is now subject to a full Environmental Assessment according to Part 58 Subpart E due to extraordinary circumstances (Section 58.35(c)).
Preparer Signature: __________________________________________Date: _________
Name/Title/Organization: __________________________________________________
________________________________________________________________________ 475
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Responsible Entity Agency Official Signature:
__________________________________________________________Date: ________
Name/Title: ______________________________________________________________
This original, signed document and related supporting material must be retained on file by the Responsible Entity in an Environmental Review Record (ERR) for the activity/project (ref: 24 CFR Part 58.38) and in accordance with recordkeeping requirements for the HUD program(s).
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15. GLOSSARY
GLOSSARY OF ACRONYMS
AI Analysis of Impediments to Fair Housing Choice
AMI Area Median Income
CAPER Consolidated Annual Performance and Evaluation Report CBDO Community-Based Development Organization
CDBG The Federal Community Development Block Grant Program CDF Community Development Fund
CFR Code of Federal Regulations. Also referred to as "the regs" CHAS Data Comprehensive Housing Affordability Strategy
CPD The Office of Community Planning and Development
CPMP Tool Consolidated Plan Management Process tool
CPP Citizen Participation Plan
EA Environmental Assessment
EIS Environmental Impact Statement
ESG The federal Emergency Shelter Grant program
FONSI Finding of No Significant Impact
GMP System Grants Management Process System
GPO Government Printing Office (online access to CFRs)
HOPWA The federal Housing Opportunity for Persons With AIDS HUD The federal Department of Housing and Urban Development IDIS Integrated Disbursement and Information System
LEP Limited English Proficient
LMA Low- and Moderate-Income Area
LMI Low- and Moderate-Income
LOCCS Line of Credit Control System. Also referred to as "locks".
MRER Minor Rehabilitation Environmental Review
NEPA National Environmental Policy Acts
NRSA Neighborhood Revitalization Strategic Area
OMB The Federal Office of Management and Budget
PHA Public Housing Agency
RFP/RFQ Request for Proposals/Request for Qualifications RLF Revolving Loan Fund
RROF Request for Release of Funds
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HOME Investment Partnership Program (HOME)
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City of Lynwood
Community Development Department
11330 Bullis Road
Lynwood, CA 90650
DRAFT JUNE 2025
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CHAPTER 1: OVERVIEW OF THE HOME PROGRAM ..................................................................................................... 5 Introduction .............................................................................................................................................................. 5 Purposes and Goals .................................................................................................................................................. 5 Allocation of Funds (92.50 and 92.102) .................................................................................................................... 7 HOME-Funded Activities ........................................................................................................................................... 8 Obligations (24 CFR 92.218-92.222) ....................................................................................................................... 10 Conflict Resolution .................................................................................................................................................. 10 CHAPTER 2: HOME PROGRAM RULES ...................................................................................................................... 12 PART 1: GENERAL PROGRAM RULES ........................................................................................................................... 12 Definition of a Project ............................................................................................................................................. 12 Subsidy .................................................................................................................................................................... 12 Eligible Costs ........................................................................................................................................................... 16 Prohibited Activities ................................................................................................................................................ 18 Hierarchy of the use of funds ................................................................................................................................. 20 Eligible Repairs and Rehabilitation ......................................................................................................................... 20 Property .................................................................................................................................................................. 23 Applicants and Beneficiaries ................................................................................................................................... 26 Long-Term Affordability .......................................................................................................................................... 29 PART 2: COST ALLOCATION AND SUBSIDY LAYERING ................................................................................................. 31 Cost Allocation ........................................................................................................................................................ 32 Subsidy Layering ..................................................................................................................................................... 33 Other Requirements ............................................................................................................................................... 34 Termination or Denial of Program Assistance ........................................................................................................ 35 Additional Funds ..................................................................................................................................................... 36 Death of Applicant .................................................................................................................................................. 36 Repayment .............................................................................................................................................................. 37 Assumption ............................................................................................................................................................. 38 Subordination ......................................................................................................................................................... 38 Monitoring .............................................................................................................................................................. 38 CHAPTER 3: CHDO REQUIREMENTS AND ACTIVITIES ............................................................................................... 40 PART 1: HOME PROGRAM REQUIREMENTS................................................................................................................ 40 CHDO Set-Aside Requirement ................................................................................................................................ 40 CHDO Qualifying Criteria ........................................................................................................................................ 40 CHDOs Set-Aside Roles: Owner, Developer, and Sponsor ...................................................................................... 50 CHDO Eligible Uses.................................................................................................................................................. 53 CHDO Special Assistance......................................................................................................................................... 54 PART 2: PROGRAM DESIGN AND IMPLEMENTATION ................................................................................................. 55 CHDO Capability ...................................................................................................................................................... 56 Types of Projects ..................................................................................................................................................... 56 Application Period .................................................................................................................................................. 56 Pre-Application for CHDO Status ............................................................................................................................ 56 CHDO Determination Worksheet ........................................................................................................................... 61 CHDO Checklist ....................................................................................................................................................... 63 Project Application ................................................................................................................................................. 66 Projects ................................................................................................................................................................... 66 CHDO Proceeds ....................................................................................................................................................... 68 479
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CHDO Certification .................................................................................................................................................. 70 Monitoring .............................................................................................................................................................. 71 Default .................................................................................................................................................................... 72 CHAPTER 4: HOMEOWNER REHABILITATION ACTIVITIES ......................................................................................... 74 PART 1: HOME PROGRAM REQUIREMENTS (GENERAL) ............................................................................................. 74 Eligible Activities ..................................................................................................................................................... 74 Forms of Finance Assistance ................................................................................................................................... 75 Eligible Costs ........................................................................................................................................................... 76 The Property ........................................................................................................................................................... 77 The Applicant/Beneficiary ...................................................................................................................................... 78 Long-Term Affordability .......................................................................................................................................... 79 Other Federal Requirements .................................................................................................................................. 79 PART 2: PROGRAM DESIGN AND IMPLEMENTATION ................................................................................................. 83 Objectives ............................................................................................................................................................... 83 Homeowner Rehabilitation Activities ..................................................................................................................... 84 Form of Assistance .................................................................................................................................................. 85 Eligible Applicant .................................................................................................................................................... 87 Qualifying Households ............................................................................................................................................ 87 Application Intake/Screening/Determination of Household Adjusted Gross In come ............................................ 88 Qualifying Properties .............................................................................................................................................. 89 Eligible Costs ........................................................................................................................................................... 90 Staffing Plan ............................................................................................................................................................ 91 CHAPTER 5: PROCESSING PROCEDURES ................................................................................................................... 97 PART 1: APPLICATION PROCESS .................................................................................................................................. 97 PART 2: APPLICATION INTAKE..................................................................................................................................... 98 PART 3: PROCUREMENT ........................................................................................................................................... 110 Construction Management ...................................................................................................................................115 Environmental Requirements and Procedures .....................................................................................................148 CHAPTER 6: ADMINISTRATIVE REQUIREMENTS ..................................................................................................... 188 PART 1: GENERAL REQUIREMENTS ........................................................................................................................... 188 Eligible Administrative and Planning Costs ...........................................................................................................188 Uniform Administrative Requirements .................................................................................................................189 Written Agreements .............................................................................................................................................190 Conflict of Interest ................................................................................................................................................197 Religious Organizations.........................................................................................................................................199 HOME Investment Trust Fund Account ................................................................................................................199 HOME Program Income ........................................................................................................................................201 Pre-Award Costs ...................................................................................................................................................202 HOME Program Draws ..........................................................................................................................................202 PART 2: FINANCIAL MANAGEMENT .......................................................................................................................... 203 Internal Controls ...................................................................................................................................................216 Record-Keeping .....................................................................................................................................................216 Reporting Requirements .......................................................................................................................................220 Monitoring ............................................................................................................................................................221 Integrated Disbursement and Information System (IDIS) ....................................................................................246 CHAPTER 7: OTHER FEDERAL REQUIREMENTS ....................................................................................................... 248 480
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Non-Discrimination and Equal Access ..................................................................................................................251 Employment and Contractor ................................................................................................................................256 Section 3 ...............................................................................................................................................................258 Site and Neighborhood Standards ........................................................................................................................261 Lead-Based Paint Safe Housing Rule .....................................................................................................................261 GLOSSARY OF HOME TERMS .................................................................................................................................. 265 CITY OF LYNWOOD LIST OF FORMS ........................................................................................................................ 273 CITY OF LYNWOOD LIST OF EXHIBITS ..................................................................................................................... 275 481
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CHAPTER 1: OVERVIEW OF THE HOME PROGRAM
Introduction
The HOME Program is a federal block grant program directed by the U.S. Department of Housing and Urban Development (HUD) and is designed to create affordable housing for low -income households. The City of Lynwood is responsible for the administration of its HOME Program.
The purposes of the HOME Program include expanding the supply of affordable housing for low - and very low-income persons; improving the means of state and local governments to implement strategies to achieve adequate supplies of decent, affordable housing; and providing both financial and technical assistance to participants to develop model programs for a ffordable, low -income housing.
HOME grants are awarded each year through a competitive application process to construct, acquire and/or rehabilitate housing, or develop new housing for homeownership. Successful grant applicants have included Community Housing Development Organizations (CHDOs).
Purposes and Goals
The HOME Program purposes and goals are:
1. Expanding the supply of decent, safe, sanitary, and affordable housing for very low- income and low-income families in Lynwood (those at or below 80 percent of area median income).
2. Mobilizing and strengthening the abilities of units of local governments, public housing authorities, and community housing development organizations to implement strategies for achieving an adequate supply of decent, safe, sanitary, and affordable housing.
3. Providing participating entities, on a coordinated basis, with various forms of federal housing assistance.
The City of Lynwood will focus on the following purposes and goals:
1. Assisting in preserving existing or constructing decent, safe, sanitary, and affordable housing in areas of greatest demonstrated need in the community in the City of Lynwood, ensuring geographic distribution, where and when possible, taking into consideration the historical information of the property and area, the current housing market, and the prospects for future demand.
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2. In areas where greatest need is identified, giving preference to those projects which provide the greatest number of qualified affor dable units relative to the HOME funds allocated, while giving consideration to serving lower income families in Lynwood.
3. Making sure units are affordable to households for the applicable period of affordability.
4. Allocating only the minimum amount of HOM E funds that the City of Lynwood determines to be necessary for the financial feasibility of the project and its viability as a qualified affordable housing project throughout the period of affordability.
5. Assisting in providing housing to meet the needs and priorities outlined in the City’s Consolidated Plan and its corresponding Annual Action Plan.
6. Providing opportunities for CHDOs to access the HOME Program on behalf of low - and very low-income residents.
7. Encouraging innovative approaches in planning, designing, constructing, enhancing energy efficiency, and financing that are cost effective in providing affordable housing.
8. Giving preference to those applications that show a greater degree of readiness to proceed with the development.
9. Allowing applic ants the ability to self -monitor their capabilities, based on geographic area, population, need and capacity.
10. Maximizing the investment of private capital to leverage HOME funds and use existing agencies and private sector mortgage financial institution r esources, while retaining the affordability of housing with local and private investment.
In accordance with these stated purposes and goals, the City of Lynwood will not process any application that is not consistent with the purposes and goals of the Ci ty's Consolidated Plan. The City of Lynwood will consider the capacity of its management team, and the availability of contractors and subcontractors in assessing the viability of each proposed project.
DISCLAIMER
This manual is a tool created for City o f Lynwood Community Development Department staff, participants and/or any related parties as a support and practical guidance related to the HOME Program.
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This manual is not intended to change, enlarge, or restrict any requirement found in the contracts, HUD Final Rule, City of Lynwood rules and policies , and/or any related federal or state rule governing this program.
This manual is not meant to be a substitute for HOME Program regulations, but as a supplement to them. It is not exhaustive regarding all considerations affecting the use of HOME Program funds .
While careful consideration and due care has been used in developing the manual, HOME Program participants are encouraged to consult with the City of Lynwood HOME Program staff to ensure correct interpretation of policies, regulations, and procedures . The City of Lynwood reserves the right to implement additional policies as needed.
It must be noted that while the City of Lynwood does not operate all HOME program activities, they may be addressed thoughout this policy and procedure manual in the possibility that the City may decide to operate such in the future.
Allocation of Funds (92.50 and 92.102)
HOME funds are allocated annually by formula to State and local governments by HUD. The City of Lynwood receives funds through this formula, and the Community Development Department is the lead agency that administers those funds . Under the HOME Program, the City of Lynwood is designated as a “Participating Jurisdiction” (PJ).
The City of Lynwood is subject to several HOME Program requirements when allocating funds to other entities. These requirements affect the way the City of Lynwood and its recipient s run its HOME Program.
Timeframes
The City of Lynwood has 24 months to enter into written agree ments with developers, owners, contractors, Subrecipients, and CHDOs to commit HOME funds and 5 years to expend HOME funds.
If the City does not meet these timeframes, it risks losing the allocated HOME funds.
Use of Funds
The HOME Program places the following limits on the "use" of funds:
1. Planning and Administration (92.207 ): The City of Lynwood may use up to 10 percent of their HOME Program allocation and program income received for eligible and reasonable planning and administration costs.
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2. CHDOS: The City of Lynwood must reserve a minimum of 15 percent of its annual allocation for activities undertaken by qualified Community Housing Development Organizations (CHDOs).
HOME-Funded Activities
The City's HOME funds may be used to support the following general affordable housing activities:
1. Homeowner rehabilitation : HOME funds may be used to assist existing owner - occupants with the repair, rehabilitation, or reconstruction of their homes.
2. Homebuyer activities: HOME funds can be used to finance the ac quisition and/or rehabilitation or new construction of homes for homebuyers.
3. Rental housing: Affordable rental housing may be acquired and/or rehabilitated, or constructed. The City’s HOME funds do not currently support rental housing.
The City of Lynwood will use its HOME Program funds for the following programs:
1. Housing Rehabilitation Programs: These are home improvement program s to provide technical and financial assistance to qualifying homeowners of residential properties. A maximum of $5 0,000 is available per homeowner in the form of a $50,000 deferred payment loan and/or a $30,000 grant; see below for details.
Owner-Occupied Rehabilitation Program – HOME Loans
A z ero-interest (0%) def erred loan will be made available to households whose incomes do not exceed the 80% of the Area Median Income adjusted for household size as identified by HUD. Program loans may not be less than $5,000 and may not exceed $50,000. There is a limit of one (1) loan per eligible owner. No loan can be made if there is more than one mortgage or encumbrance on the property. The loan must be repaid in full when the property is sold, refinanced, or title is transferred.
Applicants must own and reside in the home throughout the life of the loan.
Owner-Occupied Rehabilitation Program – HOME Grants
One-time grants of up to $ 30,000 will be made available to assist eligible homeowners. Applicants may use up to $5,000 of the grant funds to address emergency repairs. The remaining grant funds will be made available to the applicant at such time that the applicant is processed under the regular process.
Emergencies are conditions that require housing rehabilitation work necessary to remediate hazardous code-related issues. To be eligible for an emergency grant, the 485
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required repair must pose an immediate threat to the structural integrity of the residence or the health and/or safety of the property’s occupants.
This program is restricted to single -family homes only. The total of the existing mortgage debt plus loan amount must not exceed 80% of the assessed property value. Applicants must meet income eligibility and program requirements.
HOME Program Roles and Relationships
The City of Lynwood may rely on numerous partners to create affordable housing under its HOME program. Partners play different roles at different times, depending upon the project or activity being undertaken. Defined below are some of the types of partners:
1. CHDOs: A CHDO is a private, nonprofit organization that meets a series of qualifications prescribed in the HOME regulations. The City of Lynwood must use a minimum of 15 percent of its annual allocation for housing owned, developed, or sponsored by CHDOs . The City will evaluate the organizatio ns’ qualifications and designate them as CHDOs. CHDOs also may be involved in the program as Subrecipients, but the use of HOME funds in this capacity is not counted toward the 15 percent set-aside.
2. Subrecipient: A Subrecipient is a public agency or nonp rofit organization that may be selected by the City to administer all or a portion of the City's HOME Program. It may or may not also qualify as a CHDO . A public agency or nonprofit organization that receives HOME funds solely as a developer or owner of ho using is not considered a Subrecipient.
3. Developers, Owners, and Sponsors : Individuals, for-profit entities and nonprofits can participate in the HOME Program as owners, developers, or sponsors of housing.
When CHDOs use HOME funds as owners, developers or sponsors, this use of HOME funds counts toward the 15 percent CHDO set-aside.
4. Private Lenders : One of the goals of the HOME Program is to establish strong public/private partnerships. The City is required to make all reasonable efforts to maximize participation by private lenders and other members of the private sector.
The Community Reinvestment Act (CRA) requirements provide an incentive to private lending institutions to become involved in HOME Program activities.
5. Faith Based Organizations : Faith-based or religious organizations are now able to compete on an equal footing with other organizations for HUD funding. Funding may be provided directly to any Recipient, as long as those funds are not used to support inherently religious activities . As of the September 30, 2003 Final Rule for 24 CFR Part 92, HUD identified regulations for eight programs, including the HOME 486
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Program, to eliminate barriers and ensure that these programs are open to all qualified organizations regardless of their religious character.
6. Third-Party Contractors: The City may contract with a private for -profit contractor to administer all or part of its HOME Program. Unlike public agencies or nonprofits, contractors must be procured through a competitive process in accordance with applicable Office of Management and Budget (OMB) procurement requirements .
These requirements are found in 24 CFR Part 85 (for PJs) and Part 84 (for nonprofits).
Obligations (24 CFR 92.218-92.222)
Generally, the City must make contributions to housi ng that qualifies as affordable housing under the HOME program throughout a fiscal year. The contributions must total not less than 25 percent of the funds drawn from the City’s HOME Investment Trust Fund Treasury account in that fiscal year. The City of Lynwood has a zero-match obligation or is exempt from this obligation because the City’s poverty rate exceeds 11.5 percent.
Recordkeeping, Reporting, and Monitoring (992.508 and 92.509)
1. Program staff is to establish and maintain a permanent "master file" for each application. Master files are to be kept for five years for all programs and legal loan files an additional five years after a loan has been paid in full. Applications that were given a program number and were denied, withdrawn, or canceled will be kept for five years. Applications that were submitted, without all proper information and were canceled, information will be inputted into the database and kept for a one year. Master files are to be stored according to the type of program: grant, rebate, loan, legal file or paid.
2. The City of Lynwood is required to keep records that enable HUD to determine whether they have met program and project requirements . The City is also responsible for enforcing these requirements with all its HOME Program Recipients.
Monitoring and record -keeping requirements are outlined in Chapter 7; Part II:
Recordkeeping, Reporting, and Monitoring of this manual.
3. The City of Lynwood must also submit an annual performance report to HUD known as the Consolidated Annual Perfor mance and Evaluation Report (CAPER.) The City requires that all Recipients (including CHDOs) meet certain reporting obligations to assist with this annual responsibility. (See Chapter 7: Recordkeeping, Reporting, and Monitoring for further information on reporting requirements.)
Conflict Resolution
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The City of Lynwood meets all the requirements of 24.CFR, PART 92.350 of HOME final rule, as amended 2013. Whenever a relationship is declared between applicants, contractor, and program staff, the Program Administrator must submit a memo to the Director explaining the nature of the relationship and asking for directive in the assignment of the case to appropriate staff. Ordinarily the case is to be assigned to staff that do not have preexisting relationships with the applicant. A preexisting relationship will not disqualify an applicant from participating in the program, provided the applicant meets all eligibility criteria.
No member of the City government, other City officials, employees, or agent of the City who exercise policy, decision-making functions, or responsibilities in connection with the planning and implementation of the program shall directly or indirectly be eligible for this program, unless the application for assistance has been reviewed and approved according to applicable HUD policies.
This ineligibility remains for one year after an individual's relationship with the City ends.
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CHAPTER 2: HOME PROGRAM RULES
PART 1: GENERAL PROGRAM RULES
The City of Lynwood allocates funds to develop eligible HOME projects . The HOME program contains a number of basic rules that apply to all program activities. These rules involve:
1. The definition of a project;
2. The form and amount of subsidy;
3. Eligible costs;
4. The property;
5. The applicant or beneficiary;
6. The long-term affordability of the project; and
7. Applicability of other federal requirements.
The following two definitions are critical to understanding the requirements that are outlined in the following sections.
Definition of a Project
Project: A site or sites together with any building (including manufactured housing unit) or buildings located on the site(s) under common ownership, management, and financing, to be assisted with HOME funds as a single undertaking . The “project” includes all of the activities associated with the site and building.
HOME-Assisted Units: The HOME Program distinguishes between the units in a project that have been assisted with HOME funds and those that have not – hence the term HOME-assisted unit. This distinction between HOME-assisted and unassisted units allows HOME funds to be spent on mixed- income projects while still targeting HOME dollars only to income-eligible households.
Subsidy
Eligible Forms of Subsidy
HOME allows virtually any form of financial assistance, or subsidy, to be provided for eligible projects and to eligible beneficiaries through the City.
The HOME regulation lists the following forms of subsidy as eligible:
1. Interest bearing loans or adv ances: These loans are amortizing loans. Repayment is expected on a regular basis, usually monthly, so that over a fixed period of time, all of the principal and interest is repaid.
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a. Such loans may have interest rates at or below the prevailing market rate. Often, very low interest rates (i.e., one to three percent) can make monthly payments affordable to the borrower.
b. The property or some other assets are used as collateral. c. The term of the loan may vary. For home purchase, a term of up to 30 years is common while rehabilitation and construction loans tend to have terms of 10 to 15 years.
2. Non-interest-bearing loans or advances: The principal amounts of such loans are paid back on a regular basis over time, but no interest is charged.
As with interest-bearing loans, these loans will use the property or other assets as collateral and the term of the loan will vary depending on the nature of the activity funded. Such loans are made when the borrower is able to make regular payments but even a small amount of interest is not affordable.
3. Deferred loans (forgivable or repayable): These loans are not fully amortized. Instead, some, or even all, principal and interest payments are deferred to some point in the future.
Deferred loans can be structured in many different ways.
a. Deferred payment loans can be forgivable or repayable. b. If forgivable, the forgiveness might be structured to occur at one point in time (such as at the end of the affordability period), or forgiven incrementally (such as forgiving one- fifth of the loan each year over five years).
c. If repayable, repayment might be required at the sale or transfer of the property or at the end of a fixed period of time.
d. Like the amorti zing loans discussed above, these loans can accrue interest or be non - interest bearing.
e. Deferred payment loans require the property or some other form of collateral to be used as security for repayments.
f. Deferred payment loans are also referred to as “soft seconds.” They are increasingly being used to leverage private first mortgage financing in homeownership. They may also be used to help rental projects by allowing deferral of loan payments for the first few years until the project becomes stable.
4. Grants: Grants are provided with no requirement or expectation of repayment. a. Grants require no liens on the property or other assets. b. Grants are most commonly used for down payment and closing cost assistance in homebuyer programs or to provide assistance to very low-income owner-occupants for rehabilitation.
5. Interest Subsidies: This is usually an up -front discounted payment to a private lender in exchange for a lower interest rate on a loan. An interest subsidy may also be a deposit in an interest-bearing account from which monthly subsidies are drawn and paid to a lender along with the homeowner’s monthly payment.
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6. Equity Investments: An equity investment is an investment made in return for a share of ownership. Under this form of subsidy, the City acquires a financial stake in the assisted property and is paid a monetary return on the investment if money is left after expenses and loans are paid.
7. Loan Guarantees and Loan Guarantee Accounts: HOME funds may be pledged to guarantee loans or to capitalize a loan guarantee account. A loan guarantee or a loan guarantee account ensures payment of a loan in case of default.
a. A loan guarantee is a written promise to pay the lender some percentage of the outstanding principal balance of a loan in the event the borrower defaults. It may be held for a specified period of time or reduced by a specific amount over time as the loan principal is repaid.
b. A loan guarantee account is a loan loss reserve held by the lender in an amount equal to some percentage of the outstanding principal.
c. The lender holding the loan guarantee account may require a minimum balance, as well as a percentage of the principal amount of the loan. The percentage of the loan amount held as guarantee may vary from loan to loan, or from program to program.
HOME rules require that the amount of money in a loan guarantee account must be based on a reasonable estimate of the default rate on the guaranteed loans, and may not exceed 20 percent of the total outstanding principal guaranteed, except that the account may include a reasonable minimum balance.
8. Other forms approved by HUD: Other forms of assistance require HUD approval. If the City intends to use a form of assistance not listed above, the City's Consolidated Plan or Action Plan should describe the proposed form of assistance. Once approved by HUD as part of the Plan, no other HUD approval is required.
Project Subsidy Limits
The HOME Program has established a minimum subsidy amount of $1,000 and a maximum subsidy of $50,000. The subsidy limits are published by HUD each year. However, the City has the option to set -up different limits, as long as they comply with those limits e stablished by the HOME Program. Therefore, the City has set the following parameters for the Program.
1. Minimum HOME investment: The minimum amount of HOME funds is an average of $1,000, multiplied by the number of HOME-assisted units in the project.
a. The minimum only relates to the HOME funds, and not to any other funds that might be used for project costs.
b. The minimum HOME investment does not apply to TBRA.
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2. Maximum HOME Investment: The maximum per-unit HOME subsidy limit varies by PJ. HUD determines the maximum amounts, which are based on the City’s Section 221(d)(3) program limits for the metropolitan area each year. In all instances, the loan amount must be in accordance with the loan-to-value ratios explained below.
The Director has the authorit y to approve projects that exceed the standard maximum loan amount, when the standard maximum loan limit is not sufficient to bring the unit into code compliance and/or a health and safety standard conditions.
These special approvals are to be recommended on an “as needed” basis, and are subject to the maximum subsidy limits for the HOME Program.
3. Loan to Value (LTV) Ratio: Total indebtedness on the property cannot exceed 80% of the “after rehabilitation” value of the property.
4. Maximum per-unit subsidy limit is:
a. 100 percent of the dollar limits for a Section 221(d)(3) nonprofit sponsor, indexed for base city high cost areas, and adjusted for the number of bedrooms.
5. Actual HOME Investment: The actual subsidy provided will depend on the following factors:
a. The proportion of the total project cost that is HOME -eligible – some planned project costs may not be eligible expenses under the HOME Program.
b. The number of units in the project is HOME -assisted – projects may have a mix of HOME- and non-HOME-assisted units.
c. The financial needs of the project – HOME projects may not receive more subsidy than is required to make them financially feasible.
6. Costs in excess of the Program amounts may be supplemented with personal funds.
7. Affordability Percentage: Monthly housing costs should not be more than 30% of total income. HUD has developed the Housing Affordability Data System (HADS) to provide consistent measures of affordability over a long period of time. The HADS system analyzes the affordability of housing from several perspectives, including the fraction of income that a household spends on housing each month. HADS uses the standard assumption that a unit is affordable if the household spends no more than 492
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30% of its income on housing. In this context, “housing” includes utility payments and, for owner-occupied housing, real estate taxes, hazard insurance, and fees such as condo fees or homeowner’s association fees.
(https://www.huduser.gov/portal/datasets/hads/hads.html)
The American Housing Survey (AHS), released by HUD and the US Census Bureau every two years, determines monthly housing costs by “summing, when applicable, utility costs, real estate taxes, cost of homeowner insurance, condominium/homeowner’s association fees, land/site rent, other mortgage charges, other required mortgage fees, mortgage payments, rout ine maintenance costs, and rent payments”. (https://www.census.gov/programs-surveys/ahs.html)
PROCEDURE: To determine what is required and reasonable, the City of Lynwood will complete a cost allocation and subsidy layering analysis . HOME project awards a re based on the completed cost allocation and subsidy layering analysis.
Cost allocation and subsidy layering are impacted by any changes in the number of HOME-assisted units, total number of units in the project, development cost, and/or financing sources.
NOTE: Because of these requirements, all of the City of Lynwood HOME Recipients are obligated to contact the City as soon as there are any changes in project size, scope, cost, or financing sources.
Eligible Costs
Eligible costs depend on the nature of the program activity. A general list of eligible costs includes the following:
1. New construction: HOME funds may be used for new construction of both rental and ownership housing. Any project that includes the addition of dwelling units outside the existing walls of a structure is considered new construction.
2. Rehabilitation: This includes the alter ation, improvement, or modification of an existing structure . It also includes moving an existing structure to a foundation constructed with HOME funds. Rehabilitation may include adding rooms outside the existing walls of a structure, but adding a housing unit is considered new construction.
3. Reconstruction: This refers to rebuilding a structure on the same lot where housing is standing at the time of project commitment. HOME funds may be used to build a new foundation or repair an existing foundation . Reconstruction also includes replacing a substandard manufactured house with a new manufactured house . 493
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During reconstruction, the number of rooms per unit may change, but the number of units may not.
4. Reconstruction and Environmental Review (24 CFR Part 58 ): Reconstruction may take place anywhere on the lot; however, reconstruction of a single-family unit in a new location on the lot is classified as new construction for purposes of environmental review. Reconstruction of multi-family is viewed as new construction for the purposes of environmental review if the number of units is increased or decreased by more than 20 percent and/or the cost of reconstruction is more than 75 percent of the total estimated cost of the replacement after the work is completed.
5. Conversion: Conversion of an existing structure from another use to affordable residential housing is usually classified as rehabilitation. If conversion involves additional units beyond the walls (envelope) of an existing structure, the entire project will be deemed new construction. Conversion of a structure to commercial use is prohibited.
6. Site improvements: Site improvements must be in keeping with improvements to surrounding standard projects. They include new, on-site improvements (sidewalks, utility connections, sewer and water lines, etc.) where none are present . They are essential to development or repair of existing improvements. Building new, off-site utility connections to an adjacent street is also eligible. Off-site infrastructure is not eligible as a HOME expense, but may be eligible for match credit.
Example: Infrastructure, such as sewer and water lines in a public street in front of a HOME -assisted property, cannot be paid for with HOME funds . However, the connections that run from the HOME -assisted property to the street are eligible HOME costs since they are essential to the property.
7. Acquisition of property : Acquisition of existing standard property, or substandard property in need of rehabilitation, is eligible as part of either a homebuyer program or a rental housing project . After acquisition, rental units must meet HOME rental occupancy, affordability and lease requirements.
8. Acquisition of vacant land: HOME funds may be used for acquisition of vacant land only if construction will begin on a HOME project within 12 months of purchase.
Land banking is prohibited.
9. Demolition: Demolition of an existing structure may be funded through HOME only if construction will begin on the HOME project within 12 months.
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10. Relocation costs: The Uniform Relocation Act and Section 104(d) (also known as the Barney Frank Amendments; see the appendix for detailed information on these requirements) apply to all HOME -assisted p roperties. Both permanent and temporary relocation assistance are eligible costs. Staff and overhead costs associated with relocation assistance are also eligible.
11. Project-related soft costs: These costs must be reasonable and necessary. Examples of eligible project soft costs include:
a. Finance-related costs;
b. Building and planning permits;
c. Plans and specifications;
d. Fees – property assessment; recording and filing; and private lender processing;
e. Reports – termite inspection; soils; geologic; and credit; f. Lead-related costs – testing; assessment; hazard reduction work; relocation; clearance
i. Lead-related costs, such as testing/assessment, hazard reduction work, relocation, and clearance will be paid as a lead grant. Lead testing and assessment must be in con junction with other rehabilitation work.
Stabilization/removal is limited to the items as specified in the work write up to comply with the lead regulations.
g. Architectural, engineering and related professional services; h. Tenant and homebuyer counseling, p rovided the recipient of counseling ultimately becomes the tenant or owner of a HOME-assisted unit; i. Project audit costs;
j. Affirmative marketing and fair housing services to prospective tenants or owners of an assisted project; and
k. PJ staff costs directly related to projects (not including TBRA).
Project-related soft costs, such as title reports, appraisal costs, cost of third party verifications, recording fees, etc., will be paid by the City as project delivery cost and will be not be included as part of the loan, grant or rebate, provided the applicant follow through with the program. If homeowner cancels assistance or fails to meet provisions, they may be subject to reimburse the City for these costs. Exception for reimbursement would be loss of job, illness of homeowner or family member residing in the home.
Prohibited Activities
The HOME Program regulations explicitly prohibit certain activities including:
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1. Project reserve accounts: HOME funds may not be used to provide project reserve accounts (except for initial operating deficit reserves) or to pay for operating subsidies.
2. Tenant-based rental assistance for certain purposes: HOME funds may not be used as rental assistance in conjunction with the federal Rental Rehabilitation Program (Section 17) to prevent displacements . They also may not be used for certain mandated existing Section 8 Program uses, such as Section 8 rent subsidies for troubled HUD-insured projects.
3. Match for other programs : HOME Program funds may not be used as the “nonfederal” match for other federal programs except to match McKinney Act funds
4. Development, operations, or modernization of public housing : HOME Program funds may not be used to provide assistance authorized under section 9 of the 1937 Act (Public Housing Capital and Operating Funds).
5. Properties receiving assistance under 24 CFR Part 248 (Prepayment of Low-Income Housing Mortgages): Properties receiving assistance through the Low-Income Housing Preservation and Resident Homeownership Act (LIHPRHA) or the Emergency Low Income Preservation Act (ELIHPA) are not eligible for HOME assistance except if the HOME assistance is provided to priority purchasers . These programs are no longer funded.
6. Double-dipping: During the first year after project completion, the City may commit additional funds to a project. After the first year, no additional HOME funds may be provided to a HOME -assisted project during the relevant period of affordability, except for:
a. Rental assistance to families may be renewed.
b. Rental assistance may be provided to families that will occupy housing previously assisted with HOME funds.
c. A homebuyer may be assisted with HOME funds to acquire a unit that was previously assisted with HOME funds.
7. Acquisition of a City -owned property: The City may not u se HOME Program funds to reimburse itself for property in its inventory or property purchased for another purpose. However, in anticipation of a HOME project, the City may use HOME funds to:
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a. Acquire property.
b. Reimburse itself for property acquired specifically for a HOME project with other funds.
8. Project-based rental assistance: HOME funds may not be used for rental assistance if receipt of the funds is tied to occupancy in a particular project. Funds from another source, such as Section 8, may be used for this type of project-based assistance in a HOME assisted unit. Further, HOME funds may be used for other eligible costs, such as rehabilitation, in units receiving project -based assistance from another source – for example, Section 8 or state-funded project-based assistance.
9. Pay for delinquent taxes, fees, or charges : HOME funds may not be used to pay delinquent taxes, fees, or charges on properties to be assisted with HOME funds.
Hierarchy of the use of funds
Program funds must be used in the following order of priority:
1. Life Threatening or Safety Repairs.
2. Health and Safety Hazards.
3. Livability Improvements.
4. Non-critical Improvements.
5. Other eligible general property rehabilitation work.
Eligible Repairs and Rehabilitation
Program funds are to be used for the rehabilitation of homes occupied by eligible owners/occupants. Rehabilitation means repairing or improving deteriorated or outdated houses.
Deteriorated materials and components must be replaced with like materials. No luxury upgrades are allowed. Eligible repairs and improvements include:
1. Repairs that rectify the most urgent health and safety hazards, such as:
a. Unsafe structural parts of a house, which are likely to collapse in the immediate future if not supported. (e.g. porch, roof, stairways) 497
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b. Electrical conditions that is likely to result in a fire or threaten human life in the immediate future. (e.g. overloaded circuits, and hazardous fixtures, switches, outlets, or wiring.)
c. Plumbing and septic systems repairs, which involve exposed sewage, leaking supply lines, and inoperable water heaters.
d. Mechanical system repairs that create conditions likely to result in a fire or leakage of gas or fumes.
e. Other conditions determined by staff that could result in a life-threatening situation in the immediate future.
Incipient means that the fixture or system is functional now, but it is likely to fail in a few years.
2. Repairs that improve deteriorated or inadequate features of the structure that pose no immediate threat to life but will damage the dwelling if ignored, such as:
a. Defects in electrical, plumbing, and mechanical fixtures b. Unsafe entrances and exits
c. Lack of smoke detector or similar device
d. Deteriorating or i nadequate structural conditions (e.g. crumbling foundations, dry rot, and termite damage)
e. Roofing
f. Heat exchanger in the furnace may become inoperative or hazardous g. Flooring
h. Driveway
i. Fumigation
j. Modifications that aid the mobility of the elderly and physically disabled. k. Other California Building Code deficiencies.
3. Improvements intended to improve the quality of life for dwellings, such as:
a. Overcrowding
b. Addition or renovation of bedrooms or bathrooms. (See Item 6 below.) c. Renovation of kitchen
d. Addition or renovation of laundry facility
e. Lack of energy or water-saving devices (replacement of existing items only) f. Heater
4. Improvements that do not address life threatening or quality of life issues but are eligible, provided that items a and b listed below are in conjunction with work performed:
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a. Sandblasting/stucco
b. Painting
5. Rehabilitation work not related to rectifying life threatening and urgent safety issues, fixing health and safety hazards, improving livability, and improving non -critical conditions is considered general property rehabilitation.
General property improvements for reconstruction would allow for the construction of a garage and/or a driveway.
6. The construction of additional bedrooms and bathrooms is allowed if the need can be demonstrated per the guidelines listed below. The accepted standard definition of overcrowding is more than 1.5 people per room or more than 2 people per bedroom.
The program will not fund additions to a home for a den or family room.
GUIDELINES FOR ROOM AND BATHROOM ADDITIONS
Maximum No. of Persons
in the Household
Number of Bedrooms Number of Bathrooms
1 0 1
1-2 1 1
3-4 2 2
5-6 3 2
7-8 4 2
9-10 5 3
11-12 6 3
The following costs are not eligible for the use of proceeds for the Lynwood HOME program:
1. Materials, fixtures, equipment, or landscaping of a type and quality that exceeds adequate service, or that is not customarily used for properties in the same general area. No luxury upgrades are allowed
2. Appliances
3. Construction, rehabilitation or modification to detached garages or structures under HOME program
4. Recreational items such as barbecues, bathhouses, greenhouses, swimming pools, saunas, television antennae, and tennis courts
5. Acquisition of land
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6. Room or bathroom additions, except for addressing overcrowding conditions
7. Property taxes
8. Reimbursement of costs incurred prior to approval of assistance
9. Assistance related costs
10. Repairs related to outstanding insurance claims or claims already paid
Property
The HOME Program rules concerning the type and value of properties eligible for assistance are:
1. Property Types
a. Property must be a single -family home, condominium (interior only), and townhome (interior only)
b. Property must be owner-occupied
c. Property must have a fee simple title (clear title) or a 99-year lease hold interest
d. There must be sufficient equity in the property to ensure compliance of the loan-to-value requirements
e. Property must be located within City boundaries
f. Property must contain a legal residential structure intended for continued residential occupancy
g. The after -rehabilitation value of the property cannot exceed the HOME Homeownership Value Limits, or those established by a local market survey conducted by the City and approved by HUD (applies to HOME program)
h. All taxes and assessments currently due or in arrears on the real estate must be paid before project can be considered eligible
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i. Property cannot be located in a 100 -year storm flood hazard area as identified on the effective Flood Insurance Rate Map (FIRM) in accordance with 43 CFR 6030. If property is located in AO flood zone, then flood zone insurance will be required
2. Property Value
For owner-occupied and homebuyer properties, HOME limits the value or purchase price of the property . In summary, the price or, in the case of rehabilitated properties, the value may not exceed 95 percent of the area median purchase price.
3. Property Standards
HOME-funded properties must meet the following minimum property standards (MPS):
1. State and local standards: State and local codes and ordinances apply to any HOME funded project regardless of whether the project involves acquisition, rehabilitation, or new construction.
2. Model codes: For rehabilitation or new construction projects where there are not state or local building codes, the City must enforce national model code.
3. Housing quality standards: For acquisition-only projects, if there are no state or local codes or standards, the City must enforce Section 8 Housing Quality Standards (HQS).
4. Rehabilitation standards: The City is required to develop written rehabilitation standards to apply to all HOME-funded rehabilitation work. These standards are similar to work specifications, and generally describe the methods and materials to be used when performing rehabilitation activities.
5. International Energy Conservation Code : New construction requires compliance with the International Energy Conservation Code.
6. Handicapped accessibility : In some cases, handicapped accessibility requirements apply Section (504).
7. Energy Star : The City of Lynwood requires new construction projects (single - family and multifamily) to be certified by a HERS rater as meeting a HERS Index Score of 70 or less.
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8. Site and neighborhood standards : The site and neighborhood standards of 24 CFR 983.6(b) applies only to the new construction of rental housing.
9. Universal Design standards: The City of Lynwood requires units to adhere to the City of Lynwood Rehabilitation Standards for Housing:
a. The applicable standards vary by the type of activity . Exhibit 1 explains the minimum property standards that apply to each type of HOME activity.
b. All new manufactured housing units must meet the construction and safety standards of 24 CFR 3280. New manufactured housing units must be installed according to state or local codes or the manufacturer’s written instructions.
EXHIBIT 1
MINIMUM PROPERTY STANDARDS BY ACTIVITY TYPE
ACTIVITY MINIMUM PROPERTY STANDARD TO BE MET
Acquisition of Existing Housing
(no rehabilitation or
construction)
Applicable state or local housing quality standards and code requirements.
If no local standards/codes apply, Section 8 HQS.
Rehabilitation of Housing Local written rehabilitation standards.
AND
State and local code requirements.
If no local codes apply, one of the following national model codes:
Uniform Building Code (ICBO)
National Building Code (BOCA)
Standard Building Code (SBCCI)
OR
Council of America Building Official one- or two-family code (CABO)
OR
Minimum Property Standards at 24 CFR 200.925 or 200.926 (FHA)
AND
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Handicapped accessibility requirements, where applicable
New Construction of Housing State and local code requirements.
If no state and local codes apply, on the of the following national
model codes:
Uniform Building Code (ICBO)
National Building Code (BOCA)
Standard Building Code (SBCCI)
OR
Council of America Building Official one- or two-family code (CABO)
OR
Minimum Property Standards (FHS) at 24 CFR 200.925 (for multi-family) or 200.926 (for one- and two-unite dwellings) AND
Handicapped accessibility requirements, where applicable.
New construction of rental housing must meet site and
neighborhood standards at 24 CFR 893.6(b)
Note: The City of Lynwood using MPS may rely on inspections performed by a qualified person.
Applicants and Beneficiaries
The HOME Program is designed to provide affordable housing to low-income and very-low income families and individuals. Therefore, the program has rules about targeting program resources and establishing applicant eligibility.
1. Program Targeting:
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The City of Lynwood will use 100 percent of its HOME funds to assist families with incomes below 80 percent of the area median income.
2. Rental Housing or TBRA:
If the City elects to use HOME funds for rental housing or for TBRA, additional targeting requirements apply:
a. For each annual HOME allocation, the City of Lynwood will require that 90 percent of the occupants of HOME-assisted rental units and households assisted with HOME-funded TBRA must have incomes that are 60 percent or less of the area median.
b. 20 percent of the units in each rental housing project containing five or more units must be occupied by tenant families with incomes at or below 50 percent of median income.
c. Owners must adopt written tenant selection policies and procedures.
3. Applicant Income Eligibility
a. Income eligibility: Beneficiaries of HOME funds (homebuyers, homeowners, or tenants) must be low-income or very-low-income. Their income eligibility is determined based on their annual income. The income limits are published by HUD each year. All homeowners must certify that they meet the household income eligibility requirements and have their household income documented. The income limits in place at the time of approval will apply when determining applicant income eligibility. Income documentation must be the most recent available and at least within six months of approval date.
b. Annual income: Annual income is the gross amount of income anticipated by all adult household members during the 12 months following the effective date of the determination.
NOTE: Annual income is sometimes referred to as gross income or annual (gross) income.
Definition of Annual Income
In accordance with 2013 HOME Final Rule, the City of Lynwood has selected a single definition of income for each of its HOME -assisted programs (e.g. 0% Deferred Loan, Homebuyer Assistance Program, etc.) administered by the City.
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Annual income will be determined by examining at least 2 months of source documents evidencing annual income (e.g., wage statement, interest statement, unemployment compensation statement) for the family. Furthermore, when determining whether a family is income eligible, the City will use the following definition of “annual income”:
(1) Annual income as defined at 24 CFR 5.609 will be utilized while applying exclusions from income established at 24 CFR 5.611 as further required by the 2013 HOME Final Rule.
The City will calculate the annual income of the family by projecting the prevailing rate of income of the family at the time that the City determines that the family is income eligible. Annual income will include income from all persons in the household and income or asset e nhancement derived from the HOME-assisted project will not be considered in the calculation.
The City will not re -examine the family’s income at the time the HOME assistance is provided, unless more than six months has elapsed since the City determined that the family qualified as income eligible.
Note: The definition listed above provide s guidance on what items to include in annual income calculation (for example, wages, salaries, tips, etc.). They do not affect the method in which income is verified (discussed under “Income Verifications” below).
Income Verification
1. Initial Verification : To determine if program applicants are income -eligible, Recipients must verify their income using source documentation such as wage statements, interest statements, and unemployment compensation statements.
a. Income eligibility is based on anticipated income . When collecting income verification documentation, also consider any likely changes in income.
Note: A last year’s tax return does not establish anticipated income; nor is it adequate source documentation.
b. Once initial income verification is completed, a Recipient is not required to re-examine the applicant’s income unless six months has elapsed before assistance is provided.
2. Annual Re -examinations: For rental programs, annual re -certifications of income are required. While the HOME Program regulations require that income must be 505
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verified with source documentation every five years, the City of Lynwood requires income be verified with source documentation annually.
Long-Term Affordability
To ensure that HOME investments yield affordable housing over the long term, HOME imposes rent and occupancy requirements over the length of an affordability period.
Affordability Periods
For homebuyer and rental projects, the length of the affordability period depends on the amount of the HOME investment in the property and the nature of the activity funded . Exhibit 2 below provides the affordability periods.
EXHIBIT 2
HOME INVESTMENT PER UNIT LENGTH OF THE
AFFORDABILITY PERIOD
LESS THAN $15,000 5 YEARS
$15,000 - $40,000 10 YEARS
MORE THAN $40,000 15 YEARS
NEW CONSTRUCTION OF RENTAL HOUSING 20 YEARS
REFINANCING OF RENTAL HOUSING 15 YEARS
Occupancy
Throughout the affordability period, the HOME -assisted housing must be occupied by income - eligible households.
1. Rental housing: When units become vacant during the affordability period, subsequent tenants must be income -eligible and must be charged the app licable HOME rent. (See Chapter 6 Rental Housing Program for more information.)
2. Homebuyer assistance: If a home purchased with HOME assistance is sold during the affordability period, resale or recapture provisions apply to ensure the continued provision of affordable homeownership.
Property and Occupancy Eligibility Requirements
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1. Property must be a single -family home, condominium (interior only), and townhome (interior only).
2. Property must be owner-occupied,
3. Property must have a fee simple title (clear title) or a 99-year lease hold interest.
4. There must be sufficient equity in the property to ensure compliance of the loan -to-value requirements.
5. Property must be located within City boundaries.
6. Property must contain a legal residential structure intended for continued residential occupancy.
7. The after-rehabilitation value of the property cannot exceed the HOME Homeownership Value Limits, or those established by a local market survey conducted by the City and approved by HUD (applies to HOME program).
8. All taxes and assessments currently due or in arrears on the real estate must be paid before project can be considered eligible
9. Property cannot be located in a 100 -year storm flood hazard area as identified on t he effective Flood Insurance Rate Map (FIRM) in accordance with 43 CFR 6030. If property is located in AO flood zone, then flood zone insurance will be required.
Homeownership Exceptions
Homeownership means ownership in fee simple title in a one - to four - unit dwelling or in a condominium unit or 99-year leasehold interest except:
1. Housing located in insular areas must have a ground lease for at least 40 years.
2. Housing located on land owned by a community land trust for at least 50 years.
Ownership interest must be in good, marketable title, subject to only certain restrictions. The following situations also meet the ownership definition subject to only certain conditions:
1. Inherited property with multiple owners. This provision is for housing for which title has passed, by inheritance, to several heirs, not all of whom reside in the housing.
This most often occurs when siblings inherit a family home that is occupied by one sibling. Rehabilitation assistance will be provided to the owner -occupant when 507
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he/she: (a) is low- income, (b) occupies the housing as his or her principal residence, and (c) pays all the costs associated with ownership and maintenance of the housing (e.g., mortgage, taxes, insurance, utilities).
2. Life Estate. Under a life estate, the occupant of the property has the right to live in the housing for the remainder of his or her life and does not pay rent. This might be a situation where a disabled adult occupies a dwelling owned by another family member under a life estate, or in which a deceased spouse leaves a property to the children of a previous marriage but permits the other spouse to occupy the property for the remainder of his or her life. Rehabilitation assistance may be provided to the person holding the life estate, provided the person is low-income and occupies the housing as his or her principal residence. (Grant and rebates only)
3. Inter vivos trust, also known as living trust. A living trust is created when the owner of property conveys his or her proper ty to a trust for his or her own benefit or for that of a third party (the beneficiaries). The trust holds legal title and the beneficiary holds equitable title. The trustee is under a fiduciary responsibility to hold and manage the trust assets for the beneficiary. This is a common estate planning tool.
Rehabilitation assistance may be provided to a property if all beneficiaries of the trust qualify as a low - income family and occupy the property as their principal residence. The contingent beneficiaries, who receive no benefit from the trust and have no control over the trust assets until the beneficiary is deceased, need not be low-income. The trust must be valid and enforceable and must ensure that each beneficiary has the legal right to occupy the property for the remainder of his or her life.
4. Beneficiary Deed. A beneficiary deed conveys an interest in real property, including any debt secured by a lien on real property, to a grantee beneficiary designated by the owner and that expressly states that the deed is effective on the death of the owner. Upon the death of the owner, the grantee beneficiary receives ownership in the property, subject to all conveyances, assignments, contracts, mortgages, deeds of trust, liens, security pledges, and other encu mbrances made by the owner or to which the owner was subject during the owner’s lifetime. Rehabilitation assistance may be provided to the owner if he or she qualifies as low-income and occupies the property as his or her principal residence.
PART 2: COST ALLOCATION AND SUBSIDY LAYERING
The City of Lynwood performs a cost allocation and subsidy layering review of HOME projects to determine the appropriate subsidy amount to the project. The actual HOME Investment in a project depends on:
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1. The proportion of the total project cost that is HOME -eligible – some planned project costs may not be eligible expenses under the HOME Program.
2. How many of the units in the project are HOME -assisted – Projects may have a mix of HOME- and non-HOME-assisted units.
3. The financial needs of the project – HOME projects may not receive more subsidy than is required to make them financially feasible.
4. Cost allocation and subsidy layering are impacted by any changes in the proportion of HOME-assisted unit to total units in the project, development cost, or financing sources.
5. Because of these requirements, CHDOs, developers or subrecipients must contact the City of Lynwood as soon as there are any changes in project size, scope, cost, or financing sources at any point during the development of the project.
Cost Allocation
The HOME Program distinguishes between the units in a project that have been assisted with HOME funds and those that have not resulting in th e term HOME-assisted unit. The distinction between HOME-assisted and unassisted units allows HOME funds to be spent on mixed -income projects while still targeting HOME dollars only to income-eligible households.
Determining a HOME Assisted Unit
HOME rules create a floor (minimum) for the number of HOME-assisted units a project must have.
This floor is based on the proportional share of total eligible costs to be paid with HOME funds.
1. Before determining the allowable HOME subsidy amount, the City will establish the total HOME-eligible cost for the project.
2. Once the total HOME -eligible costs are established for the project, the City must allocate costs across units.
3. If both the assisted and non -assisted units are comparable in size, features, and number of bedrooms, the HOME-eligible costs can be pro-rated across units. (Since floating units, by definition, must be comparable, costs should always be pro-rated.)
4. If the assisted and non-assisted units are not comparable, the actual costs must be determined and allocated unit -by-unit. The specific units identified to “receive” HOME funds must be fixed – that is, designated as HOME-assisted. 509
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Subsidy Layering
HUD establishes limits on the amount of HOME funds that may be invested in affordable housing on a per-unit basis for specific areas as specified below:
1. Before committing funds to a project that combines the use of any other local, State or Federal assistance, the City of Lynwood will evaluate the project in accordance with guidelines that it has adopted, to ensure that the City does not invest any more HOME funds than are necessary to provide affordable housing.
2. The City of Lynwood will conduct a subsidy layering review in accordance with the guidelines presented in HUD Notice CPD -98-01. These guidelines include review of the following project documents:
a. Sources and/or uses of funds: CHDOs/Developers/Subrecipients are required to provide the City of Lynwood the sources/uses of funds statement for the project with supportive documentation . This state ment should reflect the project development budget and should list:
i. All proposed sources (both private and public) of funds and the dollar amounts for each respective source;
ii. Construction costs; and
iii. Financing costs and professional fees associated with the project.
b. Certification of governmental assistance: CHDOs/Developers/Subrecipients must provide a formal certification as to whether or not additional governmental assistance will be provided to the project, and if so, what kind of assistance.
c. Project development budget: CHDOs/Developers/Subrecipients must provide the City of Lynwood the project development budget so that the City can determine whether the development costs are necessary and reasonable. The budget should include all costs associated wi th the development of the project, regardless of the funding sources.
d. “Reasonableness” of costs will be based on all of the following three factors:
i. Costs of comparable projects in the same geographical area; ii. Qualifications of the cost estimators that de veloped the various budget line items; and
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iii. Comparable costs published by recognized industry cost index services.
e. Proforma: The City of Lynwood will determine the reasonableness of the rate of return on equity investment by looking at the
CHDOs/Developers/Subrecipients proforma (project income and expense statement).
i. The proforma should include achievable operating expenses. ii. It should also specify the consequences of tax benefits, if any, and any other assumptions used in calculating the project cash flow. iii. The proforma should represent, at a minimum, the term of the HOME affordability requirements, or longer if other funding sources require longer affordability terms.
Other Requirements
1. Property owners must submit an application and obtain approval prior to beginning repairs.
Costs of repairs completed prior to assistance approval are not eligible for reimbursement.
2. 100% of financial assistance must be used to rehabilitate the home. No cash is provided to homeowner.
3. The loan is to be recorded as a trust deed on the property, and cannot be lower than 2nd position. Open lines of credit must be closed prior to loan approval.
4. There is a maximum of $100,000 asset limitation in order to apply for the program. The value of homeowner’s permanent residence not to be included as part of assets. Income derived from assets must be included in the income calculation.
5. Fire insurance: The homeowner must maintain fire insurance on the property for the duration of the program loan(s). This insurance must be an amou nt adequate to cover all encumbrances on the property. The insurer must identify the City as Loss Payee for the amount of the program loan(s). A binder must be provided to the City and maintained in the project master file.
6. Flood insurance: For homes in a 100-year flood zone, the homeowner must maintain flood insurance in an amount adequate to secure the Program loan and all other encumbrances.
This policy must designate the City as Loss Payee and a binder must be provided to the City and maintained in the project master file.
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Termination or Denial of Program Assistance
Applicants may be terminated from Program or denied assistance for the following reasons. This is not a complete list. It only includes those areas for which the applicant has direct control.
1. Terminated from a federal, state, or local program, such as Section 8.
2. If applicant owes any money to the City or any housing authority under any program. If there is a repayment agreement, applicant can be terminated for not honoring the terms of the agreement.
3. False or withholding information.
4. Lack of proper paperwork.
5. The value of cash and investments exceeds $100,000, except under the following circumstances:
a. The account is a qualified retirement account (IRA, annuity, deferred compensation)
b. The account is used for regular retirement income as shown over a 2-year history, and
c. Balance in the account does not exceed $300,000, and
d. The monthly disbursement is the largest source of monthly income
6. If any member of the family commits fraud, bribery or other corrupt or criminal act in connection with any federal, state or local housing and assistance programs.
7. Not following procedures.
8. Un-permitted structures that are not eligible improvements and will not be addressed as part of the project.
9. Lack of maintenance of previously program funded improvements.
10. If applicant participated in the Program in the past, cannot reapply within seven years after the case close date for the grant and or loan program.
11. If any member of the family engages in or threaten abusive or violent behavior toward City staff.
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12. If any member refuses to sign or submit any forms.
Termination Procedures
a. Notify applicant in writing
b. Informal hearing meeting with Community Development Director
c. If applicant wishes to appeal the termination, the case will be submitted to the Loan Committee for further review and final decision.
Additional Funds
Loans—Due to unforeseen expenses during construction, which exceed the allocated contingency fund, it may be necessary to lend additional monies to complete the project. This is possible as long as the additional funds will not cause the loan to exceed the maximum loan amount, and the maximum LTV. The homeowner must execute a new Deed of Trust and Promissory Note prior to receiving additional funds.
Grants—Any funds that will not be covered by the program and will be the homeowner’s responsibility, must be paid directly to the contractor in a form of a cashier’s check or money order made out to the contractor. The proof of payment is to be submitted to the City at the completion of the project.
Death of Applicant
1. If applicant passes away during the process of the application and no other persons are on title and no work has started, assistance will be terminated
2. If other person(s) are on title and reside in the property, assistance will continue so long as household remains income eligible.
3. Additional title holders that do not reside in the property and property is not occupied, assistance will be terminated.
4. If work has starte d and applicant passes away and no one else is on title or resides at the property:
a. Continue with assistance, Executor to repay the program from trust
b. Continue with assistance, establish a repayment plan
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5. If work has started and other person(s) are on title, but do not reside in the property:
a. Continue with assistance, property to be occupied by additional title holder as specified in the agreement and will be considered owner occupied.
b. Continue with assistance, if the property is not owner occupied, assistance is to be repaid based on repayment plan.
Repayment
Loans and grants are to be paid in full if the property is not maintained. All loans must be repaid according to terms.
All loans are subject to the following acceleration clause:
The City loan plus all accrued interest becomes due and immediately payable if any of the following occurs:
1. Sale or transfer of the property, including, lease, exchange or other disposition of the property, whether voluntary of involuntary.
2. The refinancing of existing first deed of trust for a loan amount in excess of the then current loan balance. Refer to Subordination Requirements.
3. When the borrower is in default of any other obligation under the Loan Agreement.
4. When the borrower no longer occupies the property as principal residence.
5. Death of borrower. The loan is due and payable within three (3) months of the date of death.
6. Lack of maintenance on property.
No periodic payments are required. Payments can be made to loan servicing firm contracted by the City or made payable to:
The City of Lynwood
11330 Bullis Road
Lynwood, CA 90262
The City will be the receiver of loan payments and must maintain a financial record- keeping system to record payments and file statements on payment status. Payments must be deposited and accounted for in the City’s appropriate Program Income Account, as required by HUD. The City will accept loan payments from borrowers prepaying deferred loans, and from borrowers making payments in full upon sale or transfer of the property. The City may at its discretion, enter into an agreement with a third party to collect and distribute payments and/or complete all loan servicing aspects of the Program.
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Assumption
Loans are not assumable, in whole or in part. In the event that a homeowne r sells, transfers title, or discontinues residence in the rehabilitated property for any reason, the loan becomes due and payable. Original borrowers can be deleted from title, but no additional persons can be added.
Subordination
A subordination request may be approved, at the City’s sole discretion, only if it meets the following terms and conditions:
1. Property to become part of a Trust under original borrower(s).
2. Refinancing
a. The new loan must reduce the overall housing expenses. b. No cash-out is permitted, which means that new loan proceeds must be used only to pay off the existing senior debt and reasonable closing costs. Cash out for debt consolidation, vacations, etc. is not allowed.
c. The total LTV ratio cannot exceed 80% of property-appraised value. d. The new loan must have a lower fixed interest from current. e. The new loan shall include an impound account for property taxes and insurance. f. The new loan must be amortized over at least 15 years. g. The City loan’s position must not be diminished from its ori ginal position, for example, if the City loan is a second trust deed, the City will not subordinate to a third position.
h. No lender prepayment penalties are allowed.
i. A complete subordination package must be submitted to the City for review of compliance, and recommendation. The subordination package must include:
i. Letter of explanation for the subordination request
ii. Copy of new loan application
iii. Copy of new lender approval
iv. Copy of underwriting and transmittal summary
v. Copy of certified escrow instructions
vi. Copy of estimated closing statement (estimated HUD-1) vii. Copy of preliminary title report
viii. Copy of current property appraisal (no older than 6 months) ix. Copy of most recent mortgage statement
Monitoring
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Continued residency will be monitored each year for the term o f the loan. For loans, the homeowner must submit an annual certification that the property continues to be their principal place of residence, and attach appropriate verification of residency, such as utility bill and insurance renewal that evidences owner-occupancy.
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CHAPTER 3: CHDO REQUIREMENTS AND ACTIVITIES
Part I of this chapter details the CHDO set-aside requirements, the qualifications of a CHDO, CHDO set-aside roles, and the types of assistance the City of Lynwood may provide CHDOs while Part II of this chapter covers the City's CHDO selection process.
PART 1: HOME PROGRAM REQUIREMENTS
A Community Housing Development Organization (CHDO) is a private nonprofit, community - based service organization that has obtained or intends to obtain staff with the capacity to develop affordable housing for the community it serves.
The City of Lynwood is committed to support City -approved certified Community Housing Development Organizations (CHDOs) that have the appropr iate capacity and consent to develop quality affordable housing throughout the City of Lynwood. Therefore, the City of Lynwood continues to encourage qualified nonprofit organizations to apply for certification as a CHDO.
CHDO Set-Aside Requirement
Reservation of Set-Aside of Funds for CHDOs:
1. The City of Lynwood has up to 24 months from after the last day of the month in which HUD signs the HOME Investment Partnership Agreement transmittal letter to identify and designate the CHDOs they plan to work wit h, and to reserve funds for the CHDOs’ use.
2. The City of Lynwood may set aside 15 percent of their funds for housing owned, developed, or sponsored by CHDOs.
3. CHDOs may engage in other HOME -eligible activities in which they are not the owners, developers, or sponsors of the housing . However, the HOME funds committed to those activities will not count toward the set-aside.
4. The CHDO reservation of funds can be made by the City before specific projects are identified.
CHDO Qualifying Criteria
The City of Lynwood will certify a nonprofit agency as a CHDO to qualify for the CHDO set-aside. As such, the City of Lynwood will accept applications for certification on a continuous basis and the certification is valid for one (1) year.
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A CHDO is a spe cific type of private nonprofit entity . CHDOs must meet certain requirements pertaining to their:
1. Legal status;
2. Organizational structure; and
3. Capacity and experience.
(HUD Notice CPD 97-11 details these requirements).
1. Legal Status
a. Organized under State/local law: CHDOs must be organized under State and local law.
b. Purpose of organization : Provision of decent housing that is affordable to low- and moderate -income persons must be among the purposes of the organization. This commitment must be evidenced in the CHDO's:
i. Charter;
ii. Articles of incorporation;
iii. By-laws; or
iv. A resolution of the CHDO's board of directors.
c. No individual benefit: No part of the CHDO’s earnings (profits) may benefit any members, founders, contributors, or individuals.
d. Clearly defined service area : A CHDO should have a clearly defined geographic service area.
i. CHDOs do not need to represent a single neighborhood. ii. For urban areas, a CHDO may include in its service area a neighborhood or neighborhoods, city, county, or metropolitan area. iii. For rural areas, a CHDO may include in its service area a neighborhood or neighborhoods, town, village, county or multi - county area (but not the entire State.)
iv. Nonprofits serving special populations must also define the geographic boundaries of the ir service areas in order to qualify as CHDOs.
e. Nonprofit status
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i. A CHDO must have received a tax -exempt ruling from the IRS under Section 501(c)(3) of the Internal Revenue Code of 1986 in order to be designated by the PJ as a CHDO.
ii. There are many incorporation options under Section 501(c), depending on the type and purpose of the organization seeking the designation for tax-exemption.
f. The 501(c) designation status:
The 501(c) designation status permissible under HOME is:
i. 9 501(c)(3) – a charitable, nonprofit corporation;
ii. 9 501(c)(4) – a community or civic organization;
iii. 9 Section 905 – a subordinate organization of a 501(c) organization.
g. IRS standards for granting a 501(c)(3):
i. Designation for housing development organizations are narrowly applied, lengthening the time it can take to receive a 501(c)(3) designations.
ii. Designation can take 9 to 24 months.
iii. The timeframe varies by IRS region.
h. Conditional designation:
i. The IRS will usually grant new applicants a conditional designation of 501(c) status, valid for a specified period of time (usually three years.)
ii. During that period of time, the organizations may operate legally as 501(c) organizations, with all benefits pursuant to that designation, while the IRS monitors their operations.
i. Final designation:
Assuming the CHDO operates in compliance with applicable regulations during this period, the IRS will grant them final 501(c) designation.
NOTE: The City of Lynwood requirement for a 501(c) designation can only be fulfilled by having a final designation from the IRS.
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NOTE: Pending 501(c) Status Documentation that the CHDO has an application for 501(c) status pending at the IRS will not suffice to fulfill the nonprof it status requirement.
2. Organizational Structure
The City's requirement for a CHDOs organization structure is:
a. The structure of the board of directors of a CHDO is viewed as the main indicator of community control over the CHDO. With that, a CHDOs Board of Directors must be composed of the following:
i. At least one -third must be representatives of the low -income community.
ii. No more than one -third may be public officials or employees of the City.
iii. The balance is unrestricted, and may include people such as human and social service providers, lenders, individuals with access to philanthropic resources, or others willing to contribute their professional expertise.
iv. There are also maximum limits on representation and control by a for-profit entity when the CHDO is sponsored by a for-profit entity.
b. Low-income community representation: As noted above, a minimum of one- third of the board must consist of representatives of the low -income community. There are three ways to meet this requirement:
i. Residents of low-income neighborhoods in the community.
Low-income neighborhoods are defined as neighborhoods where 51 percent or more of the residents are low-income.
Residents of low-income neighborhoods on CHDO boards do not have to be low income themselves.
and/or
ii. Low-income residents of the community.
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In urban areas, "community" is not necessarily limited to a single neighborhood, but may include several neighborhoods, the city, county or metropolitan area.
In rural areas, "community" may also cover a multi -county area (but not the whole state). The board need not include low - income residents from each county in the multi-county area. Low-income residents of low -income neighborhoods in the community do not need to submit proof of their income.
If low-income residents of the community who do not live in low- income neighborhoods are necessary to meet this threshold, the CHDO must obtain a certification from the resident that the resident does qualify as low-income.
and/or
iii. Elected representatives of low-income neighborhood organizations.
A low -income neighborhood organization is an organization composed primarily of residents of a low-income neighborhood. The primary purpose of the organization must be to serve the interests of the neighborhood residents.
Block groups, town watch organizations, civic associations, neighborhood church groups, and NeighborWorks organizations can be examples of low-income neighborhood organizations. The governing body of the low -income neighborhood
organization may elect the repres entative(s) to serve on the CHDO board.
c. Low-income input: Input from the low-income community is not met solely by having low -income representation on the board . The CHDO must meet the requirements as follows:
i. The CHDO must also provide a formal process for low -income program beneficiaries to advise the CHDO on design, location of sites, development, and management of the organization's by -laws or a board resolution.
ii. This requirement is especially important for CHDOs serving a large geographic area, where it may not be possible for a CHDO to have low-income board representation from every neighborhood in which the CHDO will develop, own, or sponsor housing.
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iii. CHDOs should establish systems for community involvement in parts of their service areas where housing will be developed, but which are not represented on their boards. Such systems might include special committees of neighbors of a proposed development site, neighborhood advisory councils, or open town meetings.
d. Public-sector limits: A maximum of one -third of the governing board may consist of representatives of the public sector.
e. This limitation is intended to ensure that separation exists between the City and CHDOs, and that CHDOs are indeed community -based and community- controlled organizations.
i. A member of the governing board of a CHDO would be considered a representative of the public sector if he or she is a public official, including:
ii. Elected officials of the City of Lynwood- council members, aldermen, commissioners, state legislators, members of a school board, etc.
iii. Appointed public officials- members of a board or State commission or of any other regulatory and/or advisory boards or commissions that are appointed by the State.
iv. Public employees of the City - all employees of public agencies (including the schools) or departments of the local government (e.g., a clerk in the water and sewer department, a public facility janitor or a secretary in the tax assessment office); or
v. Appointed by a City official - any individual who is not necessarily a public official, but who has been appointed by a City official to serve on the CHDO board
vi. Members of the board appointed by public officials cannot select other members of the board.
f. If the public official is low -income: Public officials and/or appointees who themselves are either low -income community residents or residents of a low-income neighborhood count against the one -third maximum limit of public sector representatives. However, they do not count toward the one - third minimum requirement of community representatives.
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g. Cities, public bodies, or instrumentalities: Cities, public bodies or instrumentalities of public bodies cannot be considered CHDOs. Examples of instrumentalities of public bodies include public housing authorities (PHAs), urban renewal agencies, redevelopment authorities, and downtown development authorities.
i. The limits on public -sector representation on CHDO boards only serve to define CHDOs. There are other (not specific to HOME) restrictions on the participation of public officials on the boards of nonprofit organizations seeking public funds. The City should observe their conflict-of-interest guidelines in this regard as well.
h. Sponsored CHDOs: Nonprofits that have been sponsored by other nonprofits, charities, religious organizations, local or state government, public agencies, or for-profit corporations may qualify as CHDOs, but certain additional requirements and board limitations can apply.
i. Nonprofit and charity sponsors:
i. There are no limits on the proportion of the board that may be appointed by nonprofit or charity sponsors, as long as the minimum one-third community representation is met and the maximum one - third public representation is not exceeded.
ii. A one -year minimum history of service to the community by the sponsoring nonprofit or charity may help a new nonprofit to qualify as a CHDO.
j. Religious organization sponsors:
i. Organizations that are religious or faith -based are eligible, on the same basis as any other organization, to participate in the HOME Program. Government entities are not to discriminate against an organization on the basis of the organization’s religious character or affiliation.
ii. However, organizations directly funded under HOME may not engage in inherently religious activities. If the organization conducts such activities, they must be offered separately and participation must be voluntary for the beneficiaries of the assistance provided.
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Additional guidance regarding religious or faith -based organizations is provided in 24 CFR
92.2.57 of the HOME final rule.
k. Local, state government and public agency sponsors:
i. A local or state government and/or a public agency cannot qualify as a CHDO, but may sponsor the creation of CHDOs.
ii. Government officials and appointees of the government cannot exceed one-third of the members of the board.
iii. All other CHDO rules and requirements also apply.
l. For-profit corporate sponsors:
i. A CHDO cannot be controlled by, nor be under the direction of, for - profit entities or individuals seeking profit from the organization.
ii. CHDOs may be sponsored or organized by a for-profit if:
The primary purpose of the for -profit sponsor is not the development or management of housing (that is, a builder, developer or real estate management firm may not spin off a CHDO);
The for -profit appoints no more than one -third of the CHDO’s governing board and the board members appointed by the for - profit do not appoint the remaining members of the board; and The CHDO is free to contract for goods and services from any vendors it selects.
3. Experience and Capacity
a. CHDO experience: A CHDO must demonstrate that it has at least one year of experience serving the community where it intends to develop the HOME - assisted housing.
i. Newly created organizations wishing to become CHDOs can meet this requirement if the parent (or sponsoring) organization is a nonprofit and has provided services to the community for at least one year.
ii. The year of service does not have to be directly related to housing.
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iii. Prior service to the community cannot consist of a for -profit organization’s work in that community.
b. CHDO capacity: A CHDO must demonstrate the capacity of their key staff to carry out the HOME -assisted activities they are planning . This means that CHDOs must have:
i. Experienced key staff who have successfully completed projects similar to those proposed by the CHDO; or
ii. Key staff with limited or no experience, and who will use experienced consultants for the planning and development activities, as long as there is a plan in place for the consultant to train the key staff.
c. Differences in requir ed experience and capacity: There are significant differences in the type of experience and capacity that is required to carry out the variety of housing development activities eligible under the HOME program. Therefore, "experience in having completed sim ilar projects" is different for development/management of rental housing and development/sale of housing for homebuyers.
i. Because the purpose of the CHDO capacity requirement is to build staff expertise, CHDOs must have their own professional staffs . This means that the key staff required to demonstrate CHDO capacity cannot be:
Municipal, county or state employees; or
Consultants (paid or volunteer) not planning to train the CHDO's key staff.
4. Financial and Accounting Systems
a. Financial standards : CHDOs must have financial accountability standards that conform to 24 CFR 84.21, "Standards for Financial Management Systems."
i. If a CHDO or nonprofit is in the role of a subrecipient, it must comply with certain provisions of 24 CFR Part 84 and applicable provisions of 2 CFR Part 200 (Uniform Guidance), including Subpart E – Cost Principles for Nonprofit Organizations. Both publications are included in the appendices.
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ii. If a CHDO is acting as an owner, sponsor, or developer of HUD HOME assisted housing, the requirements at 24 CFR 84.21, “Standards for Financial Management Systems” apply . This means the CHDO must relate financial data to performance data and develop unit cost information.
The systems include the following:
Accurate, current, and complete financial results;
Records that identify the sources and uses of the funds; Control over and accountability of all funds and assets; Comparison of actual expenditures against budgets;
Written procedures to minimize time bet ween the transfer of funds in and the payment of funds out;
Written procedures for determining reasonableness, allocability, and allowability of costs; and
Accounting records including cost accounting records supported by sources documents.
b. Accounting systems: CHDOs/Nonprofits should establish accounting systems that include at a minimum the following reporting reports:
i. A chart of accounts that includes
The categories of accounts;
The name of the account;
The number of the account;
ii. Cash receipts journal that includes
The date the funds were received listed in chronological order; The amount received;
The source of the funds;
The purpose of the funds;
iii. Cash disbursements journal that includes
The date funds were paid out listed in chronological order; The date the expense was incurred;
The purpose of the expense;
The amount paid;
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To whom it was paid;
iv. Payroll journal that includes
A listing of employees;
Amounts paid to the employees;
Benefit expenses paid;
v. General ledger that includes
A summary of all account activities listed in chronological order; and
The financial status of all the accounts of the organization.
c. Source documentation: Costs charged against the HOME program must be supported by source documentation that shows that the costs were:
i. Incurred during the effective period of the agreement; ii. Actually paid out;
iii. Expended on eligible items and activities; and
iv. Approved by the appropriate officials of the organization.
CHDOs Set-Aside Roles: Owner, Developer, and Sponsor
The City of Lynwood provides CHDO set-aside funds to CHDOs acting as owners, developers, and sponsors of projects that create new units of affordable housing in their communities . To qualify for the set-aside funds, the CHDO must have effective decision-making authority.
CHDO set-aside funds may be used by CHDOs for those HOME activities where the CHDO acts as the owner, developer, or sponsor of the housing.
1. Owner: The CHDO is an “owner” when it holds valid legal title to or has a long-term (99-year minimum) leasehold interest in a rental property . The CHDO may be an owner with one or more individuals, corporations, partnerships or other legal entities.
a. The CHDO may be the owner and developer of its own project.
b. The CHDO may own a property in pa rtnership with either a majority or minority interest. However, the CHDO – in partnership with a wholly owned for-profit or nonprofit subsidiary – must be the managing general partner with effective control.
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2. Developer: A CHDO is a “developer” when it either owns a property and develops a project, or has a contractual obligation to a property owner to develop a project.
a. If the CHDO owns the property, it must obtain financing and rehabilitate or construct the project.
i. For HOME-assisted rental housing: At project completion, the CHDO may maintain ownership and manage the project over the long-term, or it may transfer the project to another entity for long -term ownership and management.
ii. For HOME-assisted homebuyer project: The CHDO transfers title of the property and the HOME obligations to an eligible homebuyer within a specified timeframe of project completion.
b. If the CHDO does not own the property, it must be under a contractual obligation with the owner to obtain financing and rehabilitate or construc t the project. Under this scenario, the CHDO assumes all of the risks and rewards associated with being the most detail the CHDO’s specific obligations.
iii. For HOME -assisted rental housing: The CHDO may, at project completion, manage the project for the owner.
iv. For homebuyer housing: The owner must transfer title of the property and the HOME obligations to eligible homebuyers within a specified timeframe of project completion.
c. If the CHDO develops the property for an owner pursuant to a written or other agree ment with the City, the CHDO is acting in the capacity of a subrecipient.
3. Sponsor: A CHDO is a “sponsor” for HOME -assisted rental or homebuyer housing according to the circumstances outlined below.
a. For HOME-assisted rental housing: The CHDO develops a project that it solely or partially owns and agrees to convey ownership to a second nonprofit organization at a predetermined time. The conveyance may take place prior to, during, or upon completion of the development phase.
b. The HOME funds are invested in the project owned by the CHDO sponsor.
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c. The CHDO sponsor identifies the particular nonprofit organization that will obtain ownership of the property prior to commitment of HOME funds.
d. The other nonprofit will assume from the CHDO at a specified time all HOME obligations (including repayment of loans and tenant and rent requirements) for the project . If the property is not transferred to the nonprofit organization, the CHDO sponsor will remain liable for the HOME obligations.
e. The other nonprofit organizat ion must be financially and legally separate from the CHDO sponsor. (The second nonprofit may have been created by the CHDO; nevertheless, it is a separate entity from the CHDO.)
f. The CHDO sponsor must provide sufficient resources to the nonprofit organization to ensure the completion of development and long -term operation of the project.
4. Similar roles: The developer and sponsor roles are similar in many ways.
a. In both the developer and sponsor roles, the CHDO carries out some or all of the principal project development activities – such as acquisition, financing, construction management and putting together a capable development team – to bring project from conception to completion.
b. However, as developer, the CHDO need not own the property.
c. As sponsor, the CHDO must own the property and shift the responsibility from the CHDO to another specific nonprofit at some specified time in the development process. Transfer could occur, for example, at:
i. Initiation of the construction;
ii. Completion of the construction; or
iii. Issuance of the certificate of occupancy.
The HOME long-term affordability requirements for the project are the responsibility of the owner or subsequent owners of the property.
5. CHDOs vs. Subrecipients
A community -based nonprofit organization may meet all of the regulatory requirements to be designated as a CHDO. However, in order for CHDO activities to count toward the CHDO set-aside, the CHDO must be the developer, sponsor and/or owner of the HOME-assisted housing.
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6. CHDO as a Subrecipient:
CHDOs may play the role of a "subrecipient" undertaking all other HOME-eligible activities, even if these activities do not count toward the CHDO set-aside.
a. A HOME subrecipient is an entity selected by the City to administer aspects of a HOME program (that is, screen projects, market activities, review and certify tenant income, counsel potential homebuyers) or an entire HOME activity (review requests for HOME f unds for the rental housing production set-aside.).
i. Restrictions: When a CHDO is acting in the capacity of a HOME subrecipient, it may not also receive HOME funds to develop, sponsor or own housing funded through the subrecipient activity the CHDO administers. Doing so would constitute a conflict -of-interest for the CHDO.
CHDO Eligible Uses
With the City of Lynwood approval, CHDOs may use HOME funds for all eligible HOME activities.
However, only certain types of activities count toward the minimum 15 percent set-aside.
1. Eligible Uses:
Eligible set-aside activities include the following when carried out by a CHDO acting as an owner, developer or sponser:
a. Acquisition and/or rehabilitation of rental housing;
b. New construction of rental housing;
c. Acquisition and/or rehabilitation of homebuyer properties;
d. New construction of homebuyer properties; and
e. Direct financial assistance to purchasers of HOME -assisted housing sponsored or developed by a CHDO with HOME funds.
2. Ineligible Uses:
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The following activities are ineligible set -aside activities, but may be carried out by the CHDO as a subrecipient:
a. Tenant-based rental assistance;
b. Homeowner rehabilitation; and
c. Brokering or other real estate transaction.
CHDO Special Assistance
The City of Lynwood may use HOME funds to provide special assistance to CHDOs that Include:
1. Project pre-development loans;
2. Use of HOME project proceeds; and
3. Capacity-building assistance.
NOTE: In contrast to the 15 percent set-aside, which is mandated, the City has total discretion over whether to provide these special forms of assistance.
1. Project Pre-development: The City of Lynwood may set-aside a portion of CHDO set-aside funds to be provided to the CHDO for project -specific pre-development assistance (see Part II: Program and Design).
a. The project specific pre -development assistance is intended to assure that CHDOs have access to funds for up-front, eligible project expenditures. This assistance provides a form of project feasibility "line of credit" that many nonprofit developers need, but often have difficulty obtaining from private sources.
b. All costs must be related to a speci fic project which, if deemed feasible, would receive HOME funds for development.
c. Project pre-development costs may not exceed customary and reasonable project preparation costs.
2. Types of pre -development assistance: The two primary types of project pre - development assistance are:
1. Technical assistance and site control loans, and
2. Seed money loans.
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PART 2: PROGRAM DESIGN AND IMPLEMENTATION
This section discusses the City's CHDO program design and implementation procedures.
PROCEDURES (General)
1. City of Lynwood CHDO applicants must request a specific amount, not to exceed $80,000, in the Project Application.
2. All pre-development loans must be repaid or rolled over into the permanent subsidy at on construction close.
Operating Assistance
3. The City of Lynwood permits CHDO proceeds and pre-development loans, but does not provide CHDO operating expenses.
4. Applicants requesting pre -development loans must complete both the CHDO Pre - Application and the Project Application as defined below before a loan can be considered or authorized.
Eligibility Determination
1. Once the CHDO candidates are identified, the City of Lynwood will determine whether organizations meet the CHDO qualifications outlined in the HOME regulations.
a. Eligible Applicant
The only eligible applicant for the city's HOME CHDO Program is a Community Housing Development Organization ("CHDO") as defined by the HOME Investment Partnership Act and the regulations adopted by the US Department of Housing and Urban Development (HUD") is a private nonprofit, community -based organization that meets the definition at 24 CFR 92.2. The governing law and regulations may be found at 24 CFR 92.2 and 92.300-303, and in CPD Notice 97 -11, CPD Notice 97 -09, and HUD CPD Notice 96-09.
To assist the City of Lynwood in determining the qualifications and capacity of a CHDO organization the City designed a CHDO Determination Worksheet (see Exhibit 3) . The worksheet is designed to assist the City in processing a CHDO application in the minimum time necessar y. Each section is a table 532
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which can be filled out and the table will adjust to the length of the CHDO’s response.
CHDO Capability
1. Once an organization has been determined eligible as a CHDO, the City of Lynwood will establish whether the CHDO is actually capable of carrying out the responsibilities of a CHDO by assessing the CHDOs capacity. Determining the CHDOs capacity assists the City to determine which organization(s) are qualified and capable of carrying ou t CHDO -eligible activities, and which ones need to make changes or build capacity to quality.
Types of Projects
1. The City permits CHDOs to bring any type of project which is an eligible CHDO activity as follows:
a. Acquisition and/or rehabilitation of rental housing; b. New construction of rental housing;
c. Acquisition and rehabilitation of homebuyer properties for resale to eligible, qualified buyers;
d. New construction of homebuyer properties for sale to eligible, qualified buyers; and
e. Direct financial assistance to purchasers of HOME -assisted housing sponsored or developed by a CHDO with HOME funds.
2. The City permits CHDO proceeds and pre-development loans, but does not provide CHDO operation expenses . Applicants requesting a pre -development loan must complete both the CHDO Pre -Application and the Project Application as defined below before a loan can be considered or authorized.
Application Period
1. The City of Lynwood welcomes applicants for CHDO status at any time during the calendar year.
Pre-Application for CHDO Status
1. The City of Lynwood pre-application process procedures require the applicant to meet ALL of the requirements of being a CHDO as defined by the “CHDO Determination Worksheet” provided by the City.
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2. All documentation necessary for meeting the requirements contained in the CHDO Determination Worksheet must accompany the pre -application form . The documents necessary for determination include:
a. The CHDO Determination Worksheet;
b. A copy of the Articles of Incorporation;
c. A copy of the By-Laws;
d. A copy of the Conflict of Interest Policy;
e. Any applicable signed Board Minutes or resolutions required by the CHDO Determination Worksheet;
f. A Board Form for each Board member, signed and dated by the Board member
g. A current financial statement and the most recent annual audit; and h. A statement of the applicant’s capacity to undertake a project of the scope and size proposed;
i. Including staff resumes
3. The City will review the application for compliance, completeness, and capacity.
4. The Pre-Application Process results in Pre -Qualification letter from the City HOME Program Administrator to the CHDO advising the CHDO to submit a qualifying CHDO project within 180 days of the date of the Pre-Qualification letter.
5. The City certifies CHDO s only at the point where the CHDO has an approved City CHDO project.
6. Completion of the pre -application process for CHDO status does not guarantee funding by the City.
7. In the event any of the items contained in the CHDO Determination Worksheet change between t he time of the Pre -Qualification letter and the submission of a CHDO project, the CHDO must notify the City in writing of the change (at the time of project application) and provide the documentation necessary to assess whether or not the CHDO remains compliant with the CHDO requirements.
8. Changes in the Board of Directors require the CHDO submit the Board Form for any new Board member, and identify any Board members who have left the CHDO at the time of project application and again at the HOME closing.
RECAPTURED AND RESALE FUNDS
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As discussed in the City's Annual Action Plan, the following requirements relate to CHDOs only.
This is not required for rental or homebuyer programs.
RECAPTURED FUNDS (24 CFR 92.254(a)(5)(ii)(A)(4))
Recapture is defined as the recovery of HOME funds upon the sale or transfer, rental or lease, refinancing, or the Borrower(s) no longer being a physical occupant of the property.
GENERAL PROVISIONS
a. Any amount repaid as a result of a homebuyer property being sold within the affordability period.
b. The recaptured provisions must be stated in written agreements between Recipients and the income of any eligible homebuyers.
c. Recaptured funds are a return of the original HOME investment and are technically not program income.
d. Therefore, unlike program income, 10 percent of recaptured funds cannot be used for planning and administrative costs and must be returned to the City.
PROCEDURE
a. The City of Lynwood will impose HOME recapture provisions on any property sold by a Communit y Housing Development Organization (CHDO) to a homebuyer when the City provides a direct subsidy for down payment and or closing costs to the homebuyer.
b. The balance of the loan shall be due and payable upon sale or transfer, rental or lease, refinancing, or the Borrower(s) no longer being a physical occupant of the property.
c. This recapture provision shall remain in force from the date the legal documents are executed at loan closing until the expiration of the affordability period.
d. Net Proceeds from Sale for the purpose of Recapture are defined as follows:
i. Sales Price
ii. Less Seller’s Closing Costs
iii. Less First Mortgage Balance
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iv. Less documented Capital Improvements in excess of $500 v. Less Down payment and closing costs paid from the Homebuyer’s cash at purchase
vi. Equals Net Proceeds from Sale
e. The City shall recapture from the net proceeds from sale, the remaining Development, and/or Homebuyer direct subsidy and return the recaptured funds to the HOME Investment Trust.
f. Funds remaining after Recapture shall accrue to the Homebuyer.
g. If there are no Net Proceeds from Sale, then the City shall forgive the remaining balance of the loan.
RESALE PROVISIONS [24 CFR 92.254(a)(5)(ii)(5)]
PROCEDURE
a. The City of Lynwood will impose HOME resale provisions on any property sold by a Community Housing Development Organization (CHDO) or any other entity receiving a HOME development subsidy from the City, to a homebuyer when the City does not provide a direct subsidy for down payment and or closing costs to the homebuyer.
b. Resale is defined as the recovery of HOME funds upon the sale or transfer, rental or lease, refinancing, or the homebuyer(s) no longer being a physical occupant(s) of the property:
i) In instances where the home has been rented or leased, refinanced, or the Borrower(s) are no longer are physical occupant(s) of the property the total outstanding balance of the HOME loan shall be immediately due and payable to the City;
ii) In instances where the Homebuyer’s home is sold to a qualified low- income buyer at an affordable price, the HOME loan balance shall be transferred to the subsequent qualified buyer and the affordability period shall remain in force;
a. The resale provision shall remain in force from the date the legal documents are executed at loan closing until the expiration of the affordability period defined in the Written Agreement between the City and the homebuyer(s).
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b. Resale requires the homeowner to sell the home to a low-income family and at an affordable price as defined below:
i) A low-income family is defined as a family whose income at the time of purchase from the homebuyer is no greater than 80% of the area median income as defined by HUD under the Part V income definition.
(1) The contract for sale of the home must include a provision requiring the family acquiring the home to be qualified by the City prior to acquiring the property.
ii) The affordable sales price of the HOME assisted property shall be determined as follows:
(1) The City shall determine 80% of area median income (AMI) for:
(a) A family of two (2) if the unit is a one (1) bedroom unit (b) A family of three (3) if the unit is a two (2) bedroom unit (c) A family of four (4) if the unit is a three (3) bedroom unit (d) A family of six (6) if the unit is a four (4) bedroom unit
(2) The applicable AMI shall be multiplied by twenty -five percent (25%) to determine the annual housing expense (“HE”) and divided by twelve (12) to determine the monthly HE.
(3) The mortgage interest rate shall be the average fixed rate, thirty (30) year mortgage interest rate as published by the Federal Housing Administration (FHA) at the time of determination.
(4) The term shall be thirty (30) years.
(5) The present value of an affordable mortgage shall be calculated utilizing the monthly HE, the determined interest rate, and the term.
(6) The present value shall be divided by 95 and multiplied by 100 . The result shall be the affordable sales price.
iii) The homeowner must list the property at or below the City determined affordable price.
1. Fair Return and Appreciated Value [24 CFR 92.254(a)(5)(i)]
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a) Determination of Fair Return
i) Fair Return shall be the sum of:
(1) Down payment and closing costs paid from the buyer’s cash at purchase.
(2) Seller’s (homeowner’s) closing costs at sale.
(3) Principal payments only made by the buyer in excess of the amount required by the loan.
(4) Documented capital improvements in excess of $500.
b) Fair Return is paid to the buyer at sale once first mortgage debt is paid and all other conditions of this agreement are met.
i) In the event there are no funds for fair return, then fair return does not exist.
ii) In the event there are partial funds for fair return, then fair return shall remain in force.
c) Appreciated value is:
i) The Affordable Sales Price
ii) Less first mortgage debt
iii) Less Fair Return
iv) Equals appreciated value.
(1) If appreciated value is zero, or less than zero, then no appreciated value exists.
d) Appreciated Value is shared with the homebuyer based on the City’s initial investment of HOME funds as follows:
i) The homeowner’s initial investment of down payment and closing costs divided by the City of HOME investment equals the percentage of appreciated value that shall be paid to the homeowner. ii) The balance of appreciated value shall be paid to the City.
CHDO Determination Worksheet
The CHDO Determination Worksheet is designed to assist the City in processing your CHDO application in the minimum time necessary . Each section is a table which can be filled out 538
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and will adjust to the length of the CHDOS response . Please remember to save this document as (Acronym of the CHDO) CHDO Application.
EXHIBIT 3
CHDO DETERMINATION WORKSHEET
APPLICANT INFORMATION
Applicant Name
Applicant Address
City State Zip
Contact Person Office
Phone
Cell Phone E-mail
BOARD OF DIRECTORS LIST
CHAIR Name
Home Address
City/State Zip
Telephone E-mail
PRESIDENT Name
Home Address
City/State Zip
Telephone E-mail
VICE-PRESIDENT Name
Home Address
City/State Zip
Telephone E-mail
TREASURER Name
Home Address
City/State Zip
Telephone E-mail
SECRETARY Name
Home Address
City/State Zip
Telephone E-mail
BOARD MEMBER Name
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Home Address
City/State Zip
Telephone E-mail
BOARD MEMBER Name
Home Address
City/State Zip
Telephone E-mail
BOARD MEMBER Name
Home Address
City/State Zip
Telephone E-mail
BOARD MEMBER Name
Home Address
City/State Zip
Telephone E-mail
BOARD MEMBER Name
Home Address
City/State Zip
Telephone E-mail
BOARD MEMBER Name
Home Address
City/State Zip
Telephone E-mail
BOARD MEMBER Name
Home Address
City/State Zip
Telephone E-mail
CHDO Checklist
The information contained in the CHDO Checklist refers to the definition of Community Housing Development Organizations (CHDOs) in Subpart A, 92.2 of the HOME Rule.
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9. The City of Lynwood requires the CHDO to fill the Checklist out completely stating where the response to each requirement may be found in the accompanying documentation.
I. LEGAL STATUS
A. The nonprofit organization is organized under State or local laws, as evidenced by either Charter (Articles of Incorporation) or By - Laws
B. No part of its net earnings inures to the benefit of any member, founder, contributor, or individual, as evidenced by:
C. Has a tax exemption ruling from the Internal Revenue Service (IRS) under Section 501(c)(3) or (4) of the Internal Revenue Code of 1986, as evidenced by a 501(c)(3) or (4) Certificate from the IRS. OR Is classified as a subordinate of a central organization non-profit under section 905 of the Internal Revenue code, as evidenced by a group exemption letter from the IRS that includes the CHDO.
D. Has among its purposes the provision of decent housing that is affordable to low- and moderate-income people, as
evidenced by a statement in the organization's:
II. CAPACITY
A. Conforms to the financial accountability standards of 24 CFR 84.21, "Standards for Financial Management Systems", as evidenced by a notarized statement by either the president or chief financial officer of the organization; OR a certification from a Cer tified Public Accountant, OR a HUD approved audit summary.
B. Has a demonstrated capacity for carrying out activities assisted with HOME funds, as evidenced by either resumes and/or statements that describe the experience of key staff members who have s uccessfully completed projects similar to those to be assisted with HOME funds, OR contract(s) with consultant firms or individuals who have housing experience similar to projects to be assisted with HOME funds, to train appropriate key staff of the organization.
C. Has a history of serving the community within which housing to be assisted with HOME funds is to be located, as evidenced by either a statement that documents at least one year of experience in serving the community, OR for newly created org anizations formed by local churches, service or community organizations, a statement that
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documents that its parent organization has at least one year of experience in serving the community. The CHDO or its parent organization must be able to show one year of serving the community prior to the date the participating jurisdiction provides HOME funds to the organization. In the statement, the organization must describe its history (or its parent organization's history) of serving the community by describing a ctivities which it provided (or its parent organization provided), such as, developing new housing, rehabilitating existing stock and managing housing stock, or delivering non -housing services that have had lasting benefits for the community, such as couns eling, food relief, or childcare facilities. The statement must be signed by the president or other official of the organization.
D. A defined service area which includes or overlaps the City of Lynwood as evidenced by: A resolution of the Board of Directors; the Charter, or the By-Laws
E. A current financial statement of the CHDO
III. ORGANIZATIONAL STRUCTURE
A. Maintains at least one -third of its governing board's membership for residents of low -income neighborhoods, other low-income community residents, or elected representatives of low -income neighborhood organizations as evidenced by the Organization’s By -Laws, Charter, OR Articles of Incorporation.
B. Provides a formal process for low -income, program beneficiaries to advise the organization in all of its decisions regarding the design, siting, development, and management of affordable housing projects, as evidenced by: the organization's By -laws, a r esolution of the Board of Directors, OR a written statement of operating procedures approved by the governing body.
C. A CHDO may be chartered by a State or local government, but the following restrictions apply: (1) the State or local government may not appoint more than one -third of the membership of the organization's governing body; (2) the board members appointed by the State or local government may not, in turn, appoint the remaining two -thirds of the board members; and (3) no more than one-third of the governing board members are public officials (including any employees of the PJ), as evidenced by the organization's: By -laws, Charter, OR Articles of Incorporation.
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LOCAL REQUIREMENT: A Board Information Form must be submitted for each Board member
D. If the CHDO is sponsored or created by a for -profit entity , the for - profit entity may not appoint more than one-third of the membership of the CHDO's governing body, and the board members appointed by the for-profit entity may not, in turn, appoint the remaining two -thirds of the board members, as evidenced by the CHDO's: By-laws, Charter, OR Articles of Incorporation.
IV. RELATIONSHIP WITH FOR-PROFIT ENTITIES
A. The CHDO is not controlled, nor receives directions from individuals, or entities seeking profit from the organization, as evidenced by the organization's By-laws, OR a Memorandum of Understanding (MOU).
B. A Community Housing Development Organization may be sponsored or created by a for -profit entity, however: (1) the for -profit entity's primary purpose does not include the development or management of housing, as evidenced in the for-profit organization's By-laws
(2) the CHDO is free to contract for goods and services from vendor(s) of its own choosing, as evidenced in the CHDO's By -laws, Charter, OR Articles of Incorporation
V. OTHER FEDERAL REQUIREMENTS
(1) Has a conflict of interest policy for Board of Directors and Staff that meets the requirements of 24 CFR Part 92.356 of the HOME Regulations
Project Application
10. Once the City has provided the CHDO with a Pre -Qualification letter, the CHDO applicant must submit a viable, compliant CHDO project to the City within 180 days.
Projects
The following describes the required submissions for various types' projects allowed by the City:
Single Family
Single Family program applicants are required to submit a complete program description that Defines:
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1. The buyer(s) to be served;
a. By family size and household income
2. The type of program activity:
b. Acquisition/Rehabilitation/Sale
c. New Construction
d. Other
3. The project timeframe and timeline
4. The total project costs
a. Including all Sources and Uses
5. The total subsidy per buyer
a. The City does not offer a separate down payment and closing costs assistance program. The applicant must define what portion of the funds requested will be a development subsidy and what portion of the subsidy will be down payment and closing cost assistance to the buyer.
Multifamily
Multifamily program applicants are required to submit a site-specific project, including:
1. A development and operating pro forma.
2. The type of program activity:
a. Acquisition/Operation
b. Acquisition/Rehabilitation/Operation
c. New Construction
d. Special Needs
3. The project timeframe and timeline.
4. The total project cost:
a. Including all Sources and Uses for the development.
b. The total HOME subsidy requested.
5. An operating pro forma showing all income and expenses for the entire HOME required compliance period:
a. Rents must be compliant with the HUD allowable rents for the Los Angeles MSA.
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c. The project must have a positive cash flow for the entire HOME compliance period.
CHDO Proceeds
CHDO Proceeds result from the sale of a single family or m ultifamily property financed by the City through the HOME program . Proceeds include both HOME funds and any other funds from any source which are realized by the sale of property assisted in any form or fashion with HOME funds.
1. In single family sales, the total HOME funds provided by the City to the CHDO for any specific project under the HOME contract, less the actual expenses for the project, the buyer’s down payment, the buyer’s contribution, and any non-HOME or non-CDBG mortgages are defined as CHDO Proceeds, or Proceeds.
2. In multifamily sales, the total HOME funds provided by the City to the CHDO for any specific project under the HOME contract, less the actual expenses of the project, the buyer’s down payment, the buyer’s contribution, and any non -HOME or non - CDBG mortgages are defined as CHDO Proceeds, or Proceeds.
3. Allowable Uses of CHDO Proceeds:
An eligible activity defined by either the HOME program regulations or this agreement that directly supports the creation of affordable housing in our community shall be collectively known as an “allowable use” . Allowable uses are further defined and limited by this agreement as follows:
a. Any eligible use of HOME funds, as defined in 24 CFR Parts 91 and 92 of the Final HOME Rule shall be an allowable use under this contract, so long as the allowable use results in or supports the creation of new units of affordable single-family housing for purchase by HOME qualified buyers or for rent by HOME qualified tenants
4. Prohibited Uses
a. Proceeds may not be used to fund, finance or pay for a loan counseling, debt counseling or homebuyer counseling programs or efforts as long as the City provides funding to any other organization or entity to provide these services.
b. Proceeds may not be used to fund any operating reserves of the CHDO. 545
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c. Proceeds may not be utilized to make repairs, reconstruct, or rebuild any unit previously financed with HOME funds without the express written permission of the City.
5. Governing Law and Regulation
a. Final HOME Rule: 24 CFR Parts 91 and 92;
b. CPD Notice 97-9; and
c. The City’s Contract with the CHDO
6. Accounting for Proceeds
a. The CHDO shall retain proceeds in a separate bank account and shall provide an accounting of the use of proceeds to the City on a quarterly basis. b. The accounting shall designate the project and show the flow of funds into and out of the project account until all funds in the account are expended in accordance with the CHDO Contract and the CHDO Proceeds Addendum c. To facilitate proper accounting for the proceeds, the CHDO shall utilize the spreadsheet designated by the City and included here by reference. d. The auditor of the CHDO shall, at each annual audit, review the CHDO proceeds account of the CHDO and shall include in the annual audit specific language stating whether o r not the CHDO has complied with the terms of the CHDO Proceeds Addendum to the Contract between the City and the CHDO.
7. Allocation and Use of Proceeds
a. Under the CHDO’s contract with the City, the City provides the CHDO with a development subsidy to assis t in the development of either multifamily or single-family housing within the City;
b. The development subsidy is expended by the CHDO;
c. Proceeds are realized upon the sale of the completed property to a qualified buyer as defined by the City’s contract with the CHDO.
d. Proceeds are realized on the date of the close of the property to the end owner.
e. At the close of each project which yields proceeds to the CHDO, the CHDO shall allocate proceeds as follows:
i. If proceeds are less than $5,000, then all proceeds fro m the associated property account shall be allocated by the CHDO to the general administration (salaries, benefits and/or administrative 546
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costs) of the CHDO for the support of the development of affordable housing.
ii. If proceeds are more than $5,000, then:
1. Ten percent (10 percent) of proceeds shall be immediately allocated to the general administration (salaries, benefits and/or administrative costs) of the CHDO for the support of the development of affordable housing;
2. Ninety percent (90 percent) of proceeds shall be allocated to land acquisition, site development, and/or construction financing.
3. Each subsequent return of proceeds shall follow the same methodology until the proceeds are less than $5,000, at which time the proceeds account for the project shall be closed.
iii. To facilitate the quick rollover and expenditure of proceeds, the CHDO will invest proceeds in the next available project as soon as the proceeds are realized, and before a request for additional funds for development activity from the City.
8. Draw Requests
a. Requests to the City for disbursement of funds for land acquisition, site development and/or construction financing on any subsequent project under this contract, shall include the following:
i. The full amount of the requested disbursement;
ii. The amount drawn from proceeds
iii. Including the project name or names, the amount is drawn from. iv. The net amount of the requested disbursement.
9. CHDO proceeds must be specifically requested in the CHDO’s Project Application.
10. The City of Lynwood will not assign staff to a CHDO on either a full or a part -time basis in order to fulfill the CHDOs capacity requirement.
11. Allow CHDOs pay the City of Lynwood for any technical assistance and/or training that the City provides.
CHDO Certification
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CHDO Certification/Recertification Requirements:
Certified CHDOs or organizations that wish to be certified as a City of Lynwood CHDO must use the City's application to apply for certification. Certified CHDOs must be re-certified on an annual basis, providing all documentation required for initial certification is up to date and accurate . Agencies meeting the CHDO certification requirements as indicated in the CHDO section of these operating procedures will be recommended by the City of Lynwood staff for certification.
A City of Lynwood CHDO seeking recertification or an agency seeking certification as a City of Lynwood CHDO must currently demonstrate capacity to carry out HOME assisted activities either with:
a. Experienced staff who have successfully completed similar projects, that draws a distinction between development, management of rental housing and development, sale of housing for first-time homebuyers, OR
b. Key staff with limited or no experience who will utilize experienced consultants (if consultants ar e in charge of development, there must be a written plan submitted yearly to the City of Lynwood indicating how the consultant will train key staff during that funded year).
Monitoring
The City of Lynwood will monitor the performance of the CHDO to assist the City to identify:
Strengths and weaknesses in CHDO operations and the support systems necessary for CHDOs to operate and for the HOME program to succeed. Identifying what needs to be changed, and for securing the appropriate technical assistance and training needed to do so.
Determining the level, type, and areas of need will vary from CHDO to CHDO, and, within CHDOs, from year to year.
Monitoring CHDO performance will include a review of the following factors:
1. Compliance with HOME requirements;
2. A risk assessment of the CHDO;
3. Completion of funded projects;
4. Timeliness and ability to complete projects within established budget parameters;
5. Human resources;
6. Adequate financial resources;
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7. Ability to leverage other resources;
8. Adequate financial systems;
9. Board operations;
10. Strategic plans;
11. Organizational work plans;
12. Record-keeping;
13. Compliance with HOME tar targeting requirements; and
14. Board composition and operations.
PROCEDURE:
1. The City will issue a letter ninety (90) days in advance of monitoring specifying a set of files, policies, procedures, and accounts the City will require the CHDO deliver to the City on a date certain;
a. Each year, within 120 days of the close of the CHDO’s fiscal year, the CHDO shall deliver an audit by a certified public accountant to the City;
i. The audit shall contain the CHDO Proceeds provision noted under accounting, if applicable;
2. After the CHDO has submitted the required documents the City will conduct a desk review to insure compliance with the HOME and local requirements;
3. Upon completion of the desk review the City will establish a mutually acceptable date for the on-site monitoring;
4. The City will specify, at its’ sole discretion, the items the City will review on-site.
5. The City will conduct on the on-site monitoring.
6. Within thirty (30) days of the on -site monitoring, the City will issue a Monitoring Report delineating any deficiencies found;
7. The CHDO shall have thirty (30) days to address or correct those deficiencies identified in the monitoring report.
Default
Any of the following conditions shall result in default by the CHDO:
1. Failure by the CHDO to deliver the audit within the prescribed period; 549
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2. Failure by the CHDO to submit the required quarterly reports;
3. Failure by the CHDO to segregate the CHDO Proceeds in a separate account, or to properly account for the Proceeds to the standard provided by this agreement (if applicable);
4. Failure by the CHDO to meet the development or program benchmarks contained in the City’s Contract with the CHDO.
5. Any action of the staff or Board of Directors which violates the laws and regulations of the United States; the laws and regulations of the State of California; and/or the laws and regulations of the City.
NOTE: If the CHDO defaults as defined herein, th e City, may, at the City’s sole discretion, end or suspend the Contract between the City and the CHDO.
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CHAPTER 4: HOMEOWNER REHABILITATION ACTIVITIES
This chapter describes how HOME funds may be used to assist owners in the rehabilitation of owner-occupied housing. Eligible activities, forms of assistance and property types are covered in this chapter.
This chapter is divided into two parts: General HOME Program requirements, and the City of Lynwood program design and implementation procedures focusing on how to determine 95 percent of median value, as well as subsidy type, and selection.
PART 1: HOME PROGRAM REQUIREMENTS (GENERAL)
General HOME Program requirements include : eligible Homeowner Reha bilitation Activities , applicant eligibility requirements, forms of financial assistance, and property standards and value.
A summary of the key homeowner rehabilitation rules and how to document compliance with these rules is provided as Exhibit 4.
Eligible Activities
HOME funds may be used to assist existing homeowners with the repair, rehabilitation, or reconstruction of owner-occupied units.
Whenever HOME funds are used for rehabilitation, the work must be performed according to the City's written rehabilitation standards and the unit(s) must be brought up to the applicable state or local code. If a state or local code does not exist, the unit may be brought up to the standards of the national model codes.
This means that the City may not undertake some forms of special purpose homeowner repair programs, such as:
1. Weatherization programs;
2. Emergency repair programs; or
3. Handicapped accessibility programs.
However, these types of programs may be undertaken, if the property meets or will be brought up to the applicable HOME property standards.
1. The City's HOME funds will be used to assist existing homeowners with the repair, rehabilitation, or reconstruction of owner-occupied units.
2. HOME funds that are used for rehabilitation must be performed according to the City's written rehabilitation standards and the unit must be brought up to the applicable state or local code.
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Forms of Finance Assistance
The City of Lynwood may structure HOME assistance for owner -occupied rehabilitation using any of the following forms of assistance:
1. Grants;
2. Deferred-payment loans;
3. Non-interest-bearing loans; and
4. Interest-bearing loans.
There are several other less common forms of financial assistance that may be used in homeowner rehabilitation programs. These forms include interest subsidies and loan guarantees. Both methods enable the City to use small amounts of HOME funds to leverage private money for rehabilitation. They include:
5. Interest subsidies: Interest subsidies, also referred to as interest reduction grants or interest rate buydowns, are similar to principal reduction grants or loans except that the HOME funds are used to “buy down” the interest rate to an affordable level. In this case, the HOME subsidy is paid directly to the lender and not provided to the homeowner.
6. Loan guarantees: Loan guarantees are another way to leverage HOME funds for homeowner rehabilitation. A loan guarantee could be used as a credit enhancement when a borrower otherwise eligible for a private loan is denied because of a real or perceived risk factor. In these cases, the City could provide a loan guarantee that would ensure payment, thus making an otherwise risky loan acceptable to a private lender.
Subsidy Limits
1. Minimum HOME investment: The minimum amount of HOME funds is an average of $1,000, multiplied by the number of HOME-assisted units in the project.
a. The minimum only relates to the HOME funds, and not to any other funds that might be used for project costs.
2. Maximum HOME investment: The standard maximum loan amount is $50,000.
The Director has the authority to approve projects that exceed the standard maximum loan amount, when the standard maximum loan limit is not sufficient to bring the unit into code compliance and/or a health and safety standard conditions.
These special approvals are to be recommended on an “as needed” basis, and are subject to the maximum subsidy limits for the HOME Program. 552
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Costs in excess of the Program amounts may be supplemented with personal funds.
In all instances, the loan amount must be in accordance with the loan-to-value ratios
3. The maximum per -unit HOME subsidy limit varies by PJ. HUD determines the maximum amounts, which are based on the City's Section 221(d)(3) program limits for the metropolitan area, each year . An economist in a local HUD field office can provide these limits.
The maximum per -unit subsidy limit is $50,000. Thi s amount is the standard maximum loan amount.
Eligible Costs
Under HOME, both the actual cost of rehabilitating the housing and related soft costs are eligible. Exhibit 4 lays out the specific eligible HOME costs under a homeowner rehabilitation program.
EXHIBIT 4
HOME-ELIGIBLE HOMEOWNER REHABILITATION COSTS
HARD COSTS
Meeting the rehabilitation standards
Meeting applicable codes, standards and
ordinances
Essential improvements
Energy-related improvements
Lead-based paint hazard reduction*
Accessibility for disabled persons
Repair or replacement of major housing
systems
Incipient repairs and general property
improvements of a non-luxury nature
Site improvements and utility connections
*Note: Lead hazard reduction costs are not
counted as hard costs for the purposes of
determining the level of assistance under 24
CFR Part 35 (the Lead Safe Housing Rule).
SOFT COSTS
Financing fees
Credit reports
Title binders and insurance
Recordation fees, transaction taxes
Legal and accounting fees
Appraisals
Architectural/engineering fees, including
specifications and job progress inspections
Project costs incurred by the PJ that are
directly related to a specific project
Refinancing of secured existing debt if the
housing is owner-occupied and refinancing
allows the overall costs of borrower to be
reduced and the housing is made more
affordable
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The Property
Eligible Property Types
1. To be eligible for HOME assistance, a property must be:
a. Occupied by an income-eligible homeowner; and
b. The owner’s principal residence.
2. The following property types may be included under the program:
a. Traditional single-family housing that is owned fee simple (this housing may contain one to four dwelling units);
b. A townhouse unit;
c. A condominium unit;
d. A cooperative unit or unit in a mutual housing project (if state law recognizes these as forms of homeownership); or
e. A manufactured home, including mobile home.
3. If HOME funds are used to assist the rental units in a two - to-four-unit residence, the HOME r ental requirements apply –including provisions regarding tenant occupancy, initial rent levels, and long-term affordability.
4. If HOME funds are used to rehabilitate only the owner -occupied unit in a two -to- four-unit residence, the rental housing rules do not apply.
Maximum Property Value
To use HOME funds, the value of the HOME assisted property after rehabilitation must not exceed 95 percent of the median purchase price for the area, as published by HUD, or, in accordance with the Final Rule, as determined locally through market analysis.
1. Determining after -rehabilitation value : To establish project eligibility, after - rehabilitation value must be established prior to any work being performed. The after-rehabilitation value may be established by one or more of the following methods:
a. Estimates of value : Estimates of value by the City or subrecipient may be used. Project files must contain the estimate of value and document the basis for the value estimates.
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b. Appraisals: Appraisals, whether prepared by a licensed fee appraiser or by a staff appraiser of the City, may be used. Pro ject files must document the appraised value and the appraisal approach used.
2. Tax assessments: Tax assessments for a comparable property located in the same neighborhood may be used to establish the after -rehabilitation value if the assessment is current and accurately reflects market value after rehabilitation.
Determining the 95 Percent of Median Purchase Price Limit
The Final Rule offers the City two options for determining the 95 percent of median purchase price limit for owner-occupied single-family housing.
The City may either perform a:
1. A local market survey, or
2. Use the figures published by FHA for its 203(b) program . (The national cap established by the 203(b) program does not apply.)
Property Standards
As with all HOME-assisted properties, properties that are rehabilitated with HOME funds must meet certain standards.
The City is required to have written rehabilitation standards describing the methods and materials to be used when performing rehabilitation . All HOME-assisted rehabilitation projects must meet the City's written rehabilitation standards.
The Applicant/Beneficiary
Principal residence
Loan documents or other forms of written agreement between the purchaser and the City must incorporate this requirement. This includes:
1. Owning or having a membership in a cooperative or mutual housing project that constitutes homeownership under state law; or
2. Maintaining an equivalent form of ownership approved by HUD.
3. Life estates and land contracts/contracts for deeds are not approved by HUD as eligible forms of ownership.
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Long-Term Affordability
There are no long -term affordability or occupancy requirements associated with rehabilitation assistance to owner-occupants. However, the City may choose to impose such requirements.
Other Federal Requirements
Exhibit 5 identifies the other federal requirements that must be followed when HOME is used for rehabilitation of homeowner properties, while Exhibit 6 identifies rules on how to documents a homeowner rehabilitation program. These exhibits are meant to serve as checklists only.
EXHIBIT 5
OTHER FEDERAL REQUIREMENTS
Other Federal
Requirements
Apply to
Homeowner
Rehabilitation?
Special/Issues/
Considerations
Regulatory Citations and
References
Non-Discrimination and Equal Access Rules
Fair Housing and
Equal
Opportunity
Yes. Must
affirmatively
further Fair
Housing.
92.202 and 92.250
Title VI of Civil Rights Act
of 1964 (42 U.S.C. 2000d
et. seq.)
Fair Housing Act (42 U.S.C.
3601-3620)
Executive Order 11063
(amended by Executive
Order 12259)
Age Discrimination Act of
1975, as amended (42
U.S.C. 6101)
24 CFR 5.105(a)
Affirmative
Marketing
No 92.251
Handicapped
Accessibility
No. (Note:
Accessibility
improvements are
eligible costs.)
Section 504 of the
Rehabilitation Act of 1973
(implemented at 24 CFR
Part 8)
For multi-family buildings
only, 24 CFR 100.205
(implements the Fair
Housing Act)
Employment and Contracting Rules
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Equal
Opportunity
Employment
Yes Small projects offer
opportunities for
minority and resident-
contractors.
Executive Order 11246
(implemented at 41 CFR
Part 60)
Section 3
Economic
Opportunity
Yes, if amount of
assistance exceeds
$200,000 OR
contract or
subcontract
exceeds $100,000.
Include Section 3
clause in contracts
and subcontracts.
Section 3 of the Housing
and Urban Development
Act of 1968 (implemented
at 24 CFR Part 135)
Minority/Women
Employment
Yes Must develop
procedures and
include in contracts
and subcontracts.
Executive Orders 11625,
12432 and 12138
24 CFR 85.36(e)
Davis-Bacon No 92.354
Davis-Bacon Act (40 U.S.C.
276 276a-5)
24 CFR Part 70
(volunteers)
Copeland Anti-Kickback
Act (40 U.S.C. 276c)
Conflict of
Interest
Yes 92.356
24 CFR 85.36
24 CFR 84.42
Debarred
Contractors
Yes Check HUD’s list of
debarred contractors.
24 CFR Part 5
Other Federal Requirements
Environmental
Reviews
Yes Neighborhood
reviews may
facilitate targeted
programs, but
individual checklist
still required for
each project site
Special attention
should be paid to
flood insurance
and historic
requirements.
92.352
24 CFR Part 58.35 a(4)
National Environmental
Policy Act (NEPA) of 1969
Flood Insurance Yes for PJs that are
cities/counties. No
Must obtain flood
insurance if located in
a FEMA designated
Section 202 of the Flood
Disaster Protection Act of
1973 (42 U.S.C. 4106)
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for state
programs.
100-year flood plain.
Community must be
participating in
FEMA’s flood
insurance program.
Site and
Neighborhood
Standards
No. 24 CFR 893.6(b) Site and Neighborhood
Standards
Lead-Based Paint Yes for pre-1978
units.
Notices to owners.
Paint testing of
surfaces to be
disturbed.
Risk assessment, if
applicable, based
on level of
rehabilitation
assistance.
Safe work
practices and
clearance.
Provisions
included in all
contracts and
subcontracts.
92.355
Lead Based Paint
Poisoning Prevention Act
of 1971 (42 U.S.C. 4821
et.seq.)
24 CFR Part 35
982.401 (j) [except
paragraph 982.401
(j)(1)(i)]
Relocation Yes Relocation is required
if tenants are living in
the other units.
Relocation is not
required for owner-
occupied units.
92.353
Uniform Relocation
Assistance and Real
Property Acquisition
Policies Act of 1970 (URA)
(42 U.S.C. 4201-4655)
49 CFR Part 24
24 CFR Part 42 (subpart B)
Section 104(d) “Barney
Frank Amendments”
EXHIBIT 6
SUMMARY OF HOMEOWNER REHABILITATION RULES AND HOW TO DOCUMENT Key HOME Requirement Documentation
Eligible Participants
Owner Income Gross income <80 percent of
median income based on the
upcoming 12 months.
Completed application in the
project file.
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Income is defined by one of
three options: Section 8 annual
income; annual income under
Census long form; or adjusted
gross income under IRS Form
1040.
Source documentation (wage
statements, interest
statements) in the project file.
Owner Occupancy Applicant must occupy unit as
his/her principal residence.
Client must sign a clause on the
application form certifying that
the property is the principal
residence.
Ownership of Applicant must have ownership
of the property through:
free simple title,
99-year leasehold interest (50
years on trust or restricted
Indian lands), or
ownership/membership in a
cooperative or mutual housing
project.
Title check documentation in
project file.
Copy of deed or other
ownership document in the
project file.
Homeowner’s
Insurance
Endorsement
Applicant must have evidence of
homeowner’s insurance
Homeowner’s Insurance
Endorsement
Eligible Property
Property Type Eligible property types include:
one-to-four-unit property;
condominium unit;
cooperative or mutual housing
unit, if recognized by state law;
or
manufactured or mobile home.
If two-to-four units, indicate
status of non-owner-occupied
units in the application.
If non-owner units were
assisted with HOME funds,
provide agreement with
homeowner regarding rental
requirements and reference to
the property's rental
monitoring file.
Property Location Property must be located within
geographic area of the PJ.
Application should include
address in PJ’s geographic area.
HOME Minimum A minimum of $1,000 in HOME
funds must be invested in each
assisted unit.
The maximum per-unit subsidy
limit is determined by HUD.
Maintain records in project file
demonstrating that the per-unit
HOME investment exceeded
$1,000.
Maintain records in the project
file indicated total HOME
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subsidy did not exceed
maximums provided by HUD.
Property Value After-rehabilitation value must
not exceed 95 percent of the
area median purchase price.
Use 203(b) limits; OR
Establish local limits and obtain
HUD approval
If using local value limits,
document data used to
determine limits as well as
evidence of HUD approval in
the program file.
Document method for
determining value in the
project file.
Copy of value estimate held in
project file.
Property Standards Property must meet PJ’s written
rehabilitation standards.
Property must meet applicable
codes (state or local
codes/standards or one of three
nationally accepted
codes/standards).
Document local code or model
code used in program files
Maintain written rehabilitation
standards in program files.
Include inspection report or
certification by inspector in
project file.
Keep inspection checklist and
work write-up in project file.
Eligible Activities Rehabilitation, reconstruction. Document all expenditures.
PART 2: PROGRAM DESIGN AND IMPLEMENTATION
Objectives
The City of Lynwood receives an annual allocation of HOME funds from the U.S. Department of Housing and Urban Development (HUD) . HOME funds are designed to provide or preserve affordable housing for families at or below eighty (80 percent) percent of the Area Median Income (“AMI”). The City is included in the Los Angeles Metropolitan Statistical Area (“LA MSA”).
Under the HOME Program, the City of Lynwood has elected to design and implement a homeowner rehabilitation program referred to as the HOME HOMEOWNER REHABILITATION A CTIVITIES. This program is designed to meet the following objectives:
1. Implement a City-wide program designed to serve very -low and low-income households,
2. Provide a valuable service to qualified homeowners and residents,
3. Preserve existing single-family homes, either detached, or attached, within the City limits.
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GOALS
The City's Homeowner Rehabilitation Activities goals include:
1. Utilizing project selection criteria to establish criteria for determining which projects are chosen (i.e., the level of needed repair or ability of the owner to leverage other funds).
2. Assertively marketing the Homeowner Rehabilitation Activities to ensure the program information is widely and fairly distributed.
ADMINISTRATIVE PLAN
Under the supervision of the Community Development Director, the City's Administrative Analyst II and HOME program Consultant will implement the Homeowner Rehabilitation Activities tasks including:
1. Implementing the methods and criteria for selecting applicants;
2. Administrating and tracking the waiting list (how it will be administered);
3. Utilizing and updating the appropriate forms for assistance and criteria in determining
Homeowner Rehabilitation Activities
1. The HOME Program provides a 0% Deferred Interest Loan (Loan) up to $50,000 for the rehabilitation of owner -occupied single-family homes or condominiums to the City’s residential code (Code ) and the Ci ty’s Rehabilitation Standards (Standards ).
Rehabilitation to Code and Standards are required.
2. Rehabilitation of a condominium unit for an owner(s) is limited to the unit itself, and may not include common areas, or areas that are the responsibly of the Homeowners’ Association (“HOA”);
3. Should areas which are common areas or areas that are the responsibility of the HOA not meet code, then the condominium unit shall be ineligible for rehabilitation unless the common area or items of HOA responsibility are corrected prior to or during rehabilitation funded by HOME funds;
4. Rehabilitation of a single-family unit is limited to the unit itself, and does not include outbuildings. Outbuildings which do not meet code must be rehabilitated by the owner at the owner’s expense prior to or during rehabilitation f unded by HOME or be demolished by the City;
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5. Non-conforming additions or structures must be demolished during rehabilitation with HOME funds. If permitted by local codes, the non -conforming structure or addition may be rebuilt using HOME funds.
Form of Assistance
The City has carefully designed the HOME Program to both meet community needs and the program goals.
1. The entire L oan is due and payable to the City if any of the following conditions occur:
a. The property is sold;
b. The property is foreclosed on;
c. The property is refinanced;
d. The property is leased;
e. The applicant(s) fail(s) to occupy the property as their primary residence;
f. In the event that one of the Joint Tenants listed in the Deed of Trust dies, ownership as stipulated by California Real Estate Law, transfers to the surviving individual. This procedure is not a transfer of title . Consequently, the remaining joint tenant will assume the Loan pursuan t to the original terms of the Loan.
LOAN CONDITIONS
Both the City and the Applicant adhere to certain loan conditions as follows:
The City
1. The City will comply with the Fair Credit Reporting Act that stipulates and guarantees the applicant's privacy and right to have all information regarding the loan transaction kept in a confidential manner;
2. The City shall not discriminate upon the basis of sex, age, race, creed, color, class, national origin, or ancestry in the awarding of financial assistance;
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The Applicant(s)
1. The Applicant shall use the financed loan to pay for the cost of rehabilitation as detailed on the work write -up or scope of wo rk submitted by the program inspector;
2. The Applicant shall permit City inspections of the property to be renovated for compliance with all Federal, State, and City building standards;
3. The Applicant shall not award any contract for rehabilitation work to be paid in whole or in part with the proceeds of the loan to any general contractor who, at the time, is not on the City’s approved contractors’ list;
4. The Applicant shall allow no member of the City who exercises any function of responsibility in connection with the administration of the HOME funds to have any interest, direct or indirect, in the proceeds of the loan, or in any contract entered into by the applicant for the performance of work financed, in whole or in part, with the proceeds of the loan;
5. The Applicant shall not pay any bonus, commission or fee for the purpose of obtaining approval of the loan application;
6. The Applicant shall occupy and maintain the housing unit for the term of loan;
NOTE: The Applicant shall maintain fire, liability, and hazard insurance coverage on the housing unit in an amount that is at least the value of the after rehabilitation appraised value of the property.
7. The Applicant shall cause the City to be named a co -insured party on the fire, liability, and hazard insurance coverage.
8. The Applicant shall keep property taxes current for the term of the loan;
9. The Applicant shall not discriminate upon the basis of sex, age, race, creed, color, class, national origin, or ancestry in the awarding of the construction contract; and
10. The Applicant shall utilize funds within sixty (60) days of loan closing unless granted a written time extension by the City.
DEFAULT
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In the event that the Applicant fails to adhere to the conditions and restrictions contained within the Written Agreement between the Applicant and the City, the City reserves the right to terminate the individual's participation in the HOME Program and/or demand full repayment of the loan.
Eligible Applicant
The HOME Program is open to all applicants who meet the eligible household requirements provided above. The City, in recognition of the high proportion of elderly and special needs families that reside in substandard housing within the City, will provide a priority to owner occupants that are elderly and/or disabled.
An Applicant(s) owns and occupies the property where proof of ownership is established through a legal Deed of Trust. Assistance from the City shall be available only to Applicants who:
1. Have the capacity and authority to competently enter into financial and contractual agreements;
2. Whose household income that does not exceed 80% of the area median income adjusted by family size (See Qualifying Households);
3. Whose monthly housing costs are not and will not be more than 30% of income
4. Agree to comply with any and all applicable permits, codes, and/or other City regulations;
5. Agree to sign and abide by the Written Agreement and Promissory Note between the City and the Applicant(s); and
6. Agree to vacate the property during the rehabilitation period at their own expense
NOTE: Elderly is defined as being above 55 years of age. Disabled is defined as having a recognized disability under the Americans Disabilities Act.
Qualifying Households
1. The 0% Deferred Interest Loan is targeted at owner-occupant households who have resided in their home for at least two (2) years, and
2. That are at or below 80 percent of the LA MSA AMI
The income limits for the Loan as of 2025 are:
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Family Size One Person Two Person Three
Person
Four
Person
Five Person Six Person
Maximum
Income to
Qualify
$84,850 $96,950 $109,050 $121,150 $130,850 $140,550
NOTE: Income limits are adjusted annually.
1. Owner-Occupants are all persons listed on the deed.
2. A household includes all persons living in the unit at the time of application, except persons who are paid caregivers of elderly or handicapped individuals.
3. All members of the Household must be U.S. Citizens or Resident Aliens.
4. Each member of the household must provide a social security number at the time of application.
Application Intake/Screening/Determination of Household Adjusted Gross Income
The City utilizes the Part V definition of Adjusted Gross Income as defined in the Technical Guide to Determining Income and Allowances for the HOME Program (Third Edition, January 2005).
In calculating adjusted gross income, the applicant’s income and that of all other household members at the time of application shall be considered. The income of household members under eighteen (18) years of age will be excluded. The income of any persons who are paid caregivers of elderly or handicapped individuals will be excluded.
A household member is any person residing in the household at the time of application.
Income is defined as follows:
1. The full amount before any payroll deductions of wages and salaries, overtime pay, commissions, fees, tips, bonuses, and other compensation for personal services;
2. The net income from an operation of a business or profession, as calculated by averaging the net income as reported in their Federal Income Taxes for the past three years;
3. Interest, dividends, and other net income of any type from the real or personal property (where the family assets are in excess of $50,000, excluding property, 565
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adjusted gross income shall include the greater of the actual income derived from all assets or percentage of such assets based on the current passbook savings rate);
4. The full amount of periodic payments received from social security, annuities, insurance poli cies, retirements funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump -sum payment for the delayed start of a periodic payment;
5. Payment in lieu of earnings, such as unemployment, workers' compensati on, severance pay, welfare assistance (NOTE: Such payments may be excluded by the lending institutions providing the first mortgage for purposes of underwriting, but shall be included in eligibility determinations for this Program);
6. Periodic and determinable allowances, such as alimony and child support payment, and regular contributions or gifts received from persons not residing in the dwelling to the extent that such payments are reasonably expected to continue;
7. All regular pay, special pay, and allowa nces of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the family, spouse, or other person whose dependents are residing in the unit;
8. Any earned income tax credit to the extent it exceeds income tax liability;
9. Any other income that must be reported for Federal and State income tax purposes; and,
10. Gross Self-Employed income as reported on Schedule C, IRS 1040, will be adjusted to reflect deductions for necessary and reasonable business expense.
Qualifying Properties
In order to qualify for the HOME Program, properties must be:
1. Located within the City limits;
2. Be held in fee simple by the applicant(s) as defined herein; a. Properties held in a life estate, cooperative units or properties that include residential or commercial rental property are not eligible for the Loan.
3. The property shall be free of negative encumbrances on title. a. All trustees must sign all the appropriate documentation required by the City.
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4. Property taxes must be current on the property;
5. The property must have a rehabilitation cost that does not exceed seventy -five percent (75%) of the after-rehabilitation value of the property as determined by the City;
6. Total debt on the property, including the Loan, may not exceed 100% of the after rehabilitation appraised value of the property.
Eligible Costs
The HOME Loan funds are available for the cost of improvements that are physically attached and permanent in nature within the following scope of work:
1. Appropriate remediation of Lead Based Paint, as required;
2. The correction of all code violations to the City Code;
3. The correction of any deficiencies to meet the City’s Rehabilitation Standard;
4. The correction of incipient code violations;
a. An incipient code violation is defined as a condition that is likely to occur within the first ten years of the loan term. For example, a fifteen (15) year old roof will need to be replaced in year five (5) of the loan term, and is therefore an incipient code violation.
5. The addition of disability features to a property currently occupied by a disabled person or persons; and
6. Improvements to the overall energy efficiency of the property.
INELIGIBLE COSTS
1. The repair, purchase or installation of appliances that are designed and manufactured to be freestanding;
2. The repair, purchase or installation of recreational items such as barbecues, bathhouses, greenhouses, swimming pools, saunas, television antennae, tennis courts;
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3. The repair, purchase or installation of luxury items such as burglar alarms, burglar protection bars, dumbwaiters, kennels, murals, ceiling fans, flower boxes, awnings, patios, decks and storage sheds/workshops;
4. The repair, purchase, or installation of other items deemed ineligible by the Director of Community Development or his designated representative; and
5. The relocation of family members during rehabilitation of the property.
Staffing Plan
It is the intention of the City to administer the majority of the Loan in-house. However, to the extent necessary the City may utilize other agencies including, consultants, and private lenders.
City of Lynwood Organization Roles and Responsibilities For questions concerning the HOME Program, individuals may contact the Community Development Department staff directly by telephone, or e-mail. The mailing address is
City of Lynwood
Community Development Department
11330 Bullis Road, Lynwood, CA 90262.
Exhibit 7, on the following page summarizes the City of Lynwood staff roles and responsibilities in administrating the City's HOME Program.
EXHIBIT 7
CITY OF LYNWOOD STAFFING PLAN
Staff Members Phone Number E-Mail Address
Julian Lee
City Manager
(310) 603-0220 [email protected]
Gabriel Linares
Director of Community Development
(310) 603-0220
x605
[email protected]
Suzanne Trejo
Administrative Analyst II
(310) 603-0220
x601
[email protected]
Lissette Montoya
CDBG & HOME Consultant
(310) 603-0220 [email protected]
Maria Lennox
Rehabilitation Consultant
(562) 761-1478 [email protected]
Harry Wong
Finance Director
(310) 603-0220
x202
[email protected]
Delania Whitaker
Financial Analyst
(310) 603-0220
x202
[email protected]
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City Manager – as the City of Lynwood certifying officer, signs HOME Program certifications, loan documents, loan agreements, and wiring requests.
Community Development Director – approves loans, executes loan agreements, authorizes loan disbursements, initiates IDIS draws.
Administrative Analyst II – assists in the administration and implementation of housing and community development programs, marketing/outreach, pre-income qualification, preparation of loan documents, loan pre -approval, reviews and requests disbursement s, and maintains f ile documentation.
CDBG and HOME Consultant – assists in the administration and implementation of housing and community development programs, including Public Services, Home Rehabilitation and CHDO selection and monitoring, marketing/outreach, income qua lification, preparation of loan documents, loan pre-approval, reviews and requests disbursements, maintains file documentation, IDIS voucher preparation.
Rehabilitation Consultant – reviews site inspection/work plan, prepares cost estimates, reviews for lead based -paint issues, inspects rehabilitation progress, evaluates requests for rehab disbursements, calculates after rehab value appraisal, serves as the project manager for HOME rehabilitation projects, prepares/reviews requests for disbursement, and p repares request for certificate of completion.
Finance Director – reviews loan approval (agreement, note, deed of trust), approves IDIS disbursements, and vouchers.
Financial Analyst – IDIS set-up activity information; maintains file documentation and IDIS reports.
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HOMEOWNER REHABILITATION ACTIVITIES PROCEDURES
The Rehabilitation Consultant, with assistance f rom the Management Analyst, will complete the following procedures:
1. Provide the Borrower with the application and other forms required by the Guidelines for participation in the Program.
City of Lynwood
HOME Program
City Manager
Community
Development
Director
Administrative
Anlayst II
CDBG & HOME
Program
Consultant
Rehabilitation
Consultant
Finance Director
Financial Analyst
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a. The Homeowner Rehabilitation Activities Application Form shall be completed by everyone who lives in the home to be rehabilitated (single family).
b. The application for multifamily shall include rental property household member information forms and appropriate release of information forms.
2. Complete a title search to identify all persons on title.
3. Verify of Income of every member of the household above the age of 18 (unles s enrolled full time in school) who earns any income.
4. Verify benefits and employment and make sure the forms are signed by the borrower(s).
5. Obtain t he borrower’s signatures on the Loan application and all other appropr iate application forms.
6. Review the borrower's most recent property tax information and identifying parcel number.
7. Verify borrower signature on Fair Lending Notice.
8. Verify borrower signature on Statement of Understanding (if applicable).
9. The Management Analyst shall obtain a credit report for all persons on the title.
10. The Management Analyst shall obtain a Limited Coverage policy of title insurance prior to closing any Program loan from a title insurance company doing business in Los Angeles County for all HOME loans.
11. The Manageme nt Analyst shall obtain a standard CLTA Lender Guarantee policy of title insurance from such title company for all Owner-Investor loans.
12. Prior to closing a Program loan, the Management Analyst shall review the condition of title and, based on that review, close the loan only if the title exception(s) disclosed do not materially affect the collateral given to secure the loan.
13. The Program Consultant shall prepare an Environmental Review in the f orm approved by the City. Said Review shall describe any adverse environmental effects of the loan -funded improvements that are likely to occur.
14. The completed Environmental Review will be submitted to the City’s Community Development Director for its review and approval prior to closing the loan.
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a. The Rehabilitation Consultant will not approve any proposed loan if the loan funded improvements are likely to have a significant adverse impact on the environmental, as defined by the National Environmental Policy Act (NEPA).
APPLICATION REVIEW
1. The Rehabilitation Consultant will review all loan application documents, and based on the documents shall make a determination of eligibility consistent with the HOME Guidelines.
2. If additional information or documen tation is required to evaluate the proposed loan, the Rehabilitation Consultant shall request additional information from the borrower.
3. The Rehabilitation Consultant will maintain confidentiality with respect to all financial information received from the borrower to the maximum extent permitted by law.
4. Once the application package is complete, and provided the borrower, the property and the proposed improvements meet all the eligibility requirements set forth in the HOME Guidelines, the Rehabilitation Consultant will prepare a summary analysis of the loan request and make a recommendation to the Community Development Director.
5. These recommendations will be reviewed by the Community Development Director based on the following criteria:
a. Priority will be determined:
i. according to the City's HOME waiting list
ii. “first come, first serve basis,”
iii. immediate need,
iv. project readiness basis;
b. The borrower, property, and proposed improvements meet all eligibility requirements contained in Section 3 of these Guidelines. c. The proposed loan meets the Loan Criteria contained in the HOME Guidelines. d. The proposed loan meets all HOME loan underwriting conditions. e. The proposed improvements comply with all local, state, and federal regulations, including but not limited to:
i. Land Use Zoning;
ii. Design Review;
iii. Building Permits;
iv. California Environmental Quality Act (CEQA];
v. National Environmental Policy Act [NEPA];
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vi. Davis Bacon Prevailing Wage; and
vii. Other regulations which may be applicable.
f. No borrower shall be excluded or discriminated against because of race, color, religion, ancestry, sex, age, national origin, physical handicap, or any other legally prohibited basis.
EXCEPTION/SPECIAL CIRCUMSTANCES
The following procedures shall be used when considering any action which would depart from policy and procedures developed in the HOME Guidelines:
1. Consideration of exceptional/special circumstances may be initiated by either the borrower, Rehabilitation Consultant, or the Community Development Director.
2. A report will be prepared by the Rehabilitation Consultant that will be included in the borrower’s loan application file, along with all other loan documents.
a. This report will contain a narrative, including relevant information provided by the borrower and the recommended course of action.
3. The City’s Community Development Director or his/her designated representative will review the report and make a determination regarding the exception/special circumstances.
4. The recommendation shall consider use of, HOME Program loan funds, Community Development Block Grant (CDBG), or other potential funding sources which may be used to address the exception/special circumstances.
5. Based on demonstrated need and at the discretion of the Community Development Director, this award may be increased up to $85,000.
APPEAL
1. A borrower may appeal in writing the decision of the City with respect to the approval or denial of a HOME loan to the City Manager within 30 days of the decision.
2. The City Manager will review the matter and decide the appeal which shall be the final decision of the City and there shall be no further appeal from that decision.
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CHAPTER 5: PROCESSING PROCEDURES
PART 1: APPLICATION PROCESS
During the application process the Community Development staff must:
1. Certify income eligibility.
2. Verify property ownership.
3. Verify property is in the City of Lynwood.
4. Verify that property is owner-occupied.
5. Verify that mortgage, property taxes, and insurance are paid up-to-date.
6. Re-calculate the LTV.
7. Verify the type of mortgage is held in first positions.
8. Create a file for each application, organized in the order provided in the File Checklist form. The file must be properly labeled.
9. Log application database.
All forms must be fully completed and signed accordingly. All supporting documentation must be current (no older than 3 months). The following is a list of the required supporting documentation:
1. Verification of dependent children living at home.
2. Proof of full-time student status for dependents 18+ of age.
3. Complete bank statements for the last two (2) months
4. Asset/investment statements for the last two months.
5. Complete federal and state income tax returns (including W-2’s, 1099’s etc). For loans and self-employed the most recent 2 years.
6. If self-employed, most recent certified quarterly financial report.
7. Documentation evidencing eligibility of other program requirements, such as ownership, 574
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occupancy, and property location.
8. EDD Notice for adult household members who do not receive income.
9. When available, a copy of current appraisal report (dated within 3 months).
PART 2: APPLICATION INTAKE
The purpose of the intake is to establish eligibility of the applicant. The Community Development staff or assigned staff member conducts the intake. The intake is completed by the applicant submitting a complete application with supporting documentation. Non-complete applications will be returned to applicant with list of necessary items to process application.
It is crucial for the Community Development staff to estimate household income, LTV, the property preliminary after rehabilitation value, and the types of encumbrances on the property to determine eligibility. The income and LTV analysis compl eted during the intake process is not verified until further documentation is obtained to validate. Calculations are based on the review of proper documentation. LTV only applies to loans.
Verification of Property Ownership and Status
In addition to income documentation, the Community Development Staff must obtain supporting documentation to determine eligibility for other program requirements.
Eligibility Requirement Must verify with at least one of the following:
Verification of ownership:
The property must be owned by the applicants
Copy of grant deed or, quitclaim deed,
Title report or insurance issued within the
last year, which verifies the vesting to be
the applicants’ name(s)
Verification that property is owner- occupied:
The property must be the owner’s principal
place of residence.
Copy of current property tax bill that shows
homeowner’s exemption and the subject
property as the mailing address
Verification that mortgage payment is current.
Assistance cannot be provided if payment is
not current.
Copy of most recent mortgage statement
that shows payment is current
Mortgage history printout
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Verification of type of first mortgage. No
reverse mortgages, negative amortizations for
loans. Reverse mortgages, negative
amortizations are acceptable for grants only.
Copy of most current mortgage statement
Copy of note specifying terms of repayment
and interest rate
Verification that property taxes are up- to-
date.
Assistance cannot be provided if taxes are not
current.
Printout from the Los Angeles County Tax
Collector’s website that shows the tax as
current. Website at http://ttax.co.la.ca.us/
Receipt of payment (if payment has been
recently made and website has not been
updated)
Copy of payment arrangements from tax
collector for delinquent tax
Verification that insurance is up-to- date. Copy of current evidence of insurance or policy. It must show the expiration date, or
specify that it is continuous
Verification of Loan-to-Value (LTV) (loan
program)
Copy of most current mortgage
statement(s)
Copy of note(s) specifying loan amount
Property encumbrances: The Community Development Staff must verify the types of loans of the existing debt. Fixed rate loans are preferred. However, variable rates, and interest -only loans are acceptable. Properties with reverse mortgages, and negatively amortized loans are not eligible for loans, but are acceptable for grants.
Income Calculation
The Program utilizes the annual income definition as defined in 24 CFR 5.609 (Part 5 annual income) to determine household income eligibility. Households must have income at or below 80% AMI, adjusted for family size, to be eligible for the program. The latest published income limits provided by HUD will be used.
During the Intake, the Community Development Staff must calculate household income earnings of all adult household members based on the requirements.
The preliminary income calculation must include income derived from:
a. Employment (wages, salary, overtime, tips, bonuses, etc.) b. Self-employment / Business income
c. Social security benefits
d. Child and/or family support, alimony
e. Rents
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f. Public assistance
g. Income from assets or investment (interest, dividends, royalties, annuities, etc.) h. Pensions
i. Unemployment, disability, or worker’s compensation
j. Union benefits
k. Other sources of income not specified above
Income may be certified based on information obtained from third party verifications and the review of documents provided at the time of application. The income certification is valid for a period of six months (validation period). It will not be required to re -certify income unless six months have lapsed from the time of certification and no expenditures have been incurred for the project. Funds must be expended or committed to project prior to the expiration of the validation period.
The Community Development Staff is responsible for obtaining all the required income documentation for all the sources of income. The sources of income can be determined by:
1. The Income, Asset and Employment Disclosure portion of the application.
2. Tax returns, may sometimes reveal relevant income sources, such as interest income, capital gains, dividends, etc., which may not have been disclosed in the loan forms that may require additional documentation.
Eligibility can be established by examining documentation on the different sources of income for the household. Applicants must supply at least 2 months of source documentation (e.g., wage statements, interest statements, or unemployment compensation). The following is a list of income sources, and examples of acceptable documentation:
Type of Income Documentation Source – not older than 3 months Gross employment income:
Wages
Salary
Overtime
Tips
Commissions
Bonuses
Employment verification from employer
Paycheck stubs (copies of the most recent 2
months of paycheck stubs)
Certified copies of tax returns and W -2’s if within
the first quarter of the new calendar year, requires
a signed 4506 form
Copy of employment contract, which must specify
the earnings amount and expiration date
Net self-employment or business
income
Certified copies of tax returns, with signed 4506
form for the previous 2 years (including all
attachments, specifically Schedule “C”)
Audited financial statement
Latest quarterly financial statement
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Social security benefits
Including SSI payments
Including anticipated Cost of Living
Adjustments (COLAs)
Written verification from the Social
Security Administration
Copy of award letter stipulating the benefit
amount
Copy of bank statement verifying the direct
deposit of the benefit amount Periodic determinable allowances:
Child support
Alimony
Copy of court decree that establishes amount of
support
2 months of statements from State office that
verifies the amount of support
Affidavit of support with supporting documents
(subject to proof that the foregoing methods of
documents are not available).
If absent parent is incarcerated, provide proof of
incarceration
Regular contributions received from
organizations or persons not residing in
the dwelling
Notarized affidavit of support and amount shown
on bank deposits.
Net rental income Tax returns, including schedule “E” Copies of rental agreements/leases, along with a
breakdown of monthly expenses to determine net
income including mortgage statement
Copies of most recent rent checks, along with a
breakdown of monthly expenses to determine net
income
Welfare assistance:
Payments under CALWorks
Welfare or General relief
Benefit award letter specifying the amount of the
cash aid and/or food stamps
Verification from case worker stating the benefit
amount
Copy of checks
Income from assets:
Savings account(s)
Checking account(s)
Investments
Bank statements showing the last 3 months of
interest
Savings passbook
Verification of deposit
Most recent income tax returns showing the
interest earned
Investment statements showing the dividends
earned and/or anticipated earnings Gross amount of payments in lieu of earnings:
Unemployment
Disability compensation
Worker’s compensation
Benefit award letter showing monthly benefit
Copy of checks (2 months)
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Gross amount of periodic payment:
Annuities
Pensions/Retirement
Disability benefits
Death benefits
Statement of benefits
Benefit award letter
Verification from awarding agency/entity
Other sources of income:
Union benefits
Adoption Assistance
Other income not specified above
Statement of benefit award that evidences
benefit amount
Documentation to support declaration of other
income
Check stubs (2 months)
No income: EDD Notice of Benefits
Verification of previous employment
Verification from IRS
Statement of Non-Earnings form
No tax returns: Verification from IRS that no taxes were filed.
Assets of an Absent Spouse will be taken into consideration. The value to be determined.
Third Party Verifications may be required. The City contracts with Amerinational and all loans are serviced by Amerinational. If Amerinational recommends verification of income and or assets the Community Development Staff will attach the Confidential Information Disclosure Authorization to the verification form, which authorizes the third-party to release the information requested. Third- party written verifications may be in the form of original forms, facsimile copies, e-mail, or Internet.
Although written requests and responses are generally preferred, conversations with a third party are acceptable if documented through a memorandum to the file, which specifies the contact person, information conveyed, and date of call. In all cases, the Community Development Staff must make sure that the person verifying the information is a valid source. Fees associated with third-party verifications are paid by the City, but may be reimbursed through activity delivery costs.
Income Exclusions
The list of sources of income that should not be included in the in come calculation is specified in 24 CFR Part 5.
Assessing Information and Computing Income
The Community Development Staff must calculate the household income based on the documentation obtained, and complete an Anticipated Income Determination form for each household.
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When assessing the documentation, it is important to determine:
a. The basis on which employees are paid, such as hourly, weekly, monthly, with or without overtime, etc.
b. In the case of overtime, it is crucial to determine whether the overtime is irregular or a predictable part of the person’s income.
c. If the household member will continue to earn overtime pay on a regular basis, then the Community Development Staff must calculate the average amount of overtime pay earned over the period used to calculate income eligibility, and the average amount of overtime earnings must be included in the income projection for the household. d. If overtime work is not constant, and will not be constant in the next 12 months, the Community Development Staff must r equest detailed overtime information from the employer in the Verification of Employment, and use the information supplied by the employer to determine how overtime is to be calculated.
Formulas used to determine annual income:
Frequency Formula
Weekly Multiply gross income by 52 weeks
Biweekly Multiply gross income by 26 weeks
Twice-a-month Multiply gross income by 24 weeks
Monthly Multiply gross income by 12 months
Refer to the Technical Guide for Determining Income and Allowances for the HOME Program for household members who have variations in pay.
If the Community Development staff has verification that the household member has been employed by the same employer from the beginning of the calendar year, then the monthly income can be calculated by dividing the year -to-date (YTD) annual earnings by the number of paychecks received. For example, if the paycheck stub indicates that the individual is paid bi -weekly and the pay date was June 28, 2016, and the YTD is $18,500, then you divide $18,500 by 13 paychecks, and annualize the calculated monthly earnings by multiplying the result by 26. $18,500 ÷ 13 = $1,423.08 per pay period
$1,423.08 x 26 = $37,000.08 per year
The above method will only work if staff has verified that the household member has worked for that same employer since the beginning of the calendar year, and if the paycheck stub reflects the year-to-date earnings that include all overtime, bonuses, etc.
Special Circumstances
If income cannot be calculated by using the documentation described above, then the income calculation must be handled on a case-by-case basis, as appropriate for the situation. For example:
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If the income is derived from the sale of recyclable materials, it will be necessary to provide enough documentation (i.e. sales receipts) to reasonably determine annual income. The documentation must be in a form acceptable to the Program staff. Self-certifications of income are not allowed.
Income shall be re -examined for eligibility if more than six (6) months have lapsed between the date the family was last qualified as income eligible and the first expenditure.
Household Size
Since income limits are adjusted by household size, it is crucial to accurately determine the size of the applicant’s household.
For income purposes, all household members’ income is to be counted regardless of relationship.
This includes tenants, borders, permanent live -in caretakers, and non -eligible occupants. Foster children are not to be included as part of the total household members when determining the eligibility for the addition of bedrooms and bathrooms.
Undocumented (i.e. illegal residents) household members are not counted in determining household size unless they can provide a valid foreign government issued ID with sufficient proof of address.
A child who is subject to shared -custody may be counted as part of the household if the child resides with the household at least 50% of the time. Community Development Staff must obtain verification of dependent children living at home, such as copy of birth certificate, court order awarding child custody, school record s, or other documentation that will verify the dependent of part of the household.
Unborn children are not considered part of the household.
The Community Development Staff must review the “breakdown of household members” portion of the application, whic h is where the borrower discloses all the members of the household. The Community Development Staff must also look for “red flags” that indicate discrepancies in the household size disclosed by the applicant. For example, if the applicant claims that he ha s 3 dependent children, but the tax returns only show 2 children. In this case, the Community Development Staff must obtain more information and additional documentation to support the 3rd dependent child, such as a copy of the birth certificate for a newborn, a court order that grants custody of the child, or school records for the additional dependent.
For household members of 18 years of age and older who are full -time students, the Community Development Staff must obtain verification of full -time student status, such as school records, registration, or other documentation that will evidence student status.
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Verification of Dependents Copy of birth certificate(s) Copy of school records
Court order warding custody
Adoption documents
Proof of full-time student status for dependents 18+ years of age
Comparing Household Income to Income Limits
Once the household size and anticipated household income has been determined, the information must be compared to the Income Limits issued by HUD to verify eligibility. The Community Development Staff must make sure to use the most recent income limits chart.
Households must have incomes at or below 80% AMI, adjusted for family size, to be eligible for the Program.
Monthly Housing Costs
Monthly housing costs should not be more than 30% of household income.
The Housing Affordability Data System (HADS) developed by HUD provides consistent measures of affordability over a long period of time. The HADS system analyzes the affordability of housing from several perspectives, including the fraction of income that a household spends on housing each month. HADS uses the standard assumption that a unit is affordable if the household spends no more than 30% of its income on housing. In this context, “housing” includes utility payments and, for owner-occupied housing, re al estate taxes, hazard insurance, and fees such as condo fees or homeowner’s association fees. More information here:
https://www.huduser.gov/portal/publications/pdf/Trends_hsg_costs_85-2005.pdf
In addition, the American Housing Survey (AHS) released by HUD and the US Census Bureau every two years determines monthly housing costs by “summing, when applicable, utility costs, real estate taxes, cost of homeowner insurance, condominium/homeowner’s association fee, land/site rent, other mortgage charges, other required mortgage fees, mortgage payments, routine maintenance costs, and rent payments”. More information here:
https://www.census.gov/content/dam/Census/programs-surveys/ahs/tech- documentation/AHS_Codebook.pdf
Title Report
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from the time eligibility has been established. The PIRT will identify all deeds, liens, covenants, and other documents recorded against the subject property. The report is ordered by Amerinational.
Credit Reports
All occupants 18 and older are to complete the Authorization for Release of Information form.
Credit reports will be ordered for all adult members of the household. Upo n receipt of credit reports, they are to be reviewed to insure they coincide with reported income.
Lead-based Paint Assessment
Order lead testing assessment (when applicable) to comply with HUD’s Lead Safe Housing Rule, a certified Environmental Company must perform a lead inspection to test surfaces to be disturbed during rehabilitation activities on properties built prior to 1978. A post lead clearance is also required. Refer to Appendix C: Lead- Based Paint Hazard Reduction Requirements.
Preliminary Loan to Value (LTV)
The Community Development Staff must verify the LTV in order to remain in compliance of maximum LTV requirements. The LTV is calculated by adding all of the indebtedness against the subject property, and the proposed Program loan. The total is then divided by the estimated value of the property. Total LTV not to exceed 80%.
Example/Scenario of LTV calculation:
$125,000 1st mortgage
$ 35,000 Proposed Program loan
–––––––––
$155,000 Total indebtedness
$425,000 Estimated property value
$155,000 ÷ $425,000 = 36%
Preliminary After Rehabilitation Value
The U.S. Department of Housing and Urban Development (HUD) requires documentation of the after-rehabilitation value (ARV) to show such housing is within Section 203(b) program limits.
In accordance with 24 CFR 92.254(b), housing currently owned by a family (i.e., owner- occupied housing) only qualifies as affordable housing under the HOME Program if the estimated value of the property, after rehabilitation, does not exceed 95 percent of the median purchase price for 583
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the area (as established by HUD). The City must maintain files showing how ARV was determined and found to be within the applicable program limits. Property value must be determined prior to the provision of HOME Program assistance. The value will be established by appraisals prepared by a licensed fee appraiser. Project files must document the post rehabilitation appraised value and clearly indicate it in the appraisal report. This requires the City to provide the appraiser the written work write-up that includes the proposed rehabilitation for the subject property. An estimate of value also reflects the value of a standard property; this corresponds to the estimated post-rehabilitation value of the subject property, based on the proposed rehabilitation. The form called 95% Property Value Limit must be completed for each project.
Application – Follow-up
As needed, request all required third party verifications, such as verifications of mortgage, employment, benefits, or deposit.
Upon receipt and review of documentation (income, property information, credit report) the Community Development Staff will notify the applicants of their eligibility or request additional documents for clarification. The homeowner will be notified in writing of the additional documentation and will be given (30) days to submit.
If the homeowner does not respond within the (30) calendar day deadline specified in the correspondence, the Community Development Staff will cancel the file. If the file is canceled, the homeowner will not be eligible to re-apply for the program until a year from the closing of the file.
The City will only permit a file to be re -instated due to illness, hospitalization or death in the immediate family
Request for the re-instatement has to be done in writing within 30 calendar days of the cancellation of the file.
The Community Development Staff must keep a calendar or “tickler file” for timely follow-up after the initial intake.
Denial of Application
If during the application intake the Community Development Staff determines that the applicant does not qualify for the Program, a denial letter must be mailed, indicating the reason for denial.
The applicant will be given a 30-day period to appeal the denial.
Approval of Application
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After the applicant’s eligi bility is established, the Community Development Staff will notify applicant in writing of their eligibility for the program and indicate the assistance to be provided.
Initial Property Inspection
Program staff will schedule an initial property inspection with the property owner. The initial inspection will allow the property to be evaluated and determine which repair items will be addressed. In addition, after the inspection a determination will be made as to whether or not lead-based paint stabilization or abatement will be required. To facilitate the inspection the following steps should be taken:
1. Coordinate inspection with Building and Safety Inspector (if necessary).
2. In conducting the inspection, schedule a time with the property owner to conduct the formal property inspection. At the time of the inspection, the Community Development Staff should:
a. Review the property
b. Obtain a list of general property improvements desired by the homeowner c. Check the dwelling for structural deficiencies. Physically walk through the dwelling identifying every substandard feature that may be observed and note all improvements necessary to bring the dwelling up to Code. (Un-permitted structures that do not meet program guidelines must be permitted before assistance can continue).
d. Inform the homeowner of deficiencies identified
e. Obtain homeowner preferences regarding options for correcting deficiencies. f. Take thorough pre -construction photos of each area in which rehabilitation or repairs will occur. Additionally, if neces sary for historical purposes, take photos of the subject property, property to the right and left and across the street.
3. When reviewing inspection notes the Community Development Staff shall take into account the following:
a. Overcrowded conditions. If it’ s determined that overcrowded conditions exist and there is a request for the construction of an additional bedroom/bathroom an explanation will be included in the file. Such report shall include the number of occupants in household, the age and gender of occupants in household, the age and gender of occupants in household, and the existing number of size of sleeping quarters.
b. Rehabilitation Feasibility. Community Development Staff shall make a determination on the rehabilitation feasibility of the property with the following factors taken into account:
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c. Location of structure
d. Excessive rehabilitation costs
e. Type of improvements
f. Type of structure
g. Condition of structure
h. Homeowner’s needs
4. Order termite inspection reports for all loans. Community Development Staff must fax the request to at least three (3) qualified termite companies and keep the fax confirmation in the loan master file.
If the property has been inspected and treated for termites within the last 12 months, a new termite report is not required. In which case, the Community Development Staff must request a copy of the Notice of Work Completed from the homeowners.
Copies of Lead report/assessment and termite report must be provided to the homeowner. The Community Development Staff must also tak e into consideration the reports when preparing the work write-up.
Historic Preservation
Historic preservation requirements apply to properties that are 50 years old or older. Historic properties are residential properties listed in or eligible to be listed in the National Register of Historic Places, state or local inventory of historic place s, designated as a historic landmark, or designated as contributing to a historic district by local law or ordinance. Refer to Appendix G – Historic Preservation Forms. The Community Development Staff must determine if the property is subject to historic preservation requirements, as follows:
1. Verify the age of the property with a property profile. If the property is not 50 years old or older, then no further historic process is required.
2. If the subject property is 50 years old or older and the rehabilitation work will involve exterior work, the Community Development Staff must submit a Historic Eligibility Determination to State Historic Preservation Office (SHPO) via regular mail. This consultation with SHPO is only for projects that will include exterior work. SHPO clearance is not needed for projects that will only address interior rehabilitation, or for properties that are not 50 years old or older. The consultation letter must include:
a. Photographs of the property as required by the State. b. A list of the proposed rehabilitation.
c. Relevant information regarding the historic significance of the property.
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3. SHPO must respond within 30 days. If no response is received, then rehabilitation work may proceed.
4. Complete of Historic and Architectural Assessment Form.
a. If the proposed rehabilitation involves only interior work or if the subject property is less than 50 years old, only Part A of the Historic and Architectural Assessment Form is necessary.
b. If the proposed rehabilitation involves exterior work to a property that is 50 years old or older, verify that proper consultation was submitted to SHPO. If no response is received from SHPO within 30 days, then project is able to proceed. c. Complete Part B of the Historic and Architectural Assessment Form for projects that involve exterior rehabilitation of properties 50 years old and older.
Environmental Requirements
An Environmental Assessment to be completed for all properties. The Community Development Staff must complete the Environmental Finding Report during the property inspection; it must be signed by the Community Development Staff and the Community Development Director or its designee.
Relocation
In accordance with the Uniform Reloca tion Act, i f the project will prevent the homeowner from accessing heat, bathroom facilities , or the kitchen, then the homeowner may request relocation assistance to assist in covering the costs of relocation advisory services to displaced tenants and owner occupants, moving expenses, and temporary living arrangements. Relocation costs incurred by the City are eligible for reimbursement through HUD. Written notice must be provided to the tenant or owner occupant a minimum of 90 days prior to the required date of the move.
Work Write-up
The Community Development Staff must prepare the Work Write -up, which is the set of instructions specifying the proposed rehabilitation work, and will also serve as part of the contract.
The Work Write-Up must describe and address any code violations, health and safety deficiencies, and lead hazards in a manner that is sufficiently detailed to serve as the basis for obtaining bids from contractors.
PART 3: PROCUREMENT
This chapter provides an overview of the HUD standards for Federal procurement requirements located at 2 CFR Part 200.317-326.
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The City of Lynwood needs to ensure that all applicable Federal requirements are followed throughout the process. While the City has its own procurement and contracting requirements, the use of Federal funding requires compliance with Federal regulations at a minimum. The pr imary purpose of the procurement procedure is to assure free and open competition is achieved.
The City of Lynwood and its Recipients must follow procurement procedures as they pertain to the HOME Program:
OMB Standards - Materials shall be procured in a ccordance with the requirements of 2 CFR Part 200.317-326, and shall subsequently follow the property standards, covering utilization and disposal of property.
Use and Reversion of Assets - The use and disposition of real property and equipment must be in compliance with the requirements of 24 CFR Part 200 and CFR 570.502, 570.503, 570.504, and HERA as applicable, which include but are not limited to the following:
Any HOME Program funds on hand and any accounts receivable attributable to the use of funds shall be transferred to the City of Lynwood at the time of expiration, cancellation, or termination of the Agreement.
Real property under the "Recipients" control that was acquired or improved, in whole or in part, with funds under the Agreement shall be used to meet one of the HOME Program Activities.
PROCUREMENT TYPES
1st Procurement Method: Competitive Sealed Bids (formal Advertising) The sealed bid method is required for procuring all construction contracts or for goods costing more than $100,000. The only exceptions to this rule are single family housing rehabilitation projects where the total cost does not exceed $100,000. These projects may be conducted under the Small Purchases Method. During this process, bids are publicly solicited and a firm fixed-price contract is awarded to the responsible bidder whose bid, conforming to all the material terms and conditions of the invitation for bids, is the lowest in price.
In order for sealed bidding to be feasible, the following conditions should be present:
1. A complete, adequate, and realistic specification or purchase description is available;
2. Two or more responsible bidders are willing and able to compete effectively for the business; and
3. The procurement lends itself to a firm -fixed-price contract and the selection of the successful bidder can be made principally on the basis of price.
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When sealed bids are used, the following requirements apply:
1. Publication Period: The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them sufficient time prior to the date set for opening the bids;
2. Federal Funding Advertised: The advertisement should indicate that the project is being funded with HOME funds and that federal requirements will apply to the contracts.
2. Clear Definition: The invitation of bids, which will include any specifications and pertinent attachments, shall define the items or services in order for the bidder to properly respond;
3. Itemized Costs: Bids must show the quanti ty and cost of each line item. Lump sum bids and/or bid items that are not specifically identified or are generally grouped as miscellaneous or contingency are not allowed.
4. Public Opening: All bids will be publicly opened at the time and place prescribed i n the invitation for bids;
5. Selection and Contracting: A firm fixed -price contract award will be made in writing to the lowest responsive and responsible bidder; and
6. Rejection of all Bids: Any or all bids may be rejected if there is a sound documented reason.
Negotiations after Unsuccessful Competitive Sealed Bidding : Negotiations are permitted within the following guidelines, which consider that time or other circumstances will not permit a re-solicitation of competitive sealed bids.
Bids Over Construction Budget by 10 percent or Less: When bids are received and the low bid exceeds available funds and it is determined in writing from the procuring agency that time or other circumstances will not permit the delay required to re -solicit competitive sealed bi ds, a contract may be negotiated with the lowest responsive and responsible bidder, provided that the lowest base bid does not exceed available funds by an amount greater than five percent of the construction budget established for that portion of work. The procuring agency may change the scope of the work (with prior approval from the Authority) to reduce the cost to be within the established construction budget.
Bids Over Construction Budget by more than 10 Percent: When bids are received and the low bid exceeds available funds by more than 10 percent of the construction budget and it is determined in writing from the procuring agency that time or other circumstances will not permit the delay required to re -solicit competitive sealed bids, a contract may be negotiated provided that:
a. Each responsible bidder who submitted a bid under the original solicitation is notified of the determination and is given reasonable opportunity to negotiate. b. The negotiated price is lower than the lowest rejected bid by any responsible and responsive bidder under the original solicitation.
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c. The negotiated price is the lowest negotiated price offered by any reasonable and responsible offeror.
d. If the scope of services originally addressed has been significantly changed, prior Authority approval is required and a project amendment may be necessary.
2nd Procurement Method: Competitive Sealed Proposals (RFPs/RFQs)
Competitive sealed proposals are used in two instances:
1. The acquisition of any engineering or architecture services, or
2. The purchase of other professional services where the total cost will exceed $100,000.
Under this procurement method, the Recipient must publish a written request for submissions and then review these submissions based on established selection criteria. This method of procurement differs from the small purchases method in that the solicitation must be published and cannot be restricted to a smaller or limited number of bidders. Under this approach, there are two possible methods of soliciting proposals:
1. A Request for Proposals asks that officers submit both qualifications and cost information.
2. A Request for Qualifications only asks for information on the offeror’s expertise/experience and not on cost.
When acquiring any service that is not architecture or engineering, the full RFP process must be used. For example, if the City were to hire a for -profit HOME Program contract administrator and that contract exceeded $100,000, an RFP would be required.
When acquiring architectural or engineering services, either a RFP or a RFQ may be used. The City recommends the use of an RFP process when feasible or practical, since it provides the recipient additional information.
Request for Proposals (RFP): When a RFP process is required, the City must d evelop a written document outlining the scope of the services and the selection criteria. The scope must be sufficiently detailed so that potential bidders are able to develop effective pricing proposals and submit appropriate qualifications.
Request for Qualifications (RFQ): The RFQ process may only be used in two instances:
1. For complicated architectural or engineering services, or
2. When the RFQ is used to narrow a pool of potential bidders and a formal RFP will follow. In any other competitive proposal instance, the RFP must be used. The RFQ process does not request cost information at the time of solicitation.
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3rd Procurement Method: Small Purchase Procedures
The Small Purchase Procedures Method allows acquiring goods and services totaling no more than $100,000, without publishing a formal request for proposals or invitation for bids. This method of procurement is typically used to purchase commodities such as equipment or other materials. In the highly unlikely event materials are purchased that will exceed $100,000, they must use the Sealed Competitive Bid Method.
The Small Purchases Method can also be used to acquire eligible types of services, such as professional consulting, environmental review, or planning. This method cannot be used if the services contract will exceed $100,000 in value. If the services contract will exceed $100,000, an RFP must be issued under the competitive proposals approach. Note that engineering architectural and construction services cannot be procured using the small pu rchase method and must always be acquired using the competitive proposal approach . These acquisitions must occur under the competitive sealed bid method. In general, the small purchase procedure should not be used to acquire construction contractors. The only exception to this is when the City is contracting for single family rehabilitation, where the total cost of the rehabilitation will not exceed $100,000.
4th Procurement Method: Noncompetitive Proposals
Procurement by noncompetitive proposals is procurement through solicitations of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate.
Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids, or competitive proposals and one of the following circumstances applies:
a. The item is available only from a single source;
b. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
c. The City authorizes noncompetitive proposals; or
d. After solicitation of a number of sources, competition is determined inadequate.
OTHER CONSIDERATIONS
Aside from selecting the method of procurement, there are several other cons iderations the City of Lynwood adhere to when procuring goods or services with Federal funds including:
Conflict of Interest
1. A written code of conduct must be maintained to help prevent conflicts of interest in procurement.
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2. The written code of conduct must apply to all employees, officers, agents of the City or its Recipient, and members of their immediate family, and partners.
3. The code shall prevent financial interest or other benefits earned for any of these persons due to a HOME Program -related procurement action. These persons also cannot solicit or accept gratuities, favors or other items of monetary value from contractors.
Excluded Parties
1. The City must adhere to the prohibitions in 2 CFR Part 24 24 on the use of debarred, suspended, or ineligible contractors. A person who is debarred or suspended shall be excluded from Federal financial and non -financial assistance and benefits under Federal programs and activities.
2. Federal funds may not be used to directly or indirectly employ, award contracts to, or otherwise engage the services of any contractor during any period of debarment, suspension, or placement on ineligibility status.
3. The City should regularly check all contractors, subcontractors, and l ower-tier contractors against the Federal publication that lists debarred, suspended, and ineligible contractors.
4. In addition, the City should check this list before signing any contract with contractors or subcontractors.
5. Information on parties excluded from Federal procurement and non -procurement programs is available at www.sam.gov.
Minority/Woman Owned Business Enterprises
1. The City of Lynwood is required by Federal law to ensure that minority and women-owned business have information about and the opportunity to bid on federally funded competitive contracts.
2. The City is required by law to use minority and women’s businesses whenever possible.
Construction Management
In order to ensure HOME Program compliance and the overall success of projects, there are a wide number of critical tasks that the City must undertake to properly manage HOME -funded construction, including tasks such as formulating effective standards, managing inspections for quality, and the proper approaches to change orders, contingency funding, and periodic reporting by partners.
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Part I of this section covers the applicable standards and codes while Part II addresses the City's HOME requirements related to the construction process a nd the procedures that the City has developed to effectively manage construction activities.
STANDARDS AND CODES RELATED TO CONSTRUCTION
PROPERTY STANDARDS (24 CFR 92.251)
Property standards are required in the HOME Program to achieve two major purposes:
1. Set a minimum standard for habitability/functionality, for purposes of inspecting and specifying necessary improvements listed in the scope of work; and
2. Establish materials, methods, and standards for any work to be performed.
The property standards that are applicable to the City's HOME Program are described briefly below.
Housing Codes/Standards
1. Housing codes/standards specify the basic living and structural conditions for existing properties. They are used to determine if an existing residence is habitable and identify health and safety conditions.
2. Housing codes/standards are used as the basis for initial inspections of existing properties to identify needed repairs and appropriate improvements. Their purpose is to ensure that existing housing is not occupied unless it is decent, safe, and sanitary.
3. Waivers can be requested for rehabilitation developments if structural constraints prohibit adherence to the minimum design standards. Waiver requirements are detailed as part of the City's Minimum Design Standards.
Building Codes
1. Building codes are a series of requirements that specify how new construction or rehabilitation work is to be carried out. They inform contractors about how to do the work and are used by inspectors to check completed work.
a. The City of Lynwood building codes are mandatory citywide. The City requires that , owners, and developers comply with the building codes adopted in the City's jurisdiction.
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2. A number of related codes, such as the fire code and plumbing code, are incorporated into the City building codes.
3. Most work governed by building codes requires that licensed contractors obtain permits prior to starting the work.
4. A building permit alerts building officials and inspectors to the fact that certain types of construction are about to begin and completed work must be inspected to determine if it meets requirements.
Rehabilitation Codes
1. Rehabilitation codes provide specific guidance about applying building codes to guide repair, remodeling, and rehabilitation of existing structures. Appendix J of the International Residential Code provides the minimum requirements for existing structures being rehabilitated.
2. They serve the same purpose as building codes, but are moderated to be reasonable approaches to existing conditions because it would be very expensive (perhaps impossible) to renovate an existing older building to meet the same standards for new constructed buildings.
Rehabilitation Standards
1. A rehabilitation standard defines the quality of materials a nd workmanship that must be used when a particular repair is made. Rehabilitation standards (sometimes called construction standards) speak to the quality, durability, and aesthetics of the end product.
2. They define what methods and materials are eligible for HOME payment.
3. The City of Lynwood has adopted written rehabilitation standards for rehabilitation of owner-occupied units, single -family and multi -family, whether the work is done by contractors, or nonprofits.
EXHIBIT 8 – CITY OF LYNWOOD REHABILITATION STANDARDS
SECTION I: SITE IMPROVEMENTS
NOTE: All work requires review by the Building Division regarding need for plans/permits.
SITE IMPROVEMENTS – OUTBUILDINGS
REHABILITATION STANDARD: 75% or more salvageable
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Minimum Life: 5 Years
Unsafe, illegal or unapproved structures, including outbuildings, additions and patio covers will be removed if it is not financially feasible (up to $5,000) to complete rehabilitation required to make them structurally sound, leak free and building and zoning code legal.
REPLACEMENT STANDARD: No outbuilding shall be provided.
SITE IMPROVEMENTS – PAVING AND WALKS
NOTE: Any work may require a permit from the Engineering Division.
REHABILITATION STANDARD:
Minimum Life: 15 Years
Badly deteriorated, essential paving, such as front sidewalks, will be replaced to match.
Deteriorated paving may be removed or replaced.
REPLACEMENT STANDARD:
Minimum Life: 20 Years
Essential walks and drives shall be replaced with 4” thick, 4% air entrained, 3000 PSI concrete with metal reinforcement.
SITE IMPROVEMENTS – LANDSCAPING
REHABILITATION STANDARD:
Site shall be graded to direct water to run away from foundation. Trees that are too close to the structure shall be removed.
REPLACEMENT STANDARD:
Only for-sale homes’ front yards may be landscaped with a $500 maximum allowance.
SITE IMPROVEMENTS – FENCING/GATES
REHABILITATION STANDARD:
Minimum Life: 5 Years
Fencing shall be rehabilitated to meet the local code.
REPLACEMENT STANDARD:
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When funding is sufficient for nonessential improvement, additional wood or wrought iron fencing may be installed to create defensible space in conformance with neighborhood/homeownership association requirements.
SITE IMPROVEMENTS – SWIMMING POOLS/HOT TUBS
REHABILITATION STANDARD:
Minimum Life: 3 Years
Beyond scope of federal financing. Pools may be filled.
REPLACEMENT STANDARD: N/A
SECTION II: EXTERIOR SURFACES
NOTE: All work requires review by the Building Division regarding need for plans/permits.
EXTERIOR SURFACES – EXTERIOR CLADDING
REHABILITATION STANDARD:
Minimum Life: 10 Years
Siding and trim will be intact and weatherproof. All exterior wood components will have a minimum of one continuous coat of paint, and no exterior painted surface will have any deteriorated paint.
REPLACEMENT STANDARD:
Minimum Life: 25 Years
Historically sensitive vinyl siding with 45-year material warranty.
EXTERIOR SURFACES – EXTERIOR PORCHES/BALCONIES
REHABILITATION STANDARD:
Minimum Life: 10 Years
Unsafe or unsightly porches and balconies will be rehabilitated to conform closely with porches in the neighborhood. Porch rehabilitation will be structurally sound, with smooth and even decking surfaces.
REPLACEMENT STANDARD:
Minimum Life: 20 Years
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Deteriorated porches and balconies shall be replaced with preservative treated structural lumber and tongue and groove pine or synthetic deck material. Replace with concrete if economically possible.
EXTERIOR SURFACES – EXTERIOR RAILINGS
REHABILITATION STANDARD: None
REPLACEMENT STANDARD:
Minimum Life: 20 Years
Railings that do not meet the current code shall be removed and replaced with wrought iron or synthetic wood.
EXTERIOR SURFACES – EXTERIOR STEPS AND PATIOS
REHABILITATION STANDARD:
Minimum Life: 10 Years
Steps, stairs and decks shall, be structurally upgraded to adopted building code; free from all significant deterioration.
REPLACEMENT STANDARD:
Minimum Life: 20 Years
Any replacement patio, deck or stoop shall be of a minimum functional size, design and construction.
SECTION III: FOUNDATIONS & STRUCTURE
NOTE: All work requires review by the Building Division regarding need for plans/permits.
FOUNDATIONS & STRUCTURE – FIREWALLS
REHABILITATION STANDARD:
Minimum Life: 15 Years
Party walls and garage ceilings shall be maintained without cracks and plaster deterioration and upgraded with 5/8" type X gypsum, glued and screwed to structure.
REPLACEMENT STANDARD:
Minimum Life: 20 Years
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All party walls shall conform to the 2010 edition of the California Building Code’s new construction requirements for fire separation at both walls and roofs.
FOUNDATIONS AND STRUCTURE – FOUNDATIONS
REHABILITATION STANDARD:
Minimum Life: 20 Years
Foundations shall be rehabilitated to be sound and water resistant if financially feasible.
REPLACEMENT STANDARD:
Foundation replacements above 25% are beyond the scope of the program and usually indicate an infeasible project.
FOUNDATIONS & STRUCTURE – STRUCTURAL WALLS
REHABILITATION STANDARD:
Minimum Life: 20 Years
All structural members shall be free from deterioration, rot and termite damage and be sized in conformance to building code. Any member not in conformance with code shall be re -supported as determined by a structural engineer.
REPLACEMENT STANDARD:
Minimum Life: 40 Years
Walls shall be 2" x 4", 16" on center with at least R -19 insulation and solid sheathing to match existing.
SECTION IV: WINDOWS AND DOORS
WINDOWS AND DOORS – INTERIOR DOORS PLACEMENT
REHABILITATION STANDARD:
Minimum Life: 10 Years
All bedrooms, baths and closets shall have operating doors. Privacy locksets on bath and master bedroom. All other doors shall have passage locks. Recycle doors when possible.
REPLACEMENT STANDARD:
Minimum Life: 15 Years
Doors may be solid core or composite in paint grade jambs. 598
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WINDOWS AND DOORS – EXTERIOR DOORS
REHABILITATION STANDARD:
Minimum Life: 10 Years
Exterior doors shall be 1 ¾ inch thick, solid core, insulated to minimum R -6, weather stripped, operate smoothly, including a peep site, a dead bolt, and an entrance lock set. Rod iron installations require review by the Building Division.
REPLACEMENT STANDARD:
Minimum Life: 20 Years
All replacement doors at the front of the property will be neighborhood sensitive, Energy Star, steel or fiberglass solid core doors with peep sight and deadbolt. Garage/house doors shall be 20-minute fire rated with self-closing hinges. Energy Star, solid core doors with peep sight, dead bolt, and entrance locksets shall be installed at entrances not visible from the front street. Garage doors shall be R-5, embossed metal with a lockable assembly.
WINDOWS AND DOORS – WINDOW PLACEMENT
REHABILITATION/REPLACEMENT STANDARD: Bedrooms shall have all operable windows with a screen and meet egress requirements (one per room) per California Building Code.
WINDOWS AND DOORS – WINDOWS & SLIDING GLASS DOORS
REHABILITATION STANDARD:
Minimum Life: 10 Years
All windows and sliding glass doors shall be weather tight, include a locking device, and where required for egress, be fully functioning/operational.
REPLACEMENT STANDARD: Energy Star
Minimum Life: 20 Years
Double glazed, PVC or fiberglass, a minimum R-value of 2.8 (U=.33), SHGC of 0.30 and DP of 45.
SECTION V: ROOFING
ROOFING – FLAT AND LOW SLOPE ROOFING
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REHABILITATION STANDARD:
Minimum Life: 10 Years
Rehabilitate roofing when cost is less than 30% of total replacement cost.
Built-up roofing, flashing and accessories shall be rehabilitated per California Building Code 2010 wherever a 5-year leak free warranty is available from a certified roofing company.
REPLACEMENT STANDARD:
Minimum Life: 15 Years
The most cost effective Energy Star certified roof of: 3 ply hot built -up, T.P.O. or EPDM per California Building Code 2010.
ROOFING – PITCHED ROOFS
REHABILITATION STANDARD:
Minimum Life: 10 years with warranty
Rehabilitate when cost is less than or equal to 5% of total replacement cost.
Missing and leaking shingles and flashing shall be rehabilitated on otherwise functional roofs per California Building Code 2010. Concrete , metal and tile roofs shall be rehabilitated when at all possible. Antennae and communication disks shall be permanently removed.
REPLACEMENT STANDARD:
Moderate: Minimum Life: 30 Years
Fiberglass, asphalt, 3 tab, class A shingle weighing at least 235 and up to 270 lbs, architectural grade, 30-year warranty with ridge ventilation system per California Building Code 2010.
SECTION VI: INSULATION AND VENTILATION
INSULATION AND VENTILATION – ATTIC VENTILATION
NOTE: All new work requires permits from the Building Division.
REHABILITATION STANDARD:
Minimum Life: 5-Year
Any pre-installed ventilation shall be maintained or if powered and not functioning, replaced.
REPLACEMENT STANDARD:
Minimum Life: 20 Years
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Attics will be ventilated with a minimum of one ( 1) square foot of free vent for each 150 square feet of roof area or be redesigned for integration with new insulation system. Solar powered roof vents may be used when possible.
INSULATION AND VENTILATION – BATH VENTILATION
REHABILITATION STANDARD: None
REPLACEMENT STANDARD:
Minimum Life: 10 Years
Energy Star, exterior ducted, 70 CFM, max 20 sones and separate switch or humidistat in all full and three-quarter baths.
INSULATION AND VENTILATION – INFILTRATION
REHABILITATION/REPLACEMENT STANDARD:
Minimum Life: 5 Years
All exterior doors and attic hatches shall be weather stripped. All visible cracks shall be caulked.
INSULATION AND VENTILATION – INSULATION
REHABILITATION STANDARD: Not Applicable
REPLACEMENT STANDARD:
Minimum Life: 15 Years
Attic insulation goal is R-30, crawls spaces R19. New walls will be insulated to capacity with blown cellulose, fiberglass or closed cell foam to cavity capacity. Attic access panel must be insulated to R-30 with rigid foam.
INSULATION AND VENTILATION – KITCHEN VENTILATION
REHABILITATION STANDARD: N/A
REPLACEMENT STANDARD:
Minimum Life: 5 Years
Energy Star, exterior ducted range hoods or exhaust fans with less than 10 sones, at least 120 CFM and capped with a functional back draft.
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City of Lynwood
HOME Investment Partnership Program
Policies and Procedures Manual
DRAFT Page 125
SECTION VII: INTERIOR STANDARDS
INTERIOR STANDARDS – INTERIOR RAILINGS
REHABILITATION STANDARD:
Minimum Life: 10 Years
Handrails will be present on one side of all interior steps or stairways with more than two risers and around platforms over 30" above floor level with adequa te structural attachment, in compliance with the California Building Code 2010.
REPLACEMENT STANDARD:
Minimum Life: 15 Years
Hand and guardrails shall be replaced with universal design standard material and construction in compliance with the California Building Code 2010.
INTERIOR STANDARDS – INTERIOR WALLS AND CEILINGS
REHABILITATION STANDARD:
Minimum Life: 5 Years
Walls shall be stripped of wallpaper, holes, cracks and deteriorated surfaces. All visual surfaces shall be patched and sanded as to create a smooth surface and recoated using premium, low VOC, vinyl acrylic paint.
REPLACEMENT STANDARD:
Minimum Life: 10 Years
Walls shall be plumb, ceiling level with a smooth finish on at least 1/2" gypsum with water resistant board in wet areas. 5/8” Type X over 16” on center studs installed per the American Gypsum Association. Kitchen tile backsplashes and wainscot in ceramic tile baths.
INTERIOR STANDARDS – HAZMAT TESTING AND TREATMENT
REHABILITATION STANDARD:
SAFE PRACTICES
Low: Minimum Life: 3 Months
Asbestos and lead paint hazards, when previously identified, shall be addressed in conformance with applicable local, state, and federal laws. Rehabilitated properties shall be cleaned to pass a Lead Dust clearance test to the levels prescribed by HUD regulations.
Moderate: Minimum Life: 1 Year
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City of Lynwood
HOME Investment Partnership Program
Policies and Procedures Manual
DRAFT Page 126
All properties shall be visually inspected for asbestos and lead suspect materials. No friable asbestos and all interior and exterior lead suspect surfaces shall be repainted using premium acrylic latex. Properties shall pass HUD lead dust clearance standards prior to occupancy.
High: Minimum Life: 1 Year
All properties shall undergo visual "Risk Evaluations" by rehab supervisors and be treated with the most affordable interior, exterior and site clean-up to clearance standards.
REPLACEMENT STANDARD: IN PLACE MANAGEMENT & ABATEMENT
High: Minimum Life: 20 Years
After an inspection by an EPA Certified Inspector, all hazardous material shall be removed from all moving parts, floors and mouthable surfaces. Encapsulants and enclosures may be used.
INTERIOR STANDARDS – CLOSETS
REHABILITATION STANDARD:
Minimum Life: 10 Years
Existing closets will be maintained.
REPLACEMENT STANDARD:
Minimum Life: 10 Years
All bedrooms shall have a closet with a door, clothe s rod, and shelf. Baths must include linen storage and coat hooks must be near the front door.
INTERIOR STANDARDS – FLOORING
REHABILITATION STANDARD:
Minimum Life: 10 Years
Ceramic tile flooring may be rehabilitated and wood floors sanded and refinished . Salvageable carpet may be cleaned. Minimum life for carpet is 5 years.
REPLACEMENT STANDARD:
Minimum Life: 20 Years
Stone, tile or vinyl flooring may be installed over reinforced cement underlayment in baths. Wood or laminate flooring may be installed in living and dining rooms and halls. Kitchen and utility to be ceramic tile. FHA approved carpet over 6 lb rebond underlayment is allowed in bedrooms when economically feasible.
INTERIOR STANDARDS – APPLIANCES
Assessment of existing appliances shall be made to determine if replacement is necessary. 603
City of Lynwood
HOME Investment Partnership Program
Policies and Procedures Manual
DRAFT Page 127
REPLACEMENT STANDARD: Energy Star and Water Sense. The following appliances are eligible to be installed only when funding allows:
• Dishwasher: Energy Star rated;
• Washing Machine: Energy Star rated (required);
• Dryer: 7 CF with sensor dry system;
• Refrigerator: Energy Star rated (required);
• Range – Gas or electric, 4 burner;
• Garbage disposal – 1/2 hp, with minimum 3-year warranty; • Microwave/Hood combination (if replacing current equipment); and • Built-in Oven (to match) Energy Star rated.
INTERIOR STANDARDS – MINIMUM KITCHEN DESIGN
REHABILITATION/REPLACEMENT STANDARD:
Cabinet Storage: 2 bedroom – 8’ minimum; 3 bedroom – 10’ minimum; 4 bedroom – 12’ minimum.
SECTION VIII: ELECTRIC
NOTE: All electrical work requires permits from the Building Division.