200
2 CFR Ch. II (1–1–21 Edition) §200.508
submitted within the earlier of 30 cal-
endar days after receipt of the audi-
tor’s report(s), or nine months after
the end of the audit period, unless a
different period is specified in a pro-
gram-specific audit guide. Unless re-
stricted by Federal law or regulation,
the auditee must make report copies
available for public inspection.
Auditees and auditors must ensure
that their respective parts of the re-
porting package do not include pro-
tected personally identifiable informa-
tion.
(2) When a program-specific audit
guide is available, the auditee must
electronically submit to the FAC the
data collection form prepared in ac-
cordance with §200.512(b), as applicable
to a program-specific audit, and the re-
porting required by the program-spe-
cific audit guide.
(3) When a program-specific audit
guide is not available, the reporting
package for a program-specific audit
must consist of the financial state-
ment(s) of the Federal program, a sum-
mary schedule of prior audit findings,
and a corrective action plan as de-
scribed in paragraph (b)(2) of this sec-
tion, and the auditor’s report(s) de-
scribed in paragraph (b)(4) of this sec-
tion. The data collection form prepared
in accordance with §200.512(b), as appli-
cable to a program-specific audit, and
one copy of this reporting package
must be electronically submitted to
the FAC.
(d) Other sections of this part may
apply. Program-specific audits are sub-
ject to:
(1) 200.500 Purpose through 200.503 Re-
lation to other audit requirements,
paragraph (d);
(2) 200.504 Frequency of audits
through 200.506 Audit costs;
(3) 200.508 Auditee responsibilities
through 200.509 Auditor selection;
(4) 200.511 Audit findings follow-up;
(5) 200.512 Report submission, para-
graphs (e) through (h);
(6) 200.513 Responsibilities;
(7) 200.516 Audit findings through
200.517 Audit documentation;
(8) 200.521 Management decision; and
(9) Other referenced provisions of this
part unless contrary to the provisions
of this section, a program-specific
audit guide, or program statutes and
regulations.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49571, Aug. 13,
2020]
AUDITEES
§200.508 Auditee responsibilities.
The auditee must:
(a) Procure or otherwise arrange for
the audit required by this part in ac-
cordance with §200.509, and ensure it is
properly performed and submitted
when due in accordance with §200.512.
(b) Prepare appropriate financial
statements, including the schedule of
expenditures of Federal awards in ac-
cordance with §200.510.
(c) Promptly follow up and take cor-
rective action on audit findings, in-
cluding preparation of a summary
schedule of prior audit findings and a
corrective action plan in accordance
with §200.511(b) and (c), respectively.
(d) Provide the auditor with access to
personnel, accounts, books, records,
supporting documentation, and other
information as needed for the auditor
to perform the audit required by this
part.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49572, Aug. 13, 2020]
§200.509 Auditor selection.
(a) Auditor procurement. In procuring
audit services, the auditee must follow
the procurement standards prescribed
by the Procurement Standards in
§§200.317 through 200.326 of subpart D of
this part or the FAR (48 CFR part 42),
as applicable. When procuring audit
services, the objective is to obtain
high-quality audits. In requesting pro-
posals for audit services, the objectives
and scope of the audit must be made
clear and the non-Federal entity must
request a copy of the audit organiza-
tion’s peer review report which the
auditor is required to provide under
GAGAS. Factors to be considered in
evaluating each proposal for audit
services include the responsiveness to
the request for proposal, relevant expe-
rience, availability of staff with profes-
sional qualifications and technical
abilities, the results of peer and exter-
nal quality control reviews, and price.
Whenever possible, the auditee must
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201
OMB Guidance §200.511
make positive efforts to utilize small
businesses, minority-owned firms, and
women’s business enterprises, in pro-
curing audit services as stated in
§200.321, or the FAR (48 CFR part 42),
as applicable.
(b) Restriction on auditor preparing in-
direct cost proposals. An auditor who
prepares the indirect cost proposal or
cost allocation plan may not also be se-
lected to perform the audit required by
this part when the indirect costs recov-
ered by the auditee during the prior
year exceeded $1 million. This restric-
tion applies to the base year used in
the preparation of the indirect cost
proposal or cost allocation plan and
any subsequent years in which the re-
sulting indirect cost agreement or cost
allocation plan is used to recover costs.
(c) Use of Federal auditors. Federal
auditors may perform all or part of the
work required under this part if they
comply fully with the requirements of
this part.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49572, Aug. 13, 2020]
§200.510 Financial statements.
(a) Financial statements. The auditee
must prepare financial statements that
reflect its financial position, results of
operations or changes in net assets,
and, where appropriate, cash flows for
the fiscal year audited. The financial
statements must be for the same orga-
nizational unit and fiscal year that is
chosen to meet the requirements of
this part. However, non-Federal entity-
wide financial statements may also in-
clude departments, agencies, and other
organizational units that have separate
audits in accordance with §200.514(a)
and prepare separate financial state-
ments.
(b) Schedule of expenditures of Federal
awards. The auditee must also prepare
a schedule of expenditures of Federal
awards for the period covered by the
auditee’s financial statements which
must include the total Federal awards
expended as determined in accordance
with §200.502. While not required, the
auditee may choose to provide infor-
mation requested by Federal awarding
agencies and pass-through entities to
make the schedule easier to use. For
example, when a Federal program has
multiple Federal award years, the
auditee may list the amount of Federal
awards expended for each Federal
award year separately. At a minimum,
the schedule must:
(1) List individual Federal programs
by Federal agency. For a cluster of pro-
grams, provide the cluster name, list
individual Federal programs within the
cluster of programs, and provide the
applicable Federal agency name. For
R&D, total Federal awards expended
must be shown either by individual
Federal award or by Federal agency
and major subdivision within the Fed-
eral agency. For example, the National
Institutes of Health is a major subdivi-
sion in the Department of Health and
Human Services.
(2) For Federal awards received as a
subrecipient, the name of the pass-
through entity and identifying number
assigned by the pass-through entity
must be included.
(3) Provide total Federal awards ex-
pended for each individual Federal pro-
gram and the Assistance Listings Num-
ber or other identifying number when
the Assistance Listings information is
not available. For a cluster of pro-
grams also provide the total for the
cluster.
(4) Include the total amount provided
to subrecipients from each Federal pro-
gram.
(5) For loan or loan guarantee pro-
grams described in §200.502(b), identify
in the notes to the schedule the bal-
ances outstanding at the end of the
audit period. This is in addition to in-
cluding the total Federal awards ex-
pended for loan or loan guarantee pro-
grams in the schedule.
(6) Include notes that describe that
significant accounting policies used in
preparing the schedule, and note
whether or not the auditee elected to
use the 10% de minimis cost rate as
covered in §200.414.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49572, Aug. 13,
2020]
§200.511 Audit findings follow-up.
(a) General. The auditee is responsible
for follow-up and corrective action on
all audit findings. As part of this re-
sponsibility, the auditee must prepare
a summary schedule of prior audit find-
ings. The auditee must also prepare a
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202
2 CFR Ch. II (1–1–21 Edition) §200.512
corrective action plan for current year
audit findings. The summary schedule
of prior audit findings and the correc-
tive action plan must include the ref-
erence numbers the auditor assigns to
audit findings under §200.516(c). Since
the summary schedule may include
audit findings from multiple years, it
must include the fiscal year in which
the finding initially occurred. The cor-
rective action plan and summary
schedule of prior audit findings must
include findings relating to the finan-
cial statements which are required to
be reported in accordance with
GAGAS.
(b) Summary schedule of prior audit
findings. The summary schedule of
prior audit findings must report the
status of all audit findings included in
the prior audit’s schedule of findings
and questioned costs. The summary
schedule must also include audit find-
ings reported in the prior audit’s sum-
mary schedule of prior audit findings
except audit findings listed as cor-
rected in accordance with paragraph
(b)(1) of this section, or no longer valid
or not warranting further action in ac-
cordance with paragraph (b)(3) of this
section.
(1) When audit findings were fully
corrected, the summary schedule need
only list the audit findings and state
that corrective action was taken.
(2) When audit findings were not cor-
rected or were only partially corrected,
the summary schedule must describe
the reasons for the finding’s recurrence
and planned corrective action, and any
partial corrective action taken. When
corrective action taken is significantly
different from corrective action pre-
viously reported in a corrective action
plan or in the Federal agency’s or pass-
through entity’s management decision,
the summary schedule must provide an
explanation.
(3) When the auditee believes the
audit findings are no longer valid or do
not warrant further action, the reasons
for this position must be described in
the summary schedule. A valid reason
for considering an audit finding as not
warranting further action is that all of
the following have occurred:
(i) Two years have passed since the
audit report in which the finding oc-
curred was submitted to the FAC;
(ii) The Federal agency or pass-
through entity is not currently fol-
lowing up with the auditee on the audit
finding; and
(iii) A management decision was not
issued.
(c) Corrective action plan. At the com-
pletion of the audit, the auditee must
prepare, in a document separate from
the auditor’s findings described in
§200.516, a corrective action plan to ad-
dress each audit finding included in the
current year auditor’s reports. The cor-
rective action plan must provide the
name(s) of the contact person(s) re-
sponsible for corrective action, the cor-
rective action planned, and the antici-
pated completion date. If the auditee
does not agree with the audit findings
or believes corrective action is not re-
quired, then the corrective action plan
must include an explanation and spe-
cific reasons.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49572, Aug. 13, 2020]
§200.512 Report submission.
(a) General. (1) The audit must be
completed and the data collection form
described in paragraph (b) of this sec-
tion and reporting package described in
paragraph (c) of this section must be
submitted within the earlier of 30 cal-
endar days after receipt of the audi-
tor’s report(s), or nine months after
the end of the audit period. If the due
date falls on a Saturday, Sunday, or
Federal holiday, the reporting package
is due the next business day.
(2) Unless restricted by Federal stat-
utes or regulations, the auditee must
make copies available for public in-
spection. Auditees and auditors must
ensure that their respective parts of
the reporting package do not include
protected personally identifiable infor-
mation.
(b) Data collection. The FAC is the re-
pository of record for subpart F of this
part reporting packages and the data
collection form. All Federal agencies,
pass-through entities and others inter-
ested in a reporting package and data
collection form must obtain it by ac-
cessing the FAC.
(1) The auditee must submit required
data elements described in Appendix X
to Part 200, which state whether the
audit was completed in accordance
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203
OMB Guidance §200.512
with this part and provides informa-
tion about the auditee, its Federal pro-
grams, and the results of the audit.
The data must include information
available from the audit required by
this part that is necessary for Federal
agencies to use the audit to ensure in-
tegrity for Federal programs. The data
elements and format must be approved
by OMB, available from the FAC, and
include collections of information from
the reporting package described in
paragraph (c) of this section. A senior
level representative of the auditee (e.g.,
state controller, director of finance,
chief executive officer, or chief finan-
cial officer) must sign a statement to
be included as part of the data collec-
tion that says that the auditee com-
plied with the requirements of this
part, the data were prepared in accord-
ance with this part (and the instruc-
tions accompanying the form), the re-
porting package does not include pro-
tected personally identifiable informa-
tion, the information included in its
entirety is accurate and complete, and
that the FAC is authorized to make the
reporting package and the form pub-
licly available on a website.
(2) Exception for Indian Tribes and
Tribal Organizations. An auditee that is
an Indian tribe or a tribal organization
(as defined in the Indian Self-Deter-
mination, Education and Assistance
Act (ISDEAA), 25 U.S.C. 450b(l)) may
opt not to authorize the FAC to make
the reporting package publicly avail-
able on a Web site, by excluding the au-
thorization for the FAC publication in
the statement described in paragraph
(b)(1) of this section. If this option is
exercised, the auditee becomes respon-
sible for submitting the reporting
package directly to any pass-through
entities through which it has received
a Federal award and to pass-through
entities for which the summary sched-
ule of prior audit findings reported the
status of any findings related to Fed-
eral awards that the pass-through enti-
ty provided. Unless restricted by Fed-
eral statute or regulation, if the
auditee opts not to authorize publica-
tion, it must make copies of the report-
ing package available for public inspec-
tion.
(3) Using the information included in
the reporting package described in
paragraph (c) of this section, the audi-
tor must complete the applicable data
elements of the data collection form.
The auditor must sign a statement to
be included as part of the data collec-
tion form that indicates, at a min-
imum, the source of the information
included in the form, the auditor’s re-
sponsibility for the information, that
the form is not a substitute for the re-
porting package described in paragraph
(c) of this section, and that the content
of the form is limited to the collection
of information prescribed by OMB.
(c) Reporting package. The reporting
package must include the:
(1) Financial statements and sched-
ule of expenditures of Federal awards
discussed in §200.510(a) and (b), respec-
tively;
(2) Summary schedule of prior audit
findings discussed in §200.511(b);
(3) Auditor’s report(s) discussed in
§200.515; and
(4) Corrective action plan discussed
in §200.511(c).
(d) Submission to FAC. The auditee
must electronically submit to the FAC
the data collection form described in
paragraph (b) of this section and the
reporting package described in para-
graph (c) of this section.
(e) Requests for management letters
issued by the auditor. In response to re-
quests by a Federal agency or pass-
through entity, auditees must submit a
copy of any management letters issued
by the auditor.
(f) Report retention requirements.
Auditees must keep one copy of the
data collection form described in para-
graph (b) of this section and one copy
of the reporting package described in
paragraph (c) of this section on file for
three years from the date of submis-
sion to the FAC.
(g) FAC responsibilities. The FAC must
make available the reporting packages
received in accordance with paragraph
(c) of this section and §200.507(c) to the
public, except for Indian tribes exer-
cising the option in (b)(2) of this sec-
tion, and maintain a data base of com-
pleted audits, provide appropriate in-
formation to Federal agencies, and fol-
low up with known auditees that have
not submitted the required data collec-
tion forms and reporting packages.
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204
2 CFR Ch. II (1–1–21 Edition) §200.513
(h) Electronic filing. Nothing in this
part must preclude electronic submis-
sions to the FAC in such manner as
may be approved by OMB.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13,
2020]
FEDERAL AGENCIES
§200.513 Responsibilities.
(a)(1) Cognizant agency for audit re-
sponsibilities. A non-Federal entity ex-
pending more than $50 million a year in
Federal awards must have a cognizant
agency for audit. The designated cog-
nizant agency for audit must be the
Federal awarding agency that provides
the predominant amount of funding di-
rectly (direct funding) (as listed on the
Schedule of expenditures of Federal
awards, see §200.510(b)) to a non-Fed-
eral entity unless OMB designates a
specific cognizant agency for audit.
When the direct funding represents less
than 25 percent of the total expendi-
tures (as direct and subawards) by the
non-Federal entity, then the Federal
agency with the predominant amount
of total funding is the designated cog-
nizant agency for audit.
(2) To provide for continuity of cog-
nizance, the determination of the pre-
dominant amount of direct funding
must be based upon direct Federal
awards expended in the non-Federal en-
tity’s fiscal years ending in 2019, and
every fifth year thereafter.
(3) Notwithstanding the manner in
which audit cognizance is determined,
a Federal awarding agency with cog-
nizance for an auditee may reassign
cognizance to another Federal award-
ing agency that provides substantial
funding and agrees to be the cognizant
agency for audit. Within 30 calendar
days after any reassignment, both the
old and the new cognizant agency for
audit must provide notice of the
change to the FAC, the auditee, and, if
known, the auditor. The cognizant
agency for audit must:
(i) Provide technical audit advice and
liaison assistance to auditees and audi-
tors.
(ii) Obtain or conduct quality control
reviews on selected audits made by
non-Federal auditors, and provide the
results to other interested organiza-
tions. Cooperate and provide support to
the Federal agency designated by OMB
to lead a governmentwide project to
determine the quality of single audits
by providing a reliable estimate of the
extent that single audits conform to
applicable requirements, standards,
and procedures; and to make rec-
ommendations to address noted audit
quality issues, including recommenda-
tions for any changes to applicable re-
quirements, standards and procedures
indicated by the results of the project.
The governmentwide project can rely
on the current and on-going quality
control review work performed by the
agencies, State auditors, and profes-
sional audit associations. This govern-
mentwide audit quality project must
be performed once every 6 years (or at
such other interval as determined by
OMB), and the results must be public.
(iii) Promptly inform other affected
Federal agencies and appropriate Fed-
eral law enforcement officials of any
direct reporting by the auditee or its
auditor required by GAGAS or statutes
and regulations.
(iv) Advise the community of inde-
pendent auditors of any noteworthy or
important factual trends related to the
quality of audits stemming from qual-
ity control reviews. Significant prob-
lems or quality issues consistently
identified through quality control re-
views of audit reports must be referred
to appropriate state licensing agencies
and professional bodies.
(v) Advise the auditor, Federal
awarding agencies, and, where appro-
priate, the auditee of any deficiencies
found in the audits when the defi-
ciencies require corrective action by
the auditor. When advised of defi-
ciencies, the auditee must work with
the auditor to take corrective action.
If corrective action is not taken, the
cognizant agency for audit must notify
the auditor, the auditee, and applicable
Federal awarding agencies and pass-
through entities of the facts and make
recommendations for follow-up action.
Major inadequacies or repetitive sub-
standard performance by auditors must
be referred to appropriate state licens-
ing agencies and professional bodies for
disciplinary action.
(vi) Coordinate, to the extent prac-
tical, audits or reviews made by or for
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205
OMB Guidance §200.513
Federal agencies that are in addition
to the audits made pursuant to this
part, so that the additional audits or
reviews build upon rather than dupli-
cate audits performed in accordance
with this part.
(vii) Coordinate a management deci-
sion for cross-cutting audit findings
(see in §200.1 of this part) that affect
the Federal programs of more than one
agency when requested by any Federal
awarding agency whose awards are in-
cluded in the audit finding of the
auditee.
(viii) Coordinate the audit work and
reporting responsibilities among audi-
tors to achieve the most cost-effective
audit.
(ix) Provide advice to auditees as to
how to handle changes in fiscal years.
(b) Oversight agency for audit respon-
sibilities. An auditee who does not have
a designated cognizant agency for
audit will be under the general over-
sight of the Federal agency determined
in accordance with §200.1 oversight
agency for audit. A Federal agency with
oversight for an auditee may reassign
oversight to another Federal agency
that agrees to be the oversight agency
for audit. Within 30 calendar days after
any reassignment, both the old and the
new oversight agency for audit must
provide notice of the change to the
FAC, the auditee, and, if known, the
auditor. The oversight agency for
audit:
(1) Must provide technical advice to
auditees and auditors as requested.
(2) May assume all or some of the re-
sponsibilities normally performed by a
cognizant agency for audit.
(c) Federal awarding agency respon-
sibilities. The Federal awarding agency
must perform the following for the
Federal awards it makes (See also the
requirements of §200.211):
(1) Ensure that audits are completed
and reports are received in a timely
manner and in accordance with the re-
quirements of this part.
(2) Provide technical advice and
counsel to auditees and auditors as re-
quested.
(3) Follow-up on audit findings to en-
sure that the recipient takes appro-
priate and timely corrective action. As
part of audit follow-up, the Federal
awarding agency must:
(i) Issue a management decision as
prescribed in §200.521;
(ii) Monitor the recipient taking ap-
propriate and timely corrective action;
(iii) Use cooperative audit resolution
mechanisms (see the definition of coop-
erative audit resolution in §200.1 of this
part) to improve Federal program out-
comes through better audit resolution,
follow-up, and corrective action; and
(iv) Develop a baseline, metrics, and
targets to track, over time, the effec-
tiveness of the Federal agency’s proc-
ess to follow-up on audit findings and
on the effectiveness of Single Audits in
improving non-Federal entity account-
ability and their use by Federal award-
ing agencies in making award deci-
sions.
(4) Provide OMB annual updates to
the compliance supplement and work
with OMB to ensure that the compli-
ance supplement focuses the auditor to
test the compliance requirements most
likely to cause improper payments,
fraud, waste, abuse or generate audit
finding for which the Federal awarding
agency will take sanctions.
(5) Provide OMB with the name of a
single audit accountable official from
among the senior policy officials of the
Federal awarding agency who must be:
(i) Responsible for ensuring that the
agency fulfills all the requirements of
paragraph (c) of this section and effec-
tively uses the single audit process to
reduce improper payments and improve
Federal program outcomes.
(ii) Held accountable to improve the
effectiveness of the single audit process
based upon metrics as described in
paragraph (c)(3)(iv) of this section.
(iii) Responsible for designating the
Federal agency’s key management sin-
gle audit liaison.
(6) Provide OMB with the name of a
key management single audit liaison
who must:
(i) Serve as the Federal awarding
agency’s management point of contact
for the single audit process both within
and outside the Federal Government.
(ii) Promote interagency coordina-
tion, consistency, and sharing in areas
such as coordinating audit follow-up;
identifying higher-risk non-Federal en-
tities; providing input on single audit
and follow-up policy; enhancing the
utility of the FAC; and studying ways
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206
2 CFR Ch. II (1–1–21 Edition) §200.514
to use single audit results to improve
Federal award accountability and best
practices.
(iii) Oversee training for the Federal
awarding agency’s program manage-
ment personnel related to the single
audit process.
(iv) Promote the Federal awarding
agency’s use of cooperative audit reso-
lution mechanisms.
(v) Coordinate the Federal awarding
agency’s activities to ensure appro-
priate and timely follow-up and correc-
tive action on audit findings.
(vi) Organize the Federal cognizant
agency for audit’s follow-up on cross-
cutting audit findings that affect the
Federal programs of more than one
Federal awarding agency.
(vii) Ensure the Federal awarding
agency provides annual updates of the
compliance supplement to OMB.
(viii) Support the Federal awarding
agency’s single audit accountable offi-
cial’s mission.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13,
2020]
AUDITORS
§200.514 Scope of audit.
(a) General. The audit must be con-
ducted in accordance with GAGAS. The
audit must cover the entire operations
of the auditee, or, at the option of the
auditee, such audit must include a se-
ries of audits that cover departments,
agencies, and other organizational
units that expended or otherwise ad-
ministered Federal awards during such
audit period, provided that each such
audit must encompass the financial
statements and schedule of expendi-
tures of Federal awards for each such
department, agency, and other organi-
zational unit, which must be consid-
ered to be a non-Federal entity. The fi-
nancial statements and schedule of ex-
penditures of Federal awards must be
for the same audit period.
(b) Financial statements. The auditor
must determine whether the financial
statements of the auditee are presented
fairly in all material respects in ac-
cordance with generally accepted ac-
counting principles. The auditor must
also determine whether the schedule of
expenditures of Federal awards is stat-
ed fairly in all material respects in re-
lation to the auditee’s financial state-
ments as a whole.
(c) Internal control. (1) The compli-
ance supplement provides guidance on
internal controls over Federal pro-
grams based upon the guidance in
Standards for Internal Control in the
Federal Government issued by the
Comptroller General of the United
States and the Internal Control—Inte-
grated Framework, issued by the Com-
mittee of Sponsoring Organizations of
the Treadway Commission (COSO).
(2) In addition to the requirements of
GAGAS, the auditor must perform pro-
cedures to obtain an understanding of
internal control over Federal programs
sufficient to plan the audit to support
a low assessed level of control risk of
noncompliance for major programs.
(3) Except as provided in paragraph
(c)(4) of this section, the auditor must:
(i) Plan the testing of internal con-
trol over compliance for major pro-
grams to support a low assessed level
of control risk for the assertions rel-
evant to the compliance requirements
for each major program; and
(ii) Perform testing of internal con-
trol as planned in paragraph (c)(3)(i) of
this section.
(4) When internal control over some
or all of the compliance requirements
for a major program are likely to be in-
effective in preventing or detecting
noncompliance, the planning and per-
forming of testing described in para-
graph (c)(3) of this section are not re-
quired for those compliance require-
ments. However, the auditor must re-
port a significant deficiency or mate-
rial weakness in accordance with
§200.516 Audit findings, assess the re-
lated control risk at the maximum,
and consider whether additional com-
pliance tests are required because of
ineffective internal control.
(d) Compliance. (1) In addition to the
requirements of GAGAS, the auditor
must determine whether the auditee
has complied with Federal statutes,
regulations, and the terms and condi-
tions of Federal awards that may have
a direct and material effect on each of
its major programs.
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207
OMB Guidance §200.515
(2) The principal compliance require-
ments applicable to most Federal pro-
grams and the compliance require-
ments of the largest Federal programs
are included in the compliance supple-
ment.
(3) For the compliance requirements
related to Federal programs contained
in the compliance supplement, an audit
of these compliance requirements will
meet the requirements of this part.
Where there have been changes to the
compliance requirements and the
changes are not reflected in the com-
pliance supplement, the auditor must
determine the current compliance re-
quirements and modify the audit proce-
dures accordingly. For those Federal
programs not covered in the compli-
ance supplement, the auditor must fol-
low the compliance supplement’s guid-
ance for programs not included in the
supplement.
(4) When internal control over some
or all of the compliance requirements
for a major program are likely to be in-
effective in preventing or detecting
noncompliance, the planning and per-
forming of testing described in para-
graph (c)(3) of this section are not re-
quired for those compliance require-
ments. However, the auditor must re-
port a significant deficiency or mate-
rial weakness in accordance with
§200.516, assess the related control risk
at the
(e) Audit follow-up. The auditor must
follow-up on prior audit findings, per-
form procedures to assess the reason-
ableness of the summary schedule of
prior audit findings prepared by the
auditee in accordance with §200.511(b),
and report, as a current year audit
finding, when the auditor concludes
that the summary schedule of prior
audit findings materially misrepre-
sents the status of any prior audit find-
ing. The auditor must perform audit
follow-up procedures regardless of
whether a prior audit finding relates to
a major program in the current year.
(f) Data collection form. As required in
§200.512(b)(3), the auditor must com-
plete and sign specified sections of the
data collection form.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13,
2020]
§200.515 Audit reporting.
The auditor’s report(s) may be in the
form of either combined or separate re-
ports and may be organized differently
from the manner presented in this sec-
tion. The auditor’s report(s) must state
that the audit was conducted in ac-
cordance with this part and include the
following:
(a) Financial statements. The auditor
must determine and provide an opinion
(or disclaimer of opinion) whether the
financial statements of the auditee are
presented fairly in all materials re-
spects in accordance with generally ac-
cepted accounting principles (or a spe-
cial purpose framework such as cash,
modified cash, or regulatory as re-
quired by state law). The auditor must
also decide whether the schedule of ex-
penditures of Federal awards is stated
fairly in all material respects in rela-
tion to the auditee’s financial state-
ments as a whole.
(b) A report on internal control over
financial reporting and compliance
with provisions of laws, regulations,
contracts, and award agreements, non-
compliance with which could have a
material effect on the financial state-
ments. This report must describe the
scope of testing of internal control and
compliance and the results of the tests,
and, where applicable, it will refer to
the separate schedule of findings and
questioned costs described in para-
graph (d) of this section.
(c) A report on compliance for each
major program and a report on internal
control over compliance. This report
must describe the scope of testing of
internal control over compliance, in-
clude an opinion or disclaimer of opin-
ion as to whether the auditee complied
with Federal statutes, regulations, and
the terms and conditions of Federal
awards which could have a direct and
material effect on each major program
and refer to the separate schedule of
findings and questioned costs described
in paragraph (d) of this section.
(d) A schedule of findings and ques-
tioned costs which must include the
following three components:
(1) A summary of the auditor’s re-
sults, which must include:
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208
2 CFR Ch. II (1–1–21 Edition) §200.516
(i) The type of report the auditor
issued on whether the financial state-
ments audited were prepared in accord-
ance with GAAP (i.e., unmodified opin-
ion, qualified opinion, adverse opinion,
or disclaimer of opinion);
(ii) Where applicable, a statement
about whether significant deficiencies
or material weaknesses in internal con-
trol were disclosed by the audit of the
financial statements;
(iii) A statement as to whether the
audit disclosed any noncompliance
that is material to the financial state-
ments of the auditee;
(iv) Where applicable, a statement
about whether significant deficiencies
or material weaknesses in internal con-
trol over major programs were dis-
closed by the audit;
(v) The type of report the auditor
issued on compliance for major pro-
grams (i.e., unmodified opinion, quali-
fied opinion, adverse opinion, or dis-
claimer of opinion);
(vi) A statement as to whether the
audit disclosed any audit findings that
the auditor is required to report under
§200.516(a);
(vii) An identification of major pro-
grams by listing each individual major
program; however, in the case of a clus-
ter of programs, only the cluster name
as shown on the Schedule of Expendi-
tures of Federal Awards is required;
(viii) The dollar threshold used to
distinguish between Type A and Type B
programs, as described in §200.518(b)(1)
or (3) when a recalculation of the Type
A threshold is required for large loan
or loan guarantees; and
(ix) A statement as to whether the
auditee qualified as a low-risk auditee
under §200.520.
(2) Findings relating to the financial
statements which are required to be re-
ported in accordance with GAGAS.
(3) Findings and questioned costs for
Federal awards which must include
audit findings as defined in §200.516(a).
(i) Audit findings (e.g., internal con-
trol findings, compliance findings,
questioned costs, or fraud) that relate
to the same issue must be presented as
a single audit finding. Where practical,
audit findings should be organized by
Federal agency or pass-through entity.
(ii) Audit findings that relate to both
the financial statements and Federal
awards, as reported under paragraphs
(d)(2) and (d)(3) of this section, respec-
tively, must be reported in both sec-
tions of the schedule. However, the re-
porting in one section of the schedule
may be in summary form with a ref-
erence to a detailed reporting in the
other section of the schedule.
(e) Nothing in this part precludes
combining of the audit reporting re-
quired by this section with the report-
ing required by §200.512(b) when al-
lowed by GAGAS and appendix X to
this part.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13,
2020]
§200.516 Audit findings.
(a) Audit findings reported. The audi-
tor must report the following as audit
findings in a schedule of findings and
questioned costs:
(1) Significant deficiencies and mate-
rial weaknesses in internal control
over major programs and significant
instances of abuse relating to major
programs. The auditor’s determination
of whether a deficiency in internal con-
trol is a significant deficiency or a ma-
terial weakness for the purpose of re-
porting an audit finding is in relation
to a type of compliance requirement
for a major program identified in the
Compliance Supplement.
(2) Material noncompliance with the
provisions of Federal statutes, regula-
tions, or the terms and conditions of
Federal awards related to a major pro-
gram. The auditor’s determination of
whether a noncompliance with the pro-
visions of Federal statutes, regula-
tions, or the terms and conditions of
Federal awards is material for the pur-
pose of reporting an audit finding is in
relation to a type of compliance re-
quirement for a major program identi-
fied in the compliance supplement.
(3) Known questioned costs that are
greater than $25,000 for a type of com-
pliance requirement for a major pro-
gram. Known questioned costs are
those specifically identified by the
auditor. In evaluating the effect of
questioned costs on the opinion on
compliance, the auditor considers the
best estimate of total costs questioned
(likely questioned costs), not just the
questioned costs specifically identified
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209
OMB Guidance §200.516
(known questioned costs). The auditor
must also report known questioned
costs when likely questioned costs are
greater than $25,000 for a type of com-
pliance requirement for a major pro-
gram. In reporting questioned costs,
the auditor must include information
to provide proper perspective for judg-
ing the prevalence and consequences of
the questioned costs.
(4) Known questioned costs that are
greater than $25,000 for a Federal pro-
gram which is not audited as a major
program. Except for audit follow-up,
the auditor is not required under this
part to perform audit procedures for
such a Federal program; therefore, the
auditor will normally not find ques-
tioned costs for a program that is not
audited as a major program. However,
if the auditor does become aware of
questioned costs for a Federal program
that is not audited as a major program
(e.g., as part of audit follow-up or other
audit procedures) and the known ques-
tioned costs are greater than $25,000,
then the auditor must report this as an
audit finding.
(5) The circumstances concerning
why the auditor’s report on compliance
for each major program is other than
an unmodified opinion, unless such cir-
cumstances are otherwise reported as
audit findings in the schedule of find-
ings and questioned costs for Federal
awards.
(6) Known or likely fraud affecting a
Federal award, unless such fraud is
otherwise reported as an audit finding
in the schedule of findings and ques-
tioned costs for Federal awards. This
paragraph does not require the auditor
to report publicly information which
could compromise investigative or
legal proceedings or to make an addi-
tional reporting when the auditor con-
firms that the fraud was reported out-
side the auditor’s reports under the di-
rect reporting requirements of GAGAS.
(7) Instances where the results of
audit follow-up procedures disclosed
that the summary schedule of prior
audit findings prepared by the auditee
in accordance with §200.511(b) materi-
ally misrepresents the status of any
prior audit finding.
(b) Audit finding detail and clarity.
Audit findings must be presented in
sufficient detail and clarity for the
auditee to prepare a corrective action
plan and take corrective action, and
for Federal agencies and pass-through
entities to arrive at a management de-
cision. The following specific informa-
tion must be included, as applicable, in
audit findings:
(1) Federal program and specific Fed-
eral award identification including the
Assistance Listings title and number,
Federal award identification number
and year, name of Federal agency, and
name of the applicable pass-through
entity. When information, such as the
Assistance Listings title and number
or Federal award identification num-
ber, is not available, the auditor must
provide the best information available
to describe the Federal award.
(2) The criteria or specific require-
ment upon which the audit finding is
based, including the Federal statutes,
regulations, or the terms and condi-
tions of the Federal awards. Criteria
generally identify the required or de-
sired state or expectation with respect
to the program or operation. Criteria
provide a context for evaluating evi-
dence and understanding findings.
(3) The condition found, including
facts that support the deficiency iden-
tified in the audit finding.
(4) A statement of cause that identi-
fies the reason or explanation for the
condition or the factors responsible for
the difference between the situation
that exists (condition) and the required
or desired state (criteria), which may
also serve as a basis for recommenda-
tions for corrective action.
(5) The possible asserted effect to
provide sufficient information to the
auditee and Federal agency, or pass-
through entity in the case of a sub-
recipient, to permit them to determine
the cause and effect to facilitate
prompt and proper corrective action. A
statement of the effect or potential ef-
fect should provide a clear, logical link
to establish the impact or potential
impact of the difference between the
condition and the criteria.
(6) Identification of questioned costs
and how they were computed. Known
questioned costs must be identified by
applicable Assistance Listings num-
ber(s) and applicable Federal award
identification number(s).
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210
2 CFR Ch. II (1–1–21 Edition) §200.517
(7) Information to provide proper per-
spective for judging the prevalence and
consequences of the audit findings,
such as whether the audit findings rep-
resent an isolated instance or a sys-
temic problem. Where appropriate, in-
stances identified must be related to
the universe and the number of cases
examined and be quantified in terms of
dollar value. The auditor should report
whether the sampling was a statis-
tically valid sample.
(8) Identification of whether the
audit finding was a repeat of a finding
in the immediately prior audit and if
so any applicable prior year audit find-
ing numbers.
(9) Recommendations to prevent fu-
ture occurrences of the deficiency iden-
tified in the audit finding.
(10) Views of responsible officials of
the auditee.
(c) Reference numbers. Each audit
finding in the schedule of findings and
questioned costs must include a ref-
erence number in the format meeting
the requirements of the data collection
form submission required by §200.512(b)
to allow for easy referencing of the
audit findings during follow-up.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49574, Aug. 13, 2020]
§200.517 Audit documentation.
(a) Retention of audit documentation.
The auditor must retain audit docu-
mentation and reports for a minimum
of three years after the date of
issuance of the auditor’s report(s) to
the auditee, unless the auditor is noti-
fied in writing by the cognizant agency
for audit, oversight agency for audit,
cognizant agency for indirect costs, or
pass-through entity to extend the re-
tention period. When the auditor is
aware that the Federal agency, pass-
through entity, or auditee is con-
testing an audit finding, the auditor
must contact the parties contesting
the audit finding for guidance prior to
destruction of the audit documentation
and reports.
(b) Access to audit documentation.
Audit documentation must be made
available upon request to the cognizant
or oversight agency for audit or its des-
ignee, cognizant agency for indirect
cost, a Federal agency, or GAO at the
completion of the audit, as part of a
quality review, to resolve audit find-
ings, or to carry out oversight respon-
sibilities consistent with the purposes
of this part. Access to audit docu-
mentation includes the right of Federal
agencies to obtain copies of audit docu-
mentation, as is reasonable and nec-
essary.
§200.518 Major program determina-
tion.
(a) General. The auditor must use a
risk-based approach to determine
which Federal programs are major pro-
grams. This risk-based approach must
include consideration of: current and
prior audit experience, oversight by
Federal agencies and pass-through en-
tities, and the inherent risk of the Fed-
eral program. The process in para-
graphs (b) through (h) of this section
must be followed.
(b) Step one. (1) The auditor must
identify the larger Federal programs,
which must be labeled Type A pro-
grams. Type A programs are defined as
Federal programs with Federal awards
expended during the audit period ex-
ceeding the levels outlined in the table
in this paragraph (b)(1):
Total Federal awards ex-
pended Type A/B threshold
Equal to or exceed $750,000
but less than or equal to
$25 million.
$750,000.
Exceed $25 million but less
than or equal to $100 mil-
lion.
Total Federal awards ex-
pended times .03.
Exceed $100 million but less
than or equal to $1 billion.
$3 million.
Exceed $1 billion but less
than or equal to $10 billion.
Total Federal awards ex-
pended times .003.
Exceed $10 billion but less
than or equal to $20 billion.
$30 million.
Exceed $20 billion ................. Total Federal awards ex- pended times .0015.
(2) Federal programs not labeled
Type A under paragraph (b)(1) of this
section must be labeled Type B pro-
grams.
(3) The inclusion of large loan and
loan guarantees (loans) must not result
in the exclusion of other programs as
Type A programs. When a Federal pro-
gram providing loans exceeds four
times the largest non-loan program it
is considered a large loan program, and
the auditor must consider this Federal
program as a Type A program and ex-
clude its values in determining other
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211
OMB Guidance §200.518
Type A programs. This recalculation of
the Type A program is performed after
removing the total of all large loan
programs. For the purposes of this
paragraph a program is only considered
to be a Federal program providing
loans if the value of Federal awards ex-
pended for loans within the program
comprises fifty percent or more of the
total Federal awards expended for the
program. A cluster of programs is
treated as one program and the value
of Federal awards expended under a
loan program is determined as de-
scribed in §200.502.
(4) For biennial audits permitted
under §200.504, the determination of
Type A and Type B programs must be
based upon the Federal awards ex-
pended during the two-year period.
(c) Step two. (1) The auditor must
identify Type A programs which are
low-risk. In making this determina-
tion, the auditor must consider wheth-
er the requirements in §200.519(c), the
results of audit follow-up, or any
changes in personnel or systems affect-
ing the program indicate significantly
increased risk and preclude the pro-
gram from being low risk. For a Type
A program to be considered low-risk, it
must have been audited as a major pro-
gram in at least one of the two most
recent audit periods (in the most re-
cent audit period in the case of a bien-
nial audit), and, in the most recent
audit period, the program must have
not had:
(i) Internal control deficiencies
which were identified as material
weaknesses in the auditor’s report on
internal control for major programs as
required under §200.515(c);
(ii) A modified opinion on the pro-
gram in the auditor’s report on major
programs as required under §200.515(c);
or
(iii) Known or likely questioned costs
that exceed five percent of the total
Federal awards expended for the pro-
gram.
(2) Notwithstanding paragraph (c)(1)
of this section, OMB may approve a
Federal awarding agency’s request that
a Type A program may not be consid-
ered low risk for a certain recipient.
For example, it may be necessary for a
large Type A program to be audited as
a major program each year at a par-
ticular recipient to allow the Federal
awarding agency to comply with 31
U.S.C. 3515. The Federal awarding
agency must notify the recipient and,
if known, the auditor of OMB’s ap-
proval at least 180 calendar days prior
to the end of the fiscal year to be au-
dited.
(d) Step three. (1) The auditor must
identify Type B programs which are
high-risk using professional judgment
and the criteria in §200.519. However,
the auditor is not required to identify
more high-risk Type B programs than
at least one fourth the number of low-
risk Type A programs identified as low-
risk under Step 2 (paragraph (c) of this
section). Except for known material
weakness in internal control or compli-
ance problems as discussed in
§200.519(b)(1) and (2) and (c)(1), a single
criterion in risk would seldom cause a
Type B program to be considered high-
risk. When identifying which Type B
programs to risk assess, the auditor is
encouraged to use an approach which
provides an opportunity for different
high-risk Type B programs to be au-
dited as major over a period of time.
(2) The auditor is not expected to per-
form risk assessments on relatively
small Federal programs. Therefore, the
auditor is only required to perform risk
assessments on Type B programs that
exceed twenty-five percent (0.25) of the
Type A threshold determined in Step 1
(paragraph (b) of this section).
(e) Step four. At a minimum, the
auditor must audit all of the following
as major programs:
(1) All Type A programs not identi-
fied as low risk under step two (para-
graph (c)(1) of this section).
(2) All Type B programs identified as
high-risk under step three (paragraph
(d) of this section).
(3) Such additional programs as may
be necessary to comply with the per-
centage of coverage rule discussed in
paragraph (f) of this section. This may
require the auditor to audit more pro-
grams as major programs than the
number of Type A programs.
(f) Percentage of coverage rule. If the
auditee meets the criteria in §200.520,
the auditor need only audit the major
programs identified in Step 4 (para-
graphs (e)(1) and (2) of this section) and
such additional Federal programs with
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212
2 CFR Ch. II (1–1–21 Edition) §200.519
Federal awards expended that, in ag-
gregate, all major programs encompass
at least 20 percent (0.20) of total Fed-
eral awards expended. Otherwise, the
auditor must audit the major programs
identified in Step 4 (paragraphs (e)(1)
and (2) of this section) and such addi-
tional Federal programs with Federal
awards expended that, in aggregate, all
major programs encompass at least 40
percent (0.40) of total Federal awards
expended.
(g) Documentation of risk. The auditor
must include in the audit documenta-
tion the risk analysis process used in
determining major programs.
(h) Auditor’s judgment. When the
major program determination was per-
formed and documented in accordance
with this Subpart, the auditor’s judg-
ment in applying the risk-based ap-
proach to determine major programs
must be presumed correct. Challenges
by Federal agencies and pass-through
entities must only be for clearly im-
proper use of the requirements in this
part. However, Federal agencies and
pass-through entities may provide
auditors guidance about the risk of a
particular Federal program and the
auditor must consider this guidance in
determining major programs in audits
not yet completed.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13,
2020]
§200.519 Criteria for Federal program
risk.
(a) General. The auditor’s determina-
tion should be based on an overall eval-
uation of the risk of noncompliance oc-
curring that could be material to the
Federal program. The auditor must
consider criteria, such as described in
paragraphs (b), (c), and (d) of this sec-
tion, to identify risk in Federal pro-
grams. Also, as part of the risk anal-
ysis, the auditor may wish to discuss a
particular Federal program with
auditee management and the Federal
agency or pass-through entity.
(b) Current and prior audit experience.
(1) Weaknesses in internal control over
Federal programs would indicate high-
er risk. Consideration should be given
to the control environment over Fed-
eral programs and such factors as the
expectation of management’s adher-
ence to Federal statutes, regulations,
and the terms and conditions of Fed-
eral awards and the competence and
experience of personnel who administer
the Federal programs.
(i) A Federal program administered
under multiple internal control struc-
tures may have higher risk. When as-
sessing risk in a large single audit, the
auditor must consider whether weak-
nesses are isolated in a single oper-
ating unit (e.g., one college campus) or
pervasive throughout the entity.
(ii) When significant parts of a Fed-
eral program are passed through to
subrecipients, a weak system for moni-
toring subrecipients would indicate
higher risk.
(2) Prior audit findings would indi-
cate higher risk, particularly when the
situations identified in the audit find-
ings could have a significant impact on
a Federal program or have not been
corrected.
(3) Federal programs not recently au-
dited as major programs may be of
higher risk than Federal programs re-
cently audited as major programs with-
out audit findings.
(c) Oversight exercised by Federal agen-
cies and pass-through entities. (1) Over-
sight exercised by Federal agencies or
pass-through entities could be used to
assess risk. For example, recent moni-
toring or other reviews performed by
an oversight entity that disclosed no
significant problems would indicate
lower risk, whereas monitoring that
disclosed significant problems would
indicate higher risk.
(2) Federal agencies, with the concur-
rence of OMB, may identify Federal
programs that are higher risk. OMB
will provide this identification in the
compliance supplement.
(d) Inherent risk of the Federal pro-
gram. (1) The nature of a Federal pro-
gram may indicate risk. Consideration
should be given to the complexity of
the program and the extent to which
the Federal program contracts for
goods and services. For example, Fed-
eral programs that disburse funds
through third-party contracts or have
eligibility criteria may be of higher
risk. Federal programs primarily in-
volving staff payroll costs may have
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213
OMB Guidance §200.521
high risk for noncompliance with re-
quirements of §200.430, but otherwise
be at low risk.
(2) The phase of a Federal program in
its life cycle at the Federal agency
may indicate risk. For example, a new
Federal program with new or interim
regulations may have higher risk than
an established program with time-test-
ed regulations. Also, significant
changes in Federal programs, statutes,
regulations, or the terms and condi-
tions of Federal awards may increase
risk.
(3) The phase of a Federal program in
its life cycle at the auditee may indi-
cate risk. For example, during the first
and last years that an auditee partici-
pates in a Federal program, the risk
may be higher due to start-up or close-
out of program activities and staff.
(4) Type B programs with larger Fed-
eral awards expended would be of high-
er risk than programs with substan-
tially smaller Federal awards ex-
pended.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49575, Aug. 13, 2020]
§200.520 Criteria for a low-risk
auditee.
An auditee that meets all of the fol-
lowing conditions for each of the pre-
ceding two audit periods must qualify
as a low-risk auditee and be eligible for
reduced audit coverage in accordance
with §200.518.
(a) Single audits were performed on
an annual basis in accordance with the
provisions of this Subpart, including
submitting the data collection form
and the reporting package to the FAC
within the timeframe specified in
§200.512. A non-Federal entity that has
biennial audits does not qualify as a
low-risk auditee.
(b) The auditor’s opinion on whether
the financial statements were prepared
in accordance with GAAP, or a basis of
accounting required by state law, and
the auditor’s in relation to opinion on
the schedule of expenditures of Federal
awards were unmodified.
(c) There were no deficiencies in in-
ternal control which were identified as
material weaknesses under the require-
ments of GAGAS.
(d) The auditor did not report a sub-
stantial doubt about the auditee’s abil-
ity to continue as a going concern.
(e) None of the Federal programs had
audit findings from any of the fol-
lowing in either of the preceding two
audit periods in which they were classi-
fied as Type A programs:
(1) Internal control deficiencies that
were identified as material weaknesses
in the auditor’s report on internal con-
trol for major programs as required
under §200.515(c);
(2) A modified opinion on a major
program in the auditor’s report on
major programs as required under
§200.515(c); or
(3) Known or likely questioned costs
that exceeded five percent of the total
Federal awards expended for a Type A
program during the audit period.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49575, Aug. 13, 2020]
MANAGEMENT DECISIONS
§200.521 Management decision.
(a) General. The management deci-
sion must clearly state whether or not
the audit finding is sustained, the rea-
sons for the decision, and the expected
auditee action to repay disallowed
costs, make financial adjustments, or
take other action. If the auditee has
not completed corrective action, a
timetable for follow-up should be
given. Prior to issuing the manage-
ment decision, the Federal agency or
pass-through entity may request addi-
tional information or documentation
from the auditee, including a request
for auditor assurance related to the
documentation, as a way of mitigating
disallowed costs. The management de-
cision should describe any appeal proc-
ess available to the auditee. While not
required, the Federal agency or pass-
through entity may also issue a man-
agement decision on findings relating
to the financial statements which are
required to be reported in accordance
with GAGAS.
(b) Federal agency. As provided in
§200.513(a)(3)(vii), the cognizant agency
for audit must be responsible for co-
ordinating a management decision for
audit findings that affect the programs
of more than one Federal agency. As
provided in §200.513(c)(3)(i), a Federal
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. I
awarding agency is responsible for
issuing a management decision for
findings that relate to Federal awards
it makes to non-Federal entities.
(c) Pass-through entity. As provided in
§200.332(d), the pass-through entity
must be responsible for issuing a man-
agement decision for audit findings
that relate to Federal awards it makes
to subrecipients.
(d) Time requirements. The Federal
awarding agency or pass-through enti-
ty responsible for issuing a manage-
ment decision must do so within six
months of acceptance of the audit re-
port by the FAC. The auditee must ini-
tiate and proceed with corrective ac-
tion as rapidly as possible and correc-
tive action should begin no later than
upon receipt of the audit report.
(e) Reference numbers. Management
decisions must include the reference
numbers the auditor assigned to each
audit finding in accordance with
§200.516(c).
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49575, Aug. 13, 2020]
APPENDIX I TO PART 200—FULL TEXT OF
NOTICE OF FUNDING OPPORTUNITY
The full text of the notice of funding op-
portunity is organized in sections. The re-
quired format outlined in this appendix indi-
cates immediately following the title of each
section whether that section is required in
every announcement or is a Federal award-
ing agency option. The format is designed so
that similar types of information will appear
in the same sections in announcements of
different Federal funding opportunities. To-
ward that end, there is text in each of the
following sections to describe the types of in-
formation that a Federal awarding agency
would include in that section of an actual
announcement.
A Federal awarding agency that wishes to
include information that the format does not
specifically discuss may address that subject
in whatever section(s) is most appropriate.
For example, if a Federal awarding agency
chooses to address performance goals in the
announcement, it might do so in the funding
opportunity description, the application con-
tent, or the reporting requirements.
Similarly, when this format calls for a
type of information to be in a particular sec-
tion, a Federal awarding agency wishing to
address that subject in other sections may
elect to repeat the information in those sec-
tions or use cross references between the sec-
tions (there should be hyperlinks for cross-
references in any electronic versions of the
announcement). For example, a Federal
awarding agency may want to include Sec-
tion A information about the types of non-
Federal entities who are eligible to apply.
The format specifies a standard location for
that information in Section C.1 but does not
preclude repeating the information in Sec-
tion A or creating a cross reference between
Section A and C.1, as long as a potential ap-
plicant can find the information quickly and
easily from the standard location.
The sections of the full text of the an-
nouncement are described in the following
paragraphs.
A. PROGRAM DESCRIPTION—REQUIRED
This section contains the full program de-
scription of the funding opportunity. It may
be as long as needed to adequately commu-
nicate to potential applicants the areas in
which funding may be provided. It describes
the Federal awarding agency’s funding prior-
ities or the technical or focus areas in which
the Federal awarding agency intends to pro-
vide assistance. As appropriate, it may in-
clude any program history (e.g., whether this
is a new program or a new or changed area of
program emphasis). This section must in-
clude program goals and objectives, a ref-
erence to the relevant Assistance Listings, a
description of how the award will contribute
to the achievement of the program’s goals
and objectives, and the expected perform-
ance goals, indicators, targets, baseline data,
data collection, and other outcomes such
Federal awarding agency expects to achieve,
and may include examples of successful
projects that have been funded previously.
This section also may include other informa-
tion the Federal awarding agency deems nec-
essary, and must at a minimum include cita-
tions for authorizing statutes and regula-
tions for the funding opportunity.
B. FEDERAL AWARD INFORMATION—REQUIRED
This section provides sufficient informa-
tion to help an applicant make an informed
decision about whether to submit a proposal.
Relevant information could include the total
amount of funding that the Federal awarding
agency expects to award through the an-
nouncement; the expected performance indi-
cators, targets, baseline data, and data col-
lection; the anticipated number of Federal
awards; the expected amounts of individual
Federal awards (which may be a range); the
amount of funding per Federal award, on av-
erage, experienced in previous years; and the
anticipated start dates and periods of per-
formance for new Federal awards. This sec-
tion also should address whether applica-
tions for renewal or supplementation of ex-
isting projects are eligible to compete with
applications for new Federal awards.
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OMB Guidance Pt. 200, App. I
This section also must indicate the type(s)
of assistance instrument (e.g., grant, cooper-
ative agreement) that may be awarded if ap-
plications are successful. If cooperative
agreements may be awarded, this section ei-
ther should describe the ‘‘substantial in-
volvement’’ that the Federal awarding agen-
cy expects to have or should reference where
the potential applicant can find that infor-
mation (e.g., in the funding opportunity de-
scription in Section A. or Federal award ad-
ministration information in Section D. If
procurement contracts also may be awarded,
this must be stated.
C. ELIGIBILITY INFORMATION
This section addresses the considerations
or factors that determine applicant or appli-
cation eligibility. This includes the eligi-
bility of particular types of applicant organi-
zations, any factors affecting the eligibility
of the principal investigator or project direc-
tor, and any criteria that make particular
projects ineligible. Federal agencies should
make clear whether an applicant’s failure to
meet an eligibility criterion by the time of
an application deadline will result in the
Federal awarding agency returning the ap-
plication without review or, even though an
application may be reviewed, will preclude
the Federal awarding agency from making a
Federal award. Key elements to be addressed
are:
1. Eligible Applicants—Required. Announce-
ments must clearly identify the types of en-
tities that are eligible to apply. If there are
no restrictions on eligibility, this section
may simply indicate that all potential appli-
cants are eligible. If there are restrictions on
eligibility, it is important to be clear about
the specific types of entities that are eligi-
ble, not just the types that are ineligible.
For example, if the program is limited to
nonprofit organizations subject to 26 U.S.C.
501(c)(3) of the tax code (26 U.S.C. 501(c)(3)),
the announcement should say so. Similarly,
it is better to state explicitly that Native
American tribal organizations are eligible
than to assume that they can unambiguously
infer that from a statement that nonprofit
organizations may apply. Eligibility also can
be expressed by exception, (e.g., open to all
types of domestic applicants other than indi-
viduals). This section should refer to any
portion of Section D specifying documenta-
tion that must be submitted to support an
eligibility determination (e.g., proof of
501(c)(3) status as determined by the Internal
Revenue Service or an authorizing tribal res-
olution). To the extent that any funding re-
striction in Section D.6 could affect the eli-
gibility of an applicant or project, the an-
nouncement must either restate that restric-
tion in this section or provide a cross-ref-
erence to its description in Section D.6.
2. Cost Sharing or Matching—Required. An-
nouncements must state whether there is re-
quired cost sharing, matching, or cost par-
ticipation without which an application
would be ineligible (if cost sharing is not re-
quired, the announcement must explicitly
say so). Required cost sharing may be a cer-
tain percentage or amount, or may be in the
form of contributions of specified items or
activities (e.g., provision of equipment). It is
important that the announcement be clear
about any restrictions on the types of cost
(e.g., in-kind contributions) that are accept-
able as cost sharing. Cost sharing as an eligi-
bility criterion includes requirements based
in statute or regulation, as described in
§200.306 of this Part. This section should
refer to the appropriate portion(s) of section
D. stating any pre-award requirements for
submission of letters or other documentation
to verify commitments to meet cost-sharing
requirements if a Federal award is made.
3. Other—Required, if applicable. If there are
other eligibility criteria (i.e., criteria that
have the effect of making an application or
project ineligible for Federal awards, wheth-
er referred to as ‘‘responsiveness’’ criteria,
‘‘go-no go’’ criteria, ‘‘threshold’’ criteria, or
in other ways), must be clearly stated and
must include a reference to the regulation of
requirement that describes the restriction,
as applicable. For example, if entities that
have been found to be in violation of a par-
ticular Federal statute are ineligible, it is
important to say so. This section must also
state any limit on the number of applica-
tions an applicant may submit under the an-
nouncement and make clear whether the
limitation is on the submitting organization,
individual investigator/program director, or
both. This section should also address any
eligibility criteria for beneficiaries or for
program participants other than Federal
award recipients.
D. APPLICATION AND SUBMISSION INFORMATION
1. Address to Request Application Package—
Required. Potential applicants must be told
how to get application forms, kits, or other
materials needed to apply (if this announce-
ment contains everything needed, this sec-
tion need only say so). An Internet address
where the materials can be accessed is ac-
ceptable. However, since high-speed Internet
access is not yet universally available for
downloading documents, and applicants may
have additional accessibility requirements,
there also should be a way for potential ap-
plicants to request paper copies of materials,
such as a U.S. Postal Service mailing ad-
dress, telephone or FAX number, Telephone
Device for the Deaf (TDD), Text Telephone
(TTY) number, and/or Federal Information
Relay Service (FIRS) number.
2. Content and Form of Application Submis-
sion—Required. This section must identify
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. I
the required content of an application and
the forms or formats that an applicant must
use to submit it. If any requirements are
stated elsewhere because they are general re-
quirements that apply to multiple programs
or funding opportunities, this section should
refer to where those requirements may be
found. This section also should include re-
quired forms or formats as part of the an-
nouncement or state where the applicant
may obtain them.
This section should specifically address
content and form or format requirements
for:
i. Pre-applications, letters of intent, or
white papers required or encouraged (see
Section D.4), including any limitations on
the number of pages or other formatting re-
quirements similar to those for full applica-
tions.
ii. The application as a whole. For all sub-
missions, this would include any limitations
on the number of pages, font size and type-
face, margins, paper size, number of copies,
and sequence or assembly requirements. If
electronic submission is permitted or re-
quired, this could include special require-
ments for formatting or signatures.
iii. Component pieces of the application
(e.g., if all copies of the application must
bear original signatures on the face page or
the program narrative may not exceed 10
pages). This includes any pieces that may be
submitted separately by third parties (e.g.,
references or letters confirming commit-
ments from third parties that will be con-
tributing a portion of any required cost shar-
ing).
iv. Information that successful applicants
must submit after notification of intent to
make a Federal award, but prior to a Federal
award. This could include evidence of com-
pliance with requirements relating to human
subjects or information needed to comply
with the National Environmental Policy Act
(NEPA) (42 U.S.C. 4321–4370h).
3. Unique entity identifier and System for
Award Management (SAM)—Required. This
paragraph must state clearly that each ap-
plicant (unless the applicant is an individual
or Federal awarding agency that is excepted
from those requirements under 2 CFR
25.110(b) or (c), or has an exception approved
by the Federal awarding agency under 2 CFR
25.110(d)) is required to: (i) Be registered in
SAM before submitting its application; (ii)
Provide a valid unique entity identifier in its
application; and (iii) Continue to maintain
an active SAM registration with current in-
formation at all times during which it has an
active Federal award or an application or
plan under consideration by a Federal award-
ing agency. It also must state that the Fed-
eral awarding agency may not make a Fed-
eral award to an applicant until the appli-
cant has complied with all applicable unique
entity identifier and SAM requirements and,
if an applicant has not fully complied with
the requirements by the time the Federal
awarding agency is ready to make a Federal
award, the Federal awarding agency may de-
termine that the applicant is not qualified to
receive a Federal award and use that deter-
mination as a basis for making a Federal
award to another applicant.
4. Submission Dates and Times—Required.
Announcements must identify due dates and
times for all submissions. This includes not
only the full applications but also any pre-
liminary submissions (e.g., letters of intent,
white papers, or pre-applications). It also in-
cludes any other submissions of information
before Federal award that are separate from
the full application. If the funding oppor-
tunity is a general announcement that is
open for a period of time with no specific due
dates for applications, this section should
say so. Note that the information on dates
that is included in this section also must ap-
pear with other overview information in a lo-
cation preceding the full text of the an-
nouncement (see §200.204 of this part).
5. Intergovernmental Review—Required, if ap-
plicable. If the funding opportunity is subject
to Executive Order 12372, ‘‘Intergovern-
mental Review of Federal Programs,’’ the
notice must say so and applicants must con-
tact their state’s Single Point of Contact
(SPOC) to find out about and comply with
the state’s process under Executive Order
12372, it may be useful to inform potential
applicants that the names and addresses of
the SPOCs are listed in the Office of Manage-
ment and Budget’s website.
6. Funding Restrictions—Required. Notices
must include information on funding restric-
tions in order to allow an applicant to de-
velop an application and budget consistent
with program requirements. Examples are
whether construction is an allowable activ-
ity, if there are any limitations on direct
costs such as foreign travel or equipment
purchases, and if there are any limits on in-
direct costs (or facilities and administrative
costs). Applicants must be advised if Federal
awards will not allow reimbursement of pre-
Federal award costs.
7. Other Submission Requirements— Required.
This section must address any other submis-
sion requirements not included in the other
paragraphs of this section. This might in-
clude the format of submission, i.e., paper or
electronic, for each type of required submis-
sion. Applicants should not be required to
submit in more than one format and this sec-
tion should indicate whether they may
choose whether to submit applications in
hard copy or electronically, may submit only
in hard copy, or may submit only electroni-
cally.
This section also must indicate where ap-
plications (and any pre-applications) must be
submitted if sent by postal mail, electronic
means, or hand-delivery. For postal mail
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OMB Guidance Pt. 200, App. I
1 With respect to electronic methods for
providing information about funding oppor-
tunities or accepting applicants’ submissions
of information, each Federal awarding agen-
cy is responsible for compliance with Section
508 of the Rehabilitation Act of 1973 (29
U.S.C. 794d).
submission, this must include the name of an
office, official, individual or function (e.g.,
application receipt center) and a complete
mailing address. For electronic submission,
this must include the URL or email address;
whether a password(s) is required; whether
particular software or other electronic capa-
bilities are required; what to do in the event
of system problems and a point of contact
who will be available in the event the appli-
cant experiences technical difficulties.1
E. APPLICATION REVIEW INFORMATION
1. Criteria—Required. This section must ad-
dress the criteria that the Federal awarding
agency will use to evaluate applications.
This includes the merit and other review cri-
teria that evaluators will use to judge appli-
cations, including any statutory, regulatory,
or other preferences (e.g., minority status or
Native American tribal preferences) that
will be applied in the review process. These
criteria are distinct from eligibility criteria
that are addressed before an application is
accepted for review and any program policy
or other factors that are applied during the
selection process, after the review process is
completed. The intent is to make the appli-
cation process transparent so applicants can
make informed decisions when preparing
their applications to maximize fairness of
the process. The announcement should clear-
ly describe all criteria, including any sub-
criteria. If criteria vary in importance, the
announcement should specify the relative
percentages, weights, or other means used to
distinguish among them. For statutory, reg-
ulatory, or other preferences, the announce-
ment should provide a detailed explanation
of those preferences with an explicit indica-
tion of their effect (e.g., whether they result
in additional points being assigned).
If an applicant’s proposed cost sharing will
be considered in the review process (as op-
posed to being an eligibility criterion de-
scribed in Section C.2), the announcement
must specifically address how it will be con-
sidered (e.g., to assign a certain number of
additional points to applicants who offer
cost sharing, or to break ties among applica-
tions with equivalent scores after evaluation
against all other factors). If cost sharing will
not be considered in the evaluation, the an-
nouncement should say so, so that there is
no ambiguity for potential applicants. Vague
statements that cost sharing is encouraged,
without clarification as to what that means,
are unhelpful to applicants. It also is impor-
tant that the announcement be clear about
any restrictions on the types of cost (e.g., in-
kind contributions) that are acceptable as
cost sharing.
2. Review and Selection Process—Required.
This section may vary in the level of detail
provided. The announcement must list any
program policy or other factors or elements,
other than merit criteria, that the selecting
official may use in selecting applications for
Federal award (e.g., geographical dispersion,
program balance, or diversity). The Federal
awarding agency may also include other ap-
propriate details. For example, this section
may indicate who is responsible for evalua-
tion against the merit criteria (e.g., peers ex-
ternal to the Federal awarding agency or
Federal awarding agency personnel) and/or
who makes the final selections for Federal
awards. If there is a multi-phase review proc-
ess (e.g., an external panel advising internal
Federal awarding agency personnel who
make final recommendations to the deciding
official), the announcement may describe the
phases. It also may include: the number of
people on an evaluation panel and how it op-
erates, the way reviewers are selected, re-
viewer qualifications, and the way that con-
flicts of interest are avoided. With respect to
electronic methods for providing informa-
tion about funding opportunities or accept-
ing applicants’ submissions of information,
each Federal awarding agency is responsible
for compliance with Section 508 of the Reha-
bilitation Act of 1973 (29 U.S.C. 794d).
In addition, if the Federal awarding agency
permits applicants to nominate suggested re-
viewers of their applications or suggest those
they feel may be inappropriate due to a con-
flict of interest, that information should be
included in this section.
3. For any Federal award under a notice of
funding opportunity, if the Federal awarding
agency anticipates that the total Federal
share will be greater than the simplified ac-
quisition threshold on any Federal award
under a notice of funding opportunity may
include, over the period of performance, this
section must also inform applicants:
i. That the Federal awarding agency, prior
to making a Federal award with a total
amount of Federal share greater than the
simplified acquisition threshold, is required
to review and consider any information
about the applicant that is in the designated
integrity and performance system accessible
through SAM (currently FAPIIS) (see 41
U.S.C. 2313);
ii. That an applicant, at its option, may re-
view information in the designated integrity
and performance systems accessible through
SAM and comment on any information about
itself that a Federal awarding agency pre-
viously entered and is currently in the des-
ignated integrity and performance system
accessible through SAM;
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. I
iii. That the Federal awarding agency will
consider any comments by the applicant, in
addition to the other information in the des-
ignated integrity and performance system,
in making a judgment about the applicant’s
integrity, business ethics, and record of per-
formance under Federal awards when com-
pleting the review of risk posed by appli-
cants as described in §200.206.
4. Anticipated Announcement and Federal
Award Dates—Optional. This section is in-
tended to provide applicants with informa-
tion they can use for planning purposes. If
there is a single application deadline fol-
lowed by the simultaneous review of all ap-
plications, the Federal awarding agency can
include in this section information about the
anticipated dates for announcing or noti-
fying successful and unsuccessful applicants
and for having Federal awards in place. If ap-
plications are received and evaluated on a
‘‘rolling’’ basis at different times during an
extended period, it may be appropriate to
give applicants an estimate of the time need-
ed to process an application and notify the
applicant of the Federal awarding agency’s
decision.
F. FEDERAL AWARD ADMINISTRATION
INFORMATION
1. Federal Award Notices—Required. This
section must address what a successful appli-
cant can expect to receive following selec-
tion. If the Federal awarding agency’s prac-
tice is to provide a separate notice stating
that an application has been selected before
it actually makes the Federal award, this
section would be the place to indicate that
the letter is not an authorization to begin
performance (to the extent that it allows
charging to Federal awards of pre-award
costs at the non-Federal entity’s own risk).
This section should indicate that the notice
of Federal award signed by the grants officer
(or equivalent) is the authorizing document,
and whether it is provided through postal
mail or by electronic means and to whom. It
also may address the timing, form, and con-
tent of notifications to unsuccessful appli-
cants. See also §200.211.
2. Administrative and National Policy Re-
quirements—Required. This section must iden-
tify the usual administrative and national
policy requirements the Federal awarding
agency’s Federal awards may include. Pro-
viding this information lets a potential ap-
plicant identify any requirements with
which it would have difficulty complying if
its application is successful. In those cases,
early notification about the requirements al-
lows the potential applicant to decide not to
apply or to take needed actions before re-
ceiving the Federal award. The announce-
ment need not include all of the terms and
conditions of the Federal award, but may
refer to a document (with information about
how to obtain it) or Internet site where ap-
plicants can see the terms and conditions. If
this funding opportunity will lead to Federal
awards with some special terms and condi-
tions that differ from the Federal awarding
agency’s usual (sometimes called ‘‘general’’)
terms and conditions, this section should
highlight those special terms and conditions.
Doing so will alert applicants that have re-
ceived Federal awards from the Federal
awarding agency previously and might not
otherwise expect different terms and condi-
tions. For the same reason, the announce-
ment should inform potential applicants
about special requirements that could apply
to particular Federal awards after the review
of applications and other information, based
on the particular circumstances of the effort
to be supported (e.g., if human subjects were
to be involved or if some situations may jus-
tify special terms on intellectual property,
data sharing or security requirements).
3. Reporting—Required. This section must
include general information about the type
(e.g., financial or performance), frequency,
and means of submission (paper or elec-
tronic) of post-Federal award reporting re-
quirements. Highlight any special reporting
requirements for Federal awards under this
funding opportunity that differ (e.g., by re-
port type, frequency, form/format, or cir-
cumstances for use) from what the Federal
awarding agency’s Federal awards usually
require. Federal awarding agencies must also
describe in this section all relevant require-
ments such as those at 2 CFR 180.335 and
180.350.
If the Federal share of any Federal award
may include more than $500,000 over the pe-
riod of performance, this section must in-
form potential applicants about the post
award reporting requirements reflected in
appendix XII to this part.
G. FEDERAL AWARDING AGENCY CONTACT(S)—
REQUIRED
The announcement must give potential ap-
plicants a point(s) of contact for answering
questions or helping with problems while the
funding opportunity is open. The intent of
this requirement is to be as helpful as pos-
sible to potential applicants, so the Federal
awarding agency should consider approaches
such as giving:
i. Points of contact who may be reached in
multiple ways (e.g., by telephone, FAX, and/
or email, as well as regular mail).
ii. A fax or email address that multiple
people access, so that someone will respond
even if others are unexpectedly absent dur-
ing critical periods.
iii. Different contacts for distinct kinds of
help (e.g., one for questions of programmatic
content and a second for administrative
questions).
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OMB Guidance Pt. 200, App. II
H. OTHER INFORMATION—OPTIONAL
This section may include any additional
information that will assist a potential ap-
plicant. For example, the section might:
i. Indicate whether this is a new program
or a one-time initiative.
ii. Mention related programs or other up-
coming or ongoing Federal awarding agency
funding opportunities for similar activities.
iii. Include current Internet addresses for
Federal awarding agency Web sites that may
be useful to an applicant in understanding
the program.
iv. Alert applicants to the need to identify
proprietary information and inform them
about the way the Federal awarding agency
will handle it.
v. Include certain routine notices to appli-
cants (e.g., that the Federal Government is
not obligated to make any Federal award as
a result of the announcement or that only
grants officers can bind the Federal Govern-
ment to the expenditure of funds).
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 43310, July 22, 2015; 85 FR 49575, Aug. 13,
2020]
APPENDIX II TO PART 200—CONTRACT
PROVISIONS FOR NON-FEDERAL ENTI-
TY CONTRACTS UNDER FEDERAL
AWARDS
In addition to other provisions required by
the Federal agency or non-Federal entity, all
contracts made by the non-Federal entity
under the Federal award must contain provi-
sions covering the following, as applicable.
(A) Contracts for more than the simplified
acquisition threshold, which is the inflation
adjusted amount determined by the Civilian
Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils)
as authorized by 41 U.S.C. 1908, must address
administrative, contractual, or legal rem-
edies in instances where contractors violate
or breach contract terms, and provide for
such sanctions and penalties as appropriate.
(B) All contracts in excess of $10,000 must
address termination for cause and for con-
venience by the non-Federal entity including
the manner by which it will be effected and
the basis for settlement.
(C) Equal Employment Opportunity. Ex-
cept as otherwise provided under 41 CFR
Part 60, all contracts that meet the defini-
tion of ‘‘federally assisted construction con-
tract’’ in 41 CFR Part 60–1.3 must include the
equal opportunity clause provided under 41
CFR 60–1.4(b), in accordance with Executive
Order 11246, ‘‘Equal Employment Oppor-
tunity’’ (30 FR 12319, 12935, 3 CFR Part, 1964–
1965 Comp., p. 339), as amended by Executive
Order 11375, ‘‘Amending Executive Order
11246 Relating to Equal Employment Oppor-
tunity,’’ and implementing regulations at 41
CFR part 60, ‘‘Office of Federal Contract
Compliance Programs, Equal Employment
Opportunity, Department of Labor.’’
(D) Davis-Bacon Act, as amended (40 U.S.C.
3141–3148). When required by Federal program
legislation, all prime construction contracts
in excess of $2,000 awarded by non-Federal
entities must include a provision for compli-
ance with the Davis-Bacon Act (40 U.S.C.
3141–3144, and 3146–3148) as supplemented by
Department of Labor regulations (29 CFR
Part 5, ‘‘Labor Standards Provisions Appli-
cable to Contracts Covering Federally Fi-
nanced and Assisted Construction’’). In ac-
cordance with the statute, contractors must
be required to pay wages to laborers and me-
chanics at a rate not less than the prevailing
wages specified in a wage determination
made by the Secretary of Labor. In addition,
contractors must be required to pay wages
not less than once a week. The non-Federal
entity must place a copy of the current pre-
vailing wage determination issued by the De-
partment of Labor in each solicitation. The
decision to award a contract or subcontract
must be conditioned upon the acceptance of
the wage determination. The non-Federal en-
tity must report all suspected or reported
violations to the Federal awarding agency.
The contracts must also include a provision
for compliance with the Copeland ‘‘Anti-
Kickback’’ Act (40 U.S.C. 3145), as supple-
mented by Department of Labor regulations
(29 CFR Part 3, ‘‘Contractors and Sub-
contractors on Public Building or Public
Work Financed in Whole or in Part by Loans
or Grants from the United States’’). The Act
provides that each contractor or sub-
recipient must be prohibited from inducing,
by any means, any person employed in the
construction, completion, or repair of public
work, to give up any part of the compensa-
tion to which he or she is otherwise entitled.
The non-Federal entity must report all sus-
pected or reported violations to the Federal
awarding agency.
(E) Contract Work Hours and Safety
Standards Act (40 U.S.C. 3701–3708). Where
applicable, all contracts awarded by the non-
Federal entity in excess of $100,000 that in-
volve the employment of mechanics or labor-
ers must include a provision for compliance
with 40 U.S.C. 3702 and 3704, as supplemented
by Department of Labor regulations (29 CFR
Part 5). Under 40 U.S.C. 3702 of the Act, each
contractor must be required to compute the
wages of every mechanic and laborer on the
basis of a standard work week of 40 hours.
Work in excess of the standard work week is
permissible provided that the worker is com-
pensated at a rate of not less than one and a
half times the basic rate of pay for all hours
worked in excess of 40 hours in the work
week. The requirements of 40 U.S.C. 3704 are
applicable to construction work and provide
that no laborer or mechanic must be re-
quired to work in surroundings or under
working conditions which are unsanitary,
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. III
hazardous or dangerous. These requirements
do not apply to the purchases of supplies or
materials or articles ordinarily available on
the open market, or contracts for transpor-
tation or transmission of intelligence.
(F) Rights to Inventions Made Under a
Contract or Agreement. If the Federal award
meets the definition of ‘‘funding agreement’’
under 37 CFR §401.2 (a) and the recipient or
subrecipient wishes to enter into a contract
with a small business firm or nonprofit orga-
nization regarding the substitution of par-
ties, assignment or performance of experi-
mental, developmental, or research work
under that ‘‘funding agreement,’’ the recipi-
ent or subrecipient must comply with the re-
quirements of 37 CFR Part 401, ‘‘Rights to In-
ventions Made by Nonprofit Organizations
and Small Business Firms Under Govern-
ment Grants, Contracts and Cooperative
Agreements,’’ and any implementing regula-
tions issued by the awarding agency.
(G) Clean Air Act (42 U.S.C. 7401–7671q.) and
the Federal Water Pollution Control Act (33
U.S.C. 1251–1387), as amended—Contracts and
subgrants of amounts in excess of $150,000
must contain a provision that requires the
non-Federal award to agree to comply with
all applicable standards, orders or regula-
tions issued pursuant to the Clean Air Act
(42 U.S.C. 7401–7671q) and the Federal Water
Pollution Control Act as amended (33 U.S.C.
1251–1387). Violations must be reported to the
Federal awarding agency and the Regional
Office of the Environmental Protection
Agency (EPA).
(H) Debarment and Suspension (Executive
Orders 12549 and 12689)—A contract award
(see 2 CFR 180.220) must not be made to par-
ties listed on the governmentwide exclusions
in the System for Award Management
(SAM), in accordance with the OMB guide-
lines at 2 CFR 180 that implement Executive
Orders 12549 (3 CFR part 1986 Comp., p. 189)
and 12689 (3 CFR part 1989 Comp., p. 235),
‘‘Debarment and Suspension.’’ SAM Exclu-
sions contains the names of parties debarred,
suspended, or otherwise excluded by agen-
cies, as well as parties declared ineligible
under statutory or regulatory authority
other than Executive Order 12549.
(I) Byrd Anti-Lobbying Amendment (31
U.S.C. 1352)—Contractors that apply or bid
for an award exceeding $100,000 must file the
required certification. Each tier certifies to
the tier above that it will not and has not
used Federal appropriated funds to pay any
person or organization for influencing or at-
tempting to influence an officer or employee
of any agency, a member of Congress, officer
or employee of Congress, or an employee of a
member of Congress in connection with ob-
taining any Federal contract, grant or any
other award covered by 31 U.S.C. 1352. Each
tier must also disclose any lobbying with
non-Federal funds that takes place in con-
nection with obtaining any Federal award.
Such disclosures are forwarded from tier to
tier up to the non-Federal award.
(J) See §200.323.
(K) See §200.216.
(L) See §200.322.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75888, Dec. 19, 2014; 85 FR 49577, Aug. 13,
2020]
APPENDIX III TO PART 200—INDIRECT
(F&A) COSTS IDENTIFICATION AND
ASSIGNMENT, AND RATE DETERMINA-
TION FOR INSTITUTIONS OF HIGHER
EDUCATION (IHES)
A. GENERAL
This appendix provides criteria for identi-
fying and computing indirect (or indirect
(F&A)) rates at IHEs (institutions). Indirect
(F&A) costs are those that are incurred for
common or joint objectives and therefore
cannot be identified readily and specifically
with a particular sponsored project, an in-
structional activity, or any other institu-
tional activity. See subsection B.1 for a dis-
cussion of the components of indirect (F&A)
costs.
1. Major Functions of an Institution
Refers to instruction, organized research,
other sponsored activities and other institu-
tional activities as defined in this section:
a. Instruction means the teaching and
training activities of an institution. Except
for research training as provided in sub-
section b, this term includes all teaching and
training activities, whether they are offered
for credits toward a degree or certificate or
on a non-credit basis, and whether they are
offered through regular academic depart-
ments or separate divisions, such as a sum-
mer school division or an extension division.
Also considered part of this major function
are departmental research, and, where
agreed to, university research.
(1) Sponsored instruction and training means
specific instructional or training activity es-
tablished by grant, contract, or cooperative
agreement. For purposes of the cost prin-
ciples, this activity may be considered a
major function even though an institution’s
accounting treatment may include it in the
instruction function.
(2) Departmental research means research,
development and scholarly activities that
are not organized research and, con-
sequently, are not separately budgeted and
accounted for. Departmental research, for
purposes of this document, is not considered
as a major function, but as a part of the in-
struction function of the institution.
(3) Only mandatory cost sharing or cost
sharing specifically committed in the project
budget must be included in the organized re-
search base for computing the indirect (F&A)
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OMB Guidance Pt. 200, App. III
cost rate or reflected in any allocation of in-
direct costs. Salary costs above statutory
limits are not considered cost sharing.
b. Organized research means all research
and development activities of an institution
that are separately budgeted and accounted
for. It includes:
(1) Sponsored research means all research
and development activities that are spon-
sored by Federal and non-Federal agencies
and organizations. This term includes activi-
ties involving the training of individuals in
research techniques (commonly called re-
search training) where such activities utilize
the same facilities as other research and de-
velopment activities and where such activi-
ties are not included in the instruction func-
tion.
(2) University research means all research
and development activities that are sepa-
rately budgeted and accounted for by the in-
stitution under an internal application of in-
stitutional funds. University research, for
purposes of this document, must be com-
bined with sponsored research under the
function of organized research.
c. Other sponsored activities means programs
and projects financed by Federal and non-
Federal agencies and organizations which in-
volve the performance of work other than in-
struction and organized research. Examples
of such programs and projects are health
service projects and community service pro-
grams. However, when any of these activities
are undertaken by the institution without
outside support, they may be classified as
other institutional activities.
d. Other institutional activities means all ac-
tivities of an institution except for instruc-
tion, departmental research, organized re-
search, and other sponsored activities, as de-
fined in this section; indirect (F&A) cost ac-
tivities identified in this Appendix para-
graph B, Identification and assignment of in-
direct (F&A) costs; and specialized services
facilities described in §200.468 of this part.
2. Criteria for Distribution
a. Base period. A base period for distribu-
tion of indirect (F&A) costs is the period
during which the costs are incurred. The
base period normally should coincide with
the fiscal year established by the institution,
but in any event the base period should be so
selected as to avoid inequities in the dis-
tribution of costs.
b. Need for cost groupings. The overall ob-
jective of the indirect (F&A) cost allocation
process is to distribute the indirect (F&A)
costs described in Section B, Identification
and assignment of indirect (F&A) costs, to
the major functions of the institution in pro-
portions reasonably consistent with the na-
ture and extent of their use of the institu-
tion’s resources. In order to achieve this ob-
jective, it may be necessary to provide for
selective distribution by establishing sepa-
rate groupings of cost within one or more of
the indirect (F&A) cost categories referred
to in subsection B.1. In general, the cost
groupings established within a category
should constitute, in each case, a pool of
those items of expense that are considered to
be of like nature in terms of their relative
contribution to (or degree of remoteness
from) the particular cost objectives to which
distribution is appropriate. Cost groupings
should be established considering the general
guides provided in subsection c of this sec-
tion. Each such pool or cost grouping should
then be distributed individually to the re-
lated cost objectives, using the distribution
base or method most appropriate in light of
the guidelines set forth in subsection d of
this section.
c. General considerations on cost groupings.
The extent to which separate cost groupings
and selective distribution would be appro-
priate at an institution is a matter of judg-
ment to be determined on a case-by-case
basis. Typical situations which may warrant
the establishment of two or more separate
cost groupings (based on account classifica-
tion or analysis) within an indirect (F&A)
cost category include but are not limited to
the following:
(1) If certain items or categories of expense
relate solely to one of the major functions of
the institution or to less than all functions,
such expenses should be set aside as a sepa-
rate cost grouping for direct assignment or
selective allocation in accordance with the
guides provided in subsections b and d.
(2) If any types of expense ordinarily treat-
ed as general administration or depart-
mental administration are charged to Fed-
eral awards as direct costs, expenses applica-
ble to other activities of the institution
when incurred for the same purposes in like
circumstances must, through separate cost
groupings, be excluded from the indirect
(F&A) costs allocable to those Federal
awards and included in the direct cost of
other activities for cost allocation purposes.
(3) If it is determined that certain expenses
are for the support of a service unit or facil-
ity whose output is susceptible of measure-
ment on a workload or other quantitative
basis, such expenses should be set aside as a
separate cost grouping for distribution on
such basis to organized research, instruc-
tional, and other activities at the institution
or within the department.
(4) If activities provide their own pur-
chasing, personnel administration, building
maintenance or similar service, the distribu-
tion of general administration and general
expenses, or operation and maintenance ex-
penses to such activities should be accom-
plished through cost groupings which include
only that portion of central indirect (F&A)
costs (such as for overall management)
which are properly allocable to such activi-
ties.
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. III
(5) If the institution elects to treat fringe
benefits as indirect (F&A) charges, such
costs should be set aside as a separate cost
grouping for selective distribution to related
cost objectives.
(6) The number of separate cost groupings
within a category should be held within
practical limits, after taking into consider-
ation the materiality of the amounts in-
volved and the degree of precision attainable
through less selective methods of distribu-
tion.
d. Selection of distribution method.
(1) Actual conditions must be taken into
account in selecting the method or base to
be used in distributing individual cost
groupings. The essential consideration in se-
lecting a base is that it be the one best suit-
ed for assigning the pool of costs to cost ob-
jectives in accordance with benefits derived;
with a traceable cause-and-effect relation-
ship; or with logic and reason, where neither
benefit nor a cause-and-effect relationship is
determinable.
(2) If a cost grouping can be identified di-
rectly with the cost objective benefitted, it
should be assigned to that cost objective.
(3) If the expenses in a cost grouping are
more general in nature, the distribution may
be based on a cost analysis study which re-
sults in an equitable distribution of the
costs. Such cost analysis studies may take
into consideration weighting factors, popu-
lation, or space occupied if appropriate. Cost
analysis studies, however, must (a) be appro-
priately documented in sufficient detail for
subsequent review by the cognizant agency
for indirect costs, (b) distribute the costs to
the related cost objectives in accordance
with the relative benefits derived, (c) be sta-
tistically sound, (d) be performed specifically
at the institution at which the results are to
be used, and (e) be reviewed periodically, but
not less frequently than rate negotiations,
updated if necessary, and used consistently.
Any assumptions made in the study must be
stated and explained. The use of cost anal-
ysis studies and periodic changes in the
method of cost distribution must be fully
justified.
(4) If a cost analysis study is not per-
formed, or if the study does not result in an
equitable distribution of the costs, the dis-
tribution must be made in accordance with
the appropriate base cited in Section B, un-
less one of the following conditions is met:
(a) It can be demonstrated that the use of
a different base would result in a more equi-
table allocation of the costs, or that a more
readily available base would not increase the
costs charged to Federal awards, or
(b) The institution qualifies for, and elects
to use, the simplified method for computing
indirect (F&A) cost rates described in Sec-
tion D.
(5) Notwithstanding subsection (3), effec-
tive July 1, 1998, a cost analysis or base other
than that in Section B must not be used to
distribute utility or student services costs.
Instead, subsection B.4.c, may be used in the
recovery of utility costs.
e. Order of distribution.
(1) Indirect (F&A) costs are the broad cat-
egories of costs discussed in Section B.1.
(2) Depreciation, interest expenses, oper-
ation and maintenance expenses, and general
administrative and general expenses should
be allocated in that order to the remaining
indirect (F&A) cost categories as well as to
the major functions and specialized service
facilities of the institution. Other cost cat-
egories may be allocated in the order deter-
mined to be most appropriate by the institu-
tions. When cross allocation of costs is made
as provided in subsection (3), this order of al-
location does not apply.
(3) Normally an indirect (F&A) cost cat-
egory will be considered closed once it has
been allocated to other cost objectives, and
costs may not be subsequently allocated to
it. However, a cross allocation of costs be-
tween two or more indirect (F&A) cost cat-
egories may be used if such allocation will
result in a more equitable allocation of
costs. If a cross allocation is used, an appro-
priate modification to the composition of
the indirect (F&A) cost categories described
in Section B is required.
B. IDENTIFICATION AND ASSIGNMENT OF
INDIRECT (F&A) COSTS
1. Definition of Facilities and Administration
See §200.414 which provides the basis for
these indirect cost requirements.
2. Depreciation
a. The expenses under this heading are the
portion of the costs of the institution’s
buildings, capital improvements to land and
buildings, and equipment which are com-
puted in accordance with §200.436.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated in
the following manner:
(1) Depreciation on buildings used exclu-
sively in the conduct of a single function,
and on capital improvements and equipment
used in such buildings, must be assigned to
that function.
(2) Depreciation on buildings used for more
than one function, and on capital improve-
ments and equipment used in such buildings,
must be allocated to the individual functions
performed in each building on the basis of
usable square feet of space, excluding com-
mon areas such as hallways, stairwells, and
rest rooms.
(3) Depreciation on buildings, capital im-
provements and equipment related to space
(e.g., individual rooms, laboratories) used
jointly by more than one function (as deter-
mined by the users of the space) must be
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OMB Guidance Pt. 200, App. III
treated as follows. The cost of each jointly
used unit of space must be allocated to bene-
fitting functions on the basis of:
(a) The employee full-time equivalents
(FTEs) or salaries and wages of those indi-
vidual functions benefitting from the use of
that space; or
(b) Institution-wide employee FTEs or sal-
aries and wages applicable to the benefitting
major functions (see Section A.1) of the in-
stitution.
(4) Depreciation on certain capital im-
provements to land, such as paved parking
areas, fences, sidewalks, and the like, not in-
cluded in the cost of buildings, must be allo-
cated to user categories of students and em-
ployees on a full-time equivalent basis. The
amount allocated to the student category
must be assigned to the instruction function
of the institution. The amount allocated to
the employee category must be further allo-
cated to the major functions of the institu-
tion in proportion to the salaries and wages
of all employees applicable to those func-
tions.
3. Interest
Interest on debt associated with certain
buildings, equipment and capital improve-
ments, as defined in §200.449, must be classi-
fied as an expenditure under the category
Facilities. These costs must be allocated in
the same manner as the depreciation on the
buildings, equipment and capital improve-
ments to which the interest relates.
4. Operation and Maintenance Expenses
a. The expenses under this heading are
those that have been incurred for the admin-
istration, supervision, operation, mainte-
nance, preservation, and protection of the in-
stitution’s physical plant. They include ex-
penses normally incurred for such items as
janitorial and utility services; repairs and
ordinary or normal alterations of buildings,
furniture and equipment; care of grounds;
maintenance and operation of buildings and
other plant facilities; security; earthquake
and disaster preparedness; environmental
safety; hazardous waste disposal; property,
liability and all other insurance relating to
property; space and capital leasing; facility
planning and management; and central re-
ceiving. The operation and maintenance ex-
pense category should also include its allo-
cable share of fringe benefit costs, deprecia-
tion, and interest costs.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated in
the same manner as described in subsection
2.b for depreciation.
c. A utility cost adjustment of up to 1.3
percentage points may be included in the ne-
gotiated indirect cost rate of the IHE for or-
ganized research, per the computation alter-
natives in paragraphs (c)(1) and (2) of this
section:
(1) Where space is devoted to a single func-
tion and metering allows unambiguous meas-
urement of usage related to that space, costs
must be assigned to the function located in
that space.
(2) Where space is allocated to different
functions and metering does not allow unam-
biguous measurement of usage by function,
costs must be allocated as follows:
(i) Utilities costs should be apportioned to
functions in the same manner as deprecia-
tion, based on the calculated difference be-
tween the site or building actual square foot-
age for monitored research laboratory space
(site, building, floor, or room), and a sepa-
rate calculation prepared by the IHE using
the ‘‘effective square footage’’ described in
subsection (c)(2)(ii) of this section.
(ii) ‘‘Effective square footage’’ allocated to
research laboratory space must be calculated
as the actual square footage times the rel-
ative energy utilization index (REUI) posted
on the OMB Web site at the time of a rate
determination.
A. This index is the ratio of a laboratory
energy use index (lab EUI) to the cor-
responding index for overall average college
or university space (college EUI).
B. In July 2012, values for these two indices
(taken respectively from the Lawrence
Berkeley Laboratory ‘‘Labs for the 21st Cen-
tury’’ benchmarking tool and the US Depart-
ment of Energy ‘‘Buildings Energy
Databook’’ and were 310 kBtu/sq ft-yr. and
155 kBtu/sq ft-yr., so that the adjustment
ratio is 2.0 by this methodology. To retain
currency, OMB will adjust the EUI numbers
from time to time (no more often than annu-
ally nor less often than every 5 years), using
reliable and publicly disclosed data. Current
values of both the EUIs and the REUI will be
posted on the OMB website.
5. General Administration and General Expenses
a. The expenses under this heading are
those that have been incurred for the general
executive and administrative offices of edu-
cational institutions and other expenses of a
general character which do not relate solely
to any major function of the institution; i.e.,
solely to (1) instruction, (2) organized re-
search, (3) other sponsored activities, or (4)
other institutional activities. The general
administration and general expense category
should also include its allocable share of
fringe benefit costs, operation and mainte-
nance expense, depreciation, and interest
costs. Examples of general administration
and general expenses include: Those expenses
incurred by administrative offices that serve
the entire university system of which the in-
stitution is a part; central offices of the in-
stitution such as the President’s or
Chancellor’s office, the offices for institu-
tion-wide financial management, business
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. III
services, budget and planning, personnel
management, and safety and risk manage-
ment; the office of the General Counsel; and
the operations of the central administrative
management information systems. General
administration and general expenses must
not include expenses incurred within non-
university-wide deans’ offices, academic de-
partments, organized research units, or simi-
lar organizational units. (See subsection 6.)
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be grouped first
according to common major functions of the
institution to which they render services or
provide benefits. The aggregate expenses of
each group must then be allocated to serv-
iced or benefitted functions on the modified
total cost basis. Modified total costs consist
of the same elements as those in Section C.2.
When an activity included in this indirect
(F&A) cost category provides a service or
product to another institution or organiza-
tion, an appropriate adjustment must be
made to either the expenses or the basis of
allocation or both, to assure a proper alloca-
tion of costs.
6. Departmental Administration Expenses
a. The expenses under this heading are
those that have been incurred for adminis-
trative and supporting services that benefit
common or joint departmental activities or
objectives in academic deans’ offices, aca-
demic departments and divisions, and orga-
nized research units. Organized research
units include such units as institutes, study
centers, and research centers. Departmental
administration expenses are subject to the
following limitations.
(1) Academic deans’ offices. Salaries and
operating expenses are limited to those at-
tributable to administrative functions.
(2) Academic departments:
(a) Salaries and fringe benefits attrib-
utable to the administrative work (including
bid and proposal preparation) of faculty (in-
cluding department heads) and other profes-
sional personnel conducting research and/or
instruction, must be allowed at a rate of 3.6
percent of modified total direct costs. This
category does not include professional busi-
ness or professional administrative officers.
This allowance must be added to the com-
putation of the indirect (F&A) cost rate for
major functions in Section C; the expenses
covered by the allowance must be excluded
from the departmental administration cost
pool. No documentation is required to sup-
port this allowance.
(b) Other administrative and supporting
expenses incurred within academic depart-
ments are allowable provided they are treat-
ed consistently in like circumstances. This
would include expenses such as the salaries
of secretarial and clerical staffs, the salaries
of administrative officers and assistants,
travel, office supplies, stockrooms, and the
like.
(3) Other fringe benefit costs applicable to
the salaries and wages included in sub-
sections (1) and (2) are allowable, as well as
an appropriate share of general administra-
tion and general expenses, operation and
maintenance expenses, and depreciation.
(4) Federal agencies may authorize reim-
bursement of additional costs for department
heads and faculty only in exceptional cases
where an institution can demonstrate undue
hardship or detriment to project perform-
ance.
b. The following guidelines apply to the de-
termination of departmental administrative
costs as direct or indirect (F&A) costs.
(1) In developing the departmental admin-
istration cost pool, special care should be ex-
ercised to ensure that costs incurred for the
same purpose in like circumstances are
treated consistently as either direct or indi-
rect (F&A) costs. For example, salaries of
technical staff, laboratory supplies (e.g.,
chemicals), telephone toll charges, animals,
animal care costs, computer costs, travel
costs, and specialized shop costs must be
treated as direct costs wherever identifiable
to a particular cost objective. Direct charg-
ing of these costs may be accomplished
through specific identification of individual
costs to benefitting cost objectives, or
through recharge centers or specialized serv-
ice facilities, as appropriate under the cir-
cumstances. See §§200.413(c) and 200.468.
(2) Items such as office supplies, postage,
local telephone costs, and memberships must
normally be treated as indirect (F&A) costs.
c. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated as
follows:
(1) The administrative expenses of the
dean’s office of each college and school must
be allocated to the academic departments
within that college or school on the modified
total cost basis.
(2) The administrative expenses of each
academic department, and the department’s
share of the expenses allocated in subsection
(1) must be allocated to the appropriate func-
tions of the department on the modified
total cost basis.
7. Sponsored Projects Administration
a. The expenses under this heading are lim-
ited to those incurred by a separate organi-
zation(s) established primarily to administer
sponsored projects, including such functions
as grant and contract administration (Fed-
eral and non-Federal), special security, pur-
chasing, personnel, administration, and edit-
ing and publishing of research and other re-
ports. They include the salaries and expenses
of the head of such organization, assistants,
and immediate staff, together with the sala-
ries and expenses of personnel engaged in
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supporting activities maintained by the or-
ganization, such as stock rooms, print shops,
and the like. This category also includes an
allocable share of fringe benefit costs, gen-
eral administration and general expenses,
operation and maintenance expenses, and de-
preciation. Appropriate adjustments will be
made for services provided to other functions
or organizations.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated to
the major functions of the institution under
which the sponsored projects are conducted
on the basis of the modified total cost of
sponsored projects.
c. An appropriate adjustment must be
made to eliminate any duplicate charges to
Federal awards when this category includes
similar or identical activities as those in-
cluded in the general administration and
general expense category or other indirect
(F&A) cost items, such as accounting, pro-
curement, or personnel administration.
8. Library Expenses
a. The expenses under this heading are
those that have been incurred for the oper-
ation of the library, including the cost of
books and library materials purchased for
the library, less any items of library income
that qualify as applicable credits under
§200.406. The library expense category should
also include the fringe benefits applicable to
the salaries and wages included therein, an
appropriate share of general administration
and general expense, operation and mainte-
nance expense, and depreciation. Costs in-
curred in the purchases of rare books (mu-
seum-type books) with no value to Federal
awards should not be allocated to them.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated
first on the basis of primary categories of
users, including students, professional em-
ployees, and other users.
(1) The student category must consist of
full-time equivalent students enrolled at the
institution, regardless of whether they earn
credits toward a degree or certificate.
(2) The professional employee category
must consist of all faculty members and
other professional employees of the institu-
tion, on a full-time equivalent basis. This
category may also include post-doctorate
fellows and graduate students.
(3) The other users category must consist
of a reasonable factor as determined by insti-
tutional records to account for all other
users of library facilities.
c. Amount allocated in paragraph b of this
section must be assigned further as follows:
(1) The amount in the student category
must be assigned to the instruction function
of the institution.
(2) The amount in the professional em-
ployee category must be assigned to the
major functions of the institution in propor-
tion to the salaries and wages of all faculty
members and other professional employees
applicable to those functions.
(3) The amount in the other users category
must be assigned to the other institutional
activities function of the institution.
9. Student Administration and Services
a. The expenses under this heading are
those that have been incurred for the admin-
istration of student affairs and for services
to students, including expenses of such ac-
tivities as deans of students, admissions, reg-
istrar, counseling and placement services,
student advisers, student health and infir-
mary services, catalogs, and commence-
ments and convocations. The salaries of
members of the academic staff whose respon-
sibilities to the institution require adminis-
trative work that benefits sponsored projects
may also be included to the extent that the
portion charged to student administration is
determined in accordance with subpart E of
this Part. This expense category also in-
cludes the fringe benefit costs applicable to
the salaries and wages included therein, an
appropriate share of general administration
and general expenses, operation and mainte-
nance, interest expense, and depreciation.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in
this category must be allocated to the in-
struction function, and subsequently to Fed-
eral awards in that function.
10. Offset for Indirect (F&A) Expenses Other-
wise Provided for by the Federal Govern-
ment
a. The items to be accumulated under this
heading are the reimbursements and other
payments from the Federal Government
which are made to the institution to support
solely, specifically, and directly, in whole or
in part, any of the administrative or service
activities described in subsections 2 through
9. b. The items in this group must be treated
as a credit to the affected individual indirect
(F&A) cost category before that category is
allocated to benefitting functions.
C. DETERMINATION AND APPLICATION OF
INDIRECT (F&A) COST RATE OR RATES
1. Indirect (F&A) Cost Pools
a. (1) Subject to subsection b, the separate
categories of indirect (F&A) costs allocated
to each major function of the institution as
prescribed in Section B, must be aggregated
and treated as a common pool for that func-
tion. The amount in each pool must be di-
vided by the distribution base described in
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subsection 2 to arrive at a single indirect
(F&A) cost rate for each function.
(2) The rate for each function is used to
distribute indirect (F&A) costs to individual
Federal awards of that function. Since a
common pool is established for each major
function of the institution, a separate indi-
rect (F&A) cost rate would be established for
each of the major functions described in Sec-
tion A.1 under which Federal awards are car-
ried out.
(3) Each institution’s indirect (F&A) cost
rate process must be appropriately designed
to ensure that Federal sponsors do not in
any way subsidize the indirect (F&A) costs of
other sponsors, specifically activities spon-
sored by industry and foreign governments.
Accordingly, each allocation method used to
identify and allocate the indirect (F&A) cost
pools, as described in Sections A.2 and B.2
through B.9, must contain the full amount of
the institution’s modified total costs or
other appropriate units of measurement used
to make the computations. In addition, the
final rate distribution base (as defined in
subsection 2) for each major function (orga-
nized research, instruction, etc., as described
in Section A.1 functions of an institution)
must contain all the programs or activities
which utilize the indirect (F&A) costs allo-
cated to that major function. At the time an
indirect (F&A) cost proposal is submitted to
a cognizant agency for indirect costs, each
institution must describe the process it uses
to ensure that Federal funds are not used to
subsidize industry and foreign government
funded programs.
2. The Distribution Basis
Indirect (F&A) costs must be distributed to
applicable Federal awards and other benefit-
ting activities within each major function
(see section A.1) on the basis of modified
total direct costs (MTDC), consisting of all
salaries and wages, fringe benefits, materials
and supplies, services, travel, and up to the
first $25,000 of each subaward (regardless of
the period covered by the subaward). MTDC
is defined in §200.1. For this purpose, an indi-
rect (F&A) cost rate should be determined
for each of the separate indirect (F&A) cost
pools developed pursuant to subsection 1.
The rate in each case should be stated as the
percentage which the amount of the par-
ticular indirect (F&A) cost pool is of the
modified total direct costs identified with
such pool.
3. Negotiated Lump Sum for Indirect (F&A)
Costs
A negotiated fixed amount in lieu of indi-
rect (F&A) costs may be appropriate for self-
contained, off-campus, or primarily subcon-
tracted activities where the benefits derived
from an institution’s indirect (F&A) services
cannot be readily determined. Such nego-
tiated indirect (F&A) costs will be treated as
an offset before allocation to instruction, or-
ganized research, other sponsored activities,
and other institutional activities. The base
on which such remaining expenses are allo-
cated should be appropriately adjusted.
4. Predetermined Rates for Indirect (F&A) Costs
Public Law 87–638 (76 Stat. 437) as amended
(41 U.S.C. 4708) authorizes the use of pre-
determined rates in determining the ‘‘indi-
rect costs’’ (indirect (F&A) costs) applicable
under research agreements with educational
institutions. The stated objectives of the law
are to simplify the administration of cost-
type research and development contracts (in-
cluding grants) with educational institu-
tions, to facilitate the preparation of their
budgets, and to permit more expeditious
closeout of such contracts when the work is
completed. In view of the potential advan-
tages offered by this procedure, negotiation
of predetermined rates for indirect (F&A)
costs for a period of two to four years should
be the norm in those situations where the
cost experience and other pertinent facts
available are deemed sufficient to enable the
parties involved to reach an informed judg-
ment as to the probable level of indirect
(F&A) costs during the ensuing accounting
periods.
5. Negotiated Fixed Rates and Carry-Forward
Provisions
When a fixed rate is negotiated in advance
for a fiscal year (or other time period), the
over- or under-recovery for that year may be
included as an adjustment to the indirect
(F&A) cost for the next rate negotiation.
When the rate is negotiated before the carry-
forward adjustment is determined, the carry-
forward amount may be applied to the next
subsequent rate negotiation. When such ad-
justments are to be made, each fixed rate ne-
gotiated in advance for a given period will be
computed by applying the expected indirect
(F&A) costs allocable to Federal awards for
the forecast period plus or minus the carry-
forward adjustment (over- or under-recovery)
from the prior period, to the forecast dis-
tribution base. Unrecovered amounts under
lump-sum agreements or cost-sharing provi-
sions of prior years must not be carried for-
ward for consideration in the new rate nego-
tiation. There must, however, be an advance
understanding in each case between the in-
stitution and the cognizant agency for indi-
rect costs as to whether these differences
will be considered in the rate negotiation
rather than making the determination after
the differences are known. Further, institu-
tions electing to use this carry-forward pro-
vision may not subsequently change without
prior approval of the cognizant agency for
indirect costs. In the event that an institu-
tion returns to a post-determined rate, any
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over- or under-recovery during the period in
which negotiated fixed rates and carry-for-
ward provisions were followed will be in-
cluded in the subsequent post-determined
rates. Where multiple rates are used, the
same procedure will be applicable for deter-
mining each rate.
6. Provisional and Final Rates for Indirect
(F&A) Costs
Where the cognizant agency for indirect
costs determines that cost experience and
other pertinent facts do not justify the use
of predetermined rates, or a fixed rate with
a carry-forward, or if the parties cannot
agree on an equitable rate, a provisional rate
must be established. To prevent substantial
overpayment or underpayment, the provi-
sional rate may be adjusted by the cognizant
agency for indirect costs during the institu-
tion’s fiscal year. Predetermined or fixed
rates may replace provisional rates at any
time prior to the close of the institution’s
fiscal year. If a provisional rate is not re-
placed by a predetermined or fixed rate prior
to the end of the institution’s fiscal year, a
final rate will be established and upward or
downward adjustments will be made based on
the actual allowable costs incurred for the
period involved.
7. Fixed Rates for the Life of the Sponsored
Agreement
a. Except as provided in paragraph (c)(1) of
§200.414, Federal agencies must use the nego-
tiated rates in effect at the time of the ini-
tial award throughout the life of the Federal
award. Award levels for Federal awards may
not be adjusted in future years as a result of
changes in negotiated rates. ‘‘Negotiated
rates’’ per the rate agreement include final,
fixed, and predetermined rates and exclude
provisional rates. ‘‘Life’’ for the purpose of
this subsection means each competitive seg-
ment of a project. A competitive segment is
a period of years approved by the Federal
awarding agency at the time of the Federal
award. If negotiated rate agreements do not
extend through the life of the Federal award
at the time of the initial award, then the ne-
gotiated rate for the last year of the Federal
award must be extended through the end of
the life of the Federal award.
b. Except as provided in §200.414, when an
educational institution does not have a nego-
tiated rate with the Federal Government at
the time of an award (because the edu-
cational institution is a new recipient or the
parties cannot reach agreement on a rate),
the provisional rate used at the time of the
award must be adjusted once a rate is nego-
tiated and approved by the cognizant agency
for indirect costs.
8. Limitation on Reimbursement of
Administrative Costs
a. Notwithstanding the provisions of sub-
section C.1.a, the administrative costs
charged to Federal awards awarded or
amended (including continuation and re-
newal awards) with effective dates beginning
on or after the start of the institution’s first
fiscal year which begins on or after October
1, 1991, must be limited to 26% of modified
total direct costs (as defined in subsection 2)
for the total of General Administration and
General Expenses, Departmental Adminis-
tration, Sponsored Projects Administration,
and Student Administration and Services
(including their allocable share of deprecia-
tion, interest costs, operation and mainte-
nance expenses, and fringe benefits costs, as
provided by Section B, and all other types of
expenditures not listed specifically under
one of the subcategories of facilities in Sec-
tion B.
b. Institutions should not change their ac-
counting or cost allocation methods if the ef-
fect is to change the charging of a particular
type of cost from F&A to direct, or to reclas-
sify costs, or increase allocations from the
administrative pools identified in paragraph
B.1 of this Appendix to the other F&A cost
pools or fringe benefits. Cognizant agencies
for indirect cost are authorized to allow
changes where an institution’s charging
practices are at variance with acceptable
practices followed by a substantial majority
of other institutions.
9. Alternative Method for Administrative Costs
a. Notwithstanding the provisions of sub-
section C.1.a, an institution may elect to
claim a fixed allowance for the ‘‘Adminis-
tration’’ portion of indirect (F&A) costs. The
allowance could be either 24% of modified
total direct costs or a percentage equal to
95% of the most recently negotiated fixed or
predetermined rate for the cost pools in-
cluded under ‘‘Administration’’ as defined in
Section B.1, whichever is less. Under this al-
ternative, no cost proposal need be prepared
for the ‘‘Administration’’ portion of the indi-
rect (F&A) cost rate nor is further identifica-
tion or documentation of these costs re-
quired (see subsection c). Where a negotiated
indirect (F&A) cost agreement includes this
alternative, an institution must make no
further charges for the expenditure cat-
egories described in Section B.5, Section B.6,
Section B.7, and Section B.9.
b. In negotiations of rates for subsequent
periods, an institution that has elected the
option of subsection a may continue to exer-
cise it at the same rate without further iden-
tification or documentation of costs.
c. If an institution elects to accept a
threshold rate as defined in subsection a of
this section, it is not required to perform a
detailed analysis of its administrative costs.
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However, in order to compute the facilities
components of its indirect (F&A) cost rate,
the institution must reconcile its indirect
(F&A) cost proposal to its financial state-
ments and make appropriate adjustments
and reclassifications to identify the costs of
each major function as defined in Section
A.1, as well as to identify and allocate the fa-
cilities components. Administrative costs
that are not identified as such by the insti-
tution’s accounting system (such as those in-
curred in academic departments) will be
classified as instructional costs for purposes
of reconciling indirect (F&A) cost proposals
to financial statements and allocating facili-
ties costs.
10. Individual Rate Components
In order to provide mutually agreed-upon
information for management purposes, each
indirect (F&A) cost rate negotiation or de-
termination must include development of a
rate for each indirect (F&A) cost pool as well
as the overall indirect (F&A) cost rate.
11. Negotiation and Approval of Indirect (F&A)
Rate
a. Cognizant agency for indirect costs is
defined in Subpart A.
(1) Cost negotiation cognizance is assigned
to the Department of Health and Human
Services (HHS) or the Department of De-
fense’s Office of Naval Research (DOD), nor-
mally depending on which of the two agen-
cies (HHS or DOD) provides more funds di-
rectly to the educational institution for the
most recent three years. Information on
funding must be derived from relevant data
gathered by the National Science Founda-
tion. In cases where neither HHS nor DOD
provides Federal funding directly to an edu-
cational institution, the cognizant agency
for indirect costs assignment must default to
HHS. Notwithstanding the method for cog-
nizance determination described in this sec-
tion, other arrangements for cognizance of a
particular educational institution may also
be based in part on the types of research per-
formed at the educational institution and
must be decided based on mutual agreement
between HHS and DOD. Where a non-Federal
entity only receives funds as a subrecipient,
see §200.332.
(2) After cognizance is established, it must
continue for a five-year period.
b. Acceptance of rates. See §200.414.
c. Correcting deficiencies. The cognizant
agency for indirect costs must negotiate
changes needed to correct systems defi-
ciencies relating to accountability for Fed-
eral awards. Cognizant agencies for indirect
costs must address the concerns of other af-
fected agencies, as appropriate, and must ne-
gotiate special rates for Federal agencies
that are required to limit recovery of indi-
rect costs by statute.
d. Resolving questioned costs. The cog-
nizant agency for indirect costs must con-
duct any necessary negotiations with an edu-
cational institution regarding amounts ques-
tioned by audit that are due the Federal
Government related to costs covered by a ne-
gotiated agreement.
e. Reimbursement. Reimbursement to cog-
nizant agencies for indirect costs for work
performed under this Part may be made by
reimbursement billing under the Economy
Act, 31 U.S.C. 1535.
f. Procedure for establishing facilities and
administrative rates must be established by
one of the following methods:
(1) Formal negotiation. The cognizant
agency for indirect costs is responsible for
negotiating and approving rates for an edu-
cational institution on behalf of all Federal
agencies. Federal awarding agencies that do
not have cognizance for indirect costs must
notify the cognizant agency for indirect
costs of specific concerns (i.e., a need to es-
tablish special cost rates) which could affect
the negotiation process. The cognizant agen-
cy for indirect costs must address the con-
cerns of all interested agencies, as appro-
priate. A pre-negotiation conference may be
scheduled among all interested agencies, if
necessary. The cognizant agency for indirect
costs must then arrange a negotiation con-
ference with the educational institution.
(2) Other than formal negotiation. The cog-
nizant agency for indirect costs and edu-
cational institution may reach an agreement
on rates without a formal negotiation con-
ference; for example, through correspond-
ence or use of the simplified method de-
scribed in this section D of this Appendix.
g. Formalizing determinations and agree-
ments. The cognizant agency for indirect
costs must formalize all determinations or
agreements reached with an educational in-
stitution and provide copies to other agen-
cies having an interest. Determinations
should include a description of any adjust-
ments, the actual amount, both dollar and
percentage adjusted, and the reason for mak-
ing adjustments.
h. Disputes and disagreements. Where the
cognizant agency for indirect costs is unable
to reach agreement with an educational in-
stitution with regard to rates or audit reso-
lution, the appeal system of the cognizant
agency for indirect costs must be followed
for resolution of the disagreement.
12. Standard Format for Submission
For facilities and administrative (indirect
(F&A)) rate proposals, educational institu-
tions must use the standard format, shown
in section E of this appendix, to submit their
indirect (F&A) rate proposal to the cog-
nizant agency for indirect costs. The cog-
nizant agency for indirect costs may, on an
institution-by-institution basis, grant excep-
tions from all or portions of Part II of the
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standard format requirement. This require-
ment does not apply to educational institu-
tions that use the simplified method for cal-
culating indirect (F&A) rates, as described in
Section D of this Appendix.
As provided in section C.10 of this appen-
dix, each F&A cost rate negotiation or deter-
mination must include development of a rate
for each F&A cost pool as well as the overall
F&A rate.
D. SIMPLIFIED METHOD FOR SMALL
INSTITUTIONS
1. General
a. Where the total direct cost of work cov-
ered by this Part at an institution does not
exceed $10 million in a fiscal year, the sim-
plified procedure described in subsections 2
or 3 may be used in determining allowable
indirect (F&A) costs. Under this simplified
procedure, the institution’s most recent an-
nual financial report and immediately avail-
able supporting information must be utilized
as a basis for determining the indirect (F&A)
cost rate applicable to all Federal awards.
The institution may use either the salaries
and wages (see subsection 2) or modified
total direct costs (see subsection 3) as the
distribution basis.
b. The simplified procedure should not be
used where it produces results which appear
inequitable to the Federal Government or
the institution. In any such case, indirect
(F&A) costs should be determined through
use of the regular procedure.
2. Simplified Procedure—Salaries and Wages
Base
a. Establish the total amount of salaries
and wages paid to all employees of the insti-
tution.
b. Establish an indirect (F&A) cost pool
consisting of the expenditures (exclusive of
capital items and other costs specifically
identified as unallowable) which customarily
are classified under the following titles or
their equivalents:
(1) General administration and general ex-
penses (exclusive of costs of student adminis-
tration and services, student activities, stu-
dent aid, and scholarships).
(2) Operation and maintenance of physical
plant and depreciation (after appropriate ad-
justment for costs applicable to other insti-
tutional activities).
(3) Library.
(4) Department administration expenses,
which will be computed as 20 percent of the
salaries and expenses of deans and heads of
departments.
In those cases where expenditures classi-
fied under subsection (1) have previously
been allocated to other institutional activi-
ties, they may be included in the indirect
(F&A) cost pool. The total amount of sala-
ries and wages included in the indirect (F&A)
cost pool must be separately identified.
c. Establish a salary and wage distribution
base, determined by deducting from the total
of salaries and wages as established in sub-
section a from the amount of salaries and
wages included under subsection b.
d. Establish the indirect (F&A) cost rate,
determined by dividing the amount in the in-
direct (F&A) cost pool, subsection b, by the
amount of the distribution base, subsection
c.
e. Apply the indirect (F&A) cost rate to di-
rect salaries and wages for individual agree-
ments to determine the amount of indirect
(F&A) costs allocable to such agreements.
3. Simplified Procedure—Modified Total Direct
Cost Base
a. Establish the total costs incurred by the
institution for the base period.
b. Establish an indirect (F&A) cost pool
consisting of the expenditures (exclusive of
capital items and other costs specifically
identified as unallowable) which customarily
are classified under the following titles or
their equivalents:
(1) General administration and general ex-
penses (exclusive of costs of student adminis-
tration and services, student activities, stu-
dent aid, and scholarships).
(2) Operation and maintenance of physical
plant and depreciation (after appropriate ad-
justment for costs applicable to other insti-
tutional activities).
(3) Library.
(4) Department administration expenses,
which will be computed as 20 percent of the
salaries and expenses of deans and heads of
departments. In those cases where expendi-
tures classified under subsection (1) have
previously been allocated to other institu-
tional activities, they may be included in the
indirect (F&A) cost pool. The modified total
direct costs amount included in the indirect
(F&A) cost pool must be separately identi-
fied.
c. Establish a modified total direct cost
distribution base, as defined in Section C.2,
The distribution basis, that consists of all
institution’s direct functions.
d. Establish the indirect (F&A) cost rate,
determined by dividing the amount in the in-
direct (F&A) cost pool, subsection b, by the
amount of the distribution base, subsection
c.
e. Apply the indirect (F&A) cost rate to
the modified total direct costs for individual
agreements to determine the amount of indi-
rect (F&A) costs allocable to such agree-
ments.
E. DOCUMENTATION REQUIREMENTS
The standard format for documentation re-
quirements for indirect (indirect (F&A)) rate
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proposals for claiming costs under the reg-
ular method is available on the OMB
website.
F. CERTIFICATION
1. Certification of Charges
To assure that expenditures for Federal
awards are proper and in accordance with
the agreement documents and approved
project budgets, the annual and/or final fis-
cal reports or vouchers requesting payment
under the agreements will include a certifi-
cation, signed by an authorized official of
the university, which reads ‘‘By signing this
report, I certify to the best of my knowledge
and belief that the report is true, complete,
and accurate, and the expenditures, disburse-
ments and cash receipts are for the purposes
and intent set forth in the award documents.
I am aware that any false, fictitious, or
fraudulent information, or the omission of
any material fact, may subject me to crimi-
nal, civil or administrative penalties for
fraud, false statements, false claims or oth-
erwise. (U.S. Code, Title 18, Section 1001 and
Title 31, Sections 3729–3733 and 3801–3812)’’.
2. Certification of Indirect (F&A) Costs
a. Policy. Cognizant agencies must not ac-
cept a proposed indirect cost rate unless
such costs have been certified by the edu-
cational institution using the Certificate of
indirect (F&A) Costs set forth in subsection
F.2.c
b. The certificate must be signed on behalf
of the institution by the chief financial offi-
cer or an individual designated by an indi-
vidual at a level no lower than vice president
or chief financial officer.
An indirect (F&A) cost rate is not binding
upon the Federal Government if the most re-
cent required proposal from the institution
has not been certified. Where it is necessary
to establish indirect (F&A) cost rates, and
the institution has not submitted a certified
proposal for establishing such rates in ac-
cordance with the requirements of this sec-
tion, the Federal Government must unilater-
ally establish such rates. Such rates may be
based upon audited historical data or such
other data that have been furnished to the
cognizant agency for indirect costs and for
which it can be demonstrated that all unal-
lowable costs have been excluded. When indi-
rect (F&A) cost rates are unilaterally estab-
lished by the Federal Government because of
failure of the institution to submit a cer-
tified proposal for establishing such rates in
accordance with this section, the rates es-
tablished will be set at a level low enough to
ensure that potentially unallowable costs
will not be reimbursed.
c. Certificate. The certificate required by
this section must be in the following form:
Certificate of Indirect (F&A) Costs
This is to certify that to the best of my
knowledge and belief:
(1) I have reviewed the indirect (F&A) cost
proposal submitted herewith;
(2) All costs included in this proposal [iden-
tify date] to establish billing or final indi-
rect (F&A) costs rate for [identify period
covered by rate] are allowable in accordance
with the requirements of the Federal agree-
ment(s) to which they apply and with the
cost principles applicable to those agree-
ments.
(3) This proposal does not include any costs
which are unallowable under subpart E of
this part such as (without limitation): Public
relations costs, contributions and donations,
entertainment costs, fines and penalties, lob-
bying costs, and defense of fraud pro-
ceedings; and
(4) All costs included in this proposal are
properly allocable to Federal agreements on
the basis of a beneficial or causal relation-
ship between the expenses incurred and the
agreements to which they are allocated in
accordance with applicable requirements.
I declare that the foregoing is true and cor-
rect.
Institution of Higher Education:
Signature: llllllllllllllllll
Name of Official: llllllllllllll
Title: llllllllllllllllllll
Date of Execution: lllllllllllll
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75888, Dec. 19, 2014; 80 FR 54409, Sept. 10,
2015; 85 FR 49577, Aug. 13, 2020]
APPENDIX IV TO PART 200—INDIRECT
(F&A) COSTS IDENTIFICATION AND
ASSIGNMENT, AND RATE DETERMINA-
TION FOR NONPROFIT ORGANIZA-
TIONS
A. GENERAL
1. Indirect costs are those that have been
incurred for common or joint objectives and
cannot be readily identified with a par-
ticular final cost objective. Direct cost of
minor amounts may be treated as indirect
costs under the conditions described in
§200.413(d). After direct costs have been de-
termined and assigned directly to awards or
other work as appropriate, indirect costs are
those remaining to be allocated to benefit-
ting cost objectives. A cost may not be allo-
cated to a Federal award as an indirect cost
if any other cost incurred for the same pur-
pose, in like circumstances, has been as-
signed to a Federal award as a direct cost.
2. ‘‘Major nonprofit organizations’’ are de-
fined in paragraph (a) of §200.414. See indi-
rect cost rate reporting requirements in sec-
tions B.2.e and B.3.g of this Appendix.
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OMB Guidance Pt. 200, App. IV
B. ALLOCATION OF INDIRECT COSTS AND
DETERMINATION OF INDIRECT COST RATES
1. General
a. If a nonprofit organization has only one
major function, or where all its major func-
tions benefit from its indirect costs to ap-
proximately the same degree, the allocation
of indirect costs and the computation of an
indirect cost rate may be accomplished
through simplified allocation procedures, as
described in section B.2 of this Appendix.
b. If an organization has several major
functions which benefit from its indirect
costs in varying degrees, allocation of indi-
rect costs may require the accumulation of
such costs into separate cost groupings
which then are allocated individually to ben-
efitting functions by means of a base which
best measures the relative degree of benefit.
The indirect costs allocated to each function
are then distributed to individual Federal
awards and other activities included in that
function by means of an indirect cost rate(s).
c. The determination of what constitutes
an organization’s major functions will de-
pend on its purpose in being; the types of
services it renders to the public, its clients,
and its members; and the amount of effort it
devotes to such activities as fundraising,
public information and membership activi-
ties.
d. Specific methods for allocating indirect
costs and computing indirect cost rates
along with the conditions under which each
method should be used are described in sec-
tion B.2 through B.5 of this Appendix.
e. The base period for the allocation of in-
direct costs is the period in which such costs
are incurred and accumulated for allocation
to work performed in that period. The base
period normally should coincide with the or-
ganization’s fiscal year but, in any event,
must be so selected as to avoid inequities in
the allocation of the costs.
2. Simplified Allocation Method
a. Where an organization’s major functions
benefit from its indirect costs to approxi-
mately the same degree, the allocation of in-
direct costs may be accomplished by (i) sepa-
rating the organization’s total costs for the
base period as either direct or indirect, and
(ii) dividing the total allowable indirect
costs (net of applicable credits) by an equi-
table distribution base. The result of this
process is an indirect cost rate which is used
to distribute indirect costs to individual
Federal awards. The rate should be expressed
as the percentage which the total amount of
allowable indirect costs bears to the base se-
lected. This method should also be used
where an organization has only one major
function encompassing a number of indi-
vidual projects or activities, and may be
used where the level of Federal awards to an
organization is relatively small.
b. Both the direct costs and the indirect
costs must exclude capital expenditures and
unallowable costs. However, unallowable
costs which represent activities must be in-
cluded in the direct costs under the condi-
tions described in §200.413(e).
c. The distribution base may be total di-
rect costs (excluding capital expenditures
and other distorting items, such as sub-
awards for $25,000 or more), direct salaries
and wages, or other base which results in an
equitable distribution. The distribution base
must exclude participant support costs as de-
fined in §200.1.
d. Except where a special rate(s) is re-
quired in accordance with section B.5 of this
Appendix, the indirect cost rate developed
under the above principles is applicable to
all Federal awards of the organization. If a
special rate(s) is required, appropriate modi-
fications must be made in order to develop
the special rate(s).
e. For an organization that receives more
than $10 million in direct Federal funding in
a fiscal year, a breakout of the indirect cost
component into two broad categories, Facili-
ties and Administration as defined in para-
graph (a) of §200.414, is required. The rate in
each case must be stated as the percentage
which the amount of the particular indirect
cost category (i.e., Facilities or Administra-
tion) is of the distribution base identified
with that category.
3. Multiple Allocation Base Method
a. General. Where an organization’s indi-
rect costs benefit its major functions in
varying degrees, indirect costs must be accu-
mulated into separate cost groupings, as de-
scribed in subparagraph b. Each grouping
must then be allocated individually to bene-
fitting functions by means of a base which
best measures the relative benefits. The de-
fault allocation bases by cost pool are de-
scribed in section B.3.c of this Appendix.
b. Identification of indirect costs. Cost
groupings must be established so as to per-
mit the allocation of each grouping on the
basis of benefits provided to the major func-
tions. Each grouping must constitute a pool
of expenses that are of like character in
terms of functions they benefit and in terms
of the allocation base which best measures
the relative benefits provided to each func-
tion. The groupings are classified within the
two broad categories: ‘‘Facilities’’ and ‘‘Ad-
ministration,’’ as described in section A.3 of
this Appendix. The indirect cost pools are de-
fined as follows:
(1) Depreciation. The expenses under this
heading are the portion of the costs of the
organization’s buildings, capital improve-
ments to land and buildings, and equipment
which are computed in accordance with
§200.436.
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. IV
(2) Interest. Interest on debt associated
with certain buildings, equipment and cap-
ital improvements are computed in accord-
ance with §200.449.
(3) Operation and maintenance expenses.
The expenses under this heading are those
that have been incurred for the administra-
tion, operation, maintenance, preservation,
and protection of the organization’s physical
plant. They include expenses normally in-
curred for such items as: janitorial and util-
ity services; repairs and ordinary or normal
alterations of buildings, furniture and equip-
ment; care of grounds; maintenance and op-
eration of buildings and other plant facili-
ties; security; earthquake and disaster pre-
paredness; environmental safety; hazardous
waste disposal; property, liability and other
insurance relating to property; space and
capital leasing; facility planning and man-
agement; and central receiving. The oper-
ation and maintenance expenses category
must also include its allocable share of
fringe benefit costs, depreciation, and inter-
est costs.
(4) General administration and general ex-
penses. The expenses under this heading are
those that have been incurred for the overall
general executive and administrative offices
of the organization and other expenses of a
general nature which do not relate solely to
any major function of the organization. This
category must also include its allocable
share of fringe benefit costs, operation and
maintenance expense, depreciation, and in-
terest costs. Examples of this category in-
clude central offices, such as the director’s
office, the office of finance, business serv-
ices, budget and planning, personnel, safety
and risk management, general counsel, man-
agement information systems, and library
costs.
In developing this cost pool, special care
should be exercised to ensure that costs in-
curred for the same purpose in like cir-
cumstances are treated consistently as ei-
ther direct or indirect costs. For example,
salaries of technical staff, project supplies,
project publication, telephone toll charges,
computer costs, travel costs, and specialized
services costs must be treated as direct costs
wherever identifiable to a particular pro-
gram. The salaries and wages of administra-
tive and pooled clerical staff should nor-
mally be treated as indirect costs. Direct
charging of these costs may be appropriate
as described in §200.413. Items such as office
supplies, postage, local telephone costs, peri-
odicals and memberships should normally be
treated as indirect costs.
c. Allocation bases. Actual conditions
must be taken into account in selecting the
base to be used in allocating the expenses in
each grouping to benefitting functions. The
essential consideration in selecting a method
or a base is that it is the one best suited for
assigning the pool of costs to cost objectives
in accordance with benefits derived; a trace-
able cause and effect relationship; or logic
and reason, where neither the cause nor the
effect of the relationship is determinable.
When an allocation can be made by assign-
ment of a cost grouping directly to the func-
tion benefitted, the allocation must be made
in that manner. When the expenses in a cost
grouping are more general in nature, the al-
location must be made through the use of a
selected base which produces results that are
equitable to both the Federal Government
and the organization. The distribution must
be made in accordance with the bases de-
scribed herein unless it can be demonstrated
that the use of a different base would result
in a more equitable allocation of the costs,
or that a more readily available base would
not increase the costs charged to Federal
awards. The results of special cost studies
(such as an engineering utility study) must
not be used to determine and allocate the in-
direct costs to Federal awards.
(1) Depreciation. Depreciation expenses
must be allocated in the following manner:
(a) Depreciation on buildings used exclu-
sively in the conduct of a single function,
and on capital improvements and equipment
used in such buildings, must be assigned to
that function.
(b) Depreciation on buildings used for more
than one function, and on capital improve-
ments and equipment used in such buildings,
must be allocated to the individual functions
performed in each building on the basis of
usable square feet of space, excluding com-
mon areas, such as hallways, stairwells, and
restrooms.
(c) Depreciation on buildings, capital im-
provements and equipment related space
(e.g., individual rooms, and laboratories)
used jointly by more than one function (as
determined by the users of the space) must
be treated as follows. The cost of each joint-
ly used unit of space must be allocated to
the benefitting functions on the basis of:
(i) the employees and other users on a full-
time equivalent (FTE) basis or salaries and
wages of those individual functions benefit-
ting from the use of that space; or
(ii) organization-wide employee FTEs or
salaries and wages applicable to the benefit-
ting functions of the organization.
(d) Depreciation on certain capital im-
provements to land, such as paved parking
areas, fences, sidewalks, and the like, not in-
cluded in the cost of buildings, must be allo-
cated to user categories on a FTE basis and
distributed to major functions in proportion
to the salaries and wages of all employees
applicable to the functions.
(2) Interest. Interest costs must be allo-
cated in the same manner as the deprecia-
tion on the buildings, equipment and capital
equipment to which the interest relates.
(3) Operation and maintenance expenses.
Operation and maintenance expenses must
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OMB Guidance Pt. 200, App. IV
be allocated in the same manner as the de-
preciation.
(4) General administration and general ex-
penses. General administration and general
expenses must be allocated to benefitting
functions based on modified total costs
(MTC). The MTC is the modified total direct
costs (MTDC), as described in §200.1, plus the
allocated indirect cost proportion. The ex-
penses included in this category could be
grouped first according to major functions of
the organization to which they render serv-
ices or provide benefits. The aggregate ex-
penses of each group must then be allocated
to benefitting functions based on MTC.
d. Order of distribution.
(1) Indirect cost categories consisting of
depreciation, interest, operation and mainte-
nance, and general administration and gen-
eral expenses must be allocated in that order
to the remaining indirect cost categories as
well as to the major functions of the organi-
zation. Other cost categories should be allo-
cated in the order determined to be most ap-
propriate by the organization. This order of
allocation does not apply if cross allocation
of costs is made as provided in section B.3.d.2
of this Appendix.
(2) Normally, an indirect cost category will
be considered closed once it has been allo-
cated to other cost objectives, and costs
must not be subsequently allocated to it.
However, a cross allocation of costs between
two or more indirect costs categories could
be used if such allocation will result in a
more equitable allocation of costs. If a cross
allocation is used, an appropriate modifica-
tion to the composition of the indirect cost
categories is required.
e. Application of indirect cost rate or
rates. Except where a special indirect cost
rate(s) is required in accordance with section
B.5 of this Appendix, the separate groupings
of indirect costs allocated to each major
function must be aggregated and treated as a
common pool for that function. The costs in
the common pool must then be distributed to
individual Federal awards included in that
function by use of a single indirect cost rate.
f. Distribution basis. Indirect costs must
be distributed to applicable Federal awards
and other benefitting activities within each
major function on the basis of MTDC (see
definition in §200.1).
g. Individual Rate Components. An indi-
rect cost rate must be determined for each
separate indirect cost pool developed. The
rate in each case must be stated as the per-
centage which the amount of the particular
indirect cost pool is of the distribution base
identified with that pool. Each indirect cost
rate negotiation or determination agreement
must include development of the rate for
each indirect cost pool as well as the overall
indirect cost rate. The indirect cost pools
must be classified within two broad cat-
egories: ‘‘Facilities’’ and ‘‘Administration,’’
as described in §200.414(a).
4. Direct Allocation Method
a. Some nonprofit organizations treat all
costs as direct costs except general adminis-
tration and general expenses. These organi-
zations generally separate their costs into
three basic categories: (i) General adminis-
tration and general expenses, (ii) fund-
raising, and (iii) other direct functions (in-
cluding projects performed under Federal
awards). Joint costs, such as depreciation,
rental costs, operation and maintenance of
facilities, telephone expenses, and the like
are prorated individually as direct costs to
each category and to each Federal award or
other activity using a base most appropriate
to the particular cost being prorated.
b. This method is acceptable, provided each
joint cost is prorated using a base which ac-
curately measures the benefits provided to
each Federal award or other activity. The
bases must be established in accordance with
reasonable criteria and be supported by cur-
rent data. This method is compatible with
the Standards of Accounting and Financial
Reporting for Voluntary Health and Welfare
Organizations issued jointly by the National
Health Council, Inc., the National Assembly
of Voluntary Health and Social Welfare Or-
ganizations, and the United Way of America.
c. Under this method, indirect costs con-
sist exclusively of general administration
and general expenses. In all other respects,
the organization’s indirect cost rates must
be computed in the same manner as that de-
scribed in section B.2 of this Appendix.
5. Special Indirect Cost Rates
In some instances, a single indirect cost
rate for all activities of an organization or
for each major function of the organization
may not be appropriate, since it would not
take into account those different factors
which may substantially affect the indirect
costs applicable to a particular segment of
work. For this purpose, a particular segment
of work may be that performed under a sin-
gle Federal award or it may consist of work
under a group of Federal awards performed
in a common environment. These factors
may include the physical location of the
work, the level of administrative support re-
quired, the nature of the facilities or other
resources employed, the scientific disciplines
or technical skills involved, the organiza-
tional arrangements used, or any combina-
tion thereof. When a particular segment of
work is performed in an environment which
appears to generate a significantly different
level of indirect costs, provisions should be
made for a separate indirect cost pool appli-
cable to such work. The separate indirect
cost pool should be developed during the
course of the regular allocation process, and
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. IV
the separate indirect cost rate resulting
therefrom should be used, provided it is de-
termined that (i) the rate differs signifi-
cantly from that which would have been ob-
tained under sections B.2, B.3, and B.4 of this
Appendix, and (ii) the volume of work to
which the rate would apply is material.
C. NEGOTIATION AND APPROVAL OF INDIRECT
COST RATES
1. Definitions
As used in this section, the following terms
have the meanings set forth in this section:
a. Cognizant agency for indirect costs means
the Federal agency responsible for negoti-
ating and approving indirect cost rates for a
nonprofit organization on behalf of all Fed-
eral agencies.
b. Predetermined rate means an indirect cost
rate, applicable to a specified current or fu-
ture period, usually the organization’s fiscal
year. The rate is based on an estimate of the
costs to be incurred during the period. A pre-
determined rate is not subject to adjust-
ment.
c. Fixed rate means an indirect cost rate
which has the same characteristics as a pre-
determined rate, except that the difference
between the estimated costs and the actual
costs of the period covered by the rate is car-
ried forward as an adjustment to the rate
computation of a subsequent period.
d. Final rate means an indirect cost rate
applicable to a specified past period which is
based on the actual costs of the period. A
final rate is not subject to adjustment.
e. Provisional rate or billing rate means a
temporary indirect cost rate applicable to a
specified period which is used for funding, in-
terim reimbursement, and reporting indirect
costs on Federal awards pending the estab-
lishment of a final rate for the period.
f. Indirect cost proposal means the docu-
mentation prepared by an organization to
substantiate its claim for the reimbursement
of indirect costs. This proposal provides the
basis for the review and negotiation leading
to the establishment of an organization’s in-
direct cost rate.
g. Cost objective means a function, organiza-
tional subdivision, contract, Federal award,
or other work unit for which cost data are
desired and for which provision is made to
accumulate and measure the cost of proc-
esses, projects, jobs and capitalized projects.
2. Negotiation and Approval of Rates
a. Unless different arrangements are
agreed to by the Federal agencies concerned,
the Federal agency with the largest dollar
value of Federal awards directly funded to an
organization will be designated as the cog-
nizant agency for indirect costs for the nego-
tiation and approval of the indirect cost
rates and, where necessary, other rates such
as fringe benefit and computer charge-out
rates. Once an agency is assigned cognizance
for a particular nonprofit organization, the
assignment will not be changed unless there
is a shift in the dollar volume of the Federal
awards directly funded to the organization
for at least three years. All concerned Fed-
eral agencies must be given the opportunity
to participate in the negotiation process but,
after a rate has been agreed upon, it will be
accepted by all Federal agencies. When a
Federal agency has reason to believe that
special operating factors affecting its Fed-
eral awards necessitate special indirect cost
rates in accordance with section B.5 of this
Appendix, it will, prior to the time the rates
are negotiated, notify the cognizant agency
for indirect costs. (See also §200.414.) If the
nonprofit does not receive any funding from
any Federal agency, the pass-through entity
is responsible for the negotiation of the indi-
rect cost rates in accordance with
§200.332(a)(4).
b. Except as otherwise provided in
§200.414(f), a nonprofit organization which
has not previously established an indirect
cost rate with a Federal agency must submit
its initial indirect cost proposal immediately
after the organization is advised that a Fed-
eral award will be made and, in no event,
later than three months after the effective
date of the Federal award.
c. Unless approved by the cognizant agency
for indirect costs in accordance with
§200.414(g), organizations that have pre-
viously established indirect cost rates must
submit a new indirect cost proposal to the
cognizant agency for indirect costs within
six months after the close of each fiscal year.
d. A predetermined rate may be negotiated
for use on Federal awards where there is rea-
sonable assurance, based on past experience
and reliable projection of the organization’s
costs, that the rate is not likely to exceed a
rate based on the organization’s actual costs.
e. Fixed rates may be negotiated where
predetermined rates are not considered ap-
propriate. A fixed rate, however, must not be
negotiated if (i) all or a substantial portion
of the organization’s Federal awards are ex-
pected to expire before the carry-forward ad-
justment can be made; (ii) the mix of Federal
and non-Federal work at the organization is
too erratic to permit an equitable carry-for-
ward adjustment; or (iii) the organization’s
operations fluctuate significantly from year
to year.
f. Provisional and final rates must be nego-
tiated where neither predetermined nor fixed
rates are appropriate. Predetermined or
fixed rates may replace provisional rates at
any time prior to the close of the organiza-
tion’s fiscal year. If that event does not
occur, a final rate will be established and up-
ward or downward adjustments will be made
based on the actual allowable costs incurred
for the period involved.
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OMB Guidance Pt. 200, App. V
g. The results of each negotiation must be
formalized in a written agreement between
the cognizant agency for indirect costs and
the nonprofit organization. The cognizant
agency for indirect costs must make avail-
able copies of the agreement to all concerned
Federal agencies.
h. If a dispute arises in a negotiation of an
indirect cost rate between the cognizant
agency for indirect costs and the nonprofit
organization, the dispute must be resolved in
accordance with the appeals procedures of
the cognizant agency for indirect costs.
i. To the extent that problems are encoun-
tered among the Federal agencies in connec-
tion with the negotiation and approval proc-
ess, OMB will lend assistance as required to
resolve such problems in a timely manner.
D. Certification of Indirect (F&A) Costs
(1) Required Certification. No proposal to
establish indirect (F&A) cost rates must be
acceptable unless such costs have been cer-
tified by the nonprofit organization using
the Certificate of Indirect (F&A) Costs set
forth in section j. of this appendix. The cer-
tificate must be signed on behalf of the orga-
nization by an individual at a level no lower
than vice president or chief financial officer
for the organization.
(2) Each indirect cost rate proposal must
be accompanied by a certification in the fol-
lowing form:
Certificate of Indirect (F&A) Costs
This is to certify that to the best of my
knowledge and belief:
(1) I have reviewed the indirect (F&A) cost
proposal submitted herewith;
(2) All costs included in this proposal [iden-
tify date] to establish billing or final indi-
rect (F&A) costs rate for [identify period
covered by rate] are allowable in accordance
with the requirements of the Federal awards
to which they apply and with subpart E of
this part.
(3) This proposal does not include any costs
which are unallowable under subpart E of
this part such as (without limitation): Public
relations costs, contributions and donations,
entertainment costs, fines and penalties, lob-
bying costs, and defense of fraud pro-
ceedings; and
(4) All costs included in this proposal are
properly allocable to Federal awards on the
basis of a beneficial or causal relationship
between the expenses incurred and the Fed-
eral awards to which they are allocated in
accordance with applicable requirements.
I declare that the foregoing is true and cor-
rect.
Nonprofit Organization: lllllllllll
Signature: llllllllllllllllll
Name of Official: llllllllllllll
Title: llllllllllllllllllll
Date of Execution: lllllllllllll
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 54410, Sept. 10, 2015; 85 FR 49579, Aug. 13,
2020]
APPENDIX V TO PART 200—STATE/LOCAL
GOVERNMENTWIDE CENTRAL SERVICE
COST ALLOCATION PLANS
A. GENERAL
1. Most governmental units provide certain
services, such as motor pools, computer cen-
ters, purchasing, accounting, etc., to oper-
ating agencies on a centralized basis. Since
federally-supported awards are performed
within the individual operating agencies,
there needs to be a process whereby these
central service costs can be identified and
assigned to benefitted activities on a reason-
able and consistent basis. The central service
cost allocation plan provides that process.
All costs and other data used to distribute
the costs included in the plan should be sup-
ported by formal accounting and other
records that will support the propriety of the
costs assigned to Federal awards.
2. Guidelines and illustrations of central
service cost allocation plans are provided in
a brochure published by the Department of
Health and Human Services entitled ‘‘A
Guide for State, Local and Indian Tribal Gov-
ernments: Cost Principles and Procedures for
Developing Cost Allocation Plans and Indirect
Cost Rates for Agreements with the Federal
Government.’’ A copy of this brochure may be
obtained from the HHS Cost Allocation Serv-
ices or at their website.
B. DEFINITIONS
1. Agency or operating agency means an or-
ganizational unit or sub-division within a
governmental unit that is responsible for the
performance or administration of Federal
awards or activities of the governmental
unit.
2. Allocated central services means central
services that benefit operating agencies but
are not billed to the agencies on a fee-for-
service or similar basis. These costs are allo-
cated to benefitted agencies on some reason-
able basis. Examples of such services might
include general accounting, personnel ad-
ministration, purchasing, etc.
3. Billed central services means central serv-
ices that are billed to benefitted agencies or
programs on an individual fee-for-service or
similar basis. Typical examples of billed cen-
tral services include computer services,
transportation services, insurance, and
fringe benefits.
4. Cognizant agency for indirect costs is de-
fined in §200.1. The determination of cog-
nizant agency for indirect costs for states
and local governments is described in section
F.1.
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. V
5. Major local government means local gov-
ernment that receives more than $100 million
in direct Federal awards subject to this Part.
C. SCOPE OF THE CENTRAL SERVICE COST
ALLOCATION PLANS
The central service cost allocation plan
will include all central service costs that
will be claimed (either as a billed or an allo-
cated cost) under Federal awards and will be
documented as described in section E. omit-
ted from the plan will not be reimbursed.
D. SUBMISSION REQUIREMENTS
1. Each state will submit a plan to the De-
partment of Health and Human Services for
each year in which it claims central service
costs under Federal awards. The plan should
include (a) a projection of the next year’s al-
located central service cost (based either on
actual costs for the most recently completed
year or the budget projection for the coming
year), and (b) a reconciliation of actual allo-
cated central service costs to the estimated
costs used for either the most recently com-
pleted year or the year immediately pre-
ceding the most recently completed year.
2. Each major local government is also re-
quired to submit a plan to its cognizant
agency for indirect costs annually.
3. All other local governments claiming
central service costs must develop a plan in
accordance with the requirements described
in this Part and maintain the plan and re-
lated supporting documentation for audit.
These local governments are not required to
submit their plans for Federal approval un-
less they are specifically requested to do so
by the cognizant agency for indirect costs.
Where a local government only receives
funds as a subrecipient, the pass-through en-
tity will be responsible for monitoring the
subrecipient’s plan.
4. All central service cost allocation plans
will be prepared and, when required, sub-
mitted within six months prior to the begin-
ning of each of the governmental unit’s fis-
cal years in which it proposes to claim cen-
tral service costs. Extensions may be grant-
ed by the cognizant agency for indirect costs
on a case-by-case basis.
E. DOCUMENTATION REQUIREMENTS FOR
SUBMITTED PLANS
The documentation requirements described
in this section may be modified, expanded, or
reduced by the cognizant agency for indirect
costs on a case-by-case basis. For example,
the requirements may be reduced for those
central services which have little or no im-
pact on Federal awards. Conversely, if a re-
view of a plan indicates that certain addi-
tional information is needed, and will likely
be needed in future years, it may be rou-
tinely requested in future plan submissions.
Items marked with an asterisk (*) should be
submitted only once; subsequent plans
should merely indicate any changes since the
last plan.
1. General
All proposed plans must be accompanied by
the following: an organization chart suffi-
ciently detailed to show operations including
the central service activities of the state/
local government whether or not they are
shown as benefitting from central service
functions; a copy of the Comprehensive An-
nual Financial Report (or a copy of the Exec-
utive Budget if budgeted costs are being pro-
posed) to support the allowable costs of each
central service activity included in the plan;
and, a certification (see subsection 4.) that
the plan was prepared in accordance with
this Part, contains only allowable costs, and
was prepared in a manner that treated simi-
lar costs consistently among the various
Federal awards and between Federal and
non-Federal awards/activities.
2. Allocated Central Services
For each allocated central service*, the
plan must also include the following: a brief
description of the service, an identification
of the unit rendering the service and the op-
erating agencies receiving the service, the
items of expense included in the cost of the
service, the method used to distribute the
cost of the service to benefitted agencies,
and a summary schedule showing the alloca-
tion of each service to the specific benefitted
agencies. If any self-insurance funds or
fringe benefits costs are treated as allocated
(rather than billed) central services, docu-
mentation discussed in subsections 3.b. and
c. must also be included.
3. Billed Services
a. General. The information described in
this section must be provided for all billed
central services, including internal service
funds, self-insurance funds, and fringe ben-
efit funds.
b. Internal service funds.
(1) For each internal service fund or simi-
lar activity with an operating budget of $5
million or more, the plan must include: A
brief description of each service; a balance
sheet for each fund based on individual ac-
counts contained in the governmental unit’s
accounting system; a revenue/expenses state-
ment, with revenues broken out by source,
e.g., regular billings, interest earned, etc.; a
listing of all non-operating transfers (as de-
fined by GAAP) into and out of the fund; a
description of the procedures (methodology)
used to charge the costs of each service to
users, including how billing rates are deter-
mined; a schedule of current rates; and, a
schedule comparing total revenues (includ-
ing imputed revenues) generated by the serv-
ice to the allowable costs of the service, as
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237
OMB Guidance Pt. 200, App. V
determined under this part, with an expla-
nation of how variances will be handled.
(2) Revenues must consist of all revenues
generated by the service, including unbilled
and uncollected revenues. If some users were
not billed for the services (or were not billed
at the full rate for that class of users), a
schedule showing the full imputed revenues
associated with these users must be pro-
vided. Expenses must be broken out by ob-
ject cost categories (e.g., salaries, supplies,
etc.).
c. Self-insurance funds. For each self-insur-
ance fund, the plan must include: the fund
balance sheet; a statement of revenue and
expenses including a summary of billings
and claims paid by agency; a listing of all
non-operating transfers into and out of the
fund; the type(s) of risk(s) covered by the
fund (e.g., automobile liability, workers’
compensation, etc.); an explanation of how
the level of fund contributions are deter-
mined, including a copy of the current actu-
arial report (with the actuarial assumptions
used) if the contributions are determined on
an actuarial basis; and, a description of the
procedures used to charge or allocate fund
contributions to benefitted activities. Re-
serve levels in excess of claims (1) submitted
and adjudicated but not paid, (2) submitted
but not adjudicated, and (3) incurred but not
submitted must be identified and explained.
d. Fringe benefits. For fringe benefit costs,
the plan must include: a listing of fringe ben-
efits provided to covered employees, and the
overall annual cost of each type of benefit;
current fringe benefit policies; and proce-
dures used to charge or allocate the costs of
the benefits to benefitted activities. In addi-
tion, for pension and post-retirement health
insurance plans, the following information
must be provided: the governmental unit’s
funding policies, e.g., legislative bills, trust
agreements, or state-mandated contribution
rules, if different from actuarially deter-
mined rates; the pension plan’s costs accrued
for the year; the amount funded, and date(s)
of funding; a copy of the current actuarial
report (including the actuarial assumptions);
the plan trustee’s report; and, a schedule
from the activity showing the value of the
interest cost associated with late funding.
4. Required Certification
Each central service cost allocation plan
will be accompanied by a certification in the
following form:
CERTIFICATE OF COST ALLOCATION
PLAN
This is to certify that I have reviewed the
cost allocation plan submitted herewith and
to the best of my knowledge and belief:
(1) All costs included in this proposal [iden-
tify date] to establish cost allocations or bil-
lings for [identify period covered by plan] are
allowable in accordance with the require-
ments of this Part and the Federal award(s)
to which they apply. Unallowable costs have
been adjusted for in allocating costs as indi-
cated in the cost allocation plan.
(2) All costs included in this proposal are
properly allocable to Federal awards on the
basis of a beneficial or causal relationship
between the expenses incurred and the Fed-
eral awards to which they are allocated in
accordance with applicable requirements.
Further, the same costs that have been
treated as indirect costs have not been
claimed as direct costs. Similar types of
costs have been accounted for consistently.
I declare that the foregoing is true and cor-
rect.
Governmental Unit: lllllllllllll
Signature: llllllllllllllllll
Name of Official: llllllllllllll
Title: llllllllllllllllllll
Date of Execution: lllllllllllll
F. NEGOTIATION AND APPROVAL OF CENTRAL
SERVICE PLANS
1. Federal Cognizant Agency for Indirect Costs
Assignments for Cost Negotiation
In general, unless different arrangements
are agreed to by the concerned Federal agen-
cies, for central service cost allocation
plans, the cognizant agency responsible for
review and approval is the Federal agency
with the largest dollar value of total Federal
awards with a governmental unit. For indi-
rect cost rates and departmental indirect
cost allocation plans, the cognizant agency
is the Federal agency with the largest dollar
value of direct Federal awards with a govern-
mental unit or component, as appropriate.
Once designated as the cognizant agency for
indirect costs, the Federal agency must re-
main so for a period of five years. In addi-
tion, the following Federal agencies continue
to be responsible for the indicated govern-
mental entities:
Department of Health and Human Services—
Public assistance and state-wide cost alloca-
tion plans for all states (including the Dis-
trict of Columbia and Puerto Rico), state
and local hospitals, libraries and health dis-
tricts.
Department of the Interior—Indian tribal
governments, territorial governments, and
state and local park and recreational dis-
tricts.
Department of Labor—State and local labor
departments.
Department of Education—School districts
and state and local education agencies.
Department of Agriculture—State and local
agriculture departments.
Department of Transportation—State and
local airport and port authorities and transit
districts.
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. V
Department of Commerce—State and local
economic development districts.
Department of Housing and Urban Develop-
ment—State and local housing and develop-
ment districts.
Environmental Protection Agency—State and
local water and sewer districts.
2. Review
All proposed central service cost allocation
plans that are required to be submitted will
be reviewed, negotiated, and approved by the
cognizant agency for indirect costs on a
timely basis. The cognizant agency for indi-
rect costs will review the proposal within six
months of receipt of the proposal and either
negotiate/approve the proposal or advise the
governmental unit of the additional docu-
mentation needed to support/evaluate the
proposed plan or the changes required to
make the proposal acceptable. Once an
agreement with the governmental unit has
been reached, the agreement will be accepted
and used by all Federal agencies, unless pro-
hibited or limited by statute. Where a Fed-
eral awarding agency has reason to believe
that special operating factors affecting its
Federal awards necessitate special consider-
ation, the funding agency will, prior to the
time the plans are negotiated, notify the
cognizant agency for indirect costs.
3. Agreement
The results of each negotiation must be
formalized in a written agreement between
the cognizant agency for indirect costs and
the governmental unit. This agreement will
be subject to re-opening if the agreement is
subsequently found to violate a statute or
the information upon which the plan was ne-
gotiated is later found to be materially in-
complete or inaccurate. The results of the
negotiation must be made available to all
Federal agencies for their use.
4. Adjustments
Negotiated cost allocation plans based on a
proposal later found to have included costs
that: (a) are unallowable (i) as specified by
law or regulation, (ii) as identified in subpart
F, General Provisions for selected Items of
Cost of this Part, or (iii) by the terms and
conditions of Federal awards, or (b) are unal-
lowable because they are clearly not allo-
cable to Federal awards, must be adjusted, or
a refund must be made at the option of the
cognizant agency for indirect costs, includ-
ing earned or imputed interest from the date
of transfer and debt interest, if applicable,
chargeable in accordance with applicable
Federal cognizant agency for indirect costs
regulations. Adjustments or cash refunds
may include, at the option of the cognizant
agency for indirect costs, earned or imputed
interest from the date of expenditure and de-
linquent debt interest, if applicable, charge-
able in accordance with applicable cognizant
agency claims collection regulations. These
adjustments or refunds are designed to cor-
rect the plans and do not constitute a re-
opening of the negotiation.
G. OTHER POLICIES
1. Billed Central Service Activities
Each billed central service activity must
separately account for all revenues (includ-
ing imputed revenues) generated by the serv-
ice, expenses incurred to furnish the service,
and profit/loss.
2. Working Capital Reserves
Internal service funds are dependent upon
a reasonable level of working capital reserve
to operate from one billing cycle to the next.
Charges by an internal service activity to
provide for the establishment and mainte-
nance of a reasonable level of working cap-
ital reserve, in addition to the full recovery
of costs, are allowable. A working capital re-
serve as part of retained earnings of up to 60
calendar days cash expenses for normal oper-
ating purposes is considered reasonable. A
working capital reserve exceeding 60 cal-
endar days may be approved by the cog-
nizant agency for indirect costs in excep-
tional cases.
3. Carry-Forward Adjustments of Allocated
Central Service Costs
Allocated central service costs are usually
negotiated and approved for a future fiscal
year on a ‘‘fixed with carry-forward’’ basis.
Under this procedure, the fixed amounts for
the future year covered by agreement are
not subject to adjustment for that year.
However, when the actual costs of the year
involved become known, the differences be-
tween the fixed amounts previously approved
and the actual costs will be carried forward
and used as an adjustment to the fixed
amounts established for a later year. This
‘‘carry-forward’’ procedure applies to all cen-
tral services whose costs were fixed in the
approved plan. However, a carry-forward ad-
justment is not permitted, for a central serv-
ice activity that was not included in the ap-
proved plan, or for unallowable costs that
must be reimbursed immediately.
4. Adjustments of Billed Central Services
Billing rates used to charge Federal awards
must be based on the estimated costs of pro-
viding the services, including an estimate of
the allocable central service costs. A com-
parison of the revenue generated by each
billed service (including total revenues
whether or not billed or collected) to the ac-
tual allowable costs of the service will be
made at least annually, and an adjustment
will be made for the difference between the
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239
OMB Guidance Pt. 200, App. VI
revenue and the allowable costs. These ad-
justments will be made through one of the
following adjustment methods: (a) a cash re-
fund including earned or imputed interest
from the date of transfer and debt interest, if
applicable, chargeable in accordance with
applicable Federal cognizant agency for indi-
rect costs regulations to the Federal Govern-
ment for the Federal share of the adjust-
ment, (b) credits to the amounts charged to
the individual programs, (c) adjustments to
future billing rates, or (d) adjustments to al-
located central service costs. Adjustments to
allocated central services will not be per-
mitted where the total amount of the adjust-
ment for a particular service (Federal share
and non-Federal) share exceeds $500,000. Ad-
justment methods may include, at the option
of the cognizant agency, earned or imputed
interest from the date of expenditure and de-
linquent debt interest, if applicable, charge-
able in accordance with applicable cognizant
agency claims collection regulations.
5. Records Retention
All central service cost allocation plans
and related documentation used as a basis
for claiming costs under Federal awards
must be retained for audit in accordance
with the records retention requirements con-
tained in subpart D of this part.
6. Appeals
If a dispute arises in the negotiation of a
plan between the cognizant agency for indi-
rect costs and the governmental unit, the
dispute must be resolved in accordance with
the appeals procedures of the cognizant
agency for indirect costs.
7. OMB Assistance
To the extent that problems are encoun-
tered among the Federal agencies or govern-
mental units in connection with the negotia-
tion and approval process, OMB will lend as-
sistance, as required, to resolve such prob-
lems in a timely manner.
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 54410, Sept. 10, 2015; 85 FR 49581, Aug. 13,
2020]
APPENDIX VI TO PART 200—PUBLIC
ASSISTANCE COST ALLOCATION PLANS
A. GENERAL
Federally-financed programs administered
by state public assistance agencies are fund-
ed predominately by the Department of
Health and Human Services (HHS). In sup-
port of its stewardship requirements, HHS
has published requirements for the develop-
ment, documentation, submission, negotia-
tion, and approval of public assistance cost
allocation plans in Subpart E of 45 CFR Part
95. All administrative costs (direct and indi-
rect) are normally charged to Federal awards
by implementing the public assistance cost
allocation plan. This Appendix extends these
requirements to all Federal awarding agen-
cies whose programs are administered by a
state public assistance agency. Major feder-
ally-financed programs typically adminis-
tered by state public assistance agencies in-
clude: Temporary Aid to Needy Families
(TANF), Medicaid, Food Stamps, Child Sup-
port Enforcement, Adoption Assistance and
Foster Care, and Social Services Block
Grant.
B. DEFINITIONS
1. State public assistance agency means a
state agency administering or supervising
the administration of one or more public as-
sistance programs operated by the state as
identified in Subpart E of 45 CFR Part 95.
For the purpose of this Appendix, these pro-
grams include all programs administered by
the state public assistance agency.
2. State public assistance agency costs means
all costs incurred by, or allocable to, the
state public assistance agency, except ex-
penditures for financial assistance, medical
contractor payments, food stamps, and pay-
ments for services and goods provided di-
rectly to program recipients.
C. POLICY
State public assistance agencies will de-
velop, document and implement, and the
Federal Government will review, negotiate,
and approve, public assistance cost alloca-
tion plans in accordance with Subpart E of 45
CFR Part 95. The plan will include all pro-
grams administered by the state public as-
sistance agency. Where a letter of approval
or disapproval is transmitted to a state pub-
lic assistance agency in accordance with
Subpart E, the letter will apply to all Fed-
eral agencies and programs. The remaining
sections of this Appendix (except for the re-
quirement for certification) summarize the
provisions of Subpart E of 45 CFR Part 95.
D. SUBMISSION, DOCUMENTATION, AND AP-
PROVAL OF PUBLIC ASSISTANCE COST ALLO-
CATION PLANS
1. State public assistance agencies are re-
quired to promptly submit amendments to
the cost allocation plan to HHS for review
and approval.
2. Under the coordination process outlined
in section E, affected Federal agencies will
review all new plans and plan amendments
and provide comments, as appropriate, to
HHS. The effective date of the plan or plan
amendment will be the first day of the cal-
endar quarter following the event that re-
quired the amendment, unless another date
is specifically approved by HHS. HHS, as the
cognizant agency for indirect costs acting on
behalf of all affected Federal agencies, will,
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. VII
as necessary, conduct negotiations with the
state public assistance agency and will in-
form the state agency of the action taken on
the plan or plan amendment.
E. REVIEW OF IMPLEMENTATION OF APPROVED
PLANS
1. Since public assistance cost allocation
plans are of a narrative nature, the review
during the plan approval process consists of
evaluating the appropriateness of the pro-
posed groupings of costs (cost centers) and
the related allocation bases. As such, the
Federal Government needs some assurance
that the cost allocation plan has been imple-
mented as approved. This is accomplished by
reviews by the Federal awarding agencies,
single audits, or audits conducted by the
cognizant agency for indirect costs.
2. Where inappropriate charges affecting
more than one Federal awarding agency are
identified, the cognizant HHS cost negotia-
tion office will be advised and will take the
lead in resolving the issue(s) as provided for
in Subpart E of 45 CFR Part 95.
3. If a dispute arises in the negotiation of
a plan or from a disallowance involving two
or more Federal awarding agencies, the dis-
pute must be resolved in accordance with the
appeals procedures set out in 45 CFR Part 16.
Disputes involving only one Federal award-
ing agency will be resolved in accordance
with the Federal awarding agency’s appeal
process.
4. To the extent that problems are encoun-
tered among the Federal awarding agencies
or governmental units in connection with
the negotiation and approval process, the Of-
fice of Management and Budget will lend as-
sistance, as required, to resolve such prob-
lems in a timely manner.
F. UNALLOWABLE COSTS
Claims developed under approved cost allo-
cation plans will be based on allowable costs
as identified in this Part. Where unallowable
costs have been claimed and reimbursed,
they will be refunded to the program that re-
imbursed the unallowable cost using one of
the following methods: (a) a cash refund, (b)
offset to a subsequent claim, or (c) credits to
the amounts charged to individual Federal
awards. Cash refunds, offsets, and credits
may include at the option of the cognizant
agency for indirect cost, earned or imputed
interest from the date of expenditure and de-
linquent debt interest, if applicable, charge-
able in accordance with applicable cognizant
agency for indirect cost claims collection
regulations.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49581, Aug. 13, 2020]
APPENDIX VII TO PART 200—STATES AND
LOCAL GOVERNMENT AND INDIAN
TRIBE INDIRECT COST PROPOSALS
A. GENERAL
1. Indirect costs are those that have been
incurred for common or joint purposes.
These costs benefit more than one cost ob-
jective and cannot be readily identified with
a particular final cost objective without ef-
fort disproportionate to the results achieved.
After direct costs have been determined and
assigned directly to Federal awards and
other activities as appropriate, indirect costs
are those remaining to be allocated to bene-
fitted cost objectives. A cost may not be al-
located to a Federal award as an indirect
cost if any other cost incurred for the same
purpose, in like circumstances, has been as-
signed to a Federal award as a direct cost.
2. Indirect costs include (a) the indirect
costs originating in each department or
agency of the governmental unit carrying
out Federal awards and (b) the costs of cen-
tral governmental services distributed
through the central service cost allocation
plan (as described in Appendix V to this part)
and not otherwise treated as direct costs.
3. Indirect costs are normally charged to
Federal awards by the use of an indirect cost
rate. A separate indirect cost rate(s) is usu-
ally necessary for each department or agen-
cy of the governmental unit claiming indi-
rect costs under Federal awards. Guidelines
and illustrations of indirect cost proposals
are provided in a brochure published by the
Department of Health and Human Services
entitled ‘‘A Guide for States and Local Govern-
ment Agencies: Cost Principles and Procedures
for Establishing Cost Allocation Plans and Indi-
rect Cost Rates for Grants and Contracts with
the Federal Government.’’ A copy of this bro-
chure may be obtained from HHS Cost Allo-
cation Services or at their website.
4. Because of the diverse characteristics
and accounting practices of governmental
units, the types of costs which may be classi-
fied as indirect costs cannot be specified in
all situations. However, typical examples of
indirect costs may include certain state/
local-wide central service costs, general ad-
ministration of the non-Federal entity ac-
counting and personnel services performed
within the non-Federal entity, depreciation
on buildings and equipment, the costs of op-
erating and maintaining facilities.
5. This Appendix does not apply to state
public assistance agencies. These agencies
should refer instead to Appendix VI to this
part.
B. DEFINITIONS
1. Base means the accumulated direct costs
(normally either total direct salaries and
wages or total direct costs exclusive of any
extraordinary or distorting expenditures)
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OMB Guidance Pt. 200, App. VII
used to distribute indirect costs to indi-
vidual Federal awards. The direct cost base
selected should result in each Federal award
bearing a fair share of the indirect costs in
reasonable relation to the benefits received
from the costs.
2. Base period for the allocation of indirect
costs is the period in which such costs are in-
curred and accumulated for allocation to ac-
tivities performed in that period. The base
period normally should coincide with the
governmental unit’s fiscal year, but in any
event, must be so selected as to avoid inequi-
ties in the allocation of costs.
3. Cognizant agency for indirect costs means
the Federal agency responsible for reviewing
and approving the governmental unit’s indi-
rect cost rate(s) on the behalf of the Federal
Government. The cognizant agency for indi-
rect costs assignment is described in Appen-
dix V, section F.
4. Final rate means an indirect cost rate ap-
plicable to a specified past period which is
based on the actual allowable costs of the pe-
riod. A final audited rate is not subject to
adjustment.
5. Fixed rate means an indirect cost rate
which has the same characteristics as a pre-
determined rate, except that the difference
between the estimated costs and the actual,
allowable costs of the period covered by the
rate is carried forward as an adjustment to
the rate computation of a subsequent period.
6. Indirect cost pool is the accumulated
costs that jointly benefit two or more pro-
grams or other cost objectives.
7. Indirect cost rate is a device for deter-
mining in a reasonable manner the propor-
tion of indirect costs each program should
bear. It is the ratio (expressed as a percent-
age) of the indirect costs to a direct cost
base.
8. Indirect cost rate proposal means the doc-
umentation prepared by a governmental unit
or subdivision thereof to substantiate its re-
quest for the establishment of an indirect
cost rate.
9. Predetermined rate means an indirect cost
rate, applicable to a specified current or fu-
ture period, usually the governmental unit’s
fiscal year. This rate is based on an estimate
of the costs to be incurred during the period.
Except under very unusual circumstances, a
predetermined rate is not subject to adjust-
ment. (Because of legal constraints, pre-
determined rates are not permitted for Fed-
eral contracts; they may, however, be used
for grants or cooperative agreements.) Pre-
determined rates may not be used by govern-
mental units that have not submitted and
negotiated the rate with the cognizant agen-
cy for indirect costs. In view of the potential
advantages offered by this procedure, nego-
tiation of predetermined rates for indirect
costs for a period of two to four years should
be the norm in those situations where the
cost experience and other pertinent facts
available are deemed sufficient to enable the
parties involved to reach an informed judg-
ment as to the probable level of indirect
costs during the ensuing accounting periods.
10. Provisional rate means a temporary indi-
rect cost rate applicable to a specified period
which is used for funding, interim reimburse-
ment, and reporting indirect costs on Fed-
eral awards pending the establishment of a
‘‘final’’ rate for that period.
C. ALLOCATION OF INDIRECT COSTS AND
DETERMINATION OF INDIRECT COST RATES
1. General
a. Where a governmental unit’s depart-
ment or agency has only one major function,
or where all its major functions benefit from
the indirect costs to approximately the same
degree, the allocation of indirect costs and
the computation of an indirect cost rate may
be accomplished through simplified alloca-
tion procedures as described in subsection 2.
b. Where a governmental unit’s depart-
ment or agency has several major functions
which benefit from its indirect costs in vary-
ing degrees, the allocation of indirect costs
may require the accumulation of such costs
into separate cost groupings which then are
allocated individually to benefitted func-
tions by means of a base which best meas-
ures the relative degree of benefit. The indi-
rect costs allocated to each function are
then distributed to individual Federal
awards and other activities included in that
function by means of an indirect cost rate(s).
c. Specific methods for allocating indirect
costs and computing indirect cost rates
along with the conditions under which each
method should be used are described in sub-
sections 2, 3 and 4.
2. Simplified Method
a. Where a non-Federal entity’s major
functions benefit from its indirect costs to
approximately the same degree, the alloca-
tion of indirect costs may be accomplished
by (1) classifying the non-Federal entity’s
total costs for the base period as either di-
rect or indirect, and (2) dividing the total al-
lowable indirect costs (net of applicable
credits) by an equitable distribution base.
The result of this process is an indirect cost
rate which is used to distribute indirect
costs to individual Federal awards. The rate
should be expressed as the percentage which
the total amount of allowable indirect costs
bears to the base selected. This method
should also be used where a governmental
unit’s department or agency has only one
major function encompassing a number of in-
dividual projects or activities, and may be
used where the level of Federal awards to
that department or agency is relatively
small.
b. Both the direct costs and the indirect
costs must exclude capital expenditures and
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242
2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. VII
unallowable costs. However, unallowable
costs must be included in the direct costs if
they represent activities to which indirect
costs are properly allocable.
c. The distribution base may be (1) total di-
rect costs (excluding capital expenditures
and other distorting items, such as pass-
through funds, subcontracts in excess of
$25,000, participant support costs, etc.), (2)
direct salaries and wages, or (3) another base
which results in an equitable distribution.
3. Multiple Allocation Base Method
a. Where a non-Federal entity’s indirect
costs benefit its major functions in varying
degrees, such costs must be accumulated
into separate cost groupings. Each grouping
must then be allocated individually to bene-
fitted functions by means of a base which
best measures the relative benefits.
b. The cost groupings should be established
so as to permit the allocation of each group-
ing on the basis of benefits provided to the
major functions. Each grouping should con-
stitute a pool of expenses that are of like
character in terms of the functions they ben-
efit and in terms of the allocation base
which best measures the relative benefits
provided to each function. The number of
separate groupings should be held within
practical limits, taking into consideration
the materiality of the amounts involved and
the degree of precision needed.
c. Actual conditions must be taken into ac-
count in selecting the base to be used in allo-
cating the expenses in each grouping to ben-
efitted functions. When an allocation can be
made by assignment of a cost grouping di-
rectly to the function benefitted, the alloca-
tion must be made in that manner. When the
expenses in a grouping are more general in
nature, the allocation should be made
through the use of a selected base which pro-
duces results that are equitable to both the
Federal Government and the governmental
unit. In general, any cost element or related
factor associated with the governmental
unit’s activities is potentially adaptable for
use as an allocation base provided that: (1) it
can readily be expressed in terms of dollars
or other quantitative measures (total direct
costs, direct salaries and wages, staff hours
applied, square feet used, hours of usage,
number of documents processed, population
served, and the like), and (2) it is common to
the benefitted functions during the base pe-
riod.
d. Except where a special indirect cost
rate(s) is required in accordance with para-
graph (C)(4) of this Appendix, the separate
groupings of indirect costs allocated to each
major function must be aggregated and
treated as a common pool for that function.
The costs in the common pool must then be
distributed to individual Federal awards in-
cluded in that function by use of a single in-
direct cost rate.
e. The distribution base used in computing
the indirect cost rate for each function may
be (1) total direct costs (excluding capital ex-
penditures and other distorting items such
as pass-through funds, subawards in excess of
$25,000, participant support costs, etc.), (2)
direct salaries and wages, or (3) another base
which results in an equitable distribution.
An indirect cost rate should be developed for
each separate indirect cost pool developed.
The rate in each case should be stated as the
percentage relationship between the par-
ticular indirect cost pool and the distribu-
tion base identified with that pool.
4. Special Indirect Cost Rates
a. In some instances, a single indirect cost
rate for all activities of a non-Federal entity
or for each major function of the agency may
not be appropriate. It may not take into ac-
count those different factors which may sub-
stantially affect the indirect costs applicable
to a particular program or group of pro-
grams. The factors may include the physical
location of the work, the level of administra-
tive support required, the nature of the fa-
cilities or other resources employed, the or-
ganizational arrangements used, or any com-
bination thereof. When a particular Federal
award is carried out in an environment
which appears to generate a significantly
different level of indirect costs, provisions
should be made for a separate indirect cost
pool applicable to that Federal award. The
separate indirect cost pool should be devel-
oped during the course of the regular alloca-
tion process, and the separate indirect cost
rate resulting therefrom should be used, pro-
vided that: (1) The rate differs significantly
from the rate which would have been devel-
oped under paragraphs (C)(2) and (C)(3) of
this Appendix, and (2) the Federal award to
which the rate would apply is material in
amount.
b. Where Federal statutes restrict the re-
imbursement of certain indirect costs, it
may be necessary to develop a special rate
for the affected Federal award. Where a ‘‘re-
stricted rate’’ is required, the same proce-
dure for developing a non-restricted rate will
be used except for the additional step of the
elimination from the indirect cost pool those
costs for which the law prohibits reimburse-
ment.
D. SUBMISSION AND DOCUMENTATION OF
PROPOSALS
1. Submission of Indirect Cost Rate Proposals
a. All departments or agencies of the gov-
ernmental unit desiring to claim indirect
costs under Federal awards must prepare an
indirect cost rate proposal and related docu-
mentation to support those costs. The pro-
posal and related documentation must be re-
tained for audit in accordance with the
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243
OMB Guidance Pt. 200, App. VII
records retention requirements contained in
§200.334.
b. A governmental department or agency
unit that receives more than $35 million in
direct Federal funding must submit its indi-
rect cost rate proposal to its cognizant agen-
cy for indirect costs. Other governmental de-
partment or agency must develop an indirect
cost proposal in accordance with the require-
ments of this Part and maintain the proposal
and related supporting documentation for
audit. These governmental departments or
agencies are not required to submit their
proposals unless they are specifically re-
quested to do so by the cognizant agency for
indirect costs. Where a non-Federal entity
only receives funds as a subrecipient, the
pass-through entity will be responsible for
negotiating and/or monitoring the subrecipi-
ent’s indirect costs.
c. Each Indian tribal government desiring
reimbursement of indirect costs must submit
its indirect cost proposal to the Department
of the Interior (its cognizant agency for indi-
rect costs).
d. Indirect cost proposals must be devel-
oped (and, when required, submitted) within
six months after the close of the govern-
mental unit’s fiscal year, unless an exception
is approved by the cognizant agency for indi-
rect costs. If the proposed central service
cost allocation plan for the same period has
not been approved by that time, the indirect
cost proposal may be prepared including an
amount for central services that is based on
the latest federally-approved central service
cost allocation plan. The difference between
these central service amounts and the
amounts ultimately approved will be com-
pensated for by an adjustment in a subse-
quent period.
2. Documentation of Proposals
The following must be included with each
indirect cost proposal:
a. The rates proposed, including subsidiary
work sheets and other relevant data, cross
referenced and reconciled to the financial
data noted in subsection b. Allocated central
service costs will be supported by the sum-
mary table included in the approved central
service cost allocation plan. This summary
table is not required to be submitted with
the indirect cost proposal if the central serv-
ice cost allocation plan for the same fiscal
year has been approved by the cognizant
agency for indirect costs and is available to
the funding agency.
b. A copy of the financial data (financial
statements, comprehensive annual financial
report, executive budgets, accounting re-
ports, etc.) upon which the rate is based. Ad-
justments resulting from the use of
unaudited data will be recognized, where ap-
propriate, by the Federal cognizant agency
for indirect costs in a subsequent proposal.
c. The approximate amount of direct base
costs incurred under Federal awards. These
costs should be broken out between salaries
and wages and other direct costs.
d. A chart showing the organizational
structure of the agency during the period for
which the proposal applies, along with a
functional statement(s) noting the duties
and/or responsibilities of all units that com-
prise the agency. (Once this is submitted,
only revisions need be submitted with subse-
quent proposals.)
3. Required certification.
Each indirect cost rate proposal must be
accompanied by a certification in the fol-
lowing form:
CERTIFICATE OF INDIRECT COSTS
This is to certify that I have reviewed the
indirect cost rate proposal submitted here-
with and to the best of my knowledge and
belief:
(1) All costs included in this proposal [iden-
tify date] to establish billing or final indi-
rect costs rates for [identify period covered
by rate] are allowable in accordance with the
requirements of the Federal award(s) to
which they apply and the provisions of this
Part. Unallowable costs have been adjusted
for in allocating costs as indicated in the in-
direct cost proposal
(2) All costs included in this proposal are
properly allocable to Federal awards on the
basis of a beneficial or causal relationship
between the expenses incurred and the agree-
ments to which they are allocated in accord-
ance with applicable requirements. Further,
the same costs that have been treated as in-
direct costs have not been claimed as direct
costs. Similar types of costs have been ac-
counted for consistently and the Federal
Government will be notified of any account-
ing changes that would affect the predeter-
mined rate.
I declare that the foregoing is true and cor-
rect.
Governmental Unit: lllllllllllll
Signature: llllllllllllllllll
Name of Official: llllllllllllll
Title: llllllllllllllllllll
Date of Execution: lllllllllllll
E. NEGOTIATION AND APPROVAL OF RATES
1. Indirect cost rates will be reviewed, ne-
gotiated, and approved by the cognizant
agency on a timely basis. Once a rate has
been agreed upon, it will be accepted and
used by all Federal agencies unless prohib-
ited or limited by statute. Where a Federal
awarding agency has reason to believe that
special operating factors affecting its Fed-
eral awards necessitate special indirect cost
rates, the funding agency will, prior to the
time the rates are negotiated, notify the cog-
nizant agency for indirect costs.
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244
2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. VIII
2. The use of predetermined rates, if al-
lowed, is encouraged where the cognizant
agency for indirect costs has reasonable as-
surance based on past experience and reli-
able projection of the non-Federal entity’s
costs, that the rate is not likely to exceed a
rate based on actual costs. Long-term agree-
ments utilizing predetermined rates extend-
ing over two or more years are encouraged,
where appropriate.
3. The results of each negotiation must be
formalized in a written agreement between
the cognizant agency for indirect costs and
the governmental unit. This agreement will
be subject to re-opening if the agreement is
subsequently found to violate a statute, or
the information upon which the plan was ne-
gotiated is later found to be materially in-
complete or inaccurate. The agreed upon
rates must be made available to all Federal
agencies for their use.
4. Refunds must be made if proposals are
later found to have included costs that (a)
are unallowable (i) as specified by law or reg-
ulation, (ii) as identified in §200.420, or (iii)
by the terms and conditions of Federal
awards, or (b) are unallowable because they
are clearly not allocable to Federal awards.
These adjustments or refunds will be made
regardless of the type of rate negotiated
(predetermined, final, fixed, or provisional).
F. OTHER POLICIES
1. Fringe Benefit Rates
If overall fringe benefit rates are not ap-
proved for the governmental unit as part of
the central service cost allocation plan,
these rates will be reviewed, negotiated and
approved for individual recipient agencies
during the indirect cost negotiation process.
In these cases, a proposed fringe benefit rate
computation should accompany the indirect
cost proposal. If fringe benefit rates are not
used at the recipient agency level (i.e., the
agency specifically identifies fringe benefit
costs to individual employees), the govern-
mental unit should so advise the cognizant
agency for indirect costs.
2. Billed Services Provided by the Recipient
Agency
In some cases, governmental departments
or agencies (components of the govern-
mental unit) provide and bill for services
similar to those covered by central service
cost allocation plans (e.g., computer cen-
ters). Where this occurs, the governmental
departments or agencies (components of the
governmental unit)should be guided by the
requirements in Appendix V relating to the
development of billing rates and documenta-
tion requirements, and should advise the
cognizant agency for indirect costs of any
billed services. Reviews of these types of
services (including reviews of costing/billing
methodology, profits or losses, etc.) will be
made on a case-by-case basis as warranted by
the circumstances involved.
3. Indirect Cost Allocations Not Using Rates
In certain situations, governmental de-
partments or agencies (components of the
governmental unit), because of the nature of
their Federal awards, may be required to de-
velop a cost allocation plan that distributes
indirect (and, in some cases, direct) costs to
the specific funding sources. In these cases, a
narrative cost allocation methodology
should be developed, documented, main-
tained for audit, or submitted, as appro-
priate, to the cognizant agency for indirect
costs for review, negotiation, and approval.
4. Appeals
If a dispute arises in a negotiation of an in-
direct cost rate (or other rate) between the
cognizant agency for indirect costs and the
governmental unit, the dispute must be re-
solved in accordance with the appeals proce-
dures of the cognizant agency for indirect
costs.
5. Collection of Unallowable Costs and
Erroneous Payments
Costs specifically identified as unallowable
and charged to Federal awards either di-
rectly or indirectly will be refunded (includ-
ing interest chargeable in accordance with
applicable Federal cognizant agency for indi-
rect costs regulations).
6. OMB Assistance
To the extent that problems are encoun-
tered among the Federal agencies or govern-
mental units in connection with the negotia-
tion and approval process, OMB will lend as-
sistance, as required, to resolve such prob-
lems in a timely manner.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75889, Dec. 19, 2014; 85 FR 49581, Aug. 13,
2020]
APPENDIX VIII TO PART 200— NON-
PROFIT ORGANIZATIONS EXEMPTED
FROM SUBPART E OF PART 200
1. Advance Technology Institute (ATI),
Charleston, South Carolina
2. Aerospace Corporation, El Segundo, Cali-
fornia
3. American Institutes of Research (AIR),
Washington, DC
4. Argonne National Laboratory, Chicago, Il-
linois
5. Atomic Casualty Commission, Wash-
ington, DC
6. Battelle Memorial Institute,
Headquartered in Columbus, Ohio
7. Brookhaven National Laboratory, Upton,
New York
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245
OMB Guidance Pt. 200, App. XII
8. Charles Stark Draper Laboratory, Incor-
porated, Cambridge, Massachusetts
9. CNA Corporation (CNAC), Alexandria, Vir-
ginia
10. Environmental Institute of Michigan,
Ann Arbor, Michigan
11. Georgia Institute of Technology/Georgia
Tech Applied Research Corporation/Geor-
gia Tech Research Institute, Atlanta,
Georgia
12. Hanford Environmental Health Founda-
tion, Richland, Washington
13. IIT Research Institute, Chicago, Illinois
14. Institute of Gas Technology, Chicago, Il-
linois
15. Institute for Defense Analysis, Alexan-
dria, Virginia
16. LMI, McLean, Virginia
17. Mitre Corporation, Bedford, Massachu-
setts
18. Noblis, Inc., Falls Church, Virginia
19. National Radiological Astronomy Observ-
atory, Green Bank, West Virginia
20. National Renewable Energy Laboratory,
Golden, Colorado
21. Oak Ridge Associated Universities, Oak
Ridge, Tennessee
22. Rand Corporation, Santa Monica, Cali-
fornia
23. Research Triangle Institute, Research
Triangle Park, North Carolina
24. Riverside Research Institute, New York,
New York
25. South Carolina Research Authority
(SCRA), Charleston, South Carolina
26. Southern Research Institute, Bir-
mingham, Alabama
27. Southwest Research Institute, San Anto-
nio, Texas
28. SRI International, Menlo Park, California
29. Syracuse Research Corporation, Syra-
cuse, New York
30. Universities Research Association, Incor-
porated (National Acceleration Lab), Ar-
gonne, Illinois
31. Urban Institute, Washington DC
32. Nonprofit insurance companies, such as
Blue Cross and Blue Shield Organizations
33. Other nonprofit organizations as nego-
tiated with Federal awarding agencies
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49582, Aug. 13, 2020]
APPENDIX IX TO PART 200—HOSPITAL
COST PRINCIPLES
Based on initial feedback, OMB proposes to
establish a review process to consider exist-
ing hospital cost determine how best to up-
date and align them with this Part. Until
such time as revised guidance is proposed
and implemented for hospitals, the existing
principles located at 45 CFR Part 75 Appen-
dix E, entitled ‘‘Principles for Determining
Cost Applicable to Research and Develop-
ment Under Grants and Contracts with Hos-
pitals,’’ remain in effect.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75889, Dec. 19, 2014]
APPENDIX X TO PART 200—DATA
COLLECTION FORM (FORM SF–SAC)
The Data Collection Form SF–SAC is
available on the FAC Web site.
APPENDIX XI TO PART 200—COMPLIANCE
SUPPLEMENT
The compliance supplement is available on
the OMB website.
[85 FR 49582, Aug. 13, 2020]
APPENDIX XII TO PART 200—AWARD
TERM AND CONDITION FOR RECIPIENT
INTEGRITY AND PERFORMANCE MAT-
TERS
A. REPORTING OF MATTERS RELATED TO
RECIPIENT INTEGRITY AND PERFORMANCE
1. General Reporting Requirement
If the total value of your currently active
grants, cooperative agreements, and procure-
ment contracts from all Federal awarding
agencies exceeds $10,000,000 for any period of
time during the period of performance of this
Federal award, then you as the recipient dur-
ing that period of time must maintain the
currency of information reported to the Sys-
tem for Award Management (SAM) that is
made available in the designated integrity
and performance system (currently the Fed-
eral Awardee Performance and Integrity In-
formation System (FAPIIS)) about civil,
criminal, or administrative proceedings de-
scribed in paragraph 2 of this award term
and condition. This is a statutory require-
ment under section 872 of Public Law 110–417,
as amended (41 U.S.C. 2313). As required by
section 3010 of Public Law 111–212, all infor-
mation posted in the designated integrity
and performance system on or after April 15,
2011, except past performance reviews re-
quired for Federal procurement contracts,
will be publicly available.
2. Proceedings About Which You Must Report
Submit the information required about
each proceeding that:
a. Is in connection with the award or per-
formance of a grant, cooperative agreement,
or procurement contract from the Federal
Government;
b. Reached its final disposition during the
most recent five-year period; and
c. Is one of the following:
(1) A criminal proceeding that resulted in a
conviction, as defined in paragraph 5 of this
award term and condition;
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2 CFR Ch. II (1–1–21 Edition) Pt. 200, App. XII
(2) A civil proceeding that resulted in a
finding of fault and liability and payment of
a monetary fine, penalty, reimbursement,
restitution, or damages of $5,000 or more;
(3) An administrative proceeding, as de-
fined in paragraph 5. of this award term and
condition, that resulted in a finding of fault
and liability and your payment of either a
monetary fine or penalty of $5,000 or more or
reimbursement, restitution, or damages in
excess of $100,000; or
(4) Any other criminal, civil, or adminis-
trative proceeding if:
(i) It could have led to an outcome de-
scribed in paragraph 2.c.(1), (2), or (3) of this
award term and condition;
(ii) It had a different disposition arrived at
by consent or compromise with an acknowl-
edgment of fault on your part; and
(iii) The requirement in this award term
and condition to disclose information about
the proceeding does not conflict with appli-
cable laws and regulations.
3. Reporting Procedures
Enter in the SAM Entity Management area
the information that SAM requires about
each proceeding described in paragraph 2 of
this award term and condition. You do not
need to submit the information a second
time under assistance awards that you re-
ceived if you already provided the informa-
tion through SAM because you were required
to do so under Federal procurement con-
tracts that you were awarded.
4. Reporting Frequency
During any period of time when you are
subject to the requirement in paragraph 1 of
this award term and condition, you must re-
port proceedings information through SAM
for the most recent five year period, either
to report new information about any pro-
ceeding(s) that you have not reported pre-
viously or affirm that there is no new infor-
mation to report. Recipients that have Fed-
eral contract, grant, and cooperative agree-
ment awards with a cumulative total value
greater than $10,000,000 must disclose semi-
annually any information about the crimi-
nal, civil, and administrative proceedings.
5. Definitions
For purposes of this award term and condi-
tion:
a. Administrative proceeding means a non-
judicial process that is adjudicatory in na-
ture in order to make a determination of
fault or liability (e.g., Securities and Ex-
change Commission Administrative pro-
ceedings, Civilian Board of Contract Appeals
proceedings, and Armed Services Board of
Contract Appeals proceedings). This includes
proceedings at the Federal and State level
but only in connection with performance of a
Federal contract or grant. It does not in-
clude audits, site visits, corrective plans, or
inspection of deliverables.
b. Conviction, for purposes of this award
term and condition, means a judgment or
conviction of a criminal offense by any court
of competent jurisdiction, whether entered
upon a verdict or a plea, and includes a con-
viction entered upon a plea of nolo
contendere.
c. Total value of currently active grants,
cooperative agreements, and procurement
contracts includes—
(1) Only the Federal share of the funding
under any Federal award with a recipient
cost share or match; and
(2) The value of all expected funding incre-
ments under a Federal award and options,
even if not yet exercised.
B. [Reserved]
[80 FR 43310, July 22, 2015, as amended at 85
FR 49582, Aug. 13, 2020]
PARTS 201–299 [RESERVED]
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13 ATTACHMENT C CONTINUED
FEDERAL PROVISIONS
Should funding be allocated through American Rescue Plan Act (ARPA; (Title VI of the Social Security Act Section 602 et seq.), the COUNTY will administer and distribute those funds in accordance with ARPA. ARPA requires that payments from the Coronavirus Fiscal Recovery Fund be used to respond to the public health emergency or its negative economic impacts, to respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay, provide government services to the extent the reduction of revenue due to COVID-19 public health emergency, and to make necessary investments in water, sewer or broadband infrastructure. It is effective beginning May 17, 2021 and ends on December 31, 2026.
Subrecipient acknowledges and agrees that this Agreement is subject to the federal requirements, including but not limited to the federal provisions provided below:
1. NON-DISCRIMINATION. Subrecipient shall not be discriminate in the provision of services, allocation of benefits, accommodation in facilities, or employment of personnel on the basis of ethnic group identification, race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status or sex in the performance of this Agreement; and, to the extent they shall be found to be applicable hereto, shall comply with the provisions of the California Fair Employment and Housing Act (Gov. Code 12900 et. seq), the Federal Civil Rights Act of 1964 (P.L. 88-352), the Americans with Disabilities Act of 1990 (42 U.S.C. S1210 et seq.) and all other applicable laws or regulations.
2. EQUAL EMPLOYMENT OPPORTUNITY/ FAIR EMPLOYMENT PRACTICES/ FEDERAL PROVISIONS. During the performance of this Agreement, the Subrecipient shall not deny benefits to any person on the basis of religion, color, ethnic group identification, sex, age, physical or mental disability, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, religion, color, national origin, ancestry, physical handicap, mental disability, medical condition, marital status, age, or sex. Subrecipient shall ensure that the evaluation and treatment of employees and applicants for employment are free of such discrimination.
A. Subrecipient shall comply with the provisions of the Fair Employment and Housing Act (Government Code, Section 12900 et seq.), the regulations promulgated thereunder (California Code of Regulations, Title 2, Section 11000 et seq.), the provisions of Executive Order 11246 of Sept. 23, 1965 and of the rules, regulations, and relevant orders of the Secretary of Labor, the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Government Code, Sections 11135-11139.8), and of the rules, regulations or standards adopted by the County to implement such article.
B. The Subrecipient shall comply with the provisions of the Copeland “Anti-Kickback” Act, 18 U.S.C. § 874, 40 U.S.C. § 3145, and the requirements of 29 C.F.R. pt. 3 as may be applicable, which are incorporated by reference into this Agreement.
3. CLEAN AIR ACT. The Subrecipient agrees to comply with all applicable standards, orders, or regulations issued pursuant to the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.
The Subrecipient agrees to report each violation to the County and understands and agrees that the County will, in turn, report each violation as required to assure notification to the California
14 Governor's Office of Emergency Services, Federal Emergency Management Agency (FEMA), and the appropriate Environmental Protection Agency Regional Office. The Subrecipient agrees to include these requirements in each subcontract exceeding $150,000 financed in whole or in part with Federal assistance provided by FEMA.
4. FEDERAL WATER POLLUTION CONTROL ACT
The Subrecipient agrees to comply with all applicable standards, orders, or regulations issued pursuant to the Federal Water Pollution Control Act, as amended, 33 U.S.C. Sections 1251 et seq.
The Subrecipient agrees to report each violation to the County and understands and agrees that the County will, in turn, report each violation as required to assure notification to the Federal Emergency Management Agency (FEMA), and the appropriate Environmental Protection Agency Regional Office.
The Subrecipient agrees to include these requirements in each subcontract exceeding $150,000 financed in whole or in part with Federal assistance provided by FEMA.
5. DEBARMENT AND SUSPENSION CLAUSE
This Agreement is a covered transaction for purposes of 2 C.F.R. pt. 180 and 2 C.F.R. pt. 3000. As such the Subrecipient is required to verify that none of the Subrecipient, its principals (defined at 2 C.F.R. § 180.995), or its affiliates (defined at 2 C.F.R. § 180.905) are excluded (defined at 2 C.F.R. § 180.940) or disqualified (defined at 2 C.F.R. § 180.935).
The Subrecipient must comply with 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C and must include a requirement to comply with these regulations in any lower tier covered transaction it enters into.
This certification is a material representation of fact relied upon by the County. If it is later determined that the Subrecipient did not comply with 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C, in addition to remedies available to the County, the Federal Government may pursue available remedies, including but not limited to suspension and/or debarment.
The bidder or proposer agrees to comply with the requirements of 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C while this offer is valid and throughout the period of any contract that may arise from this offer. The bidder or proposer further agrees to include a provision requiring such compliance in its lower tier covered transactions.
6. BYRD ANTI- LOBBYING AMENDMENT, 31 U.S.C. § 1352 (AS AMENDED)
Subrecipients who apply or bid for an award of $100,000 or more shall file the required certification.
Each tier certifies to the tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant, or any other award covered by 31 U.S.C. § 1352.
Each tier shall also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up to the recipient who in turn will forward the certification(s) to the County.
APPENDIX A, 44 C.F.R. PART 18- CERTIFICATION REGARDING LOBBYING
The undersigned [Subrecipient] certifies, to the best of his or her knowledge, that:
A. No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection
15 with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
B. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions.
C. The undersigned shall require that the language of this certification be included in the award documents for all sub-awards at all tiers (including subcontracts, sub-grants, and contracts under grants, loans, and cooperative agreements) and that all sub-recipients shall certify and disclose accordingly.
This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by 31, U.S.C. § 1352 (as amended by the Lobbying Disclosure Act of 1995). Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
The Subrecipient certifies or affirms the truthfulness and accuracy of each statement of its certification and disclosure, if any. In addition, the Subrecipient understands and agrees that the provisions of 31 U.S.C. § 3801 et seq., apply to this certification and disclosure, if any.
SUBRECIPIENT
By
Date
7. PROCUREMENT OF RECOVERED MATERIALS
In the performance of this Agreement, the Subrecipient shall make maximum use of products containing recovered materials that are EPA-designated items unless the product cannot be acquired A. Competitively within a timeframe providing for compliance with the contract performance schedule;
B. Meeting contract performance requirements; or
C. At a reasonable price.
Information about this requirement, along with the list of EPA-designated items, is available at EPA’s Comprehensive Procurement Guidelines web site, https://www.epa.gov/smm/comprehensive- procurement-guideline-cpg-program
The Subrecipient also agrees to comply with all other applicable requirements of Section 6002 of the Solid Waste Disposal Act.
8. ACCESS TO RECORDS
The following access to records requirements apply to this Agreement:
A. The Subrecipient agrees to provide the County, the FEMA Administrator, the Comptroller General of the United States, or any of their authorized representatives access to any books, documents, papers, and records of the Subrecipient which are directly pertinent to this Agreement for the purposes of making audits, examinations, excerpts, and transcriptions B. The Subrecipient agrees to permit any of the foregoing parties to reproduce by any means whatsoever or to copy excerpts and transcriptions as reasonably needed.
16 C. The Subrecipient agrees to provide the FEMA Administrator or his or her authorized representatives access to construction or other work sites pertaining to the work being completed under the contract.
D. In compliance with the Disaster Recovery Act of 2018, the County and the Subrecipient acknowledge and agree that no language in this contract is intended to prohibit audits or internal reviews by the FEMA Administrator or the Comptroller General of the United States.
9. DEPARTMENT OF HOMELAND SECURITY SEAL, LOGO, FLAGS
The Subrecipient shall not use the DHS seal(s), logos, crests, or reproductions of flags or likenesses of DHS agency officials without specific FEMA pre-approval.
10. COMPLIANCE WITH FEDERAL LAW, REGULATIONS, AND EXECUTIVE ORDERS
This is an acknowledgement that FEMA financial assistance will be used to fund all or a portion of the contract. The Subrecipient will comply with all applicable Federal law, regulations, executive orders, FEMA policies, procedures, and directives.
11. NO OBLIGATION BY FEDERAL GOVERNMENT
The Federal Government is not a party to this Agreement and is not subject to any obligations or liabilities to the non-Federal entity, contractor, or any other party pertaining to any matter resulting from the contract.
12. PROGRAM FRAUD AND FALSE OR FRAUDULENT STATEMENTS OR RELATED ACTS
The Subrecipient acknowledges that 31 U.S.C. Chapter 38 (Administrative Remedies for False Claims and Statements) applies to the Subrecipient’s actions pertaining to this Agreement.
13. FEDERAL PREVAILING WAGE
DAVIS-BACON ACT COMPLIANCE (applicable to construction contracts in excess of $2,000 awarded by grantees and subgrantees when required by Federal grant program legislation)
To the extent required by any Federal grant programs applicable to expected funding or reimbursement expenses incurred in connection with the services provided under this Agreement, Subrecipient agrees to comply with the Davis-Bacon Act (40 U.S.C. §§ 3141-3144 and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5) as set forth below.
A. The Subrecipient shall be bound to the provisions of the Davis-Bacon Act, and agrees to be bound by all the provisions of Labor Code section 1771 regarding prevailing wages. All labor on this project shall be paid neither less than the greater of the minimum wage rates established by the U.S. Secretary of Labor (Federal Wage Rates), or by the State of California Director of Department of Industrial Relations (State Wage Rates). Current DIR requirements may be found at http://www.dir.ca.gov/lcp.asp . Additionally, wages are required to be paid not less than once a week.
B. The general prevailing wage rates may be accessed at the Department of Labor Home Page at www.wdol.gov . Under the Davis Bacon heading, click on “Selecting DBA WDs.” In the drop down menu
17 for State, select, “California.” In the drop down menu for County, select “Riverside.” In the drop down menu for Construction Type, make the appropriate selection. Then, click Search.
The Federal minimum wage rates for this project are predetermined by the United States Secretary of Labor. If there is a difference between the minimum wage rates predetermined by the Secretary of Labor and the general prevailing wage rates determined by the Director of the California DIR for similar classifications of labor, the Subrecipient and subcontractors shall pay not less than the higher wage rate. The County will not accept lower State wage rates not specifically included in the Federal minimum wage determinations. This includes “helper” (or other classifications based on hours of experience) or any other classification not appearing in the Federal wage determinations. Where Federal wage determinations do not contain the State wage rate determination otherwise available for use by the Subrecipient and subcontractors, the Subrecipient and subcontractors shall pay not less than the Federal minimum wage rate which most closely approximates the duties of the employees in question.
14. CONTRACT WORK HOURS AND SAFETY STANDARDS (applicable to all contracts in excess of $100,000 that involve the employment of mechanics or laborers, but not to purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence)
A. Compliance: Subrecipient agrees that it shall comply with Sections 3702 and 3704 of the Contract Work Hours and Safety Standards Act (40 U.S.C. §§ 3701–3708) as supplemented by Department of Labor regulations (29 CFR Part 5), which are incorporated herein.
B. Overtime: No contractor or subcontractor contracting for any part of the work under this Agreement which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek.
C. Violation; liability for unpaid wages; liquidated damages: In the event of any violation of the provisions of paragraph B of this section, the Subrecipient and any subcontractor responsible therefore shall be liable for the unpaid wages. In addition, such Subrecipient and subcontractor shall be liable to the United States for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic employed in violation of the provisions of paragraph B, in the sum of $10 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours without payment of the overtime wages required by paragraph B.
D. Withholding for unpaid wages and liquidated damages: Subrecipient shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any moneys payable on account of work performed by the contractor or subcontractor under any such contract or any other Federal contract with the same prime contractor, or any other federally- assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime contractor, such sums as may be determined to be necessary to satisfy any liabilities of such contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause set for in paragraph C of this section.
E. Subcontracts: The contractor or subcontractor shall insert in any subcontracts the clauses set forth in paragraphs A through D of this section and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in paragraphs A through D of this section.
18 15. RIGHTS TO INVENTIONS MADE UNDER A CONTRACT OR AGREEMENT— Contracts or agreements for the performance of experimental, developmental, or research work shall provide for the rights of the Federal Government and the recipient in any resulting invention in accordance with 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements,” and any implementing regulations issued by HUD.
16. RIGHTS TO DATA AND COPYRIGHTS – Subrecipients and consultants agree to comply with all applicable provisions pertaining to the use of data and copyrights pursuant to 48 CFR Part 27.4, Federal Acquisition Regulations (FAR).
17. PROHIBITION ON CONTRACTING FOR COVERED TELECOMMUNICATIONS
EQUIPMENT OR SERVICES
A. Definitions. As used in this clause, the terms backhaul; covered foreign country; covered telecommunications equipment or services; interconnection arrangements; roaming; substantial or essential component; and telecommunications equipment or services have the meaning as defined in FEMA Policy, #405-143-1 Prohibitions on Expending FEMA Award Funds for Covered Telecommunications Equipment or Services As used in this clause— B. Prohibitions.
(1) Section 889(b) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, Pub. L. No. 115-232, and 2 C.F.R. § 200.216 prohibit the head of an executive agency on or after Aug.13, 2020, from obligating or expending grant, cooperative agreement, loan, or loan guarantee funds on certain telecommunications products or from certain entities for national security reasons.
(2) Unless an exception in paragraph (c) of this clause applies, the contractor and its subcontractors may not use grant, cooperative agreement, loan, or loan guarantee funds from the Federal Emergency Management Agency to:
(i) Procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system;
(ii) Enter into, extend, or renew a contract to procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system; (iii) Enter into, extend, or renew contracts with entities that use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system; or (iv)Provide, as part of its performance of this contract, subcontract, or other contractual instrument, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.
C. Exceptions.
(1) This clause does not prohibit contractors from providing— a. A service that connects to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements; or
b. Telecommunications equipment that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles.
19 (2) By necessary implication and regulation, the prohibitions also do not apply to:
a. Covered telecommunications equipment or services that:
i. Are not used as a substantial or essential component of any system; and ii. Are not used as critical technology of any system.
b. Other telecommunications equipment or services that are not considered covered telecommunications equipment or services.
D. Reporting requirement.
(1) In the event the contractor identifies covered telecommunications equipment or services used as a substantial or essential component of any system, or as critical technology as part of any system, during contract performance, or the contractor is notified of such by a subcontractor at any tier or by any other source, the contractor shall report the information in paragraph (d)(2) of this clause to the recipient or subrecipient, unless elsewhere in this contract are established procedures for reporting the information. (2) The Subrecipient shall report the following information pursuant to paragraph (d)(1) of this clause:
(i) Within one business day from the date of such identification or notification:
The contract number; the order number(s), if applicable; supplier name; supplier unique entity identifier (if known); supplier Commercial and Government Entity (CAGE) code (if known); brand; model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); item description; and any readily available information about mitigation actions undertaken or recommended. ii) Within 10 business days of submitting the information in paragraph (d)(2)(i) of this clause: Any further available information about mitigation actions undertaken or recommended. In addition, the contractor shall describe the efforts it undertook to prevent use or submission of covered telecommunications equipment or services, and any additional efforts that will be incorporated to prevent future use or submission of covered telecommunications equipment or services. Page 10
E. Subcontracts. The Subrecipient shall insert the substance of this clause, including this paragraph (e), in all subcontracts and other contractual instruments.
18. REPORTING OF MATTERS RELATED TO RECIPIENT INTEGRITY AND PERFORMANCE A. General Reporting Requirement
If the total value of your currently active grants, cooperative agreements, and procurement contracts from all Federal awarding agencies exceeds $10,000,000 for any period of time during the period of performance of this Federal award, then you as the recipient during that period of time must maintain the currency of information reported to the System for Award Management (SAM) that is made available in the designated integrity and performance system (currently the Federal Awardee Performance and Integrity Information System (FAPIIS)) about civil, criminal, or administrative proceedings described in paragraph 2 of this award term and condition. This is a statutory requirement under section 872 of Public Law 110-417, as amended (41 U.S.C. 2313). As required by section 3010 of Public Law 111- 212, all information posted in the designated integrity and performance system on or after April 15, 2011, except past performance reviews required for Federal procurement contracts, will be publicly available.
B. Proceedings About Which You Must Report
Submit the information required about each proceeding that:
a. Is in connection with the award or performance of a grant, cooperative agreement, or procurement contract from the Federal Government;
b. Reached its final disposition during the most recent five-year period; and
20 c. Is one of the following:
(1) A criminal proceeding that resulted in a conviction, as defined in paragraph 5 of this award term and condition;
(2) A civil proceeding that resulted in a finding of fault and liability and payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more; (3) An administrative proceeding, as defined in paragraph 5. of this award term and condition, that resulted in a finding of fault and liability and your payment of either a monetary fine or penalty of $5,000 or more or reimbursement, restitution, or damages in excess of $100,000; or (4) Any other criminal, civil, or administrative proceeding if:
(i) It could have led to an outcome described in paragraph 2.c.(1), (2), or (3) of this award term and condition;
(ii) It had a different disposition arrived at by consent or compromise with an acknowledgment of fault on your part; and
(iii) The requirement in this award term and condition to disclose information about the proceeding does not conflict with applicable laws and regulations.
C. Reporting Procedures
Enter in the SAM Entity Management area the information that SAM requires about each proceeding described in paragraph 2 of this award term and condition. You do not need to submit the information a second time under assistance awards that you received if you already provided the information through SAM because you were required to do so under Federal procurement contracts that you were awarded.
D. Reporting Frequency
During any period of time when you are subject to the requirement in paragraph 1 of this award term and condition, you must report proceedings information through SAM for the most recent five year period, either to report new information about any proceeding(s) that you have not reported previously or affirm that there is no new information to report. Recipients that have Federal contract, grant, and cooperative agreement awards with a cumulative total value greater than $10,000,000 must disclose semiannually any information about the criminal, civil, and administrative proceedings.
E. Definitions
For purposes of this award term and condition:
a. Administrative proceeding means a non-judicial process that is adjudicatory in nature in order to make a determination of fault or liability (e.g., Securities and Exchange Commission Administrative proceedings, Civilian Board of Contract Appeals proceedings, and Armed Services Board of Contract Appeals proceedings). This includes proceedings at the Federal and State level but only in connection with performance of a Federal contract or grant. It does not include audits, site visits, corrective plans, or inspection of deliverables.
b. Conviction, for purposes of this award term and condition, means a judgment or conviction of a criminal offense by any court of competent jurisdiction, whether entered upon a verdict or a plea, and includes a conviction entered upon a plea of nolo contendere. c. Total value of currently active grants, cooperative agreements, and procurement contracts includes - (1) Only the Federal share of the funding under any Federal award with a recipient cost share or match; and
(2) The value of all expected funding increments under a Federal award and options, even if not yet exercised.
21 Attachment D – Indemnification and Insurance Requirements
INDEMNIFICATION
A. Basic Indemnity
1. To the fullest extent permitted by applicable law, Subrecipient agrees to indemnify, hold harmless and defend the County of Riverside, its Agencies, Districts, Departments and Special Districts, Board of Supervisors, elected and appointed officials, and each of their respective directors, members officers, employees, agents, volunteers and representatives ("Indemnitees") and each of them from any and all Losses that arise out of or relate to any act or omission constituting ordinary and not professional negligence (including, without limitation, negligent breach of contract), recklessness, or willful misconduct on the part of Subrecipient or its subconsultants or their respective employees, agents, representatives, or independent contractors.
2. "Losses" shall mean any and all economic and non-economic losses, costs, liabilities, claims, damages, actions, judgements, settlements and expenses, including, without limitation, full and actual attorney's fees (including, without limitation, attorney's fees for trial and on appeal), expert and non-expert witness fees, arbitrator and arbitration fees and mediator and mediation fees.
3. Subrecipient further agrees to and shall indemnify and hold harmless the Indemnitees from all liability arising from suits, claims, demands, actions, or proceedings made by agents, employees or subcontractors of Subrecipient for salary, wages, compensation, health benefits, insurance, retirement or any other benefit not explicitly set forth in this Agreement and arising out of work performed for County pursuant to this Agreement. The Indemnitees shall be entitled to the defense and indemnification provided for hereunder regardless of whether the Loss is in part caused or contributed to by the acts or omissions of an Indemnitee or any other person or entity; provided however, that nothing contained herein shall be construed as obligating Subrecipient to indemnify and hold harmless any Indemnitee to the extent not required under the provisions of Paragraph B below.
B. Indemnity for Design Professionals
1. To the fullest extent permitted by Applicable Law, Subrecipient agrees to defend (through legal counsel reasonably acceptable to County), indemnify and hold harmless the Indemnitees, and each of them, against any and all Losses that arise out of, pertain to, or relate to, any negligence, recklessness or willful misconduct constituting professional negligence on the part of Subrecipient or its Subconsultants, or their respective employees, agents, representatives, or independent contractors. The Indemnitees shall be entitled to the defense, and indemnification provided for hereunder regardless of whether the Loss is, in part, caused or contributed to by the acts or omissions of an Indemnitee or any other person or entity; provided, however, that nothing contained herein shall be construed as obligating Subrecipient to indemnify and hold harmless any Indemnitee to the extent not required under the provisions of this section. Subrecipient shall defend and pay, all costs and fees, including but not limited to attorney fees, cost of investigation, and defense, in any loss, suits, claims, demands, actions, or proceedings to the extent and in proportion to the percentage, such costs and fees arise out of, pertain to, or relate to the negligence, recklessness or willful misconduct of Subrecipient arising out of or from the performance of professional design services under this Agreement. The duty to defend applies to any alleged or actual negligence, recklessness, willful misconduct of Subrecipient. The cost for defense shall apply whether or not Subrecipient is a party to the lawsuit and shall apply whether or not Subrecipient is directly liable to the plaintiffs in the lawsuit. The duty to defend applies even if Indemnitees are alleged or found to be actively negligent, but only in proportion to the percentage of fault or negligence of Subrecipient.
22 2. Without affecting the rights of County under any other provision of this Agreement, Subrecipient shall not be required to indemnify or hold harmless or provide defense or defense costs to an Indemnitee for a loss due to that Indemnitee's negligence, recklessness or willful misconduct; provided, however, that such negligence, recklessness or willful misconduct has been determined by agreement of Subrecipient and Indemnitee or has been adjudged by the findings of a court of competent jurisdiction.
C. Subrecipient agrees to obtain or cause to be obtained executed defense and indemnity agreements with provisions identical to those set forth in this section from each and every Subconsultant, of every Tier.
D. Subrecipient's indemnification obligations under this Agreement shall not be limited by the amount or type of damages, compensation or benefits payable under any policy of insurance, workers' compensation acts, disability benefit acts or other employee benefit acts.
E. The Indemnitees shall be entitled to recover their attorneys' fees, costs and expert and consultant costs in pursuing or enforcing their right to defense and/or indemnification under this Agreement.
INSURANCE REQUIREMENTS
Without limiting or diminishing the Subrecipient’s obligation to indemnify or hold the County harmless, Subrecipient shall procure and maintain or cause to be maintained, at its sole cost and expense, the following insurance coverages during the term of this Agreement. As respects to the insurance section only, the County herein refers to the County of Riverside, its Agencies, Districts, Special Districts, and Departments, their respective directors, officers, Board of Supervisors, employees, elected or appointed officials, agents or representatives as Additional Insureds.
A. Workers’ Compensation: If the Subrecipient has employees as defined by the State of California, the Subrecipient shall maintain statutory Workers Compensation Insurance (Coverage A) as prescribed by the laws of the State of California. Policy shall include Employers’ Liability (Coverage B) including Occupational Disease with limits not less than $1,000,000 per person per accident. The policy shall be endorsed to waive subrogation in favor of The County of Riverside.
B. Commercial General Liability: Commercial General Liability insurance coverage, including but not limited to, premises liability, unmodified contractual liability, products and completed operations liability, personal and advertising injury, and cross liability coverage, covering claims which may arise from or out of Subrecipient’s performance of its obligations hereunder. Policy shall name the County as Additional Insured. Policy’s limit of liability shall not be less than $2,000,000 per occurrence combined single limit. If such insurance contains a general aggregate limit, it shall apply separately to this agreement or be no less than two (2) times the occurrence limit. Policy shall name the County as Additional Insureds.
C. Vehicle Liability: If vehicles or mobile equipment are used in the performance of the obligations under this Agreement, then Subrecipient shall maintain liability insurance for all owned, non-owned or hired vehicles so used in an amount not less than $1,000,000 per occurrence combined single limit. If such insurance contains a general aggregate limit, it shall apply separately to this agreement or be no less than two (2) times the occurrence limit. Policy shall name the County as Additional Insureds.
23 D. Professional Liability: Subrecipient shall maintain Professional Liability Insurance providing coverage for the Subrecipient’s performance of work included within this Agreement, with a limit of liability of not less than $1,000,000 per occurrence and $2,000,000 annual aggregate. If Contractor’s Professional Liability Insurance is written on a claims made basis rather than an occurrence basis, such insurance shall continue through the term of this Agreement and Subrecipient shall purchase at his sole expense either 1) an Extended Reporting Endorsement (also, known as Tail Coverage); or 2) Prior Dates Coverage from new insurer with a retroactive date back to the date of, or prior to, the inception of this Agreement; or 3) demonstrate through Certificates of Insurance that Subrecipient has Maintained continuous coverage with the same or original insurer. Coverage provided under items 1), 2), or 3) will continue as long as the law allows. Policy shall name the County as Additional Insureds.
E. General Insurance Provisions - All lines:
1. Any insurance carrier providing insurance coverage hereunder shall be admitted to the State of California and have an A M BEST rating of not less than A: VIII (A:8) unless such requirements are waived, in writing, by the County Risk Manager. If the County’s Risk Manager waives a requirement for a particular insurer such waiver is only valid for that specific insurer and only for one policy term.
2. The Subrecipient must declare its insurance self-insured retention for each coverage required herein. If any such self-insured retention exceed $500,000 per occurrence each such retention shall have the prior written consent of the County Risk Manager before the commencement of operations under this Agreement. Upon notification of self-insured retention unacceptable to the County, and at the election of the County’s Risk Manager, Subrecipient’s carriers shall either; 1) reduce or eliminate such self-insured retention as respects this Agreement with the County, or 2) procure a bond which guarantees payment of losses and related investigations, claims administration, and defense costs and expenses.
3. Subrecipient shall cause Subrecipient’s insurance carrier(s) to furnish the County of Riverside with either 1) a properly executed original Certificate(s) of Insurance and certified original copies of Endorsements effecting coverage as required herein, and 2) if requested to do so orally or in writing by the County Risk Manager, provide original Certified copies of policies including all Endorsements and all attachments thereto, showing such insurance is in full force and effect. Further, said Certificate(s) and policies of insurance shall contain the covenant of the insurance carrier(s) that a minimum of thirty (30) days written notice shall be given to the County of Riverside prior to any material modification, cancellation, expiration or reduction in coverage of such insurance. If Subrecipient insurance carrier(s) policies does not meet the minimum notice requirement found herein, Subrecipient shall cause Subrecipient’s insurance carrier(s) to furnish a 30 day Notice of Cancellation Endorsement.
4. In the event of a material modification, cancellation, expiration, or reduction in coverage, this Agreement shall terminate forthwith, unless the County of Riverside receives, prior to such effective date, another properly executed original Certificate of Insurance and
24 original copies of endorsements or certified original policies, including all endorsements and attachments thereto evidencing coverage’s set forth herein and the insurance required herein is in full force and effect. Subrecipient shall not commence operations until the County has been furnished original Certificate (s) of Insurance and certified original copies of endorsements and if requested, certified original policies of insurance including all endorsements and any and all other attachments as required in this Section. An individual authorized by the insurance carrier to do so on its behalf shall sign the original endorsements for each policy and the Certificate of Insurance.
5. It is understood and agreed to by the parties hereto that the Subrecipient’s insurance shall be construed as primary insurance, and the County's insurance and/or deductibles and/or self- insured retentions or self-insured programs shall not be construed as contributory.
6. If, during the term of this Agreement or any extension thereof, there is a material change in the scope of services; or, there is a material change in the equipment to be used in the performance of the scope of work; or, the term of this Agreement, including any extensions thereof, exceeds five (5) years; the County reserves the right to adjust the types of insurance and the monetary limits of liability required under this Agreement, if in the County Risk Management's reasonable judgment, the amount or type of insurance carried by the Subrecipient has become inadequate.
7. Subrecipient shall pass down the insurance obligations contained herein to all tiers of subcontractors working under this Agreement.
8. The insurance requirements contained in this Agreement may be met with a program(s) of self-insurance acceptable to the County.
9. Subrecipient agrees to notify County of any claim by a third party or any incident or event that may give rise to a claim arising from the performance of this Agreement
25 Attachment E - Project Monitoring Requirements
Quarterly Progress Reports shall be submitted on the 21st of the month following the previous quarter. Quarterly reports shall be sent via e-mail to [email protected]. The quarterly report shall include a brief description of the work performed during the reporting period, including photographs, construction status, milestones achieved, financial status report including cost incurred to date, cash flow projections, schedule updates, and any problems encountered in the performance of the work under this Agreement. The progress pay estimate for the reporting period shall be included as part of the quarterly progress report submittal.
In addition to the above, project schedule and cashflow projection updates shall be emailed to the County on a monthly basis.
26 Attachment F - Construction Requirements
Subrecipient shall:
1. Pursuant to the California Environmental Quality Act ("CEQA"), act as Lead Agency and assume responsibility for preparation, circulation and adoption of all necessary and appropriate CEQA documents pertaining to the construction, operation and maintenance of Neighborhood Revitalization Project.
2. To the extent that it has not already done so, the Subrecipient shall prepare or cause plans and specifications ("Plans") to be prepared for the Neighborhood Revitalization Project prior to advertising Neighborhood Revitalization Project for construction bids.
3. Provide County a copy of the engineering design cost proposal and associated design schedule for the Neighborhood Revitalization Project.
4. Advertise and award a public works construction contract for the Neighborhood Revitalization Project and begin construction per the schedules included in Attachment A of this Agreement.
5. Prior to advertising Neighborhood Revitalization Project for public works construction contract, obtain all necessary permits, approvals, or agreements as may be required by any federal, state and local resource or regulatory agencies pertaining to the construction, operation and maintenance of Neighborhood Revitalization Project. Assume sole responsibility for compliance with the requirements of all regulatory permits, including any amendments thereto, pertaining to the construction, operation and maintenance of Neighborhood Revitalization Project.
6. Implement or cause to be implemented, all environmental mitigation required in association with the construction, operation and maintenance of Neighborhood Revitalization Project.
7. Prior to advertising Neighborhood Revitalization Project for public works construction contract, obtain all necessary permits, licenses, agreements, approvals, rights of way, rights of entry, encroachment permits, and temporary construction easements as may be needed to construct, operate and maintain the Neighborhood Revitalization Project.
8. Advertise, award and administer a public works construction contract for the Neighborhood Revitalization Project pursuant to the provisions of applicable laws for public works of improvements, including but not limited to the California Public Contract Code, Government Code and Labor Code.
9. Shall certify and cause its contractor to certify, that it is not a target of economic sanctions imposed in response to Russia’s actions in Ukraine imposed by the United States government or the State of California. The Subrecipient and its Contractor are required to comply with the economic sanctions imposed in response to Russia’s actions in Ukraine, including with respect to, but not limited to, the federal executive orders identified in California Executive Order N-6-22, located at https://www.gov.ca.gov/wp- content/uploads/2022/03/3.4.22-Russia-Ukraine-Executive-Order.pdf and the sanctions identified on the United States Department of the Treasury website ( https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country- information/ukraine-russia-related-sanctions). The Subrecipient and its Contractor are required to comply with all applicable reporting requirements regarding compliance with the economic sanctions, including, but not limited to, those reporting requirements set forth in California
27 Executive Order N-6-22 for all parties with one or more agreements with the State of California, the County of Riverside, or any other local agency, with a value of Five Million Dollars ($5,000,000) or more. Notwithstanding any other provision in these documents, failure to comply with the economic sanctions and all applicable reporting requirements may result in disqualification or termination of the Construction Agreement, if awarded.
For parties and contractors with an agreement value of Five Million Dollars ($5,000,000) or more with the State of California, the County of Riverside, or any other local agency, reporting requirements include, but are not limited to, information related to steps taken in response to Russia’s actions in Ukraine, including but not limited to:
a. Desisting from making any new investments or engaging in financial transactions with Russian institutions or companies that are headquartered or have their principal place of business in Russia;
b. Not transferring technology to Russia or companies that are headquartered or have their principal place of business in Russia; and
c. Direct support to the government and people of Ukraine.
To comply with this requirement, please insert your name and Federal ID Number (if available) on the Certification Form attached hereto, execute by a duly authorized representative for the contractor and return to the County.
10. The Subrecipient shall require, and the specifications, bid and contract documents shall require all contractors, subcontractors, vendors, equipment operators and owner operators, in each such case to the extent such individuals or entities are engaged to perform work on the Neighborhood Revitalization Project, to pay at least general prevailing wage rates to all workers employed in the execution of the contract, to post a copy of the general prevailing wage rates at the job-site in a conspicuous place available to all employees and applicants for employment, and to otherwise comply with applicable provisions of the California Labor Code and applicable laws relating to general prevailing wage rates.
11. Each contractor engaged to perform work on the Neighborhood Revitalization Project shall be required to furnish (i) labor and material payment bonds, and (ii) contract performance bonds, each in an amount equal to 100% of the contract price naming the Subrecipient as obligee and issued by a California admitted surety which complies with the provisions of Section 995.660 of the California Code of Civil Procedure.
12. Provide County with written notice that Subrecipient has awarded a public works construction contract for Neighborhood Revitalization Project. The written notice shall include the Contractor's actual bid amounts for Neighborhood Revitalization Project, setting forth herein the lowest responsible bid contract amount.
13. Prior to commencing Neighborhood Revitalization Project construction, provide to County:
a. A construction schedule which shall show the order and dates in which Subrecipient or Subrecipient’s contractor proposes to carry on the various parts of work, including estimated start and completion dates, and
b. A confined space procedure specific to Neighborhood Revitalization Project. The procedure shall comply with requirements contained in California Code of
28 Regulations, Title 8, Section 5156 et seq. and County's Confined Space Procedures, SOM-18.
14. Require its construction contractor(s) to comply with all Cal/OSHA safety regulations including regulations concerning confined space and maintain a safe working environment for all working on the site.
15. Order the relocation of all utilities within Subrecipient rights of way which conflict with the construction of Neighborhood Revitalization Project and which must be relocated at the expense of who may have superior property rights.
16. Procure or caused to be procured insurance coverages during the term of this Agreement. Subrecipient shall require its Neighborhood Revitalization Project construction contractor(s) to furnish original certificate(s) of insurance and original certified copies of endorsements and if requested, certified original policies of insurance including all endorsements and any and all other attachments. Prior to Subrecipient issuing a Notice to Proceed to its construction contractor(s) to begin construction of Neighborhood Revitalization Project, an original certificate of insurance evidencing the required insurance coverage shall be provided to County. At minimum, the procured insurance coverages should adhere to the County’s required insurance provided in Attachment D to this Agreement.
17. Construct, or cause to be constructed, Neighborhood Revitalization Project pursuant to a Subrecipient administered public works construction contract, in accordance with the Plans, and pay all costs associated therewith.
18. Inspect the Neighborhood Revitalization Project construction or cause the Neighborhood Revitalization Project's construction to be inspected by its construction manager and pay all costs associated therewith.
19. Provide County with a copy of the Subrecipient's recorded Notice of Completion.
20. Keep an accurate accounting of Neighborhood Revitalization Project cost and provide this accounting to County with Subrecipient’s Notice of Completion. The final accounting of construction cost shall include a detailed breakdown of all costs, including, but not limited to, payment vouchers, Subrecipient approved change orders and other such construction contract documents as may be necessary to establish the actual cost of construction for the PLANS. Subrecipient shall be responsible to pay any amounts in excess of Award amount provided in this Agreement.
21. Refund to County, at the time of providing a Notice of Completion, any unexpended portions of Award amount within thirty (30) days of the Notice of Completion is filed for recordation.
29 COMPLIANCE WITH ECONOMIC SANCTIONS IN RESPONSE TO RUSSIA’S ACTIONS
IN UKRAINE
Prior to bidding on, submitting a proposal, or executing a contract, a party/contractor must certify: 1) it is not a target of economic sanctions and 2) in compliance with economic sanctions imposed by the U.S. government in response to Russia’s actions in Ukraine, as well as any requirements related to the Russian sanctions imposed by the California Governor’s Executive Order N-6-22 issued on March 4, 2022 and under state law, if any.
To comply with this requirement, please insert the party/contractor name and Federal ID Number (if available), complete the information described below and execute by an authorized representative of the contractor.
CERTIFICATION
I, the authorized representative for contractor named below, certify I am duly authorized to execute this certification on behalf of the contractor below, and the contractor identified below has conducted a good faith review of existing contracts. I attest that the contractor is not a target of economic sanctions, and that contractor is in compliance with the economic sanctions imposed by the U.S. government in response to Russia’s actions in Ukraine, as well as any requirements related to the Russian sanctions imposed by the California Governor’s Executive Order N-6-22 issued on March 4, 2022 and under state law, if any.
Party/Contractor Name (Printed) Federal ID Number (or n/a) By (Authorized Signature)
Printed Name and Title of Person Signing
Date
Item No. 10
CITY OF TEMECULA
AGENDA REPORT
TO: City Manager/City Council
FROM: Patrick Thomas, Director of Public Works/City Engineer DATE: August 22, 2023
SUBJECT: Approve the Funding Agreement with the County of Riverside for the Michael "Mike" Naggar Park Dog Park Renovation Project, PW21-14 and Authorize the City Manager to Execute the Agreement
PREPARED BY: Nino Abad, Senior Civil Engineer
Kellen Freeman, Assistant Engineer
RECOMMENDATION: That the City Council:
1. Approve the "Funding Agreement for City of Temecula Michael "Mike" Naggar Community Park Expansion Project" (Agreement) with the County of Riverside; and
2. Authorize the City Manager to execute the Agreement.
BACKGROUND: The Michael "Mike" Naggar Community Park Dog Park Renovation project, PW21-14, is a parks/recreation project that includes construction of a new dog park, approximately 33,000 square foot in area, located at Michael "Mike" Naggar Park to replace the existing dog park currently located behind the Margarita Recreation Center site. The project is currently funded by a combination of Measure S and Proposition 68 Per Capita Grand funds.
On May 23, 2023 the Temecula City Council authorized staff to bid the construction contract for the project. The bid advertisement was cancelled as the City was recently informed that additional grant funds has been allocated to the project.
The City of Temecula previously applied for grant funding through the Coronavirus State and Local Fiscal Recovery Funds authorized under the American Rescue Plan Act (ARPA) to provide state, local and tribal governments with the resources needed to respond to the Covid-19 Pandemic, its economic effects, and to build a stronger, more equitable economy during the recovery. On July 26, 2023, the County of Riverside formally notified the City that it has committed $200,000 of its allotment of ARPA funds to the City. The City must execute the attached Funding Agreement with the County prior to use of the funds as well as incorporate any relevant terms regarding the use of funds into the construction contract documents prior to readvertising the project for bids.
Staff recommends that the Temecula City Council approve the Agreement and authorize the City Manager to execute said Agreement.
FISCAL IMPACT: The Michael "Mike" Naggar Community Park Dog Park Renovation project is identified in the City's Capital Improvement Program (CIP) budget for Fiscal Years 2024-2028, and is funded with Measure S and Proposition 68 Per Capita Grant funds.
Executing the Agreement will increase the available project funds by $200,000 in ARPA funding.
A separate City Council item to amend the current CIP Budget is also being considered on this August 22, 2023 City Council Agenda, includes amendment to the PW21-14 budget for the ARPA funding.
ATTACHMENTS: 1. Funding Agreement
2. Project Description
FUNDING AGREEMENT FOR
CITY OF TEMECULA MIKE NAGGAR COMMUNITY PARK EXPANSION PROJECT This Funding Agreement ("Agreement") is entered into by and between the County of Riverside, a political subdivision of the State of California, ("County") and the City of Temecula, ("Subrecipient").
County and Subrecipient are sometimes individually referred to as "Party" and collectively as "Parties."
RECITALS
WHEREAS, on March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law, amending Section 9901 of Title VI of the Social Security Act which establishes the Coronavirus State and Local Fiscal Recovery Funds (Fiscal Recovery Funds) to provide state, local and Tribal governments with the resources needed to respond to the pandemic and its economic effects and to build a stronger, more equitable economy during the recovery; and WHEREAS, on February 8, 2022, Minute Order 3.3, the Board of Supervisors of the County of Riverside approved allocation of ARPA funds to support eligible projects within Riverside County; and WHEREAS, on January 6, 2022, the U.S. Department of the Treasury (U.S. Treasury) adopted a final rule implementing the Fiscal Recovery Funds which took effect on April 1, 2022 (Final Rule); and
WHEREAS, to respond to the negative effects of the pandemic, which in turn affect our community as a whole, the County has dedicated a portion of the allotted ARPA funds to local agencies for the delivery and implementation of eligible neighborhood revitalization projects; and WHEREAS, the County desires to reimburse and the Subrecipient desires to accept ARPA Fiscal Recovery Funds in a total amount not to exceed $200,000, for expenditures identified in Attachment A related to the Mike Naggar Community Park Expansion Project ("Neighborhood Revitalization Project"); and
NOW THEREFORE, in consideration of the mutual benefits, covenants, terms and conditions contained herein, the Parties agree as follows:
AGREEMENT
1. Incorporation of Recitals. The Recitals set forth above are incorporated herein and made an operative part of this Agreement.
2. Contract Documents. This Agreement consists of this Agreement and the following attachments, attached hereto and by this reference incorporated herein:
2.1 Attachment A — Neighborhood Revitalization Project Scope
2.2 Attachment B — U.S. Treasury ARPA Fiscal Recovery Funds Final Rule
2.3 Attachment C — Uniform Administrative Requirements, Cost Principles, Federal Provisions and Audit Requirements for Federal Awards -2 CFR Part 200 et seq
2.4 Attachment D — Indemnification and Insurance Requirements
2.5 Attachment E — Project Monitoring Requirements
2.6 Attachment F — Construction Requirements
3. Neighborhood Revitalization Project; Scope of Work. Subrecipient shall be responsible for completion of all activities associated with design, implementation, installation and construction of the Neighborhood Revitalization Project, as described in Attachment A, on or before December 31, 2026, by first using funds received from the County in the amount provided in Section 4 of this Agreement.
The Subrecipient shall also furnish timely reporting and documentation assuring Subrecipient's compliance with the U.S. Treasury ARPA Guidelines (as stated in the Final Rule of the U.S.
Department of the Treasury published in the Federal Register on January 27, 2022), and within the timelines and specifications provided in Attachment E. Under the provisions of the Agreement, the County shall bear no responsibility for the Neighborhood Revitalization Project, including without limitation any activities associated with implementation, installation and construction, or any future operation or maintenance of the Neighborhood Revitalization Project.
3.1 Project Signage. Subrecipient shall include appropriate acknowledgement of credit to the County for its support when promoting the Neighborhood Revitalization Project or using any data and/or information developed under this Agreement. Signage shall be posted in a prominent location at Neighborhood Revitalization Project site(s) and shall include the U.S. Department of Treasury's, and the County's color logos, along with the following disclosure statement: "Funding for this project has been provided in full or in part from the American Rescue Plan Act, and through an agreement with the County of Riverside." The Subrecipient shall also include in each of its contracts for work under this Agreement a provision that incorporates the requirements stated within this Paragraph.
4. Funding.
4.1 County shall provide funding to Subrecipient in a total amount not to exceed $200,000 ("Award"), in quarterly payments in accordance with progress pay estimates submittals, and in compliance with ARPA Guidelines as set forth in Attachment B, attached hereto and by this reference incorporated herein, for the completion of the Neighborhood Revitalization Project. In the event that there is a conflict in the terms for payment in this Agreement and the terms in Attachments B and C, the terms in Attachments B and C shall take precedence. Subrecipient shall provide other non-federal funding at least equal to the amounts shown in Attachment A, attached hereto and by this reference incorporated herein, as a match to the funds provided by the County for the Neighborhood Revitalization Project.
4.2 Except as expressly provided in Attachment A of this Agreement, Subrecipient shall not be entitled to, nor receive from County any additional funding or other type of remuneration for services rendered under this Agreement. The Award amounts described in this Section are specifically for the Neighborhood Revitalization Project and make up the entire amount which the County has approved to fund for the Neighborhood Revitalization Project. Subrecipient shall not be entitled by virtue of this Agreement to consideration in excess of specified per -project Award amounts, and Subrecipient shall be responsible for any and all costs incurred above any Award amount for its implementation and completion of the Neighborhood Revitalization Project. Any subsequent amendments to the Neighborhood Revitalization Project scope or description is not covered by this Agreement, and the funding for any such amendment or for any Neighborhood Revitalization Project cost overruns shall be the sole responsibility of Subrecipient, unless otherwise approved in writing by the County.
4.3 Should it be determined at any time by the Subrecipient or the County that the Subrecipient cannot, will not or is unable to complete the Neighborhood Revitalization Project subject to this Agreement in accordance with the applicable State and Federal requirements and the provisions of this Agreement on or before December 31, 2026, then the subrecipient shall return 100% of the Award amount reimbursed to Subrecipient for the uncompleted Neighborhood Revitalization Project as of the date of notification to the County, within thirty (30) days of notification. 2 4.4 In the event the actual cost for Neighborhood Revitalization Project is less than Award, Subrecipient shall refund the difference to County within thirty (30) days of filing the Notice of Completion for the Neighborhood Revitalization Project, or by June 30, 2026, whichever occurs first.
Subrecipient shall return any reimbursed Award Funds that have not been expended or are not adequately supported by invoices and documentation to the County, within thirty (30) days of completion of construction of the Neighborhood Revitalization Project, or upon request by the County, whichever occurs first.
5. Invoicing and Billing
5.1 Invoices.
5.1.1 Invoices shall be submitted via e-mail to RIVCOARPAgRIVCO.ORG. The final invoice from the Subrecipient will be submitted with enough time for the County to reimburse the Subrecipient prior to December 31, 2026, per the final rule of ARPA.
5.1.2 Supporting documentation shall accompany each invoice: copies of paid receipts and invoices of all Neighborhood Revitalization Project costs incurred by Subrecipient.
5.1.3 To ensure compliance with Federal and State regulations, County may require additional supporting documentation or clarification of claimed expenses as follows:
5.1.3.1 County Executive Office staff shall notify Subrecipient to obtain necessary additional documentation or clarification.
5.1.3.2 Subrecipient shall respond within three (3) business days with required additional documentation or clarification to avoid disallowances/partial payment of invoice.
5.1.3.3 All invoices containing expenses that need additional documentation or clarification not provided to County within three (3) business days of request shall have those expenses disallowed and only the allowed expenses shall be paid.
5.1.3.4 Subrecipient may resubmit disallowed expenses as a supplemental invoice only and must be accompanied by required documentation.
5.2 Payments
5.2.1 If the conditions set forth in this Agreement are met, County shall pay, on/or before the thirtieth (30th) day after receipt of a complete and accurate invoice, the sum of money claimed by the approved invoice, (less any credit due County for adjustments of prior invoices). If the conditions are not met, County shall pay when the necessary processing is completed and/or proper backup documentation is provided.
5.2.2 County shall not pay for unauthorized costs incurred by Subrecipient or for the claimed work which County monitoring shows have not been provided as authorized.
5.2.3 County retains the right to withhold payment on disputed claims.
6. Term. The Term of this Agreement shall be from the date of approval of this Agreement until filing of notice of completion for the Neighborhood Revitalization Project, or on December 31, 2026, whichever is sooner, unless sooner terminated as provided herein. 3 7. Subrecipient Compliance Obligations. The Subrecipient agrees to comply with the terms and conditions of this Agreement. The Subrecipient also agrees to apply the terms and conditions of this Agreement to all of its subcontractors (if applicable) and to require their strict compliance therewith.
If it is determined that the Subrecipient is noncompliant, County may temporarily withhold or disallow reimbursement of costs, under 2 C.F.R. Part 200, as supplemented by 2 C.F.R. Part 910.
7.1 Federal Provisions. Subrecipient and all of its subcontractors shall comply with the Uniform Administrative Requirements, Cost Principles, Federal Provisions and Audit Requirements for Federal Awards Provisions contained in Attachment C
8. Contract Representatives.
8.1 County Representative. The County Executive Officer, or designee, shall be the designated representative who shall administer this Agreement on behalf of the County.
8.2 Subrecipient Representative. The City Manager, or designee, shall be the designated representative who shall administer this Agreement on behalf of the Subrecipient.
8.3 The Contract Representatives may be contacted as described in Section 11, below.
9. Records and Audit.
9.1 Subrecipient shall store and maintain all writings, documents and records prepared or compiled in connection with the performance of this Agreement for a minimum of five (5) years from the termination or completion of this Agreement. This includes any handwriting, typewriting, printing, photostatic, photographing and every other means of recording upon any tangible thing, any form of communication or representation including letters, words, pictures, sounds or symbols or any combination thereof. Any authorized representative of County shall have access to any writings as defined above for the purposes of making a report, audit, evaluation, or examination Further, County has the right at all reasonable times to audit, inspect or otherwise evaluate the work performed or being performed under this Agreement.
9.2 If it is determined pursuant to an audit that any funds provided pursuant to this Agreement have been improperly expended, Subrecipient shall, at the direction of the agency performing the audit, reimburse the County within thirty (30) days the full amount of such improperly expended funds. The funds shall be reimbursed in accordance with the recommendations in the audit.
10. Monitoring of Contract Compliance and Infrastructure Progressports.
10.1 Contract Compliance. The Subrecipient shall comply with the monitoring arrangements set forth in Project Monitoring Requirements, and Construction Requirements, attached as Attachments E and F, respectively.
10.2 Neighborhood Revitalization Project Progress Reports and Progress Pay Estimates.
Subrecipient shall, as specified herein, provide quarterly reports detailing Neighborhood Revitalization Project's progress, including a financial status report and milestone progress report as described in Attachment E.
11. Notices. As used in this Agreement, notice includes but is not limited to the communications of any notice, request, demand, approval, statement, report, acceptance, consent, waiver, and appointment. All notices must be in writing. All such notices from one party to another may be delivered in person, sent via reputable overnight courier, or served by first-class mail, certified or registered, postage prepaid, to each and all of the addresses set forth below. 4 If to County: If to Subrecipient:
Riverside County Executive Office City of Temecula
Attention: Rania Odenbaugh and Scott Bruckner Attention: Aaron Adams 4080 Lemon Street, 0' Floor, 41000 Main Street
Riverside, CA. 92501 Temecula, CA 92590
12. Conflicts of Interest. Subrecipient covenants that it presently has no interest, including but not limited to, other projects or independent contracts, and shall not acquire any such interest, direct or indirect, which would conflict in any manner or degree with the performance of services required under this Agreement. Subrecipient further covenants that in the performance of this Agreement, no person having any such interest shall be employed or retained by it under this Agreement. In the event federal funds are used, in whole or in part, for this Neighborhood Revitalization Project, Subrecipient understands and agrees it must maintain a conflict of interest policy consistent with 2. C.F.R. section 200.318 (c) and that such conflict of interest policy is applicable to each activity funded under this award. Subrecipient must disclose in writing to the U.S. Treasury or through County, as appropriate, any potential conflict of interest affecting the awarded funds in accordance with 2. C.F.R. section 200.12.
13. Nondiscrimination. During any period in which Subrecipient is in receipt of funds from County, Subrecipient and its Board, officers, employees, agents, representatives or subcontractors shall not unlawfully discriminate in violation of any Federal, State or local law, rule or regulation against any employee, applicant for employment or person receiving services under this Agreement because of race, religious creed, color, national origin, ancestry, physical or mental disability including perception of disability, medical condition, genetic information, pregnancy related condition, marital status, gender/sex, sexual orientation, gender identity, gender expression, age (over 40), political affiliation or belief, or military and veteran status. Subrecipient and its officers, employees, agents, representatives or subcontractors shall comply with all applicable Federal, State and local laws and regulations related to non- discrimination and equal opportunity, including without limitation the County's non- discrimination policy; Title VI of the Civil Rights Act of 1964 (42 US.C. sections 2000d et seq.) and U.S. Treasury's implementing regulations at 31 C.F.R. Part 22, which prohibit discrimination on the basis of race, color, or national origin under programs or activities receiving federal financial assistance; The Fair Housing Act, Title VIII of the Civil Rights Act of 1968 (42 U.S.C. sections 3601 et seq.), which prohibits discrimination in housing on the basis of race, color, religion, national origin, sex, familial status, or disability; Section 504 of the Rehabilitation Act of 1973, as amended (42 U.S.C. sections 6101 et seq.), and the U.S. Treasury's implementing regulations at 31 C.F.R. part 23, which prohibit discrimination on the basis of age in programs or activities receiving federal financial assistance; and Title II of the Americans with Disabilities Act of 1990, as amended (42 U.S.C. sections 12101 et seq.)which prohibits discrimination on the basis of disability under programs, activities, and services provided or made available by state and local governments or instrumentalities or agencies thereto; The Fair Employment and Housing Act (Government Code sections 12900 et seq.); California Labor Code sections 1101, and 1102; the Federal Civil Rights Act of 1964 (P.L. 88-352), as amended; and all applicable regulations promulgated in the California Code of Regulations or the Code of Federal Regulations, and Riverside County's non-discrimination policy.
Subrecipient shall include the non-discrimination and compliance provisions of this Section in all subcontracts to perform work under or as a derivative of this Agreement. 5 14. Indemnification. The Subrecipient shall be bound by the indemnification, hold harmless and defend provisions contained in Attachment D.
15. Insurance. Subrecipient shall obtain, and maintain, or caused to be obtained and maintained, at all times during the Term of this Agreement, insurance coverage in the amounts and coverage specified in Attachment D.
16. Termination. The County may terminate this agreement upon a determination that Subrecipient is not complying with AR -PA terms and conditions. The County may withhold additional planned distributions of funding to Subrecipient pending receipt of requisite reporting requirements by Subrecipient to the County as described herein.
17. Compliance with Laws. The Subrecipient is required to comply with all applicable federal, state and local laws and regulations for all work performed or funded by and through this Agreement. The Subrecipient is required to obtain all necessary federal, state and local permits, authorizations and approvals for all work performed under this Agreement.
18. Disputes. The parties shall attempt to resolve any disputes amicably at the working level. If that is not successful, the dispute shall be referred to the senior management of the parties. The Subrecipient shall proceed diligently with the Neighborhood Revitalization Project described in this Agreement pending the resolution of a dispute. The Parties reserve the right to pursue any remedies at law or in equity should any dispute relating to this Agreement not by resolved by the Parties. Notwithstanding the foregoing, prior to the filing of any legal action related to this Agreement, the Parties shall be obligated to attend a mediation session in Riverside County before a neutral third party mediator. A second mediation session shall be required if the first session is not successful. The parties shall share the cost of the mediations.
19. Status of Subrecipient. The Subrecipient is, for purposes relating to this Agreement, an independent contractor and shall not be deemed an employee of the County. It is expressly understood and agreed that the Subrecipient (including its employees, agents, and subcontractors) shall in no event be entitled to any benefits to which County employees are entitled, including but not limited to overtime, any retirement benefits, worker's compensation benefits, and injury leave or other leave benefits. There shall be no employer -employee relationship between the parties nor is there a joint venture; and Subrecipient shall indemnify and hold County harmless from any and all claims that may be made against County based upon any contention by a third party that an employer -employee relationship exists by reason of this Agreement.
19.1 All acts of Subrecipient and its officers, employees, agents, representatives, subcontractors, and all others acting on behalf of Subrecipient relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of County. Subrecipient, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of County. No agent, officer or employee of the County is to be considered an employee of Subrecipient. At all times during the term of this Agreement, the Subrecipient and its officers, employees, agents, representatives, or subcontractors are, and shall represent and conduct themselves as, independent contractors and not employees of County.
19.2 Subrecipient shall determine the method, details, and means of performing the work and services to be provided by Subrecipient under this Agreement. Subrecipient shall be responsible to County only for the requirements and results specified in this Agreement and, except as expressly 11 provided in this Agreement, shall not be subjected to County's control with respect to the physical action or activities of Subrecipient in fulfillment of this Agreement. Subrecipient has control over the manner and means for completion of the Neighborhood Revitalization Project described in this Agreement. If necessary, Subrecipient has the responsibility for employing or engaging other persons or firms to assist Subrecipient in fulfilling the terms and obligations under this Agreement.
19.3 If in the performance of this Agreement any third persons are employed by Subrecipient, such persons shall be entirely and exclusively under the direction, supervision, and control of Subrecipient. All terms of employment including hours, wages, working conditions, discipline, hiring and discharging or any other term of employment or requirements of law shall be determined by the Subrecipient. It is further understood and agreed that Subrecipient must issue W-2 forms or other forms as required by law for income and employment tax purposes for all Subrecipient's assigned personnel under the terms and conditions of this Agreement.
20. Entire Agreement. This Agreement is the result of negotiations between the Parties. This Agreement is intended by the Parties as a full and final expression of their understanding with respect to the matters contained in this Agreement and shall not be modified in any manner except by an instrument in writing executed by the Parties or their respective successors in interest.
21. Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.
22. Governing Law and Venue. The interpretation and performance of this Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County, California.
23. Construction/Interpretation. Headings or captions to the provisions of this Agreement are solely for the convenience of the Parties, are not part of this Agreement, and shall not be used to interpret or determine the validity of this Agreement. Any ambiguity in this Agreement shall not be construed against the drafter, but rather the terms and provisions hereof shall be given a reasonable interpretation as if both parties had in fact drafted this Agreement.
24. No Waiver. Failure of the Parties to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any rights or powers hereunder at any one time or more times be deemed a waiver or relinquishment of such other right or power at any other time or times.
25. No Third -Party Beneficiaries. There are no intended third -party beneficiaries of any right or obligation assumed by the Parties.
26. Severability. It is intended that each paragraph of this Agreement shall be treated as separate and divisible, and in the event that any paragraphs are deemed unenforceable, the remainder shall continue to be in full force and effect so long as the primary purpose of this Agreement is unaffected.
27. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
28. Use of Electronic (Digital) Signatures. This Agreement may be executed in any number of counterparts, each of which will be an original, but all of which together will constitute one instrument.
Each party of this Agreement agrees to the use of electronic signatures, such as digital signatures that 7 meet the requirements of the California Uniform Electronic Transactions Act (("CUETA") Cal. Civ.
Code §§ 1633.1 to 1633.17), for executing this Agreement. The parties further agree that the electronic signatures of the parties included in this Agreement are intended to authenticate this writing and to have the same force and effect as manual signatures. Electronic signature means an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record pursuant to the CUETA as amended from time to time. The CUETA authorizes use of an electronic signature for transactions and contracts among parties in California, including a government agency. Digital signature means an electronic identifier, created by computer, intended by the party using it to have the same force and effect as the use of a manual signature, and shall be reasonably relied upon by the parties. For purposes of this section, a digital signature is a type of "electronic signature" as defined in subdivision (i) of Section 1633.2 of the Civil Code
[Signature Provisions on Following Page]
0 28. Authority to Enter Agreement. Each Party to this Agreement warrants to the other that it is duly organized and existing and that it and the respective signatories have full right and authority to enter into and consummate this Agreement and all related documents and bind the parties thereto.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date as indicated beside each Party's signature.
COUNTY:
COUNTY OF RIVERSIDE, a political subdivision
of the State of California
Chair, Board of Supervisors
ATTEST:
Clerk of the Board
Kimberly Rector
M.
Deputy
(Seal)
APPROVED AS TO FORM
County Counsel
01 SUBRECIPIENT:
CITY OF TEMECULA
Lo
Aaron Adams, City Manager
Date
ATTEST:
Randi Johl, City Clerk
APPROVED AS TO FORM:
Peter M. Thorson, City Attorney
Attachment A — Neighborhood Revitalization Project Scope Doi Park Renovation at Michael "Mike" Na22ar Park
Scope of Work
The Subrecipient will complete all planning, design, and procurement necessary to construct the Project. The Subrecipient will construct a dog park at Michael "Mike" Naggar Community Park that includes a pen for small breed dogs and a pen for large breed dogs. In addition, there will be new water fountains, benches, trash receptacles, dog bag dispensers, trees and other landscape improvements, and shade structures.
Project Budtet
COUNTY OF
RIVERSIDE
SUBRECIPIENT
ARPA
NON-FEDERAL
ESTIMATED
ITEM
DESCRIPTION
PROJECT
FUNDING
PROJECT COST
FUNDING
AMOUNT
AMOUNT
of to Exceed
1 Facility Planning
$0
$0
$0
2 Preliminary Design
$0
$0
$0
3 Final Design
$0
$71,516
$71,516
4 Spec Review,
$0
$100,000
$100,000
Bid/Award
5 Construction
$200,000
$593,484
$793,484
6 Admin Closeout
$0
$75,000
$75,000
TOTAL:
$200,000
$840,000
$1,040,000
Schedule
ITEM
DESCRIPTION OF SUBMITTAL
ESTIMATED DUE
DATE
1 Feasibility Report
N/A
2 Preliminary Design Report
N/A
3 Final Design
August 21, 2023
4 1 Sec Review, Bid/Award
August 21, 2023
5 Construction and Implementation
January 31, 2024
6 Admin Closeout
Aril 30, 2024
10 Attachment B — U.S. Treasury ARPA Fiscal Recovery Funds Final Rule 11 Attachment C — Uniform Administrative Requirements, Cost Principles, Federal Provisions and Audit Requirements for Federal Awards -2 CFR Part 200 et seq 2 CFR Part 200 attached hereto
12 ATTACHMENT C CONTINUED
FEDERAL PROVISIONS
Should funding be allocated through American Rescue Plan Act (ARPA; (Title VI of the Social Security Act Section 602 et seq.), the COUNTY will administer and distribute those funds in accordance with ARPA. ARPA requires that payments from the Coronavirus Fiscal Recovery Fund be used to respond to the public health emergency or its negative economic impacts, to respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay, provide government services to the extent the reduction of revenue due to COVID-19 public health emergency, and to make necessary investments in water, sewer or broadband infrastructure. It is effective beginning May 17, 2021 and ends on December 31, 2026.
Subrecipient acknowledges and agrees that this Agreement is subject to the federal requirements, including but not limited to the federal provisions provided below:
1. NON-DISCRIMINATION. Subrecipient shall not be discriminate in the provision of services, allocation of benefits, accommodation in facilities, or employment of personnel on the basis of ethnic group identification, race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status or sex in the performance of this Agreement; and, to the extent they shall be found to be applicable hereto, shall comply with the provisions of the California Fair Employment and Housing Act (Gov. Code 12900 et. seq), the Federal Civil Rights Act of 1964 (P.L. 88-352), the Americans with Disabilities Act of 1990 (42 U.S.C. S1210 et seq.) and all other applicable laws or regulations.
2. EQUAL EMPLOYMENT OPPORTUNITY/ FAIR EMPLOYMENT PRACTICES/ FEDERAL PROVISIONS. During the performance of this Agreement, the Subrecipient shall not deny benefits to any person on the basis of religion, color, ethnic group identification, sex, age, physical or mental disability, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, religion, color, national origin, ancestry, physical handicap, mental disability, medical condition, marital status, age, or sex. Subrecipient shall ensure that the evaluation and treatment of employees and applicants for employment are free of such discrimination.
A. Subrecipient shall comply with the provisions of the Fair Employment and Housing Act (Government Code, Section 12900 et seq.), the regulations promulgated thereunder (California Code of Regulations, Title 2, Section 11000 et seq.), the provisions of Executive Order 11246 of Sept. 23, 1965 and of the rules, regulations, and relevant orders of the Secretary of Labor, the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Government Code, Sections 11135-11139.8), and of the rules, regulations or standards adopted by the County to implement such article.
B. The Subrecipient shall comply with the provisions of the Copeland "Anti -Kickback" Act, 18 U.S.C. § 874, 40 U.S.C. § 3145, and the requirements of 29 C.F.R. pt. 3 as may be applicable, which are incorporated by reference into this Agreement.
3. CLEAN AIR ACT. The Subrecipient agrees to comply with all applicable standards, orders, or regulations issued pursuant to the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.
The Subrecipient agrees to report each violation to the County and understands and agrees that the County will, in turn, report each violation as required to assure notification to the California 13 Governor's Office of Emergency Services, Federal Emergency Management Agency (FEMA), and the appropriate Environmental Protection Agency Regional Office. The Subrecipient agrees to include these requirements in each subcontract exceeding $150,000 financed in whole or in part with Federal assistance provided by FEMA.
4. FEDERAL WATER POLLUTION CONTROL ACT
The Subrecipient agrees to comply with all applicable standards, orders, or regulations issued pursuant to the Federal Water Pollution Control Act, as amended, 33 U.S.C. Sections 1251 et seq.
The Subrecipient agrees to report each violation to the County and understands and agrees that the County will, in turn, report each violation as required to assure notification to the Federal Emergency Management Agency (FEMA), and the appropriate Environmental Protection Agency Regional Office.
The Subrecipient agrees to include these requirements in each subcontract exceeding $150,000 financed in whole or in part with Federal assistance provided by FEMA.
5. DEBARMENT AND SUSPENSION CLAUSE
This Agreement is a covered transaction for purposes of 2 C.F.R. pt. 180 and 2 C.F.R. pt. 3000. As such the Subrecipient is required to verify that none of the Subrecipient, its principals (defined at 2 C.F.R. § 180.995), or its affiliates (defined at 2 C.F.R. § 180.905) are excluded (defined at 2 C.F.R. § 180.940) or disqualified (defined at 2 C.F.R. § 180.935).
The Subrecipient must comply with 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C and must include a requirement to comply with these regulations in any lower tier covered transaction it enters into.
This certification is a material representation of fact relied upon by the County. If it is later determined that the Subrecipient did not comply with 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C, in addition to remedies available to the County, the Federal Government may pursue available remedies, including but not limited to suspension and/or debarment.
The bidder or proposer agrees to comply with the requirements of 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C while this offer is valid and throughout the period of any contract that may arise from this offer. The bidder or proposer further agrees to include a provision requiring such compliance in its lower tier covered transactions.
6. BYRD ANTI- LOBBYING AMENDMENT, 31 U.S.C. § 1352 (AS AMENDED) Subrecipients who apply or bid for an award of $100,000 or more shall file the required certification.
Each tier certifies to the tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant, or any other award covered by 31 U.S.C. § 1352.
Each tier shall also disclose any lobbying with non -Federal funds that takes place in connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up to the recipient who in turn will forward the certification(s) to the County.
APPENDIX A, 44 C.F.R. PART 18- CERTIFICATION REGARDING LOBBYING The undersigned [Subrecipient] certifies, to the best of his or her knowledge, that:
A. No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection 14 with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
B. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions.
C. The undersigned shall require that the language of this certification be included in the award documents for all sub -awards at all tiers (including subcontracts, sub -grants, and contracts under grants, loans, and cooperative agreements) and that all sub -recipients shall certify and disclose accordingly.
This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by 31, U.S.C. § 1352 (as amended by the Lobbying Disclosure Act of 1995). Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
The Subrecipient certifies or affirms the truthfulness and accuracy of each statement of its certification and disclosure, if any. In addition, the Subrecipient understands and agrees that the provisions of 31 U.S.C. § 3801 et seq., apply to this certification and disclosure, if any.
SUBRECIPIENT
By
Date
7. PROCUREMENT OF RECOVERED MATERIALS
In the performance of this Agreement, the Subrecipient shall make maximum use of products containing recovered materials that are EPA -designated items unless the product cannot be acquired A. Competitively within a timeframe providing for compliance with the contract performance schedule;
B. Meeting contract performance requirements; or
C. At a reasonable price.
Information about this requirement, along with the list of EPA -designated items, is available at EPA's Comprehensive Procurement Guidelines web site, https://www.epa.gov/smm/comprehensive- procurement-guideline-cpg-program
The Subrecipient also agrees to comply with all other applicable requirements of Section 6002 of the Solid Waste Disposal Act.
8. ACCESS TO RECORDS
The following access to records requirements apply to this Agreement:
A. The Subrecipient agrees to provide the County, the FEMA Administrator, the Comptroller General of the United States, or any of their authorized representatives access to any books, documents, papers, and records of the Subrecipient which are directly pertinent to this Agreement for the purposes of making audits, examinations, excerpts, and transcriptions B. The Subrecipient agrees to permit any of the foregoing parties to reproduce by any means whatsoever or to copy excerpts and transcriptions as reasonably needed. 15 C. The Subrecipient agrees to provide the FEMA Administrator or his or her authorized representatives access to construction or other work sites pertaining to the work being completed under the contract.
D. In compliance with the Disaster Recovery Act of 2018, the County and the Subrecipient acknowledge and agree that no language in this contract is intended to prohibit audits or internal reviews by the FEMA Administrator or the Comptroller General of the United States.
9. DEPARTMENT OF HOMELAND SECURITY SEAL, LOGO, FLAGS
The Subrecipient shall not use the DHS seal(s), logos, crests, or reproductions of flags or likenesses of DHS agency officials without specific FEMA pre -approval.
10. COMPLIANCE WITH FEDERAL LAW, REGULATIONS, AND EXECUTIVE ORDERS This is an acknowledgement that FEMA financial assistance will be used to fund all or a portion of the contract. The Subrecipient will comply with all applicable Federal law, regulations, executive orders, FEMA policies, procedures, and directives.
11. NO OBLIGATION BY FEDERAL GOVERNMENT
The Federal Government is not a party to this Agreement and is not subject to any obligations or liabilities to the non -Federal entity, contractor, or any other party pertaining to any matter resulting from the contract.
12. PROGRAM FRAUD AND FALSE OR FRAUDULENT STATEMENTS OR RELATED ACTS
The Subrecipient acknowledges that 31 U.S.C. Chapter 38 (Administrative Remedies for False Claims and Statements) applies to the Subrecipient's actions pertaining to this Agreement.
13. FEDERAL PREVAILING WAGE
DAVIS-BACON ACT COMPLIANCE (applicable to construction contracts in excess of $2,000 awarded by grantees and subgrantees when required by Federal grant program legislation) To the extent required by any Federal grant programs applicable to expected funding or reimbursement expenses incurred in connection with the services provided under this Agreement, Subrecipient agrees to comply with the Davis -Bacon Act (40 U.S.C. §§ 3141-3144 and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5) as set forth below.
A. The Subrecipient shall be bound to the provisions of the Davis -Bacon Act, and agrees to be bound by all the provisions of Labor Code section 1771 regarding prevailing wages. All labor on this project shall be paid neither less than the greater of the minimum wage rates established by the U.S. Secretary of Labor (Federal Wage Rates), or by the State of California Director of Department of Industrial Relations (State Wage Rates). Current DIR requirements may be found at http://www.dir.ca.gov/lcp.asp . Additionally, wages are required to be paid not less than once a week.
B. The general prevailing wage rates may be accessed at the Department of Labor Home Page at www.wdol.gov . Under the Davis Bacon heading, click on "Selecting DBA WDs." In the drop down menu 16 for State, select, "California." In the drop down menu for County, select "Riverside." In the drop down menu for Construction Type, make the appropriate selection. Then, click Search.
The Federal minimum wage rates for this project are predetermined by the United States Secretary of Labor. If there is a difference between the minimum wage rates predetermined by the Secretary of Labor and the general prevailing wage rates determined by the Director of the California DIR for similar classifications of labor, the Subrecipient and subcontractors shall pay not less than the higher wage rate. The County will not accept lower State wage rates not specifically included in the Federal minimum wage determinations. This includes "helper" (or other classifications based on hours of experience) or any other classification not appearing in the Federal wage determinations. Where Federal wage determinations do not contain the State wage rate determination otherwise available for use by the Subrecipient and subcontractors, the Subrecipient and subcontractors shall pay not less than the Federal minimum wage rate which most closely approximates the duties of the employees in question.
14. CONTRACT WORK HOURS AND SAFETY STANDARDS (applicable to all contracts in excess of $100,000 that involve the employment of mechanics or laborers, but not to purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence)
A. Compliance: Subrecipient agrees that it shall comply with Sections 3702 and 3704 of the Contract Work Hours and Safety Standards Act (40 U.S.C. §§ 3701-3708) as supplemented by Department of Labor regulations (29 CFR Part 5), which are incorporated herein.
B. Overtime: No contractor or subcontractor contracting for any part of the work under this Agreement which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek.
C. Violation; liability for unpaid wages; liquidated damages: In the event of any violation of the provisions of paragraph B of this section, the Subrecipient and any subcontractor responsible therefore shall be liable for the unpaid wages. In addition, such Subrecipient and subcontractor shall be liable to the United States for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic employed in violation of the provisions of paragraph B, in the sum of $10 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours without payment of the overtime wages required by paragraph B.
D. Withholding for unpaid wages and liquidated damages: Subrecipient shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any moneys payable on account of work performed by the contractor or subcontractor under any such contract or any other Federal contract with the same prime contractor, or any other federally - assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime contractor, such sums as may be determined to be necessary to satisfy any liabilities of such contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause set for in paragraph C of this section.
E. Subcontracts: The contractor or subcontractor shall insert in any subcontracts the clauses set forth in paragraphs A through D of this section and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in paragraphs A through D of this section.
17 15. RIGHTS TO INVENTIONS MADE UNDER A CONTRACT OR AGREEMENT— Contracts or agreements for the performance of experimental, developmental, or research work shall provide for the rights of the Federal Government and the recipient in any resulting invention in accordance with 37 CFR part 401, "Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements," and any implementing regulations issued by HUD.
16. RIGHTS TO DATA AND COPYRIGHTS — Subrecipients and consultants agree to comply with all applicable provisions pertaining to the use of data and copyrights pursuant to 48 CFR Part 27.4, Federal Acquisition Regulations (FAR).
17. PROHIBITION ON CONTRACTING FOR COVERED TELECOMMUNICATIONS
EQUIPMENT OR SERVICES
A. Definitions. As used in this clause, the terms backhaul; covered foreign country; covered telecommunications equipment or services; interconnection arrangements; roaming; substantial or essential component; and telecommunications equipment or services have the meaning as defined in FEMA Policy, #405-143-1 Prohibitions on Expending FEMA Award Funds for Covered Telecommunications Equipment or Services As used in this clause B. Prohibitions.
(1) Section 889(b) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, Pub. L. No. 115-232, and 2 C.F.R. § 200.216 prohibit the head of an executive agency on or after Aug.13, 2020, from obligating or expending grant, cooperative agreement, loan, or loan guarantee funds on certain telecommunications products or from certain entities for national security reasons.
(2) Unless an exception in paragraph (c) of this clause applies, the contractor and its subcontractors may not use grant, cooperative agreement, loan, or loan guarantee funds from the Federal Emergency Management Agency to:
(i) Procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system;
(ii) Enter into, extend, or renew a contract to procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system; (iii) Enter into, extend, or renew contracts with entities that use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system; or (iv)Provide, as part of its performance of this contract, subcontract, or other contractual instrument, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.
C. Exceptions.
(1) This clause does not prohibit contractors from providing a. A service that connects to the facilities of a third -party, such as backhaul, roaming, or interconnection arrangements; or
b. Telecommunications equipment that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles.
18 (2) By necessary implication and regulation, the prohibitions also do not apply to:
a. Covered telecommunications equipment or services that:
i. Are not used as a substantial or essential component of any system; and ii. Are not used as critical technology of any system.
b. Other telecommunications equipment or services that are not considered covered telecommunications equipment or services.
D. Reporting requirement.
(1) In the event the contractor identifies covered telecommunications equipment or services used as a substantial or essential component of any system, or as critical technology as part of any system, during contract performance, or the contractor is notified of such by a subcontractor at any tier or by any other source, the contractor shall report the information in paragraph (d)(2) of this clause to the recipient or subrecipient, unless elsewhere in this contract are established procedures for reporting the information. (2) The Subrecipient shall report the following information pursuant to paragraph (d)(1) of this clause:
(i) Within one business day from the date of such identification or notification:
The contract number; the order number(s), if applicable; supplier name; supplier unique entity identifier (if known); supplier Commercial and Government Entity (CAGE) code (if known); brand; model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); item description; and any readily available information about mitigation actions undertaken or recommended. ii) Within 10 business days of submitting the information in paragraph (d)(2)(i) of this clause: Any further available information about mitigation actions undertaken or recommended. In addition, the contractor shall describe the efforts it undertook to prevent use or submission of covered telecommunications equipment or services, and any additional efforts that will be incorporated to prevent future use or submission of covered telecommunications equipment or services. Page 10
E. Subcontracts. The Subrecipient shall insert the substance of this clause, including this paragraph (e), in all subcontracts and other contractual instruments.
18. REPORTING OF MATTERS RELATED TO RECIPIENT INTEGRITY AND PERFORMANCE A. General Reporting Requirement
If the total value of your currently active grants, cooperative agreements, and procurement contracts from all Federal awarding agencies exceeds $10,000,000 for any period of time during the period of performance of this Federal award, then you as the recipient during that period of time must maintain the currency of information reported to the System for Award Management (SAM) that is made available in the designated integrity and performance system (currently the Federal Awardee Performance and Integrity Information System (FAPIIS)) about civil, criminal, or administrative proceedings described in paragraph 2 of this award term and condition. This is a statutory requirement under section 872 of Public Law 110-417, as amended (41 U.S.C. 2313). As required by section 3010 of Public Law I I I- 212, all information posted in the designated integrity and performance system on or after April 15, 2011, except past performance reviews required for Federal procurement contracts, will be publicly available.
B. Proceedings About Which You Must Report
Submit the information required about each proceeding that:
a. Is in connection with the award or performance of a grant, cooperative agreement, or procurement contract from the Federal Government;
b. Reached its final disposition during the most recent five-year period; and 19 c. Is one of the following:
(1) A criminal proceeding that resulted in a conviction, as defined in paragraph 5 of this award term and condition;
(2) A civil proceeding that resulted in a finding of fault and liability and payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more; (3) An administrative proceeding, as defined in paragraph 5. of this award term and condition, that resulted in a finding of fault and liability and your payment of either a monetary fine or penalty of $5,000 or more or reimbursement, restitution, or damages in excess of $100,000; or (4) Any other criminal, civil, or administrative proceeding if- (i) It could have led to an outcome described in paragraph 2.c.(1), (2), or (3) of this award term and condition;
(ii) It had a different disposition arrived at by consent or compromise with an acknowledgment of fault on your part; and
(iii) The requirement in this award term and condition to disclose information about the proceeding does not conflict with applicable laws and regulations.
C. Reporting Procedures
Enter in the SAM Entity Management area the information that SAM requires about each proceeding described in paragraph 2 of this award term and condition. You do not need to submit the information a second time under assistance awards that you received if you already provided the information through SAM because you were required to do so under Federal procurement contracts that you were awarded.
D. Reporting Frequency
During any period of time when you are subject to the requirement in paragraph 1 of this award term and condition, you must report proceedings information through SAM for the most recent five year period, either to report new information about any proceeding(s) that you have not reported previously or affirm that there is no new information to report. Recipients that have Federal contract, grant, and cooperative agreement awards with a cumulative total value greater than $10,000,000 must disclose semiannually any information about the criminal, civil, and administrative proceedings.
E. Definitions
For purposes of this award term and condition:
a. Administrative proceeding means a non judicial process that is adjudicatory in nature in order to make a determination of fault or liability (e.g., Securities and Exchange Commission Administrative proceedings, Civilian Board of Contract Appeals proceedings, and Armed Services Board of Contract Appeals proceedings). This includes proceedings at the Federal and State level but only in connection with performance of a Federal contract or grant. It does not include audits, site visits, corrective plans, or inspection of deliverables.
b. Conviction, for purposes of this award term and condition, means a judgment or conviction of a criminal offense by any court of competent jurisdiction, whether entered upon a verdict or a plea, and includes a conviction entered upon a plea of nolo contendere. c. Total value of currently active grants, cooperative agreements, and procurement contracts includes - (1) Only the Federal share of the funding under any Federal award with a recipient cost share or match; and
(2) The value of all expected funding increments under a Federal award and options, even if not yet exercised.
20 Attachment D — Indemnification and Insurance Requirements
INDEMNIFICATION
A. Basic Indemnity
1. To the fullest extent permitted by applicable law, Subrecipient agrees to indemnify, hold harmless and defend the County of Riverside, its Agencies, Districts, Departments and Special Districts, Board of Supervisors, elected and appointed officials, and each of their respective directors, members officers, employees, agents, volunteers and representatives ("Indemnitees") and each of them from any and all Losses that arise out of or relate to any act or omission constituting ordinary and not professional negligence (including, without limitation, negligent breach of contract), recklessness, or willful misconduct on the part of Subrecipient or its subconsultants or their respective employees, agents, representatives, or independent contractors.
2. "Losses" shall mean any and all economic and non -economic losses, costs, liabilities, claims, damages, actions, judgements, settlements and expenses, including, without limitation, full and actual attorney's fees (including, without limitation, attorney's fees for trial and on appeal), expert and non -expert witness fees, arbitrator and arbitration fees and mediator and mediation fees.
3. Subrecipient further agrees to and shall indemnify and hold harmless the Indemnitees from all liability arising from suits, claims, demands, actions, or proceedings made by agents, employees or subcontractors of Subrecipient for salary, wages, compensation, health benefits, insurance, retirement or any other benefit not explicitly set forth in this Agreement and arising out of work performed for County pursuant to this Agreement. The Indemnitees shall be entitled to the defense and indemnification provided for hereunder regardless of whether the Loss is in part caused or contributed to by the acts or omissions of an Indemnitee or any other person or entity; provided however, that nothing contained herein shall be construed as obligating Subrecipient to indemnify and hold harmless any Indemnitee to the extent not required under the provisions of Paragraph B below.
B. Indemnity for Design Professionals
1. To the fullest extent permitted by Applicable Law, Subrecipient agrees to defend (through legal counsel reasonably acceptable to County), indemnify and hold harmless the Indemnitees, and each of them, against any and all Losses that arise out of, pertain to, or relate to, any negligence, recklessness or willful misconduct constituting professional negligence on the part of Subrecipient or its Subconsultants, or their respective employees, agents, representatives, or independent contractors. The Indemnitees shall be entitled to the defense, and indemnification provided for hereunder regardless of whether the Loss is, in part, caused or contributed to by the acts or omissions of an Indemnitee or any other person or entity; provided, however, that nothing contained herein shall be construed as obligating Subrecipient to indemnify and hold harmless any Indemnitee to the extent not required under the provisions of this section. Subrecipient shall defend and pay, all costs and fees, including but not limited to attorney fees, cost of investigation, and defense, in any loss, suits, claims, demands, actions, or proceedings to the extent and in proportion to the percentage, such costs and fees arise out of, pertain to, or relate to the negligence, recklessness or willful misconduct of Subrecipient arising out of or from the performance of professional design services under this Agreement. The duty to defend applies to any alleged or actual negligence, recklessness, willful misconduct of Subrecipient. The cost for defense shall apply whether or not Subrecipient is a party to the lawsuit and shall apply whether or not Subrecipient is directly liable to the plaintiffs in the lawsuit. The duty to defend applies even if Indemnitees are alleged or found to be actively negligent, but only in proportion to the percentage of fault or negligence of Subrecipient.
21 2. Without affecting the rights of County under any other provision of this Agreement, Subrecipient shall not be required to indemnify or hold harmless or provide defense or defense costs to an Indemnitee for a loss due to that Indemnitee's negligence, recklessness or willful misconduct; provided, however, that such negligence, recklessness or willful misconduct has been determined by agreement of Subrecipient and Indemnitee or has been adjudged by the findings of a court of competent jurisdiction.
C. Subrecipient agrees to obtain or cause to be obtained executed defense and indemnity agreements with provisions identical to those set forth in this section from each and every Subconsultant, of every Tier.
D. Subrecipient's indemnification obligations under this Agreement shall not be limited by the amount or type of damages, compensation or benefits payable under any policy of insurance, workers' compensation acts, disability benefit acts or other employee benefit acts.
E. The Indemnitees shall be entitled to recover their attorneys' fees, costs and expert and consultant costs in pursuing or enforcing their right to defense and/or indemnification under this Agreement.
INSURANCE REQUIREMENTS
Without limiting or diminishing the Subrecipient's obligation to indemnify or hold the County harmless, Subrecipient shall procure and maintain or cause to be maintained, at its sole cost and expense, the following insurance coverages during the term of this Agreement. As respects to the insurance section only, the County herein refers to the County of Riverside, its Agencies, Districts, Special Districts, and Departments, their respective directors, officers, Board of Supervisors, employees, elected or appointed officials, agents or representatives as Additional Insureds.
A. Workers' Compensation: If the Subrecipient has employees as defined by the State of California, the Subrecipient shall maintain statutory Workers Compensation Insurance (Coverage A) as prescribed by the laws of the State of California. Policy shall include Employers' Liability (Coverage B) including Occupational Disease with limits not less than $1,000,000 per person per accident. The policy shall be endorsed to waive subrogation in favor of The County of Riverside.
B. Commercial General Liability: Commercial General Liability insurance coverage, including but not limited to, premises liability, unmodified contractual liability, products and completed operations liability, personal and advertising injury, and cross liability coverage, covering claims which may arise from or out of Subrecipient's performance of its obligations hereunder. Policy shall name the County as Additional Insured. Policy's limit of liability shall not be less than $2,000,000 per occurrence combined single limit. If such insurance contains a general aggregate limit, it shall apply separately to this agreement or be no less than two (2) times the occurrence limit. Policy shall name the County as Additional Insureds.
C. Vehicle Liability: If vehicles or mobile equipment are used in the performance of the obligations under this Agreement, then Subrecipient shall maintain liability insurance for all owned, non -owned or hired vehicles so used in an amount not less than $1,000,000 per occurrence combined single limit. If such insurance contains a general aggregate limit, it shall apply separately to this agreement or be no less than two (2) times the occurrence limit. Policy shall name the County as Additional Insureds.
22 D. Professional Liability (ONLY TO BE INCLUDED IN CONTRACTS WITH SERVICE
PROVIDERS INCLUDING BUT NOT LIMITED TO ENGINEERS, DESIGN PROFESSIONALS, DOCTORS, AND LAWYERS) Contractor shall maintain Professional Liability Insurance providing coverage for the Contractor's performance of work included within this Agreement, with a limit of liability of not less than $1,000,000 per occurrence and $2,000,000 annual aggregate. If Contractor's Professional Liability Insurance is written on a claims made basis rather than an occurrence basis, such insurance shall continue through the term of this Agreement and Subrecipient shall purchase at his sole expense either 1) an Extended Reporting Endorsement (also, known as Tail Coverage); or 2) Prior Dates Coverage from new insurer with a retroactive date back to the date of, or prior to, the inception of this Agreement; or 3) demonstrate through Certificates of Insurance that Subrecipient has Maintained continuous coverage with the same or original insurer. Coverage provided under items 1), 2), or 3) will continue as long as the law allows. Policy shall name the County as Additional Insureds.
E. General Insurance Provisions - All lines:
1. Any insurance carrier providing insurance coverage hereunder shall be admitted to the State of California and have an A M BEST rating of not less than A: VIII (A:8) unless such requirements are waived, in writing, by the County Risk Manager. If the County's Risk Manager waives a requirement for a particular insurer such waiver is only valid for that specific insurer and only for one policy term.
2. The Subrecipient must declare its insurance self -insured retention for each coverage required herein. If any such self -insured retention exceed $500,000 per occurrence each such retention shall have the prior written consent of the County Risk Manager before the commencement of operations under this Agreement. Upon notification of self -insured retention unacceptable to the County, and at the election of the County's Risk Manager, Subrecipient's carriers shall either; 1) reduce or eliminate such self -insured retention as respects this Agreement with the County, or 2) procure a bond which guarantees payment of losses and related investigations, claims administration, and defense costs and expenses.
3. Subrecipient shall cause Subrecipient's insurance carrier(s) to furnish the County of Riverside with either 1) a properly executed original Certificate(s) of Insurance and certified original copies of Endorsements effecting coverage as required herein, and 2) if requested to do so orally or in writing by the County Risk Manager, provide original Certified copies of policies including all Endorsements and all attachments thereto, showing such insurance is in full force and effect. Further, said Certificate(s) and policies of insurance shall contain the covenant of the insurance carrier(s) that a minimum of thirty (30) days written notice shall be given to the County of Riverside prior to any material modification, cancellation, expiration or reduction in coverage of such insurance. If Subrecipient insurance carrier(s) policies does not meet the minimum notice requirement found herein, Subrecipient shall cause Subrecipient's insurance carrier(s) to furnish a 30 day Notice of Cancellation Endorsement. 23 4. In the event of a material modification, cancellation, expiration, or reduction in coverage, this Agreement shall terminate forthwith, unless the County of Riverside receives, prior to such effective date, another properly executed original Certificate of Insurance and original copies of endorsements or certified original policies, including all endorsements and attachments thereto evidencing coverage's set forth herein and the insurance required herein is in full force and effect. Subrecipient shall not commence operations until the County has been furnished original Certificate (s) of Insurance and certified original copies of endorsements and if requested, certified original policies of insurance including all endorsements and any and all other attachments as required in this Section. An individual authorized by the insurance carrier to do so on its behalf shall sign the original endorsements for each policy and the Certificate of Insurance.
5. It is understood and agreed to by the parties hereto that the Subrecipient's insurance shall be construed as primary insurance, and the County's insurance and/or deductibles and/or self - insured retentions or self -insured programs shall not be construed as contributory.
6. If, during the term of this Agreement or any extension thereof, there is a material change in the scope of services; or, there is a material change in the equipment to be used in the performance of the scope of work; or, the term of this Agreement, including any extensions thereof, exceeds five (5) years; the County reserves the right to adjust the types of insurance and the monetary limits of liability required under this Agreement, if in the County Risk Management's reasonable judgment, the amount or type of insurance carried by the Subrecipient has become inadequate.
7. Subrecipient shall pass down the insurance obligations contained herein to all tiers of subcontractors working under this Agreement.
8. The insurance requirements contained in this Agreement may be met with a program(s) of self-insurance acceptable to the County.
9. Subrecipient agrees to notify County of any claim by a third party or any incident or event that may give rise to a claim arising from the performance of this Agreement 24 Attachment E - Project Monitoring Requirements
Quarterly Progress Reports shall be submitted on the 21' of the month following the previous quarter. Quarterly reports shall be sent via e-mail to RIVCOARPA&RIVCO.ORG. The quarterly report shall include a brief description of the work performed during the reporting period, including construction status, milestones achieved, financial status report including cost incurred to date, cash flow projections, schedule updates, and any problems encountered in the performance of the work under this Agreement. The progress pay estimate for the reporting period shall be included as part of the quarterly progress report submittal.
In addition to the above, project schedule and cashflow projection updates shall be emailed to the County on a monthly basis.
25 Attachment F - Construction Requirements
Subrecipient shall:
1. Pursuant to the California Environmental Quality Act ("CEQA"), act as Lead Agency and assume responsibility for preparation, circulation and adoption of all necessary and appropriate CEQA documents pertaining to the construction, operation and maintenance of Neighborhood Revitalization Project.
2. To the extent that it has not already done so, the Subrecipient shall prepare or cause plans and specifications ("Plans") to be prepared for the Neighborhood Revitalization Project prior to advertising Neighborhood Revitalization Project for construction bids.
3. Provide County a copy of the engineering design cost proposal and associated design schedule for the Neighborhood Revitalization Project.
4. Advertise and award a public works construction contract for the Neighborhood Revitalization Project and begin construction per the schedules included in Attachment A of this Agreement.
5. Prior to advertising Neighborhood Revitalization Project for public works construction contract, obtain all necessary permits, approvals, or agreements as may be required by any federal, state and local resource or regulatory agencies pertaining to the construction, operation and maintenance of Neighborhood Revitalization Project. Assume sole responsibility for compliance with the requirements of all regulatory permits, including any amendments thereto, pertaining to the construction, operation and maintenance of Neighborhood Revitalization Project.
6. Implement or cause to be implemented, all environmental mitigation required in association with the construction, operation and maintenance of Neighborhood Revitalization Project.
7. Prior to advertising Neighborhood Revitalization Project for public works construction contract, obtain all necessary permits, licenses, agreements, approvals, rights of way, rights of entry, encroachment permits, and temporary construction easements as may be needed to construct, operate and maintain the Neighborhood Revitalization Project.
8. Advertise, award and administer a public works construction contract for the Neighborhood Revitalization Project pursuant to the provisions of applicable laws for public works of improvements, including but not limited to the California Public Contract Code, Government Code and Labor Code.
9. Shall certify and cause its contractor to certify, that it is not a target of economic sanctions imposed in response to Russia's actions in Ukraine imposed by the United States government or the State of California. The Subrecipient and its Contractor are required to comply with the economic sanctions imposed in response to Russia's actions in Ukraine, including with respect to, but not limited to, the federal executive orders identified in California Executive Order N-6-22, located at hgps://www. og v ca.gov/wp- content/uploads/2022/03/3.4.22-Russia-Ukraine-Executive-Order.pdf and the sanctions identified on the United States Department of the Treasury website ( https://home.treasM . goy/policy-issues/financial-sanctions/sanctions-pro grams-and-country- information/ukraine-russia-related-sanctions). The Subrecipient and its Contractor are required to comply with all applicable reporting requirements regarding compliance with the economic sanctions, including, but not limited to, those reporting requirements set forth in California 26 Executive Order N-6-22 for all parties with one or more agreements with the State of California, the County of Riverside, or any other local agency, with a value of Five Million Dollars ($5,000,000) or more. Notwithstanding any other provision in these documents, failure to comply with the economic sanctions and all applicable reporting requirements may result in disqualification or termination of the Construction Agreement, if awarded.
For parties and contractors with an agreement value of Five Million Dollars ($5,000,000) or more with the State of California, the County of Riverside, or any other local agency, reporting requirements include, but are not limited to, information related to steps taken in response to Russia's actions in Ukraine, including but not limited to:
a. Desisting from making any new investments or engaging in financial transactions with Russian institutions or companies that are headquartered or have their principal place of business in Russia;
b. Not transferring technology to Russia or companies that are headquartered or have their principal place of business in Russia; and
c. Direct support to the government and people of Ukraine.
To comply with this requirement, please insert your name and Federal ID Number (if available) on the Certification Form attached hereto, execute by a duly authorized representative for the contractor and return to the County.
10. The Subrecipient shall require, and the specifications, bid and contract documents shall require all contractors, subcontractors, vendors, equipment operators and owner operators, in each such case to the extent such individuals or entities are engaged to perform work on the Neighborhood Revitalization Project, to pay at least general prevailing wage rates to all workers employed in the execution of the contract, to post a copy of the general prevailing wage rates at the job -site in a conspicuous place available to all employees and applicants for employment, and to otherwise comply with applicable provisions of the California Labor Code and applicable laws relating to general prevailing wage rates.
11. Each contractor engaged to perform work on the Neighborhood Revitalization Project shall be required to furnish (i) labor and material payment bonds, and (ii) contract performance bonds, each in an amount equal to 100% of the contract price naming the Subrecipient as obligee and issued by a California admitted surety which complies with the provisions of Section 995.660 of the California Code of Civil Procedure.
12. Provide County with written notice that Subrecipient has awarded a public works construction contract for Neighborhood Revitalization Project. The written notice shall include the Contractor's actual bid amounts for Neighborhood Revitalization Project, setting forth herein the lowest responsible bid contract amount.
13. Prior to commencing Neighborhood Revitalization Project construction, provide to County:
a. A construction schedule which shall show the order and dates in which Subrecipient or Subrecipient's contractor proposes to carry on the various parts of work, including estimated start and completion dates, and
b. A confined space procedure specific to Neighborhood Revitalization Project. The procedure shall comply with requirements contained in California Code of 27 Regulations, Title 8, Section 5156 et seq. and County's Confined Space Procedures, SOM-18.
14. Require its construction contractor(s) to comply with all Cal/OSHA safety regulations including regulations concerning confined space and maintain a safe working environment for all working on the site.
15. Order the relocation of all utilities within Subrecipient rights of way which conflict with the construction of Neighborhood Revitalization Project and which must be relocated at the expense of who may have superior property rights.
16. Procure or caused to be procured insurance coverages during the term of this Agreement. Subrecipient shall require its Neighborhood Revitalization Project construction contractor(s) to furnish original certificate(s) of insurance and original certified copies of endorsements and if requested, certified original policies of insurance including all endorsements and any and all other attachments. Prior to Subrecipient issuing a Notice to Proceed to its construction contractor(s) to begin construction of Neighborhood Revitalization Project, an original certificate of insurance evidencing the required insurance coverage shall be provided to County. At minimum, the procured insurance coverages should adhere to the County's required insurance provided in Attachment D to this Agreement.
17. Construct, or cause to be constructed, Neighborhood Revitalization Project pursuant to a Subrecipient administered public works construction contract, in accordance with the Plans, and pay all costs associated therewith.
18. Inspect the Neighborhood Revitalization Project construction or cause the Neighborhood Revitalization Project's construction to be inspected by its construction manager and pay all costs associated therewith.
19. Provide County with a copy of the Subrecipient's recorded Notice of Completion.
20. Keep an accurate accounting of Neighborhood Revitalization Project cost and provide this accounting to County with Subrecipient's Notice of Completion. The final accounting of construction cost shall include a detailed breakdown of all costs, including, but not limited to, payment vouchers, Subrecipient approved change orders and other such construction contract documents as may be necessary to establish the actual cost of construction for the PLANS. Subrecipient shall be responsible to pay any amounts in excess of Award amount provided in this Agreement.
21. Refund to County, at the time of providing a Notice of Completion, any unexpended portions of Award amount within thirty (30) days of the Notice of Completion is filed for recordation.
28 COMPLIANCE WITH ECONOMIC SANCTIONS IN RESPONSE TO RUSSIA'S ACTIONS
IN UKRAINE
Prior to bidding on, submitting a proposal, or executing a contract, a party/contractor must certify: 1) it is not a target of economic sanctions and 2) in compliance with economic sanctions imposed by the U.S. government in response to Russia's actions in Ukraine, as well as any requirements related to the Russian sanctions imposed by the California Governor's Executive Order N-6-22 issued on March 4, 2022 and under state law, if any.
To comply with this requirement, please insert the party/contractor name and Federal ID Number (if available), complete the information described below and execute by an authorized representative of the contractor.
CERTIFICATION
I, the authorized representative for contractor named below, certify I am duly authorized to execute this certification on behalf of the contractor below, and the contractor identified below has conducted a good faith review of existing contracts. I attest that the contractor is not a target of economic sanctions, and that contractor is in compliance with the economic sanctions imposed by the U.S. government in response to Russia's actions in Ukraine, as well as any requirements related to the Russian sanctions imposed by the California Governor's Executive Order N-6-22 issued on March 4, 2022 and under state law, if any.
Party/Contractor Name (Printed)
Federal ID Number or n a
By (Authorized Signature)
Printed Name and Title of Person Signing
Date
E-
29 Adft
IT
The Heart of Southern California
Wine Country
DOG PARK RENOVATION
Parks/Recreation Project
Project Description: This project is to design and construct a dog park at Mike Naggar Community Park. The dog park will include small and large dog pens, seating, drinking fountains, shade and an agility dog course feature.
Benefit: This project protects the City's vast investment in parks and open space facilities. In addition, this project satisfies the City's Core Values of a Healthy and Livable City and Responsive City Government.
Core Value: Healthy and Livable City
Project Status: This project is dependent on the Prop 68 Per Capita Grant.
Design is currently at 90%. The project is estimated to be complete in Fiscal Year 2023-24.
Department: Public Works - Account No. 210.265.999.5800.PW21-14 / 207 Level: I
City of Temecula
Fiscal Years 2024-28
Capital Improvement Program
2023-24
Prior Years
2022-23 Adopted 2024-25 2025-26 2026-27 2027-28
Total Project
Project Cost:
Actuals
Adjusted Budget Projected Projected Projected Projected Cost
5801-Administration
25,000 100,000
125,000
5804-Construction
533,484 10,000
543,484
5802-Design & Environmental
15,116
56,400
71,516
Total Expenditures
15,116
614,884 110,000
740,000
Source of Funds:
4025-Grants
4002-Measure S
25,000
247,126
357,874 110,000
247,126
492,874
Total Funding
25,000
605,000 110,000
740,000
Future Operating & Maintenance Costs:
Total Operating Costs
Notes :
1. Proposition 68 Grant from the California Department of Parks and Recreation.
Item No. 11
CITY OF TEMECULA
AGENDA REPORT
TO: City Manager/City Council
FROM: Patrick Thomas, Director of Public Works/City Engineer DATE: August 22, 2023
SUBJECT: Approve Specifications and Authorize Solicitation of Construction Bids for Citywide Slurry Seal Program — Fiscal Year 2022-23, PW23-16 PREPARED BY: Amer Attar, Engineering Manager
Emalee Sena, Engineering Technician II
RECOMMENDATION: That the City Council:
1. Approve the specifications and authorize the Department of Public Works to solicit construction bids for the Citywide Slurry Seal Program — Fiscal Year 2022-23, PW23-16; and
2. Make a finding that this project is exempt from CEQA per Article 19, Categorical Exemption, Section 15301, Existing Facilities, of the CEQA Guidelines.
BACKGROUND: As part of the Operating Budget for Fiscal Year 2022-23, slurry will be utilized to seal the project roadways against water intrusion and deterioration of asphalt concrete pavement wearing surface. Ideally, slurry seal is applied every five to seven years as it prolongs pavement life thereby delaying more costly rehabilitation measures such as asphalt concrete overlays or removal and reconstruction. Construction involves roadway preparation by removal of existing striping/markings and cleaning/sealing large cracks. This is followed by application of slurry seal and subsequent restoration of striping and pavement markings.
Staff has identified the street locations based on the Pavement Management Program (PMP) Update completed in 2017-18, current pavement conditions, time elapsed since the last preventative maintenance measure and geographical proximity. The streets to be sealed are in the communities of Rancho Vista, Los Ranchitos, and Rancho Vista East. An added alternate slurry seal area for this project is the community of Vail Ranch. The slurry seal of this area is contingent on the bids received and the available budget. The name of the streets to be slurry sealed are shown on the attached list and project location maps.
Project specifications are complete and the project is ready to be advertised for construction bids.
The contract documents are available for review in the office of the Director of Public Works.
The Engineer's Construction Estimate for the Project is $1,303,923. The estimate for the added alternate areas is $973,056.
The project is exempt from the CEQA requirements pursuant to Article 19, Categorical Exemption, Section 15301, Existing Facilities, of the CEQA Guidelines. Section 15301 states that the repair and maintenance of existing highways and streets are Class 1 activities which is exempt from CEQA.
FISCAL IMPACT: This project is funded in the Operating Budget with Measure A funds. If necessary, the project budget can be supplemented from the Pavement Rehabilitation Program — Citywide project budget if they are available after consideration of the planned segments to be rehabilitated under that project. This project will slurry seal as much area as the budget allows.
ATTACHMENTS: 1. Slurry Seal Street Name List
2. Project Location Maps
Rancho Vista and Los Ranchitos Slurry Seal Street Name List - FY 2022-23
AGENA ST
CRESTA VERDE CT
REMORA ST
ALPHA PL
DEL MAR CT
RENDOVA PL
ARGO CT
EL DOMINO PL
SAN FERMIN PL
ASTEROID WY
EL FARO PL
SAN JULIAN PL
AVENIDA DE
EL LUCERO PL
SANTA CECILIA DR
CALAZADA
ELINDA RD
SANTA SUZANNE PL
BEL MONTE CT
ESCOLACATA DR
SANTIAGO RD
BOREALIS DR
ESTERO ST
SENELA PL
CABO ST
FLORES DR
SENELA PL
CABRILLO AVE
JEDEDIAH SMITH RD
SKY TERRACE DR
CACTUS PL
JOHN WARNER RD
SOUTHERN CROSS RD
CAJON DR
LA PAZ RD
SPICA CT
CALLE CARRANZA
LA PRESA LOOP
STAR CT
CALLE DE VELARDO
LA PRIMAVERA ST
TIERRA ROBLES PL
CALLE HALCON
LAS VIOLETTAS CT
TWILIGHT CT
CALLE SONORA
LAURIE RAE LN
VALLEJO AV
CALLE VIOLETA
LEVANDE PL
VALLEJO AVE E
CAMINO DEL SOL
LOLITA RD
VERDADERO PL
CAMPO ROJO
LOMA PORTOLA DR
VERDE DR
CAMPO VERDE
MANZANO DR
VERONDA PL
CANDIDA DR
MARIPOSA PL
VIA BRISA
CAPRICE CT
MILKY WAY DR
VIA CANADA
CARINO PL
MIRA LOMA DR
VIA VELEZ PL
CASA CHATA PL
MOONTIDE CT
VILLA ALTURAS DR
CENTAUR CT
MOUNTAIN VIEW
VILLA DEL SUR DR
CIELO DE AZUL
NEBULA LN
VILLA TER CT
CIELO MESA
PALMA DR
VIRGO CT
COLINA VERDE
PAULITA RD
VISTA DEL RANCHO
COLVER CT
PESCADO DR
WINDCREST LN
CORONADO DR
PIASANO PL
YORBA AV
CORTE VILLA
PIO PICO RD
COSMIC DR
PORTRAITS LN
Rancho Vista East Slurry Seal Street Name List - FY 2022-23
CALLE JAB ILI
CORTE CORONADO
CORTE SOLEDAD
CALLE RESACA
CORTE DEL CERRO
CORTE VALENTINE
CAMINO CASANA
CORTE FLORECITA
CORTE ZAMORA
CAMINO DE LA TORRE
CORTE HIGUERA
ROSA CT
CAMINO MAREA
CORTE LA PUENTA
VIA ASTURIAS
CAMINO MERANO
CORTE LARA
VIA BALDERAMA
CAMINO NUNEZ
CORTE LAS CRUCES
VIA REINA
CAMINO SENECO
CORTE MONTIA
VIA TORENO
CORTE AMALIA
CORTE PALACIO
VIA TORRES
CORTE BACARRO
CORTE PARADO
VIA VASQUEZ
CORTE BALBOA
CORTE PERGAMINO
VIA VISTANA
CORTE CAMARA
CORTE SAN VICENTE
VINTAGE HILLS DR
CORTE CANEL
CORTE SANTA
CORTE CARMELA
CATALINA
CORTE CHATADA
CORTE SEDA
Additive Alternate - Vail Ranch Slurry Seal Street Name List - FY 2022-23
AKES PASS
COUNTRY GLEN WY
NICLYN DR
ALIGHCHI WY
CRESTWOOD CIR
OVERLAND TR
AVENIDA BICICLETA
CUPA LN
PAROWN DR
AVENIDA DE
CUTCHOGUE DR
PASCUAL CIR
MISSIONS
ENRIQUETA CIR
POTESTAS DR
AVITA CIR
FERN CIR
PRIS LN
BANANAL WY
FREESIA WY
REGINA DR
BOG UTA WY
GAROLI PASS
RHIANNON WY
BRENTWOOD PL
GRADO CIR
ROMERO DR
BRICE CIR
HAFIZ PASS
ROSEWOOD CIR
CALLE ALFREDO
HARMONY LN
ROSSMAN CIR
CALLE BANUELOS
HISLOP WY
SAMILIN CIR
CALLE CANTU
HUPA DR
SASKIA PASS
CALLE HILARIO
HUPP DR
SAWYERS RUN RD
CALLE LANGARICA
JAMIN CIR
SHALE CIR
CALLE LOPEZ
JOHNSTON DR
SHAYNNA CIR
CALLE MIRA COPA
JOSHEROO CT
SILKY PASS
CAMINO ALAMOSA
KABIAN CT
SOTELO DR
CAMINO GONZALES
KARIE WY
STRIGEL CT
CAMINO HERNANDEZ
KIT CT
SUNBEAM TR
CAMINO MARACA
LABETA CIR
TEHACHAPI PASS
CAMINO OTILIA
LAURIANO DR
TERRACE DR
CAMINO PIEDRA ROJO
LEVI CT
TERZICH DR
CAMINO RUBANO
LINALOU RANCH RD
THATCHER CT
CAYENNE TR
LONGFELLOW AV
TIBURCIO DR
CERVIN CIR
LORRAINE DR
TOBIAS CIR
CINON DR
MACHON RD
TULLEY RANCH RD
CORTE CANARIO
MAPLEWOOD CT
VALENTINO WY
CORTE GANSO
MARGE PL
VIA RIO TEMECULA RD
CORTE GUTIERREZ
MARZI CT
WELTON WY
CORTE RODRIGUEZ
MELISSA CIR
CORTE SANCHEZ
MILL RUN CT
Alk
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Updated 8/8/2023
Item No. 12
CITY OF TEMECULA
AGENDA REPORT
TO: City Manager/City Council
FROM: Patrick Thomas, Director of Public Works/City Engineer DATE: August 22, 2023
SUBJECT: Accept Improvements and File the Notice of Completion for the Traffic Signal — Park and Ride Access Improvements, PW18-11
PREPARED BY: Nino Abad, Senior Civil Engineer
Laura Bragg, Associate Engineer II
RECOMMENDATION: That the City Council:
Accept the construction of the Traffic Signal — Park and Ride Access Improvements, PW18-11, as complete; and
2. Direct the City Clerk to file and record the Notice of Completion.
BACKGROUND: On May 25, 2021, the City Council awarded a construction contract to PAL General Engineering, Inc. (PAL), in the amount of $901,846.00, and authorized the City Manager to approve contract change orders not to exceed the contingency amount of $90,184.60, for a total authorization of $992,030.60 to complete the Traffic Signal - Park and Ride Access Improvements, PW18-11.
The Traffic Signal — Park and Ride Access Improvements project provided for the construction of a traffic signal and modifications to the medians on Temecula Parkway at Wabash Lane, construction of an access road from Temecula Parkway at Wabash Lane to the existing park and ride facility, and the elimination of the previously existing entrance to the park and ride facility on Vallejo Avenue by extending the existing wall. The access road goes through private property, and it is allowed via an Access Easement Agreement with the property owner. There is also a Reimbursement Agreement with the property owner, which requires them to pay the City a portion of the construction costs upon filing of the Notice of Completion.
PAL General Engineering, Inc., exhausted contract working days on March 7, 2022, and continued to work on contract items through April 21, 2023, with involvement of the Surety Company that provided the Performance Bond for the project. On April 21, 2023, the City received `Beneficial Use" of the project area and at that time there were three items outstanding. As of July 31, 2023, PAL has completed the work in accordance with the approved plans and specifications with the exception of the same three outstanding items that the City has agreed to complete.
Two of the three outstanding items pertain to installation of the Traffic Signal CCTV camera. The City has taken possession of the camera purchased for this project and will work with the manufacturer to place it at an appropriate location that will fully use the cameras capabilities. The City's IT Department will supply and install a different model CCTV camera. The third item is to assist in recording the survey document for the Wabash Lane and Temecula Parkway intersection at the County of Riverside. PAL's survey subcontractor is often nonresponsive, so this item will be performed by the City as to not delay filing the Notice of Completion.
The City is in the process of negotiating the final payment with PAL, therefore, the Performance Bond, Labor and Materials Bond, and retention will not be released at this time. This negotiation may be a lengthy process due to the involvement of the Surety Company. The Contractor's Affidavit and Final Release will be provided when final payment negotiations are complete. All work will be warranted for a period of one year from April 21, 2023, the date the City obtained "beneficial use" of the project improvements. A Maintenance Bond will need to be supplied by PAL and the Surety Company as part of the final payment negotiations.
Per the terms of the Reimbursement Agreement, the City must provide to the property owner the Notice of Completion and other project documents before said property owner will reimburse the City their share of the construction costs. Since the negotiations with the Contractor and Surety could be lengthy, the City is filing the Notice of Completion now instead of waiting for the final payment negotiations to be completed.
The base amount of the construction contract was $901,846.00, five contract change orders were issued in the amount of $9,939.53. A sixth contract change order to reconcile quantity underruns is in progress and will be processed once the final payment negotiations are complete. The total project cost will be known at that point.
FISCAL IMPACT: There are no fiscal impact associated with accepting the project and filing and recording the Notice of Completion.
ATTACHMENTS: 1. Notice of Completion
2. Project Description
3. Project Location
RECORDING REQUESTED BY
AND RETURN TO:
CITY CLERK
CITY OF TEMECULA
41000 Main Street
Temecula, CA 92590
EXEMPT FROM RECORDER'S FEES
Pursuant to Government Code
Sections 6103 and 27383
NOTICE OF COMPLETION
NOTICE IS HEREBY GIVEN THAT:
Temecula Valley Hospitality, LLC, is the owner of the property hereinafter described. The City of Temecula and Temecula Valley Hospitality, LLC, have entered into an Access Easement Agreement and a Reimbursement Agreement to allow for the construction and perpetual usage of a driveway that traverses the south westerly corner of the Temecula Valley Hospitality Property and connecting to the City of Temecula's property adjacent to the west.
2. The full address of the City of Temecula is 41000 Main Street, Temecula, California 92590.
3. The Nature of Interest is a Contract which was awarded by the City of Temecula to PAL General Engineering, Inc., 2364 Paseo De Las Americas #104-1461, San Diego, CA 92154, to perform the following work of improvement:
Traffic Signal — Park and Ride Access Improvements, PW18-11
4. Said work was completed by said company according to plans and specifications and to the satisfaction of the Director of Public Works of the City of Temecula and that said work was accepted by the City Council of the City of Temecula at a regular meeting thereof held on August 22, 2023. That upon said contract Argonaut Insurance Company, c/o CMGIA, 20335 Ventura Blvd., Ste 426, Woodland Hills, CA, 91364, was surety for the bond given by the said company as required by law.
5. The property on which said work of improvement was completed is in the City of Temecula, County of Riverside, State of California, and is described as follows:
Traffic Signal — Park and Ride Access Improvements, PW18-11 Riverside County Tax Assessor's Parcel Number 922-190-033
6. The location of said property is: Wabash Lane and Temecula Parkway, Temecula, CA 92592
Dated at Temecula, California, this 22"d day of August, 2023.
City of Temecula
Randi Johl, City Clerk
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, City Clerk of the City of Temecula, California, do hereby certify under penalty of perjury, that the foregoing NOTICE OF COMPLETION is true and correct, and that said NOTICE OF COMPLETION was duly and regularly ordered to be recorded in the Office of the County Recorder of Riverside by said City Council.
Dated at Temecula, California, this 22nd day of August, 2023.
City of Temecula
Randi Johl, City Clerk
Alk
f
The Heart of Southern California
Wine Country
City of Temecula
Fiscal Years 2024-28
Capital Improvement Program
TRAFFIC SIGNAL - PARK & RIDE ACCESS IMPROVEMENTS
Circulation Project
Project Description: This project includes the installation of a traffic signal on Temecula Parkway at Wabash Lane. The project also includes relocating the access of the Park and Ride facility on Temecula Parkway at La Paz Road from Vallejo Avenue to Wabash Lane.
Benefit: This project improves traffic safety and circulation throughout the City.
Core Value: Healthy and Livable City
Project Status: Construction will be completed in Fiscal Year 2022-23.
Department: Public Works - Account No. 210.265.999.605 / PW18-11 Level: I
Project Cost:
Prior Years
Actuals
2023-24
2022-23 Proposed 2024-25 2025-26 2026-27 2027-28
Adjusted Budget Projected Projected Projected Projected Total Project
Cost
Administration
537,560
17 537,577
Construction
620,950
639,174
1,260,123
Construction Engineering
83,767
47,661
131,428
Design & Environmental
273,651
5,453
279,104
MSHCP
2,664
2,664
Total Expenditures
1,518,590
692,306
2,210,896
Source of Funds:
Developer Contribution
175,000
175,000
General Fund
226,725
226,725
Measure S
1,018,590
290,581
1,309,171
Settlement Proceeds
500,000
500,000
Total Funding
i 1,745,315
465,581 -
2,210,896
Future Operating & Maintenance Costs:
Total Operating Costs
U
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CO
Traffic Signal Park and Ride Access lmprovements
Circulation Project Location
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82 Item No. 13
CITY OF TEMECULA
AGENDA REPORT
TO: City Manager/City Council
FROM: Patrick Thomas, Director of Public Works/City Engineer DATE: August 22, 2023
SUBJECT: Receive and File Temporary Street Closures for 2023 Autumnfest Events PREPARED BY: Anissa Sharp, Management Assistant
Nick Minicilli, Senior Traffic Engineer
RECOMMENDATION: That the City Council receive and file the temporary closure of certain streets for the following 2023 Autumnfest Events:
GOLDEN ERA RUNWAY SHOW
NATIONAL EMERGENCY PREPAREDNESS FAIR
ARTFEST
HEALTH & COMMUNITY RESOURCE FAIR
CYCLE FOR HOPE
GREEK FESTIVAL
HALLOWEEN CARNIVAL
VETERAN'S DAY
PECHANGA PU'ESKA MOUNTAIN DAY
BACKGROUND: Nine special events are scheduled between August 2023 and November 2023 which necessitates the physical closure of all or portions of certain streets within the Old Town area and other streets throughout Temecula. These closures are necessary for event operation as well as to protect participants and viewers.
The eight events and associated street closures are as follows:
1) GOLDEN ERA RUNWAY SHOW — August 261h
The Golden Era Runway Show is a private permitted event, planned to be held Saturday, August 26th in Old Town Temecula. The street closures are scheduled as follows:
Main Street
from the easterly driveway edge of th
Saturday, August 26
Be Good Restaurant (28636 Old Town Front
Street) to Mercedes Street 8:00 a.m. to 10:00 p.m.
Mercedes Street Saturday, August 26th
Third Street to Fourth Street 8:00 a.m. to 10:00 p.m.
Street closures for the Golden Era Runway Show event are shown on Exhibit "A" attached hereto. 2) NATIONAL EMERGENCY PREPAREDNESS FAIR — September 9'
The National Emergency Preparedness Fair event will be held Saturday, September 9"' in Old Town Temecula with street closures scheduled as follows:
Main Street
from the easterly driveway edge of
Saturday, September 9th
Be Good Restaurant (28636 Old Town Front
6:00 a.m. to 4:00 p.m.
Street) to Mercedes Street
Mercedes Street
Saturday, September 9th
Third Street to Fourth Street
6:00 a.m. to 4:00 p.m.
Street closures for the National Emergency Preparedness Fair event are shown on Exhibit "A" attached hereto.
3) ARTFEST — September 15th and September 16t'
The ArtFest event will be held Friday, September 151h and Saturday, September 16th in Old Town Temecula with street closures scheduled as follows:
Main Street
8:00 a.m. on Thursday, September 14th
from the easterly driveway edge of
to
Be Good Restaurant (28636 Old Town Front
Street) to Mercedes Street
11:00 p.m. on Saturday, September 16th
8:00 a.m. on Thursday, September 14th
Mercedes Street
Third Street to Fourth Street
to
11:00 p.m. on Saturday, September 161h
Street closures for the ArtFest event are shown on Exhibit "A" attached hereto. 4) HEALTH & COMMUNITY RESOURCE FAIR — September 301h
The Health & Community Resource Fair event will be held Saturday, September 30th in Old Town Temecula with street closures scheduled as follows:
Main Street
8:00 a.m. on Friday, September 29th
from the easterly driveway edge of
Be Good Restaurant (28636 Old Town Front
to
8:00 p.m. on Saturday, September 30th
Street) to Mercedes Street
8:00 a.m. on Friday, September 29th
Mercedes Street
Third Street to Fourth Street
to
8:00 p.m. on Saturday, September 30th
Street closures for the Health & Community Resource Fair event are shown on Exhibit "A" attached hereto.
5) CYCLE FOR HOPE — October 1't
The Cycle for Hope is a private permitted event, planned to be held Sunday, October lit with street closures scheduled as follows:
Rider Way
Sunday, October lst
Enterprise Circle West to
6:00 a.m. to 2:00 p.m.
Commerce Center Drive
Commerce Center Drive
Sunday, October I"
Rider Way to Overland Drive
6:00 a.m. to 2:00 p.m.
Street closures for the Cycle for Hope event are shown on Exhibit "B" attached hereto. 6) GREEK FESTIVAL — October 14t' and October 151h
The Greek Festival is a private permitted event, planned to be held Saturday, October 141h and Sunday, October 15th in Old Town Temecula with street closures scheduled as follows:
Main Street
8:00 a.m. on Friday, October 131h
from the easterly driveway edge of
Be Good Restaurant (28636 Old Town Front
to
8:00 a.m. on Monday, October 16th
Street) to Mercedes Street
8:00 a.m. on Friday, October 131h
Mercedes Street
Third Street to Fourth Street
to
8:00 a.m. on Monday, October 16th
Street closures for the Greek Festival event are shown on Exhibit "A" attached hereto.
7) HALLOWEEN CARNIVAL — October 27t'
The Halloween Carnival event will be held Friday, October 271" in Old Town Temecula with street closures scheduled as follows:
Main Street
from the easterly driveway edge of
Friday, October 271h
Be Good Restaurant (28636 Old Town Front
8:00 a.m. to 11:00 p.m.
Street) to Mercedes Street
Mercedes Street
Friday, October 271h
Third Street to Fourth Street
8:00 a.m. to 11:00 p.m.
Street closures for the Halloween Carnival event are shown on Exhibit "A" attached hereto. 8) VETERAN'S DAY — November 11th
The Veteran's Day event will be held Saturday, November 11 th in Old Town Temecula with street closures scheduled as follows:
Main Street
from the easterly driveway edge of
Saturday, November 1 lth
Be Good Restaurant (28636 Old Town Front
10:00 a.m. to 10:00 p.m.
Street) to Mercedes Street
Mercedes Street
Saturday, November 1 lth
Third Street to Fourth Street
10:00 a.m. to 10:00 p.m.
Street closures for the Veteran's Day event are shown on Exhibit "A" attached hereto. 9) PECHANGA PU'ESKA MOUNTAIN DAY — November 15th
The Pechanga Pu'6ska Mountain Day event will be held Wednesday, November 15th in Old Town Temecula with street closures scheduled as follows:
Main Street
from the easterly driveway edge of
Wednesday, November 15th
Be Good Restaurant (28636 Old Town Front
12:00 p.m. to 9:00 p.m.
Street) to Mercedes Street
Mercedes Street
Wednesday, November 15th
Third Street to Fourth Street
12:00 p.m. to 9:00 p.m.
Street closures for the Pechanga Pu'eska Mountain Day event are shown on Exhibit "A" attached hereto.
Street closures are allowed by the California Vehicle Code upon approval by the local governing body for certain conditions. Under Vehicle Code Section 21101, "Regulation of Highways," local authorities, for those highways under their jurisdiction, may adopt rules and regulations by ordinance or resolution for, among other instances, "temporary closing a portion of any street for celebrations, parades, local special events, and other purposes, when, in the opinion of local authorities having jurisdiction, the closing is necessary for the safety and protection of persons who are to use that portion of the street during the temporary closing." Chapter 12.12 of the Temecula Municipal Code, Parades and Special Events, provides standards and procedures for special events on public streets, highways, sidewalks, or public right of way and authorizes the City Council or City Manager to temporarily close streets, or portions of streets, for these events.
FISCAL IMPACT: The costs of police services, as well as services provided by the City Public Works Maintenance Division (for providing, placing, and retrieving of necessary warning and advisory devices), are appropriately budgeted within the City's operating budget.
ATTACHMENTS: 1. Exhibit A — Autumnfest Road Closures 2023
2. Exhibit B — Cycle for Hope Road Closures 2023
Exhibit A: Autumnfest Road Closures 2023
Autumnfest Events
• Golden Era Runway Show
August 26th, 8 AM - 10 PM
• National Emergency
Preparedness Fair
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Mercedes St
September 9th, 6 AM - 4 PM
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• ArtFest,
September 14th, 8 AM to
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September 16th, 11 PM
• Health & Community
�Fourth
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Resource Fair
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September 29th, 8 AM to
September 30th, 8 PM'
• Greek Festival
October 13th, 8 AM to
October 16th, 8 AM
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Main St
• Halloween Carnival
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October 27th, 8 AM - 11 PM;
• Veteran's Day
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November 11 th, 10 AM - 10 PM
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Pechanga Pu'eska Mountain
Day
November 15th, 12 PM - 9 PM
Road Closure
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28636 Old
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Third St
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Rider Way
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Road Closures
• Cycle for Hope
Sunday, October 1st
6:00 a.m. to 2:00 p.m.
Exhibit B: Cycle for Hope Road Closures 2023
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Commerce Center Dr
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Overland Dr
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Item No. 14
ACTION MINUTES
TEMECULA COMMUNITY SERVICES DISTRICT MEETING
COUNCIL CHAMBERS
41000 MAIN STREET
TEMECULA, CALIFORNIA
AUGUST 8, 2023
CALL TO ORDER at 6:16 PM: President James Stewart
ROLL CALL: Alexander, Brown, Kalfus, Schwank, Stewart
CSD PUBLIC COMMENTS -None
CSD CONSENT CALENDAR
Unless otherwise indicated below, the following pertains to all items on the Consent Calendar.
Approved the Staff Recommendation (5-0): Motion by Alexander, Second by Brown. The vote reflected unanimous approval.
5. Approve Action Minutes of July 25, 2023
Recommendation: That the Board of Directors approve the action minutes of July 25, 2023.
CSD DIRECTOR OF COMMUNITY SERVICES REPORT
CSD GENERAL MANAGER REPORT
CSD BOARD OF DIRECTORS REPORTS
CSD ADJOURNMENT
At 6:17 PM, the Community Services District meeting was formally adjourned to Tuesday, August 22, 2023 at 4:30 PM for a Closed Session, with a regular session commencing at 6:00 PM, City Council Chambers, 41000 Main Street, Temecula, California.
James Stewart, President
ATTEST:
Randi Johl, Secretary
[SEAL]
Item No. 15
TEMECULA COMMUNITY SERVICES DISTRICT
AGENDA REPORT
TO: General Manager/Board of Directors
FROM: Erica Russo, Director of Community Services
DATE: August 22, 2023
SUBJECT: Approve Agreement with Titan Rental Group, Inc. for Event and Program Rental Items
PREPARED BY: Dawn Adamiak, Community Services Superintendent RECOMMENDATION: That the Board of Directors approve the agreement with Titan Rental Group, Inc. for event and program rental items.
BACKGROUND: Dependable, professional vendors play an essential role in supporting the Community Services Department by providing needed services. Titan Rentals Group, Inc. is committed to providing high quality rental items and has been serving Temecula residents and visitors in this capacity for over 10 years. Under this three-year contract, Titan Rental Group, Inc. will provide various rental items for numerous events and programs, including:
• Temecula Rod Run
• Teen Night Light Egg Hunt
• Temecula Special Games
• 4th of July Extravaganza
• Memorial Day Event
• Human Services Events & Programs
• New Year's Eve Grape Drop
• Art Fest
• Santa's Electric Light Parade
This three-year agreement will begin August 22, 2023, and remain in effect until July 31, 2026, unless terminated earlier pursuant to the provisions of the agreement. The cost for this agreement will not exceed $190,000 for the three-year term.
FISCAL IMPACT: Adequate funds for the current fiscal year have been requested as part of the Fiscal Year 2023-24 Annual Operating Budget. Funds for future fiscal years under this multi -year agreement will be requested as part of the normal annual budget process.
ATTACHMENTS: Agreement
NON-EXCLUSIVE SERVICES AGREEMENT
BETWEEN TEMECULA COMMUNITY SERVICES DISTRICT AND
TITAN RENTAL GROUP, INC.
EVENT SERVICES
THIS AGREEMENT is made and effective as of August 22, 2023, between the Temecula Community Services District, a community services district (hereinafter referred to as "City"), and Titan Rental Group, Inc., a Corporation, (hereinafter referred to as "Vendor"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows:
1. TERM
This Agreement shall commence on August 22, 2023, and shall remain and continue in effect until tasks described herein are completed, but in no event later than July 31, 2026, unless sooner terminated pursuant to the provisions of this Agreement.
2. SERVICES
Vendor shall perform the services and tasks described and set forth in Exhibit A, attached hereto and incorporated herein as though set forth in full. Vendor shall complete the tasks in according to the schedule of services which is also set forth in Exhibit A.
Vendor recognizes and agrees that this Agreement is for the purpose of establishing a contractual relationship between the City and the Vendor for the non-exclusive procurement of services outlined on Exhibit A, attached hereto, and incorporated herein as though set forth in full.
The Vendor understands this Agreement is non-exclusive and the City reserves the right to purchase similar services from other Vendors.
3. PERFORMANCE
Vendor shall faithfully and competently exercise the ordinary skill and competence of members of their profession. Vendor shall employ all generally accepted standards and practices utilized by persons engaged in providing similar services as are required of Vendor hereunder in meeting its obligations under this Agreement.
4. PAYMENT
a. The City agrees to pay Vendor, in accordance with the payment rates and terms and the schedule of payment as set forth in Exhibit B, Payment Rates and Schedule, attached hereto and incorporated herein by this reference as though set forth in full, based upon actual time spent on the above tasks. Any terms in Exhibit B, other than the payment rates and schedule of payment, are null and void. This amount shall not exceed One Hundred Ninety Thousand Dollars and No Cents ($190,000.00) for the total term of this agreement unless additional payment is approved as provided in this Agreement. b. Vendor shall not be compensated for any services rendered in connection with its performance of this Agreement which are in addition to those set forth herein, unless such additional services are authorized in advance and in writing by the General Manager. Vendor shall be compensated for any additional services in the amounts and in the manner as agreed to by General Manager and Vendor at the time City's written authorization is given to Vendor for the performance of said services. The not to exceed payment amount listed herein is an estimated expenditure and this Agreement does not guarantee Vendor this amount in purchases. 08/08/2021
C. Vendor will submit invoices for actual services performed. Payment shall be made within thirty (30) days of receipt of each invoice as to all non -disputed fees. If the City disputes any of Vendor's fees, it shall give written notice to Vendor within thirty (30) days of receipt of an invoice of any disputed fees set forth on the invoice. For all reimbursements authorized by this Agreement, Vendor shall provide receipts on all reimbursable expenses in excess of Fifty Dollars ($50) in such form as approved by the Director of Finance.
5. NON -ASSIGNABILITY
The Vendor shall not assign the performance of this Agreement, nor any part thereof, nor any monies due hereunder, without prior written consent of the City.
6. INDEPENDENT CONTRACTOR
The Vendor is and shall at all times remain as to the City a wholly independent contractor.
The personnel performing the Work under this Agreement on behalf of the Vendor shall at all times be under Vendor's exclusive direction and control.
7. LEGAL RESPONSIBILITIES
The Vendor shall keep itself informed of State and Federal laws and regulations which in any manner affect those employed by it or in any way affect the performance of its service pursuant to this Agreement. The Vendor shall at all times observe and comply with all such laws and regulations. The City, and its officers and employees, shall not be liable at law or in equity occasioned by failure of the Vendor to comply with this section.
8. LICENSES
At all times during the term of this Agreement, Vendor shall have in full force and effect, all licenses required of it by law for the performance of services described in this Agreement.
9. INDEMNIFICATION
Vendor agrees to defend, indemnify, protect, and hold harmless, the City of Temecula, Temecula Community Services District, and/or the Successor Agency to the Temecula Redevelopment Agency, and its officers, officials, employees, agents, and volunteers, from and against any and all claims, demands, losses, defense costs or expenses, actions, liability or damages of any kind and nature which the City of Temecula, Temecula Community Services District, and/or the Successor Agency to the Temecula Redevelopment Agency, its officers, agents, employees, and volunteers may sustain or incur or which may be imposed upon them for injury to or death of persons, or damage to property arising out of Vendor's negligent or wrongful acts or omissions arising out of or in any way related to the Work or the Vendor's performance or non-performance of this Agreement, excepting only liability out of the sole negligence of the City of Temecula, Temecula Community Services District, and/or the Successor Agency to the Temecula Redevelopment Agency.
10. INSURANCE REQUIREMENTS
Vendor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the work hereunder by the Vendor, its agents, representatives, or employees. a. Minimum Scope of Insurance. Coverage shall be at least as broad as:
08/08/2021
1) Insurance Services Office Commercial General Liability Form No. CG 00 01 11 85 or 88.
2) Insurance Services Office Business Auto Coverage form CA 00 01 06 92 covering Automobile Liability, code 1 (any auto). If the Vendor owns no automobiles, a non - owned auto endorsement to the General Liability policy described above is acceptable. 3) Worker's Compensation insurance as required by the State of California and Employer's Liability Insurance. If the Vendor has no employees while performing under this Agreement, worker's compensation insurance is not required, but Vendor shall execute a declaration that it has no employees.
a. Minimum Limits of Insurance. Vendor shall maintain limits no less than:
1) General Liability: One Million ($1,000,000) per occurrence for bodily injury, personal injury, and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit.
2) Automobile Liability: One Million ($1,000,000) per accident for bodily injury and property damage.
3) Worker's Compensation as required by the State of California; Employer's Liability: One Million Dollars ($1,000,000) per accident for bodily injury or disease. b. Deductibles and Self -Insured Retentions. Any deductibles or self -insured retentions shall not exceed Twenty Five Thousand Dollars and No Cents ($25,000).
C. Other Insurance Provisions. The general liability and automobile liability policies are to contain, or be endorsed to contain, the following provisions:
1) The City of Temecula, the Temecula Community Services District, the Successor Agency to the Temecula Redevelopment Agency, their officers, officials, employees and volunteers are to be covered as insured's, as respects: liability arising out of activities performed by or on behalf of the Vendor; products and completed operations of the Vendor; premises owned, occupied or used by the Vendor; or automobiles owned, leased, hired or borrowed by the Vendor. The coverage shall contain no special limitations on the scope of protection afforded to the City of Temecula, the Temecula Community Services District, the Successor Agency to the Temecula Redevelopment Agency, their officers, officials, employees or volunteers.
2) For any claims related to this project, the Vendor's insurance coverage shall be primary insurance as respects the City of Temecula, the Temecula Community Services District, the Successor Agency to the Temecula Redevelopment Agency, their officers, officials, employees and volunteers. Any insurance or self -insured maintained by the City of Temecula, Temecula Community Services District, and/or the SuccessorAgency to the Temecula Redevelopment Agency, its officers, officials, employees or volunteers shall be excess of the Vendor's insurance and shall not contribute with it.
3) Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City of Temecula, the Temecula Community Services District, and the Successor Agency to the Successor Agency to the Temecula Redevelopment Agency, their officers, officials, employees or volunteers.
4) The Vendor's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability.
08/08/2021
5) Each insurance policy required by this agreement shall be endorsed to state in substantial conformance to the following: If the policy will be canceled before the expiration date the insurer will notify in writing to the City of such cancellation not less than thirty (30) days' prior to the cancellation effective date.
6) If insurance coverage is canceled or, reduced in coverage or in limits the Vendor shall within two (2) business days of notice from insurer phone, fax, and/or notify the City via certified mail, return receipt requested of the changes to or cancellation of the policy. d. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating of A-:VII or better, unless otherwise acceptable to the City. Self- insurance shall not be considered to comply with these insurance requirements. e. Verification of Coverage. Vendor shall furnish the City with original endorsements effecting coverage required by this clause. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. The endorsements are to be on forms provided by the City. All endorsements are to be received and approved by the City before work commences. As an alternative to the City's forms, the Vendor's insurer may provide complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by these specifications.
11. TERMINATION OR SUSPENSION
This Agreement may be terminated or suspended at any time, for any reason, with or without cause at the sole and exclusive discretion of the General Manager, without default or breach of this Agreement by the City.
12. NOTICES
Any notices which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable document delivery service, such as but not limited to, Federal Express, that provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by Notice. Notice shall be effective upon delivery to the addresses specified below or on the third business day following deposit with the document delivery service or United States Mail as provided above.
Mailing Address: City of Temecula
Attn: General Manager
41000 Main Street
Temecula, CA 92590
To Vendor: Titan Rental Group, Inc.
Attn: Jeff Leichty
14460 Veterans Way
Moreno Valley, CA 92553
13. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court of final jurisdiction, it is the intent of the parties that all other provisions of this Agreement be construed to remain fully valid, enforceable, and binding on the parties. 08/08/2021
14. GOVERNING LAW
This Agreement shall be construed in accordance with, and governed by, the laws of the State of California as applied to contracts that are executed and performed entirely in California.
The City and Vendor understand and agree that the laws of the State of California shall govern the rights, obligations, duties, and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in the municipal, superior, or federal district court with geographic jurisdiction over the City of Temecula.
In the event such litigation is filed by one party against the other to enforce its rights under this Agreement, the prevailing party, as determined by the court's judgment, shall be entitled to reasonable attorney fees and litigation expenses for the relief granted.
15. PROHIBITED INTEREST
No officer, or employee of the City of Temecula that has participated in the development of this agreement or its approval shall have any financial interest, direct or indirect, in this Agreement, the proceeds thereof, the Vendor, or Vendor's sub -contractors for this project, during his/her tenure or for one year thereafter. The Vendor hereby warrants and represents to the City that no officer or employee of the City of Temecula that has participated in the development of this agreement or its approval has any interest, whether contractual, non -contractual, financial or otherwise, in this transaction, the proceeds thereof, or in the business of the Vendor or Vendor's sub -contractors on this project. Vendor further agrees to notify the City in the event any such interest is discovered whether or not such interest is prohibited by law or this Agreement.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties relating to the obligations of the parties described in this Agreement. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement and shall be of no further force or effect. Each party is entering into this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material.
17. AUTHORITY TO EXECUTE THIS AGREEMENT
The person or persons executing this Agreement on behalf of the Vendor warrants and represents that he or she has the authority to execute this Agreement on behalf of the Vendor and has the authority to bind the Vendor to the performance of its obligation hereunder. The General Manager is authorized to enter into an amendment on behalf of the City to make the following non -substantive modifications to the agreement: (a) name changes; (b) extension of time; (c) non -monetary changes in scope of work; (d) agreement termination. 08/08/2021
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written.
TEMECULA COMMUNITY SERVICES
DISTRICT
By:
James Stewart, TCSD President
ATTEST:
By:
Randi Johl, Secretary
APPROVED AS TO FORM:
By:
Peter M. Thorson, General
Counsel
TITAN RENTAL GROUP, INC.
By:
i
By:
Angel Leichty, Vice s dent
VENDOR
Titan Rental Group, Inc.
Jeff Leichty
14460 Veterans Way
Moreno Valley, CA 92553
951-453-1541
infop,titaneventrentals.com
6 City Purchasing Mgr.
Initials and Date:
08/08/2021
EXHIBIT A
Scope of Work / Outline Of Order or Service Procedure
Vendor recognizes and agrees that this Agreement is for the purpose of establishing a contractual relationship between the Temecula Community Services District and the Vendor, for the purchase of goods or services. The procedure for ordering goods or requesting services is set forth as follows:
1. The General Manager or his designee shall submit to Vendor a written "Request for Order/Services". The Request for Order/Services shall include a description of the items to be purchased or the services to be completed, the time for delivery or completion of the services, and the plans and specifications for goods and equipment, if any.
2. Within five (5) business days of the date of the Request for Order/Services, Vendor shall respond in writing to the Request for Order/Services and advise the General Manager or his designee whether the goods are available, or services can be performed, along with the cost and estimated delivery or start of services.
3. In the event an emergency or service is required, the General Manager or his designee may transmit the Request for Order/Services orally to the Vendor. As soon as practical following the emergency, the Vendor and City designee shall in good faith confirm in writing the scope of the emergency order submitted or services undertaken.
4. Upon acceptance of the Vendor's response by the General Manager or his designee the Vendor shall proceed with the order or begin services. The acceptance of the goods and/or performance of the services shall be pursuant to the terms of this Agreement.
Services Include but may not be limited to:
Event site rental items, including but not limited to
a. Tables
b. Chairs
c. Canopies
d. Pedestrian Fencing
e. Tablecloths
08/08/2021
EXHIBIT B
PAYMENT RATES AND SCHEDULE
Quotes shall be provided as requested by City staff for each service requested. Cost of services shall be as quoted, but in no event shall the total Agreement amount exceed $190,000.00, as outlined in Section 4 of this Agreement. The not to exceed payment amount listed herein is an estimated expenditure and this Agreement does not guarantee Vendor this amount in purchases. 08/08/2021
Item No. 16
TEMECULA COMMUNITY SERVICES DISTRICT
AGENDA REPORT
TO: General Manager/Board of Directors
FROM: Patrick Thomas, Director of Public Works/City Engineer DATE: August 22, 2023
SUBJECT: Approve Annexation of Tract Map Numbers 37341 and 37341-17, Within Sommers Bend, to Service Level B (Residential Street Lights) Rates and Charges (Located on East Side of Butterfield Stage Road and North of Long Valley Wash) PREPARED BY: Ron Moreno, Assistant Director of Public Works Annie Bostre-Le, Public Works Development Manager
RECOMMENDATION: That the Board of Directors adopt the following resolutions entitled:
RESOLUTION NO. CSD
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
TEMECULA COMMUNITY SERVICES DISTRICT OF THE
CITY OF TEMECULA, DECLARING INTENTION TO ANNEX
PROPERTY (TRACT MAP 37341 AND 37341-17) TO SERVICE
LEVEL B - RESIDENTIAL STREET LIGHTS AND TO LEVY
ASSESSMENTS ON SUCH PROPERTY FOR FISCAL YEAR
2024-25, APPROVING THE ENGINEER'S REPORT, AND
SETTING THE DATE, TIME AND PLACE OF A PUBLIC
HEARING ON THE PROPOSED ANNEXATION AND
ASSESSMENTS
RESOLUTION NO. CSD
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
TEMECULA COMMUNITY SERVICES DISTRICT OF THE
CITY OF TEMECULA, INITIATING PROCEEDINGS TO
ANNEX PROPERTY (TRACT MAP 37341 AND 37341-17) TO
SERVICE LEVEL B FOR FISCAL YEAR 2024-25
BACKGROUND: The Temecula Community Services District (TCSD) operates under the authority of Community Services District Law and provides residential street lighting to numerous residential subdivisions within the City of Temecula through Service Level "B". The boundaries of the TCSD are coterminous with the City, and City Council serves as the Board of Directors of the TCSD.
Tract Map Numbers 37341 and 37341-17, within Sommers Bend, formerly known as Roripaugh Ranch is an existing residential development. On November 26, 2002, the City Council approved the Roripaugh Ranch Specific Plan with private streets. On January 23, 2018, the City Council approved the Roripaugh Ranch Specific Plan Amendment Number 4, which included a slight realignment and removal of gated entries on Sommers Bend (Loop Road) and interior local streets were revised to comply with updated fire safety requirements. These improvements allowed the roadway and street lights to be publicly dedicated as accepted on Tract Map 37368 recorded on July 25, 2019.
The property owner has requested that the TCSD establish the future parcel charges necessary to provide ongoing revenue for residential street lighting within the development. Beginning Fiscal Year 2024-25, the following TCSD rates and charges are proposed for residential street lighting services within Tract Map Numbers 37341 and 37341-17:
Service Level B $ 25.68 per residential parcel
Pursuant to the provisions of Proposition 218, the TCSD is required to hold a public hearing and obtain voter or property owner approval in order to establish certain new rates and charges. In addition, a report must be prepared and filed with the Secretary/City Clerk which identifies all of the affected parcels and the amount of the proposed rates and charges and date of the Public Hearing. The Public Hearing is held at least 45 days after the mailing of the notices. If the proposed rates and charges are not rejected pursuant to a written protest, then the TCSD will conduct a mailed ballot proceeding not less than 45 days after the public hearing. The proposed rates and charges for Service Level B cannot be imposed unless the property owners have approved the new charges.
Staff recommends that the Board of Directors adopt the resolution to accept the filing of the report on the proposed residential street lighting rates and charges for Tract Map Numbers 37341 and 37341-17, beginning in Fiscal Year 2024-25 and schedule a public hearing concerning this issue for October 10, 2023. Staff will then proceed with noticing the owner of Tract Map Numbers 37341 and 37341-17, regarding the proposed rates and charges and the public hearing date. If there is no majority protest against the rates and charges on October 10, 2023, staff with then proceed with the mailed ballot process of Service Level B.
FISCAL IMPACT: If voter approved, the proposed rates and charges of $25.68 per parcel will generate an annual levy of $ 3,543.84 for Service Level B. Actual costs for providing long-term residential street lighting services within Tract Map Numbers 37341 through 37341-17 will be absorbed into Service Level B upon installation of said improvements.
ATTACHMENTS: 1. Vicinity Maps — Tract Maps 37341 and 37341-17
2. Resolution of Intention
3. Resolution of Initiating Proceedings
4. Preliminary Annexation Engineer's Report
IN THE CITY CIF TEMECULA, COUNTY OF RIVERSIDE , STATE OF CALIFORNIA SHEET 4 OF 7 SHEETS
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1. SEE SHEET NO. 2 FOR BOUNDARY CONTROL SHEET.
SURVEYOR'S NOTES AND MONUMENT NOTES.
2. SEE SHEET NO. 3 FOR BOUNDARY MAP, BASIS OF
BEARINGS AND VICINITY MAP.
MARCH 2O19 LEGEND
INDICATES BOUNDARY.
- INOICATES CENTER LINE.
INDICATES LOT LINE
INDICATES SHEET NO.
Ax- EASEMENT NOTES
1. AN EASEMENT FOR PUBLIC UTIL[TIES AND
INCIDENTAL PURPOSES fN FAVOR OF GENERAL
TELEPHONE COMPANY OF CALIFORNIA
RECORDED DECEMBER 5, 1986 AS INSTRUMENT
NO. 88-354239, O.R. CANNOT BE PLOTTED FROM
RECORD-
2 A 3' PUBLIC UTILITY EASEMENT DEDICATED HEREON.
3 A PRIVATE DRAINAGE EASEMENT WITHIN LOT 53
AND LOT 54.
4. AN EASEMENT FOR PUBLIC UTILITY PURPOSES IN FAVOR OF
EASTERN MUNICIPAL WATER DISTRICT RECORDED NOVEMBER
14, 2013 AS DOCUMENT NO. 2013-0539683, O.R.
5. AN EASEMENT FOR UNDERGROUND ELECTRICAL. SUPPLY SYSTEMS
AND COMMUNICATION SYSTEMS AND INCIMENTAL PURPOSES
IN FAVOR OF SOUTHERN CALIFORNIA EDISON COMPANY, A
CORPORATION RECORDED DECEMBER 4, 2019 AS INSTRUMENT
NO. 2019-0499070, O.R.
SCALES 1" = 80'
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LEGEND
INDICATES BOUNDARY.
— INDICATES CENTER LINE.
INDICATES LOT LINE.
OINDICATES SHEET N0.
�X EASEMENT NOTES
1. AN EASEMENT FOR PUBLIC UTILITIES AND
INCIDENTAL PURPOSES IN FAVOR OF GENERAL
TELEPHONE COMPANY OF CALIFORNIA
RECORDED DECEMBER 5, 1988 AS INSTRUMENT
NO. 88-354239, O.R. CANNOT BE PLOTTED FROM
RECORD..
2 A 3' PUBLIC UTILITY EASEMENT DEDICATED
HEREON.
3 A SEWER EASEMENT DEDICATED TO EASTERN
MUNICIPAL WATER DISTRICT FOR SEWER
PURPOSES WITHIN LOT 82 AND LOT 84.
4 AN EASEMENT DEDICATED TO
EASTERN MUNICIPAL WATER
DISTRICT FOR SEWER AND WATER
PURPOSES.
21 Al 22
23 m
21 m
IN THE CITY OF TEMECULA,COUNTY OF RIVERSIDE ,STATE OF CALIFORNIA TRACI MAP N010 3 17
BEING A PORTION OF PARCEL B OF NOTICE OF LOT LINE ADJUSTMENT NO.LD19-1393 RECORDED FEBRUARY 20,2020 AS INSTRUMENT N0. 2020-0076510 OF OFFICIAL. RECORDS, A PORTION OF LOTS 24 AND 25 OF TRACT MAP N0. 37368, AS FILED IN BOOK 468,PAGES 89 THROUGH 96,INCLUSIVE,OF MAPS, SHOWN AS PARCEL B OF NOTICE OF LOT LINE ADJUSTMENT N0. LD21-1111 RECORDED JANUARY 6, 2022 AS INSTRUMENT N0. 2022-0008833 OF OFFICIAL RECORDS, ALL IN THE CITY OF TEMECULA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, LYING WITHIN SECTION 21, TOWNSHIP 7 SOUTH, RANGE 2 WEST, SAN BERNARDINO MERIDIAN.
RICK ENGINEERING COMPANY JUNE 2021
SHEET INDEX MAP
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NO. LD21-�
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SHEET 4 OF 7 SHEETS
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SURVEYOR'S NOTES, MONUMENT NOTES AND
RECORD DATA FOR BOUNDARY.
2. SEE SHEET NO. 3 FOR BOUNDARY MAP, BASIS OF
BEARINGS AND VICINITY MAP.
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RESOLUTION NO. CSD 2023-
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
TEMECULA COMMUNITY SERVICES DISTRICT OF THE
CITY OF TEMECULA, DECLARING INTENTION TO
ANNEX PROPERTY (TRACT MAP 37341 AND 37341-17) TO
SERVICE LEVEL B - RESIDENTIAL STREET LIGHTS AND
TO LEVY ASSESSMENTS ON SUCH PROPERTY FOR
FISCAL YEAR 2024-25, APPROVING THE ENGINEER'S
REPORT, AND SETTING THE DATE, TIME AND PLACE
OF A PUBLIC HEARING ON THE PROPOSED
ANNEXATION AND ASSESSMENTS
WHEREAS, the Board of Directors (the "Board") of the Temecula Community Services District (the "District") of the City of Temecula has initiated proceedings for the annexation of certain property, to Service Level B of the District (the "Assessment District") pursuant to the Landscaping and Lighting Act of 1972, as found in Part 2 (commencing with Section 22500) of Division 15 of the California Streets and Highways Code ("the Act"), for the purpose of funding Residential Street Lighting; and
WHEREAS, as ordered by the Board, Webb Municipal Finance, LLC., the assessment engineer, has prepared and filed with the Clerk of the Board a report regarding the assessments which are proposed to be levied on and collected from the owners of the Subject Property, as defined below, for Fiscal Year 2024-25, to pay the costs of the maintenance and servicing of such Residential Street Lighting, and that report has been presented to and considered by the Board; and
WHEREAS, it is necessary that the Board adopt a resolution of intention pursuant to Sections 22606 and 22587 of the California Streets and Highways Code setting and providing for notice of the time, date and place of public hearing on said report, the proposed annexation of the Subject Property to the Assessment District and the proposed assessments; and WHEREAS, in addition to the requirements set forth in the Act, to annex property into the Assessment District, Proposition 218 establishes detailed requirements for the imposition of a "new or increased" special assessment; and
WHEREAS, in addition to notice, ballot and hearing requirements, Proposition 218 requires the District to separate the general benefits from the special benefits conferred on a parcel, and to only asses the special benefits on that parcel; and WHEREAS, Proposition 218 requires all assessments to be supported by a detailed Engineer's Report prepared by a registered professional engineer; and WHEREAS, the proposed assessment will assess properties located within the Assessment District pursuant to the amounts stated in the Engineer's Report ("Assessment Amount"); and
WHEREAS, pursuant to Proposition 218, the District must comply with applicable sections of Article XII(D) of the California Constitution regarding the notice, hearing and protest procedures.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by Board of Directors of the Temecula Community Services District of the City of Temecula, California as follows:
Section 1. Recitals. The above recitals are true and correct and are incorporated herein by this reference.
Section 2. Findings. The Board of Directors finds that:
(a) The Engineer's report of Webb Municipal Finance, LLC. (the "Report") contains all matters required by the Act and Proposition 218 and may, therefore, be approved by the Board; (b) The assessments which are proposed to be levied for Fiscal Year 2024-25 on all parcels of assessable property which are proposed to be annexed, to the Assessment District are based on special benefit conferred upon each such parcel from the payment of the costs of the residential street lighting and the maintenance and servicing thereof; (c) The proportionate special benefit derived by each parcel within the Assessment District has been determined in relationship to the entirety of the capital cost of the installation, maintenance and servicing of the residential street lights and appurtenant facilities; (d) The Assessment Amount which is proposed to be assessed on each such parcel is based upon and will not exceed the reasonable cost of the proportional special benefit conferred on that parcel;
(e) The Assessment Amount is supported by a detailed engineer's report prepared by a registered professional engineer certified by the State of California.
Section 3. Intention. The Board declares that it intends to annex the Subject Property, as defined below, into the Assessment District, to levy and collect assessments on all of the lots and parcels of assessable property which are proposed to be annexed, to the Assessment District for Fiscal Year 2024-25, and for the duration specified in Section 7 herein, in the amounts set forth in the Report. Such assessments will be collected at the same time and in the same manner as county taxes are collected, and all laws providing for the collection and enforcement of county taxes shall apply to the collection and enforcement of the assessments.
Section 4. Improvements. The improvements which shall be provided for such property by and through the assessments levied annually thereon include the following:
(a) The installation, maintenance and servicing of residential street lights; Section 5. Annexation to Assessment District. The property which is proposed to be annexed to the Assessment District is all the property that is in the Temecula Community Services District and which is described in Exhibit "A" attached hereto and by this reference made a part hereof ("Subject Property"). Upon the completion of the annexation proceedings, the
property proposed to be annexed will be included in the Assessment District. The boundaries of the annexation are further described and shown in the Report.
Section 6. Report and Assessments. The Report, which is on file with the Clerk of the Board, and which has been presented to the Board at the meeting at which this resolution is adopted, is approved. Reference is made to the Report for a full and detailed description of the improvements, the boundaries of the annexation, the assessments which are proposed to be levied on the assessable lots and parcels of land in the annexation as a part of the Assessment District for Fiscal Year 2024-25.
Section 7. Duration of Assessments. The assessments shall be levied on all parcels of assessable property in the annexation, as identified in the Report, so long as the assessments are necessary to finance the improvements specified in Section 4 hereof and the maintenance and servicing thereof.
Section 8. Hearing. The public hearing on the proposed annexation of the Subject Property to the Assessment District and the assessments which are proposed to be levied for Fiscal Year 2024-25 and which is required by Sections 22587 through 22594 and 22624 through 22629 of the California Streets and Highways Code and Section 53753 of the California Government Code, and Proposition 218 shall be held at 6:00 p.m. on October 10, 2023, in the City Council Chambers at 41000 Main Street, Temecula, California.
Section 9. Notice of Hearing and Ballots. The Clerk of the Board shall mail a notice of the proposed annexation, the proposed assessments and of the time, date and place of the public hearing, as specified in Section 8 hereof, to the record owner of each parcel of property identified in the Report. Such notice shall specify the total amount of the assessment chargeable to all the property within the annexation, the amount chargeable to each owner's particular parcel, the duration of the assessments, the reason for the assessments and the basis upon which the amounts of the proposed assessments were calculated, together with the date, time and location of the public hearing, as specified in Section 8 hereof. The notice shall include, in a conspicuous place, thereon, a summary of the procedures applicable to the completion, return and tabulation of the assessment ballots which will accompany the notice and shall include a statement that the existence of a majority protest will result in the assessments not being levied, and that a majority protest will exist if, upon the conclusion of the hearing, assessment ballots submitted in opposition to the assessments exceed the assessment ballots submitted in favor of the assessments based on financial obligation. There shall be included with each such notice mailed to owner of identified parcels within the annexation an assessment ballot which includes the District's address for receipt of any ballot when completed by any owner receiving such notice whereby such owner may indicate his or her name, reasonable identification of the parcel and support or opposition to the proposed assessments. The notice and the assessment ballots shall conform in all respects to the requirements of subdivisions (b) and (c) of Section 53753 of the California Government Code and Article XIII(D) of the California Constitution. Should there be any conflict between the Act and Proposition 218, Proposition 218 shall control.
K3
Section 10. If Maiority Protest Exists
If a maiority protest exists, the Board shall not undergo another District -initiated petition under the Act for at least twelve (12) months from the hearing date thereof, unless otherwise provided by law.
PASSED, APPROVED, AND ADOPTED by the Board of Directors of the Temecula Community Services District of the City of Temecula this 22" d day of August, 2023.
James Stewart, President
ATTEST:
Randi Johl, Secretary
[SEAL]
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, Secretary of the Temecula Community Services District of the City of Temecula, do hereby certify that the foregoing Resolution No. CSD 2023- was duly and regularly adopted by the Board of Directors of the Temecula Community Services District of the City of Temecula at a meeting thereof held on the 22nd day of August, 2023, by the following vote:
AYES: BOARD MEMBERS:
NOES: BOARD MEMBERS:
ABSTAIN: BOARD MEMBERS:
ABSENT: BOARD MEMBERS:
W
Randi Johl, Secretary
EXHIBIT A
DESCRIPTION OF PROPOSED TERRITORY TO BE ANNEXED
The properties proposed to be annexed into Service Level B of the Temecula Community Services District are identified by Riverside County Assessor's Parcel Numbers (APN) in the Preliminary Annexation Engineer's Report - Appendix A — Assessment Roll.
RESOLUTION NO. CSD 2023-
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
TEMECULA COMMUNITY SERVICES DISTRICT OF THE
CITY OF TEMECULA, INITIATING PROCEEDINGS TO
ANNEX PROPERTY (TRACT MAP 37341 AND 37341-1) TO
SERVICE LEVEL B FOR FISCAL YEAR 2024-25
WHEREAS, the Board of Directors (the "Board") of the Temecula Community Services District (the "District") of the City of Temecula desires to undertake proceedings pursuant to the provisions of the Landscape and Lighting Act of 1972, Part 2, Division 15 of the California Streets and Highways Code (commencing with Section 22500) (hereafter referred to as the "Act"), to annex certain property, to Service Level B of the District (the "Assessment District") for the purpose of funding Residential Street Lighting; and
WHEREAS, the Board of Directors has retained Webb Municipal Finance, LLC. for the purpose of preparing and filing the Engineer's Report and assisting in the public hearing and formation process of the proposed annexation.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the Board of Directors of the Temecula Community Services District of the City of Temecula, California as follows:
Section 1. Recitals
That the Recitals set forth above are true and correct.
Section 2. Engineer's Report
The Board of Directors hereby orders Webb Municipal Finance, LLC. to prepare and file with the Clerk of the Board the Engineer's Report (the "Report") concerning the annexation of property, to the Assessment District in accordance with the Act and the laws of the State of California.
Section 3. Improvements
The improvements shall include the maintenance and servicing of residential street lighting.
Section 4. Severability
That the Board of Directors declares that, should any provision, section, paragraph, sentence or word of this Resolution be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of the Resolution as hereby adopted shall remain in full force and effect
Section 5. Effective Date
That this Resolution shall take effect upon its adoption.
Section 6. Certification
That the Clerk of the Board shall certify as to the adoption of this Resolution and shall cause the same to be processed in the manner required by law.
PASSED, APPROVED, AND ADOPTED by the Board of Directors of the Temecula Community Services District of the City of Temecula this 22"d day of August, 2023.
James Stewart, President
ATTEST:
Randi Johl, Secretary
[SEAL]
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, Secretary of the Temecula Community Services District of the City of Temecula, do hereby certify that the foregoing Resolution No. CSD 2023- was duly and regularly adopted by the Board of Directors of the Temecula Community Services District of the City of Temecula at a meeting thereof held on the 22nd day of August, 2023, by the following vote:
AYES: BOARD MEMBERS:
NOES: BOARD MEMBERS:
I.\:331I_\I0: 97_ MLINLTJR]a:7.Y�
ABSENT: BOARD MEMBERS:
Randi Johl, Secretary
3 Webb
MUNICIPAL FINANCE
Preliminary Annexation Engineer's Report
Tract Nos. 37341 and 37341-17
Temecula Community Services District
Service Level B — Residential Streetlights
Prepared For
a
The Heart of Southern California
Wine Country
August 2023
Table of Contents
Sections
Section i.
Section 1
Section 2
Section 3
Tables
Table 3-1.
Appendices
Appendix A
Appendix B
Engineer's Statement
Plans and Specifications
Method of Apportionment
Budget
Operating Budget for Service Level B
Tax Roll
Annexation Assessment Diagram
_i
1 2
4 4
A-1
B-1
i. Engineer's Statement
AGENCY: CITY OF TEMECULA
PROJECT: TEMECULA COMMUNITY SERVICES DISTRICT SERVICE LEVEL B — RESIDENTIAL STREET LIGHTING ANNEXATION —TRACT NOS. 37341 AND 37341-17
TO: BOARD OF DIRECTORS
CITY OF TEMECULA
STATE OF CALIFORNIA
REPORT PURSUANT TO "LANDSCAPING AND LIGHTING ACT OF 1972" Pursuant to Articles XIII D, Section 4 of the California Constitution, the Proposition 218 Omnibus Implementation Act and the Landscape and Lighting Act of 1972 this Report is prepared and presented to the Board of Directors (the "Board") to describe and outline the proposed annexation of territory into Temecula Community Services District Service Level B (the "District"). The Board will conduct a noticed public hearing to consider public comments and written protests regarding the annexation and levy of the parcels within the proposed annexation territory. Upon conclusion of the public hearing, property owner protest ballots received will be tabulated to determine whether a majority protest exists. The Board will confirm the results of the balloting once the ballot tabulation is completed. If a majority protest exists, further proceedings to implement the proposed annexation and levy of assessments shall be abandoned at that time. If tabulation of the ballots indicates that a majority protest does not exist for the proposed annexation and levy of assessments, the Board may adopt this Report and confirm the annexation of territory and levy of assessments as presented herein. In such case, the levy information will be submitted to the Riverside County Auditor/Controller and included as Assessments on the property tax roll for Fiscal Year 2024-2025.
SECTION 1 The PLANS AND SPECIFICATIONS describe the annexation territory and the overall nature and extent of the improvements and services provided.
SECTION 2 The METHOD OF APPORTIONMENT outlines the method of calculating each property's proportional special benefit necessary to calculate the property's annual assessment. This method of apportionment is consistent with the previously adopted method of apportionment for Service Level B that was approved by the property owners in a protest ballot proceeding conducted when the Service Level was formed.
SECTION 3 A BUDGET showing the estimated annual costs to operate, maintain and service the local lighting improvements and appurtenant facilities within the annexation territory.
SECTION 4 An ASSESSMENT ROLL with the proposed assessment amounts to be levied and collected in Fiscal Year 2024-2025 for each parcel based on the parcel's calculated proportional special benefit as outlined in the Method of Apportionment and the annual assessment rates established by the estimated budgets.
SECTION 5 ASSESSMENT DIAGRAM showing the boundaries of the proposed annexation territory. Parcel identification, the lines and dimensions of each lot, parcel, and subdivision of land within the annexation territory are shown on the Riverside County Assessor's Parcel Maps and shall include any subsequent lot line adjustments or parcel changes therein. Reference is hereby made to the Riverside County Assessor's Parcel Maps for a detailed description of the lines and dimensions of each lot and parcel of land within the annexation territory.
Temecula Community Services District Service Level B — Residential Street Lighting Engineer's Report —Annexation Tract Nos. 37341 and 37341-17
i. Engineer's Statement
I Matthew E. Webb, a Professional Civil Engineer (employed at Albert A. Webb Associates and retained through an agreement between Webb Municipal Finance, LLC and my employer), acting on behalf of the Temecula Community Services District, pursuant to the "CSD Law", do hereby submit the following:
The District requested Webb Municipal Finance, LLC, to prepare and file an Engineer's Annexation Report for Temecula Community Services District Service Level B, pursuant to Article XIII D, Section 4 of the California Constitution, presenting plans and specifications describing the general nature, location and extent of the improvements to be maintained, an estimate of the costs of the maintenance, operations, and servicing of the improvements for Service Level B, for the referenced Fiscal Year, an assessment of the estimated costs of the maintenance, operations, and servicing the improvements, assessing the net amount upon all assessable lots and/or parcels within the proposed annexation territory in proportion to the special benefit received; Reference is hereby made to the Riverside County Assessor's maps for a detailed description of the lines and dimensions of parcels within the District. The undersigned respectfully submits the enclosed Report as directed by the Board of Directors of the Temecula Community Services District. Please note that Albert A. Webb Associates provides engineering advice and related consulting services. Albert A. Webb Associates is not a registered municipal advisor and does not participate in municipal advisory activities, and nothing in this Engineer's Report is or should be interpreted to be municipal advisory services or advice.
Temecula Community Services District Service Level B — Residential Street Lighting Engineer's Report —Annexation Tract Nos. 37341 and 37341-17
i. Engineer's Statement
Executed this day of
QRflFESS�QN
a NN . 37385 M
'rr CIVIC- Y
�oF CALiF°�
2023.
ALBERT A. WEBB ASSOCIATES
MATTHEW E. WEBB
PROFESSIONAL CIVIL ENGINEER NO. 37385
ENGINEER OF WORK
ON BEHALF OF THE CITY OF TEMECULA AND
THE TEMECULA COMMUNITY SERVICES DISTRICT
STATE OF CALIFORNIA
Final approval, confirmation and levy of the annexation territory and all matters in the Engineer's Report were made on the day of 2023, by adoption of Resolution No. by the Board of Directors.
CITY CLERK
CITY OF TEMECULA
STATE OF CALIFORNIA
A copy of the Tax Roll and Engineer's Annexation Report were filed in the office of the City Clerk on the day of , 2023.
CITY CLERK
CITY OF TEMECULA
STATE OF CALIFORNIA
Temecula Community Services District Service Level B — Residential Street Lighting Engineer's Report —Annexation Tract Nos. 37341 and 37341-17
1. Plans and Specifications
The territory within the proposed annexation consists of lots or parcels of land within the District, which is coterminous with the City of Temecula boundary. The purpose of the District is to provide through annual assessments, funding for the ongoing operation, maintenance, utility costs, and administration of residential streetlights.
Temecula Services District Service Level B — Residential Street Lighting Engineer's Report —Annexation Tract Nos. 37341 and 37341-17
2. Methodology
Proposition 218 Compliance
On November 5, 1996, California voters approved Proposition 218, entitled the "Right to Vote on Taxes Act," which added Article XIII D to the California Constitution. While its title refers only to taxes, Proposition 218 establishes new procedural requirements for the formation and administration of assessment districts. Proposition 218 also requires that with certain specified exceptions, which are described below, all existing assessment districts must be ratified by the property owners within the District using the new procedures.
Some of these exceptions include:
1. Any assessments imposed exclusively to finance the capital cost or maintenance and operation expenses for streets.
2. Any assessments levied pursuant to a petition signed by the persons owning all of the parcels subject to the assessment at the time the assessment was initially imposed.
However, even if assessments are initially exempt from Proposition 218, if the assessments are increased in the future, the City will need to comply with the provisions of Proposition 218 for that portion of the increased assessment formula.
Proposition 218 does not define the term "streets," however, based on the opinions of the public agency officials, attorneys, assessment engineers, and Senate Bill 919, it has been determined that streets include all public improvements located within the street rights -of -way. This would include median and parkway landscaping, traffic signals, safety lighting, and street lighting.
Proposition 218 defines "assessment" as "any levy or charge upon real property by an agency for a special benefit conferred upon the real property." Cal. Const., art. XIII D, §2(b). A special assessment, sometimes called a "benefit assessment," is a charge generally levied upon parcels of real property to pay for benefits the parcels receive from local improvements. Special assessments are levied according to statutory authority granted by the Legislature or, in some instances, local charters. Distinguishing among taxes, fees, and assessments can be difficult and often depends on the context in which the distinction is made. For example, taxes, assessments, and property -related fees all may be imposed on property. The key feature that distinguishes an assessment from a tax, fee, or charge is the existence of a special benefit to real property. Without identifying a special benefit, there can be no assessment.
Distinguishing General and Special Benefit
Proposition 218 added a set of procedures and requirements, which a local government must follow to levy an assessment. In addition to notice, hearing, and assessment ballot proceedings, Proposition 218 provides that "only special benefits are assessable" and requires a local government to "separate the general benefits from the special benefits conferred on a parcel."
By its nature, most public improvements financed through an assessment district contain an element of public benefit. The test is: does there exist, with relation to the improvement, a special benefit to the property assessed? The law requires the portion of the cost of the improvement, which benefits the public generally, to be separated from that portion of the cost of the improvement, which specially benefits assessed properties. Proposition 218 provides the following definition of "special benefit":
"Special benefit" means a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. General enhancement of property value does not constitute "special benefit".
Temecula Services District Service Level B — Residential Street Lighting Engineer's Report —Annexation Tract Nos. 37341 and 37341-17
2. Methodology
Method of Apportionment
Pursuant to the Landscaping and Lighting Act of 1972 and Article XI II D of the Constitution of the State of California, all parcels that have special benefit conferred upon them as a result of the maintenance and operation of improvements shall be identified, and the proportionate special benefit derived by each identified parcel shall be determined in relationship to the entire cost of the maintenance and operation of the improvements. Only parcels that receive direct special benefit are assessed, and each parcel is assessed in proportion to the estimated benefit received.
To assess benefits equitably it is necessary to calculate each property's relative share of the special benefits conferred by the funded improvements and service. The Equivalent Dwelling Unit (EDU) method of assessment apportionment is utilized in this District and establishes a basic unit (base value) of benefit and then calculates the benefit derived by each assessed parcel as a multiple (or a fraction) of that basic unit. For the purposes of this Engineer's Report, an EDU is the quantum of benefit derived from the various improvements by a single-family residential parcel. The single-family residential parcel has been selected as the basic unit for the calculation of assessments since it represents the majority of the parcels in the District. Thus, the "benchmark" property (the single-family residential parcel) derives one EDU of benefit and is assigned 1.00 Equivalent Dwelling Unit. The Assessment for Single -Family parcels within the District is therefore calculated by dividing the total District Assessment by the total number of Equivalent Dwelling Units to determine the Annual Assessment per Equivalent Dwelling Unit or Single -Family parcel.
Total District Balance to Levy (Budgeted) / Total Number of EDUs (Total Residential Lots + Assigned Condominium Units) = Assessment per EDU/Parcel
The district includes all developed single-family residential parcels, condominiums, and residential vacant lots for which the District provides ongoing servicing, operation, and maintenance of local street lighting improvements.
The current rate and charge for Service Level B is $25.68 per residential lot ($12.84 per condominium unit within Specific Plans) and shall be applied to developed and undeveloped residential parcels.
Temecula Services District Service Level B — Residential Street Lighting 3 Engineer's Report —Annexation Tract Nos. 37341 and 37341-17
3. Budget
Table 3-1
Estimated Service Level B Annexation Operating Budget Summary for Fiscal Year 2024-2025 Budget Item
Level B Level
192 Annexation
B
OPERATIONS MAINTENANCE
Property Tax Administrative Fees
$12,000
$65
Street Lighting
$455,000
$2,463
Subtotal Operations Maintenance
$455,000
$2,463
TOTAL DIRECT DISTRICT COSTS
$467,000
$2,528
EXPENDITURES/REVENUES
Contingency Reserve
$0
$0
TOTAL EXPENDITURES / REVENUES
$467,000
$2,528
CONTRIBUTIONS
Other Contributions
($187,763)
($1,016)
TOTAL COLLECTION/CONTRIBUTIONS
($187,763)
($1,016)
Balance to Levy .•
Number of Parcels
138
Number of EDUs
138
Assessment Rate per EDU
$25.68
Temecula Services District Service Level B — Residential Street Lighting Engineer's Report —Annexation Tract Nos. 37341 and 37341-17
APPENDIX A
Assessment Roll
Service Level B Annexation
Assessment Roll
,.
964690001 1 $ 25.68
964690002 1 $ 25.68
964690003
1 $ 25.68
964690004
1 $ 25.68
964690005
1 $ 25.68
964690006
1 $ 25.68
964690007
1 $ 25.68
964690008
1 $ 25.68
964691001
1 $ 25.68
964691002
1 $ 25.68
964691003
1 $ 25.68
964691004
1 $ 25.68
964691005
1 $ 25.68
964691006
1 $ 25.68
964691007
1 $ 25.68
964692001
1 $ 25.68
964692002
1 $ 25.68
964692003
1 $ 25.68
964692004
1 $ 25.68
964692005
1 $ 25.68
964692006
1 $ 25.68
964692007
1 $ 25.68
964692008
1 $ 25.68
964692009
1 $ 25.68
964692010
1 $ 25.68
964693001
1 $ 25.68
964693002
1 $ 25.68
964693003
1 $ 25.68
964693004
1 $ 25.68
964693005
1 $ 25.68
964693006
1 $ 25.68
964693007
1 $ 25.68
964693008
1 $ 25.68
964693009
1 $ 25.68
964693010
1 $ 25.68
964693011
1 $ 25.68
964693012
1 $ 25.68
964693013
1 $ 25.68
964693014
1 $ 25.68
964693015
1 $ 25.68
964693016
1 $ 25.68
..
964693017
1 $ 25.68
964694001
1 $ 25.68
964694002
1 $ 25.68
964694003
1 $ 25.68
964694004
1 $ 25.68
964694005
1 $ 25.68
964694006
1 $ 25.68
964694007
1 $ 25.68
964694008
1 $ 25.68
964694009
1 $ 25.68
964694010
1 $ 25.68
964694011
1 $ 25.68
964694012
1 $ 25.68
964910001
1 $ 25.68
964910002
1 $ 25.68
964910003
1 $ 25.68
964910004
1 $ 25.68
964910005
1 $ 25.68
964910006
1 $ 25.68
964910007
1 $ 25.68
964910008
1 $ 25.68
964910009
1 $ 25.68
964910010
1 $ 25.68
964910011
1 $ 25.68
964910012
1 $ 25.68
964910013
1 $ 25.68
964910014
1 $ 25.68
964910015
1 $ 25.68
964910016
1 $ 25.68
964910017
1 $ 25.68
964910018
1 $ 25.68
964910019
1 $ 25.68
964910020
1 $ 25.68
964910021
1 $ 25.68
964910022
1 $ 25.68
964910023
1 $ 25.68
964910024
1 $ 25.68
964910025
1 $ 25.68
964910026
1 $ 25.68
964910027
1 $ 25.68
964910028
1 $ 25.68
964910029
1 $ 25.68
964910030
1 $ 25.68
964910031
1 $ 25.68
964910032
1 $ 25.68
..
964910033
1 $ 25.68
964910034
1 $ 25.68
964910035
1 $ 25.68
964910036
1 $ 25.68
964910037
1 $ 25.68
964910038
1 $ 25.68
964910039
1 $ 25.68
964910040
1 $ 25.68
964910041
1 $ 25.68
964910042
1 $ 25.68
964910043
1 $ 25.68
964910044
1 $ 25.68
964910045
1 $ 25.68
964911001
1 $ 25.68
964911002
1 $ 25.68
964911003
1 $ 25.68
964911004
1 $ 25.68
964911005
1 $ 25.68
964911006
1 $ 25.68
964911007
1 $ 25.68
964911008
1 $ 25.68
964911009
1 $ 25.68
964911010
1 $ 25.68
964911011
1 $ 25.68
964911012
1 $ 25.68
964911013
1 $ 25.68
964911014
1 $ 25.68
964911015
1 $ 25.68
964911016
1 $ 25.68
964911017
1 $ 25.68
964911018
1 $ 25.68
964911019
1 $ 25.68
964911020
1 $ 25.68
964911021
1 $ 25.68
964911022
1 $ 25.68
964911023
1 $ 25.68
964911024
1 $ 25.68
964911025
1 $ 25.68
964911026
1 $ 25.68
964911027
1 $ 25.68
964911028
1 $ 25.68
964911029
1 $ 25.68
964911030
1 $ 25.68
964911031
1 $ 25.68
964911032
1 $ 25.68
APPENDIX B
Annexation Assessment Diagram
Webb
MVNICIPAL FINANCE
ASSESSMENT DIAGRAM
SERVICE LEVEL B - RESIDENTIAL STREET LIGHTING
ANNEXATION BOUNDARY - TRACT NOs. 37341 AND 37341-17
TEMECULA COMMUNITY SERVICES DISTRICT
CITY OF TEMECULA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA OUSS'?O R OD
GLUBNsg GeN1E
F\1NE
Legend
ANNEXATION BOUNDARY
PARCEL LINE
VICINITY MAP
NOT TO SCALE
ITN -V/ �'--
THIS ASSESSMENT DIAGRAM CORRECTLY SHOWS THE LOT OR PARCEL OF LAND INCLUDED WITHIN THE BOUNDARIES OF THE ANNEXATION u IJ v 1 l yy DISTRICT FOR DETAILS CONCERNING THE LINES AND
www.wr.w..x DIMENSIONS OF LOTS OR PARCELS REFER TO THE COUNTY NOT TO SCALE ASSESSORS MAPS FOR FISCAL YEAR 2022-2023. M:IGIS-Assessment) Temecula I TCSD SL B Annex Assessment Diagram.mxd
Item No. 17
CITY OF TEMECULA
AGENDA REPORT
TO: City Manager/City Council
FROM: Luke Watson, Deputy City Manager
DATE: August 22, 2023
SUBJECT: Introduce Ordinance Amending Titles 5, 8, and 17 of the Temecula Municipal Code, and Adopt a Resolution Setting the Fee for a Tobacco Shop Permit and Find that this Ordinance is Exempt from the California Environmental Quality Act (CEQA) Pursuant to CEQA Guidelines Section 15061 (b)(3) PREPARED BY:
RECOMMENDATION:
Mark Collins, Assistant Planner
That the City Council:
1. Introduce and read by title only an ordinance entitled:
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TEMECULA AMENDING TITLES 5, 8, AND 17 OF THE
TEMECULA MUNICIPAL CODE TO (1) AMEND MASSAGE
ESTABLISHMENT REGULATIONS, (2) ADD DEFINITIONS
FOR TOBACCO SHOP, TOBACCO SHOP PERMIT AND
UPDATE DEFINITIONS OF TOBACCO PRODUCT AND
TOBACCO PARAPHERNALIA, (3) IMPLEMENT A TOBACCO
SHOP PERMIT PROGRAM TO INCLUDE STRUCTURAL AND
OPERATIONAL REQUIREMENTS, (4) UPDATE TOBACCO
RETAILERS LICENSE PROCESSES, (5) AMEND
REGULATIONS ON SMOKING IN HOTEL ROOMS, (6)
REMOVE TOBACCO SHOP AS A CONDITIONALLY
PERMITTED USE IN TABLE 17.08.030, (7) IMPLEMENT
TOBACCO SHOP PERMIT REQUIREMENTS IN PLANNED
DEVELOPMENT OVERLAY ZONING DESIGNATIONS 1 AND
4, AND (8) MAKE A FINDING THAT THIS ORDINANCE IS
EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL
QUALITY ACT (CEQA) PURSUANT TO CEQA GUIDELINES
SECTION 15061 (13)(3)
2. Adopt Resolution entitled:
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TEMECULA ESTABLISHING A TOBACCO SHOP PERMIT
FEE
SUMMARY OF ORDINANCE: The proposed Ordinance would make amendments to Titles 5, 8, and 17 of the Temecula Municipal Code. Listed below is a summary of the proposed changes to the Municipal Code:
Changes to Title 5 — Chapter 5.22 Massage and Massage Establishments:
Clarifying that Reiki, Cupping, Lymphatic, and similar massage, or wellness activities are massage activities that require a Massage Establishment Permit (MEP)
2. Require the practitioners of Reiki, Cupping, Lymphatic and similar massage or wellness activities to be a Certified Massage Therapist with a valid California Massage Therapy Council License (CAMTC)
3. Prohibit outcall massage services without a physician's written recommendation or order
4. Prohibit pets at massage establishments, with the exception of working service dogs
5. Require medical professionals who operate, own or supervise an exempt massage business to sign an affidavit attesting that massage is performed under their care and must be on site during such treatments
6. Modify the code to consolidate violations into an inspection friendly table Changes to Title 5 — Chapter 5.24 Licensure of Tobacco Retailers:
7. Add definition for "Tobacco Shop," "Tobacco Shop Permit," and update the definitions of "Tobacco Paraphernalia," and "Tobacco Product"
Implement an annual permit for Tobacco Shops, to include:
a. A cap on the number of Tobacco Shops within the City at a rate of one (1) Tobacco Shop per 10,000 Temecula residents,
b. Separation requirements for Tobacco Shops from sensitive receptors, c. Operational standards,
d. Sign and lighting requirements,
e. Prohibit lounge and leisure type activities; and
f. Prohibit the sale or consumption of alcohol
9. Update the process for a Tobacco Retailers License and assign duties to specific departments, in this instance it would be the Chief of Police or their designee Changes to Title 8 — Chapter 8.36 Smoking in Public Places:
10. Update the number of hotels rooms permitted to be designated as "smoking" rooms in accordance with state law
11. Remove an outdated exemption for smoking indoors for significant tobacco retailers Changes to Title 17
Table 17.08.030 Schedule of Permitted Uses:
12. Remove Tobacco Shop as a conditionally permitted use in the Neighborhood Commercial (NC) Zoning Designation
Planned Development Overlay No. 1 — Table 17.22.106 Schedule of Permitted Uses:
13. Add "Note 6" to the table specifying that Tobacco Shops are subject to the requirements of Section 5.24.120
Planned Development Overlay No. 4 — Table 17.22.136B Schedule of Permitted Uses:
14. Add "Note 7" to the table specifying that Tobacco Shops are subject to the requirements of Section 5.24.120
BACKGROUND: The City of Temecula City Council adopted the Municipal Code in January 1990. Since its adoption, the City Council has periodically made amendments to various sections of the Code to improve its clarity, make corrections and implement state law. The proposed amendments to the Temecula Municipal Code include amendments to Title 5 (Business Licenses and Regulations), Title 8 (Health and Safety), and Title 17 (Zoning).
Pursuant to Government Code Section 65800, the Planning Commission is required to review and make recommendations to the City Council regarding zoning regulations and amendments to Title 17 Zoning (Development Code) of the Temecula Municipal Code. The changes to Title 5 (Business Licenses and Regulations), and Title 8 (Health and Safety) of the Temecula Municipal Code of the proposed ordinance fall outside the purview of the Planning Commission, in that it is not an amendment to Title 17. However, staff felt it was important for the Planning Commission to review these proposed changes, which will place new requirements on existing and future tobacco shops throughout the City. The item was presented at a public hearing to the Planning Commission on July 19, 2023, and Resolution No. 2023-14 was adopted recommending the City Council adopt the proposed ordinance.
City staff met with the City Council Public Safety Ad Hoc Subcommittee on April 25, 2023 to discuss the proposed ordinance and again on June 13, 2023 to discuss proposed changes to the draft ordinance (Councilmembers Alexander and Kalfus).
City staff met with the Planning Commission Municipal Code Maintenance Ad Hoc Subcommittee on June 7, 2023 (Commissioners Hagel and Ruiz).
FISCAL IMPACT: Community Development budgeted sufficient funds for the ordinance development and fee study, which will include administrative costs, and enforcement.
ATTACHMENTS: 1. Ordinance
2. Resolution
3. Planning Commission Resolution No. 2023-14
4. Notice of Public Hearing
5. Notice of Exemption
ORDINANCE NO.2023-
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF TEMECULA AMENDING TITLES 5, 8, AND 17 OF THE
TEMECULA MUNICIPAL CODE TO (1) AMEND
MASSAGE ESTABLISHMENT REGULATIONS, (2) ADD
DEFINITIONS FOR TOBACCO SHOP, TOBACCO SHOP
PERMIT AND UPDATE DEFINITIONS OF TOBACCO
PRODUCT AND TOBACCO PARAPHERNALIA, (3)
IMPLEMENT A TOBACCO SHOP PERMIT PROGRAM TO
INCLUDE STRUCTURAL AND OPERATIONAL
REQUIREMENTS, (4) UPDATE TOBACCO RETAILERS
LICENSE PROCESSES, (5) AMEND REGULATIONS ON
SMOKING IN HOTEL ROOMS, (6) REMOVE TOBACCO
SHOP AS A CONDITIONALLY PERMITTED USE IN
TABLE 17.08.030, (7) IMPLEMENT TOBACCO SHOP
PERMIT REQUIREMENTS IN PLANNED DEVELOPMENT
OVERLAY ZONING DESIGNATIONS 1 AND 4, AND (8)
MAKE A FINDING THAT THIS ORDINANCE IS EXEMPT
FROM THE CALIFORNIA ENVIRONMENTAL QUALITY
ACT (CEQA) PURSUANT TO CEQA GUIDELINES
SECTION 15061 (B)(3)
THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY ORDAIN AS FOLLOWS:
Section 1. Procedural Findings. The City Council of the City of Temecula does hereby find, determine and declare that:
A. City staff identified the need to make minor revisions and clarifications to portions of Title 5 (Business Licenses and Regulations), Title 8 (Health and Safety), and Title 17 (Zoning) of the Temecula Municipal Code.
B. The code amendments are being made to address operational concerns surrounding massage establishments, implement a new permit for tobacco shops to include operational standards, and remove tobacco shop as a conditionally permitted use in the neighborhood commercial zoning district. In addition, the ordinance updates the number of permitted smoking rooms allowed in hotels in accordance with changes in state law. Finally, the code amendment makes minor typographical edits to the code.
C. As required by State law, the Planning Commission considered the proposed amendments to Title 17 (Zoning) of the Temecula Municipal Code ("Ordinance") on July 19, 2023, at a duly noticed public hearing as prescribed by law, at which time the City staff and interested persons had an opportunity to and did testify either in support of or opposition to this matter.
D. At the conclusion of the Planning Commission hearing and after due consideration of the testimony, the Planning Commission adopted PC Resolution No. 2023-14, recommending that the City Council approve the code amendments.
E. The City Council, at a regular meeting, considered the Ordinance on August 22, 2023, at a duly noticed public hearing, as prescribed by law, at which time the City Staff and interested persons had an opportunity to and did testify either in support or opposition to this matter.
F. Following the public hearing, the City Council considered the entire record of information received at the public hearings before the Planning Commission and City Council.
Section 2. Further Findings. The City Council, in approving the proposed Ordinance, hereby makes the following additional findings as required by Section 17.01.040 ("Relationship to General Plan") of the Temecula Municipal Code:
1. The proposed uses are allowed in the land use designation in which the use is located, as shown on the land use map, or is described in the text of the general plan.
The proposed changes to Title 17 include removal of tobacco shop as a permitted use in Neighborhood Commercial Zoning Designation and requiring Tobacco Shops in Planned Development Overlay (PDO) districts No. 1 and 4 to adhere to the new requirements of a Tobacco Shop Permit. These changes are prohibiting land uses or imposing requirements on existing uses, rather than allowing a use where it was not previously permitted. All other proposed amendments are minor clarifications and typographical edits and do not propose any land use changes contrary to the adopted General Plan.
2. The proposed uses are in conformance with the goals, policies, programs and guidelines of the elements of the general plan.
The proposed amendments to Title 17 of the Temecula Municipal Code do not propose any land use that is inconsistent with the Temecula General Plan. The majority of the Code Amendments do not create or allow new uses where they were not previously allowed. Only the revisions to the Neighborhood Commercial (NC) Zoning district impact the use of land. The Code Amendments would remove Tobacco Shop as a permitted use in the NC Zoning district only. The remaining proposed amendments to the Temecula Municipal Code are minor clarifications and typographical edits and do not result in a contrary policy direction or indicate an inconsistency between the Temecula Municipal Code and the adopted General Plan.
3. The proposed uses are to be established and maintained in a manner which is consistent with the general plan and all applicable provisions contained therein.
The proposed amendments to Title 5, 8, and 17 of the Temecula Municipal Code do not propose any land use that is inconsistent with the Temecula General Plan. The proposed changes to massage establishments modify definitions and operational requirements, require notarized documentation for exempt massage facilities and the prohibition of pets furthers Policy 5.4 of the Economic
Development Element of the Temecula General Plan, which is to "Monitor existing businesses and support small businesses and the business retention program to encourage local employment and growth of local businesses." Changes to tobacco regulations include modifying definitions, implementing an annual permit for tobacco shops to include operational requirements, and updating the number of designated smoking rooms is in compliance with Goal 3 of the Community Design Element of the Temecula General Plan which is to ensure "Preservation and enhancement of the positive qualities of individual districts or neighborhood." All other proposed amendments are clarifications and typographical edits and do not propose any land use changes contrary to the adopted General Plan.
Section 3. Environmental Findings. The City Council hereby finds that this Ordinance is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Title 14 of the California Code of Regulations, Section 15061(b)(3) because it can be seen with certainty that there is no possibility that the Municipal Code amendments would have a significant impact on the environment. The Municipal Code amendments are minor policy changes, changes required by state law, and the imposition of regulations on existing uses and will not increase the intensity or density of any land use. A Notice of Exemption has been prepared and will be filed in accordance with CEQA and the State CEQA Guidelines.
Section 4. Section 5.22.020 (Definitions) of Chapter 5.22 (Massage and Massage Establishments) of Title 5 (Business License and Regulations) of the Temecula Municipal Code is hereby amended to amend the definition of "Massage" as follows (with additions appearing in underlined text), with all other provisions of Section 5.22.020 remaining unchanged:
"Massage" means the scientific manipulation of the soft tissues of the human body. "Massage" includes bodywork such as reiki, trigger point, hiatsu, cpppin and l3phatic drainage.
Section 5. A new Item 5.22.040.A.I is hereby added to Subsection 5.22.040.A of Section 5.22.040 (Massage Establishment Permit Required) of Chapter 5.22 (Massage and Massage Establishments) of Title 5 (Business License and Regulations) of the Temecula Municipal Code (with additions appearing in underlined text), with all other provisions of Section
5.22.040 remaining unchanged:
A. It is unlawful for any person to engage in, operate, conduct or carry on, in or upon any premises, a massage establishment without first obtaining a massage establishment permit pursuant to this chapter, securing the necessary business license as required by this code, and complying with Title 5 of this code. A separate permit shall be obtained for each separate massage establishment operated by such person.
1. Massage establishments include facilities that provide Reiki, Trigger Point, Shiatsu, Cupping, Lymphatic Drainage and any other activity that meets the definition of massage, as defined in Section 5.22.020 of this code.
Professionals of such massage practices or any activity that meets the definition of massage as defined in Section 5.22.020 of this code shall be CAMTC certified in accordance with Section 5.22.030 of this code.
3 Section 6. Item 5.22.090.A.1 of Subsection 5.22.090.A (Requirements applicable to the operation of outcall services) of Chapter 5.22 (Massage and Massage Establishments) of Title 5 (Business License and Regulations) of the Temecula Municipal Code is hereby amended to read as follows (with additions appearing in underlined text), with all other provisions of Section
5.22.090 remaining unchanged:
A. Outcall Massage. No person shall provide outcall massage in the city unless all of the following requirements are met:
1. The appointment for the outcall massage is performed only under a physician's written recommendation or order and the appointment was made by a massage establishment in good standing under this chapter and the massage professional is employed by the same massage establishment.
Section 7. A new Subsection "28" (Pets) is hereby added to Subsection B (Operations) of Section 5.22.080 (Requirements applicable to the operation of massage establishments.) of Chapter 5.22 (Massage and Massage Establishments) of Title 5 (Business License and Regulations) of the Temecula Municipal Code to read as follows (with additions appearing in underlined text), with all other provisions of Section 5.22.080 remaining unchanged:
28. Pets. No pet(s) or live animal mascots, regardless of species, shall be allowed on site of any massage establishment, except for a working "service animal" as defined in Section
6.04.010 of this code.
Section 8. Subsection 5.22.120A.I (Exemptions) of Chapter 5.22 (Massage and Massage Establishments) of Title 5 (Business License and Regulations) of the Temecula Municipal Code is hereby amended to read as follows (with deletions shown in strikethrough text and additions appearing in underlined text), with all other provisions of Section 5.22.120 remaining unchanged:
A. This chapter shall not apply to the following individuals or businesses while engaged in the performance of the duties of their respective professions:
1. Persons
of the state of Galifomia, > btA not fifnited to, holders of medieal degfees, stleh as
pPhysicians, surgeons, chiropractors, osteopaths, and per -sons the-r- medical professionals and other persons holding a valid certificate to practice the healing arts, except for CAMTC-certified massage eg therapists, working under their direct supervision who are working at the same location as the licensed person, provided such professionals are performing massage, as defined in this chapter, at a licensed business as part of, and to the extent permitted by, their respective professions. Direct supervision, as used in this subsection, requires persons holding a valid certificate to practice the healing arts under the provisions of Division 2 (commencing with Section 500) Business and Professions Code to be present at the office of the business establishment and immediately available to furnish assistance and direction throughout the performance of the massage. The supervising medical professional is required to be physicalpresent on site. The required presence does not include virtual presence through audio/video real-time communications technology;
4 Section 9. A new subsection "C" (Affidavit) is hereby added to Section 5.22.120 (Exemptions) of Chapter 5.22 (Massage and Massage Establishments) of Title 5 (Business License and Regulations) of the Temecula Municipal Code to read as follows (with additions appearing in underlined text), with all other provisions of Section 5.22.120 remaining unchanged:
C. Affidavit. All persons holding a valid certificate to practice the healing arts under the laws of the state of California who operate an exempt massage facility as defined by Section
5.22.120 of this code shall provide a notarized affidavit attesting that all massage treatments performed are under their order or direction and that they will remain on site during all such treatments. Such persons must assure that all assistants, students or aides do not function autonomously.
Section 10. A new Section 5.22.155 (Violation Summary) is hereby added to Chapter
5.22 (Massage and Massage Establishments) of Title 5 (Business License and Regulations) of the Temecula Municipal Code to read as follows:
5.22.155 Violation and Penalty Table.
Table 5.22.155 - Violation Summary'
Level 1 VIOLATIONS
Code Section
Per TMC 5.22.140(B)(1) - Any violation of the provisions below are rounds to revoke a Massage Establishment Permit
5.22.070(C)(1)(a)
Applicant or any officer/director of a corporation operating a massage establishment has been convicted of any crime that requires registration with any level of government or agency similar to and including Penal Code Section 290 or involves conduct that violates any law similar to and including Penal Code Sections 266(h), 266(i), 314, 315, 316, 318, 647 (a), (b , or (d), 653.22, 653.23 or any crime settled in a plea to violations of Penal Code Section 415, 602 or any lesser included or related offense.
5.22.070(C (1� )(b)
Applicant or any officer/director of a corporation operating a massage establishment has been convicted of a Health and Safety Code Section 11550 offense or any offense involvingthe sale, distribution or possession of a controlled substance specified in Health and Safety Code Sections 11054, 11055, 11056, 11057 or 11058.
5.22.070(C (1)(c)
Applicant or any officer/director of a corporation operating a massage establishment has engaged in conduct in another jurisdiction which, if it had occurred within the City, would constitute grounds for denial or revocation under this chapter.
5.22.070(C)(1)(d)
Applicant or any officer/director of a corporation operating a massage establishment has been subjected to a permanent injunction against the conducting or maintaining of a nuisance pursuant to Penal Code Sections 11225 through 11235 or any similar provisions of law in a jurisdiction outside the state of California
5.22.070(C)(1)(e)
Applicant or any officer/director of a corporation operating a massage establishment has engaged in conduct in any state or country which would
constitute an offense as described in subsection 5.22.070(1)(a) or (b) of this section
5.22.070(C)(1)(fl
Applicant or any officer/director of a corporation operating a massage establishment has been convicted of an act involving theft, dishonesty, fraud, deceit or moral turpitude or an act of violence, which act or acts are related to the qualifications, functions or duties of the operator of a massage establishment, or which act or acts occurred in connection with the operation of a massage establishment
5.22.070 C (1� )(g)
Applicant or any officer/director of a corporation operating a massage establishment is registered under Penal Code Section 290, or any similar law in any state or other jurisdiction.
5.22.070(C)(1)(h)
Applicant or any officer/director of a corporation operating a massage establishment has had a massage establishment permit, or other similar license or permit denied, suspended or revoked for cause by any governmental authority.
5.22.070(C)(1)(i)
Applicant or any officer/director of a corporation operating a massage establishment has had any massage therapist or massage practitioner permit, ^
license, or certification denied, revoked or suspended by the CAMTC.
5.22.080(B)(5)
No person or persons shall be allowed to live inside the massage establishment at any time. Beds, mattresses, waterbeds, futons, sofa beds, or any We of portable or convertible beds are not permitted on the premises.
5.22.080(B)(7)
No person shall enter, be in or remain in anyof a massage establishment while _part
in possession of, consuming using or under the influence of any alcoholic beverage, recreational drugs or controlled substance. The operator and on -duty manager shall be responsible to ensure that no such person shall enter or remain upon the massage establishment. Service of alcoholic beverages or recreational drugs shall not be allowed.
5.22.080(B)(8)
No contraceptive devices, i.e., condoms or other prophylactics, or sexual devices, the primM purpose of which is for sexual stimulation, shall be sold, utilized, or allowed on the premises or possessed by any employee while on the premises.
5.22.080(B)(20)
No massage professional or any person employed by the massage establishment, including independent contractors, may engage in acts that a reasonable person in the client's perspective, would be understood as an offer to perform or engage in with a client, acts that are sexual in nature, nor shall any massage professional or any_person employed by the massage establishment, massage the genitals or anal area of any patron, nor shall anyoperator or manager allow or permit such massage. An operator must comply with Business and Professions Code Section 4609(a) relating to sexual acts, including not allowing massage professionals to engage in any form of sexual activi on the premises of the massage ,
establishment, or to engage in sexual activi while providing massage for ,
compensation. A massage professional may only provide massage of female breasts with written consent of the person receiving the massage and a referral from a licensed California health care provider. This section is not intended to prohibit any massage technique recognized zed by CAMTC as legitimate, or to impose any specific restriction or professional practice beyond those set forth in Business and Professions Code Section 4609(a). No operator, manager or employee while performing any task or service associated with the massage business, shall be present in any room with another person unless the person's genitals, lg uteal crease, anus and, in the case of a female, her breasts, are fully covered.
5.22.080(B)(21)
A massage professional may not wear attire that is transparent, see -through, or substantially exposes the massage professional's undergarments or that exposes his or her breasts, buttocks or genitals, or that in any way willfully and lewdly exposes his or her private parts in any that is in public or where there are other people present who may be offended or annoyed by such action. Swim attire may not be worn unless the massage professional is providing a water -based massage modality approved by the CAMTC. A massage professional shall not wear any clothing that is deemed by the CAMTC to constitute unprofessional attire. All employees of the massage establishment that are not massage professionals shall also adhere to these clothing requirements.
5.22.140(B ((a)
The massage establishment is emplo�g a massagepist that does not hold a valid CAMTC license.
5.22.140(B (1� )(d)
Alcoholic beverage or recreational drugs are found on -site.
5.22.140(B)(1)(e)
The massage establishment has violated anyprovision of Business and Professions Code Section 4600 et seq
5.22.140(B)(1)(fl
The chief of police determines that the massage establishment's operations constitute an immediate threat to the public health and safety.
Level 2 VIOLATIONS
Code Section
Per TMC 5.22.140(B)(2) - Any three violations in a 12 month period of the provisions below are grounds to revoke a Massage Establishment Permit
5.22.080(A)(1)(a)
Massage establishments shall be located in a zoning district which permits such use. When a new massage establishment is proposed to be constructed, a set of plans shall be submitted to the city for approval and shall be accompanied by he appropriate application and plan check fee.
5.22.080(A)(1)(b)
No massage establishment located in a building or structure with exterior windows fronting a public street, highway, walkway, or parking area, shall, during business hours, block visibility into the interior reception and waiting area through the use of curtains, closed blinds, or any other material that obstructs, blurs or darkens the view into the premises.
5.22.080(A)(2)
Neither signs nor the front of the business shall be illuminated by strobe, flashing lights or string lights. Each operator and/or on -du manager shall display the ,
massage establishment permit in a conspicuous public place in the lobby of the massage establishment. In addition, each operator and/or on -duty manager shall ensure: (a) CAMTC Certificates for each massage professional employed at the establishment (whether on -du or not,) are conspicuously displayed in the lobby ,
area of the massage establishment, and (b) that each massage professional has his or her identification card in his or her possession while providing massage services for compensation.
5.22.080(A)(3)
Services List. Each operator shall post and maintain a list of services available and the cost of such services, in a conspicuous public place within the premises. No owner, managerperator shall permit, and no massage professional shall offer or perform, any service other than those posted, nor shall an operator or a massage professional request or charge a fee for any service other than those on the list of services available and posted in the reception area or provided to the client in advance of any outcall services.
5.22.080(A)(4)
-�
Each operator shall illuminate each room or area where massage is performed with light equivalent to a minimum of forty -watt incandescent light bulb, and shall provide sufficient ventilation. Such lighting and ventilation shall otherwise comply with the current mechanical and building code of the city. The lighting in each massage room shall be activated at all times while the patron is in such room or area.
5.22.080(A)(5)
-�
A minimum of one toilet and one separate wash basin shall be provided for patrons in each massage establishment. Each wash basin shall be equipped with soap or detergent and hot running water at all times and shall be located in close proximity to the area devoted to the performing of massage services. A permanently installed soap dispenser, filled with soap, and a single service towel dispenser or hand air dryer shall be provided at the restroom hand wash sink. Bar soap shall not be used.
A trash receptacle shall be provided in each toilet room. Showers may be provided at the o erator's o tion.
5.22.080(A)06
If male and female patrons are to be treated simultaneously at the same massage establishment, separate massage rooms shall be provided for male and female patrons provided, however, that massage establishments having separate massage rooms for male and female patrons may provide "couples massage" in a single room, subject to the requirements of this subsection. Couples massage, i.e_, concurrent massage of two persons, is permitted within one room provided all other requirements of this chapter are satisfied including, but not limited to, provision of a separate massage table and massage professional for each customer.
Any room to be used for couples massage shall be sufficiently sized so as to comply with any and all applicable building and fire codes and to permit free assa e and movement of the massage professionals.
5.22.080(A)(7)
All facilities of the massage establishment must be in good and shall be thoroughly cleaned and sanitized each day the business is in operation. All walls, floors and ceilings of each restroom and shower area, if any, shall be made of washable mold -resistant surfaces.
5.22.080(A)(8)
A massage table shall be provided in each massage room and the massage shall be performed on this massage table. The tables shall have a minimum height of twenty-eight inches. Two-inch thick foam pads with maximum width of four feet may be used on a massage table and must be covered with durable, washable plastic or other waterproof material. Beds, floor mattresses and waterbeds are not permitted on the premises.
5.22.080(B)(1)
Each operator and/or on duty manager shall provide and maintain on the premises adequate equipment for disinfecting and sterilizing instruments used in massa e.
5.22.080(B)(3)
Common use of towels or linen shall not be permitted. Towels and linen shall be laundered or changed promptly after each use. Separate cabinets or containers shall be provided for the storage of clean and soiled linen and towels, and such cabinets or containers shall be plainly marked: "clean linen" and "soiled linen."
5.22.080(B)(4)
Each massage establishment and/or massage professional shall provide and maintain at the location where the massage is performed adequate equipment for disinfecting and sterilizing instruments used in massage. Instruments utilized in performing massage shall not be used on more than one client unless they been sterilized, using approved sterilization methods.
5.22.080(B)(6)
No food of any kind shall be cooked or prepared in a massage establishment. No food of any kind shall be for sale or sold in the establishment.
5.22.080(B)(9)
No electrical, mechanical or artificial device shall be used by the operator or any employee of the massage establishment for audio and/or video recordingor r for
monitoring the performance of a massage or the conversation or other sounds in the massage rooms without the written consent of the patron.
5.22.080(B)(10)
The operator and/or manager of the massage establishment shall maintain a roster of all employees, including operators, managers and massage professionals, showing each name, nickname and alias, home address, age, birth date, gender, height, weight, color of hair and eyes, phone number, Social Security Number, CAMTC certificate number, date of employment, and duties of each employee.
The foregoing roster and all information therein shall be maintained on the premises for a period of two years following the termination of each employee.
Upon consent or upon obtaining an applicable warrant, the operator or manager on duty shall make the roster immediately available for inspection during all hours the massage establishment is open for business. Information in the roster shall be available for inspection only try or police department representatives while performing official duties. It is unlawful for a massage establishment to employ or retain any person to provide massage for compensation, or to allow any person to provide massage for compensation on the premises of a massage establishment, unless that person is listed as a massage professional on the massage permit issued pursuant tothis cha ter.
5.22.080(B)(11)
The massage professional shall provide to each patron clean, sanitary and opaque coverings capable of covering areas of the patron identified as prohibited massage areas including the genital area, anus and female breast(s). Re -use of such coverings is prohibited unless adequately cleaned and sanitized.
5.22.080(B)(12)
Every person operating a massage establishment shall keep a record of the dates and hours of each treatment or service provided, the name and address of the patron, the name of massage professional administering such service and a description of the treatment or service rendered.
5.22.080(B)(13)
The owner must advise the city, in writing, at the time of application for a permit of the business hours, and any change in hours occurring thereafter. No person shall operate a massage establishment or administer a massage in any massage establishment or at an outcall location booked by that massage establishment between the hours of nine p.m. and seven a.m. All massages must terminate by nine p.m., regardless of the start time. All customers, patrons and visitors shall be excluded from the massage establishment during these hours and be advised of these hours. The hours of operation must be displayed in a conspicuous public place in the lobby within the massage establishment and in the front window clearly visible from the outside. It is the obligation and responsibili of the ,
massage establishment to inform clients of the requirement that any massage service must cease by nine p.m.
5.22.080(B)(14)
No permitted massage establishment shall place, publish or distribute, or cause to be placed, published or distributed, in any publication or any website, any advertisingthat hat depicts any portion of the human body that would reasonably suggest to prospective patrons that any service is available other than those services authorized by the Massage Therapy Act and pursuant to this chapter. No massage establishment shall employ language in the text of such advertising that would reasonably suggest to a prospective patron that any service is available other than those services authorized by this chapter. The massage establishment shall ensure that it and all certified massage professionals comply with Business and Professions Code Sections 4608, 4609 and 4611, by requiring the massage professionals to include the name under which he or she is certified and his or her certificate number in yLny and all advertising of massage for com ensation• to not
engage in sexually suggestive advertising related to massage services; to not hold him or herself out as a certified massage professional, or use terms such as "licensed" or "certified," that implies that an uncertified person is certified as a massage professional; to not falsely state or advertise or put out any sign or card, or to falsely represent to the public, that any individual is licensed, certified, or registered as a massage professional if that individual is not so certified by the CAMTC.
5.22.080(B)(15)
No operator or manager shall engage in, conduct or carry on the business of a massage establishment unless there is on file with the police department, in full force and effect at all times, documents issued by an insurance company authorized to do business in the state of California evidencing that the permit holder is insured under a liability insurance policy providing minimum coverage of one million dollars for personal injury or death to one person arising out of the operation of the massage establishment and/or the administration of any massage.
Evidence of the required insurance shall be provided to the chief of police at the time an initial application, or renewal application, is filed.
5.22.080(B)(16)
All massage establishments must comply with all state and federal laws and regglations providing for access to and receipt of services by disabled persons.
5.22.080(B)(17)
All front, reception, hallway or front exterior doors (except back or exterior doors used solely for employee entrance to and exit from the massage establishment) shall be unlocked during business hours, except as may be permitted by applicable law (such as the Temecula Fire Code) which allow for safety doors that may be opened from the inside when locked. No massage may be performed within any cubicle, room, booth or any other area within a massage establishment that is fitted with a lock of an,, kind as a locking doorknob, padlock, dead bolt, sliding bar or similar device), unless the door is an exterior door. No entry doors to any room shall be obstructed by any means. The requirement that an exterior door must remain unlocked at all times does not apply to any massage establishment owned by one individual with one or no employees or independent contractors.
5.22.080(B)(18)
No person shall be permitted to be within a massage establishment except within the lobby or reception area, or area where a customer is receiving massage services, during hours of operation, unless that person has been disclosed to the Lty as required under this chapter, including Section 5.22.060(A)(5).
5.22.080(B)(19)
No massage establishment may discriminate or exclude patrons on the basis of their race, sex, religion, age, disability or any other classification protected under federal or state laws, rules or regulations.
5.22.080(B)(22)
The operator and on du manager shall be jointly responsible for the conduct of ,
all employees while the employees are on the premises of the massage establishment. Any act or omission of an employee constituting a violation of any provision of this chapter shall be deemed to be an act or omission of the operator and on duty managerpurposes of determining whether the massage establishment permit should be revoked, or an application for such permit or renewal thereof, denied.
5.22.080(B)(23j
No operator or manager shall employ any person as a massage professional who does not hold a CAMTC Certificate. Every operator or manager shall report to the chief of police any change of employees, whether by new or renewed employment, discharge or termination, on the form and in the manner required by the chief of police. The report shall contain the name of the employee and the date of hire or termination. The report shall be made within ten business days of the date of hire or termination. The operator and manager must notify the chief of police 10 immediately upon the massage establishment's notice of any disciplinary action taken by the CAMTC regarding one of the establishment's massage professionals and submit a copy of the notice or order. This provision requires reportin to the chief of police, even if the operator or manager believes that the chief of police has or will receive the information from another source.
5.22.080(B)(24)
No massage establishment shall operate as a school of massage, or use the same facilities as that of a school of massage,
5.22.080(B)(25)
Operation of a massage establishment without a qualified manager being present at all times that the massage establishment is open for business is prohibited.
5.22.080(B)(26)
Each operator and on -duty manager shall at all times comply with all provisions of this chapter and all other applicable provisions of the Temecula Municipal Code, all conditions of any required zoning approvals, conditions imposed by the chief of police, and all state and federal laws, statutes and regulations, and shall provide roof of compliance u on request by the police de artment.
5.22.080(B)(27)
Each massage establishment shall have and maintain a dedicated telecommunication device physically at the business location with an assigned telephone number capable of receiving_ incoming calls and dialingout ut to emergency services specifically 911.
5.22.080(B)(28)
No pet(s) or live animal mascot(s), regardless of species, shall be allowed on site of any massage establishment, the only exemption shall be a working "service animal" as defined in Section 6.04.010 of this code.
' This is a summary of violations only. Please see the referenced code sections for complete details an omission from this table does not remove the burden of compliance.
Section 11. Chapter 5.24 is hereby renamed as "Licensure of Tobacco Retailers and Tobacco Shops".
Section 12. Section 5.24.030 (Definitions) of Chapter 5.24 (Licensure of Tobacco Retailers) of Title 5 (Business Licenses and Regulations) of the Temecula Municipal Code is hereby amended to add definitions for "Tobacco Shop" and "Permit" and to revise the definitions for "Tobacco paraphernalia" and "Tobacco product" to read as follows (with additions appearing in underlined text) with all other provisions of Section 5.24.030 remaining unchanged:
"Tobacco Shop" means any premises dedicated to the disnlav, sale, distribution, delivery, offerin furnishing, or marketing of tobacco, tobacco products, tobacco accessories, or tobacco paraphernalia, including all non -tobacco products that contain nicotine. Any premises that dedicates more than 10 percent of its floor space(excluding bathrooms, kitchens, breakrooms, and other exclusive employee use common areas) to tobacco products, tobacco accessories or tobacco paraphernalia shall be considered a "Tobacco Shop" for purposes of this chapter. If a premises dedicates less than 10 percent of its floor space (excluding bathrooms, kitchens, breakrooms, and other exclusive employee use common areas) to tobacco products, tobacco accessories or tobacco paraphernalia, then it shall be considered a "Tobacco Retailer" as defined in Section 5.24.030. and is not governed by this Chapter.
"Tobacco Shop Permit" or "TSP" means a Tobacco Shop Permit issued pursuant to this chapter. m
"Tobacco paraphernalia" means cigarette papers or wrappers, pipes, electronic cigarette or vqping devices, holders of smoking materials of all types, cigarette rolling machines, and any other item designed for the smoking, preparation, storing, or consumption of tobacco products. "Tobacco product" means:
1. Any substance containing tobacco leaf, including but not limited to cigarettes, cigars, pipe tobacco, electronic cigarette or vaping device to include liquid, snuff, chewing tobacco, dipping tobacco, bidis, or any other preparation of tobacco; and
2. Any product or formulation of matter containing biologically active amounts of nicotine that is manufactured, sold, offered for sale, or otherwise distributed with the expectation that the product or matter will be introduced into the human body but does not include any product specifically approved by the Federal Food and Drug Administration for use in treating nicotine or tobacco product dependence.
Section 12. A new Section 5.24.120 "Tobacco Shops" is hereby added to Chapter 5.24 (Licensure of Tobacco Retailers) of Title 5 (Business Licenses and Regulations) of the Temecula Municipal Code to read as follows (with additions appearing in underlined text):
5.24.120 Tobacco Shops.
A. Tobacco Shop Permit (TSP) Required.
1. It is unlawful for any person to engage in, operate, conduct or carry on, in or upon any premises, a tobacco shop without first obtaining a permit pursuant to this chapter, securing the necessary business license as required by this code, and complying with Title 5 of this code. A separate permit shall be obtained for each separate tobacco shop operated by such person.
2. A permit to operate a tobacco shop shall be valid for a period of one year and shall expire in conjunction with the business license.
B. Maximum Number of Tobacco Shops.
1. The maximum number of tobacco shops within the city shall not exceed one tobacco shop per every ten thousand (10,000) inhabitants of the city, with any fraction of that ratio being rounded down to the nearest whole number. For purposes of this section, the total number of inhabitants of the citv shall be determined by the most current published data available from the California State Department of Finances, as of the date an application for a tobacco shop permit is filed.
2. If there is no lapse in the timely renewal of a city business license and tobacco retailers license as required under this chapter, tobacco shops operating with a valid and current business license and current and valid Tobacco Retailers License no later than sixty 60) days after the effective date of this ordinance and that operate in compliance with all local, state and federal laws, ordinances, rules and regulations, may continue to operate in the city even if the number of tobacco shops exceed the maximum number of tobacco shops permitted in the city pursuant to subsection B(1) above and separation requirements pursuant to subsection E(l)(a) of this chapter.
3. Any owner that meets the requirements of subsection 2 above may sell or transfer the tobacco shop, but the new owner of the tobacco shop shall apply and obtain a tobacco shop 12 permit before the new owner or operator begins operating the tobacco shop. If the tobacco shop that is sold or transferred does not have a history of violating any provisions of the chapter for at least one year preceding the date of sale or transfer of the business, the business may obtain a tobacco shop permit to operate in the city even if the number of tobacco shops exceed the maximum number of tobacco shops permitted in the city pursuant to subsection B(1) above, as long as the business meets all the requirements of Section
5.24.120(D).
C. Application for Tobacco Shop Permit.
1. All persons desiring a tobacco shop permit shall file a written application on the required form available at the citesplanning department. The application, to be signed under penalty of perjury, shall be accompanied by the appropriate filing fee established by resolution of the city council. The applicant must be at least twenty-one (21) years of age at the time of application. The application shall be completed and signed b, t�perator of the proposed tobacco shop, if a sole proprietorship; one e�partner, if the operator is a partnership; one officer or one director, if the operator is a corporation; and one participant, if the operator is a joint venture. The application for a tobacco shoppermit does not authorize operation of a tobacco shop unless and until such permit has been properly granted. The application shall contain or be accompanied by the following information:
a. The type of ownership of the business; for example, whether an individual, partnership, or corporation. If the applicant is a corporation, the name of the corporation shall be set forth exactly as shown in its articles of incorporation or charter, together with the state and date of incorporation and the names and residence addresses of each of its current officers and directors, and of each stockholder holding more than five percent of the stock of that corporation. If the applicant is a partnership, the application shall set forth the name and residence of each of the partners, including limited partners. If the business is a limited partnership, it shall furnish a copy of its certificate of limited partnership filed with the Secretary of State. If one or more of the partners is a corporation, the provisions of this subsection pertainingtrporations shall apply; b. The precise name under which the tobacco shop is to be conducted; c. The complete address, all telephone numbers, and email address of the tobacco shop; d. The following personal information concerningtpplicant:
i. Full complete name and all aliases used by the applicant, ii. Current address and all previous residential addresses for eight years immediately preceding the present address of the applicant,
iii. Acceptable proof that the applicant is at least twenty-one (21) years of age, iv. Proof of legal residency and/or the ability to legally work in the United States, v. The applicant's complete business, occupation and employment history for eight years preceding the date of application, including, but not limited to, the tobacco shop or similar business history and experience of the applicant, vi. The complete tobacco shop license history of the applicant, whether such person has ever had any permit, license, or certification to conduct sales of tobacco products issued or denied by any governmental authority; the date of issuance of 13 such a permit or license, whether the permit or license was denied, revoked or suspended; and the reason therefor,
vii. Whether the applicant has ever had a tobacco retailers license, tobacco shop permit, or any_permit/license required for the operation of a tobacco shop denied, revoked or suspended by any government authority, and the reason therefor, viii. All criminal convictions occurring in any state or country, including convictions resulting from any plea of nolo contendere (no contest), within the last ten years, including those dismissed or expunged pursuant to Penal Code Section 1203.4, but excluding infraction traffic violations, and the date and place of each such conviction and reason therefor,
ix. Information re ag rding any pending criminal charges against the applicant, and x. A complete set of fingerprints taken by the police department. e. The name and address of the owner and lessor of the premises upon or in which the tobacco shop is to be located. In the event the applicant is not the legal owner of the premises, the application must be accompanied by a copy of the lease and a notarized acknowledgment from the owner of the premises that a tobacco shop will be located on the premises, and that the tobacco shop must operate in compliance with the requirements of this chapter;
f. Such other identification and information as the chief of police may reauire in order to discover the truth of the matters required to be set forth in the application; g. A statement in writing and dated by the applicant that he or she certifies under penalty of perjury that all information contained in the application is true and correct; h. Statements in writing and dated by the applicant and the applicant's designated manager(s) certify under nder penalty of perjury that they:
i. Have reviewed Chapter 5.24 and Chapter 8.56 of the Temecula Municipal Code, ii. Understand its contents,
iii. Understand the duties of a manager,
iv. Will only ploy persons of legal age to sell tobacco products, v. Authorize the chief of police to investigate the truth of the information contained in the application, and
vi. Will be responsible for the conduct of all tobacco shop operators, employees, agents, independent contractors, or other representatives while such persons are on the premises of the tobacco shop, and that failure to comply with the provisions of this chapter and any federal, state, or local law, may result in the revocation of the tobacco shop permit.
If, during the term of a tobacco shop permit, the permit holder has any change in information submitted on the original or renewal application, the permit holder shall notify the police department of such change, within ten (10) business days thereafter, in writing and
A floor plan of the proposed tobacco shop showing all interior areas, includingareas reas
where tobacco products are stored or sold, all doors, display cases, restrooms, plumbing, and an., other features required by the chief of police. 14 k. The applicant, if a corporation or partnership, shall designate one or more of its officers or partners to act as manager during business hours. If the applicant is an individual, then that individual, or designee thereof shall act as manager. Each person who shall serve as manager shall complete and sign all application forms required of an individual ,qpplicant for a tobacco shop permit.
1. Notwithstanding the fact that an application filed under this section may be a "public record" under Government Code Section 6250, et seq., certain portions of such application contain information vital to the effective administration and enforcement of the licensing and/or permit scheme established herein which is personal, private, confidential, or the disclosure of which could expose the applicant to a risk of harm.
Those portions of the application which are not subject to disclosure are: the applicant's residence address and telephone number, the applicant's date of birth and/or age, the applicant's driver's permit and/or social security number, and/or personal financial data. The city council in adopting the he application or permitting system set forth herein has determined in accordance with Government Code Section 6255 that the public interest in disclosure of the information set forth above is outweighed the public interest in achieving compliance with this chapter by ensuring that the applicant's privacy, confidentially or security interests are protected. The city clerk shall cause to be redacted from any copy of a completed permit application made available to any member of the public, the information set forth above.
D. Tobacco Shon Permit Issuance and Denial.
1. Upon receipt of a written application for a tobacco shop permit, the chief of police shall conduct an investigation to ascertain whether the applicant satisfies the requirements of this chapter. The chief of police shall, within thirty (30) days of receipt of an application, and on a first -come -first -served -basis, approve, conditionally approve or deny the gpplication. The thirty -day (30) period may be extended for up to thirty (30) additional days, if necessary, to complete the investigation at the discretion of the chief of police or their designee.
2. The chief of police shall deny all tobacco shop permit application(s) if the maximum number of tobacco shops under section 5.24.120(B)(1) has been met.
3. The chief of police shall deny all tobacco shop permit application(s) if they make any of the followingfindings:
a. The applicant, if an individual, or any of the officers or directors of the corporation, if the applicant is a corporation; or a partner, if the applicant is a partnership, or any person directly engaged or employed in the tobacco shop, includingif f any of the above listed parties, has within ten (10) years preceding the date of application:
i. Been convicted of a violation of Health and Safety Code Section 11550 or any offense involving the illegal sale, distribution or possession of a controlled substance specified in Health and Safety Code Sections 11054, 11055, 11056, 11057 or 11058:
ii. Engaged in conduct in another jurisdiction which, if it had occurred within the city, would constitute grounds for denial or revocation under this chapter; 15 iii. Been subjected to a permanent injunction against the conducting or maintaining of a nuisance pursuant to Penal Code Sections 11225 through 11235 or any similar provisions of law in a jurisdiction outside the state of California; iv. Engaged in conduct in any state or country which would constitute an offense as described in subsection (3)(i) or (ii) of this section; v. The applicant has had a Tobacco Retailers License revoked from any jurisdiction authorized to issue such license(s);
vi. The applicant or any of the applicant's proposed employees, after a full hearing by administrative proceeding or state court, has aided and abetted any of the offenses listed in this section;
vii. The applicant has made a false, misleading or fraudulent statement or omission of fact to the city in the permit application;
viii. The application does not contain all of the information required by this section; ix. The tobacco shop, as proposed by the applicant, does not comply with all applicable laws, including, but not limited to, health, zoning, fire and safety requirements, regulations and standards;
x. The applicant has not satisfied the requirements of this chapter in the time specified; xi. The location of the proposed tobacco shop has within a twelve (12) month period prior to the submittal of the application:
(a) Been the site of a violation of this chapter, or any similar criminal or civil ordinance, law, rule, or regulation of the state of California or any other public agency related to the operation of a tobacco shop,
(b) Been the site of a tobacco shop that was closed due to criminal activity. For purposes of this subsection, closure due to criminal activity includes voluntary closure of a tobacco shop after there have been arrests at the location or other notices relating to criminal activity,
(c) Been the site of a tobacco shop where violations have not been addressed in the time specified in the notice of violation or administrative citation, (d) Been the site of a tobacco shop that has been revoked pursuant to this chapter, (e) Been the site of a tobacco shop that has received a notice of revocation or fine issued pursuant to the Temecula Municipal Code, while any appeal of the revocation or fine is pending, or
(f) Been the site of a tobacco shop that has outstanding fines issued pursuant to the Temecula Municipal Code that have not been paid.
b. If the application is denied for failure to comply with this chapter, the applicant, owner and operator of the tobacco shop may not reapply for a period of one year from the date the application was denied.
c. An appeal of the denial of a tobacco shop establishment permit shall be ,governed by procedures set forth in Section 5.24.120(J).
E. Tobacco Shop Requirements.
1. Facilities.
a. Location. No tobacco shoe shall be located within five hundred (500) feet of a sensitive receptor(s), as defined in Chapter 9.20.020 of this code or from another tobacco sho. 16 This shall be measured in a straight line from any entrance of the tobacco shop to the property line of a sensitive receptor or another tobacco shop. A radius map package shall be required at the time of submittal when there is concern about the proposed tobacco shop location in relation to sensitive receptors, this shall be at the discretion of the chief of police or the director of community development. b. Structure. Tobacco shops shall be located in a zoning district which permits such use.
No tobacco shop located in a building or structure with exterior windows fronting a public street, highway, walkway, or parking area, shall, during business hours, block visibility into the interior area through the use of curtains, closed blinds, or an., other material that obstructs, blurs or darkens the view into the premises. c. Display of Permits. Tobacco shops shall at all times display in a conspicuous and prominent manner, visible upon entrance to the tobacco shop all permits, licenses, or any other approval required for the operation of a tobacco shop. Expired permits do not satisfy this requirement.
d. Signs. All tobacco shop signs shall comply with all provisions of Chapter 17.28 (Sign Standards,) or the appropriate Specific Plan or Planned Development Overlgy PDO).
When there is a conflict between standards, the more restrictive standard shall be followed. Tobacco shops shall not have signage on doors, windows or storefronts except as provided for in Chapter 17.28.050(I)&(J). No signs shall be closer than eighteen (18) inches from all exterior doors, windows and storefront. No signs depicting tobacco use shall be able to be seen from the public right of way. Each sign violating this section shall be counted as a violation. e. Lighting. Tobacco shops shall be internally illuminated with white or soft white lights only. No lightingfor or any purpose shall be placed around or on windows or doors, to include frames.
f. Accessory Uses. Lounge, arcade, and similar accessory activities prohibited. No tobacco shop shall allow or provide an area either indoor or outdoor that is for a customer lounge, arcade, or similar use(s).
g. Bathroom Facilities. Customers shall be prohibited from utilizing any bathroom facilities on site.
2. Operations.
a. Business License. Each tobacco shop shall hold a valid business license issued b. the City of Temecula.
b. State Tobacco Retailers License. Each tobacco shop shall hold a valid California Cigarette and Tobacco Products Retailer's License issued by the State Board of Equalization, in accordance with State law.
c. City Tobacco Retailers License. Each tobacco shop shall hold a valid Tobacco Retailers License issued by the City of Temecula.
d. Tobacco Shop Permit. Each tobacco shop shall hold a valid Tobacco Shop Permit (TSP) issued by the City of Temecula.
e. Hours of Operation. The owner must advise the city, in writing, at the time of gpplication for a permit of the business hours, and any change in hours occurring 17 thereafter. No person shall operate a tobacco shop between the hours of nine p.m. and seven a.m.
f. Employee Age. No person under the age of twenty-one (21) years, at the time of application, shall operate or be employed by a tobacco shop. g. Living Prohibited. No person or persons shall be allowed to live inside the tobacco shop at any time. Beds, mattresses, waterbeds, futons, sofa beds, or any type of portable or convertible beds are not permitted on the premises.
h. Alcoholic Beverages/Drugs — Prohibited Materials. No person shall enter, be in or remain in any part of a tobacco shop while in possession of, consuming or under the influence of any alcoholic beverage, recreational drugs (including cannabis,) or a controlled substance. The operator and on -duty manager shall be responsible to ensure that no such person shall enter or remain upon the tobacco shop. Service of alcoholic beverages or recreational drugs shall not be allowed to include all substances located in Chapter 8.56 (Psychoactive Bath Salts, Psychoactive Herbal Incense, and other Synthetic Drugs). A tobacco shop is not permitted to sell, store, distribute, trade or _give for no charge alcohol.
i. Tobacco Use. There shall be no tobacco use or consumption (including "tasting_s") at any tobacco shop.
j. Samples. Tobacco shops are prohibited from providing samples or tastings of any tobacco product or accessory whether free or for charge. k. Entrances. Tobacco shops cater specifically to adult customers over the age of twenty- one (21) to purchase tobacco products, accessories, etc. not the general public. As such, entrances/exits shall remain closed, not locked, during the hours of operation and employees shall not congregate, gather, or loiter in such areas.
Tobacco Products, and Paraphernalia. Tobacco Products, and tobacco paraphernalia shall not be kept within ten (10) linear feet from any building entrance or check-out counter. This prohibition shall not apply if the display is not physically accessible to customers.
m. Tobacco Flavors. A tobacco shop, or any of the tobacco shop's agents or employ shall not sell, offer for sale, or possess with the intent to sell or offer for sale, a flavored tobacco product or a tobacco product flavor enhancer as defined in Health and SafetX Code § 104559.5. This includes the storage of flavored tobacco products. n. Single Cigarettes. No tobacco shop shall sell single or individual cigarettes sometimes referred to as "loosies."
o. Self -Service Displays Prohibited. No person shall display tobacco products or tobacco paraphernalia by means of a self-service display or to engage in tobacco retailing by means of a self-service display. A tobacco retailer who chooses to display tobacco products or tobacco paraphernalia in a locked cabinet, case or similar structure must post a clear and conspicuous sign on or within five feet of the display, stating that the case or structure is locked at all times.
p. Compliance With All Laws. Each operator or manager shall at all times comply with all provisions of this chapter and all other applicable provisions of the Temecula Municipal Code, all conditions of any required zoning approvals, conditions imposed 18 by the chief of police, and all state and federal laws, statutes and regulations, and shall provide proof of compliance upon request by the police department.
3. Inspections.
a. A tobacco shop may b�pected twice a year for the purpose of determining that the provisions of this chapter are met. Such inspections may be made by the police department, persons employed by the city whose job descriptions require the person to enforce the provisions of this code, including, but not limited to, code enforcement officers, and such other enforcement officials as described in Sections 1.16.020 and
1.21.020 of the Temecula Municipal Code or its successor sections. b. Complaints or violations related to this chapter reported to the City may result in additional inspections at the discretion of the chief of police.
F. Transfer and Changes of Business.
1. No tobacco shop permit may be sold, transferred or assi.need by a permit holder, or by operation of law, to any other person or persons. Any such sale, transfer or assignment, or attempted sale, transfer or assignment, shall be deemed to constitute a voluntary surrender of such permit and such permit shall thereafter be null and void; provided and exceptin& however, that if the permit holder is a partnership and one or more of the partners should die, one or more of the surviving partners may acquire, by purchase or otherwise, the interest of the deceased partner or partners without effecting a surrender or termination of such permit, and in such case, the permit, upon notification to the chief of police, shall be placed in the name of the surviving partners.
G. Fees.
1. The city council shall establish by resolution, and from time to time may amend, the fees for the administration of this chapter. Fees required by this chapter shall be in addition to any required under any other chapter of this code.
H. Duration and Renewal of Permits.
1. Tobacco shop permits may be renewed on the first business day in February 2024, and on a year-to-year basis thereafter on the first business day in February, provided the permit holder continues to meet the requirements of this chapter. "Business day" as used in this subsection shall mean the days that Temecula City Hall is open for business.
2. No permit granted herein shall confer any vested right to anyPersonfor more than the permit period.
3. Applications for a permit renewal shall be filed with the chief of police at least sixty 0) days prior to expiration of the existing �permit, otherwise the permit will lapse. At the discretion of the chief of police, a conditional permit pending satisfactory completion of the renewal application process may be issued to renewal applicants who have no permit revocation proceedings pending at the time of filing of the renewal application.
4. Renewal applications shall set forth such information as ma.. b�quired by the chief of police to update and verify the information contained in the original permit application.
The applicant shall pay an application fee when applying for renewal.
5. If an application for renewal of permit and all required information is not timely received and the permit expires, no right or privilege to operate a tobacco shop shall exist.
I. Violation and Penalty.
19 1. Violations of this Section are broken down into two levels of severity as they relate to the Tobacco Shop Permit (TSP):
a. Level 1 Violations are violations of such significance that a single violation of such provisions would cause the immediate revocation of the tobacco shop permit (TSP). b. Level 2 Violations are violations of this chapter that do not rise to the severity of Level 1 Violations. Any three (3) Level 2 violations in a twelve (12) month period is grounds for revocation of the TSP by the chief of police.
2. Table 5.24.120 — Violation Summary Table
Table 5.24.120 - Violation Summary'
Level 1 VIOLATIONS
Code Section
Per TMC 5.24.120.H(I)(1)(a) - Any violation of the provisions below are urounds to revoke a Tobacco Shop Permit
5.24.120.E(1)(a)
No tobacco shop shall be located within one -thousand (1,000)feet of a sensitive receptor(s), as defined in Chapter 9.20.020 of this code or from another tobacco shop. This shall be measured in a straight line from any entrance of the facility to the property line of a sensitive receptor or another tobacco shop.
5.24.120.E(1)(b)
Tobacco shops shall be located in a zoning district which permits such use. No tobacco shop located in a building or structure with exterior windows fronting a public street, highway, walkway, or parking area, shall, during business hours, block visibility into the interior area through the use of curtains, closed blinds, or any other material that obstructs, blurs or darkens the view into the premises.
5.24.120.E(1)(f)
Lounge, arcade and similar accessory activities prohibited. No tobacco shop shall allow or provide an area either indoor or outdoor that is for customer lounge, arcade or similar use (s).
5.24.120.E(2)(a)
Each tobacco shop shall hold a valid business license issued by the City of Temecula.
5.24.120.E(2)(b)
Each tobacco shop shall hold a valid California Cigarette and Tobacco Products Retailer's License issued by the State Board of Equalization, in accordance with State law.
5.24.120.E(2)(c)
Each tobacco shop shall hold a valid Tobacco Retailers License issued by the City of Temecula.
5.24.120.E(2)(d)
Each tobacco shop shall hold a valid Tobacco Shop Permit issued b, the City of Temecula.
5.24.120.E(2)(g)
No person or persons shall be allowed to live inside the tobacco shop at any time. Beds, mattresses, waterbeds, futons, sofa beds, or any type of portable or convertible beds are not permitted on the premises.
5.24.120.E(2)(h)
No person shall enter, be in or remain in any part of a tobacco shop while in possession of, consuming using or under the influence of any alcoholic beverage, recreational drugs or controlled substance. The operator and on- duty manager shall be responsible to ensure that no such person shall enter or remain upon the tobacco shop. Service of alcoholic beverages or recreational drugs shall not be allowed to include all substances located in Chapter 8.56 (Psychoactive Bath Salts, Psychoactive Herbal Incense, and 20 other Synthetic Drugs). A tobacco shop is not permitted to sell, store, distribute, trade or give for no charge alcohol.
Level 2 VIOLATIONS
Code Section
Per TMC 5.24.120.H(I)(1)(b) - Any three violations in a 12 month period of the provisions below are grounds to revoke a Tobacco Shop Permit
5.24.120.E(1)(c)
Tobacco shops shall at all times display in a conspicuous and prominent manner, visible upon entrance to the tobacco shop all permits, licenses, or any other approval required for the operation of a tobacco shop. Expired permits do not satisfy this requirement.
5.24.120.E(1)(d)
All tobacco shop signs shall comply with all provisions of Chapter 17.28 (Sign Standards) or the appropriate Specific Plan or Planned Development Overlay (y (PDO). When there is a conflict between standards, the more restrictive standard shall be followed. Tobacco shops shall not have signage on doors, windows or storefronts except as provided for in Chapter 17.28.050(D)(J). No signs shall be closer than eighteen 18) inches from all exterior doors, windows and storefront. No signs depicting tobacco use shall be able to be seen from the public right of way sign violating this section shall be counted as a violation.
5.24.120.E(1)(e)
Tobacco shops shall be internally illuminated with white or soft white lights only. No lightingfor any purpose shall be placed around or on windows or doors, to include frames.
5.24.120.E(1)(g)
Customers shall be prohibited from utilizing any bathroom facilities on site.
5.24.120.E(2)(e)
The owner must advise the city, in writing, at the time of application for a permit of the business hours, and any change in hours occurring thereafter.
No person shall operate a tobacco shop between the hours of nine p.m. and seven a.m.
5.24.120.E(2)(f)
No person under the age of twenty-one (21) years, at the time of gpplication, shall operate or be employ a tobacco shop_
5.24.120.E(2)(i)
There shall be no tobacco use or consumption at any tobacco shop_
5.24.120.E(2)(i)
Tobacco shops are prohibited from providing samples of any tobacco product or accessory whether free or for charge.
5.24.120.E(2)(k)
Tobacco shops cater specifically to adult customers over the age of twen -one (21) to purchase tobacco products, accessories, etc. not the ,
general public. As such, entrances/exits shall remain closed, not locked, during the hours of operation and employees shall not congregate, ag ther or loiter in such areas.
5.24.120.E(2)(1)
Tobacco Products, and Paraphernalia shall not be kept within ten Ll0) linear feet from any building entrance or check-out counter. This prohibition shall not apply if the display is not physically accessible to customers.
5.24.120.E(2)(m)
A tobacco shop, or any of the tobacco shops agents or employees, shall not sell, offer for sale, or possess with the intent to sell or offer for sale, a flavored tobacco product or a tobacco product flavor enhancer as defined 21 in Health and Safety Code § 104559.5. This includes the storage of
5.24.120.E(2)(n) No tobacco shop shall sell single or individual cigarettes sometimes referred to as "loosies."
No person shall display tobacco products or tobacco paraphernalia by means of a self-service display or to engage in tobacco retailing by means of a self-service display. A tobacco retailer who chooses to display
5.24.120.E(2)(o) tobacco products or tobacco paraphernalia in a locked cabinet, case or similar structure must post a clear and conspicuous sign on or within five feet of the display stating that the cabinet, case or structure is locked at all times.
1 This is a summary of violations only. Please see the referenced code sections for
3. Violations that are not specifically identified in this section such as 5.24.120(E)(2)(a) shall be classified at the sole discretion of the chief of police on a case-bv-case basis.
J. Revocation, Permit Denial and Appeal.
1. Violation and Noncompliance. The chief of bolice may refuse to issue a hermit. renew a permit, or may revoke an existing permit, on the grounds that the applicant or permit holder has failed to comply with the permit conditions or other requirements of this chapter, or any requirement of state law. In any such case, the applicant or permit holder shall have the right to appeal in the time and manner set forth in this section.
For purposes of this section. if an administrative citation is contested. and is held to be invalid or rescinded by an independent hearing officer appointed pursuant to this chapter, or by any court of law, the violations identified in the administrative citation shall not form the basis for revoking or refusing to renew a tobacco shop permit. If any administrative citation is contested, and is upheld by an independent hearing officer appointed pursuant to this chanter, or by anv court of law, that administrative citation can form the basis for the revocation or refusal to renew a tobacco shop permit.
2. Notice. When the chief of police concludes that grounds for denial of a new permit or permit renewal, or permit revocation exist, the chief of police shall serve the applicant or permit holder, either personally or by certified mail, addressed to the business or residence address of applicant or permit holder, with a notice of denial of permit, or notice of intent to revoke or deny renewal. This notice shall state the reasons for the decision, the effective date of the decision, the right of the applicant or permit holder to appeal the decision to a hearing officer, and that the decision will be final if no written anneal is filed within the time permitted.
3. Appeal.
a. The right to file a written appeal of a revocation or denial of new permit or renewal of aapermit shall terminate upon the expiration of fifteen (15) dqys of the date of mailing by the chief of police of the notice specified in subsection J(2) of this section. The written anneal shall be filed with the citv clerk of the citv of Temecula and shall be 22 accompanied by an appeal fee in an amount as set by city council resolution, and the city clerk shall promptly forward a copy of the appeal to the chief of police. b. In the event an appeal is timely filed, the denial of the permit, or renewal or revocation of the permit, shall not be effective until a final decision has been made on the appeal.
Notwithstanding the foregoing, if the chief of police finds and determines that permitting a tobacco shop to continue to operate, pending the appeal hearing, would present an unreasonable and immediate risk to the public health and safety, the denial of renewal or revocation may take effect immediately. If no timely appeal is filed, the denial of renewal or revocation shall become effective upon expiration of the period for filing appeals.
c. Upon receipt of a timely appeal, the city clerk shall refer the appeal to the California Office of Administrative Hearings ("OAH") for the assignment of an administrative law judge to serve as the hearing officer.
i. Not less than fifteen (15) dqys prior to the meal hearing, the city clerk shall notify the chief of police and the appellant of the names of three qualified attorneys or retired Superior Court or Appellate Court judges submitted to the city clerk by a reputable firm providing mediators and arbitrators to serve as a panel from which the hearing officer will be selected.
ii. Within five days of the date of mailing the notice of the available panel, the chief of police and the appellant matey the city clerk in writing that he or she elects to remove one of the three potential hearing officers.
iii. The city clerk shall then request the mediation and arbitration firm to select one of the remaining names on the list as the designated hearing officer for the appeal hearing.
iv. The hearing officer shall be fair and impartial and shall have no bias for or against the chief of police or the appellant.
d. At the appeal hearing, the hearing officer shall receive oral and written evidence from the chief of police and the appellant. The hearing officer shall have authority to administer oaths to those persons who will provide oral testimony. The evidence presented need not comply with the strict rules of evidence set forth in the California Evidence Code, but shall be the type of evidence upon which reasonable and prudent people rely upon in the conduct of serious affairs. The hearing officer shall have broad authority to control the proceedings and to provide for cross examination of witness in a fair and impartial manner. The chief of police shall have the burden of proof to establish by clear and convincing evidence the facts upon which his or her decision is based. The appeal hearing shall be recorded by audio recording. Anyparty ma. sole cost and expense, utilize the services of a certified court reporter to prepare the verbatim record of the hearing. If a court reporter is used, the transcript prepared shall be made available for purchase to both parties. The hearing officer may continue the agppeal hearing from time to time, but only upon written motion of a party showing good cause for the continuance.
e. The hearing officer may uphold, modify or reverse the decision of the chief of police.
Within thirty (30) days or as otherwise determined by OAH, of the conclusion of the 23 appeal hearing, the hearing officer shall render his or her decision and make written findings supporting the decision. He or she shall send the decision to the city clerk.
Upon receipt of the hearing officer's decision, the city clerk shall send a copy of it to the chief of police and the appellant, alongwith ith a proof of mailing. f. Within ten (10days from date of the city clerk's mailing of the decision, either party may appeal the decision to the city manager. The appeal shall be in writing and filed with the city clerk, and shall state the grounds of the appeal and specify the errors in the hearing officer's decision. Upon receipt of the appeal, the city clerk shall schedule the appeal for review by the city manager to occur within thirty days. g. The city manager's review of the appeal shall be limited to determining whether the evidence received at the appeal hearing_ supports the findings and decision of the hearing officer. The city manager shall be limited to considering the evidence presented at the appeal hearing. No public hearing shall be required and no new evidence shall be taken by the city manager. The city manager's decision on the appeal shall be set forth in a written opinion. The city clerk shall mail a copy of the city manager's _opinion to the chief of police and the appellant along with a proof of service. Any legal action challenging the city manager's decision shall be filed within ninety (90) days of the date of the proof of service of mailing of the citmanager's opinion, pursuant to Section 1094.5. et sea.. of the California Code of Civil Procedure. The citv manager's decision shall be final and effective upon mailing of the opinion. If the appellant prevails following a final decision, the appeal fee shall be returned.
K. Application to Existing Businesses.
1. All requirements set forth in this chapter are deemed to be necessary for the protection of the public health, safety, and welfare and shall be applicable to and govern all existing and proposed tobacco shops immediately upon the date the ordinance is codified in this chapter, and shall become effective.
Section 13. Section 5.24.030 (Definitions) of Chapter 5.24 (Licensure of Tobacco Retailers) of Title 5 (Business Licenses and Regulations) of the Temecula Municipal Code is hereby amended to add a definition for "chief of police" to read as follows with all other provisions of Section 5.24.030 remaining unchanged:
"Chief of police" means the head of the agency or division which at the time involved has responsibility for performing the police function for, or within, the city, or his or her designee.
Section 14. Subsection E of Section 5.24.040 (Tobacco license prerequisite — Application process) of Chapter 5.24 (Licensure of Tobacco Retailers) of Title 5 (Business Licenses and Regulations) of the Temecula Municipal Code is hereby amended to read as follows (with deletions appearing in strikethrough text and additions appearing in underlined text) with all other provisions of Section 5.24.040 remaining unchanged:
E. All applications shall be submitted on a form supplied by the eity managef chief of op lice and shall contain the following information:
1. The name, address, email, website, and telephone number of each proprietor; 24 2. The business name, address, email, website, and telephone number of the single fixed location for which tobacco retailer's license is sought;
3. The name and mailing address authorized by each proprietor to receive all license - related communications and notices (the "authorized address"). If an authorized address is not supplied, each proprietor shall be understood to consent to the provision of notice at the business address specified in subsection (E)(2) of this section;
4. Proof that the location for which a tobacco retailer's license is sought has been issued a valid state tobacco retailer's license by the California Board of Equalization;
5. Whether or not any proprietor is a person who has been determined to have violated this chapter or has been a proprietor at a location that has been determined to have violated this chapter and, if so, the dates and locations of all such violations;
6. Such other information as the chief of police deems necessary for the administration or enforcement of this chapter;
Section 15. Subsection B of Section 5.24.050 (License Issuance — Standards) of Chapter
5.24 (Licensure of Tobacco Retailers) of Title 5 (Business Licenses and Regulations) of the Temecula Municipal Code is hereby amended to read as follows (with deletions appearing in strikethrough text and additions appearing in underlined text) with all other provisions of Section
5.24.050 remaining unchanged:
B. Upon the receipt of an application for a tobacco retailer's license and the license fee, the chief of police shall issue a license unless substantial record evidence demonstrates that one of the following bases for denial exists:
1. The application is incomplete or inaccurate.
2. The application seeks authorization for tobacco retailing at a location for which a prohibition on issuing licenses is in effect pursuant to Section 5.24.100(B) of this chapter.
However, this subsection shall not constitute a basis for denial of a license if the applicant provides the city with documentation demonstrating by clear and convincing evidence that the applicant has acquired or is acquiring the location or business in an arm's length transaction.
3. The application seeks authorization for tobacco retailing for a proprietor for which a prohibition on issuing licenses is in effect pursuant to Section 5.24.100(B) of this chapter.
4. The application seeks authorization for tobacco retailing that is prohibited pursuant to subsection A of this section, that is unlawful pursuant to any other city chapter, or that is unlawful pursuant to any other local, state, or federal law.
Section 16. Item 1 of Subsection B of Section 5.24.090 (License Violation) of Chapter
5.24 (Licensure of Tobacco Retailers) of Title 5 (Business License and Regulations) of the Temecula Municipal Code is hereby amended to read as follows (with deletions appearing in strikethrough text and additions appearing in underlined text) with all other provisions of Section
5.24.090 remaining unchanged:
25 B. License Compliance Monitoring.
1. Compliance with this chapter shall be monitored by the chief of police.
Any peace officer may enforce the provisions of this chapter.
Section 17. Subsection C of Section 8.36.030 (Prohibition of smoking in public places, places of employment and other areas.) of Chapter 8.36 (Smoking in Public Places of Title 8 (Health and Safety) of the Temecula Municipal Code is hereby amended to read as follows (with deletions appearing in strikethrough text and additions appearing in underlined text):
C. Unless otherwise prohibited by law, smoking is permitted in the following locations:
store;
12. By performers during theatrical productions, if smoking is a part of the theatrical production;
2-3. Private residential property, except when designated as nonsmoking under Chapter 17.30 of this code or used as a childcare or health care facility subject to licensing requirements and children, patients, or employees are present;
34. Up to twenty -€rye 20 percent of hotel and motel guest rooms, if the hotel or motel permanently designates particular guest rooms as nonsmoking rooms such that eightX seventy five 80 or more of its guest rooms are nonsmoking and ashtrays and matches are permanently removed from such nonsmoking rooms. Permanent "no smoking" signage shall be posted in nonsmoking rooms;
45. Outdoor dining areas of businesses operating under an on -sale license for public premises issued by the California Department of Alcoholic Beverage Control.
Section 18. Table 17.08.030 (Schedule of Permitted Uses Commercial/Office/Industrial Districts) of Section 17.08.030 (Use Regulations) of Chapter 17.08 (Use Regulations) of Title 17 (Zoning) of the Temecula Municipal Code is hereby amended to read as follows (with additions appearing in underlined text):
Table 17.08.030
Schedule of Permitted Uses
Commercial/Office/Industrial Districts
Description of Use
NC
I CC
I HT
I SCIPOIBPI
LI
T
Tailor shop
P
P
-
-
P
-
-
Taxi or limousine service
-
P
P
P
Tile sales
-
P
-
P
-
-
-
Tobacco shop
C- _
P13
P 13
P 13
Notes:
13. Subject to the requirements contained in Section 5.24.120 of this code.
Section 19. Table 17.22.106 (Schedule of Permitted Uses Pala Road Planned Development Overlay District -1) of Section 17.22.106 (Use Regulations) of Article 2. (Pala Road Planned Development Overlay District-1) of Chapter 17.22 (Planned Development Overlay 26 Zoning District (PDO-)) of Title 17 (Zoning) of the Temecula Municipal Code is hereby amended to read as follows (with additions appearing in underlined text):
Table 17.22.106 Schedule of Permitted Uses
Pala Road Planned Development Overlay District-1
Description of Use
PDO-1
T
Tailor shop
P
Taxi or limousine service
P
Tile sales
P
Tobacco sho 6
P
Tool and die casting
-
Transfer, moving and storage
Transportation terminals and stations
-
Truck rentals (no sales or/service)
C
TVNCR repair
P
Notes:
1. The CUP will be subject to Section 17.10.020(B), special standards for the sale of alcoholic beverages.
2. Subject to citywide antenna standards.
3. See Section 17.10.020(L), special standards for indoor swap meets.
4. See Section 17.10.020(N ), special standards for self -storage or mini -warehouse facilities.
5. Subject to the special setback provisions contained in Section 17.22.108.
6. Subject to the requirements of Section 5.24.120
Section 20. Table 17.22.136B (Schedule of Permitted Uses Temecula Creek Village Planned Development Overlay District -4) of Section 17.22.136 (Use Regulations) of Article V. (Temecula Creek Village Planned Development Overlay District-4) of Chapter 17.22 (Planned Development Overlay Zoning District (PDO-)) of Title 17 (Zoning) of the Temecula Municipal Code is hereby amended to read as follows (with additions appearing in underlined text):
Table 17.22.136B
Schedule of Permitted Uses
Temecula Creek Village Planned Development Overlay District-4 Description of Use
PD04R
PDO-4V6
T
Tailor shop
P
P
Taxi or limousine service
P
-
Tile sales
P
-
Tobacco shopi
P7
-
Tool and die casting-
-
Transfer, moving and storage
-
Transportation terminals and stations
-
-
27 Table 17.22.136B
Schedule of Permitted Uses
Temecula Creek Village Planned Development Overlay District-4 Description of Use
PDO-4R
PDO-4V6
Truck rentals no sales or service
-
-
TV/VCR repair P P4
Notes:
1. The CUP will be subject to Section 17.10.020(B) special standards for the sale of alcoholic beverages.
2. Subject to the requirements of Chapter 17.40 of the Temecula Municipal Code.
3. In PDO-4, all senior housing residential projects shall use the development and performance standards for the high density residential zone and the provisions contained in Section 17.06.050(H).
4. The size of the use or activity is limited to 5,000 square feet.
5. Outdoor entertainment in conjunction with an eating establishment is permitted provided that the outside noise levels do not interfere with off -site conversation.
6. Drive through facilities are not allowed in the village planning area.
Retail/support commercial planning area is identified as PDO-4R.
Village commercial planning area is identified as PDO-4V.
Multifamily planning areas A and B use the high density column in Table 17.06.030.
7. Subject to the requirements of Section 5.24.120
Section 21. Severability. If any section or provision of this Ordinance is for any reason held to be invalid or unconstitutional by any court of competent jurisdiction, or contravened by reason of any preemptive legislation, the remaining sections and/or provisions of this Ordinance shall remain valid. The City Council hereby declares that it would have adopted this Ordinance, and each section or provision thereof, regardless of the fact that any one or more section(s) or provision(s) may be declared invalid or unconstitutional or contravened via legislation.
Section 22. Certification. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same or a summary thereof to be published and posted in the manner required by law.
Section 23. Effective Date. This Ordinance shall take effect thirty (30) days after passage.
28 PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this day of ,
ATTEST:
Randi Johl, City Clerk
[SEAL]
29 Zak Schwank, Mayor
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, City Clerk of the City of Temecula, do hereby certify that the foregoing Ordinance No. 2023- was duly introduced and placed upon its first reading at a meeting of the City Council of the City of Temecula on the 22nd day of August, 2023, and that thereafter, said Ordinance was duly adopted by the City Council of the City of Temecula at a meeting thereof held on the day of , , by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
30 Randi Johl, City Clerk
RESOLUTION NO.2023-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF TEMECULA ESTALISHING A TOBACCO SHOP
PERMIT FEE
THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The City Council has the authority to establish application review fees. As such, the City Council has the authority to establish a fee for the review of Tobacco Shop Permit applications.
Section 2. The City Council herby finds and determines that, based upon its review of the information and analysis of City Staff, the proposed establishes a reasonable fee for staff to conduct Tobacco Shop Permit application reviews.
Section 3. The City Council herby approves the following fee schedule:
Permit Type
I Fee
Tobacco Shop Permit — New Application
$854.00
Tobacco Shop Permit — Renewal Application
$346.00
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 22"d day of August, 2023.
Zak Schwank, Mayor
ATTEST:
Randi Johl, City Clerk
[SEAL]
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 2023- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 22"d day of August, 2023, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
Randi Johl, City Clerk
PC RESOLUTION NO.2023-14
A RESOLUTION OF THE PLANNING COMMISSION OF
THE CITY OF TEMECULA RECOMMENDING THAT
THE CITY COUNCIL ADOPT AN ORDINANCE
ENTITLED, "AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF TEMECULA AMENDING TITLES 5, 8,
AND 17 OF THE TEMECULA MUNICIPAL CODE TO (1)
AMEND MASSAGE ESTABLISHMENT REGULATIONS,
(2) ADD DEFINITIONS FOR TOBACCO SHOP, TOBACCO
SHOP PERMIT AND UPDATE DEFINITIONS OF
TOBACCO PRODUCT AND TOBACCO
PARAPHERNALIA, (3) IMPLEMENT A TOBACCO SHOP
PERMIT PROGRAM TO INCLUDE STRUCTURAL AND
OPERATIONAL REQUIREMENTS, (4) UPDATE
TOBACCO RETAILERS LICENSE PROCESSES, (5)
AMEND REGULATIONS ON SMOKING IN HOTEL
ROOMS, (6) REMOVE TOBACCO SHOP AS A
CONDITIONALLY PERMITTED USE IN TABLE 17.08.030,
(7) IMPLEMENT TOBACCO SHOP PERMIT
REQUIREMENTS IN PLANNED DEVELOPMENT
OVERLAY ZONING DESIGNATIONS 1 AND 4, AND (8)
MAKE A FINDING THAT THIS ORDINANCE IS EXEMPT
FROM THE CALIFORNIA ENVIRONMENTAL QUALITY
ACT (CEQA) PURSUANT TO CEQA GUIDELINES
SECTION 15061 (B)(3)."
Section 1. Procedural Findings. The Planning Commission of the City of Temecula does hereby find, determine and declare that:
A. City staff identified the need to make revisions and clarifications to portions of Title 5 (Business Licenses and Regulations), Title 8 (Health and Safety), and Title 17 (Zoning) of the Temecula Municipal Code.
B. The Planning Commission, at a regular meeting, considered the proposed amendments to Title 5 (Business Licenses and Regulations), Title 8 (Health and Safety), and Title 17 (Zoning) of the Temecula Municipal Code on July 19, 2023, at a duly noticed public hearing as prescribed by law, at which time the City staff and interested persons had an opportunity to, and did testify either in support or opposition to this matter.
C. The proposed amendments to Title 5, 8, & 17 are consistent with the City of Temecula General Plan, and each element thereof.
D. At the conclusion of the Planning Commission hearing and after due consideration of the testimony, the Planning Commission recommended that the City Council adopt the Ordinance attached hereto as Exhibit "A".
E. All legal preconditions to the adoption of this Resolution have occurred.
Section 2. Further Findings. In recommending adoption of the proposed Ordinance, the Planning Commission of the City of Temecula does hereby make the following additional findings as required by Section 17.01.040 ("Relationship to General Plan") of the Temecula Municipal Code:
1. The proposed use is allowed in the land use designation in which the use is located, as shown on the land use map, or is described in the text of the general plan.
Of the 15 proposed amendments to Title 5 (Business Licenses and Regulations), Title 8 (Health and Safety), and Title 17 (Zoning) none propose any land use that is inconsistent with the Temecula General Plan. The changes to Title 17 include removing tobacco shop as a permitted use in Neighborhood Commercial Zoning District and add a note to the permitted use table in Planned Development Overlay Districts No. 1 and 4 related to tobacco shops. These changes are prohibiting land uses or imposing requirements on existing uses, rather than allowing a use where it was not previously permitted. All other proposed amendments are minor clarifications and typographical edits and do not propose any land use changes contrary to the adopted General Plan.
2. The proposed uses are in conformance with the goals, policies, programs and guidelines of the elements of the general plan.
The proposed amendments to Title 17 of the Temecula Municipal Code do not propose any land use that is inconsistent with the Temecula General Plan. The majority of the Code Amendments do not create or allow new uses where they were not previously allowed. Only the revisions to the Neighborhood Commercial (NC) Zoning district impact the use of land. The Code Amendments would remove Tobacco Shop as a permitted use in the NC Zoning district only. The remaining proposed amendments to the Temecula Municipal Code are minor clarifications and typographical edits and do not result in a contrary policy direction or indicate an inconsistency between the Temecula Municipal Code and the adopted General Plan.
3. The proposed uses are to be established and maintained in a manner which is consistent with the general plan and all applicable provisions contained therein.
The proposed amendments to Title 5, 8, and 17 of the Temecula Municipal Code do not propose any land use that is inconsistent with the Temecula General Plan. The proposed changes to massage establishments modify definitions and operational requirements, require notarized documentation for exempt massage facilities and the prohibition of pets furthers Policy 5.4 of the Economic Development Element of the Temecula General Plan, which is to "Monitor existing businesses and support small businesses and the business retention program to encourage local employment and growth of local businesses." Changes to tobacco regulations include modifying definitions, implementing an annual permit for tobacco shops to include operational requirements, and updating the number of designated smoking rooms is in compliance with Goal 3 of the Community Design Element of the Temecula General Plan which is to ensure "Preservation and enhancement
of the positive qualities of individual districts or neighborhood." All other proposed amendments are clarifications and typographical edits and do not propose any land use changes contrary to the adopted General Plan.
Section 3. Environmental Compliance. In accordance with the California Environmental Quality Act, the proposed Ordinance is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Title 14 of the California Code of Regulations, Section 15061 (b) (3) because it can be seen with certainty that there is no possibility that the Ordinance will have a significant effect on the environment. The Municipal Code amendments are minor policy changes, changes required by state law, and the imposition of regulations on existing uses and will not increase the intensity or density of any land use. The Planning Commission, therefore, recommends that the City Council of the City of Temecula adopt a Notice of Exemption for the proposed ordinance.
Section 4. Recommendation. The City of Temecula Planning Commission hereby recommends the City Council approve Planning Application No. LR23-0050, a proposed Citywide Ordinance as set forth on Exhibit "A", attached hereto, and incorporated herein by this reference.
PASSED, APPROVED AND ADOPTED by the City of Temecula Planning Commission this 19th day of July 2023.
v I Wow;
mw)
7PA PRA
Chair
ATTEST:
Luke Watson
Secretary
[SEAL]
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA }
I, Luke Watson, Secretary of the Temecula Planning Commission, do hereby certify that the forgoing PC Resolution No. 2023-14 was duly and regularly adopted by the Planning Commission of the City of Temecula at a regular meeting thereof held on the 19th day of July, 2023, by the following vote:
AYES:
4 PLANNING COMMISSIONERS:
Hagel, Solis, Turley-Trejo, Watts
NOES:
0 PLANNING COMMISSIONERS:
None
ABSTAIN:
0 PLANNING COMMISSIONERS:
None
ABSENT: 1 PLANNING COMMISSIONERS
Ruiz
.1
Luke Watson
Secretary
ORDINANCE NO.2023-
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF TEMECULA AMENDING TITLES 5, 8, AND 17 OF THE
TEMECULA MUNICIPAL CODE TO (1) AMEND
MASSAGE ESTABLISHMENT REGULATIONS, (2) ADD
DEFINITIONS FOR TOBACCO SHOP, TOBACCO SHOP
PERMIT AND UPDATE DEFINITIONS OF TOBACCO
PRODUCT AND TOBACCO PARAPHERNALIA, (3)
IMPLEMENT A TOBACCO SHOP PERMIT PROGRAM TO
INCLUDE STRUCTURAL AND OPERATIONAL
REQUIREMENTS, (4) UPDATE TOBACCO RETAILERS
LICENSE PROCESSES, (5) AMEND REGULATIONS ON
SMOKING IN HOTEL ROOMS, (6) REMOVE TOBACCO
SHOP AS A CONDITIONALLY PERMITTED USE IN
TABLE 17.08.030, (7) IMPLEMENT TOBACCO SHOP
PERMIT REQUIREMENTS IN PLANNED DEVELOPMENT
OVERLAY ZONING DESIGNATIONS 1 AND 4, AND (8)
MAKE A FINDING THAT THIS ORDINANCE IS EXEMPT
FROM THE CALIFORNIA ENVIRONMENTAL QUALITY
ACT (CEQA) PURSUANT TO CEQA GUIDELINES
SECTION 15061 (11)(3)
THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY ORDAIN AS FOLLOWS:
Section 1. Procedural Findings. The City Council of the City of Temecula does hereby find, determine and declare that:
A. City staff identified the need to make minor revisions and clarifications to portions of Title 5 (Business Licenses and Regulations), Title 8 (Health and Safety), and Title 17 (Zoning) of the Temecula Municipal Code.
B. The code amendments are being made to address operational concerns surrounding massage establishments, implement a new permit for tobacco shops to include operational standards, and remove tobacco shop as a conditionally permitted use in the neighborhood commercial zoning district. In addition, the ordinance updates the number of permitted smoking rooms allowed in hotels in accordance with changes in state law. Finally, the code amendment makes minor typographical edits to the code.