Playing by the Rules Ch. 6 Page
Chap
Other Administra
ter 6
tive and Cross- Cutting Requirements
Contents
6.1 Program Income .............................................................................................................................................6-3
6.2 Subrecipient Agreements, including Programmatic and Budget
Changes ......................................................................................................................................................................6-4
6.3 Program Monitoring......................................................................................................................................6-4
6.4 Suspension and Termination .....................................................................................................................6-5
6.5 Political Activity...............................................................................................................................................6-5
6.6 Confict of Interest..........................................................................................................................................6-5
6.7 Civil Rights and Fair Housing; Employment and Contracting
Opportunities ...........................................................................................................................................................6-6
6.8 Labor Standards ..............................................................................................................................................6-8
6.9 Environmental Requirements ....................................................................................................................6-9
6.10 Historic Preservation ..................................................................................................................................6-9
6.11 Floodplain Management ....................................................................................................................... 6-10
6.12 National Flood Insurance Program ..................................................................................................... 6-10
6.13 Relocation, Real Property Acquisition, and One-for-One Housing
Replacement .......................................................................................................................................................... 6-10
6.14 Lead-Based Paint ....................................................................................................................................... 6-11
Exercise for Chapter 6—Other Administrative and Program
Requirements Questions ................................................................................................................................... 6-13
Exercise for Chapter 6—Other Administrative and Program
Requirements Answers ...................................................................................................................................... 6-15
Playing by the Rules: CDBG Administrative Systems | Chapter 6-1
Playing by the Rules: CDBG Administrative Systems | Chapter 6-2
Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
In approving your organization’s CDBG-funded activities, your grantee has determined that your activities
are eligible and will meet one of three National Objectives (24 CFR 570.208). This requirement is the
foundation for the regulatory framework of the CDBG program in 24 CFR 570. However, specifc adminis-
trative and program requirements spelled out in Part 570 and elsewhere apply to your use of CDBG funds.
Some of these requirements apply to all CDBG-funded activities while others may or may not apply, based
on the type of activity you are undertaking.
Subpart J, “Grant Administration,” is located in 24 CFR 570.500-513. Subpart K, “Other Program
Requirements,” is comprised of 24 CFR 570.600–615. Together, they provide a guide to many
of the federal requirements related to the CDBG program that apply to both grantees and
subrecipients.
As you plan your program, be sure to familiarize yourself with these sections of the CDBG reg-
ulations. Failure to comply with applicable requirements in these areas—such as lead-based
paint hazard reduction, Davis-Bacon labor standards, or relocation—can result in substantial
disallowance of costs for your organization and possibly repayment of expended CDBG monies
with non-federal dollars. Knowing the rules ahead of time will prepare you to navigate these
requirements successfully.
This chapter addresses six of the key administrative requirements of the CDBG program. Four
of these are elements of Subpart J, “Grant Administration” (24 CFR 570.500-513) and two are
elsewhere in the CDBG regulations:
• Program Income (24 CFR 570.504).
• Subrecipient Agreements, including programmatic and budget changes (24 CFR 570.503).
• Program Monitoring (24 CFR 570.501(b), 2 CFR 200.331-332).
• Suspension and Termination (24 CFR 503(b)(6)).
• Political Activity (24 CFR 570.207(a)(3)).
• Confict of Interest (24 CFR 570.611).
Other chapters in this guide address other administrative requirements in Subpart J:
• Use of Real Property (see Chapter 4).
• Records and Reports (see Chapter 5).
• Grant Closeout (see Chapter 8).
Several Federal statutes outside the CDBG program apply to CDBG-funded activities. Most of
these are specifcally identifed in Subpart K, “Other Program Requirements.” You will often
hear these requirements referred to as “cross-cutting requirements,” because they cut across
departments to apply to all activities delivered by the Federal Government.
This chapter addresses these cross-cutting requirements:
• Civil Rights and Fair Housing (24 CFR 570.601), Employment and Contracting Opportuni-
ties (24 CFR 570.607), and Architectural Barriers and Americans with Disabilities (24 CFR
570.614).
• Labor Standards (24 CFR 570.603).
• Environmental Requirements (24 CFR 570.604).
• Historic Preservation (24 CFR 570.202(d)).
• Floodplain Management (24 CFR 55).
• National Flood Insurance Program (24 CFR 570.605).
•Relocation, Real Property Acquisition, and One-for-One Housing Replacement (24 CFR
570.606).
• Lead-based Paint (24 CFR 570.608).
This chapter provides a summary of these requirements and their applicability to the CDBG
program. The links in the sections below will help you access not only the specifc regulations,
Executive Orders, and laws which are the primary sources for these requirements, but also
HUD notices and other resources with further information on these regulations.
Playing by the Rules: CDBG Administrative Systems | Chapter 6-3
Notes
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Chapter 6: Other Administrative and Cross-Cutting Requirements
Finally, carefully review the subrecipient agreement from your grantee for any other adminis-
trative requirements that may be unique to your community or your program.
AS YOU READ THIS CHAPTER, THINK ABOUT…
1. Which of your agency’s activities may involve or be afected by any of the requirements
summarized in this chapter?
2. Whether any of these requirements might require a change in the way you currently conduct
your CDBG-assisted activities and, if so, how?
3. How you could adapt your procedures (e.g., through staf training or changes in systems) to
ensure that compliance with these requirements will not hinder fulflling the objectives of
your subrecipient agreement?
4. Will you need technical assistance to understand or implement any of these requirements?
5. Does your current subrecipient agreement adequately address the requirements summa
rized here?
6.1 Program Income
See 24 CFR 570.5041.
The term “program income” means any gross income you receive that was directly generated
from the use of CDBG funds (24 CFR 570.500(a)). See Chapter 2 of this guide for information
on how to treat program income in your fnancial management system.
Program income includes:
• Proceeds from the sale or long-term lease of real property purchased or improved with
CDBG funds.
• Proceeds from the disposition of equipment purchased with CDBG funds.
• Gross income from the use or rental of property acquired, constructed, or improved by
the grantee or subrecipient with CDBG funds, minus the costs incidental to the generation
of the income.
• Payments of principal and interest on loans made using CDBG funds.
• Proceeds from the sale of loans made with CDBG funds.
• Proceeds from the sale of obligations secured by loans made with CDBG funds.
• Interest earned on program income, pending the disposition of such program income.
• Interest earned on funds held in a lump sum drawdown account, which must be used
for the activities for which the balance is being held (see 24 CFR 570.513(c)).
• Funds collected through special assessments made against properties owned and occu-
pied by households, not of low- and moderate-income, where such assessments are used
to recover part or all of the CDBG portion of a public improvement.
Program income does not include interest earned on cash advances from the grantee or funds
held in a revolving loan fund account. Such interest must be returned to the grantee for remit-
tance to HUD.
Other tips on the treatment of program income:
• For an activity assisted partially with CDBG funds that generate income, use the percentage
that is CDBG-funded to determine the portion that is program income.
• Your subrecipient agreement should specify whether you should return program income to
the grantee or retain it to carry out CDBG activities (24 CFR 570.504(c)).
• When the subrecipient agreement specifes that you can retain and reuse the program in-
come, it will also specify how you may use it.
Note that 2 CFR 200.307 on program income does not apply to CDBG. See 24 CFR 570.502(a)(3). 1
Playing by the Rules: CDBG Administrative Systems | Chapter 6-4
Notes
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Chapter 6: Other Administrative and Cross-Cutting Requirements
• You must record receipt and expenditure of program income in your fnancial records.
• When you retain program income, you must spend it for an authorized activity before you
draw down additional grant funds from the grantee, except in the case of a revolving loan
fund.
• When you draw down program funds, you must certify that you do not have program in-
come on hand that you can use to fund the activity.
• If you deposited program income in a revolving loan fund, you must use the program income
for the revolving fund activity before drawing down additional grant funds for that activity.
• When your subrecipient agreement expires, you must return any program income on hand
or subsequently received, back to your grantee. See “Smart Management of CDBG Program
Income.”
6.2 Subrecipient Agreements, including Programmatic and
Budget Changes
The relationship between your organization and Your subrecipient agreement from the HUDyour grantee is defned by your subrecipient agree-grantee will specify the process for request ment. This agreement will include key requirements ing a change in your program or budget. for the performance of your CDBG project or pro-
gram; certain provisions that HUD requires are cited
in 24 CFR 570.503.
The subrecipient agreement and the grantee’s written policies must specify when prior ap-
proval from the grantee is necessary for a programmatic or budget change relative to the
subrecipient’s CDBG-funded activities. For example, you will usually need prior approval and/
or a written amendment to the agreement for any of the following changes:
• A revision to the scope or objectives of your CDBG activities, including purpose, location, or
benefciaries.
• Extending the term of your program or project.
• Changes in key personnel when specifed in the application package or grant award.
• In non-construction projects, when contracting out a portion of the activity to a third party,
unless specifed in the application.
• A request for an increase in the amount of CDBG funds awarded.
• Cumulative transfers among direct cost categories or among separately budgeted activities
or projects which exceed 10 percent (unless this requirement is waived by the grantee).
Your grantee may allow pre-award costs in certain cases. For allowability of pre-award costs,
contact your grantee. See 2 CFR 200.458 and 24 CFR 570.200(h). Such expenditures require
prior approval, per 2 CFR 200.407(u).
6.3 Program Monitoring
See 24 CFR 570.501(b) and 2 CFR 200.331-332.
Your grantee is responsible for ensuring that you use the CDBG funds under its oversight in
accordance with all program requirements, and for determining the adequacy of your perfor-
mance.
Accordingly, your grantee will review the documentation you submit, make site visits, and
review program fles as necessary to fulfll these responsibilities. Chapter 5: Recordkeeping
addresses the documents in your fles that you can expect your grantee to review during a
monitoring visit in greater detail.
Your grantee may visit your project sites or program operations and speak with benefciaries
and program participants.
Playing by the Rules: CDBG Administrative Systems | Chapter 6-5
Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
Your grantee will issue a report with their observations after its monitoring. The report may
include “fndings” (areas where your grantee will require corrective action) and/or “concerns”
(areas for improvement identifed during their monitoring).
HUD has developed a Community Planning and Development (CPD) Monitoring Handbook for
its staf to use when monitoring a grantee. The CPD Monitoring Handbook addresses the entire
range of CPD programs (e.g., HOME Investment Partnerships Program [HOME], Emergency
Solutions Grants [ESG], etc.). Since you are implementing your CDBG-funded program or proj-
ect on behalf of your grantee, you can expect your grantee to ask you many of these same
questions during your monitoring; the CPD Monitoring Handbook is a useful guide on what to
expect when your grantee monitors your organization. Chapter 3 of the handbook addresses
the CDBG Entitlement Program.
6.4 Suspension and Termination
See 24 CFR 570.503(b)(6).
When problems arise in the performance of a subrecipient, the grantee is responsible for tak-
ing appropriate actions for correcting these defciencies. Such measures typically include spec-
ifying corrective actions to be taken by your organization and/or disallowing incurred costs.
Your grantee has the authority to suspend or terminate CDBG activities carried out by its
subrecipients (24 CFR 570.501(b)). Consistent with 24 CFR 570.503(b)(6), your agreement must
specify that suspension or termination may occur if your organization materially fails to comply
with any term of the CDBG award and that the agreement may also be terminated for conve-
nience (also see 2 CFR 200.339-343 and 2 CFR 200 Appendix II).
Debarment is an action that may be undertaken for a variety of reasons, including certain
convictions or civil judgments, serious violations of public agreements, and causes of a serious
or compelling nature that afect your present responsibility. 2 CFR 180 includes further infor-
mation on procedures for government-wide suspension and debarment.
6.5 Political Activity
See 24 CFR 570.207(a)(3).
The regulations prohibit you from using CDBG funds to fnance the use of facilities or equip-
ment for political purposes or to engage in other partisan political activities such as candidate
forums, voter transportation, or voter registration.
However, a facility originally assisted with CDBG funds may be used on an incidental basis to
hold political meetings, candidate forums, or voter registration, provided that all parties and
organizations have access to the facility on an equal basis and are assessed equal rent or use
charges if any.
6.6 Conflict of Interest
See 24 CFR 570.611 and 2 CFR 200.112.
There are two sets of confict of interest provisions applicable to activities carried out with CDBG
funding. The frst set, applicable to your procurement of goods and services, is the procure-
ment regulation located in 2 CFR 200.318. The second set of provisions are the CDBG Confict of
Interest requirements at 24 CFR 570.611 that address situations regarding the administration
and carrying out of CDBG-assisted activities.
For procurement activities, the subrecipient must maintain written standards of conduct gov-
erning the performance of its employees engaged in the award and administration of contracts
(2 CFR 200.318(c)(1)). At a minimum, these standards must:
• Require that no employee, ofcer, or agent may participate in the selection, award, or
Playing by the Rules: CDBG Administrative Systems | Chapter 6-6
Notes
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Chapter 6: Other Administrative and Cross-Cutting Requirements
administration of a contract supported by federal funds if a real or apparent confict would
be involved. Such a confict would arise when any of the following parties has a fnancial or
other interest in the frm selected for an award:
• An employee, ofcer, or agent of your organization.
• Any immediate family member of an employee, ofcer, or agent.
• A partner of an employee, agent, or ofcer.
• An organization that employs or is about to employ any of the persons in the preceding
section.
• Require that employees, agents, and ofcers from your organization neither solicit nor ac-
cept gratuities, favors, or anything of value from contractors or parties to sub-agreements.
However, your organization may set standards for situations in which the fnancial interest
is not substantial, or the gift is an unsolicited item of nominal value.
• Provide for disciplinary actions to be applied for any violations of such standards by employ-
ees, agents, or ofcers of your organization.
For all other CDBG-assisted activities, the general standard is that no employee, agent, or of-
fcer of your organization with decision-making responsibility for CDBG funds and activities is
allowed to beneft from CDBG activities or have a fnancial interest in any agreement regarding
those activities or in the proceeds of the activities (24 CFR 570.611(b)). Specifc provisions in-
clude that:
• This requirement applies to any person who is an employee, agent, consultant, ofcer, or
elected or appointed ofcial of the grantee, a designated public agency, or a subrecipient,
and to their immediate family members and business partner(s).
• The requirement applies for such persons during their tenure and for a period of one year
after leaving the grantee or the subrecipient organization.
• Upon written request, exceptions may be granted by HUD on a case-by-case basis, after
consideration of the cumulative efect of various factors listed in 24 CFR 570.611(d), and
only with: (a) full disclosure of the potential confict and (b) a legal opinion of the grantee’s
attorney that there would be no violation of state or local laws in granting the exception.
For more information, see HUD’s “Seven Keys to Handling Conficts of Interest,” which provides
additional guidance in such areas as internal procedures to avoid conficts, staf training, and
implementing regulations.
6.7 Civil Rights and Fair Housing; Employment and
Contracting Opportunities
See 24 CFR 570.601-602 and 24 CFR 570.607.
Your subrecipient agreement will require you to administer your CDBG funds in compliance
with the following federal laws and Executive Orders and their implementing regulations:
• Title VI of the Civil Rights Act of 1964 (Public Law 88-352 implemented in 24 CFR Part 1):
This law states that no person shall, on the grounds of race, color, or national origin, be
excluded from participation in, be denied the benefts of, or be subjected to discrimination
under any program or activity receiving federal fnancial assistance.
• Fair Housing Act, Title VIII of the Civil
Rights Act of 1968: The Fair Housing Act prohib-TIP: For more information on strategies to
promote Fair Housing and Non-Discrimina its discrimination in housing practices on the basis tion, see HUD’s CDBG Cross-Cutting Issuesof race, color, religion, sex, and national origin. The Toolkit, Module 5. Fair Housing Act was amended in 1988 to protect
families with children and persons with disabilities
from discrimination in the sale or rental of housing. The Fair Housing Act also establishes requirements for
the design and construction of new rental or for-sale multi-family housing to increase accessibility for per-
sons with disabilities (24 CFR 570.614).
Playing by the Rules: CDBG Administrative Systems | Chapter 6-7
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Chapter 6: Other Administrative and Cross-Cutting Requirements
• Executive Order 11063, as amended by Executive Order 12259 (implemented in 24 CFR
107): This order and its implementing regulations require HUD to take all actions necessary
to prevent discrimination because of race, color, religion, sex, or national origin in the use,
occupancy, sale, lease, rental, or other disposition of residential property assisted with fed-
eral funds.
• Section 104(b) of Title I of the Housing and Community Development Act of 1974 (§5304), as amended: This law provides that any grant under Section 106 shall be made
only if the grantee certifes to the satisfaction of the Secretary of HUD that the grantee will,
among other things, afrmatively further fair housing.
• Section 109 of Title I of the Housing and Community Development Act of 1974 (§5309), as amended (42 U.S.C. 5301 et. seq., particularly 42 U.S.C. 6101 et. seq. and 29 U.S.C. 794):
This law mandates that no person on the grounds of race, color, national origin, sex, or reli-
gion shall be excluded from participation in, denied the benefts of, or otherwise be subject
to discrimination under any activity funded in whole or part with CDBG funds.
• Section 3 of the Housing and Community Development Act of 1968 (§1701u) (12 U.S.C.
1701u): This section implemented in 24 CFR 75 requires that, to the greatest extent feasible,
you must:
• Ensure that low- and very low-income persons who live in the metropolitan area of the
CDBG project receive opportunities for training and employment resulting from hous-
ing rehabilitation (including reduction and abatement of lead-based paint hazards),
housing construction, or other public construction projects. Where feasible, low- and
very low-income residents within the project’s service area or neighborhood, and low-
and very low-income participants in other HUD programs, should receive priority.
• Award contracts for work on housing rehabilitation (including reduction and abate-
ment of lead-based paint hazards), housing construction, or other public construction
projects to businesses that hire low- and very low-income persons residing within the
metropolitan area in which the CDBG-funded project is located; where feasible, give
priority to businesses that hire low- and very low-income residents of the service area
or neighborhoods where the project is located, and to low- and very low-income partic-
ipants in other HUD programs.
For more information on Section 3, see also Chapter 3, Section 3.4 of this Guide, “Use of
Local Businesses, Contracting with Small, Minority, and/or Women-Owned Businesses.”
• Section 504 of the Rehabilitation Act of 1973, as amended. This section specifes that no
qualifed individual shall, solely because of his or her disability, be excluded from participa-
tion (including employment), denied program benefts, or subjected to discrimination under
any program or activity receiving federal assistance. 24 CFR 8 requires that your programs
are accessible to and usable by persons with disabilities. Part 8 also prohibits you from
employment discrimination based upon disability.
• The Americans with Disabilities Act
(ADA) of 1990: This law prohibits state TIP: For more resources on these regula
and local governments, public accommo-tions, see CPD Notice 05-10, “Accessibility
dations, and commercial facilities from for Persons with Disabilities to Non-Housing
Programs Funded by Community Develop employment discrimination. The ADA also ment Block Grant Funds—Section 504 of therequires that facilities that are newly con-Rehabilitation Act of 1973, the Americans structed or altered, by or for use by a pub-With Disabilities Act, and the Architectural lic entity, be designed and constructed so Barriers Act.” that the facility is readily accessible to and
usable by persons with disabilities. The Act
defnes the range of conditions that qualify as disabilities and the reasonable accommoda-
tions that must be made to assure equality of opportunity, full participation, independent
living, and economic self-sufciency for persons with disabilities.
• The Age Discrimination Act of 1975, as amended: This law provides that no person shall
be excluded from participation, denied program benefts, or subjected to discrimination on
the basis of age under any program or activity receiving federal assistance.
Playing by the Rules: CDBG Administrative Systems | Chapter 6-8
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Chapter 6: Other Administrative and Cross-Cutting Requirements
• Executive Order 11246 (as amended by Executive Orders 11375 and 12086)—Equal Op-portunity Under HUD Contracts and HUD-Assisted Construction Contracts: This order
requires that you, your contractors, and their subcontractors, not discriminate against any
employee or applicant for employment because of race, color, religion, sex, or national or-
igin.
• The Architectural Barriers Act of 1968: The Architectural Barriers Act (ABA) of 1968 (42 U.S.C.
151-4157) requires that certain buildings fnanced with federal funds be designed, constructed, or
altered to ensure accessibility for persons with physical disabilities. The ABA covers any building or fa-
cility receiving federal funds, except privately-owned residential structures. Any covered buildings and
facilities designed, constructed, or altered with CDBG funds are subject to the ABA and must comply
with the Uniform Federal Accessibility Standards.
• Equal Access in Accordance with an Individual’s Gender Identity in Community Plan-ning and Development Programs. Through this fnal rule, HUD ensures equal access to
individuals in accordance with their gender identity in programs and shelters funded by
HUD's Ofce of Community Planning and Development (CPD). The fnal rule ensures equal
access to CPD-funded facilities, benefts, accommodations, and services in accordance with
the individuals’ gender identity and their family.
6.8 Labor Standards
See 24 CFR 570.603 Labor Standards.
You must pay “prevailing wages” to all laborers and mechanics employed by contractors or
subcontractors on construction work in excess of $2,000 and using CDBG funds. These pre-
vailing wages are determined in accordance with the Davis-Bacon Act as amended (40 U.S.C.
276a–276a-5). The Contract Work Hours and Safety Standards Act (40 U.S.C. 327–333) also
applies to such activities.
These labor standards apply to the rehabilitation of residential property only if the property
contains at least eight units.
You should consult closely with your grantee as you plan con-
struction or rehabilitation projects to ensure that you comply TIP: For more information on re with all applicable labor standards; note that the applicable quirements regarding labor stanprevailing wage may be afected by building type, number of dards, see HUD’s CDBG Cross-Cut stories, etc. Pay particular attention to the technical complexi-ting Issues Toolkit, Module 3. ties in:
• Determining whether a project is subject to Davis-Bacon
requirements.
• Obtaining the appropriate prevailing wage rates and inserting the wage determination and
the appropriate provisions in the contract.
• Requesting additional wage rate classifcations that may not appear on a wage decision.
• Conducting an adequate pre-construction conference.
• Monitoring the worksite and contractor/subcontractor payrolls to document compliance
with these requirements. Include on-site employee wage interviews.
For more information:
• “Making Davis-Bacon Work: A Practical Guide for State, Indian Tribes, and Local Agencies.” A
guide to prevailing wage requirements for HUD-funded construction projects.
• “Making Davis-Bacon Work: A Contractor’s Guide to Prevailing Wage Requirements for Fed-
erally-Assisted Construction Projects.”
• Department of Labor Regulations, 29 CFR, Subtitle A, Parts 1, 3, 5, 6 & 7. A guide to the
predetermination of wage rates.
Playing by the Rules: CDBG Administrative Systems | Chapter 6-9
Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
6.9 Environmental Requirements
See 24 CFR 570.604.
In their use of CDBG funds, grantees are required to assume responsibility for environmental
review and decision-making under the National Environmental Policy Act of 1969 (NEPA) and
other related provisions of law, generally found in HUD regulations in 24 CFR 58. The CDBG reg-
ulations explicitly prohibit you, as a subrecipient, from assuming the grantee’s environmental
responsibilities (see 24 CFR 570.503(b)(5)(i)).
Neither you nor any other party may commit funds to a CDBG-funded project, including incur-
ring project costs, until:
• Your grantee completes the appropriate environmental review and public notifcation pro-
cess.
• HUD approves a certifcation of compliance (Environmental Certifcation) with environmen-
tal laws and Request for Release of Funds from environmental conditions.
Some CDBG-funded activities, classifed as “exempt,” are not
subject to this restriction. However, before any party involved
with the project can incur costs, the grantee must frst make a
formal determination that the activities are, in fact, exempt. A
list of activities that are exempt from an environmental review
is found in 24 CFR 58.34.
For activities that are not exempt, your grantee will determine the level of environmental
review and advise you of specifc procedures. Close communication with your grantee is im-
portant during this process. You will be anxious to start your project, but actions that you may
be inclined to undertake prior to starting your project may be deemed to be “choice-limiting
actions.” Such actions can negate the environmental review process and render the entire ac-
tivity ineligible for CDBG funds. You may not undertake any choice-limiting actions prior to the
notices, publications, waiting periods, and determinations that 24 CFR 58 requires. The HUD
Exchange website includes several environmental review training materials.
TIP: For help in understanding the
environmental review process, see
HUD’s CDBG Cross-Cutting Issues
Toolkit, Module 2.
6.10 Historic Preservation
See 36 CFR 800 Protection of Historic Properties.
As a CDBG subrecipient, you are responsible for compliance with the Historic Preservation Act
and related laws and Executive Orders in your CDBG-funded activities. Before committing to
any physical improvement, alterations, or demolition project, you should confrm with your
grantee that you have complied.
Prior to undertaking a project, your grantee will determine whether the regulations of Sec-
tion 106 of the National Historic Preservation Act may apply to the property. This may involve
consultation with your State Historic Preservation Ofcer (SHPO) to determine if the property
either:
• Is or could be declared a historic property.
• Is located in a historic district or an area that could be declared a historic district.
If historic properties could be adversely afected, an agreement must be reached on appropri-
ate mitigating measures with all parties identifed in 36 CFR 800. For further guidance, see the
HUD Exchange for historic preservation resources.
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Chapter 6: Other Administrative and Cross-Cutting Requirements
6.11 Floodplain Management
For projects involving new construction or substantial improvement of existing buildings, you
should select sites located outside of special food hazard areas. Your organization should
“avoid direct or indirect support of foodplain development wherever there is a practicable
alternative” (24 CFR 55).
6.12 National Flood Insurance Program
See 24 CFR 570.605—National Flood Insurance Program and 44 CFR 59-79—Insurance and Hazard Mitigation.
As noted above, food-prone areas should generally be avoided by CDBG-funded projects.
However, if the successful implementation of your program requires that you conduct a project
in an area where your community has had notice for more than a year that the area has been
identifed by the Federal Emergency Management Agency (FEMA) as having special food haz-
ards, CDBG funds cannot be spent for acquisition or construction purposes in the area unless
the community is participating in the National Flood Insurance Program and such insurance
has been purchased for the properties in question.
Note that federal assistance may not be provided to a person who had previously received
federal food disaster assistance conditioned on obtaining and maintaining food insurance if
that person failed to obtain and maintain such insurance (24 CFR 58.6(b)).
HUD provides resources on food insurance on the HUD Exchange including:
• Flood Insurance: Compliance and documentation requirements for HUD-funded projects.
• Notice CPD-17-13: “Notice for Interpreting the Limits of the Floodway for Linear Infrastruc-
ture Projects Complying with HUD Floodplain Management Regulations, 24 CFR Part 55.”
Part 55 prohibits the use of HUD fnancial assistance for any action "located in a foodway."
The purpose of this Notice is to defne when linear infrastructure activities are considered
to be located in a foodway under 24 CFR Part 55.
6.13 Relocation, Real Property Acquisition, and One-for-
One Housing Replacement
See 24 CFR 570.606 (b) and (c) Displacement, relocation, acquisition, and replacement of housing.
You must comply with both:
• The Uniform Relocation Assistance (URA) and Real Property Acquisition Policies Act of 1970,
as amended, 24 CFR 570.606(b), and 49 CFR 24.
• The requirements of 24 CFR 570.606(c) and 24 CFR 42, Subpart C governing the Residential
Antidisplacement and Relocation Assistance Plan (RARAP) under Section 104(d) of the HCD Act.
Under the URA and your grantee’s RARAP, your organiza-
tion must provide relocation assistance to persons (fami-TIP: For additional information on URA,
lies, individuals, businesses, non-proft organizations, and please see HUD’s CDBG Cross-Cutting
farms) displaced as a direct result of acquisition, rehabili-Issues Toolkit, Module 4 and URA the
HUD Way training. tation, demolition, or conversion for a CDBG-assisted proj-
ect. All property occupants must be issued certain notices
on a timely basis; failure to issue timely notices may result
in substantial additional cost to your organization.
The RARAP also requires the one-for-one replacement of any occupied or occupiable low-/
moderate-income housing that is demolished or converted to another use in connection with
a CDBG-assisted project. Finally, the RARAP requires the identifcation of the steps that will be
taken to minimize displacement.
Real property acquisition requirements are described in 49 CFR 24, Subpart B.
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Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
6.14 Lead-Based Paint
See 24 CFR 570.608 and 24 CFR 35.
CDBG-funded activities, such as the acquisition, construction, or rehabilitation of residential
structures, may not use lead-based paint. However, until prohibited in 1978, lead-based paint
was widespread, and its presence in older homes presents a continuing public health hazard.
As a result, specifc requirements apply to the use of CDBG funds for the rehabilitation of
a residential property constructed before 1978. This section provides basic information on
lead-based paint requirements. Consult the applicable portions of 24 CFR 35 and contact your
grantee or the HUD feld ofce for greater detail if you are carrying out an activity subject to
these requirements.
At a minimum, for dwellings built before 1978, you are required to:
• Notify a purchaser or lessee of the presence of any known lead-based paint and/or lead-
based paint hazards.
• Test surfaces to be disturbed or removed during rehabilitation for the presence of lead-
based paint or presume the presence of lead-based paint.
• Notify the occupants of the results within 15 days of when the evaluation report is received
or the presumption is made.
• Provide each of these occupied dwelling units with the Environmental Protection Agency
(EPA)-approved lead hazard information pamphlet Protect Your Family From Lead in Your
Home.
• Reduce lead hazards as required by the applicable subparts of 24 CFR 35.
• Perform clearance testing, including dust testing, before re-occupancy after all but minimal
(“de minimis”) amounts of paint disturbances (24 CFR 35.1350(d)) describes de minimis lead
paint levels).
The CDBG regulation at 24 CFR 570.608 states that the following subparts of 24 CFR 35 apply to
the use of CDBG funds in pre-1978 housing:
• A—Disclosure of Known Lead-Based Paint and/or Lead-Based Paint Hazards Upon Sale or
Lease of Residential Property.
• B—General Lead-Based Paint Requirements and Defnitions for All Programs.
• J—Rehabilitation.
• K—Acquisition, Leasing, Support Services, or Operation.
• R—Methods and Standards for Lead-Based Paint Hazard Evaluation and Hazard Reduction
Activities.
24 CFR 35, Subpart A is called the Lead Disclosure Rule; and Subparts B through R, are called
the Lead Safe Housing Rule.
Certain properties are exempt from the requirements of the Lead Safe Housing Rule. They
include:
• Housing built on or after January 1, 1978.
• Zero-bedroom dwellings, including efciency apartments, single-room occupancy housing,
dormitories, or military barracks.
• Housing exclusively for the elderly or people with disabilities unless a child under age 6
resides or is expected to reside there.
• Units that are declared free of lead-based paint by a certifed lead-based paint inspector.
• Units where all lead-based paint has been removed.
• Unoccupied housing that will remain vacant until it is demolished.
• Non-residential portions of mixed-use buildings, except that spaces serving both residential
and non-residential uses are covered by the rule.
• Units that are to be rehabilitated without disturbing a painted surface.
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Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
• Units that are subject to emergency repair action needed to safeguard against imminent
danger to human life, health, or safety, or to protect the property from further structural
damage.
For properties covered by the Lead Safe Housing Rule, the lead-based paint requirements
for rehabilitation depend on the amount of federal rehabilitation assistance provided to the
unit. The amount of federal rehabilitation assistance is the average per-unit amount of federal
funds for the hard costs of rehabilitation, excluding lead-based paint hazard evaluation and
hazard reduction activities. In calculating this assistance amount, you must consider both the
total amount of federal assistance to be used (including CDBG and other funds) and the hard
costs of rehabilitation (including federal and non-federal funds). Whenever these two amounts
are not the same, the smaller of the two determines the type and level of lead-based paint
remediation. For a structure with more than one dwelling unit, apply the threshold against the
average amount of federal assistance per unit or the average hard cost of rehabilitation per
unit, whichever is lower.
The following is a general overview of the requirements based on dollar thresholds per year
per assisted housing unit:
• Up to and including $5,000—Provide the occupants with both notice of the presence or
presumption of lead hazards, provide EPA pamphlet “Protect Your Family From Lead In
Your Home,” test paint on surfaces to be disturbed or presume the presence of lead-based
paint, incorporate safe work practices as part of rehabilitation (except for minimal amounts
of paint disturbances), repair any paint that is disturbed, and provide clearance after the
work and before re-occupancy.
• $5,001–$25,000—Provide the occupants with both notice of the presence or presumption
of lead hazards, provide EPA pamphlet “Protect Your Family From Lead In Your Home,” test
paint or presume the presence of lead-based paint, conduct risk assessment to identify
lead-based paint hazards, incorporate interim control or standard treatment of lead-based
paint hazards using safe work practices, and provide clearance after the work and before
occupancy.
• Over $25,000—Provide the occupants with both notice of the presence or presumption of
lead hazards, provide EPA pamphlet “Protect Your Family From Lead In Your Home,” test
paint or presume the presence of lead-based painter, conduct risk assessment, abate all
lead-based paint hazards using safe work practices, and provide clearance after the work
and before occupancy.
• Minimal (“de minimis”) amounts—Safe work practices and clearance are not required
when maintenance or hazard reduction activities do not disturb painted surfaces that total
more than 20 square feet on exterior surfaces, two square feet in any one interior room or
space, or 10 percent of the total surface area on an interior or exterior type of component
with a small surface area (e.g., windowsills, baseboards, and trim); see 24 CFR 35.1350(d).
• Pamphlet—You can download the EPA’s pamphlet Protect Your Family From Lead in Your
Home in several languages and formats. Single paper copies can be obtained from the Na-
tional Lead Information Clearinghouse at 1-800-424-LEAD. Persons with hearing or speech
impediments may access this telephone number via TTY by calling the toll-free Federal In-
formation Relay Service at 1-800-877-8339.
HUD provides helpful resource materials in:
• Basically CDBG, Chapter 17, Lead-Based Paint.
• Lead Safe Housing, (formerly called Making it Work), HUD’s training course on lead-paint
hazard reduction.
• Guidelines for the Evaluation and Control of Lead-Based Paint Hazards in Housing, ofering
helpful advice on renovations in older housing, lead-based paint inspections, and risk as-
sessments, and where to go for help.
Playing by the Rules: CDBG Administrative Systems | Chapter 6-13
Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
Exercise for Chapter 6—Other Administrative and Program
Requirements Questions
Circle the correct answer.
1. You must use available program income before you request additional grant funds from
the grantee.
TRUE FALSE
2. You must use program income for the same CDBG-funded activity that generated it.
TRUE FALSE
3. Amendments to the subrecipient agreement are necessary only if the amount of the CDBG
funding or the period in which it will be available is to be changed.
TRUE FALSE
4. Regardless of the National Objective being addressed by a CDBG-funded public construc-
tion activity, you must ensure that to the greatest extent feasible, jobs created by the
activity are made available to local low- and moderate-income persons.
TRUE FALSE
5. The Davis-Bacon “prevailing wage” standards apply to all CDBG-funded construction or
rehabilitation projects.
TRUE FALSE
6. You are required to perform an environmental review before incurring any program ex-
penses in connection with a CDBG-funded activity.
TRUE FALSE
7. In areas identifed by FEMA as having special food hazards, the National Flood Insurance
requirements apply only to CDBG-funded new construction projects.
TRUE FALSE
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Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
8. If you demolish any low-/moderate-income dwelling units as a result of a CDBG-funded
project, the “one-for-one replacement” rule applies only if the unit was occupied at the
time that the CDBG project was initiated.
TRUE FALSE
9. If you fnd lead-based paint in a structure to be rehabilitated that has historic signifcance,
the lead-based paint abatement requirements take precedence over the historic preser-
vation requirements.
TRUE FALSE
10. If a contractor who sits on the board of directors of a nonproft subrecipient ofers to
donate his time to perform rehabilitation on the subrecipient’s homeless shelter, there is
no confict of interest if the contractor is reimbursed only for the cost of materials.
TRUE FALSE
11. A grantee may perform on-site monitoring only at a time convenient to your organization
and, during that monitoring, the grantee does not have a right to inspect individual client
fles.
TRUE FALSE
The answers are on the next page.
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Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
Exercise for Chapter 6—Other Administrative and Program
Requirements Answers
1. TRUE. According to 24 CFR 570.504(b)(2), you must use program income on hand before
drawing down additional grant funds, except in the instance of program income in a re-
volving fund. In this case, you must use the program income for the activity for which
the revolving fund was established before drawing down additional funds for that same
activity.
2. FALSE. The subrecipient agreement must specify whether your organization will be al-
lowed to retain program income (24 CFR 570.504(c)). The agreement should also specify
the CDBG activities for which this program income may be used, which do not have to
be the same activities that generated it. For example, the agreement could specify that
program income generated from repayment of economic development loans to for-proft
businesses is to be used subsequently for housing rehabilitation loans. On the other hand,
the grantee could authorize your organization to keep the income in a revolving fund, in
which case it would have to be used for making other economic development loans.
3. FALSE. There are a variety of circumstances under which a formal amendment to the
agreement should be executed. For example, a formal amendment should be made if
additional activities are added to the scope of work, funds are substantially re-budget-
ed among activities, or the performance objectives for a particular activity are modifed.
Written amendments serve to protect both the grantee and your organization by making
explicit the current expectations and legal responsibilities of each party to the agreement.
4. TRUE. A requirement of Section 3 of the Housing and Community Development Act of
1974, as amended, states both HUD grantees and their subrecipients must make every
reasonable efort to ensure that such low- and moderate-income persons in the local area
beneft from employment opportunities created by CDBG-funded projects.
5. FALSE. In general, the Davis-Bacon “prevailing wage” standards apply only to construction
contracts in excess of $2,000 for construction work fnanced in whole or in part with CDBG
assistance. For rehabilitation or new construction of residential properties, Davis-Bacon
requirements apply only to projects of eight or more units.
6. FALSE. Although you may not incur program expenses for a CDBG project before the
receipt of environmental clearance, the grantee has the responsibility of completing the
environmental review, not the subrecipient.
7. FALSE. The National Flood Insurance Program requirements apply to any CDBG-funded
acquisition or construction project (including rehabilitation) in a community that has had
notice from FEMA for more than a year that the project area has special food hazards.
8. FALSE. The “one-for-one replacement” requirement applies if the low-/moderate-income
unit had been occupiable and not just if it was actually occupied.
9. FALSE. Both the lead-based paint abatement and the historic preservation requirements
must be satisfed. If you cannot comply with both sets of requirements with the available
funding, then you may not assist the unit.
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Notes
Chapter 6: Other Administrative and Cross-Cutting Requirements
10. FALSE. Even if the contractor receives reimbursement only for materials “at cost,” the
contractor will be considered to have a “fnancial interest” and therefore a confict would
exist. However, the grantee could request that HUD provide an exception in accordance
with 24 CFR 570.611(d). In this type of instance, HUD may determine that the appearance
of a confict is avoided because the contractor’s interest does not include payment for his
or her services.
11. FALSE. In its eforts to fulfll its oversight responsibilities, a grantee has broad discretion
in scheduling on-site visits and examining any program records that it deems necessary
to monitor for compliance with CDBG requirements. However, it is good practice for your
grantee to cooperate with your organization when scheduling such a visit.