97-5 Resolution No. 97-5
RESOLUTION
AUTHORIZING EXECUTION OF A SUBRECIPIENT AGREEMENT WITH
THE CHANNING YMCA
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS, that Robert O. Malm, Interim City Manager, and
Dolonna Mecum, City Clerk, be and are hereby authorized and
directed to execute a Subrecipient Agreement on behalf of the
City of Elgin with the Channing YMCA for building
rehabilitation, a copy of which is attached hereto and made a
part hereof by reference.
s/ Kevin Kelly
Kevin Kelly, Mayor
Presented: January 8, 1997
Adopted: January 8, 1997
Omnibus Vote: Yeas 7 Nays 0
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
,0 oFE4�
�ia Agenda Item No.
— City of Elgin
December 11, 1996
TO: Mayor and Members of the City Council
FROM: Robert 0. Maim, Interim City Manager
SUBJECT: Subrecipient Agreement with the Channing YMCA
PURPOSE
The purpose of this memorandum is to provide the Mayor and
members of the City Council with information to consider a
subrecipient agreement with the Channing YMCA.
BACKGROUND
The 1996 Community Development Block Grant (CDBG) Program
provided funds to the Channing YMCA (located at 111 North
eok Channing Street) for building rehabilitation work. The
attached subrecipient agreement provides $300,000 for
architectural/engineering fees and building rehabilitation
work (principally mechanical systems replacements and
repairs) . The attached agreement has been reviewed by the
Legal Department and the Channing YMCA.
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
Channing YMCA, Patrick Nelson - Executive Director.
FINANCIAL IMPACT
The total amount of dollars set aside in CDBG funds for the
Channing YMCA project is $300,000. Account Numbers
230-0000-791.30-99 and 230-0000-791.93-36, and project number
154201 will be charged.
LEGAL IMPACT
None.
ALTERNATIVES
A subrecipient agreement is required by federal regulation
when $25,000 or more in Community Development Block Grant
funds is provided to a private not for profit organization.
y .
Subrecipient Agreement with Channing YMCA
December 11, 1996
Page 2
RECOMMENDATION
It is recommended that the Mayor and members of the City
Council approve the attached subrecipient agreement. If
approved, a resolution authorizing execution of the agreement
will be prepared for the January 8, 1997 regular meeting of
the City Council.
Respectfully submitted,
.Q.
Roger K. Dahlstrom
Director of Planning
Monica Bates
Director of Parks and
Recreation
Ro ert 0. Malm
Interim City Manager
PAA/pa
r
SUBRECIPIENT AGREEMENT
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
CHANNING YMCA
THIS AGREEMENT is made and entered into this /0 day of
,���,,. , 1997, by and between the CHANNING YMCA, an Illinois
n• -for-profit organization, (hereinafter referred to as the
"Subrecip ent" ) and the CITY OF ELGIN, Illinois, a municipal
corporation, (hereinafter referred to as the "Grantee" ) .
WHEREAS, the Grantee has applied for and received funds from
the United States Government pursuant to Title I of the Housing
and Community Development Act of 1974, Public Law 93-383; and
WHEREAS, the Subrecipient operates a facility for the
physical, mental and social well-being of area residents through
it' s programs, services, classes and events located at 111 North
Channing Street in Elgin, Illinois (hereinafter referred to as
"Facility" ) ; and
WHEREAS, the Subrecipient' s Facility is in need of repair
from deferred maintenance to the Facility; and
WHEREAS, the Subrecipient lacks the capital to undertake all
needed repairs to the Facility; and
WHEREAS, the Grantee has determined it to be in its best
interests to enter into this agreement with the Subrecipient to
assist the Subrecipient in repairing the Facility.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows :
I . SCOPE OF SERVICE
The Subrecipient and Grantee shall develop specifications
for building rehabilitation work to be accomplished at the
Facility. The specifications developed shall be reviewed and
approved by both parties hereto. Bids on the specified work
shall be solicited by Grantee. The completed rehabilitation work
shall be approved by the Subrecipient, in writing, prior to
payment by Grantee . The Subrecipient shall not unreasonably
withhold such approval.
The Subrecipient shall provide semi-annual reports to the
Grantee documenting the services and programs provided at the
Facility. Said reports are to include overall Facility revenues
and expenditures in order for the Subrecipient to maintain
eligibility for the CDBG funds provided for herein. Failure to
provide said reports shall require the Subrecipient to reimburse
the CDBG Program or Grantee for funds expended for the
rehabilitation work to the YMCA of Elgin facility. All
documentation shall be available for inspection by Grantee and
representatives of the U.S . Department of Housing & Urban
Development.
Changes in the scope of services, budget, or method of
compensation contained in this Agreement, unless otherwise noted,
may only be made through a written amendment to this Agreement,
executed by the Subrecipient and Grantee .
II . PERFORMANCE MONITORING
The Grantee shall monitor, at a minimum, on an annual basis
the performance of the Subrecipient regarding the goals and
performance standards contained herein. Substandard performance
as determined by the Grantee shall constitute a material breach
of this agreement. If action to correct such substandard
performance is not taken by the Subrecipient within 30 days after
being notified by the Grantee, the Grantee may terminate this
agreement, and may pursue any remedies provided herein or by law.
III. TIME OF PERFORMANCE
The useful life of the building improvements is estimated to
be ten ( 10) years . Based upon life expectancy, the use of said
improvements shall be reported on by the Subrecipient and
monitored by the Grantee for a ten year period from the date of
this agreement. Purchase of all building rehabilitation work
shall be completed within twelve ( 12 ) months from the date of
execution of this agreement.
IV. PAYMENT
It is expressly agreed and understood that the total amount
of CDBG funding to be provided for the Channing YMCA building
rehabilitation work under this agreement shall not exceed
$300, 000 . The Grantee shall provide payment to architects,
engineers, vendors and contractors after work completion and upon
approval of the rehabilitation work by the Subrecipient as
provided herein.
Payments may be contingent upon certification of the
Subrecipient ' s financial management system in accordance with the
standards specified in OMB Circular A-110, a copy of which is
attached hereto and made a part hereof as Exhibit "A" .
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V. NOTICES
Communication and notices shall be directed to the following
representatives :
City of Elgin YWCA of Elgin
Pat Andrews, Senior Planner Pat Nelson, Director
150 Dexter Court 111 N. Channing St.
Elgin, IL 60120 Elgin, IL 60120
( 847 ) 931-5910 ( 847) 888-7400
VI . SPECIAL CONDITIONS
The Subrecipient shall comply with the requirements of Title
24 Code of Federal Regulations, Part 570 of the Housing and Urban
Development, (attached hereto and made apart hereof as Exhibit
"B" ) , regulations concerning Community Development Block Grants
and all federal regulations and policies issued pursuant to these
regulations . The Subrecipient shall utilize funds under this
agreement to supplement rather than supplant funds otherwise
available.
VII . GENERAL CONDITIONS
A. General Compliance
Subrecipient agrees to comply with all applicable federal,
state and local laws and regulations governing the funds
provided under this agreement.
B. Independent Contractor
Nothing contained in this agreement is intended to, or shall
be construed in any manner, as creating or establishing the
relationship of employer or employee between the parties
hereto. The Subrecipient shall at all times remain an
independent contractor with respect to the services to be
performed under this agreement. Grantee shall be exempt
from payment of all Unemployment Compensation, FICA,
retirement, life and /or medical insurance and Worker' s
Compensation Insurance as the Subrecipient is an independent
Subrecipient .
C. Hold Harmless
Subrecipient shall hold harmless, defend and indemnify the
Grantee from and against any and all claims, actions, suits,
charges and causes of action, which may arise out of or in
connection with, or alleged to have arisen out of or in
connection with, Subrecipient ' s negligent or reckless
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performance or nonperformance of the services or subject
matter called for in this agreement.
D. Worker' s Compensation
The Subrecipient shall provide Worker' s Compensation
Insurance coverage for all employees involved in the
performance of this agreement.
E . Insurance and Bonding
The Subrecipient shall carry sufficient insurance coverage
to reasonably protect contract assets from loss due to
theft, fraud and/or undue physical damage, and as a minimum
shall purchase a blanket fidelity bond covering all
employees in an amount equal to payments to be received from
the Grantee .
The Subrecipient shall comply with the bonding and insurance
requirements of OMB Circular A-110 ( see Exhibit "A" ) .
F. Grantor Recognition
The Subrecipient shall ensure recognition of the role of
Grantee in providing services through this agreement. All
activities, facilities and items utilized pursuant to this
contract shall be prominently labeled as to funding source.
In addition, Subrecipient shall include a reference to the
support provided herein in all publications made possible
with funds made available pursuant to this contract.
G. Amendments
The Grantee or the Subrecipient may amend this Agreement at
any time, provided that such amendments make specific
reference to this Agreement, are executed in writing, signed
by a duly authorized representative of the parties hereto,
and approved by the Elgin City Council . Such amendments
shall not be construed to invalidate this Agreement, nor
relieve or release Subrecipient from its obligations under
this Agreement.
The Grantee may, in its discretion, amend this Agreement to
conform with federal, state or local governmental
guidelines, polices and available funding amounts or for
other reasons . If such amendments result in a change in the
funding, scope of services, or schedule of activities to be
undertaken as part of this Agreement, such modifications
shall be incorporated only by a written amendment signed by
both the Grantee and the Subrecipient. The Subrecipient
shall cooperate in the execution of any and all documents
4
necessary to effect such amendments at the sole discretion
of the Grantee.
H. Suspension or Termination
Either party may terminate this contract at any time by
giving written notice to the other of such termination and
specifying the effective date thereof at least 30 days
before the effective date of such termination. Partial
terminations of the Scope of Service may only be undertaken
with the prior approval of the Grantee. In the event of any
termination, all finished or unfinished documents, data,
studies, surveys, maps, models photographs, reports or other
materials prepared by the Subrecipient under this agreement
shall, at the option of the Grantee, become the property of
the Grantee, and the Subrecipient shall be entitled to
receive just and equitable compensation only to the extent
provided by the availability of funds as provided herein,
for any satisfactory work completed on such documents or
materials prior to the termination.
The Grantee may also suspend or terminate this Agreement, in
whole or in part, if the Subrecipient materially fails to
comply with any term of this Agreement, or with any of the
laws, rules, regulations or provisions referred to herein;
and Grantee may declare Subrecipient ineligible for any
further participation in Grantee contracts, in addition to
other remedies as provided by law. In the event that there
is probable cause to believe the Subrecipient is in
noncompliance with any applicable laws, rules or
regulations, the Grantee may withhold up to fifteen ( 15) per
cent of said Agreement funds until such time as the the
Subrecipient is found to be in compliance by the Grantee, or
is otherwise adjudicated to be in compliance.
VIII . ADMINISTRATIVE REQUIREMENTS
A. Financial Management
The Subrecipient agrees to comply with OMB Circular A-110,
( see Exhibit "A" ) , and agrees to adhere to the accounting
principals and procedures required therein, utilize adequate
internal controls, and maintain necessary source
documentation for all costs incurred.
The Subrecipient shall administer its program in conformance
with OMB Circulars A-122, "Cost Principals for Non-Profit
Organizations" , a copy of which is attached hereto and made
a part hereof as Exhibit "C" , for all costs incurred whether
charged on a direct or indirect basis .
5
B. Records and Reports
The Subrecipient shall provide the following reports and
documentation:
1) The Subrecipient shall provide the Grantee with
semi-annual reports on the number of persons served by the
YMCA of Elgin. Said reports shall include monthly number of
persons served, the average fee charged for services and
programs, organizations utilizing the facility, any
rehabilitation work problems, a summary of revenues and
expenditures of the Facility and any other information as
may be required by the Grantee.
•2 ) The Subrecipient shall retain all records pertinent to
the Channing YMCA participation and expenditures incurred
under this contract for a period of ten ( 10) years from the
date of this agreement.
3) The Grantee understands that client information
collected under this contract is private and the use or
disclosure of such information, when not directly connected
with the administration of Grantee 's or Subrecipient' s
responsibilities with respect to services provided under
this agreement is prohibited unless written consent is
obtained from such person receiving the service.
4 ) The Subrecipient shall maintain real property inventory
records which clearly identify equipment purchased with the
allocated Grantee Community Development Block Grant funds .
5 ) The Subrecipient ' s obligations to the Grantee shall not
end until all close out requirements are completed.
Activities during this close out period shall include, but
are not limited to making final payments; completion of all
required reporting; disposing of program assets (return of
unspent cash advances , unused materials and program income
balances) and determining custodianship of records .
6 ) All Subrecipient records with respect to any matters
covered by this agreement shall be made available to Grantee
and the U. S . Department of Housing and Urban Development at
any time during normal business hours, as often as the
Grantee or the U. S . Department of Housing and Urban
Development deems necessary to audit, examine, and make
excerpts or transcripts of all relevant data. Any
deficiencies noted in audit reports shall be fully satisfied
by the Subrecipient within thirty ( 30) days after receipt of
notice of such deficiencies by Subrecipient. Failure of the
Subrecipient to comply with the above audit requirements
shall constitute a material breach of this agreement and may
6
result in the withholding of future payments by Grantee.
Subrecipient hereby agrees to have an annual agency audit
conducted in compliance with any relevant requirement of the
Single Audit Act or other audit requirements as applicable.
C. Program Income
There should be no Program Income generated from this
activity. However, if Program Income is generated, any such
income shall be returned to the Grantee.
D. Uniform Administrative Requirements
Subrecipient hereby agrees to comply with the uniform
administrative requirements contained in 24 CFR, Part 570 at
570 .502, a copy of which is attached hereto and made a part
hereof as Exhibit "D" .
E. Procurement and Reimbursement Requirements
The Subrecipient shall maintain an inventory record(s) of
all personal property and materials that may be procured
with funds as provided for herein. All program assets shall
revert to Grantee upon termination of this contract or upon
discontinuation of the Channing YMCA prior to December 31,
2006 . If the subject property is sold within 10 years from
the date of this agreement or the YMCA ceases to operate the
Facility the Grantee shall be reimbursed by the Subrecipient
for all expenditures related to equipment and building
rehabilitation improvements made with Community Development
Block Grant funds under this agreement.
The Subrecipient shall procure materials in accordance with
the requirements of OMB Circular A-110 and shall
subsequently follow Attachment N, Property Management
Standards, covering utilization and disposal of property.
IX. PERSONNEL AND PARTICIPANT CONDITIONS
A. Civil Rights
1) The Subrecipient shall comply with Title VI of the Civil
Rights Act of 1964 as amended, Title VIII of the Civil
Rights Act of 1968 as amended, Section 109 of Title I of the
Housing and Community Development Act of 1974 , Section 504
of the Rehabilitation Act of 1973 , the Americans with
Disabilities Act of 1990, the Age Discrimination Act of
1975, Executive Order 11063, and with Executive Order 11246
as amended by Executive Orders 11375 and 12086 .
2 ) The Subrecipient shall not discriminate against any
employee or applicant for employment because of race, color,
7
creed, religion, ancestry, national origin, sex, disability,
or other handicap, age, marital status, or status with
regard to public assistance. Subrecipient shall take
affirmative action to ensure that all employment practices
are free from such discrimination. Such employment
practices include but are not limited to the following:
hiring, upgrading, demotion, transfer, recruitment or
recruitment advertising, layoff, termination, rates of pay
or other forms of compensation, and selection for training,
including apprenticeship.
3) The Subrecipient agrees to comply with any federal
regulations issued pursuant to compliance with Section 504
of the Rehabilitation Act of 1973 , (29 U. S .C. 706 ) which
prohibits discrimination against the handicapped in any
federally assisted program. Grantee shall provide the
Subrecipient with any guidelines necessary for compliance
with that portion of the regulations in force during the
term of this contract upon request. Failure of Grantee to
provide such guidelines shall not relieve the Subrecipient
of the obligation to comply with the terms of such
guidelines .
B. Affirmative Action
1) The Subrecipient shall carry out an Affirmative Action
Program in compliance with City of Elgin Ordinance No.
G19-93 Amending Chapter 3 . 12 of the Elgin Municipal Code.
The Subrecipient agrees to comply with Chapter
3 . 12 . 100-Affirmative Action-City contract attached hereto
and made a part hereof as Exhibit "E" .
2 ) The Subrecipient shall use its best efforts to offer
minority and women owned business enterprises the maximum
practicable opportunity to participate in the performance of
this contract. As used in this agreement, the term
"minority and female business enterprise" means a business
at least fifty-one (51) per cent owned and controlled by
minority group members or women. For the purpose of this
definition, "minority group members" are African-Americans,
Spanish-speaking, Spanish surnamed or Spanish-heritage
Americans, Asian-Americans and American Indians .
3 ) The Subrecipient shall furnish all information and
reports required hereunder and shall permit access to its
books, records and accounts by the Grantee, HUD or its
agent, or other authorized federal officials for purposes of
investigation to ascertain compliance with the rules,
regulations and provisions stated herein.
4) The Subrecipient shall send to each labor union or
representative of workers with which it has a collective
8
bargaining agreement or other contract or understanding, a
notice, to be provided by the agency contracting officer,
advising the labor union or worker' s representative of the
Subrecipient ' s commitments hereunder, and shall post copies
of the notice in conspicuous places available to employees
and applicants for employment.
5 ) The Subrecipient shall, in all solicitations or
advertisements for employees placed by or on behalf of the
Subrecipient, state that it is an Equal Opportunity or
Affirmative Action employer.
6 ) The Subrecipient shall include the provisions of
Paragraphs VII A, Civil Rights, and B, Affirmative Action,
in every subcontract or purchase order, specifically or by
reference, so that such provisions shall be binding upon
each subSubrecipient or vendor.
C. Employment Restrictions
1) The Subrecipient is prohibited from using funds provided
herein or personnel employed in the administration of the
program provided herein for political, sectarian, religious,
lobbying, political patronage, and nepotism activities .
2 ) Where employees are engaged in activities not covered
under the Occupational Safety and Health Act of 1970, they
shall not be required or permitted to work, be trained, or
receive services in buildings or surroundings or under
working conditions which are unsanitary, hazardous or
dangerous to the participant ' s health or safety.
3 ) Participants employed or trained for inherently
dangerous occupations shall be assigned to work in
accordance with reasonable safety practices .
4 ) The Subrecipient agrees to comply with the requirements
of the Secretary of Labor in accordance with the Davis-Bacon
Act as amended, the provisions of Contract Work Hours, the
Safety Standards Act, the Copeland "Anti-Kickback" Act and
all other applicable federal, state and local laws and
regulations pertaining to labor standards insofar as those
acts apply to the performance of this contract. The
Subrecipient shall maintain documentation which demonstrates
compliance with hour and wage requirements of this part.
Such documentation shall be made available to the Grantee
for review upon request.
The Subrecipient agrees that, except with respect to the
rehabilitation or construction of residential property
designed for residential uses for less than eight ( 8)
households, all contractors engaged under contracts in
9
excess of $2 , 000 for construction, renovation or repair of
any building or work financed in whole or in part with
assistance provided under this contract, shall comply with
federal requirements of the regulations of the Department of
Labor, under CFR 29, Parts 3, 1, 5, and 7 governing the
payment of wages and ratio of apprentices and trainees to
journeymen; provided, that if wage rates higher than those
required under the regulations are imposed by or local law,
nothing hereunder is intended to relieve the Subrecipient of
its obligation, if any, to require payment of the higher
wage. Subrecipient shall cause or require to be inserted in
full, in all such contracts subject to such regulations ,
provisions meeting the requirements of this paragraph, for
such contracts in excess of $10, 000 .
5) Compliance with the provisions of Section 3, the
regulations set forth in 214 CFR 135, and all applicable
rules and orders issued hereunder prior to the execution of
this contract, shall be a condition of the federal financial
assistance provided under this contract and binding upon
Grantee, Subrecipient and any subSubrecipients, their
successors and assigns, to those sanctions specified by the
agreement through which federal assistance is provided.
Subrecipient further agrees to comply with these "Section 3"
requirements and to include the following language in all
subcontracts executed under this agreement:
"The work to be performed under this contract is a
project assisted under a program providing direct
federal financial assistance from HUD and is subject to
the requirements of Section 3 of the Housing and Urban
Development Act of 1968, as amended, 12 U. S .C. 1701 .
Section 3 requires that to the greatest extent feasible
opportunities for training and employment be given to
lower income residents of the project area and
contracts for work in connection with the project be
awarded to business concerns which are located in, or
owned in substantial part by persons residing in the
areas of the project . "
The Subrecipient warrants and agrees that no contractual or
other disability exists which would prevent compliance with
the aforementioned requirements .
Subrecipient shall send to each labor organization or
representative of workers with which it has a collective
bargaining agreement or other contract or understanding, if
any, a notice advising said labor organization or worker' s
representative or its commitments under this Section 3
clause and shall post copies of the notice in conspicuous
places available to employees and applicants for employment
or training.
10
Subrecipient shall include the aforementioned Section 3
clause in every subcontract and shall take appropriate
action pursuant to the subcontract upon a finding that the
subSubrecipient is in violation of regulations issued by
Grantor Agency, Subrecipient shall not subcontract with any
• subSubrecipient where it has notice or knowledge that the
latter has been found in violation of regulations under CFR
24 135 and shall not let any subcontract unless the
subSubrecipient has first provided it with a preliminary
statement of ability to comply with the requirements of
these regulations .
D. Conduct
1) The Subrecipient shall not assign or transfer any
interest in this contract without prior written consent of
Grantee thereto; provided, however, that claims for money
due or to become due to the Subrecipient from the Grantee
under this contract may be assigned to a bank, trust
company, or other financial institution without such
approval . Notice of any such assignment or transfer shall
be furnished promptly to the Grantee.
2) The Subrecipient agrees that no funds provided, nor
personnel employed under this contract, shall be in any way
or to any extent engaged in the conduct of political
activities in violation of Chapter 15 of Title V United
States Code.
3 ) The Subrecipient agrees to abide by the provisions of 24
CFR 570 . 611 with respect to conflicts of interest, and
warrants and covenants that it presently has no financial
interest and shall not acquire any financial interest,
direct or indirect, which would conflict in any manner or
degree with the performance of services required under this
contract. Subrecipient further warrants and covenants that
in the performance of this contract no person having such a
financial interest shall be employed or retained by
Subrecipient hereunder. These conflict of interest
provisions apply to any person who is an employee, agent
consultant, officer, or elected official or appointed
official of Grantee, or of any designated public agencies or
subrecipients which are receiving funds under the CDBG
entitlement program.
4 ) The Subrecipient shall not enter into any subcontracts
with any agency or individual in the performance of this
contract without the written consent of the Grantee prior to
the execution of such agreement.
The Subrecipient shall monitor all subcontracted services on
a regular basis to assure contract compliance . Results of
11
monitoring efforts shall be summarized in written reports
and supported with documents evidence of follow up actions
taken to correct areas of noncompliance.
The Subrecipient shall cause all of the provisions of this
contract in its entirety to be included in and made a part
of any subcontract executed in the performance of this
agreement.
The Subrecipient shall ensure that all subcontractor let in
the performance of this agreement shall be awarded on a fair
and open competition basis . Executed copies of all
subcontracts shall be forwarded to Grantee along with
documentation concerning the selection process .
5 ) The Subrecipient agrees that funds provided under this
contract shall not be utilized for religious activities, to
promote religious interest, or for the benefit of a
religious organization in accordance with the federal
regulations specified in 24 CFR 570 . 200 ( j ) .
X. ENVIRONMENTAL CONDITIONS
Subrecipient shall comply with the following regulations
insofar as they apply to the performance of this contract:
1) Clean Air Act, 42 U. S .C. 1857, et seq.
2) Federal Water Pollution Control Act, as amended, 33
U.S .C. 1251, et seq. , as amended at 1318 relating to
inspection, monitoring, entry, reports, and information, as
well as other requirements specified in said Section 114 and
Section 308 , and all regulations and guidelines issued
thereunder.
3) Environmental Protection Agency (EPA) regulations
pursuant to 40 C.F.R. , Part 50, as amended.
4) National Environmental Policy Act of 1969 .
5 ) HUD Environmental Review Procedures (24 CFR, Part 58) .
6 ) Subrecipient shall comply with the requirements of the
Flood Disaster Protection Act of 1973 (P .L. -2234 ) in regard
to the sale, lease or other transfer of land acquired,
cleared or improved under the terms of this contract, as it
may apply to the provisions of this contract.
7 ) Subrecipient agrees to comply with the Historic
Preservation requirements set forth in the National Historic
Preservation Act of 1966 , as amended 16 U. S .C. 470 and the
procedures set forth in 36 CFR, Part 800, Advisory Council
12
on Historic Preservation Procedures for Protect of Historic
Properties , insofar as they apply to the performance of this
contract.
In general , this requires concurrence from the State
Historic Preservation Officer for all rehabilitation and
demolition of historic properties that are fifty (50) years
or older or that are included on a Federal, State, or local
historic property list.
The terms and provisions of this Agreement shall be
severable. In the event that any of the terms or provisions of
this agreement shall be deemed void or otherwise unenforceable
for any reason, the remainder of this Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement on the date and year first written above.
CITY OF ELGIN, a municipal
corpora.
I
By L i _ .A/.
'o.ert I . Ma m
Ac ing City Manager
Attest:
City Clerk
CHANNING YMCA, an Illinois
not-for-profit corporation
By Y,91/
Patrick N- 'son
Executive Director
13
EXECUTIVE OFFICE OF THE PRESIDENT
w9 OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20307
November 19, 1993
THE DIRECTOR
CIRCULAR NO. A-110
Revised'
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Uniform Administrative Requirements for Grants and
Agreements With Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations
1. purpose. This Circular sets forth standards for obtaining
consistency and uniformity among Federal agencies in the
administration of grants to and agreements with institutions
of higher education, hospitals, .and other non-profit
organizations.
2. Authority. Circular A-110 is issued under the authority of-
31 U.S.C. 503 (the Chief Financial Officers Act) , 31 U.S.C.
1111, 41 U.S.C. 405 (the Office of Federal Procurement
Policy Act) , Reorganization Plan No. 2 of 1970, and E.O. •
11541 ("Prescribing-the Duties of the Office of Management
and Budget and the Domestic Policy Council in the Executive
Office of the President") .
3. policy. Except as provided herein, the standards set forth
in this Circular are applicable to all Federal agencies. If
any statute specifically prescribes policies or specific
requirements that differ from the standards provided herein, _
the provisions of the statute shall govern.
•
The provisions of the sections of this Circular shall be
applied by Federal agencies to recipients. Recipients shall
apply the provisions- of this Circular to subrecipients
performing substantive work under grants and agreements that
are passed through or awarded by the primary recipient, if
such subrecipients are organizations described in paragraph
1.
This Circular does not apply to grants, contracts, __or other
agreements between the Federal Government and units of State
or local governments covered by ORB Circular A-102, "Grants
and Cooperative Agreements with State and Local
Governments, " and the Federal agencies' grants management
common rule which standardized and codified the
administrative requirements Federal agencies, impose on State
and local grantees. In addition, subawards and contracts to
State or local governments are not covered by this Circular.
However, this Circular applies to subawards made by State
and local governments to organizations covered by this
•
Grants and Agreements with Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations
SUBPART A - GENERAL
.1 Purpose.
.2 Definitions.
.3 Effect on other issuances.
.4 Deviations.
.5 Subawards.
SUBPART B - PRE-AWARD REQUIREMENTS
.10 Purpose.
.11 Pre-award policies.
.12 Forms for applying for Federal assistance.
.13 Debarment and suspension.
.14 Special award conditions.
.15 Metric system of measurement. -
.16 Resource Conservation and Recovery Act.
.17 Certifications and representations.
SUBPART C - POST-AWARD REQUIREMENTS
Financial and Program Management
.20 Purpose of financial and program management.
.21 Standards for financial management systems.
.22 Payment.
.23 Cost sharing or matching.
.24 Program income.
.25 Revision of budget and program plans.
.26 Non-Federal audits.
.27 Allowable costs.
.28 Period of availability of funds.
property Standards.
.30 Purpose of property standards.
.31 Insurance coverage.
.32 Real property.
.33 Federally-owned and exempt property.
.34 Equipment.
.35 Supplies and other expendable property.
.36 Intangible property.
.37 Property trust relationship.
3
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funds for: (1) goods and other tangible property received;
(2) services performed by employees, contractors,
subrecipients, and other payees; and, (3) other amounts
becoming owed under programs for which no current services
or performance is required.
• (b) Accrued income means the sum of: (1) earnings during a given
period from (i) services performed by the recipient, and
(ii) goods and other tangible property delivered to
purchasers, and (2) amounts becoming owed to the recipient
for which no current services or performance is required by
the recipient.
(c) Acquisition cost of equipment means the net invoice price of
the equipment, including the cost of modifications,
attachments, accessories,- or auxiliary apparatus necessary
to make the property usable for the purpose for which it was
acquired. Other charges, such as the cost of installation,
transportation, taxes, duty or protective in-transit
insurance, shall be included or excluded from the unit
acquisition cost in accordance with the recipient's regular
accounting practices. —
(d) Advance means a payment made by Treasury check or other
appropriate payment mechanism to a recipient upon its
request either before outlays are made by the recipient or
through the use of predetermined payment schedules.
(e) Award means financial assistance that provides support or
stimulation to accomplish a public purpose. Awards include
grants and other agreements in the form of money or property
in lieu of money, by the Federal Government to an eligible
recipient. The term does not include: technical assistance,
which provides .services instead of money; other assistance
in the form of loans, loan guarantees, interest subsidies,
or insurance; direct payments of any kind to individuals;
and, contracts which are required to' be entered into and
administered under procurement laws and regulations.
(f) Cash contributions means the recipient's cash outlay,
including the outlay of money contributed to the recipient
by third parties.
(g) Closeout means the process by which a Federal awarding
agency determines that all applicable administrative actions
and all required work of the award have been completed by
the recipient and Federal awarding agency.
(h) Contract means a procurement contract under an award or
subaward, and a procurement subcontract under a recipient's
or subrecipient's contract.
5
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•
• (s) j =naible nroverty and debt instruments means, but is not
limited to, trademarks, copyrights, patents and patent
• applications and such property as loans,-notes and other
debt instruments, lease agreements, stock and other
instruments of property ownership, whether considered
tangible or intangible.
(t) Obligations means the amounts of orders placed, contracts
and grants awarded, services received and similar
transactions during a given period that require •payment by
the recipient. during the same or a future period.
•
(u) Outlays or expenditures means charges made to the project or
program. They may be reported on. a cash or accrual basis.
For reports prepared on a cash basis, outlays are the sum of
cash disbursements for 'direct charges for -goods and
services, the amount of indirect expense charged, the value
of third party in-kind contributions applied and the amount
of cash advances and payments made to subrecipients. For
reports prepared on an accrual basis, outlays are the sum of
cash disbursements for direct charges for goods and
services, the amount of indirect expense incurred, the value
of in-kind contributions applied, and the net increase (or
decrease) in the amounts owed by the recipient for goods and
• other property received, for services performed by
employees, contractors, subrecipients and other payees and
other amounts becoming owed under programs for which no
current services or performance are required.
(v) Personal property means property of any kind except real
property. It may be tangible, having physical existence, or
intangible, having no physical existence, such as
copyrights, patents, or securities.
(w) prior approval- means written approval by an authorized •
official evidencing prior consent.
(x) program income means gross income earned by the recipient
that is directly generated by a supported activity or earned
as a result of the award (see exclusions in paragraphs
.24 (e) and (h) ) . Program income includes, but is not
limited to, income from fees for services performed, the use
or rental of real or personal property acquired under
federally-funded projects, the sale of commodities or items
fabricated under an award, license fees and. royalties on
patents and copyrights, and interest on loans made with
'award funds. Interest- earned.on advances of Federal funds •
is not program income. Except as otherwise provided in
Federal awarding agency regulations or the terms and
conditions of the award, program income does not include the
receipt of principal on loans, rebates, credits, discounts,
etc. , or interest earned on any of them.
7
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(ff) Subaward means an award of financial assistance in the form
of money, or property in lieu of money, made under an award
by a recipient .to an eligible subrecipient or by a
subrecipient to a lower tier subrecipient. The term
includes financial assistance when provided by any legal
agreement, even if the agreement is called a contract, but
does not include procurement of goods and, services nor does
it include any form of assistance which is excluded from the
definition of "award" in paragraph (e) .
(gg) .pubrecipient means the legal entity to which a subaward is
made and which is accountable to the recipient for the use
of the funds provided. The term may include foreign or
international organizations (such as agencies of the United
Nations) at the discretion of the Federal awarding agency.
(hh) .$upplies means all personal property excluding equipment,
intangible property, and debt instruments as defined in this
section, and inventions of a contractor conceived or first
actually reduced to practice in the performance of work
under a funding agreement ("subject inventions") , as defined
in 37 CFR part 401, "Rights to Inventions Made by Nonprofit
Organizations and Small Business Firms Under Government
Grants, Contracts, and Cooperative Agreements."
(ii) Suspension means an action by a Federal awarding agency that
temporarily withdraws Federal sponsorship under an award,
pending corrective action by the recipient or pending a
decision to terminate the award by the Federal awarding
agency. Suspension of an award is a separate action from
suspension under Federal agency regulations implementing
E.O.s 12549 and 12689, "Debarment and Suspension."
(jj) Termination means the cancellation of Federal sponsorship,
in whole or in part, under an agreement at any time prior to
the date of completion.
(kk) Third party in-kind contributions means the value of non-
cash contributions provided by non-Federal third parties.
Third party in-kind contributions may be in the form of- real
property, equipment, supplies and other expendable property,
and the value of goods and services directly benefiting and
specifically identifiable to the project or program.
(11) Unliguidated obligations, for financial reports prepared on
a cash basis, means the amount of obligations incurred by
the recipient that have not been paid. For reports prepared
on an accrued expenditure basis, they represent the amount
of obligations incurred by the recipient for which an outlay
has not been recorded.
9
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•
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.11 Pre-award policies.
(a) Use of Grants and Cooperative Agreements, and Contracts. In
each instance, the Federal awarding agency shall decide on
the appropriate award instrument (i.e. , grant, cooperative
agreement, or contract) . The Federal Grant and Cooperative
Agreement Act (31 U.S.C. 6301-08) governs the use of grants,
cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal
purpose of a transaction is to accomplish a public purpose
of support or stimulation authorized by Federal statute.
The statutory criterion for choosing between grants and
cooperative agreements is that for the latter, . "substantial
involvement is expected between the executive agency and the
State, local government, or other recipient when carrying
out the activity--contemplated .in •the agreement."- Contracts
shall be used when the principal purpose is acquisition of
property or services for the direct benefit or use of the
Federal Government.
(b) Public Notice and Priority Setting. Federal awarding
agencies shall notify the public of its intended funding
priorities for discretionary grant programs, unless funding
priorities are established by Federal statute.
.12 Forms for applying for.Federal- assistance.
(a) Federal awarding agencies shall comply with the applicable
report clearance requirements of 5 CFR part 1320,
"Controlling Paperwork Burdens on the Public," with regard
to all forms. used by the Federal awarding agency in place of
or as a supplement to the Standard Form 424 (SF-424) series.
(b) ' Applicants shall use the SF-424 series or those forms and
instructions prescribed by the Federal awarding agency.
(c) For Federal programs covered by E.O. 12372,
"Intergovernmental Review of Federal Programs," the
applicant shall complete the appropriate sections of the SF-
• 424 (Application for Federal Assistance) indicating whether
the application was subject. to review by the State Single
Point of Contact (SPOC) . The name and address of the SPOC
for a particular State can be obtained from the Federal
awarding agency or the Catalog of Federal Domestic
Assistance. The SPOC shall advise the applicant whether the
program for which application is made has been selected by
that State for review.
(d) Federal awarding agencies that do not use the SF-424 form
should indicate whether the application is subject to review
by the State under E.O. 12372.
11
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.17 Certifications and representations. Unless prohibited
by statute or codified regulation, each Federal awarding agency
is authorized and encouraged to allow recipients to submit
certifications and representations required by statute, executive
order, or regulation on an annual basis, if the recipients have
• • ongoing and continuing relationships with the agency. Annual
certifications and representations shall be signed by responsible
officials with the authority to ensure recipients' compliance
with the pertinent requirements.
SUBPART C - Post-Award Requirements
•
7inancial and Program Management,
.20 Purpose of financial and program management. Sections
.21 through .28 prescribe_standards-for financial.
management systems, methods for making payments and rules for:
satisfying cost sharing and matching requirements, accounting for
program income, budget revision approvals, making audits,
determining allowability of cost, and establishing fund
availability.
•
.21 Standards for financial management systems.
(a) Federal awarding agencies shall require recipients to• relate
financial data to performance data and develop unit cost
information whenever practical.
(b) Recipients' financial management systems shall provide for
the following.
(1) Accurate, current and complete disclosure of the
financial results of each federally-sponsored project
• or program in accordance with the reporting
requirements set forth in Section .52. If a
Federal awarding agency requires reporting on an
accrual basis from a recipient that maintains its
records on other than an accrual basis, the recipient
shall not be required to establish an accrual
accounting system. These recipients may develop such
accrual data for its reports on •the basis of an
analysis of the documentation on hand.
(2) Records- that identify adequately the source and
application of funds for federally-sponsored
activities. These records shall contain information
pertaining to Federal awards, authorizations,
obligations, unobligated balances, assets, outlays,
income and interest.
(3) Effective control over and accountability for all
funds, property and other assets. Recipients shall •
13
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.22 Payment. - .
(a) Payment methods shall minimize the time elapsing between the
transfer of funds from the United States Treasury and the
issuance or redemption of checks, warrants, or payment by
other means by the recipients. Payment methods of State
agencies or instrumentalities shall be consistent. with
Treasury-State CHIA agreements or default procedures
codified at 31 CFR part 205.
(b) Recipients are to be paid in advance, provided they maintain
or demonstrate the willingness to maintain: (1) written
procedures that minimize the time elapsing between the
transfer of funds and disbursement by the recipient, and (2)
financial management systems that meet the standards for
fund control and accountability-as -established-in Section-
.21. Cash advances to a recipient organization shall be
limited to the minimum amounts needed and be._timed to be in
accordance with the actual, immediate cash requirements of
the recipient organization in carrying out the purpose of
the approved program or project. The timing and amount of
_ cash advances shall be as close as is administratively —
• feasible to the actual disbursements by the recipient
organization for direct program or project costs and the
•
proportionate share of any allowable indirect costs.
(c) Whenever possible, advances shall be consolidated to cover
anticipated cash needs for all awards made by the Federal
awarding agency to the recipient.
•
(1) Advance payment mechanisms include, but are not limited
to, Treasury check and electronic .funds transfer.
(2) Advance payment mechanisms are subject to 31 CFR part
205. -
(3) Recipients shall be authorized to submit requests for
advances and reimbursements at least monthly when electronic
fund transfers are not used.
(d) Requests for Treasury check advance payment shall be
submitted on SF-270, "Request for Advance or Reimbursement, "
or other forms as may be authorized by OMB. This form is
not to be used when Treasury check advance payments are made
to the recipient automatically through the use of a
predetermined payment schedule or if precluded by special
Federal awarding agency instructions for electronic funds
transfer.
(e) Reimbursement is the preferred method when the requirements
in paragraph (b) cannot be met. Federal awarding agencies
may also use this method on any construction agreement, or
15
(i) Standards 'governing the use of banks and other institutions
as depositories of funds advanced under awards are as
follows.
(1) Except for situations described in paragraph (i) (2) ,
• Federal awarding agencies shall not require separate
depository accounts for funds provided to a recipient
or establish any eligibility requirements for
depositories for funds provided to a recipient.
However, recipients must be able to account for the
receipt, obligation and expenditure of funds.
(2) Advances of Federal funds shall be deposited and
maintained in insured accounts whenever possible.
(j) Consistent 'with the national -goal -of expanding the
opportunities for women-owned and minority-owned business
enterprises, recipients shall be encouraged to use women-
owned and minority-owned banks (a bank which is owned at
least 50 percent by women or minority group members) .
(k) Recipients shall maintain advances of Federal funds in
interest bearing accounts, unless_ (1) , (2) or (3) apply. '
(1) The recipient .receives less than $120,000 in Federal
awards per year.
(2) The best reasonably available interest bearing account
would not be expected to earn interest in excess of. $250 per
year on Federal cash balances.
(3) The depository would require an average or minimum
balance so high that it would not be feasible within the
expected Federal and non-Federal cash resources.
(1) For those entities where CHIA and its implementing
regulations do not apply, interest earned on Federal
advances deposited in interest bearing accounts shall be
remitted annually to Department of Health and Human
Services, Payment Management System, Rockville, MD 20852.
Interest amounts up to $250 per year may be retained by the
recipient for administrative expense. State universities
and hospitals shall comply with CMIA, as it pertains to
interest. If an entity subject to CHIA uses its own funds
to pay pre-award costs for discretionary awards without
prior written approval from the Federal awarding agency, it
waives its right to recover the interest under CHIA.
(m) Except as noted elsewhere in this Circular, only the
following forms shall be authorized for the recipients in
requesting advances and reimbursements. Federal agencies
17
•
•
(c) Values for recipient contributions of services and property
shall be established in accordance with the applicable cost
principles. If a Federal awarding agency authorizes
recipients to donate buildings or land for
construction/facilities acquisition projects or long-term
use, the value of the donated property for cost sharing or
matching shall be the lesser of (1) or (2) .
(1) The certified value of the remaining life of the
property recorded in the recipient's accounting records
at the time of donation.
(2) The current fair market value. However, when there is
sufficient justification, the Federal awarding agency
may approve the use of the current fair market value of
the donated property-,••even-if -it exceeds- the- certified
value at the time of donation to the project.
(d) Volunteer services furnished by professional and technical
personnel, consultants, and other skilled and unskilled
labor may be counted as cost sharing or matching if the
service is an integral and necessary part of an approved
project or program. Rates for volunteer services shall be
consistent with those paid for similar work in the
recipient's organization. In those instances in which the
required skills are not found in the recipient organization,
rates shall be consistent with those paid for similar work
in the labor market in which the recipient competes for the
kind of services involved. In either case, paid fringe
benefits that are reasonable, allowable, and allocable may
be included in the valuation.
(e) When an employer other than the recipient furnishes the
services of an employee, these services shall be valued at
the employee's regular rate of pay (plus an amount of fringe
benefits that are reasonable, allowable, and allocable, but
exclusive of overhead costs) , provided these services are in
the same skill for which the employee is normally paid.
(f) Donated supplies may include such items as expendable
equipment, office supplies, laboratory supplies or workshop
and classroom supplies. Value assessed to donated supplies
included in the cost sharing or matching share shall be
reasonable and. shall not exceed the fair market value of the
property at the time of the 4onation.
(g) The method used for determining cost sharing or. matching for
donated equipment, buildings and land for which title passes
to the recipient may differ according to the purpose of the
award, if (1) or (2) apply.
19
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.24 Program income.
(a) Federal awarding agencies shall apply the standards set
forth in this section in requiring recipient organization
to account for program income related to projects finance_.
• in whole or in part with Federal funds.
(b) Except as provided in paragraph (h) below, program income
earned during the project period shall be retained by the
recipient and, in accordance with Federal awarding agency
regulations or the terms and conditions of the award, shall
•
be used in .one or more of the ways listed in the following.
(1) Added to funds committed to the project by the Federal
awarding agency and recipient and used to further
eligible project-or program objectives. - . .
(2) Used to finance the non-Federal share of the project or
pram
(3) Deducted from the total project or program allowable
cost in determining the net allowable costs on which
the Federal share of costs is based.
•
(c) When an agency authorizes the disposition of program income
. • as described in paragraphs (b) (1)__or (b) (2) , program income
in excess -of any limits stipulated shall be used in
accordance with paragraph (b) (3) .
(d) In the event that the Federal awarding agency does not
specify in its regulations or the terms and conditions of
the award how program income is to be used, paragraph (b) (3)
shall apply automatically to all projects or programs except
research. For awards that support research, paragraph
(b) (1) shall apply automatically unless the awarding agency
indicates in the terms and conditions another alternative on
the award or the recipient is subject to special award
conditions, as indicated in Section .14.
(e) Unless Federal awarding agency regulations or the terms and
conditions of the award provide otherwise, recipients shall
have no obligation to the Federal Government regarding
program income earned after the end of the project period.
(f) If authorized by Federal awarding agency regulations or the
terms and conditions of the award, costs incident to the
• generation of program income may be deducted from gross •
income to determine program income, provided these costs
have not been charged to the award.
21
•
"Cost Principles for Non-Profit Organizations, " or 45
CFR part 74 Appendix E, "Principles for Determining
Costs Applicable to Research and Development under
Grants and Contracts with Hospitals, " or 48 CFR part
31, "Contract Cost Principles and •Procedures, " as
applicable.
(7) The transfer of funds allotted for training allowances
(direct payment to trainees) to other categories of
expense.
(8) Unless described in the application and funded in the
approved .awards, the subaward, transfer or contracting
out of any work under an award. This provision does
not apply to the purchase of supplies, material,
equipment' or general -support -services. - -
(d) No other prior approval requirements for specific items may
be imposed unless a deviation has been approved by OMB.
(e) Except for requirements listed in paragraphs (c) (1) and
(c) (4) of this section, Federal awarding agencies are'
authorized, at their option, to waive cost-related and
administrative prior written approvals required by this
Circular and OMB Circulars A-21 and A-122. Such waivers may
include authorizing recipients to do any one or more of the
following.
(1) Incur pre-award costs 90 calendar days prior to award
or more than 90 calendar days with the prior approval
of the Federal awarding agency. All pre-award costs
are incurred at the recipient's risk (i.e. , the Federal
awarding agency is under no obligation to reimburse
such costs if for any reason the recipient does not
receive an award or if the award is less than
anticipated and inadequate to cover such costs) .
(2) , Initiate a one-time extension of the expiration date of
the award of up to 12 months unless one or more of the
following conditions apply. For one-time extensions,
the recipient must notify the Federal awarding agency
in writing with the supporting reasons and revised
expiration date at least 10 days before the expiration
date specified in the award. This one-time extension
may not be exercised merely for the purpose of using
unobligated balances.
(i) The terms and conditions of award prohibit
the extension.
•
(ii) The extension requires additional Federal
funds.
23
•
•
making any fund or budget transfers between the two types of
work supported.
(k) For both construction and nonconstruction awards, Federal
awarding agencies shall require recipients to notify the
Federal awarding agency in writing promptly whenever the
amount of Federal authorized funds is expected to exceed the
needs of the recipient for the project period by more than
$5000 or five percent of the Federal award, whichever is
greater. This notification shall not be required if an •
application for additional funding is submitted for a
continuation award. .
(1) When requesting approval for budget revisions, recipients
shall use the budget. forms that were used in the application
unless the Federal awarding -agency- indicates -a --letter -of
request suffices.
(m) Within 30 calendar days from the date of receipt of the
request for budget revisions, Federal awarding agencies
shall review the request and notify the recipient whether
the budget revisions have been approved. If the revision is
still under consideration at the end of 30 calendar days,
the Federal awarding agency shall inform the recipient in
writing of the -date when the recipient may expect the
decision.
.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organizations shall be subject
to the audit requirements contained in OMB Circular A-133 ,
"Audits of Institutions of Higher Education and Other Non-
' Profit Institutions. "
(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act (31 U.S.C.
7501-7) and Federal awarding agency regulations implementing
OMB Circular A-128, "Audits of State and Local
Governments."
(c) Hospitals not covered by the audit provisions of OMB
Circular A-133 shall be subject to the audit requirements of
the Federal awarding agencies.
(d) Commercial organizations shall be subject to the audit
requirements of the Federal awarding agency or the prime
recipient as incorporated into the award document.
.27 Allowable costs. For each kind of recipient, there is a
set of Federal principles for determining allowable costs.
Allowability of costs shall be determined in accordance with the
25
(a) Title to real property shall vest in the recipient subject
to the condition that the recipient shall use the real
property for the authorized. purpose of the project as long
as it is needed and shall not encumber the property without
approval of the Federal awarding agency.
(b) The recipient shall obtain written approval by the Federal
awarding agency for the use of real property in other
federally-sponsored projects when the recipient determines
that the property is no longer needed for the purpose of the
original project. Use in other projects shall be limited to
those under federally-sponsored projects (i.e. , awards) or
programs that have purposes consistent with those authorized
for support by the-_Federal awarding agency.
(c) When the real property is-no- longer-needed- as provided in
paragraphs (a) and (b) , the recipient shall request
disposition instructions from the Federal awarding agency or
its successor Federal awarding agency. The Federal awarding
agency shall observe one or more of the following
disposition instructions. .
(1) The recipient may be permitted to retain title without
further obligation to the Federal Government after it
compensates the Federal Government for that percentage
of the current fair market value of the property
attributable to the Federal participation in the
project.
(2) The recipient may be directed to sell the property
under guidelines provided by the Federal awarding
agency and pay the Federal Government for that
percentage of the current fair market value of the
property attributable to the Federal participation in
the project (after deducting actual and reasonable
selling and fix-up expenses, if any, from the sales
proceeds) . When the recipient is authorized or
required to sell the property, proper sales procedures
shall be established that provide for competition to
the extent practicable and result- in the highest
possible return.
(3) The recipient may be directed to transfer title to the
property to- the Federal Government or to an eligible
third party provided that, in such cases, the recipient
shall be entitled to compensation for its attributable
percentage of the current fair market value of the
property.
27
Federal funds and shall not encumber the property without
- approval of the Federal awarding agency. When no longer
needed for the original project or program, the recipient
shall use the equipment in connection with its other
federally-sponsored activities, in the following order of
priority: (i) Activities sponsored by the Federal awarding
agency which funded the original project, then (ii)
activities sponsored by other Federal awarding agencies.
(d) During the time that equipment is used on the project or
program for which it was acquired, the recipient shall make
it available for use on other projects or programs if such
other use will not interfere with the work on the project or
program for which the .equipment: was originally acquired.
First preference for such other use shall be given to other
projects or programs- sponsored-by-the -Federal awarding
agency that financed the equipment; second preference shall
be given to projects or programs sponsored by other Federal
awarding agencies. If the equipment is owned by the Federal
Government, use on other activities not sponsored by the
Federal-Government shall be permissible if authorized by the
Federal awarding agency. User charges shall be treated as
• program income.
. (e) When acquiring replacement equipment, the recipient may use •
the equipment to be replaced as trade-in or sell the
equipment and use the proceeds to offset the costs of: the
replacement equipment- subject to the approval of the Federal
awarding agency.
(f) The recipient's property management standards for equipment
acquired with Federal funds and federally-owned equipment
shall include all of the following.
(1) Equipment records shall be maintained accurately and
shall include the following information.
(i) A description of the equipment.
•
(iir Manufacturer's serial number, model number,
Federal stock number, national stock number,
or other identification number.
(iii) Source of the equipment, including the award
number.
(iv) Whether title vests in the recipient or the
Federal Government.
(v) Acquisition date (or date received, if the
equipment was furnished by the Federal
Government) and cost.
29
•
or its successor. The amount of compensation shall be
computed by applying the percentage of Federal participation
in the cost of the original project or program to the
current fair market value of the equipment. If the
recipient has no need for the equipment, the recipient shall
• request disposition instructions from the Federal awarding
agency. The Federal awarding agency shall determine whether
the equipment can be used to meet the agency's requirements.
If no requirement exists within that agency, the
availability of the equipment shall be reported to the
General Services Administration by the Federal awarding
agency to determine whether a requirement for the equipment
exists in other Federal agencies. The Federal awarding
agency shall issue instructions to the recipient no later
than 120 calendar days after the recipient's request and the
following procedures _shall govern-.• -
(1) If so instructed or if disposition instructions are not
issued within 120 calendar days after the recipient's
request, the recipient shall sell the equipment and
reimburse the Federal awarding agency_ an• amount -
computed by applying to the sales proceeds the
percentage of Federal participation in the cost of the
• original project or program. However, the recipient
shall be permitted to deduct and retain from the •
Federal share $500 or ten percent of the proceeds,
whichever is less, for the recipient's selling and
handling expenses.
(2) If the recipient is instructed to ship the equipment
elsewhere, the recipient shall be reimbursed by the
Federal Government by an amount which is computed by
applying the percentage of the recipient's
participation in the cost of the original project or
program to the current fair market value of the
equipment, plus any reasonable shipping or interim
storage costs incurred.
(3) If the recipient is instructed to otherwise dispose of
the equipment, the recipient shall be reimbursed by the
Federal awarding agency for such costs incurred in its
disposition.
(4) The Federal awarding agency may reserve the right to
transfer the title to the Federal Government or to a
third party named by the Federal Government when such
third party is otherwise eligible under existing
statutes. Such transfer shall be subject to the
following standards.
31
•
regulations issued by the Department of Commerce at 37 CFR
part 401, "Rights to Inventions Made by Nonprofit
Organizations and Small Business Firms Under Government
Grants, Contracts and Cooperative Agreements."
(c) Unless waived by the Federal awarding agency, the Federal
Government has the right to (1) and (2) . •
(1) Obtain, reproduce, publish or otherwise use the data
• first produced under an award.
(2) Authorize others to receive, reproduce, publish, or
otherwise use such data for Federal purposes.
(d) Title to intangible property and debt instruments acquired
under an award or- subaward vests-upon acquisition in the-
recipient. The recipient shall use that property for the
originally-authorized purpose, and the recipient shall not
encumber the property without approval of the Federal
awarding agency. When no longer needed for the originally
authorized purpose, disposition of the intangible property.
shall occur in accordance with the provisions of paragraph
.34 (g) . - • -
.37 Property trust relationship. Real property, equipment,
intangible property and debt instruments that are acquired or
improved with Federal funds shall be held in trust by the
recipient as trustee for the beneficiaries of the project or
program under which the property was _acquired or improved.
Agencies may require recipients to record liens _or other
appropriate notices of record to indicate that personal or real
property has been acquired or improved with Federal funds and •
that use and disposition conditions apply to the property.
•
procurement Standards - •
.40 Purpose of procurement standards. Sections .41
through .43 set forth standards for use by recipients in
establishing procedures for the procurement of supplies and other
expendable property, equipment, real property and other services
with Federal funds. These standards are furnished to ensure that
such materials and services are obtained in an effective manner •
and in compliance with the provisions of applicable Federal
statutes and executive orders. No additional procurement
standards or requirements shall be imposed by the Federal
awarding agencies upon recipients, unless specifically required
by Federal statute or executive order or approved by OMB.
.41 Recipient responsibilities. The standards contained in
this section do not relieve the recipient of the contractual
responsibilities arising under its contract(s) . The recipient is
the responsible authority, without recourse to the Federal
33 •
•
•
(1) Recipients avoid purchasing unnecessary items.
• (2) Where appropriate, an •analysis is made of lease and
purchase alternatives to determine which would be the
most economical and practical procurement for the
Federal Government.
(3) Solicitations for goods and services provide for all of
the following. -
(i) A clear and accurate description of the
technical requirements for the material,
product or service to be procured. In
competitive procurements, such a description
shall not contain .features which unduly
restrict -competition: - . •
(ii) Requirements which the bidder/offeror must
fulfill and all other factors to be used in
evaluating bids or proposals.
(iii) A description, whenever practicable, of
technical requirements in terms of functions -
to be performed or performance required,
including the range of acceptable
characteristics or minimum acceptable
standards.
(iv) The specific features of "brand name or
equal" descriptions that bidders are required
to meet when such items are included in the
solicitation.
(v) The acceptance, to the extent practicable and
economically feasible, of products and
services dimensioned in the metric system of
measurement.
(vi) Preference, to the extent practicable and
economically feasible, for products and
services that conserve natural resources and
protect the environment and are energy
efficient.
(b) Positive efforts shall be made by recipients to utilize
small businesses, minority-owned firms, and women's business
' enterprises, whenever possible. Recipients of Federal
awards shall take all of the following steps to further this
goal.
35
•
(1) A recipient's procurement procedures or operation fails
to comply with the procurement standards in the Federal
awarding agency's implementation of •this Circular. •
(2) The procurement is expected to exceed the small
purchase threshold fixed at 41 U.S.C. 403 (11)
(currently $25,000) and is to be awarded without
competition or only one bid or offer is received in
response to a solicitation.
(3) The procurement, which is expected to exceed the small
purchase threshold, specifies a "brand name" product. .
(4) The proposed award over the small purchase threshold is.
to be awarded to other than the apparent low bidder
under a sealed:bid. procurement. - - - -
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than
the amount of the small purchase threshold.
.45 Cost and price analysis. Some form of cost or price
analysis shall be made and documented in the procurement files in
connection with every procurement action. Price analysis may be
accomplished in various ways, including the comparison of price
quotations -submitted, market prices and Similar indicia, together
with discounts. Cost analysis is the review and evaluation of
each element of cost to determine reasonableness, allocability .
and allowability.
.46 Procurement records. Procurement records and files for
purchases in excess of the small purchase threshold shall include
the following at a minimum: (a) basis for contractor selection,
(b) justification for lack of competition when competitive bids
or offers are not obtained, and (c) basis for award cost or
price.
.47 .Contract administration. A system for contract
administration shall be maintained to ensure contractor
conformance with the terms, conditions and specifications of the
contract and to ensure adequate and timely follow up of all
purchases. Recipients shall evaluate contractor performance and
document, as appropriate,- whether contractors have met the terms,
conditions and specifications of the contract.
.48 Contract provisions. The recipient shall include, in
addition to provisions to define a sound and complete agreement,
the following provisions in all contracts. The following
provisions shall also be applied to subcontracts.
•
(a) Contracts in excess of the small purchase threshold shall
contain contractual provisions or conditions that allow for
37
sureties pursuant to 31 CFR part 223, "Surety Companies
Doing Business with the United States. "
(d) All negotiated contracts (except those for less than the
small purchase threshold) awarded by recipients shall
include a provision to the effect that the recipient, the
Federal awarding agency, the Comptroller General of the
United States, or any of their duly authorized
representatives, shall have access to any books, documents,
papers and records of the contractor which are directly
pertinent to a specific program for the purpose of making
audits, examinations, excerpts and transcriptions.
(e) All contracts, including small purchases, awarded by
recipients and their .contractors shall contain the
procurement provisions-of Appendix-A to this Circular, as
applicable.
Reports and Records,
•
.50 Purpose of reports and records. Sections .51
through .53 set forth the procedures for monitoring and -
reporting on the recipient's financial and program performance
and the necessary standard reporting forms. They also set forth
record retention requirements. •
.51 Monitoring and reporting program performance.
(a) Recipients are responsible for managing and monitoring each
project,. program, subaward, function or activity supported
by the award. Recipients shall monitor subawards to ensure
subrecipients have met the audit requirements as delineated
in Section .26. '
•
(b) The Federal awarding agency shall prescribe the frequency
with which the performance reports shall be submitted.
Except as provided in paragraph .51(f) , performance
reports shall not be required more frequently than quarterly
or, less frequently than annually. Annual reports shall be
due 90 calendar days after the- grant year; quarterly or
semi-annual reports shall be due 30 days after the reporting
period. The Federal awarding agency may require annual
reports before the anniversary dates of multiple year awards
in lieu of these requirements. The final performance -
reports are due 90 calendar days after the expiration or
termination of the award.
(c) If inappropriate, a final technical or performance report
shall not be• required after completion of the project.
(d) When required, performance reports shall generally contain,
for each award, brief information on each of the following.
39
•
•
be required at the completion of the project
when the SF-270 -is-used -only for advances.-
(ii) The Federal awarding agency shall prescribe
whether the report shall be on a cash or
accrual basis. If the Federal awarding
agency requires accrual information and the
• recipient's accounting records are not
normally kept on the accrual basis, the
recipient shall not be required to convert
its accounting system, but shall develop such
accrual information through best estimates
based on an analysis of the documentation on
hand. -
(iii) The Federal awarding-agency shall determine
the frequency of the Financial Status Report
for each project or program, considering the
• size and complexity of the particular project
or program. However, the report shall not be
required more frequently than quarterly or
less frequently than annually.- A final
• report shall be required at the completion of
the agreement.
(iv) The Federal awarding agency shall require
recipients to submit the SF-269 or SF-269A
(an original and no more than two copies) no
later than 30 days after the end of each
specified reporting period for quarterly and
semi-annual reports, and 90 calendar days for
annual and final reports. Extensions of
reporting due dates may be approved by the
Federal awarding agency upon request of the
recipient.
(2) SF-272, Report of Federal Cash Transactions.
(i) When funds are advanced to recipients the
Federal awarding agency. shall require each
recipient to submit the SF-272 and, when
'necessary, its continuation sheet, SF-272a.
- The Federal awarding agency shall use this
report to monitor cash advanced to recipients
and to obtain disbursement information for
each agreement with the recipients.
(ii) Federal awarding agencies may require
forecasts of Federal cash requirements in the
"Remarks" section of the report.
41
•
•
(4) Federal awarding agencies may accept the identical
• information from the recipients in machine readable
format or computer printouts or electronic outputs in
lieu of prescribed formats.
•
(5) Federal awarding agencies may provide computer or
electronic outputs to recipients when such expedites or
contributes to the accuracy of reporting.
.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention
and access to records for awards to recipients. Federal
awarding agencies shall not impose any other record
retention or access requirements upon recipients.
(b) Financial records, supporting documents, statistical
records, and all other records pertinent to an award shall
be retained for a period of three years from the date of
submission of the final expenditure report or, for awards
that are renewed quarterly or annually, from the date of the
submission of the quarterly or annual financial report, as
• authorized by the Federal awarding agency. The only
exceptions are the following.
•
(1) If any litigation, claim, or audit is started before
the expiration of the 3-year period, the records shall
be retained until all litigation, claims or audit •
findings involving the records have been resolved and
final action taken.
(2) Records for real property and. equipment acquired with
Federal funds shall be retained for 3 years after final -
disposition.
(3) When records are transferred to or maintained by the
Federal awarding agency, the 3-year retention
requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans,
etc. as specified in paragraph .53 (g) .
(c) Copies of original records may be substituted for the
original records if authorized by the Federal -awarding
agency.
(d) The Federal awarding agency shall request transfer of
certain records to its custody from recipients when it
determines that the records possess long term retention
value. However, in order to avoid duplicate recordkeeping,
a Federal awarding agency may make arrangements for
43
•
Termination and Enforcement _
.60 Purpose of termination and enforcement. Sections
.61 and .62 set forth uniform suspension, termination and
enforcement procedures.
.61 Termination.
(a) Awards may be terminated in whole or in part only if (1) ,
(2) or (3) apply.
(1) By the Federal awarding agency, if a recipient
materially fails to comply with the terms and
conditions of an award.
(2) By the Federal •awarding'agency 'with the consent of the
recipient, in which case the two parties shall agree
upon the termination conditions, including the
effective date and, in the case of partial termination,
the portion to be terminated.
(3) By the recipient upon sending to the Federal awarding
agency written notification setting forth the reasons
for such termination, the effective date, and, in the
case of partial termination, the portion to be _ •
terminated. However, if the Federal .awarding agency
determines in the case of partial termination that the
reduced or modified portion of the grant will not
- accomplish the purposes for which the grant was made;
it may terminate the grant in its entirety under either
paragraphs (a) (1) or (2) .
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in paragraph .71(a) , including
those for property management as applicable, shall be
considered in the termination of the award, and provision
shall be made for continuing responsibilities of the
recipient after termination, as appropriate.
.62 Enforcement.
(a) Remedies for noncompliance. If a recipient materially fails
-to comply with the terms and conditions of an award, whether
stated in a Federal statute, regulation,- assurance,
application, or notice of award, the Federal awarding agency -
may, in addition to imposing any of the special conditions
outlined in Section .14, take one or more of the
following actions, as appropriate in the circumstances.
(1) Temporarily withhold cash payments pending correction
of the deficiency by the recipient or more severe
enforcement action by the Federal awarding agency.
45
•
•
.71 Closeout procedures.
(a) Recipients shall submit, within- 90 calendar days after the
date of completion of the award, all financial, performance,
and other reports as required by the terms and conditions of
the award.' The Federal awarding agency may approve
extensions when requested by the recipient.
•
(b) Unless the Federal awarding agency authorizes an extension,
a recipient shall liquidate all obligations incurred under
the award not later than 90 calendar days after the funding
period or the date of completion as specified in the terms
and conditions of the award or in agency implementing
instructions.
(c) The Federal awarding-agency -shall-make prompt payments to a
recipient for allowable reimbursable costs under the award
being closed out. _ _
(d) The recipient shall promptly refund any balances of
unobligated cash that the Federal awarding agency has
advanced or paid and that is not authorized to be retained
by the recipient for use in-other projects. OMB Circular A-
129 governs unreturned amounts that become delinquent debts.
(e) When authorized by the terms and conditions of the award,
the Federal awarding agency shall make a settlement for any
upward or downward adjustments to the Federal share of costs
after closeout reports are received.
(f) The recipient shall account for any real and personal
•
property acquired with Federal funds or received from the
Federal Government in accordance with Sections .31
through .37.
(g) In the event a final audit has not been performed prior to
the closeout of an award, the Federal awarding agency shall -
retain the right to recover an appropriate amount after
fully considering the recommendations on disallowed costs
resulting from the final audit.
.72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the
following.
(1) The right of the Federal awarding agency to disallow
- costs and recover funds on the basis of a later audit
or other review.
47
Appendix A •
• Contract Provisions
All contracts, awarded by a recipient including small
purchases, shall contain the following provisions as applicable:
' 1. Equal Employment Opportunity - All contracts shall contain a
provision requiring compliance with E.O. 11246, "Equal Employment
Opportunity," as amended by E.O. 11375, "Amending Executive Order
11246 Relating to Equal Employment Opportunity, " and as
supplemented by regulations at 41 CFR part 60, "Office of Federal
Contract Compliance Programs, Equal Employment Opportunity,
Department of Labor."
2. Copeland "Anti-Kickback" ACt (-18 U•.S;C. 874 and 40 U.S.C.
276c) - All contracts and subgrants in excess of $2000 for
construction or repair awarded by recipients and subrecipients
shall include a provision for compliance with the Copeland "Anti-
Kickback" Act (18 U.S.C. 874) , as supplemented by Department of
Labor regulations (29 CFR part 3, "Contractors_ and Subcontractors
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 subrecipient shall be prohibited from
inducing, by any mean's, any person employed in the construction,
completion, or repair of public work, to give up any part of the
compensation to -which he is otherwise entitled._ The_ recipient
shall report all suspected or reported violations to the Federal
awarding agency.
3. pavis-Bacon Act, as amended (40 U.S.C. 276a to a-71 - When
required by Federal program legislation, all construction
contracts awarded by the recipients and subrecipients of more
than $2000 shall include a provision for compliance with the
Davis-Bacon Act (40 U.S.C. 276a to a-7) and as supplemented by
Department of Labor regulations (29 CFR part 5, "Labor Standards
Provisions Applicable to Contracts Governing Federally Financed
and Assisted Construction") . Under this Act, contractors shall
be required to pay wages to laborers and mechanics at a rate not
less than the minimum wages specified in a wage determination
made by the Secretary of Labor. In addition, contractors shall
be required to pay wages not less than once a week. The
. recipient shall place a copy of the current prevailing wage
determination issued by the Department of Labor in each
solicitation and the award of a contract shall be conditioned
upon the acceptance of the wage determination. The recipient
shall report all suspected or reported violations to the Federal
awarding agency.
4 . Contract Work Hours And Safety Standards Act (40 UL.C. 327-
;33) - Where applicable, all contracts awarded by recipients in
excess of $2000 for construction contracts and in excess of $2500
49
•
•
• 8. Debarment and Suspension (E.O.s 12549 and 12689) - No
contract shall be made to parties listed on the General Services
Administration's List of Parties Excluded from Federal
Procurement or Nonprocurement Programs in accordance with E.O.s
12549 and 12689, "Debarment and Suspension. " This list contains
the names of parties debarred, suspended, or otherwise excluded
by agencies, and contractors declared ineligible under statutory
or regulatory authority other than E.O. 12549. Contractors with
awards that exceed the small purchase threshold shall provide the
required certification regarding its exclusion status and that of
its principal employees.
•
•
•
•
•
•
•
51
•
09:0642 HOUSING AND DEVELOPMENT REPORTER
8)Rehabilitation loans made with non- (d) Outstanding findings. •twith- §570.601 Public Law 88-352 and
CD:G funds. If the deposited funds o s,.nding any other provision o this sec- Public Law 90-284; affirmatively
pro: .m income derived from deposit:• ti•', no recipient shall enter . to a new furthering fair housing; Executive Order
fun. are used to subsidize or guaran -e agre- ent during any peri•.i of time in 11063.
repay, ents of rehabilitation loans m.de which •n audit or monitor' g finding on a
with •n-CDBG funds, or to provi.- a previou ump sum draw.own agreement (a) The following requirements apply
supple ental loan or grant to the bor ow- remains u'resolved. according to sections 104(b) and 107 of
er of the non-CDBG funds,the reha. lita- (e) Prior notificati,n. The recipient the Act:
tion a ivities are considered t. be shall provide e H - • field office with (1)Public Law 88-352,which is title VI
CDBG-a sisted activities subject o the written notific• io' of the amount of of the Civil Rights Act of 1964(42 U.S.C.
requirem. is applicable to such activi- funds to be distri•. ted to a private finan- 2000d et seq.), and implementing regula-
ties,excep that repayment of no CDBG cial institution -e • e distribution under tions in 24 CFR part 1.
funds sha not be treated as •rogram the provision of th section. (2) Public Law 90-284, which is the
income. (f) Recor. eeping •quirements. The Fair Housing Act (42 U.S.C. 3601-3620).
(9) Provi on of consideratio . In con- recipient s all maintain • its files a copy In accordance with the Fair Housing Act,
sideration f. the lump sum .eposit by of the ritten agreemen and related the Secretary requires that grantees
the recipient a private Tina ial institu- docu nts establishing 'nformance administer all programs and activities
tion, the dep• it must result n appropri- wit his section and concern! : perfor- related to housing and community devel-
ate benefits in support of t e recipient's m• ce by a financial institution i .ccor- opment in a manner to affirmatively
local rehabilita ion progr . Minimum '•nce with the agreement. further the policies of the Fair Housing
requirements fo such be efits are: _ Act. Furthermore, in accordance with
(i) Grantees s .11 requ',e the financial Subpart K—Other Program section 104(b)(2) of the Act, for each _
institution to pa inter: t on the lump Requirements — community receiving a grant under sub-
sum deposit. part D of this part, the certification that
(A)The interest ate .aid by the finan- the grantee will affirmatively further fair
cial institution sh.11 .e no more than §t 70.60Q General. housing shall specifically require the
three points below e rate on one year grantee to assume the responsibility of
Treasury obligation- at constant maturi- (a) This subpart K enumerates laws fair housing planning by conducting an
ty. that the Secretary will treat as applicable analysis to identify impediments to fair
(B) When an ay :-ment sets a fixed to grants made under section 106 of the housing choice within its jurisdiction,
interest rate fort e -ntire term of the Act, other than grants to States made taking appropriate actions to overcome
agreement, the ra e s ould be based on pursuant to section 106(d) of the Act. for the effects of any impediments identified
the rate at the ime the agreement is purposes of the Secretary's determina- through that analysis, and maintaining
executed. tions under section 104(e)(1) of the Act, records reflecting the analysis and actions
(C)The agree ent m y provide for an including statutes expressly made appli- in this regard.
interest rate th. would 'uctuate periodi- cable by the Act and certain other statutes (b)Executive Order 11063,as amended
cally during t - term o' the agreement, and Executive Orders for which the Sec- by Executive Order 12259 (3 CFR, 1959-
but at no time-hall the rat.- be established retary has enforcement responsibility. 1963 Comp.,p.652;3 CFR, 1980 Comp.,
at more than hree points below the rate This subpart K applies to grants made P. 307) (Equal Opportunity in Housing),
on one year reasury obli.ations at con- under the Insular areas program in and implementing regulations in 24 CFR
stant maturi- . §570.405, with the exception of part 107, also apply.
(ii) In addition to the payment of §570.612.The absence of mention herein
interest, at least one of ,' e following of any other statute for which the Secre- §570.602 Section 109 of the Act.
benefits m st be provided ∎y the finan- tary does not have direct enforcement
cial instit ion: responsibility is not intended to be taken (a) Section 109 of the Act requires that
(A) Lev'rage of the deposit-d funds so as an indication that, in the Secretary's no person in the United States shall on
that the financial institutio i commits opinion, such statute or Executive Order the ground of race,color,religion,nation-
private f nds for loans in the rehabilita- is not applicable to activities assisted al origin,or sex,be excluded from partici-
tion pro:A am in an amount s '.stantially under the Act. For laws that the Secretary pation in, or be denied the benefits of, or
in exces• of the amount of the ump sum will-treat as applicable to grants made to be subjected to discrimination under,any
deposit; States under section 106(d)of the Act for program or activity funded in whole or in
(B) lommitment of private unds by purposes of the determination required to part with community development funds
the fin.ncial institution for reha,ilitation be made by the Secretary pursuant to made available pursuant to the Act. For
loans -t below market interest aces, at section 104(e)(2) of the Act, see purposes of this section "program or
higher than normal risk, or wit, longer §570.487. activity" is defined as any function con-
than ormal repayment periods; or (b) This subpart also sets forth certain ducted by an identifiable administrative
(C) Provision of administrati e ser- additional program requirements which unit of government, subrecipient, or pri-
vices in support of the rehabi 'tation the Secretary has determined to be appli- vate contractor receiving community de-
pro: am by the participating fi ancial cable to grants provided under the Act as velopment funds or loans from the recipi-
insti ution at no cost or at lowe than a matter of administrative discretion. ent. "Funded in whole or in part with
act . cost. (c)In addition to grants made pursuant community development funds" means
(') Program income. Interest earn-d on to section 106(b) and 106(d)(2)(B) of the that community development funds in
lu p sum deposits and payment. on Act (Subparts D and F, respectively), the any amount in the form of grants or
lo ns made from such deposits are pro- requirements of this Subpart K are appli- proceeds from HUD guaranteed loans
: am income and, during the penis• of cable to grants made pursuant to sections have been transferred by the recipient or
e agreement, shall be used for reh bili- 107 and 119 of the Act (Subparts E and a subrecipient to an identifiable adminis-
tation activities under the provisio s of G, respectively), and to loans guaranteed trative unit and disbursed in a program or
this section. pursuant to Subpart M. activity. In subsection (b) of the section,
Published by Warren Gorham Lamont
COMMUNITY DEVELOPMENT 09:0643
. HDR RF-582
4-29-96
"subrecipient" means recipient as identi- is sufficient evidence to conclude that (b) The regulations in 24 CFR part 70
fled in 24 CFR 1.2(1). such discrimination existed. the recipient apply to the use of volunteers.
(b)Specific discriminatory actions pro- must take remedial affirmative action to
hibited and corrective actions. overcome the effects of prior discrimina- §570.604 Environmental standards.
(1) A recipient may not, under any tion. The word "previously does not
program or activity to which the regula- exclude current discriminatory practices. For purposes of section 104(g) of the
tions of this part may apply, directly or (ii) In the absence of discrimination, a Act, the regulations in 24 CFR part 58
through contractual or other arrange- recipient, in administering a program or specify the other provisions of law which
merits, on the ground of race, color, activity funded in whole or in part with further the purposes of the National Envi-
religion, national origin, or sex: funds made available under this part, ronmental Policy Act of 1969, and the
(i) Deny any individual any facilities, may take any nondiscriminatory affirma- procedures by which grantees must fulfill
services, financial aid or other benefits tive action necessary to ensure that the their environmental responsibilities. In
provided under the program or activity. program or activity is open to allow certain cases,grantees assume these envi-
(ii) Provide any facilities, services, fi- without regard to race, color, religion, ronmental review, decisionmaking, and
nancial aid or other benefits which are national origin or sex. action responsibilities by execution of
different, or are provided in a different (iii) After a finding of noncompliance grant agreements with the Secretary.
form, from that provided to others under or after a recipient has a firm basis to
the program or activity. conclude that discrimination has oc- §570.605 National Flood Insurance
(iii)Subject an individual to segregated curred,a recipient shall not be prohibited Program.
or separate treatment in any matter of by this section from taking any action
process related to receipt of any service or eligible under Subpart C to ameliorate an Notwithstanding the date of HUD ap-
benefit under the program or activity. imbalance in services or facilities provid- proval of the recipient's application (or,
(iv) Restrict an individual in any way ed to any geographic area or specific in the case of grants made under subpart
in access to, or in the enjoyment of, any group of persons within its jurisdiction, D of this part or HUD-administered
advantage or privilege enjoyed by others where the purpose of such action is to small cities recipients in Hawaii, the date
in connection with facilities, services, remedy prior discriminatory practice or of submission of the grantee's consoli-
financial aid or other benefits under the usage. _ dated plan, in accordance with 24 CFR
(5) Notwithstanding anything to the part 91), section 202(a) of the Flood
program or activity. P
(v)Treat an individual differently from contrary iin this section. nothing con- Disaster Protection Act of 1973 (42
others in determining whether the indi- tamed herein shall be construed to pro U.S.C. 4106) and the regulations in 44
vidual satisfies any admission, enroll- hibit any recipient from maintaining or CFR parts 59 through 79 apply to funds
constructing separate living facilities or provided under this part 570.
ment, eligibility, membership, or other P P
requirement or condition which the indi- rest room facilities for the different sexes.
vidual must meet in order to be provided Furthermore, selectivity on the basis of §570.606 Displacement, relocation,
sex is not prohibited when institutional or
any facilities, services or other benefit custodial services can properly be per- acquisition, and replacement of housing.
provided under the program or activity. formed only by a member of the same sex
(vi) Deny an individual an opportunity as the recipients of the services. (a) General policy for minhtni:ing dis-
to participate in a program or activity as placement. Consistent with the other
(c) Section 109 of the Act further goals and objectives of this part, grantees
an(2)P Al recipient cipient may not use criteria or Provides that any prohibition against (or States or state recipients, as applica-
discrimination on the basis of age under
methods of administration which have ble) shall assure that they have taken all
the Age Discrimination Act of 1975 (42
the effect of subjecting persons to dis- reasonable steps to minimize the dis-
U.S.C. 6101 et seq.) or with respect to an placement of persons (families, individu
crimination on the basis of race, color, P P
otherwise qualified handicapped person
religion, national origin, or sex, or have als, businesses, nonprofit organizations,
the effect of defeating or substantially as provided in section 504 of the Rehabil- and farms)as a result of activities assisted
itation Act of 1973 (29 U.S.C. 794) shall
impairing accomplishment of the objet- also apply to any program or activity under this part.
tives of the program or activity with (b) Relocation assistance for displaced
funded in whole or in part with funds
respect to persons of a particular race, persons at URA levels. (I) A displaced
made available pursuant to the Act. HUD
color, religion, national origin, or sex. person shall be provided with relocation
regulations implementing the Age Dis-
(3) A recipient, in determining the site crimination Act are contained in 24 CFR assistance at the levels described in, and
or location of housing or facilities provid- in accordance with the requirements of
ed in whole or in part with funds under Part 146 and the regulations implement- 49 CFR part 24, which contains the
this part,may not make selections of such ing section 504 are contained in 24 CFR government-wide regulations implement-
Part 8.
site or location which have the effect of ing the Uniform Relocation Assistance
excluding persons from,denying them the and Real Property Acquisition Policies
benefits of,or subjecting them to discrim- §570.603 Labor standards. Act of 1970 (URA) (42 U.S.C. 4601-
ination on the ground of race, color, 4655).
religion, national origin, or sex; or which (a) Section 110(a) of the Act contains (2)Displaced person. (i)For purposes of
have the purpose or effect of defeating or tabor standards that apply to nonvolun- paragraph (b) of this section, the term
substantially impairing the accomplish- teer labor financed in whole or in part "displaced person" means any person
ment of the objectives of the Act and of with assistance received under the Act. In (family, individual, business, nonprofit
this section. accordance with section 110(a)of the Act, organization, or farm) that moves from
(4)(i) In administering a program or the Contract Work Hours and Safety real property,or moves his or her person-
activity funded in whole or in part with Standards Act(40 U.S.C. 327 et seq.)also al property from real property, perma-
CDBG funds regarding which the recipi- applies. However, these requirements ap- nently and involuntarily,as a direct result
ent has previously discriminated against ply to the rehabilitation of residential of rehabilitation, demolition, or acquisi-
persons on the ground of race, color, property only if such property contains tion for an activity assisted under this
religion,national origin,or sex,or if there not less than 8 units. part. A permanent, involuntary move for
Published by Warren Gorham Lament
09:0644 HOUSING AND DEVELOPMENT REPORTER
an assisted activity includes a permanent provide relocation assistance under this ted under this part must be replaced with
move from real property that is made: section; low/moderate-income dwelling units.
(A) After notice by the grantee (or the (B) A person who moves into the (ii) Replacement low/moderate-income
state recipient, if applicable) to move property after the date of the notice dwelling units may be provided by any
permanently from the property, if the described in paragraph (b)(2)(i)(A) or(B) government agency or private developer,
move occurs after the initial official sub- of this section,but who received a written and must meet the following require-
mission to HUD(or the State, as applica- notice of the expected displacement be- ments:
ble) for grant, loan, or loan guarantee fore occupancy. (A) The units must be located within
funds under this part that are later pro- (C) A person who is not displaced as the jurisdiction of the grantee(or the state
vided or granted. described in 49 CFR 24.2(g)(2). recipient, as applicable). To the extent
(B) After notice by the property owner (D)A person who the grantee(or State, feasible and consistent with other statuto-
to move permanently from the property, as applicable)determines is not displaced ry priorities, the units shall be located
if the move occurs after the date of the as a direct result of the acquisition, within the same neighborhood as the
submission of a request for financial rehabilitation, or demolition for an assis- units replaced.
assistance by the property owner (or ted activity. To exclude a person on this (B) The units must be sufficient in
person in control of the site) that is later basis, HUD must concur in that determi- number and size to house no fewer than
approved for the requested activity. nation. the number of occupants who could have
(C) Before the date described in para- (iii) A grantee (or State or state recipi- been housed in the units that are demol-
graph (b)(2)(i)(A)or(B) of this section, if ent, as applicable) may, at any time, ished or converted. The number of occu-
either HUD or the grantee (or State, as request HUD to determine whether a pants who could have been housed in
applicable) determines that the displace- person is a displaced person under this units shall be determined in accordance
ment directly resulted from acquisition, section. — with applicable local housing occupancy
rehabilitation, or demolition for the re- (3)-Initiation of negotiations. For pur- codes. The grantee (or state recipient, as
quested activity. poses of determining the type of replace- applicable) may not replace those units
(D) After the "initiation of negotia- ment housing assistance to be provided with smaller units(e.g.,a 2-bedroom unit
tions"if the person is the tenant-occupant under paragraph (b)of this section, if the with two 1-bedroom units), unless the
of a dwelling unit and any one of the displacement is the direct result of pri-' grantee (or state recipient, as applicable)
following three situations occurs: vately undertaken rehabilitation, demoli- has provided the information required
(I) The tenant has not been provided tion, or acquisition of real property, the under paragraph (c)(1)(iii)(G) of this sec-
with a reasonable opportunity to lease term "initiation of negotiations" means tion.
and occupy a suitable decent, safe, and the execution of the grant or loan agree- (C) The units must be provided in
sanitary dwelling in the same building/ ment between the grantee (or State or standard condition. Replacement low/
complex upon the completion of the state recipient, as applicable) and the moderate income dwelling units may in-
project, including a monthly rent that person owning or controlling the real etude units that have been raised to
does not exceed the greater of the tenant's property. standard from substandard condition if:
monthly rent and estimated average utili- (c) Residential antidisplacement and (1) No person was displaced from the
ty costs before the initiation of negotia- relocation assistance plan. In accordance unit as a direct result of an assisted
[ions or 30 percent of the household's with section 104(d) of the Act, each activity (see definition of "displaced per-
average monthly gross income; or grantee must adopt, make public, and son"in paragraph(c)(3)(ii)of this section;
(2) The tenant is required to relocate certify (or, as applicable, each State must and
temporarily for the activity but the tenant ensure that each state recipient adopts, (2) The unit was vacant for at least
is not offered payment for all reasonable makes public, and certifies to the State) three months before execution of the
out-of-pocket expenses incurred in con- that it is following a residential antidis- agreement between the grantee and the
nection with the temporary relocation, placement and relocation assistance plan property owner.
including the cost of moving to and from providing one-for-one replacement units (D) The units must initially be made
available for occupancy at any time dur-
the temporary location and any increased (paragraph (c)(1) of this section), and
housing costs, or other conditions of the relocation assistance (paragraph (c)(2) of ing the period beginning one year before•
temporary relocation are not reasonable; this section). As applicable, section the grantee's(or state recipient's,as appli-
cable) submission of the information re-
and the tenant does not return to the 106(d)(5)(A) of the Act requires the state quired under paragraph (c)(1)(iii) of this
building/complex; or recipient also to certify to the State that it section and ending three years after the
(3) The tenant is required to move to will minimize displacement of persons as commencement of the demolition or re- -
another unit in the building/complex, but a result of assisted activities. Except with habilitation related to the conversion.
is not offered reimbursement for all rea- regard to the State CDBG Program, the (E) The units must be designed to
sonable out-of-pocket expenses incurred plan shall also indicate the steps that will remain low/moderate-income dwelling
in connection with the move. be taken consistent with other goals and units for at least 10 years from the date of
(ii) Notwithstanding the provisions of objectives of this part to minimize the initial occupancy.Replacement low/mod-
paragraph (b)(2)(i) of this section, the displacement of families and individuals erate-income dwelling units may include,
term "displaced person-" does not in- from their homes and neighborhoods as a but are not limited to, public housing, or
elude: result of any activities assisted under this existing housing receiving Section 8
(A) A person who is evicted for cause part. project-based assistance under the United
based upon serious or repeated violations (1) One-for-one replacement of low/ States Housing Act of 1937.
of material terms of the lease or occupan- moderate-income dwelling units. (i) All (iii) Before the grantee (or state recipi-
cy agreement.To exclude a person on this occupied and vacant occupiable low/ ent, as applicable) enters into a contract
basis,the grantee(or State or state recipi- moderate-income dwelling units that are committing it to provide funds under this
ent, as applicable) must determine that demolished or converted to a use other part for any activity that will directly
the eviction was not undertaken for the than as low/moderate-income dwelling result in the demolition of low/moderate-
purpose of evading the obligation to units in connection with an activity assis- income dwelling units or the conversion
Published by Warren Gorham Lamont
COMMUNITY DEVELOPMENT 09:0645
HDR RF-582
4-29-96
of low/moderate-income dwelling units to on the ability of low- and moderate-in- in such a manner that, to the extent
another use, the grantee (or state recipi- come households to find suitable housing. feasible, will provide a choice between
ent,as applicable) must make public, and HUD will consider relevant evidence of relocating within their neighborhoods
submit the following information in writ- housing supply and demand including, and other neighborhoods consistent with
ing to the HUD Field Office (or State, as but not limited to, the following factors: the responsibility of the grantee (or the
applicable) for monitoring purposes: the housing vacancy rate in the jurisdic- state recipient, as applicable) to affirma-
(A)A description of the proposed assis- tion;the number of vacant low/moderate- tively further fair housing;
ted activity; income dwelling units in the jurisdiction (ii)Payment for moving expenses at the
(B)The location on a map and number (excluding units that will be demolished levels described in 49 CFR part 24,
of dwelling units by size (number of or converted); the number of eligible subpart D.
bedrooms) that will be demolished or families on waiting lists for housing assis- (iii)The reasonable and necessary cost
converted to a use other than for low/ ted under the United States Housing Act of any security deposit required to rent
moderate-income dwelling units as a di- of 1937 in the jurisdiction; the needs the replacement dwelling unit, and for
rect result of the assisted activity; analysis contained in any applicable credit checks required to rent or purchase
(C)A time schedule for the commence- HUD-approved consolidated plan; and the replacement dwelling unit.
ment and completion of the demolition relevant past or predicted demographic (iv) Interim living costs. The grantee
or conversion; changes. (or state recipient, as applicable) shall
(D) The location on a map and the (B) HUD may consider the supply of reimburse a person for actual reasonable
number of dwelling units by size(number vacant low/moderate-income dwelling out-of-pocket costs incurred in connec-
of bedrooms) that will be provided as units in a standard condition available on tion with temporary relocation, including
replacement dwelling units. If such data a nondiscriminatory basis in an area that moving expenses and increased housing
are not available at the time of the general is larger than the jurisdiction of the costs, if:
submission, the submission shall identify grantee(or state recipient, as applicable). (A)The person must relocate temporar-
the general location on an area map and Such additional dwelling units shall be ily because continued occupancy of the
the approximate number of dwelling considered if the Field Office determines dwelling unit constitutes a substantial
units by size,and information identifying that the units would be suitable to serve danger to the health or safety of the
the specific location and number of dwell- the needs of the low- and moderate-in- person or the public; or
ing units by size shall be submitted and come households that could be served by (B) The person is displaced from a
disclosed to the public as soon as it is the low/moderate-income dwelling units "low/moderate-income dwelling unit,"
available; that are to be demolished or converted to none of the comparable replacement
(E) The source of funding and a time another use.HUD will base this determi- dwelling units to which the person has
schedule for the provision of replacement nation on geographic and demographic been referred qualifies as a low/moderate-
dwelling units; factors, such as location and access to income dwelling unit (defined in para-
(F)The basis for concluding that each places of employment and to other facili- graph (c)(3)(iii) of this section), and a
replacement dwelling unit will remain a ties. suitable low/moderate-income dwelling
low/moderate-income dwelling unit for at (C) The grantee (or state recipient, as unit is scheduled to become available in
least 10 years from the date of initial applicable) must submit the request for accordance with paragraph (c)(1) of this
occupancy; and determination under paragraph (c)(1)(iv) section. (Because a "comparable replace-
(G) Information demonstrating that of this section directly to the Field Office merit dwelling unit"may be made afford-
any proposed replacement of dwelling (or State, as applicable). Simultaneously able to a person through a rental assis-
units with smaller dwelling units (e.g., a with the submission of the request, the tance payment and its market rent may
2-bedroom unit with two 1-bedroom grantee (or state recipient, as applicable) exceed the Fair Market Rent (FMR)
units) is consistent with the needs analy- must make the submission public and under the Section 8 Existing Housing
sis contained in the HUD-approved con- inform interested persons that they have Program, it may not meet the definition
solidated plan; or, for purposes of the 30 days from the date of submission to of a "low/moderate-income dwelling
State CDBG program,consistent with the provide to HUD (or to the State, as unit")
housing needs of low- and moderate-in- applicable) additional information sup- (v) Replacement housing assistance.
come households in the jurisdiction. A porting or opposing the request. For Persons are eligible to receive one of the
grantee that is not required to submit a purposes of the State CDBG program, if following two forms of replacement hous-
consolidated plan to HUD must submit the State, after considering the submis- ing assistance:
information demonstrating that the pro Sion and the additional data, agrees with (A) Each person must be offered-rental
posed replacement is consistent with the the request, the State must provide its assistance equal to 60 times the amount
housing needs of low- and moderate-in- recommendation with supporting infor- necessary to reduce the monthly rent and
come households in the jurisdiction. mation to HUD. estimated average monthly cost of utili-
(iv)(A) The one-for-one replacement (2) Relocation assistance under section ties for a replacement dwelling(compara-
requirement of paragraph (c)(1) of this 104(d) of the Act. Under section 104(d), ble replacement dwelling or decent, safe,
section does not apply to the extent the each "displaced person"(defined in para- and sanitary replacement dwelling to
Field Office determines, based upon ob- graph (c)(3)(ii) of this section) is entitled which the person relocates, whichever
jective data, that there is an adequate to choose to receive either assistance at costs less) to the "Total Tenant Pay-
supply of vacant low/moderate-income URA levels (see paragraph (b) of this ment," as determined under§813.107 of
dwelling units in standard condition section) or the following relocation assis- this title. All or a portion of this assis-
available on a nondiscriminatory basis tance: tance may be offered through a certificate
within the jurisdiction of the grantee (or (i) Advisory services at the levels de- or housing voucher for rental assistance
state recipient, as applicable). In deter- scribed in 49 CFR part 24, subpart C (if available) provided through the Local
mining the adequacy of supply, HUD will (General Relocation Requirements).Ten- Public Agency under Section 8 of the
• consider whether the demolition or con- ants shall be advised of their rights under United States Housing Act of 1937, If a
version of the low/moderate-income the Fair Housing Act(42 U.S.C. 3601-19) Section 8 certificate or housing voucher is
dwelling units will have a material impact and of replacement housing opportunities provided to a person, the grantee(or state
Published by Warren Gorham Lamont
•
09:0646 HOUSING AND DEVELOPMENT REPORTER
recipient, as applicable) must provide demolition in connection with an activity satiable out-of-pocket expenses incurred
referrals to comparable replacement assisted under this part. A permanent in connection with the move.
dwelling units for which the owner is involuntary move for an assisted activity (B) Notwithstanding the provisions of
willing to participate in the Section 8 includes a permanent move from real paragraph (c)(3)(ii)(A)of this section, the
Existing Housing Program.To the extent property that is made: term "displaced person" does not in-
that cash assistance is provided, it will be (1)After notice by the grantee(or state dude:
provided in installments. recipient, as applicable) to move perma- (1) A person who is evicted for cause
(B) If the person purchases an interest nently from the property, if the move based upon serious or repeated violations
in a housing cooperative or mutual hous- occurs after the initial official submission of material terms of the lease or occupan-
ing association and occupies a decent, to HUD for grant,loan,or loan guarantee cy agreement.To exclude a person on this
safe,and sanitary dwelling in the coopera- funds under this part that are later grant- basis, the grantee (or state recipient, as
tive or association, the person may elect ed; or, for purposes of the State CDBG applicable) must determine that the evic-
to receive a lump sum payment. This Program, if the move occurs after the tion was not undertaken for the purpose
lump sum payment shall be equal to the initial submission of an application to the of evading the obligation to provide relo-
capitalized value of 60 monthly install- State by the recipient requesting assis- - cation assistance under this section;
ments of the amount that is obtained by tance under this subpart that is later (2) A person who moves into the prop-
subtracting the "Total Tenant Payment," granted for the requested activity. erty after the date of the notice described
as determined under §813.107 of this (2)After notice by the property owner, in paragraph (c)(3)(ii)(A)(1)or(2)of this
title, from the monthly rent and estimat- to move permanently from the property, section, but received a written notice of
ed average monthly cost of utilities at a if the move occurs after the date of the expected displacement before corn-
comparable replacemenT dwelling unit. submission of a request for financial mencing occupancy.
To compute the capitalized value, the assistance by the property owner (or — (3) A person who is not displaced as
installments shall be discounted at the person in control of the site) that is later defined under 49 CFR 24.2(g)(2).
rate of interest paid on passbook savings approved for the requested activity. (4) A person who the grantee(or State,
deposits by a Federally insured bank or (3) Before the date described in para- as applicable)determines is not displaced
savings and loan institution conducting graph (c)(3)(ii)(A) (1) or (2) of this sec- as a direct result of the conversion of a
business within the jurisdiction of the tion, if either HUD or the grantee (or low/moderate-income dwelling or demoli-
grantee (or state recipient, as applicable). State or state recipient, as applicable) tion in connection with an assisted activi-
To the extent necessary to minimize determines that the displacement directly ty. For a grantee or State to exclude a
hardship to the household,the grantee(or resulted from the conversion of a low/ person on this basis, HUD must concur
state recipient, as applicable) shall, sub- moderate-income dwelling unit or demo- in that determination.
ject to appropriate safeguards, issue a lition in connection with the requested (C)A grantee may,at any time,request
payment in advance of the purchase of activity. HUD to determine whether a person is a
the interest in the housing cooperative or (4) After the execution of the agree- displaced person under paragraph (a) of
mutual housing association. this section.
ment by the grantee(or state recipient, as
p applicable) covering the rehabilitation or (iii) Low/moderate-income dwelling
(C) Displaced low/moderate income
tenants shall be advised of their right to demolition, if the person is the tenant- unit. The term `low/moderate-income
elect relocation assistance pursuant to the occupant of a dwelling unit and any one dwelling unit"means a dwelling unit with
Uniform Relocation Assistance and Real of the following three situations occurs: a market rent(including utility costs)that
Property Acquisition Policies Act of 1970 does not exceed the applicable Fair Mar-
and the regulations appearing (i) The tenant has not been provided
g ppearing at 49 CFR with a reasonable opportunity to lease ket Rent (FMR) for existing housing
part 24 as an alternative to the relocation established under 24 CFR part 888, ex-
assistance available under and occupy a suitable decent, safe, and
paragraph cept that the term does not include a unit
(c)(2) of this section. p p h sanitary dwelling in the same building/ that is owned and occupied by the same
(3)Definitions. For purposes complex upon completion of the project,
f p rposes of provid- person before and after the assisted reha-
ing section 104(d) assistance under para- including a monthly rent that does not bilitation.
graph (c) of this section: exceed the greater of the tenant's monthly (iv) Standard condition and substan-
(i) Comparable replacement dwelling rent and estimated average utility costs dard condition suitable for rehabilitation.
unit. The term "comparable replacement before the execution of such agreement (A) If the grantee has a HUD-approved
dwelling unit"means a dwelling unit that: (or, for purposes of the State CDBG consolidated plan, the definitions of
(A) Meets the criteria of 49 CFR Program,before the"initiation of negoti- "standard condition" and "substandard
24.2(d) (1) through and ations"), or the "Total Tenant Payment" condition suitable for rehabilitation" es-
( ) ( ) (6)' for the person as determined under f
(B) Is available at a monthly cost for p tablished in the plan will apply.
rent plus estimated average monthly utili- §813.107 of this title; or (B) For purposes of the State CDBG
ty costs that does not exceed the "Total (ii) The tenant, required to relocate program, a State may define the terms
Tenant Payment" determined under temporarily for the activity, does not "standard condition" and "substandard
§813.107 of this title, after taking into return to the building/complex; and ei- condition suitable for rehabilitation",or it
account any rental assistance the house- ther the tenant is not offered payment for may allow the state recipient to establish
hold would receive. all reasonable out-of-pocket expenses in- and make public its definition of these
(ii) Displaced person. (A) The term curred in connection with the temporary terms. If a State permits the recipient to
"displaced person"means any low/moder- location (including the cost of moving to establish its definition of these terms, the
ate-income family or individual that and from the temporary location and any State must determine if the state recipi-
moves from real property,or moves his or increased housing costs), or other condi- ent's definition is acceptable.
her personal property from real property, tions of the temporary relocation are not (v) Vacant occupiable dwelling unit.
permanently and involuntarily,as a direct reasonable; or The term "vacant occupiable dwelling
result of the conversion of a low/moder- (iii) The tenant is required to move to unit"means a vacant dwelling unit that is
ate-income dwelling unit (defined in another unit in the building/complex, but in a standard condition;a vacant dwelling
paragraph (c)(3)(iv) of this section) or is not offered reimbursement for all rea- unit that is in a substandard condition,
Published by Warren Gorham Lamont
COMMUNITY DEVELOPMENT 09:0647
. HDR RF-582
4-29-96
but is suitable for rehabilitation; or a certify that they will comply with the ing maintenance and removal techniques
dwelling unit in any condition that has requirements of this section. for eliminating such hazards);
been occupied (except by a squatter) at (2) The cost of assistance required (v) Of the advisability and availability
any time within the period beginning one under this section may be paid from local of blood lead level screening for children
year before the date of execution of the public funds, funds provided under this under seven years of age; and
agreement by the grantee (or state recipi- part, or funds available from other (vi) That in the event of lead-based
ent,as applicable)covering the rehabilita- sources. paint is found on the property, appropri-
tion or demolition. (3) The grantee (or State and state ate abatement procedures may be under-
(d) Optional relocation assistance. Un- recipient, as applicable) must maintain taken.
der section 105(a)(l 1) of the Act, the records in sufficient detail to demonstrate (c)Elimination of lead-based paint haz-
grantee may provide (or the State may compliance with the provisions of this ards. The purpose of this paragraph is to
permit the state recipient to provide, as section. implement the provisions of section 302
applicable) relocation payments and oth- of the Lead-Based Paint Poisoning Pre-
er relocation assistance to persons dis- §570.607 Employment and contracting vention Act,42 U.S.C.4822,by establish-
placed by activities that are not subject to opportunities. ing procedures to eliminate as far as
paragraphs (b) or (c) of this section. The
grantee may also provide (or the State practicable the hazards due to the pres-
may also permit the state recipient to Grantees shall comply with: ence of paint which may contain lead and
provide, as applicable) relocation assis- (a)Executive Order 11246,as amended to which children under seven years of
tance to persons receiving assistance un- by Executive Orders 11375, 11478, age may be exposed in existing housing
der paragraphs(b)or(c)of this section at 12086, and 12107 (3 CFR, 1964-1965 which is rehabilitated with assistance
levels in excess of those required by these Comp.,p.339;3 CFR, 1966-1970 Comp., provided under this part. The Secretary
paragraphs. Unless such assistance is pro- p. 684; 3 CFR,-1966-1970 Comp., p. 803; has promulgated requirements regarding
vided under State or local law,the grantee 1978 Comp., p. 264)(Equal Employment the elimination of lead-based paint haz-
(or state recipient, as applicable) shall Opportunity)and the implementing regu- ards in HUD-associated housing at 24
provide such assistance only upon the lations at 41 CFR chapter 60; and CFR Part 35, Subpart C. This paragraph
basis of a written determination that the (b)Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. is promulgated pursuant to the authoriza-
ti-on granted in 24 CFR 35.24
assistance is appropriate (see, e.g., 24 1701u) and implementing regulations at (b)(4) and
CFR 570.201(i), as applicable). The supercedes,with respect to all housing to
which
grantee (or state recipient, as applicable) 24 CFR part 135. which it applies, the requirements pre-
must adopt a written policy available to scribed by Subpart C of 24 CFR Part 35.
the public that describes the relocation § Lead-based-paint. (1) Applicability. This paragraph ap-
assistance that the grantee(or state recipi- plies to the rehabilitation of applicable
ent, as applicable) has elected to provide (a) Prohibition against the use of lead- surfaces in existing housing which is
and that provides for equal relocation based paint. Section 401(b) of the Lead- assisted under this part. The following
assistance within each class of displaced Based Paint Poisoning Prevention Act activities assisted under the Community
persons. (42 U.S.C. 4831(b))and regulations in 24 Development Block Grant program are
(e) Acquisition of real property. The CFR part 35, subpart B apply to residen- not covered by this paragraph:
acquisition of real property for an assis- tial structures constructed or rehabilitat- (i) Emergency repairs (not including
ted activity is subject to 49 CFR part 24, ed with assistance provided under this lead-based paint-related emergency re-
subpart B. part 570. pairs);
(1) Appeals. If a person disagrees with (b)Notification of hazards of lead-based (ii) Weatherization;
the determination of the grantee (or the paint poisoning. (I) The Secretary has (iii) Water or sewer hook-ups;
state recipient, as applicable) concerning promulgated requirements regarding no- (iv) Installation of security devices;
the person's eligibility for, or the amount tification to purchasers and tenants of (v) Facilitation of tax exempt bond
of, a relocation payment under this sec- HUD-associated housing constructed pri- issuances which provide funds for reha-
tion, the person may file a written appeal or to 1978 of the hazards of lead-based bilitation;
of that determination with the grantee(or paint poisoning at 24 CFR Part 35, (vi) Other similar types of single-pur-
state recipient, as applicable).The appeal Subpart A. This paragraph is promulgat- pose programs that do not include physi-
procedures to be followed are described ed pursuant to the authorization granted cal repairs or remodeling of applicable
in 49 CFR 24.10. In addition, a low- or in 24 CFR 35.5(c) and supersedes, with surfaces (as defined in 24 CFR 35.22) of
moderate-income household that has respect to all housing to which it applies, residential structures; and
been displaced from a dwelling may file a the notification requirements prescribed (vii)Any non-single purpose rehabilita
written request for review of the grantee's by Subpart A of 24 CFR Part 35. Lion that does not involve applicable
decision to the HUD Field Office. For (2) For properties constructed prior to
purposes of the State CDBG program, a 1978, applicants for rehabilitation assis- surfaces (as defined in 24 CFR 35.22)
low- or moderate-income household may tance provided under this part and ten- that does not exceed $3,000 per unit.
file a written request for review of the ants or purchasers of properties owned by (2) Definitions.
state recipient's decision with the State. the grantee or its subrecipient and ac- "Applicable surface." All intact and
(g) Responsibility of grantee or State. quired or rehabilitated with assistance nonintact interior and exterior painted
(1)The grantee(or State, if applicable) is provided under this part shall be notified: surfaces of a residential structure.
responsible for ensuring compliance with (i)That the property may contain lead- "Chewable surfaces."All chewable pro-
the requirements of this section, notwith- based paint; truding painted surfaces up to five feet
standing any third party's contractual (ii) Of the hazards of lead-based paint; from the floor or ground, which are
obligation to the grantee to comply with (iii) Of the symptoms and treatment of readily accessible to children under seven
ilL the provisions of this section. For pur- lead-based poisoning; years of age, e.g., protruding corners,
poses of the State CDBG program, the (iv) Of the precautions to be taken to windowsills and frames, doors and
State shall require state recipients to avoid lead-based paint poisoning(includ- frames, and other protruding woodwork.
Published by Warren Gorham Lamont
•
09:0648 HOUSING AND DEVELOPMENT REPORTER
iip
"Defective paint surface. Paint on ap- tion and agree to repaint by a specified section of any responsibility for compli-
plicable surfaces that is cracking, scaling, date. A separate inspection is required. ance with State or local laws, ordinances,
chipping, peeling or loose." (5)Abatement methods. At a minimum, codes or regulations governing lead-based
"Elevated blood lead level or EBL." treatment of the defective areas and paint testing or hazard abatement.
Excessive absorption of lead, that-is, a chewable lead-based paint surfaces shall (iv) Disposal of lead-based paint debris.
confirmed concentration of lead in whole consist of covering or removal of the Lead-based paint and defective paint de-
blood of 25 p./dl (micrograms of lead per painted surfaces as described in 24 CFR bris shall be disposed of in accordance
deciliter of whole blood) or greater. 35.24(b)(2)(ii). with applicable Federal, State or local
"Lead-based paint surface." A paint (6) Funding for inspection, testing and requirements.(See e.g.,40 CFR Parts 260
surface, whether or not defective, identi- abatement. Program requirements and through 271.)
Pied as having a lead content greater than local program design will determine
or equal to 1 mg/cm2. whether the cost of inspection, testing or §570.609 Use of debarred, suspended
(3) Inspection and Testing—(i) Defec- abatement is to be borne by the owner/ or ineligible contractors or
tive paint surfaces. The grantee shall in- developer and the grantee. subrecipients.
spect for defective paint surfaces in all (7) Tenant protection. The owner/de-
units constructed prior to 1978 which are veloper shall take appropriate action to The requirements set forth in 24 CFR
occupied by families with children under protect tenants from hazards associated part 5 apply to this program.
seven years of age and which are pro- with abatement procedures. Where neces-
posed for rehabilitation assistance. The sary, these actions may include the tern- §570.610 Uniform administrative
inspection shall occur at the same time porary relocation of tenants during the requirements and cost principles.
the property is being inspected for reha- abatement process. The owner/developer
bilitation. Defective paint conditions shall notify the grantee of all such actions The-recipient, its agencies or instru-
shall be included in the work write-up for taken. mentalities, and subrecipients shall com-
the remainder of the rehabilitation work. (8) Records. The grantee shall keep a ply with the policies, guidelines, and
(ii) Chewable surfaces. The grantee copy of each inspection and/or test report requirements of 24 CFR part 85 and
shall be required to test the lead content for at least three years. OMB Circulars A-87, A-I10 (implement-
of chewable surfaces if the family residing (9) Monitoring and enforcement. HUD ed at 24 CFR part 84), A-122, A-133
in a unit, constructed prior to 1978 and field office monitoring of rehabilitation (implemented at 24 CFR part 45),and-A-
receiving rehabilitation assistance, in- programs includes reviews for compli- 1282(implemented at 24 CFR part 44),as
cludes a child under seven years of age ance with applicable program require- applicable, as they relate to the accep-
with an identified EBL condition. Lead ments for lead-based paint. The CPD tance and use of Federal funds under this
content shall be tested by using an X-ray Field Monitoring Handbook which cur- part. The applicable sections of 24 CFR
II
fluorescence analyzer (XRF) or other rently includes instructions for monitor- parts 84 and 85 are set forth at§570.502.
method approved by HUD.Test readings ing lead-based paint requirements will be
of Img/cm2 or higher using an XRF shall amended as appropriate. In cases of non- §570.611 Conflict of interest.
be considered positive for presence of compliance, HUD may impose condi-
lead-based paint. tions or sanctions on grantees to encour- (a)Applicability.(I)In the procurement
(iii) Abatement without testing. In lieu age prompt compliance. of supplies,equipment,construction,and
of the procedures set forth in paragraph (10) Compliance with other program services by recipients and by subreci-
(c)(3)(ii) of this section, in the case of a requirements, Federal, State and local pients, the conflict of interest provisions
residential structure constructed prior to laws. in 24 CFR 85.36 and 24 CFR 84.42,
1978, the grantee may forgo testing and (i) Other program requirements. To the respectively, shall apply.
abate all applicable surfaces in accor- extent that assistance from any of the (2) In all cases not governed by 24 CFR
dance with the methods set out in 24 programs covered by this section is used 85.36 and 84.42, the provisions of this
CFR 35.24(-b)(2)(ii). _ in conjunction with other HUD program section shall apply.Such cases include the
(4) Abatement Actions. (1) For inspec- assistance which have lead-based paint acquisition and disposition of real prop-
tions performed under §570.608(c)(3)(i) requirements which may have more or erty and the provision of assistance by the
and where defective paint surfaces are less stringent requirements, the more recipient or by its subrecipients to indi-
found, treatment shall be provided to stringent requirements will prevail. viduals, businesses, and other private
defective areas. Treatment shall be per- (ii) HUD responsibility. If HUD deter- entities under eligible activities that au-
formed before final inspection and ap- mines that a State or local law,ordinance, -thorize such assistance (e.g., rehabilita-
proval of the work. code or regulation provides for lead- tion, preservation, and other improve-
(ii) For testing performed under based paint testing or hazard abatement ments of private properties or facilities
§570.608(c)(3)(ii) and where interior in a manner which provides a level of pursuant to §570.202; or grants, loans,
chewable surfaces are found to contain protection from the hazards of lead-based and other assistance to businesses, indi-
lead-based paint, all interior chewable paint poisoning at least comparable to viduals, and other private entities pursu-
surfaces in any affected room shall be that provided by the requirements of this ant to §§570.203, 570.204, 570.455, or
treated.Where exterior chewable surfaces section and that adherence to the require- 570.703(i)).
are found to contain lead-based paint, the ments of this subpart would be duplica- (b) Conflicts prohibited. The general
entire exterior chewable surface shall be tive or otherwise cause inefficiencies, rule is that no persons described in para-
treated. Treatment shall be performed HUD may modify or waive the require- graph (c) of this section who exercise or
before final inspection and approval of ments of this section in such manner as have exercised any functions or responsi-
the work. may be appropriate to promote efficiency bilities with respect to CDBG activities
(iii)When weather prohibits repainting while ensuring such comparable level of assisted under this part, or who are in a
exterior surfaces before final inspection, protection. position to participate in a decisionmak-
the grantee may permit the owner to (iii) Grantee responsibility. Nothing in ing process or gain inside information
•
abate the defective paint or chewable this section is intended to relieve any
lead-based paint as required by this sec- grantee in the programs covered by this = See footnote I at Sec. 570.200(a)(5).
Published by Warren Gorham Lamont
COMMUNITY DEVELOPMENT 09:0649
HDR RF-582
4-29-96
with regard to such activities, may obtain and the exception will permit such person meeting the requirements of§570.208(a)
a financial interest or benefit from a to receive generally the same interests or that either:
CDBG-assisted activity, or have a finan- benefits as are being made available or (1) Have income eligibility require-
cial interest in any contract, subcontract, provided to the group or class; ments limiting the benefits exclusively to
or agreement with respect to a CDBG- (iv) Whether the affected person has low and moderate income persons; or
assisted activity, or with respect to the withdrawn from his or her functions or (2) Are targeted geographically or oth-
proceeds of the CDBG-assisted activity, responsibilities, or the decisionmaking erwise to primarily benefit low and mod-
either for themselves or those with whom process with respect to the specific assis- erate income persons(excluding activities
they have business or immediate family ted activity in question; serviing the public at large, such as sew-
ties, during their tenure or for one year (v) Whether the interest or benefit was ers,roads,sidewalks,and parks),and that
thereafter. For the UDAG program, the present before the affected person was in provide benefits to persons on the basis of
above restrictions shall apply to all activi- a position as described in paragraph(b)of an application.
ties that are a part of the UDAG project, this section; (c)Limitation on coverage. The restric-
and shall cover any such financial interest (vi)Whether undue hardship will result tions under this section apply only to
or benefit during, or at any time after, either to the recipient or the person applicants for new benefits not being
such person's tenure. affected when weighed against the public received by covered resident aliens as of
(c) Persons covered. The conflict of interest served by avoiding the prohibited the effective date of this section.
interest provisions of paragraph (b) of conflict; and (d) Compliance. Compliance can be
this section apply to any person who is an (vii)Any other relevant considerations. accomplished by obtaining certification
employee, agent, consultant, officer, or as provided in 24 CFR 49.20.
elected official or appointed official of the §570.612 Executive Order 12372. (e)Programs affected. (1)The Commu-
recipient, or of any designated public — nity Development Block Grant program
agencies, or of subrecipients that are (a) General. Executive Order 12372, for small cities, administered under sub-
receiving funds under this part. Intergovernmental Review of Federal part F of part 570 of this title until
(d) Exceptions. Upon the written re- Programs, and the Department's imple- closeout of the recipient's grant.
quest of the recipient,HUD may grant an menting regulations at 24 CFR Part 52, (2) The Community Development
exception to the provisions of paragraph allow each State to establish its own Block Grant -program for entitlement
(b)of this section on a case-by-case basis process for review and comment on pro- grants, administered under subpart D of
when it has satisfactorily met the thresh- posed Federal financial assistance pro- part 570 of this title.
old requirements of(d)(1)of this section, grams. (3) The Community Development
0 taking into account the cumulative effects (b) Applicability. Executive Order Block Grant program for States, adminis-
of paragraph (d)(2) of this section. 12372 applies to the CDBG Entitlement tered under subpart I of part 570 of this
(1) Threshold requirements. HUD will program and the UDAG program. The title until closeout of the unit of general
consider an exception only after the recip- Executive Order applies to all activities local government's grant by the State.
Tent has provided the following documen proposed to be assisted under UDAG,but (4) The Urban Development Action
tation: it applies to the Entitlement program only Grants program,administered under sub-
(i) A disclosure of the nature of the where a grantee proposed to use funds for Part G of part 570 of this title until
conflict, accompanied by an assurance the planning or construction (reconstruc- closeout of the recipient's grant.
that there has been public disclosure of tion or installation) of water or sewer
the conflict and a description of how the facilities. Such facilities include storm §570.614 Architectural Barriers Act
public disclosure was made; and sewers as well as all sanitary sewers, but and the Americans with Disabilities
(ii) An opinion of the recipient's attor- do not include water and sewer lines Act.
ney that the interest for which the excep- connecting a structure to the lines in the
tion is sought would not violate State or
public right-of-way or easement. It is the (a) The Architectural Barriers Act of
— local law. _ responsibility of the grantee to initiate the 1968 (42 U.S.C. 4151-4157) requires cer-
(2) Factors to be considered for excep- Executive Order review process if it pro- tain Federal and Federally funded build-
tions. In determining whether to grant a poses to use its CDBG or UDAG funds ings and other facilities to be designed,
requested exception after the recipient for activities subject to review. constructed,or altered in accordance with
has satisfactorily met the requirements of standards that insure accessibility to, and
paragraph (d)(I) of this section, HUD §570.613 Eligibility restrictions for use by, physically handicapped people. A
shall conclude that such an exception will certain resident aliens. building or facility designed,constructed,
serve to further the purposes of the Act or altered with funds allocated or reallo-
and the effective and efficient administra- (a) Restriction. Certain newly legalized cated under this part after December I I,
tion of the recipient's program or project, aliens, as described in 24 CFR part 49, 1995 and that meets the definition of
taking into account the cumulative effect are not eligible to apply for benefits under "residential structure" as defined in 24
of the following factors, as applicable: covered activities funded by the programs CFR 40.2 or the definition of"building"
(i) Whether the exception would pro- listed in paragraph (e) of this section. as defined in 41 CFR 101-19.602(a) is
vide a significant cost benefit or an "Benefits" under this section means fi- subject to the requirements of the Archi-
essential degree of expertise to the pro- nancial assistance, public services, jobs tectural Barriers Act of 1968 (42 U.S.C.
gram or project that would otherwise not and access to new or rehabilitated hous- 4151-4157) and shall comply with the
be available; ing and other facilities made available Uniform Federal Accessibility Standards
(ii) Whether an opportunity was pro- under covered activities funded by pro- (Appendix A to 24 CFR part 40 for
vided for open competitive bidding or grams listed in paragraph (e) of this residential structures, and Appendix A to
negotiation; section. "Benefits" do not include reloca- 41 CFR part 101-19, subpart 101-19.6,
III (iii) Whether the person affected is a tion services and payments to which for general type buildings).
member of a group or class of low- or displacees are entitled by law. (b) The Americans with Disabilities
moderate-income persons intended to be (b) Covered activities. "Covered activi- Act (42 U.S.C. 12131; 47 U.S.C. 155,
the beneficiaries of the assisted activity, ties" under this section means activities 201, 218 and 225) (ADA) provides com-
Published by Warren Gorham Lamont
,09:0650 HOUSING AND DEVELOPMENT REPORTER
•
prehensive civil rights to individuals with "70.702 Eligible applicants. g) Payment of issuance, underwriting,
disabilities in the areas of employment, se icing, trust administration and othe
public accommodations, State and local The !lowing public entities may app , cost associated with private sector -
government services, and telecommuni- for loan uarantee assistance under t•is nanci g of debt obligations under t is
cations. It further provides that discrimi- subpart. subpa .
nation includes a failure to design and (a) Entit ment public entities. (h) using rehabilitation eligible n-
construct facilities for first occupancy no (b) Nonen itlement public entitle that der Sec. 570.202. (i) The following co-
later than January 26, 1993 that are are assisted i the submission of a--plica- nomic d velopment activities:
readily accessible to and usable by indi- Lions by State that administer the DBG (1) Act vities eligible under §57 .203;
viduals with disabilities. Further, the and
program (und subpart I of th.. part).
ADA requires the removal of architectur- Such assistance shall consist, at a mini- (2)Com unity economic devel pment
al barriers and communication barriers mum,of the certt fications requi,-d under projects ell ible under §570.204
that are structural in nature in existing §570.704(b)(9) (and actions pursuant (j)Const ction of housing by onprof-
facilities, where such removal is readily thereto). \ it organizat ons for homeowne, hip un-
achievable-that is, easily accomplishable der section 17(d) of the Uni -d States
(c)Nonentitlem t public e lilies eligi-
and able to be carried out without much g Housing Act of 1937 (Housin, Develop-
difficulty or expense. ble to apply for giant assistance under men[ Grants Program, 24 CF` part 850)
t F
subpart of this port. or title VI ofe Housing an. Communi-
ty Developme t Act of 198 (Nehemiah
§570.703 Eligible ac vitie Housing Opp rtunity Gra ts Program,
§57i 700 Purpose. — 24 CFR part ,80).
Guaranteed loan fund ay be used for (k)A debt service re-serv- to be used in
This subpart contains requirements the following activities, •rovided such accordance witlj require ents specified
governin: the guarantee under sect.•n activities meet the re•uirements of in the contract ntered i to pursuant to
108 of t e Act of debt obligation- as §570.200. .However, g :ranteed loan § 570.705(b)(1).
defined in §570.701. funds may not be used o eimburse the (1) Acquisitiol, con.truction, recon-
CDBG program accoun or line of credit struction,rehabilrtatio ,or installation of
§570.701 D: tuitions. for costs incurred by t - pu lic entity or public facilities ( xcep for buildings for
designated public age y a paid with the general condu t oigovernment), pub-
Borrower m-:ns the public en' ty or its CDBG grant funds o progr m income. lic streets, sidewal'cs,J and other site im-
designated pub 'c agency that i- ues debt (a) Acquisition of i prove or unim- provements and p blic utilities.
obligations und= this subpa proved real property in fee o by long- (m) In the casof applications by
4110
Debt obli atio• means a .romissory term lease, including acquisiti for eco- public entities whir�t are, or which con-
tain.tain. "colonias"as defined in section 916
note or other obli•:lion issue, by a public nomic development purposes. ,
entity or its design.ted publ. agency and (b) Rehabilitatio of real property of the Cranston- onzalez National Af-
guaranteed by HU LI unde, this subpart, owned or acquired ,y the public ntity or fordable Housin Mt (42 U.S.C. 5306
or a trust certificat- or o er obligation its designated pub is agency. note); as amended b}li section 810 of the
offered by HUD or ,y . trust or other (c) Payment of nterest on obligations Housing and C mmdnity Development
offeror approved for • rposes of this guaranteed under this subpart. 1
.Act of 1992, a�quisilion, construction,
subpart by HUD whic , is guaranteed by (d) Relocatio payments an other reconstruction, `ehabi tation or installa-
HUD under this subp. ' and is based on relocation assista ce for individual, fam- lion of publicworksnd site or other
and backed by a trust or •ool composed ilies, businesses, nonprofit organizations, improvements/which serve the colonia.
of notes or other o. igat ons issued by and farm oper ions who must r ocate j
public entities or th; r des :nated public permanently or temporarily as a re ult of §570.704 Application r uirements.
agencies and guara teed e, eligible for an activity fin nced with guarantee loan
guarantee by HU* under t is subpart. funds, where he assistance is: (a)Presubrnission and .tizen participa-
Designated publ agency mans a pub- (1) Requir d under the provisio s of Lion requirements.
lic agency design. ed by a publ c entity to §570.606(b) r (c); or (1)Before submission o an application
issue debt oblig• ions as borro er under (2) Dete fined by the public entit to for loan guarantee assistant to HUD,the
this subpart. be appropriate under the provision of public en'ity must: -
- Entitlement ,ublic entity mea . a met- §570.606( (i)Dev lop a proposed ap lication that
ropolitan city .r an urban count receiv- (e) Clea nce, demolition and remo al, includes he following item
ing a grant u,der subpart D of th part. including ovement of structures to h- (A) T:ie community devel pment ob-
Guarantee, loan funds means th- pro- er sites, f buildings and improveme ts jectives the public entity p oposes to
ceeds paya• e to the borrower fro the on real operty acquired or rehabilita d pursue with the guaranteed I n funds.
issuance of debt obligations unde this pursua to paragraphs(a) and (b) of t is (B) he activities the pub is entity
subpart. section propo es to carry out with the g ranteed
,Vonent dement public entity means •ny (f)S'te preparation, including constru - loan unds. Each activity must be de-
unit of :eneral local government i a Lion, econstruction, or installation f scrib d in sufficient detail, inclu .ng the
nonenti ement area. publi and other site improvements, util- spec. is provision of §570.703 under
Publ. entity shall have the mean g ties, or facilities (other than buildings , whi it is eligible and the na ional
provi.-d for the term "Eligible pub ic which is: obj five to be met, amount of gu ran-
entity ' in section 108(o) of the Act. ( )Related to the redevelopment or us tee loan funds expected to be used, and
State-assisted public entity means a un t of he real property acquired or rehabili lot tion, to allow citizens to deter ine
of g neral local government in a nonent - t ed pursuant to paragraphs (a) and (b) th degree to which they will be affect d. •
tie. ent area which is assisted by a Stat- of this section, or The proposed application must indic to
as required in §570.704(b)(9) and (2) For an economic development pur- which activities are expected to generate
• 570.705(b)(2). pose. program income. The application must
Published by Warren Gorham Lamont
:�""'�' Handbook 1300.20
U.S.Department of Housing and Urban Development
Office of Community Planning and Development
Program Participants
and Departmental Staff
• Cost Principles for
Nonprofit Organizations
(.A Reprint of Office of
Management and Budget
Circular A-122 )
CFFO:Distribution:W-3-1,R-1,R-6-1,(Special)
1300.20
1-1. ALLOWABLE COSTS. Generally, costs must be necessary,
reasonable and directly related to the grant. In
addition, they must be legal, proper and consistent
• with the policies that govern the grantee's other
expenditures. Any credits such as purchase discounts,
rebates and allowances, adjustments of over payments
must be deducted from total costs. In some instances,
amounts received from the Federal Government to finance
organizational activities or service operations should
also be treated as applicable credits.
1-2. COMPOSITION OF COSTS.
a. Costs applicable to a grant program may be direct
or indirect. There are no strict guidelines for
classifying costs as direct or- indirect. In most
cases, the accounting system used by the recipient
will specify which types of costs are direct and
which are indirect. The important thing is that
grantees treat costs consistently for all grant
programs.
b. Direct costs should be identified specifically
with a particular grant. Typical examples are
employee compensation, materials, equipment, and
services furnished in connection with the specific
grant.
c. Indirect costs are those incurred for common or
joint objectives that benefit more than one
activity or cost objective. Typical examples are
depreciation or use allowances on buildings and
equipment, the costs of operating and maintaining
facilities, and general administration and general
expenses, such as the salaries and expenses of
executive officers, personnel administration, and
accounting. Indirect costs should be allocated
in a manner which will result in the grant program
bearing its fair share of total indirect cost. To
do this, a grantee must develop an indirect cost
• rate. This rate, expressed in percentage terms, is
applied 'o direct costs in order to determine the
amount of reimbursement a grantee can obtain for
indirect costs. A predetermined rate may be negotiated
for use in awards where there is reasonable assurance
that the rate is not likely to exceed a rate based on
the organization' s actual costs.
-1-
•
•
•
•
1300.20
d. Permits Federal agencies to accept a substitute
system for documenting personnel costs through
•
• means other than personnel activity reports.
e. Clarifies provisions covering the allowability of
costs for unemployment compensation of workmen' s
compensation and costs of insurance polices on the
lives of trustees, officers or other employees.
f. Makes allowable any increased costs of pension
plans caused by delayed funding.
g. Clarifies the value of donated services used in
the performance of a direct cost activity.
h. Establishes a new definition of capital equipment
cost $500, useful life or more than two years.
i. Permits organizational costs to be allowed when
approved by awarding agency in writing.
J. Allows Public Information Service Costs as direct
costs with awarding agency approval.
k. Clarifies rental costs.
1. Deletes the travel cost requirement for prior
approval for domestic costs.
- 1-6. EXCEPTIONS. OMB may grant exceptions. However, in the
interest of achieving maximum uniformity, exceptions
will be permitted only in highly unusual circumstances.
Attachment A: OMB Circular A-122 Cost Principles for
Non-Profit Organizations.
-3-
1300.20
Tuesday
July 8, 1980
•
•
•
.
Part III .
Office of
- ======= Management and
Budget
-Circular A-122, "Cost Principles for
Nonprofit Organizations"
C=2311
•
•
48022 Federal Register / Vol.45, No.132 / Tuesday,July .1980 / Notices
OFFICE OF MANAGEMENT AND ' public comments.The more significant .cognizant agency and the recipient to
BUDGET changes to the basic Circular and negotiate when there is no basis for
Attachment A include•. determining the fair market value of the
Circular A-122,"Cost Principles for 1.Paragraph 2."Supersession"was services rendered,and to permit indirect
Nonprofit Organizations" added to the basic Circular to make it ousts allocated to donated services to be
AGENCY:Office of Management and clear that jhis Circular supersedes cost charged to an agreement or used to meet
principles issued by Individual agenda, cost sharing or matching requirements.
Budget 2.Paragraph 4 of the basic Circular 4.Paragraph 31,Equipment and Other
ACTIO t Final Policy. has been amended to make it clear that Capitol Expenditures,was changed. •
the absence of an advance agreement as Capital equipment is now defined as
SUMMARY:This notice advises of a new any element of wet will not in Itself having an acquisition cost of 5500 and a
OMB Circular dealing with principles for affect the reason3bieness of allocability useful life of more than two years,
determining costs of grants,contracts, of that element.Also,this paragraph 5.paragraph 28,Meetings,
and other agreements with nonprofit was amended to make it clear that Conferences.The prior approval
organizations. where an Item of cost requiring prior requirement for charging meetings and
The Circular is the product of an approval is specified in,the budget, conferences as a direct cost was
interagency review conducted over a approval of the budget constitutes deleted.A sentence was added to make
two-year period.Its purpose is to approval of the cost it clear such costs were allowable
provide a set of cost principles to
3.Paragraph 5 of the basic Circular provided they meet the criterion for the
replace existing principles issued by has been changed to remove any doubt allowability of cost shown in
individual agencies.These have often as to which nonprofit organizations Attachment A.
contained varying and conflicting would not be covered by the Circular. a Paragraph 27,Organization Casts.
requirements,and created confusion Now,Appendix C to the Circular lists aB was amended to provide that
exclusions. organization same amended
costs may be allowable
among agency administrators,auditors. 4.Paragraph 8 was added to the basic wen approved in writing the
and nonprofit officials.The-new Circular pP by —
Circular to permit Federal agencies to
will provide a uniform approach to the awarding agency.
request exceptions from the
problem of determ' costs,and 7.Paragraph 30,Page Charles in
requirements of the Circular. /
promote efficiency a better Professions Journals,was revised to
d Paragraph 1?2.was added to that page charges may be
the• Federal g between recipients and Attachment A to cover the negotiation provide P rS y
the Federal Government allowable.
E FFECTIVE DATE:The Circular becomes to
and provide of of indirect cost rnges.end e.Paragraph 37.Public Information
effective on issuance. Provide for co icant ch arrangements. Service Costs,was modified to make
The more significant changes l public Information costs allowable as
FOR FURTHER INFORMATION CONTACT: Attachment B to the Circular include:
Palmer A.Marcantonio,Financial . 1.Paragraph 5,Compensation for direct costs with awarding agency
Management Branch,Office of Personal Services,was modified to: approval.
Management and Budget,Washington. a.Permit Federal agencies to accept a 9.Paragraph 43,Rental Costs,was
D.C.20503,(202)395-4773. substitute system for documenting rewritten to
SUPPLEMENTARY INFORMATIOIC Before personnel costs through means other a.Make it clear that rental costs
the Circular became final there was than personnel activity reports. under leases which create a material
extensive coordination with the affected b.Clarify provisions covering the equity on the leased property are
nonprofit organizations,professional allowability of costs for unemployment • allowable only to the amount that the
associations,Federal agencies and compensation or workmen's organization would have been allowed
others.All interested persons were compensation,and costs of insurance had they purchased the property:e.g..
given an opportunity to comment on the policies on the lives of trustees,officers. depreciation or use allowances.
proposed Circular through informal or other employees: maintenance,taxes,insurance,etc.
consultations and a notice in the Federal C.Make unallowable any increased b.Clarify the criteria for material
Register.In response to our requests for costs of pension plans caused by equity leases.
comment we received about 100 letters delayed funding. 10.Paragraph 51,Travel Costs,was
from Federal agencies,nonprofit d.Delete a paragraph dealing with amended to delete the prior approval
organizations,associations,and other review and approval of compensation of requirement for domestic travel In
interested members of the public.These individual employees. addition to the above.a number of
comments were considered in-the final 2.Paragraph 8,Contirtgenoiet.was editorial changes were made to the
version of the Circular.There follows a changed to make it clear that the term original document . .
summary of the major comments and the "contingency reserves"excludes self- Suggested Changes Not Considered
action taco on each. insurance reserves or pension funds. uws a�
In addition to the changes described. 3.Paragraph 10 was modified le Neceommy.
other changes have been made to provide that the value of donated . Comment Several respondents
-Improve the clarity and readability of services used in the performance of a questioned the provision that,for less
the Circular.To the extent possible,we direct cost activity shall be allocated a tit n arm's length"leases,rental costs
have tried to make the language of this share of indirect cost only.when(a)the are allowable only up to the amount that
Circular consistent with that of cost aggregate value of the service is would be allowed had title to the
principles for educational institutions material (b)the services are supported property been vested in the grantee
(Circular A-213,and State and local . by a significant amount of the indirect organization.In their opinion this rule
governments(Circular 74-4). cost Incurred by the organization.and will result In unnecessary cost to the
Summary of Significant (c)the direct cost activity is not pursued Federal Government.since It would
7' f s primarily for the benefit of the Federal encourage an organization to lease
Set forth are changes that have been Government Provisions were also specs on the commercial market at
made In the final Circular as a result of added to this paragraph for the • higher rate. .
—1—
•
•
48024 Federal Register / Vol. 43, No. 132 / Tuesday, July 8, 1980 / Notices .
organizations is contained in t Applicable credits clients.the public at laega.and the
•
Attachment C.Other organizations may a Advance understandings Government
be added born time to time. B.Direct Coats d Significant deviations front the
8 Responsibilities.Agendas established practices of the organization
C
responsible for administering programs Indirect Coat which oos may unjustifiably increase the award
that Involve awards to nonprofit D.Allocation of Indirect Costs and t Allocable aorta
organizations shall implement the Determination of Indirect Cost Rata a.A cost is allocable to a particular cost
provisions of this Circular.Upon 1.General objective,such as a pant.project service,or
request.implementing instruction shall 2.Simplified Vocation method other activity,in accordance with the relative
be furnished to the Office of 3.Multiple allocation base method • benefits received.A coat is allocable to a
Management and Budget Agencies shall e.Direct allocation method Government award d ti is treated
R Special indirect cost rata consistently with other costs incurred for the
designate a liaison official to serve as . same purpose to like circumstances and if it '
the agency representative on matters E.Negotiation and Approval of Indirect Cost g ncy P (1)b Incurred specifically for the award.
relating to the implementation of this R' (2)Benefits both the award and other work
Circular.'T'be name and title of such 1.Definitions And can be distributed In reasonable
representative shall be furnished to the 2.Negotiations and approval of rates proportion to the benefits received.
Office of Management and Budget (Circular Nn.A-122) (3)Is o ecesaary to the overall operatioa.of
within 30 days of the data of this Anschma.t A the organization.although a direct
Circular. relationship to any particular cost objective
7.Attochments.The principles and Genet Neel " cannot be shown.
b.Any cost allocable to a particular award
related policy guides are set forth in the A.Basic consider+ation& • or other cost objective under these principles
following Attachments: .coaopoeition of fate/costa The toll poet may not be shifted to other Federal awards to
Attachment A-General Principles of an award is the sum of the allowable overcome funding deficiencies,or to avoid
. Attachment B-Selected Items of Cost direct and allocable indirect posts/way restrictions imposed by law or by the terms
Attachment-Nonprofit applicable credits. of the award.
Organizations Not Subject to This 2.Factors affecting allowobility of cost: a.Applicable credits.
Circular To be allowable under an award.costs most a-The term applicable credits refers to-
a Requests for exceptions.The Office meet the following general criteria: wore receipts,to or offset or reduce d of ce expenditures p ns
of Management and Budget may grant a.Be reasonable for the performance of the which operate to offset to reduce expanses
8 � Y� Items that are allocable to awards as direct
exceptions to the requirements of this award and be allocable thereto under these or indirect costs.Typical'Temples of such
Circular when permissible under principles. transactions are purchase discounts.rebated
existing law.However,in the interest of b.Conform to any limitations or exclusions or allowances,recoveries or indemnities on
aehiev maximum uniforms set forth in these principles or in the award losses,insurance refunds,and adjustments of
t as to types or amount of coat Hama. overpayment or erroneous charges To the exceptions will be permitted only hi a Be consistent with policies and extent that such credits accruing or received
highly unusual circumstances. procedures that apply uniformly to both by the organization relate to allowable cost
9.Effective Dote.The provisions of federally financed and other activities of the they shall be credited to the Government
this Circular are effective Immediately. organization. either as i cost reduction or cash refund as
Implementation shall be phased in by d Be accorded consistent treatment appropriate.
incorporating the provisions into new ' e•Be determined in accordance with b.In some laxness,the=ousts received
awards made after the start of the generally accepted accounting principles. form the Federal Governmentto finance
organization's next fiscal year.For L Not be included es a cost or used to meet organizational activities or service operetione
existing awards the new principles may cost sharing or matching requirement car any should be treated as applicable credits.
other federally financed program la either the Specifically,the concept of netting such
be applied if an organization and the current or a prior period credit items against related expenditures
cognizant Federal agency agree.Earlier - g.Be adequately documented should be applied by the organizaton in
implementation,or a delay in . 3.Raasoaoble costs.A cost is reasonable determing the rates or amounts to be .
implementation of individual provisions if in Its nature or amount.It does not exceed charged to Federal awards for services
is also permitted by mutual agreement that which would be Incurred by a prudent rendered whenever the tacidtter or other
between an organization and the. _ person rmder the circumstances prevailing.t. rummer,need in providing inch services
cognizant Federal agency the time the decision was glade to in us the have been financed directly.to whole at
10.Inquiries.Further information costs.The question of the reasonableness of in per,by Federal hooch
specific cost)must be scrnttnized with concerning this Circular may be a(c)For rules covering Proper.income
particular ears in connection with
obtained by contacting the Financial organizations or separate divisions thereof (tee.,gross income earned from federally
Management Branch.Budget_Review which receive the preponderance of their supported activities)see Attachment D of
Division.Office of Management end support from awards made by Federal . 0l.03 Circular A-110. - •
Budget,Washington.D.C.20302, agencies.In determining Ms reasonableness' . . L Advance and understandings.Under all
telephone(202)395-4771 of a gives cock consideration shall be give. .given award the reasonableness and •
Tama T.MdaIyss,je. - . bar allocability of certain items of nets gray be
Ditsetor. a.Whether the cost is of a type generally difficult to determine.This is particularly tree
• recognized as ordinary and necessary for the is connection with orgfzations that receive a
(Circular Ne.A-122) ' operation of the organisation or the . preponderance of their support from Federal
Attachment A . performance of the award sega
agencies.In order to avoid'subot
- b.The restraints or requirements Imposed disallowance or dispute based on
General Principles by such factors as generally accepted sound unreasonableness or nonaDocabWty,It in •
?,ay 0/Tanana business practices.arms length bargaining. often desirable to seek a written agreement
A.Baste Coetaideretioss Federal and State laws and regulations,and with the cognizant or awarding agency to .
terms and conditions of the award. advance of the Incurrence of special or
1.Composition of total costa t Whether the Individuals concerned acted animal costs.The abettor of an advance
2.Factors affecting allowebillty accent with prudence in the circumstances. agreement oe any element of cost will VOL in
• 3.Respectable cost considering their responsibilities to the Itself,affect the eeasoeablenese er
4.Allocable coat. organization.W mambers,employees.and allocability of that'lenient. - .
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40028 Federal Register / Vol. 45, No. 132 / Tuesday. July IL 1980•/ Notices
•; function shall be agregated and treated as a aced.or any combination thereof.When a is a major lot -term shift in the dollar volume
' common pool for that function.The costs in particular segment of work is performed in an of the Federal awards to the organization.All
the common pool shall then be distributed to environment which appears to generate a concerned Federal agencies shall be given the
individual swath included in that function by' significantly different level of indirect costa, opportunity to participate in the negotiation
we of a single indirect cost rate. provisions should be made for a separate. process,but after a rate has been agreed
a.The distribution based used in computing indfhect cost pool applicable to such work. upon it will be accepted by all Federal
the indirect cost rate for each function may The separate indirect cost pool should be agencies.When a Federal agency has reason
be total direct costs(excluding capital developed during the course of the regular to believe that special operating factors
expenditures and other distorting items such allocation process,and the separate indirect affecting its awards necessitate special
• as major subcontracts and subgranti),direct cost rate resulting therefrom should be used indirect cost rates in accordance with
salaries and wages.or other base which provided it is determined that(I)the rate paragraph Di above,It will•prior to the time
results in an equitable distribution.The differs significantly from that which would the rates are negotiated.notify the 000nant
distribution base shall generally exclude have been obtained under paragraph D2,S. agenoT-
participant support cacti as defined in and 4 above,and(U)the volume of work to b.A nonprofit organization which hes sot
paragraph 20,Attachment 8.An indirect cost which the rata would apply is material. previously established an indirect cost rate
rate should be developed fir each separate il`Negot/otian and Apprv►al of Indirect Cart with a Federal agency shall after the
indirect cost pool developed.The rate in each organi'.tion is advised that an award will be
case should be stated as the peraeattyagee llotun made and,in no event,later than three
which the amount of the particular indlract 1.De/initnbns.As ubd m this section.the months after the effective data of the award.
cost pool Is of the distribution base identified following urea have the meanings set forth a Organizations that have previously
with that pooL below: established indirect cost rates must submit•
:'-4.Direct emotion method a."Cognizant agency'means the Federal .new indirect cost proposal to the cognizant
. a.Some nonprofit organizations.treat an agency responsible for negotiating and agency within six months after the close of
costs as direct costs except general -approving indirect cost rates for a nonprofit each fiscal year.
. administration and general expenses.These organization on behalf of all Federal d.A predetermined rate may be negotiated •
organizations generally separate their carte agencies for use on awards where there is reasonable
into three basic categories:(I)General b."Predetermined rata"means an Indttect assurance,based on past experience and
administration and general expenses„(U) - cost rate,applicable to a specified current at reliable projection of the organizations costs
fund retsina.and(iii)other direct functions future period.usually the organization's fiscal that the rate is not likely to exceed a rate
(including projects performed under Federal year.The rate is based on an eetfmate of the based on the organization's actual costa. .
:awards).joint cost,such as depreciation, costs to be incurred during the period.A a.Fixed rates may be negotiated when
;renal costs,operation and maintenance of predetermined rats is not subject to predetermined rates are not considered
facilities.telephone expenses and the like adjustment. appropriate.A fixed rat.however,shall not
are prorated indivlsually as direct post to a."Fixed rate'means an indirect cost rate be negotiated!!(1)all or a substantial portico
each category and to each award.or other which has the same characteristics as• of the organization's awards are expected to
ictivity using a bass most appropriate to the predetermined rate,except that the difference expire before the carry-forward adjustment.
particular cost being prorated. ,between the estimated costs and the actual can be made.(ii)the mix of Government and
'i b.This method is acceptable provided each costs of the period covered by the rate is non-government work at the organization Is
joint cost Is prorated using a base which carried forward as an adjustment to the rate too erratic to permit an equitable carry-
accurately measures the benefits provided to computation of a subsequent period forward adjustment or(ill)the organizatla s's
each award or other activity.The bases must • d"Final rats"means an indirect cost rate operations fluctuate significantly from year to
be established In accordance with rescuable applicable to•specified past period which Is Tee-
criteria, e�ional and final rates shall be
criteria,and be supported by current data. based on the actual costs of the period.A
This method is compatible with the . final rate is not subject to adjustment, negotiated where neither predetermined me •
Standards of Accounting and Finandel e."Provisional rata"or billing rite means a fixed rates ars appropriate.
Reporting for Voluntary Health and Welfare temporary indirect cost rats applicable toe s.The results of each negotiation shall be -
•Organizations Issued jointly by the National specified period which is used for funding, formalized in a written agreement between
Health Council,Inc.,the National Assembly interim reimbursement,and reporting indirect tee cognizant agency and the nonprofit
of Voluntary Health and Sochi Welfare costs an awards pending the establishment of organization.The cognizant agency shall •
Organizations,and the United Way of a rate for the period. - distribute copies of the agreement to all
America. L Indirect cost proposal"means the concerned Federal agencies. •
t Under this method,Indirect costs consist documentation prepared by an organization ht if a dispute arises Ina negotiation of an
elusively of general administration and to substantiate its claim for the Indirect cost rats between the cognizant
general expenses.In all other respects.the reimbursement of indirect costs.This agency and the nonprofit organization.the
• organization's indirect cost ratess ahal be proposal provides the basis for the revlbw dispute shall be resolved th accordance with .
computed in the same manner as that and negotiation leading totre establishment the appeals procedures of the eogtrtzent
described in paragraph D2 above. of an organization's indirect cost rate. agency•
R Special Indirect cost rotes.In some _ i`Cost objective"means a function. L To the extent that problems are
instances.a single indirect cost rate for all organizational subdivision,contract grant,ee encountered among the Federal agencies in
activities of an organization or for each major other work unit for which cost data are connection with the negotiation and approval
function of the organization ay not be desired and for which provision is made to process.the Office of Management and
appropriate.since It would not take into accunnleta and measure the cost of Budget will lend assistance as required to
account those different factor'which may processes projects,jobs and capitalized resolve each problems in a timely manner. ..--
substantially affect the indirect cost projects. (Circular Ns A-1i2)=. ... . •
applicable to a particular segment of work. 2.Aregotlollon and approval of was. Attachment I
For this purpose,a particular segment of a.Unless different arrangements are • • .
work.For this purpose,a particular segment agreed to by the agencies cor cerned the Selected(ter of Cost -
or work nay be that performed under a single Federal agency with the largest dollar value -•award or It ms consist of work ender a of awards with as organization will be Table of Corso ttr •
- group of swam performed in a commie designated as the cognizant agency for the 1.Advertising costs
envirtimment The factor'may Include the - negotiation mid approval of Indirect cost Z Bad debts -
physical location of the work.the keel of. rates and,where necessary.*that rates such 3.Bid and proposal poets(reset+.41
r,administrative eopport required•the nature of as fringe benefit and computer charge cot 4.Bonding mete
the facilities or other resources employed the rates.Oooe an agency is assigned cognizance 5.Communication cost ...•... • ••--
adentific diadpiiaae or technical skills) for a perticake nonprofit organisation.the A Compensation for personal services
Involved.the organizational arrangements as"iga.eot will not be ohaneed unless than f.Contingency provision
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46025 Federal Register / Vol. 45, No. 132 / Tuesday, July 8, 1980 / Notices
former employees for unemployment (2)Reports reflecting the distribution of on hand may be made through use .
compensation or workmen's compensation. activity of each employee must be allowances or depreciation.Howeverrsxaspt
such payments are allowable in the year of maintained for all staff members as provided in paragraph I.below a
payment with the prior approval of the (professionals and nonprofessionals)whose combination of the two methods may not be
awarding agency provided they are allocated compeaaation is charge,in whole or in part. used in connection with a single class of
to all activities of the organization. diricUy to swards.In addition,in order to fixed assets(e.g.,buildings,ni t equipment,
(4)Costs of insurance on the lives of support the allocation of indirect costs,such . computer equipment.etc.).
trustees.officers,or other employees holding reports must also be maintained for other b.The computation of use allowances of
positions of similar responsibility are employees whoa work involves two or more depreciation shall be based on the
allowable only to the extent that the funcitons or activities if a distribution of their acquisition cost of the assets involved.The
insurance represents additional compensation between such functions or acquisition cost of an asset donated to the
compensation.The costs of such insurance activities is'narded in the determination of organization by•third party shall be its fah
when the organisation is named as the organization's indirect coat rate(s)(e.g.. market value st the time of the donation.
beneficiary are unallowable. an employes engaged part-time in indirect c.The computation of use allowances ce
g.Pension plan costa. cost activities and part-time in a direct depreciation will exclude.,
(1)Costs of tbeorganlzatlon'e pension plan function).Reports maintained by nonprofit (1)The cost of laid:
which are tiicurred in accordance with the organisations to satisfy these requirements (2)Any portion of the cost of buildings gad
established policies of the organization are must meet the following standard= equipment borne by or donated by the
allowable.provided: (a)The reports must reflect an after.the• Federal Government irrespective of where
(a)Such policies meet the test at foot determination of the actual activity of title was originally vested or where It
reasonableness; each employee.Budget estimates(i.e, presently resides.and
(b)The methods of cost allocation are not 'estimates determined before the services are (3)Any portion of the cost of building.and
diaeiminatory; • performed)do not qualify as support for equipment contributed by or for the
(c)The cost assigned to each fiscal year Is chergee to awards, organization in satisfaction of a statutory
determined in accordance with generally (b)Each feport must account for the total matching retirement.
accepted accounting principles as prescribed activity for which employees are d.Where the use allowance method Is
to Accounting Principles Board Opinion No.$ compensated and which L required ie followed,the use allowance for buildings and
issued by the American Institute of Certified fulfillment of their obitsetkma to the improvement(including land improvements
Public Accountants;and organisato . such as paved parking urea,fences.and
(d)The coots assigned to a given Saul year (c)The reports most be signed by the sidewalks)will be computed at an anneal
are funded for all plan participants within six indtviduel employee.or by a teeponalbb rata not exceeding two percent of sogdaition
months:afler the end of that year.However. supervisory offrdal having first hand cost The use allowance for equipment will
i»,aeasas to normal and past"mica pinatas knowledge of the activities performed by the be computed at an annual rate not sxosedisot
coin reused by a delay in funding the empioysa,that tie distribution of activity six and two-thirds percent of adgsiiitioa cost
actuarial liability beyond b days after each resents a reasonable estimate of the When the use allowance method is aged he
g=arter of the year to which such costs are setnal work the m
assignable are unallowable. ➢des by ploys= buildings,the entire banding mast be treated
(2)Pension plan termination Insurance
during the periods covered by the reports, es a single asset;the baik3ls4's ooaspesred
prrmlums paid pursuant to the Em loyee (d)The reports mast be prepared at least (e.g.plumbing system.beating and air
Retirement Income Security Act of 1974(Pub. monthly and must coincide with one or mom conditioning etc)cannot be segregated both
L 53-406)are allowable.Late payment • Pay Periods- the buildings shell.The two permit•
charges on such premiums are unallowable. (3)Charon for the salaries and wages of limitation.however,need not be applsdb
(3)Excise taxes on accumulated funding noaprofeeaiooal employees,in addition to the equipment which le merely attached or
deficiencies and other penalties unposed supporting documentation deaatbsd in fastened to the building but not anently
under the Employee Retirement Income subparagraphs(1)and(2)above,must also fixed to it and which Is used as rnishiap or
Security Act are unallowable. be supported by records indicating the total decorations or for specialized purposes(e.g.
h.Incentive compensation.incestiw number of haws worked each day dentist chairs and dental treatment units,
compensation to employees based on cost maintained in conformance with Department counters,laboratory benches bolted to the
reduction.or efficient performance. of Labor regulations implementing the Fair floor,dishwashers,carpeting.etc.).Such
suggestion awards,safety awards,etc.are Labor Standards Act(22 al Part 515).Fot equipment will be considered as not being
allowable to the extent that the overall this purpose,the term"nonprofessional • permanently fixed to the building if it can be
compensation is determined to be reasonable employee"shall have the same meaning as removed without the need for costly or •
and such costs are paid or accrued pursuant • "nonexempt employes."under the Fair Labor extensive alterations or repairs to the I
to an agreement entered into in good faith Standards Act. , building or the equipment Equipment that
• . between the organization and the employees (4)Salaries and wages of employees used meets these criteria will be subject to the six
- before the services were rendered,or ., meeting cost sharing or matching and two-thirds percent equipment use
pursuant to an established plan followed b sh
• requirements on awardspust be supported In allowance limitation. •
the organization so consistently as to imply, the same nagger se salaries and wages s.Where depreciation method is followed.
In effect an agreement to make such claimed far reimbursement bvm awarding the period of useful service(useful life)
payment agencies. • • established in each case for usable capital
L Overtime,extra pay shift and mulliahift 7.Contingency provisions.Contributions to assets must take into consideration ouch
premiums.See paragraph 27. a contingency reserve or any similar factors as type of construction.nature of the •
{.Severance pay.See paragraph 44. - provision made for events the occurrence at equipment used.technological developments
• It Training and education costs.Sea which cannot be foretold with certainty as to In the particular program area.and the
paragraph 41. • time.intensity,or with an assurance of their renewal and replacement policies followed
I.Support of salaries and wages. happening.are unallowable.The tern • for the the Individual items or los=es of -
(1)Charges to awards for salaries and "contingency reserve"excludes self- assets involved The metbed of depredation
wages,whether treated as direct costs or Insurance eetorves(see paragraph 4f.(3)and used to assign the cost of an asset(or group
Indirect coeti,will be based on documented 1$.a.(2Xd)k pension funds(see paragraph of assets)to accounting periods shall reflect
payrolls approved by a responsible offdal(s) - 4.(a:and reserves for normal severance pay the pattern of consumption of the asset
of the organization.The distribution of (see paragraph 44.(bX4 during its useful life.In the absence delete
salaries and wages to awards must be S.Contributions.Contributions and ' evidence indicating that the expected
supported by personnel activity reports as donations by the organization to others me . consumption of the asset will be significantly
prescribed in subparegreph(2)below,except anallowable, greeter or lesser in the early portions edits
when a substitute system has been approved • O.Depreciation and gee dlorranctmst useful life than in the later portions,the
In writing by the the cognizant agency.(See a.Compensation for t3a use of buildhige, straight-line method shall be presumed to be
paragraph L2 of Attachment A) other capital improvements,and equipment the appropriate method.Depreciation
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48030 Federal Register / Vol. 4S, No. 132 / Tuesday, July L 1980 / Notices
• or collectively,or any other tangible capital (a)Types and extent of caverns shall be 22.Loeser an other awards.Any masse of
'asset.wherever located and whether owned In pecordanos with sound business practice . coats over income on any award Is
or leased by the organization, and the rates and premiums shall be unallowable ss a cost of any other award.
(2)'Idle facilities'means completely reasonable under the circumstances. This includes.bat is not limited to.the
unused fadlities that are excess to the (b)Costs allowed far business interruption organization's contributed portion by reason
organization's current needs or other similar Insurance shall be limited to of cost sharing agreements or any
(3)-Idle capad means the unused exclude coverage of management teas. underrecoveiea through negotiation of lump '
capacity of partial used facilities.It Is the (c)Costs of insurance or of any provisions rums for,or ceilings on.Indirect costs.
difference between that which a facility for a reserve covering the risk of loss or 22.Maintenance and repair costs.Costs
could achieve under 200 per cent operating damage to Government property are incurred for necessary maintenance.repair.
time on a one-shift basis less operating allowable only to the extent that the or upkeep of building and equipment
interruptions resulting from time lost for organization is liable for such loss or damage. (including Government property unless
repairs.setups.unsatisfactory materials.and (d)Provisions fora reserve under a self- otherwise provided for)which neither add to
other normal delays,and the extent to which Insurance program are allowable to the the permanent value of the property nor
the facility was actually used to meet extent that types of coverage,extent of appreciably prolong its intended Ida.but
demands during the accounting period.A coverage.rates,and premiums would have keep It In an efficient operating condition.are
multishift basis may be used if it can be been allowedbed insurance been purchased allowable.Costs incurred for improvements .
shown that this amount of usage could to cover the risks.tdowever,provision for which add to the permanent value of the
normally be expected for the type of facility known or reasonably estimated self-Insured buildings and equipment or appreciably
"Involved liabilities,which do not become payable for prolong their intended life shall be treated as
(4)"Costs of idle facilities or idle capacity" more than one year after the provision In capital expenditures(see paragraph 13).
means costs such as maintenance,repair. made shall not exceed the present value of • 23.Materials and supplies.The costs of
housing.rent,and other related costa;en, the liability. materials and supplies necessary to carry out
property taxes,Insurance,and depreciation (a)Costs of Insurance on the lives of an award are allowable.Such costa should be
or use allowances. trustees,ofilcers,or other employees holding charged at their actual prices after deducting
b.The costs of Idle facilities as positions of similar responsibilities am all cash discounts,trade discounts,rebates.
.unallowable except to the extent that allowable only to the extent that the and allowances received by the organization.
(1)They are necessary to meet insurance represents additional Withdrawals from general stores or
fluctuations in workload or compensation(see paragraph 8).The cost of stockrooms should be charged at cost under
(2)Although not necessary to meet . rues Insurance when the organization Is any recognized method of pricing
fluctuations in workload.they were Identified as the beneficiary is unallowable. consistently applied.Incoming transported=
necessary when acquired and are now idle (3)Actual losses which could have been charges may be a proper part of material
because of changes in program requirements. covered by permissible insurance(through cost.Materials and supplies charged as a
efforts to achieve more soonomkml the purchase of insurance or•self-insunav direct cost should include only the materials
operations,reorggaaization termination our program)are unallowable unless expressly and sup$iee actually used for the
other causes which could not have been provided for in the award except performance of the contract or grant.and des
reasonably foreseen.Under the exception (a)Cosh incurred because of losses sot credit should be given for any excess
stated in this subparagraph.costs of idle covered under nominal deductible Insurance materials or supplies retained or returned to
facilities are allowable for a reasonable - coverage provided in keeping with sound vendors. '
• period of time,ordinarily not to exceed oat business practice are allowable. 24.Meetings,conferences.
year.depending upon the Initiative taken to (b)Minor losses not covered by inrarsnasn a.Costs euociated with the conduct of
usa.lease,or dispose of such facilities(but such as spoilage,breakage,and meetings,and conferences;and include the
see paragraphs 47.b.and d). disappearance of sapplies,which occur in the cost of renting facilities,meals,speakers'
c.The costs of idle capacity art normal- ordinary course of opera bone.are allowable. fees.and the like.But see paragraph 12. .
cats of doing business and are a factor in the b.Indemnification includes the Entertainment oasts,and paragraph*
normal fluctuations of usage or indirect cod organized=against liabilities Participant suppers cost.
rates from period to period Sues cost are persons and any other loss or damage.not b.To the extent that these costs are
allowable,provided the capacity Is compensated by Insurance or otherwise.The identifiable with a particular cost objective,
reasonably anticipated to be necessary or Government is obligated to indemnify the they should be charged to that objective.(See
was originally reasonable and is not subject organization only to the extent expressly paragraph B.of Attachment A.)These costs
to reduction or elinrtnadon by subletting, provided in the award are allowable provided that they meet the .
renting,or sale,in ac crdancs with sound. 18.Interest."turd rising,cod inrestotsal general tests of allowable,shown In
business,economic.or security practices. management coats. Attachment A to this Circular.
Widaapreed Idle capacity throughout an - a.Co.b incurred for Interest on borrowed • c.Costs of meetings and conferences held
- entire facility or among a group of assets• capital or temporary use of endowment to conduct the general administration of the
having substantially the same function aq funds.bowies:represented are unallowable. organization are allowable.
be idle facilities. b.Costs of organized fund raising, 23.Memberships,subscriptions.and
17.Independent resat and devat pmaat Including financial campaigns,endowment professional activity costa
[Reserved). - • drives.solicitation of gl ti and bequests,and a.Costa of the organization's membership
In ineurcmcs nod ladszardilcratatc ,-. ..._ similar expenses Incurred solely to ratio in civic,business,technical and professional
a.boom=includes%sormw which the• capital or obtain contributors rtes • ' organizations are allowable.
organization is required to carry,or which Is " unallowable. b.Costs of the organization's stables{pp'=��ant�
approved under the terms of the tweed end'- ' a Web of laysetnent counsel and etal'• - to civic,Dustiness,professional.and tedud al
any other Insurance which the organisation and similar expellees incurred solely to periodicals are allowable. .
•
maintains In connection with the trowel • - enhance beams from investments Ere - a Costs of attendance at meetings and
conduct of lb operations.This paragraph unallowable. conferences,sponsored by others when the
does not apply to insurance which represents d.Fund raising and investment activities primary se is the dissemination of •
fringe benefits far employees(see paragraph- shall be allocated an appropriate share of ' technical information,are allowable.This
ILL and ILO)). • indirect cosh under the conditions described includes costs of meals,transportation,and
(1)Costs of imam=required or 'in parag'sph H of Attachment A. other items incidental to such attendance.
. approved and maintained purseast to M. : 20.Labor relations mem.Corte incurred U 2a.Organization costs.Expenditures.such
award are allowable. maintaining satisfactory relations between as Incorporation fees,brokers'fees,fees to
(21 Costs of othdlnnatztee matnfatned by' the organization and Its employees.including promoters,organizers or management
(the organization le coesec tke with the costa of labor management committees. - consultants,attorneys.aoconntent.or
general conduct of its operations are employee publications.and other related Investment counselors,whether or not
allowable snbjectto the following Itmttathema activities are allowable.�— • •--_ 'employees of the organization in connectioe
-9- •
•
• . - ,,
• 46032 ' Federal Rear / Vol. 48, No. 192 / Tuesday, July 8, 1980 / Notices
organization's facilities to approximately the control within 12 months after hire.the if any)is equal to 75 per cent or more of the
same condition existing immediately prior to organisation shall refund or credit the economic life of the leased property;La,the
commencement of Government awards,fair Government for Its share of the cost period the property is expected to be
wear and teal excepted us allowable. However,the costs of travel to an overseas economically usable by one or more users.
40.Recrv!tiny costs.The following locatiottshall be considered travel coats in 43.Royalties and other costs for use of
recruiting costs are allowable cost of"help accordance with paragraph 50 and not potnts and copyrights
wanted"advertent,.operating coats of an relocation costs for the purpose of this a.Royalties on a patent or copyright or
employment office.costs of operating an paragraph if dependents are not permitted at amortization of the cost of acquiring by
educational tasting program travel expenses the location for any reason and the costs do purchase a copyright patent.or rights
including food and lodging of employees not include costs of transporting household thereto,necessary for the proper performance
while engaged In recruiting personnel.travel goods. • of the award are allowable unless:
costs of applicants for interviews for • d.The following cons related to',location (1)The Government has a license or the
prospective employment.and relocation costa are unallowable right to free use of the patent or copyright
incurred incident to recruitment of new (1)Fees and other coats associated with ' (2)The patent or copyright has been
employees(see paragraph 41c).Where the acquiring•new home., adjudicated to be invalid or has been
organization.uses employment agencies. (2)A loss on the sale of a former home. administratively determined to be invalid.
costs not in excess of standard commercial (3)Continuing mortgage prindpal and, .(3)The patent or copyright is considered to
rates for such services are allowable. interest payments on a borne being sold be unenforceable.
41.Relocation costa (4)Income taxeapaid by an employee (4)The patent or copyright Is expired.
a.Relocation costs are costs incident to the related to reimbursed relocation costa. b.Spedal care should be exercised to
permanent change of duty assignment(fat as 42.Rental corm determining reasonableness where the
indefinite period or for a stated period of not a.Subject to the limitations described to royalties may have been arrived at as a result
less than 12 months)of an existing employee paragraphs b.through d of ihL paragraph. of less then arms length bullet:tng:e.g.:
or upon recruitment of a new employee. rental costs are allowable to the extent that (1)Royalties paid to persons,includinj
Relocation costs are allowable,subject to the the rates are reasonable in light of such corporations,affiliated with the organization.
limitation described in paragraphs b,a and d, factors as:rental costs of comparable (2)Royalties paid to unaffiliated parties,
below,provided that property,if an market conditions to the including corporations,under an agreement
(1)The move is for the benefit of the area;alternatives available;and the type.life• entered into in contemplation that a
employer. expectancy.eooditio4,and valve of the Government award would be made.
(2)Reimbursement to the employes is to Pro.,.R costs under sale end kasebadt (3)Royalties paid under an agreement
accordance vrith an established written entered into after an award is made to an
aaangements are allowable only cep to the
policy Consistently followed by the employer amount that would be allowed had the °Mt°sedes'
(3)The reimbursement does not exceed the t:In any case involving a patent er
organization continued to own the pro t formerly owned by the
employee's actual(or reasonably estimated) copyrigD IY y
c Rental costs under lees-than-le
expenses leases are allowable only up to the amount
organization.the amount of royalty allowed
b.Allowable relocation costs for current that would be allowed had title to the should not exceed the cost which would have
employees are limited to the foU been allowed had the organization retained
° �' property vested in the organization.For this ��
(1)The costs of transportation of the purpose.a less-than-arms-length use I.one title tbereta
employee,members of his immediate family under which one party to the leas.agreement N'Sersrance ms
and his household and personal effects to the is able to control or substantially iaflucnce a.Severance pay,also commonly referred
new location. the actions of the other.Such leases include. Se es dismissal wages,is a payment in
(2)The costs of finding a new home,such but are not limited to those between(I) addition to regular salaries and wages,by
as advance trips by employees and spouses divisione of an organisation:(ii)organfat ooa organizations to workers whose employment
to locate living quarters and temporary ender common control through common Is being terminated.Costa of severance pay
lodging during the transition period up to a officer,,directors.or memberx and(iii)as are allowable only to the extent that in each
maximum period of 30 days.Including organization and a director.trustee.officer. use,it Is required by(i)law.(it)employer-
advance trip time. or key employee of the org>•nt•etion or his employee agreement.(iii)established policy
(3)Closing cost&such as brokerage,legal immediate family either,directly or through that constitutes,in effect an implied
and appraisal feet,Incident to the disposition corporation,trusts,or similar aaaagemento agreement on the organization's part.or(iv)
of the employee's former home.These costs. in which they bold a controlling interese circumstances of the particular employment.
together with those described In(4)below. d Rental costs under leases which create a b.Coats of severance payments are divided
are limited tog per cent of the sales priced material equity in the leased property are into two categories as follows:
the employee's former home. allowable only up to the amount that would (1)Actual normal bunover severance
(4)The continuing cats of ownership of be allowed had the organization purchased payments shall be allocated to all activities
- . the vacant former horns after the settlement the property an the data the!jam agraameet or.where the organization provides for a
or lease date of the employee's new was executed e.g.depredation or use reserve for normal severances such method
permanent borne,such as maintenance of allowances,maintenance,taxes,insurance will be acceptable if the charge to current
buildings and grounds(exclusive of fixing rap but excluding interest expense and ether • operations is reasonable in light of payments
expenses),utilities.taxes.and proparty — unallowable costs.For this purpose.• actually made for normal severances over a
insurance. material putty In the property exists if the representative past period and if amount
(5)Other necessary and reasonable • lease in noncancelable or is cancelable mar charged an allocated to all activities of the
expenses normally incident to relocation upon the occurrence of some remote organizatSm •
such as the costa of cancelling an unexpired contingency and has one oa more Of the . .. (2)Abnormal or mass severance pay is of
lease,disconnecting and reinstalling • following cherootertstioF • such a conjectural nature that measurement
household appliances,and purchasing (1)The oganizetion has the right to of costs by means of an accrual will not
insurance against loss of or damages to purchate the property for a price which at the achieve equity to both patties.Taus.accruals
personal property.The cost of cancelling an beginning of the Iease appears to be for this purpose are not allowable.Howeven
unexpired lease is limited to three times the substantially less than the probable fair the Government recognizes its obligation to
monthly rectaL market value at the time it is permitted to participate to the extent of its fair gam.in
a Allowable relocation costs for new purchase the property(commonly called a any specific payment.Thus,efowability wen
employees are limited to those described in lease with a bargain purchase opdonk . be considered on a case-by-cam basis in the
(1)and(2)of paragraph b.above.When (2)Title to the property pause to the. avant of occurrence.
relocation costs insured incident to the organization at some time during or after the 45.Sped ial reds.rrio*Mho.
recruitment of new employees have been lease period; . a.Tae costs of services provided by hifitir
allowed either as a direct or indirect cost aid. (3)The term of the lease(initial term plus complex or specialized facilities operated by
the employee resigns for mesons within hie' periods covered by bargain renewal option& the organization.such as electronic
.
—11—
•
•
46034" r. Federal Register / Vol.45.No. 132 / Tuesday, July 8,1900 / Notices
awe
•
' .curriculum,which are allowable only to the allocation on the basis of work or time period Universities Research Aseoctetlon.
extant set forth in b.and G.above. beaelted when appropriate.Advance Incorporated(National Acceleration lab),
- e.Maintenance expense,and normal agreements are particularly important. Argonne,Illinois .
depreciation or fair rental on facilities e.Di}ect charges for foreign travel costs are Universities Corporation for Atmospheric
owned or leased by the organization for allowable only when the travel has received Research.Boulder,Colorado
training purposes are allowable to the extent prior approval of the awarding agency.Each Nonprofit Insurance Companies such as Blue
set forth in paragraphs it 22,and 42. separate foreign trip must be approved.For Cross and Blue Shield Organizations
I.Contributions or donations to purposes of this provision.foreign travel is Other nonprofit organizations as negotiated
educational or training institutions,including defined as any travel outside of Canada and with awarding agencies.
the donation of facilities or other properties. the United States and its territories and lee tae.°"are net r'''are Ili O1i
and scholarships or fellowships,are possessions.Howired.for an organization sums song lure-s
unallowable. located in foreign countries.the term"forties •
g.Training and education eats in excess of travel"means travel outside that country.
those otherwise allowable under paragrepbs
b.end c of this paragraph may be allowed lamely Na A-122)
with prior approval of the awarding meow. Attechmeat c
To be considered for approval,the -
organization must demonstrate that such Nonprofit Ongeni:Adions.aot fab}ect le this
costs are consistently incurred pursuant to as Circular
established training and education program. Aerospace Corporadam lI!Segundo,
and that the course or degree pursued is California
relative to the Held In which the employee is Argonne Universities Association.Chian,
now workinj or may reasonably be expected mama •
* Tr Associated Univenitlee,I000rporstsd
e$.a.Transportation poets.Transportation Washington.D.0
'costs include freight.ercpreas,cartage,gad Assodated Universities for Research and
postage charges relating either to goods Astronomy,Tucson.Arizona
purchased in process.or delivered These Atomic Casualty Commission.Washingtoa,
costs are allowable.When such costs mss D.C.
nsdily be identified with the items involved. Battelle memorial Institute.Headquartered to
:they may be directly charged as Columbus.Ohio —
itransportation costs or added to the oat ot &ookhavua Natiooai Laboratory.Upton,
!such items(see paragraph 23).When New York
ddentiftcation with the materials received Cantor for Energy and Environmental
cannot readily be made.transportation costs Research Energy ,(Llatvaraity Environmental
may be charged to the appropriate indirect Rico)
cost accounts if the organization follows a Commonwealth of Puerto Rion Charles 8tarNr
leonststent equitable peoredurvr fa this Draper Laboratory,Incorporated
Cestent
f 50.7}vselcasts Cambridge,Massacbusetta,Comparative
a.Travel costs are the expenses Ear Animal Research Laboratory(CARL)
transportation.lodging.subsistence,and (University of Tennessee),Oak ridge.
related items incurred by employees who ate Tennessee
in travel status on official business of the Bovironmental Institute of Michigan.Ace
organization Travel costs are allowable Ate.Michigan
subject to paragraphs b.through s.below. Hanford Environmental Health Pou datio ,
when they are directly attributable to spedso Richland Washingtao -
work under an award or are larvrrad in the UT Research Institute,Chicago,Moab
normal course of administration of the Insti t�Defense Analysis.Mtirngto4,
orb.such to Institute of Gas Technology.Chi Monk
biSuch cper may be charged a is Bea. Midwest Research Institute,Headquartered •
basis,an a per diem or mileage basis m lieu• m Kansas City,Missouri
of the two,p costs provided or on a used combination u is Mitre Corporation.Bedford.Massachmetto
of the twa,provided the method need results
in charges consistent with those normally Montana Energy Research��dd Development
' allowed by the organization in its regular . Instituts,Inc.,( *RD1).$utta,Montana
eperatfooa. . National Radiological Astronomy
. e The difference in cost between first-clam Observatory.Green Bank West Virginia
air accommodations and len than Brstclaee Oakridge Associated Universities..Oaktid"
air accommodation la unallowable except Tennessee
when less than first-class air Project Management Corprratioa.OsLrldp,
accommodations are not reasonably Teaaesaee_
available to meet necessary mission . Rand Corporation.Santa Monica,California _
requirements,such as where less than fires Research Triangle Institute.Research
class accommodations would(I)require . Triangle Park,North Carolina
circuitous routing.(it)require travel during Riverside Research Institute.New Tort.Nei
enreasonab)e hours,(Iii)greatly increase the Tad'
duration of the flight(iv)result in additional Sandia Carperstioa.AtbogaaR.e•New
costa which would offset the inaspatatioa Mexico '
savings, or(v)offer accommodations cubic. Southern Research Institute.libminablak • -
are not reasonably adequate for the medical Alabama •
needs of the traveler. Soatbwas!Research Institute.tine Antonia, . •
d.Necessary and reasonable moats of ' Taus
family movements and personnel movement, SU International,Menlo Park.CaBfornia .
is of a special or mass nature are allowable. Syrscusa Research Corporation.Byraam,
pursuant to paragraphs 40 and 41.=bind tt New York -
•
—13— •0.i. Government Tooting Orrice : 11183 -her- 311%
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
•
24 CFR Part 85
'Administrative Requirements for Grants and
Cooperative Agreements to State, Local and Federally
Recognized Indian Tribal Governments"
This "common rule" is applicable to the Community
Development Block Grant Entitlement Program to the
extent specified in 24 CFR Part 570 at S570. 502 (a) .
09:0634 HOUSING AND DEVELOPMENT REPORTER
(x) Funds collected through special if CDBG funds are used to repay th- ' g CDBG funds from the reci.'-nt under
assessments made against properties guaranteed loan.When such a guarante d th. authority of §570.204 unless the
.weed and occupied by households not of loan is partially repaid with CDBG fu ds, gran -e explicitly designat: it as a subre-
1 w and moderate income, where the the amount generated shall be prora -d to cipien . e term inclu.-s a public agen-
as - sments are used to recover all or part reflect the percentage of CDBG funds cy design. ed by a :it of general local
of .e CDBG portion of a-public im- used. Amounts generated by . tivities government • rec: ve a loan guarantee
prow. ent. financed with loans guarante d under under subpart : this part,but does not
(2) •rogram income does not include Section 108 which are not •efined as include contr. o providing supplies,
income earned (except for interest de- program income shall be tr-:ted as mis- equipment, .nstruc ,or services sub-
scribed i §570.513) on grant advances cellaneous revenue and sh. not be sub- ject to the •rocuremen equirements in
from the U.S. Treasury. The following ject to any of the requi ments of this 24 CFR :5.36 or 84.40, a .pplicab;e.
items of in.•me earned on grant advances Part, except that the u - of such funds
must be re 'tted to HUD for transmittal shall be limited to . tivities that ar- §571.501 Responsibility for grant
to the U.S. Treasury, and will not be located in a revitali .tion strategy area ad inistration. .
reallocated un•er section 106(c)or(d) of and implement a D approved area
the Act: revitalization str• egy pursuant to -
•
(i)Interest ea ed from the investment §91.215(e) of thi• title. However, such One or more public agencie in-
of the initial pro eeds of a grant advance treatment shall •t affect the right of the dud •g existing local public ag:. cies,
by the U.S. Trea ury; Secretary to re.•ire the Section 108 bor- may b designated by the chief e cutive
ii Interest ea ed on loans or other rower to pledg: such amounts as security officer o the recipient to undert• e activ-
( ) ities assis -d by this part.A.pub c agency
forms of assistance provided with CDBG for the guar. teed loan. The determine- so designat=. shall be subject • the same
funds that are used for activities deter- tion whethe- such amounts shall consti- requirements .s are applicab to subreci-
mined by HUD eithe' to be ineligible or tute progra 5• income shall be governed by requir.
to fail to meet a nat'onal objective in the provis'.ns of the contract required at (b) The recipient is ponsible for
accordance with the req irements of sub- §570.70 b)(1). ensuring that C D :G fu,ds are used in
part C of this part,or the' ail substantial- (5) E .mples of other receipts that are accordance with - 1 t ogram require-
ly to meet any other requ ement of this not co-sidered program income are pro- ments.The use of de ated public agen-
part; and ceeds rom fund raising activities carried cies, subrecipients, • contractors does
(iii) Interest earned on the 'nvestment out .y subrecipients receiving CDBG not relieve the recipe of this responsi-
of amounts reimbursed to t e CDBG assistance (the costs of fundraising are bility.The recipien is al • responsible for
program account prior to the e of the g• erally unallowable under the applica- determining the a• quac •f performance
reimbursed funds for eligible p e.oses. • e OMB circulars referenced in 24 CFR under subrecipi- t agree , nts and pro-
•
(3) The calculation of the amo:nt of :4.27), funds collected through special curement contr. ts,and for .king appro-
program income for the recip -nt's assessments used to recover the non- priate action w en performa e problems
CDBG program as a whole(i.e.,comp:s- CDBG portion of a public improvement, arise, such a- the actions d- cribed in
ing activities carried out by a grantee a and proceeds from the disposition of real §570.910. ere a unit of general local
its subrecipients) shall exclude payme't property acquired or improved with govemmen is participating wit or as
made by subrecipients of principal an /or CDBG funds when the disposition occurs part of, a urban county, or as p. of a
interest on CDBG-funded loans red' ved 'fter the applicable time period specified metropol' an city,the recipient is r:,pon-
from grantees if such payments are ade i §570.503(b)(8) for subrecipient-con- sible fo applying to the unit of ge eral
using program income received •y the tr. ed property,or in§570.505 for recip- local gt ernment the same requirem: ts
subrecipient. (By making such p ments, Tent ontrolled property. as are applicable to subrecipients, exc-.t
the subrecipient shall be deem-: to have (b) 'evolving fund means a separate that e five-year period identified und-
transferred program income t. the grant- fund ith a set of accounts that are §57 i.503(b)(8)(i) shall begin with the
ee.) The amount of progr:m income indepen'ent of other program accounts) da - that the unit of general local govern-
derived from this calcula • shall be establish-' for the purpose of carrying nt is no longer considered by HUD to
used for reporting purpose., for purposes out speci activities which, in turn, .- a part of the metropolitan city or
of applying the requ' ement under generate pa , ents to the fund for the use ,rban county, as applicable, instead of
§570.504(b)(2)(iii), an. in determining in carrying o the same activities. Each the date that the subrecipient agreement
limitations on planni : and administra- revolving loan nd's cash balance must expires.
tion and public sere' es activities to be _ be held in an i erest-bearing account, -
paid for with CDB i funds. and any interest •-id on CDBG funds
(4) Program inc. e does not include: held in this account hall be considered §570.502 Applicability of uniform
(i) Any incom: received in a single interest earned on gr.-t advances and administrative requirements.
program year by he recipient and all its must be remitted to HU.∎ for transmittal
subrecipients if he total amount of such to the U.S. Treasury no -ss frequently (a) Recipients and subrecipients that
income does •of exceed $25,000; and than annually. (Interest pai, by borrow- are governmental entities(including pub-
(ii) Amo ts generated by activities ers on eligible loans mad- from the lic agencies) shall comply with the re-
that are fi t.need by a loan guaranteed revolving loan fund shall be .rogram quirements and standards of OMB Circu-
under Se ion 108 of the Act and meet income and treated accordingly. lar No. A-87, "Cost Principles for State,.
one or ••re of the public benefit criteria (c) Subrecipient means a pu• 'c or Local, and Indian Tribal Governments";
specifi:• at §570.209(b)(2)(v) or are car- private nonprofit agency, authorit or OMB Circular A-128, "Audits of State
ried o.t in conjunction with a grant under organization,or a for-profit entity aut .r- and Local Governments" (implemented
Sect'.n 108(q) in an area determined by ized under§570.201(o), receiving CD: at 24 CFR part 44); and with the follow-
H i to meet the eligibility requirements funds from the recipient or another subre ing sections of 24 CFR part 85 "Uniform
fo designation as an Urban Empower- cipient to undertake activities eligible for Administrative Requirements for Grants
ent Zone pursuant to 24 CFR part 597, such assistance under subpart C of this and Cooperative Agreements to State and
ubpart B. Such exclusion shall not apply part. The term excludes an entity receiv- Local Governments" or the related
Published by Warren Gorham Lamont
COMMUNITY DEVELOPMENT 09:0635
HDR RF-582
• 4-29-96
CDBG provision, as specified in this (3) Subpart C-"Post-Award Require- provisions concerning the following'.fol
paragraph: ments," except for: lowing items;
(1) Section 85.3, "Definitions"; (i) Section 84.22, "Payment Require- (1) Statement of work. The agreemen
(2) Section 85.6, "Exceptions"; ments." Grantees shall follow the Stan- • all include a description of the work t•
(3) Section 85.12, "Special grant or dards of §§85.20(b)(7) and 85.21 in b. performed, a schedule for completi
subgrant conditions for"high risk' grant- making payments to subrecipients; th, work,and a budget.These items sh.41
ees"; (ii) Section 84.23, "Cost Sharing and be i• sufficient detail to provide a so .d
(4)Section 85.20,"Standards for finan- Matching"; basi'for the recipient effectively to m. i-
cial management systems," except para- (iii)Section 84.24,"Program Income." tor p.rformance under the agreeme't.
graph (a); In lieu of §84.24, CDBG subrecipients (2) 'ecords and reports. The reci'ient
(5) Section 85.21, "Payment," except shall follow §570.504; shall s.-cify in the agreement the pa icu-
as modified by §570.513; (iv)Section 84.25,"Revision of Budget lar rec. ds the subrecipient must ain-
(6) Section 85.22, "Allowable costs"; and Program Plans"; tain and the particular reports the subre-
(7) Section 85.26, "Non-federal au- (v) Section 84.32, "Real Property." In cipient st submit in order to a .ist the
dits"; lieu of§84.32, CDBG subrecipients shall recipient 'n meeting its recor. eeping
(8)Section 85.32,"Equipment,"except follow §570.505; and repo *ng requirements.
in all cases in which the equipment is (vi) Section 84.34(g), "Equipment." In (3) Prog 'm income. The a_ eement
sold, the proceeds shall be program in- lieu of .the disposition provisions of shall includ,the program inco require-
come; §84.34(g), the following applies: ments set fo h in§570.504(c). he agree-
(9) Section 85.33, "Supplies"; (A) In all cases in which equipment is ment shall al . specify that, a the end Of—
(10) Seetion 85.34, "Copyrights"; sold, the_proceeds shall be program in- the program y ar,the grantee ay require
(11) Section 85.35, "Subawards to de- come (prorated to reflect the extent to remittance of '11 or part of .ny program
barred and suspended parties"; which CDBG funds were used to acquire income balances (includin_ investments
(12)Section 85.36,"Procurement,"ex- the equipment); and thereof) held b the subrec pient (except
cept paragraph (a); (B) Equipment not needed by the su- those needed fo immedi. e cash needs,
(13) Section 85.37, "Subgrants"; brecipient for CDBG activities shall be cash balances of . revolv ng loan fund,
(14) Section 85.40, "Monitoring and transferred to the recipient for the CDBG cash balances fro, a 1 p sum draw-
reporting program performance," except program or shall be retained after com- down, or cash or •nves ments held for
paragraphs(b)through(d)and paragraph pensating the recipient; Section 108 securit ne ds).
(; (vii) Section 84.51 (b), (c), (d), (e), (0, (4) Uniform ad i strative require-
(15) Section 85.41, "Financial report- (g), and (h), "Monitoring and Reporting ments. The agreeme t shall require the
ing," except paragraphs (a), (b), and (e); Program Performance"; subrecipient to com. with applicable
(16) Section 85.42, `Retention and (viii)Section 84.52,"Financial Report- uniform administrati - requirements, as
ing", described in 570.51
access requirements for records," except g., §
that the period shall be four years; (ix) Section 84.53(b), "Retention and (5) Other progra r:quirements. The
"
access requirements for records."Section
(17) Section 85.43, "Enforcement"; q agreement shall req:ire he subrecipient
(18) Section 85.44, "Termination for 84.53(b)applies with the following excep- to carry out each a tivit in compliance
convenience"; lions: with all Federal aws d regulations .
(A)The retention period referenced in
(19) Section 85.51 "Later disallo- described in Subpart K . these regula-
§84.53(b)pertaining to individual CDBG
wances and adjustments" and tions, except that
activities shall be four years; and
(20) Section 85.52, "Collection of (i) The subrec..ient doe not assume
(B)The retention period starts from the the reci •Tent's en ironment.• res onsibil-
amounts due." p p
date of submission of the annual perfor-
(b) Subrecipients, except subrecipients ities described • §570.604; and
mance and evaluation report, as pre-
that are governmental entities,shall com- (ii) The subr:cipient does of assume
scribed in 24 CFR 91.520, in which the
ply with the requirements and standards the recipient's r-sponsibility f. initiating
of OMB Circular No. A-122, "Cost Prin- specific activity is reported on for the the review pr. ess under the .rovisions
ciples for Non-profit Organizations," or final time rather than from the date of of 24 CFR P.rt 52.
OMB Circular No.A-21, `Cost Principles submission of the final expenditure re- (6) Conditions for religious .rganiza-
for Educational Institutions," as applica- port for the award; tions. Where applicable, the con ditions
(x) Section 84.61, "Termination." In
ble,and OMB Circular A-133,"Audits of prescribed b HUD for the use o CDBG
Institutions of Higher Education and lieu of the provisions of§84.61, CDBG funds by rel gious organizations s.all be
subrecipients shall comply with
Other Nonprofit Institutions" (as set included in the agreement.
§570.503(b)(7); and 7 Susp nsion and termination. The
forth in 24 CFR part 45). Audits shall be ( )
(4) Subpart D-"After-the-Award Re-
conducted annually. Such subrecipients agreement shall specify that, in a cor-
shall also comply with the following pro- 4utrements," except for §84.71, "Close- dance wit' 24 CFR 85.43, suspensio' or
visions of the Uniform Administrative out Procedures." termination may occur if the subrecipi-nt
requirements of OMB Circular A-I10 material, fails to comply with any teR
(implemented at 24 CFR part 84, "Uni- § ! 503 Agreements with sus ecipients of the a ard, and that the award may .e
form Administrative Requirements for termin. ed for convenience in accordanc
Grants and Agreements With Institutions (a) Befor .isbursing a. CDBG funds with • CFR 85.44.
of Higher Education,Hospitals and Other to a recipient, e rec .tent shall sign a (8) eversion of assets. The agreement
Non-Profit Organizations")or the related written agreemen ' h the subrecipient. shall pecify that upon its expiration the
CDBG provision, as specified in this The agreement a remain in effect subr cipient shall transfer to the recipient
paragraph: during any pe '.d tha he subrecipient any CDBG funds on hand at the time of
(1) Subpart A-"General"; has control . er CDBG •ds, including ex.iration and any accounts receivable
(2) Subpart B-"Pre-Award Require- program i. ome. at •butable to the use of CDBG funds.It
ments," except for §84.12, "Forms for (b) At . minimum, the writt• - agree- s all also include provisions designed to
Applying for Federal Assistance"; ment . th the subrecipient shall in ude - sure that any real property under the
Published by Warren Gorham Lamont
•
tugs. -.gists / Vol. 33, tic. 48 / ='riday, March 11. 1988 / Rules and Regulations 8035
Background
In November 1983,a 20-agency task this schedule.23 agencies proposed•
force under the President's Council on government wide"common rule"in the
Management Improvement(PCMI). June 9,1987 Federal Register(52 FR
chaired by the Office of Management 21820-21862).In the same issue,OMB
and Budget(OMB). was established to proposed s revised Circular A-102(52
explore streamlining grants management FR 21816-21818).
and review OMB Circular A-102, The anal common rule will be
BACKGROUND INFORMATION _ "Uniform Administrative Requirements codified In each agency's portion of the
ON THE "COMMON RULE" for Grants to State and Local Code of Federal Regulations,as
Governments." Indicated in the Information provided
On June 18,1984,OMB published a for individual agencies below.Several
Notice in the Federal Register(49 FR agencies'rules reflect differences
24958-24959)seeking comments on over required in statute(e.g.the five-yeas
50 issues and possible options for each. record retention requirement for the
Federal agencies.States,local Department of Education programs
governments.interest groups,bu:lness under the Central Education Provisions
organizations,and nonprofit Act(CEPA)).Such differences are
organizations,as well as members of indicated in the text.
Congress,submitted several hundred All grants administration provisions
comments in program regulations which are .
Five agency chaired teams studied the inconsistent with the common rule are
Unifo�n Administrative R uiromenta comments.existing Federal agency rescinded,except to the extent they are
grants administration regulations.and required by legislation or approved as a
for Grants and Cooperative deviation by OMB.Each agency will
Agreements to State and Local — implementing manuals and
cular A-102 t specify in the agency-specific preamble
Govsrirnenta implementing O'�iB Circular A-102 to and amendments additional to the
draft agovernment-wide"common" common rule those agency regulations
AoDCc1U:Department of Agriculture: rule.The proposed common rule that are rescinded.Likewise,all grants
Department of Commerce:Department contained fiscal and administrative administration provisions of noncodified
of Defense:Department-of Education: requirements for grants to State and program tuanuala,handbooks,and other
Department of Energy:Department of local governments(grantees) and materials which are inconsistent with
Health and Human Services; subrecipients which are State and local the rule are superseded,except to the —
Department of Housing and Urban governments(subgrantees).At the same extent they are required by legislation or
Development:Department of the time,OMB and the agencies prepared a approved by OMB.
Interior.Department of Justice; revised Circular A-102—directed solely This rule is effective for grants and
Department of Labor.Department.of to Federal agencies—containing cooperative agreements awarded on or
State;Department of Transportation: guidance to Federal agencies on how after October 1.1988.the start of the
ACTION;Commission on the they should manage the award and next Federal fiscal year.As noted in the
Bicentennial of the United States administration of Federal grants. agency-specific preambles,some
Constitution:Environmental Protection On March 12.1987,the President Federal agencies may authorize earlier
Agency:Federal Emergency directed all affected agencies to - effective dates.For example.some
Management Agency.Federal Mediation simultaneously propose and Federal agencies may allow grantees to
and Conciliation Service: Institute of subsequently adopt a common rule use the new definition of equipment and
Museum Services.National Archives verbatim.except where inconsistent the increase in the threshold for small
and Records Administration:National with statutory requirements.The phase procedures as of the issuance .
Endowment for the Arts:National President explained that at the time it of the final rule.
Endowment for the Humanities: was issued "Circular A-102 was a
National Science Foundation:Small significant step toward simplification of
Business Administration:Veterans grants management."He went on to say.
Administration. . — however,that "after 16 years.some of
ACTION:Final rule. the provisions are out of date.there are
gaps where the standards do not cover
tawwAav:This action finalizes a important areas,and agencies have
common rule establishing consistency interpreted the circular in numerous
and uniformity among the Federal different ways in their regulations.It is _. -
agencies shown above in the now time for the circular to be revised to
administration of grants and cooperative reflect developments consistent with our
Agreements to State,local and federally Federalism policies and State and local
recognized Indian tribal governments. regulatory relief objectives and the
t 'rzcrrvt Dan:This rule is effective President's Management Improvement
October 1.1988.except for the Program."The President directed the
Department of Transportation.See the affected agencies to propose a common
Department of Transportation agency rule within 90 days and adopt a final
specific preamble below. =m on role within one year.To meet
Federal Register / Vol. 57, No. 48 / Friday, Mai cit.._'tl. 1988 / Rules and Regulations
•
PART SS-ADMINISTRATIVE
REQUIREMENTS FOR GRANTS AND
COOPERATIVE AGREEMENTS TO
STATE,LOCAL AND FEDERALLY
RECOGNIZED INDIAN TRIBAL
GOVERNMENTS
Subpart A-04twal
sec
85.1 Purpose and scope of this part.
852 Scope of subpart.
85.3 Definitions.
85.4 Applicability.
85.5 Effect on other issuances.
85.6 Additions and Exceptions.
Subpart ID-Pre-Award Requirements
85.10 Forms for applying for grants.
_ 63.11 State plans.
85.12 Special grant or aubgrent conditions
3 for"high-risk"grantees.
Subpart Cr-Post-Award Requi emeitts
Financial Administration
6520 Standards for financial management
_ systems.
85.21 Payment requirements.
85.22 Allowable costs. -
8523 Period of availability of funds.
85.24 Matching or cost sharing
65.25 Program income.
85.26 Non-Federal audits. -
Cbanges,Property.and Subawards
63.30 Changes under discretionary(project)
awards.
85.31 Real property.
85.32 Equipment.
85.33 Supplies.
83.34 Copyrights.
65.35 Subawards to debarred and
suspended parties.
65.36 Procurement.
83.37 Subgrants.
Reports.Records Retention.and Enforcement
85.40 Monitoring and reporting program
performance.
85.41 Financial reporting.
85.42 Retention and access requirements for
records.
65.43 Enforcement
• 85.44 Termination for convenience.
Subpart D-Atter-the-Grant Requirements
-85.50 Closeout.
85.51 Later disallowances and adjustments. -
85.32 Collection of amounts due.
Subpart E--Entitlements(Reserved)
Authority:Section 7(d).Department of
Housing and Urban Development Act.42
U.S.C.3535(d).
Dated:February 10.1988.
Carl D.Covitz,
Acting Secretory.
IMUSIO COOS 4110-33-11
•
Federal Register / Vol. 53, No.. 48 / Friday. March 11, 1988 , '...ules and Regulations 8088
"Real property"means land,including as of the expiration of a grant:(3) Health Service for the Homeless Block
land improvements, structures and Refusal to extend a grant or award Grant).
appurtenances thereto, excluding additional funds,to make a competing (3)Entitlement grants to carry out the
movable machinery and equipment. or noncompeting continuation.renewal, following programs of the Social
"Share",when referring to the extension.or supplemental award:or(4) Security Act:
awarding agency's portion of real voiding of a grant upon determination (i)Aid to Needy Families with
property,equipment or supplies,means that the award was obtained Dependent Children(Title IV-A of the
the same percentage as the awarding fraudulently.or was otherwise illegal or Act,not including the Work Incentive
agency's portion of the acquiring party's invalid from inception. Program(WIN)authorized by section
total costs under the grant to which the 'Terms of a grant or subgrant"mean 402(a)19(G);HHS grants for WIN are
acquisition costs under the grant to all requirements of the grant or subject to this part);
which the acquisition cost of the subgrant.whether in statute, (ii)Child Support Enforcement and
property was charged.Only costs are to regulations.or the award document. Establishment of Paternity(Title IV-D of
be counted—not the value of third-party 'Third party in-kind contributions" the Act);
in-kind contributions, mean property or services which benefit (iii)Foste: Care and Adoption
"State"means any of the several a federally assisted project or program Assistance(Title IV-E of the Act);
States of the United States,the District and which are contributed by non- (iv)Aid to the Aged.Blind.and
of Columbia.the Commonwealth of Federal third parties without charge to Disabled(Titles I.X,XIV,and XVI-
Puerto Rico,any territory or possession the grantee,or a cost-type contractor AABD of the Act);and
of the United States,or any agency or under the grant agreement. (v)Medical Assistince(Medicaid)
instrumentality of a State exclusive of "Unliquidated obligations"for reports (Title XIX of the Act not includi ::he
local governments.The term does not prepared on a cash basis mean the State Medicaid Fraud Control proLtri-n
include any public and Indian housing amount of obligations incurred by the authorized by section 1Cr" • :
agency under United States Housing Act grantee that has not been paid.For (4)Entitlement grants under tne,
of 1937. reports prepared on an accrued following programs of The National
"subgrant"means an award of expenditure-basis,they represent the School Lunch Act:
financial assistance in the form of amount of obligations incurred by the (i)School Lunch(s action 4 of the Act),
money.or property in lieu of money, grantee for which an outlay has not (ii)Commodity As:•istance(section 8
made under a grant by a grantee to an been recorded. of the Act),
eligible subgrantee.The term includes "Unobligated balance"means the (iii)Special Meal Assistance(section
financial assistance when provided by portion of the funds authorized by the 11 of the Act).
contractual legal agreement,but does
nut include procurement purchases.nor Federal agency that has not been (iv)Summer Food Service for Children
does it include any form of assistance obligated by the grantee and is (section 13 of the Act).and
which is excluded from the definition of determined by deducting the cumulative (v)Child Care Food Program(section
"grant"in this part. obligations from the cumulative funds 17 of the Act).
"Subgrantee"means the government authorized. (5)Entitlement grants under the
or other legal entity to which a subgrant i 85 a ApPaeabilhy, following programs of The Child _
is awarded and which is accountable to Nutrition Act of 1988:
the grantee for the use of the funds (a)General. Subparts A-13 of this part (I)Special Milk(section 3 of the Act),
provided. apply to all grants and subgrants to and
"Supplies"means all tangible governments,except where inconsistent (ii)School Breakfa:t(section 4 of the
personal property other than with Federal statutes or with regulations Act).
"equipment"as defined in this part authorized in accordance with the (8)Entitlement Far is for State
"Suspension" means depending on the exception provision of 1.15._8,or. Administrative expenses under The
context.either(1) temporary withdrawal (1) Grants and subgrants to State and Food Stamp Act of 1977(section 18 of
of the authority to obligate grant funds local institutions of higher education or the Act).
pending corrective action by the grantee State and local hospitals. (7)A grant for an experimental,pilot,
or subgrantee or a decision to terminate (2)The block grants authorized by the or demonstration project that is also
the grant.or(2) an action taken by a Omnibus Budget Reconciliation Act of supported by a grant listed in paragraph
suspending official in accordance with 1981 (Community Services:!reventive (a)(3)of this section:
agency regulations implementing E.D. Health and Health Services:Alcohol. (8)Grant funds awarded under
12.549 to immediately exclude a person Drug Abuse,and Mental Health subsection 412(e)of the Immigration and
from participating in grant transactions Services:Maternal and Child Health Nationality Act(8 U.S.C.1522(e))and
for a period,pending completion of an Services:Social Services;Low-Income subsection 501(a)of the Refugee
investigation and such legal or Home Energy Assistance:States' Education Assistance Act of 1980(Pub.
debarment proceedings as may ensue. Program of Community Development L 98-422.94 StaL 1809),for cash -
"Termination" means permanent Block Grants for Small Cities:and assistance,medical assistance,and
withdrawal of the authority to obligate Elementary and Secondary Education supplemental security income benefits
previously-awarded grant funds before other than programs administered by the to refugees and entrants and the
that authority would otherwise expire.It Secretary of Education under Title V, administrative costa of providing the
also means the voluntary relinquishment Subtitle D.Chapter 2.Section 583—the assistance and benefits;
of that authority by the grantee or Secretary's discretionary grant program) (9)Grants to local education agencies
subgrantee. 'Termination"does not and Titles I-fIl of the Job Training under 20 U.S.C.238 through 241-1(a),
include:(1)Withdrawal of funds Partnership Act of 1982 and under the and 242 through 244(portions of the
awarded on the basis of the grantee's Public Health Services Act(Section Impact Aid program),except for 20
underestimate of the unobligated 1921).Alcohol and Drug Abuse U.S.C.238(d)(2)(c)and 240(f).
balance in a prior period:(2) Treatment and Rehabilitation Block (Entitlement Increase for Handicapped
Withdrawal of the unobiigated balance Grant and Part C of Title V,Mental Children):and
Federal Register / Vol. 33', No. 48 / Friday. March 11. 1988 / Rules and Regulations 8Q91
(b)The financial management systems disbursements.Grantees must monitor disbursements.The working capital
of other grantees and subgrantees must cash drawdowns by their subgrantees to ad%ante method of payment shall not be
' meet the following standards: assure that they conform substantially used by grantees or subgrantees if the
(1)Financial reporting.Accurate, to the same standards of timing and reason for using such method is the
curreert,and complete disclosure of the amount as apply to advances to the unwillingness or inability of the grantee
finankial results of financially assisted grantees. to provide timely advances to the
activities must be made in accordance (c) An awarding agency may review subgrantee to meet the sub,{rantee's
with the financial reporting the adequacy of the financial actual cash disbursements.
requirements of the grant or subgrant. management system of any applicant for (f)Effect of program inci me.refunds.
(2)Accounting records.Grantees and financial assistance as part of a and audit recoveries on pa:•rnent. (1)
subgrantees must maintain records preaward review or at any time Grantees and subgrantees:hall disburse
which adequately identify the source subsequent to award. repayments to and interest earned on a
and application of funds provided for § 85 ' i Payment revolving fund before requesting
financially-assisted activities.These additional cash payments for the same
records must contain information (a)Scope.This section prescribes the activity.
pertaining to grant or subgrant awards basic standard and the methods under (2)Except as provided in paragraph
and authorizations.obligations, which a Federal agency will make
unobligated balances,assets,liabilities, payments to grantees.and grantees will (f)(1)of this section,grantees and
make payments to subgrantees and subgrantees shall disburse program
. outlays or expenditures,and income. P Y g
(3)Internal contra/.Effective control contractors. income,rebates,refunds,contract
b Basic standard. Methods and settlements,audit recoveries and
and accountability must be maintained ( s interest earned on such funds before
for all grant and subgrant cash,real and procedures for.payment shall minimize interest
additional cash payments.
personal property,and other assets. the time elapsing between the transfer (g) sting Withholding a payments. (1)Unless
• Grantees and subgrantees must of funds and disbursement by the otherwise i by Federal stUute.
adequately safeguard all such property grantee or subgrantee.in accordance
awarding agencies shall not slat withhold
and must assure that it is used solely for wOith Treasury regulations at 31 CFR Part payments for proper charges incurred by
authorized purposes.
(4)Budget control.Actual (c)Advances. Grantees and • grantees or subgrantees unless—
expenditures or outlays must be subgrantees shall be paid in advance, (i)The grantee or subgrantee has
compared with budgeted amounts for provided they maintain or demonstrate failed to comply with grant award
each grant or subgrant.Financial - the willingness and ability to maintain __ conditions or
information must be related to procedures to minimize the lime (ii)The grantee or subgrantee is
performance or productivity data, elapsing between the transfer of the indebted to the United States.
including the development of unit cost funds and their disbursement by the (2)Cash withheld for failure to corr ply
information whenever appropriate or • grantee or subgrantee. with grant award condition,but with(ut
"'. specifically required in the grant or (d)Reimbursement. Reimbursement suspension of the grant.shall be
subgrant agreemenL If unit cost data are shall be the preferred method when the released to the grantee upon subsequi nt
required,estimates based on available requirements in paragraph(c)of this compliance. When a grant is suspend,d,
documentation will be accepted section are not met..Grantees and payment adyustments will be made in
whenever possible. subgrantees may also be paid by accordance with > �...43(c).
(5)Allowable cost Applicable OMB reimbursement for any construction (3)A Federal agency shall not make
cost principles.agency program grant.Except as otherwise specified in payment to grantees for amounts that
regulations,and the terms of grant and regulation.Federal agencies shall not are withheld by grantees or subgrantees
subgrant agreements will be followed in use the percentage of completion from payment to contractors to assure
determining the reasonableness, method to pay construction grants.The satisfactory completion of work.
allowability,and alienability of coats. grantee or subgrantee may use that Payments shall be made by the Federal
(8).Source documentation.Accounting method to pay its.construction" agency when the grantees or
records must be supported by such contractor,and if it does,the awarding subgrantees actually disburse the
source documentation as cancelled agency's payments to the grantee or withheld funds to the contractors or to
checks,paid bills.payrolls, time and subgrantee will be based on the escrow accounts established to assure
attendance records,contract and grantee's or subgrantee'y actual rate of satisfactory completion of work.
subgrant award documents,etc. disbursement. (h)Cash depositories. (1)Consisten•
• (7)Cash management Procedures for (e) Working capital advances,If a with the national goal of expanding the
minimizing the time elapsing between ' grantee cannot meet the criteria for opportunities for minority business
the transfer of funds from the U.S. advance payments described in enterprises.grantees and subgrantees
Treasury and disbursement by grantees paragraph(c)of this section,and the are encouraged to use minority banks la
and subgrantees must be followed Federal agency has determined that bank which is owned at least 50 percent
whenever-advance payment procedures reimbursement Ts not feasible because by minority group members).A list of
are used.Grantees must establish the grantee lacks sufficient working minority owned banks can be obtained _
reasonable procedures to ensure the capital, the awarding agency may from the Minority Business Development
receipt of reports on snbgrantees'cash provide cash or a working capital Agency,Department of Commerce,
balances and cash disbursements in advance basis.Under this procedure the Washington,DC 20230.
sufficient time to enable them to prepare awarding agency shall advance cash to (2)A grantee or subgrantee shall
complete and accurate cash transactions the grantee to cover its estimated maintain a separate bank account only
reports to the awarding agency.When disbursement needs for an initial period when required by Federal-State
advances are made by letter-of-credit or generally geared to the grantee's agreement.
electronic transfer of funds methods,the disbursing cycle.Thereafter,the (i)Interest corned on advances.
grantee must make drawdowns as close awarding agency shall reimburse the Except for interest earned on advances
as possible to the time of making grantee for its actual cash of funds exempt under the
Federal Register / Vol. 53. No. 48 / Friday, March 11. 1988 / Rules and Regulations' 8093
. or ibgrantee does not have employees land.and only depreciation or use (c)Cost of generating program
performing similar work, the rates will-• allowances may.be counted for donated income. If authorized by Federal
be consistent with those ordinarily paid equipment and buildings.The regulations or the grant agreement.costs
by other employers for similar work in depreciation or use allowances for this incident to the generation if program
the same labor market.In either case,a property are not treated as third party income may be deducted from gross
reasonable amount for fringe benefits in-kind contributions.Instead,they are income to determine program income.
may be included in the valuation. treated as costs incurred by the grantee (d)Governmental revenues.Taxes,
(2)Employees of other organizations. or subgrantee.They are computed and special assessments,levies,fines,and -
When an employer other than a grantee. allocated(usually as indirect costs)in other such revenues raised by a grantee
subgrantee.or cost-type contractor accordance with the cost principles or subgrantee are not program income
furn.shes free of charge the services of specified in 18_12.2.in the same way as unless the revenues are specifically
an employee in the employee's normal depreciation or use allowances for identified in the grant agreement or
line of work,the services will be valued purchased equipment and buildings.The Federal agency regulations as program
at the employee's regular rate of pay amount of depreciation or use income.
exclusive of the employee's fringe allowances for donated equipment and (e)Royalties.Income fr-m royalties
benefits and overhead costs.If the buildings is based on the property's and license fees for copyrighted
services are in a different line of work, market value at the time it was donated. material,patents.and inventions
paragraph(c)(1)of this section applies. (f) Valuation of grantee or subgrantee developed by a grantee or subgrantee is
(d) Valuation of third party donated donated real property for construction/ program income only if the revenues are
supplies and loaned equipment or space. acquisition.If a grantee or aubgrantee specifically identified in the grant
(1)If a third party donates supplies,the donates real property for a construction agreement or Federal agency regulations
contribution will be valued at the or facilities acquisition project.the as program income.(See § 85 .34.)
market value of the supplies at the time current market value of that property (f)Property. Proceeds from the sale of
• of donation. may be counted as cost sharing or real property or equipment will be.
(2)if a third party donates the use of matching.If any part of the donated handled in accordance with the
equipment or space in a building but property was acquired with Federal requirements of§§ 85 .31 and 85.32.
retains title.the contribution will be funds,only the non-federal share of the (g) Use of program income. Program
valuedatthe fair rental rate of the property may be counted as cost sharing income shall be deducted from outlays
equipment or space. —
or matching. which may be both Federal and non-
e) Valuation of third party donated (g)Appraisal of real property. In some Federal as described below,unless the
equipment, buildings.and land. If a third cases under p ara ra hs(d).(e) and(f)of Federal a g enc y re g ulations or the grant
party donates equipment,buildings.or
land,and title passes to a grantee or this section.it will be necessary to agreement specify another alternative
subgrantee.the treatment of the donated establish the market value of land or a (or a combination of the alternatives). in
property will depend upon the purpose building or the fair rental rate of land or specifying alternatives,the Federal
of the grant or subgrant,as follows: of space in a building.In these cases,the agency may distinguish between income
(1)Awards for capita!exr„nditures. If Federal agency may require the market earned by the grantee and income
the purpose of the grant or subgrant is to value or fair rental value be set by an earned by subgrantees and between the
assist the grantee or subgrantee In the independent appraiser,and that the sources.kinds,or amounts of income.
acquisition of property, the market value value or rate be certified by the grantee. When Federal agencies authorize the
of that property at the time of donation This requirement will also be imposed alternatives in paragraphs(g)(2)and(3)
may be counted as cost sharing or by the grantee on subgrantees. of this section.program income in
; 25 Program tnearna. excess of any limits stipulated shall also .
matching R.
(2)Other awards. If assisting in the be deducted from outlays.
acquisition of property is not the (a)General. Grantees are encouraged (1)Deduction. Ordinarily program
purpose of the grant or subgrant, to earn income to defray program costs. income shall be deducted from total
paragraphs (e)(2)(i)and(ii)of this Program income includes income from allowable costs to determine the net
section apply: fees for services performed.from the use allowable costs.Program income shall
(i)If approval is obtained from the or rental of real or personal property be used for current costs unless the
awarding agency. the market value at acquired with grant funds,from the sale Federal agency authorizes otherwise.
the time of donation of the donated of commodities or items fabricated Program income which the grantee did
equipment or bite;dings and the fair under a grant agreement.and from not anticipate at the time of the award
rental rate of the donated land may be payments of principal and interest on shall be used to reduce the Federal
counted as coat sharing or matching.In loans made with grant funds.Except as agency and grantee contributions rather
the case of a subgrant. the terms of the otherwise provided in regulations of the than to increase the funds committed to
grant agreement may require that the Federal agency.program income does the project.
approval be obtained from the Federal not include interest on grant funds, - - (2)Addition.When authorized.
agency as well as the-grantee. In all rebates,credits,discounts,refunds.etc. program income may be added to the —
cases,the approval may be given only if and interest earned on any of them. funds committed to the grant agreement
a purchase of the equipment or rental of (b)Definition of program income. by the Federal agency and the grantee.
the land would be approved as an Program income means gross income The program income shall be used for
allowable direct cost.If any part of the received by the grantee or subgrantee the purposes and under the conditions of
donated property was acquired with directly generated by a grant supported the grant agreement.
Federal funds,only the non-federal activity,or earned only as a result of the (3) Cost shoring or matching.When
share of the property may be counted as grant agreement during the grant period. authorized.program income may be
cost-sharing or matching. "During the grant period”is the time used to meet the cost sharing or
(ii)If approval is not obtained under between the effective date of the award matching requirement of the grant
paragraph(e)(2)(i)of this section.no and the ending date of the award agreement.The amount of the Federal
amount may be counted for donated reflected in the final financial report grant award remains the same.
•
;_
Federal Register / Vol. 53, No. 48 / Friday, March 11. 1988 / Rules and Regulations' . 8095.
• purposes.and the grantee or subgrantee (c)Use.(1)Equipment shall be used (4)Adequate maintenance procedures
shall not dispose of or encumber its title by the grantee or subgrantee in the must be developed to keep the property
or other interests. program or project for which it was in good condition.
(c)Disposition.When real property is acquired as long as needed,whether or (5) If the grantee or subgrantee is
no longer needed for the originally not the project or program continues to authorized or required to sell the
authorized purpose.the grantee or be supported by Federal funds.When no property.proper sales procedures must
subgrantee will request disposition longer needed for the original program be established to ensure the highest
instructions from the awarding agency. or project,the equipment may be used in possible return.
The Instructions will provide for one of other activities currently or previously (e)Disposition.When original or
the following alternatives: supported by a Federal agency. replacement equipment acquired under
(1)Retention of title.Retain tide after (2)The grantee or subgrantee shall a grant or subgrant is no longer needed
compensating the awarding agency.The also make equipment available for use for the original project or program or for
amount paid to the awarding agency on other projects or programs currently other activities currently or previously
will be computed by applying the or previously supported by the Federal supported by a Federal agency.
awarding agency's percentage of Government.providing such use will not disposition of the equipment will be
participation in the cost of the original interfere with the work on the projects made as follows:
purchase to the fair market value of the or program for which it was originally (1)Items of equipment with a current
property.However,in those situations acquired.First preference for other use per-unit fair market value of less than
• where a grantee or subgrantee is shall be given to other programs or S5.000 may be retained,sold or
disposing of real property acquired with projects supported by the awarding otherwise disposed of with no further
grant funds and acquiring replacement agency.User fees should be considered 'obligation to the awarding agency.
real property under the same program. if appropriate. (2)Items of equipment with a current
. the net proceeds from the disposition (3)Notwithstanding the per unit fair market value in excess of
may be used as an offset to the cost of encouragement in § R5 .2.5(a) to earn $5•000 may be retained or sold and the
the replacement property. program income,the grantee or awarding agency shall have a right to an
(2)Sale of pFoperty.Sell the property subgrantee must not use equipment amount calculated by multiplying the
and compensate the awarding agency. acquired with grant funds to provide current market value or proceeds from
The amount due to the awarding agency services for a fee-to compete unfairly sale by the awarding agency's share of
will be calculated by applying the with private companies that provide the equipment.
awarding agency's percentage of equivalent services,unless specifically (3)In cases where a grantee or
participation in the cost of the original permitted or contemplated by Federal subgrantee fails to take appropriate
purchase to the proceeds of the sale statute. disposition actions.the-awarding agency
after deduction of any actual and (4)When acquiring replacement may direct the grantee or subgrantee to
reasonable selling and fixing-up equipment.the grantee or subgrantee take excess and disposition actions.
expenses.If the grant is still active,the may use the equipment to be replaced as (f)Federal equipment. In the event a
net proceeds from sale may be offset • a trade-in or sell the property and use - grantee or subgrantee is provided
against the original cost of the property. the proceeds to offset the cost of the federally-owned equipment:
When a grantee or subgrantee is replacement property.subject to the (1)Title will remain vested in the
directed to sell property.sales approval of the awarding agency. Federal Government.
procedures shall be followed that g (2)Grantees or subgrantees will
(d)Management requirements.
provide for competition to the extent Procedures for managing equipment manage the equipment in accordance
practicable and result in the highest with Federal agency rules and
possible return. (including replacement equipment), procedures,and submit an annual
whether acquired in whole or in part• inventory listing.
(3)Transfer of title.Transfer title to rY g•
with grant funds.until disposition takes
the awarding agency or to a third-party place will,as a minimum,metuhe (3)When the equipment is no longer
designated/approved by the awarding following requirements: needed.the grantee or subgrantee will
' agency.The grantee or subgrantee shall request disposition instructions from the
be paid an amount calculated by (1)Property records must be Federal agency.
applying the grantee or subgrantee's maintained that include a description of (g)Right to transfer title.The Federal
percentage of participation in the the property,a serial number or other awarding agency may reserve the right
purchase of the real property to the identification number,the source of to transfer title to the Federal
current fair market value of the property,who holds title,the acquisition Government or a third part named by
property• date,and cost of the property, the awarding agency when such a third
percentage of Federal participation in party is otherwise eligible under existing
;8.5.32 Equipment the cost of the property.the location,-use statutes.Such transfers shall be subject
(a)Tide.Subject to the obligations and condition of the property,and any to the following standards:
and conditions set forth in this section, ultimate disposition data including the (1)The property shall be identified in
title to equipment acquired under a date of disposal and sale price of the the grant or otherwise made known to
grant or subgrant will vest upon property the grantee in writing.
acquisition in the grantee or subgrantee (2)A physical inventory of the (2)The Federal awarding agency shall
respectively, property must be taken and the results issue disposition instruction within 120
(b)States.A State will use,manage, . reconciled with the property records at calendar days after the end of the
and dispose of equipment acquired least once every two years. Federal support of the project for which
under a grant by the State in accordance (3)A control system must be it was acquired.if the Federal awarding
with State laws and procedures.Other developed to ensure adequate agency fails to issue disposition
grantees and subgrantees will follow safeguards to prevent loss.damage,or instructions within the 120 calendar-day
paragraphs(c)through(e)of this theft of the property.Any loss,damage, period the grantee shall follow
section. or theft shall be investigated. 85 12(e).
Federal Register / Vol. SS. No. 48 / Friday. March 11, 1988 I Rules laid Regulations d097
• Reviews of protests by the Federal unduly restrict competition The (u) If sealed bids are used.the
agency will be limited to description may include•statement of following requirements apply:
(i)Violations of Federal law or the qualitative nature of the material. (A)The invitation for bids will be
' regulations sad the standards of this product or service to be procured,and publicly advertised and bids shall be
section(violations of State or!scat law when necessary,shall set forth those solicited from an adequate number of
will be under the jurisdiction of State or minimum essential characteristics and known suppliers,providing them
local authorities)and standards to which it must conform if it sufficient time prior to the date set for
(ii)Violations of the grantee's or is to satisfy its intended use.Detailed opening the bids;
subgrantee's protest procedures for product specifications should be (B)The invitation for bids.which will
failure to review a complaint or protest. avoided if at all possible.When it is include any specifications and pertinent
Protests received by the Federal agency impractical or uneconomical to make a attachments.shall define the items or
other than those specified above will be clear and accurate description of the services in order for the bidder to
referred to the grantee or subgrantee. technical requirements.a "brand name properly respond:
(c)Competition. (1)All procurement. or equal"description may be used as a (G)All bids will be public!? opened at
transactions will be conducted in a means to define the performance or the time and place prescribed in the
manner providing full and open other salient requirements of a invitation for bids:
competition consistent with the procurement.The specific features of the (D)A firm fixed-prce contract award
standards of§&538.Some of the named brand which must be met by will be made in writi ig to the lowest
. situations considered to be restrictive of offerors shall be dearly stated;and responsive and respcnsible bidder.
competition include but are not limited (ii)Identify all requirements which the Where specified in bidding documents,
to: offerors must fulfill and all other factors factors such as discoonu,transportation
(i)Placing unreasonable requirements to be used in evaluating bids or cost,and life cycle colts shall be
. on firms in order for them to qualify to proposals. considered in deterroning which bid is
do business, (4)Grantees and subgrantees will lowest.Payment disc aunts will only be
(ii)Requiring unnecessary experience ensure that all prequalified lists of used to determine the low bid when
and excessive bonding, persons.firms,or products which are erior experience indi:ales that such
(iii)Noncompetitive-pricing practices used in acquiring goods and services are discounts are usually taken advantage
between firma or between affiliated current and include enough qualified of;and
companies, sources to ensure maximum open and (E)Any or all bids may be rejected if
(iv)Noncompetitive awards to free competition.Also,grantees and there is a sound docu rented -cacao.
consultants that are on retainer subgrantees will not preclude potential (3)Procurement by ve
competiti
contracts, bidders from qualifying during the proposals.The technique of competitive
(v)Organizational conflicts of solicitation period.
proposals is normally conducted with
interest. (d)Methods of procurement to be
(vi)Specifying only a"brand name" followed.(1)Procurement by small more than one source submitting an
cost-
product instead of allowin,"an equal" offer.and either a fixed-price or cost-
P o q purchase procedures.Small purchase
product to be offered and describing the procedures are those relatively simple reimbursement type contract is
performance of other relevant and informal procurement methods for awarded.It is generally used when
requirements of the procurement.and securing services,supplies,or other conditions are not appropriate for the
(vii)Any arbitrary action in the property that do not cost more than use of sealed bids.If this method is
procurement process. $2.5.000 in the aggregate.if small tzeed the following requirements eppiy-.
(2)Grantees and subgranteee will purchase procurements are used.price (i)Requests for proposals will be
conduct procurements at a manner that or rate quotations will be obtained from publicized and identify all evaluation
prohibits the use of statutorily or an adequate number of qualified factors and their relative importance.
• administratively imposed in-State or sources. o Any response to publicized requests for
local geographical preferences in the (2)Procurement by sealed bids proposals shall be honored to the
evaluation of bids or proposals,except (formal advertising).Bids are publicly maximum extent practical:
in those cases where applicable Federal solicited and a firm-fixed-price contract (ii)Proposals will be solicited from an
statutes expressly mandate or (lump sum or unit price)is awarded to adequate number of qualified sources:
encourage geographic preference_ the responsible bidder whose bid: (iii)Grantees and subgrantees will
Nothing is this section preempts State conforming with all the material terms have a method for conducting technical
licensing laws.When contracting for and conditions of the invitation for bids. evaluations of the proposals received
• architectural and engineering(A/E) is the lowest in price.The sealed bid and for selecting awardees;
services,geographic location away be a method is the preferred method for (iv)Awards will be made to the •
selection criteria provided its procuring constructions if the recta•tirinns -responsible firm whose proposal is most
- application leaves an appropriate in §-A-S.38(d)(2)(i)apply. advantageous to the program. with price
number of qualified firma,given the (i)In order for sealed bidding to be and other Iactors considered;and
nature and sine of the project to feasible,the fnalouung conditions should (v)Grantees and subgrantees may use
compete for the contract- be present: competitive proposal procedures for
(3)Grantees will have written (A)A complete.adequate.and qua)ifi,t•atioru-based procurement of-
selection procedures for procurement realistic specification or purchase architecturalJengineering(NE)
transactions_These procedures will description is available: professional services whereby
ensure that all solicitations: (B)Two or more responsible bidden competitors qualifications are
(i)Incorporate a clear+tod accurate are willing sod able to compete evaluated and the most qualified
description of the technical. effectively for the business;and competitor is selected subject to
requirements for the material,product. (C)The procurement lends Itself to a negotiation of fair and reasonable
or service to be procured.Such -firm fixed price contract and the . compensation The method.where price
description shall not,in competitive selection of the successful hinter can be is not used as a selection Iactor,can
procurements.contaia features which made principally on the basis of price. only be used in procurement of ATE.
•
���nsclert.. Register / Vol. 53. No. 4' / cc y. March 11. 1988 / Rules and Regulations g099
(h)Bonding requirements.For (4)Compliance with the Copeland f37 $uegrsnts.
construction or facility improvement "Anti-Kickback"Act(18 U.S.C.874)as (a)States.States shall follow state
• contracts or subconstracts exceeding supplemented in Department of Labor law and procedures when awarding and
$100,000,the awarding agency may regulations(29 CFR Part 3).(All administering subgrants(whether on a
accept the bonding policy and contracts and subgrants for construction cost reimbursement or.fixed amount
requirements of the grantee or or repair) ' basis)of financial assistance to local
subgrantee provided the awarding (5)Compliance with the Davis-Bacon and Radian tribal governments.States
agency has made a determination that Act(40 U.S.C.276a to a-7)as shall: •
the awarding agency's interest is supplemented by Department of Labor (1)Ensure that every subgrant
adequately protected.If such a regulations(29 CFR Part 5). includes any clauses required by
determination has not been made,the (Construction contracts in excess of Federal statute and executive orders
minimum requirements shall be as $2000 awarded by grantees and and their implementing regulations:
follows: subgrantees when required by Federal (2)Ensure that subgrantees are aware
(!)A ant to five percent from each bidder grant program legislation) of requirements imposed upon them by
equivalent to five percent of the bid
price.The"bid guarantee"shall consist (B)Compliance with Sections 103 and Federal statute and regulation:
of a firm commitment such as a bid 107 of the Contract Work Hours and (3)Ensure that a provision for
bond,certified check.or other Safety Standards Act(40 U.S.C.327-330) compliance with Section 8 5 .42 is
. negotiable instrument accompanying a as supplemented by Department of placed in ev ery cost reimbursement
bid as assurance that the bidder will, Labor regulations(29 CFR Part 5). subgrant:and
upon acceptance of his bid,execute (Construction contracts awarded by (4)Conform any advances of grant
such contractual documents as may be grantees and subgrantees in excess of funds to subgrantees substantially to the
required within the time specified. $2.000,and in excess of$2,500 for other same standards of timing and amount
(2)A performance bond on the part of contracts which involve the employment that apply to cash advances by Federal
the contractor for 100 percent of the of mechanics or laborers) agencies.
contract price.A"performance bond"is (7)Notice of awarding agency (b)All other grontees..All other
one executed in connection with a requirements and regulations pertaining grantees shall follow the provisions of
contract to secure fulfillment of all the to reporting. this part which are applicable to
contractor's obligations under such (8)Notice of awarding agency awarding agencies when awarding and
contract.
A payment bond on the part of the requirements h and regulations pertaining cost reimbursement ortfix d amount a
contractor for 100 percent of the discovery patent or n with n which to any
f P f discovery or invention which arises or is basis)of financial assistance to local
contract price.A"payment bond"is one developed in the course of or under such and Indian tribal governments.Grantees
executed in connection with a contract contract. shall:
to assure payment as required by law of (1)Ensure that every subgrant
all persons supplying labor and material (9)Awarding agency requirements
in the execution of the work provided and regulations pertaining to copyrights includes a provision for compliance with
for in the contract. and rights in data. this part:
(i)Contract provisions.A grantee's (10)Access by the grantee.the (2)Ensure that every subgrant
and subgrantee's contracts must contain subgrantee. the Federal grantor agency, includes any clauses required by
provisions in paragraph(i)of this the Comptroller General of the United Federal statute and executive orders
Section.Federal agencies are permitted States.or any of their duly authorized and their implementing regulations:and
to require changes,remedies.changed representatives to any books, (3)Ensure that subgrantees are aware
conditions,access and records documents,papers.and records of the of requirements imposed upon them by
retention.suspension of work and other contractor which are directly pertinent Federal statutes and regulations.
clauses approved by the Office of to that specific contract for the purpose (c)Exceptions.By their own terms.
• Procurement Policy. of making audit.examination.Excerpts, certain provisions of this part do not
(1)Administrative,contractual,or and transcriptions. apply to the award and administration
legal remedies in instances where (11)Retention of all required records of subgrants:
contractors violate or breach contract for three years after grantta or (1)Section_.15-10:
terms,and provide for such sanctions subgrantees make final payments and (2)Section 25.11:
and penalties as may be appropriate. all other pending matters are closed. (3)The letter-of-credit procedures
(Contracts other than small purchases) (12)Compliance with all applicable specified in Treasury Regulations at 31
(2)Termination for cause and for CFR per ,cited in I_8.5 21:and
convenience by the grantee or standards,orders,or requirements
subgrantee including the manner by _ issued under section 308 of the Clear Air (4)Section x.50.
which It will be effected and the basis Act(42 U.S.C.1857(h)).section 508 of the Reports,Records.Retention,and
for settlement.(All contracts in excess Clean Water Act(33 U.S.C.1368). Enforcement
of$10000) Executive Order 11738.and
(3)Compliance with Executive Order Environmental Protection Agency i$.x::40 monitoring and reporting
11246 of September 24,19035 entitled regulations(40 CFR Part 15).(Contracts. Program esrforms'nce-
"Equal Employment Opportunity,"as subcontracts.and subgrants of amounts (a)Monitoring by grantees.Grantees
amended by Executive Order 11375 of in excess of 5100,000) are responsible for managing the day-to-
October 13,1967 and as supplemented in (13)Mandatory standards and policies day operations of grant and subgrant
Department of Labor regulations(41 relating to energy efficiency which are supported activities.Grantees must
CFR Part 80).(All construction contracts contained in the state energy monitor grant and subgrant supported
awarded in excess of$10.000 by conservation plan issued lie compliance activities to assure compliance with
grantees and their contractors or with the Energy Policy and applicable Federal requirements and
subgrantees) Conservation Act(Pub.L.94-163). that performance goals are being
Federal Register / Vol. 53, No. 48 / Friday. March 1.1, 1988 1 Rules and Regulations 8101
appropriate when reporting is to be electronic funds transfer or Treasury The awarding agency will request
•
y accomplished with the assistance of check advance. transfer of records to its custody when it
automatic data processing equipment (i)When a construction grant is paid determines that the records possess
provided that the information to be by letter of credit.electronic funds long-term retention value.When the
submitted is not changed in substance. transfer or Treasury check advances, records are transferred to or maintained
(2)Forecasts of Federal cosh the grantee will report its outlays to the by the Federal agency.the 3-year
requirements.Forecasts of Federal cash Federal agency using Standard Form retention requirement is not applicable
requirements may be required in the Z71,Outlay Report and Request for to the grantee or subgrantee.
"Remarks"section of the report. Reimbursement for Construction (c)Starting date of retention period—
(3)Cash in hands of subgrontees. Programs.The Federal agency will (1)General.When grant support is
When considered necessary and provide any necessary special continued or renewed at annual or other
feasible by the Federal agency.grantees instruction.However.frequency and due intervals.the retention period for the
may be required to report the amount of date shall be governed by f g5 41(b) records of each funding period starts on
cash advances in excess of three days' (3)and(4). the day the grantee or subgrantee
needs in the hands of their subgrantees (ii)When a construction grant is paid submits to the awarding agency its
or contractors and to provide short by Treasury check advances based on single or last expenditure report for that
narrative explanations of actions taken periodic requests from the grantee,the period.However.if grant support is
by the grantee to reduce the excess advances will be requested on the form continued or renewed quarterly, the
balances. specified in I.8..5r..41(d). retention period for each year's records
(4)Frequency and due date. Grantees (iii)The Federal agency may starts on the day the grantee submits its
must submit the report no later than 15 substitute the Financial Status Report expenditure report for the last quarter of
working days following the end of each specified in e.5....5_41(b)for the Outlay the Federal fiscal year.In all other
quarter.However,where an advance Report and Request for Reimbursement cases,the retention period starts on the
- either by letter of credit or electronic for Construction Programs. day the grantee submits its final
transfer of funds is authorized at an (3)Accounting basis.The accounting expenditure report.If an expenditure
annualized rate of one million dollars or basis for the Outlay Report and Request report has been waived,the retention
more,the Federal agency may require for Reimbursement for Construction period starts on-the day the report
the report to be submitted within 15 —Programs shall be governed by would have been due.
working days following the end of each la A 5.41(b)(2). (2)Real property and equipment
month.
(d)Request for advance or f$5..42 Retention and sates - records.The retention period for real
reimbursement—(1)Advance payments. requirements for records.• property and equipment records starts
Requests for Treasury check advance (a)Applicability.(1)This section from the date of the disposition or
payments will be submitted on Standard applies to all financial and replacement or transfer at the direction
Form 270.Request for Advance or programmatic records.supporting of the awarding agency.
•' Reimbursement. (This form will not be documents,statistical records,and other (3)Records for income transactions
used for drawdowns under a letter of records of grantees or subgrantees after grant orsubgront support In some
credit,electronic funds transfer or when which are: cases grantees must report income after
Treasury check advance payments are (i)Required to be maintained by the the period of grant support.Where there
' made to the grantee automatically on a terms of this Part,program regulations is such a requirement,the retention
predetermined basis.) or the grant agreement,or• period for the records pertaining to the
(2)Reimbursements.Requests for (ii)Otherwise reasonably considered earning of the income starts from the
reimbursement under nonconstruction as pertinent to program regulations or end of the grantee's fiscal year in which
grants will also be submitted on the grant agreement. the income is earned.
Standard Form 270.(For reimbursement (2)This section does riot apply to (4)Indirect cost rote proposals,cost
requests under construction grants.see records maintained by contractors or allocations plans.etc.This paragraph
. paragraph(e)(1)of this section.) subcontractors.For a requirement to applies to the following types of
(3)The frequency for submitting place a provision concerning records In documents,and their supporting records:
payment requests is treated in certain kinds of contracts,see indirect cost rate computations or
85 .41(b)(3). I 33-38(i)(10). proposals,cost allocation plans.and any .
(e)Outlay report and request for (b)Length of retention period.(1) similar accounting computations of the
reimbursement for construction Except as otherwise provided,records rate at which a particular group of costs
programs. (1)Grants that support must be retained for three years from is chargeable(such U.computer usage
construction activities paid by the starting date specified in paragraph chargeback rates or composite fringe
reimbursement method. (c)of this section. benefit rates).
(i)Requests for reimbursement under (2)If any litigation.claim.negotiation. (i)If submitted for negotiation.If the
construction-grants will be submitted on audit or other action involving the proposal.plan.or other computation is
Standard Form 271,Outlay Report and records has been started before the required to be submitted to the Federal
Request for Reimbursement for expiration of the 3-year period.the Government(or to the grantee)to form
Construction Programs.Federal agencies records must be retained until the basis for negotiation of the rate,then -
may,however,prescribe the Request for completion of the action and resolution the 3-year j'etention period for its
Advance or Reimbursement form, of all issues which arise from it•or until supporting records starts from the date
specified in f.&5_.41(d),instead of this the end of the regular 3-year period. of such submission.
form. whichever is later. (ii)If not submitted for negotiation.If
(ii)The frequency for submitting (3)To avoid duplicate recordkeeping. the proposal.plan.or other computation
reimbursement requests is treated in awarding agencies may make special is not required to be submitted to the
# _41(b)(3). arrangements with grantees and Federal Government(or to the grantee)
(2)Grants that support construction subgrantees to retain any records which for negotiation purposes.then the 3-year
activities paid by letter of credit. are continuously needed for joint use. retention period for the proposal plan.or
Federal Register / Vol. 33, No. 48 / Friday, March 11. 1288 / Rules and Regulatioits 8103
Government.If not paid within a (b)Except where otherwise provided Subpart E—Entitlement(Reserved)
reasonable period after demand.the by statutes or regulations, the Federal
Federal agency may reduce the debt by agency will charge interest on an (FR Doc.118-3251 Filed 3-70-88,8.45.ml
(1)Making an adminstrative offset overdue debt in accordance with the muses coots 3410-R3-Y,{.SO-4.M.se2s41.e.
against other requests for Federal Claims Collection Standards (4 3111C‘41-41.4710-2Y-10,`710.32-M,44$0-1S-I. 4110.
73-61.11733-01-61.31110-01-M.4000.01_41.711L-01-M.
reimbursements. CFR Ch.11).The date from which 11370-01-61.sneo-war.4310-,11,-M,u,e.7,_M, 41so.
(2)Withholding advance payments interest is computed is not extended by O4 .7M 5 "13 1 -0:;M.7 01-M•70N-01-M.
otherwise due to the grantee,or litigation or the tiling of any form of
(3)Other action permitted by law. appeal.
•
•
•
i
. Ordinance No. G19-93
AN ORDINANCE.
AMEINDING CHAPTER 3.12 ENTITLED "COMMISSION ON HUMAN RELATIONS"
1
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS:
I Section 1. That Chapter 3.12 entitled "Commission on Human
Relations" of the Elgin Municipal Code, 1976, as amended, be and is
hereby amended to read as follows:
4 3.12.010 Created. .
A commission on human relations is created.
3.12.020 Declaration of policy. .
1 Po cy.
1 A. The city council,- in support of constitutional provisions
against prejudice and the practice of discrimination
' against any individual or group because of race, color,
I religion, creed, sex, national origin, age, ancestry,
familial -status or handicap, desires to establish a
commission on human relations. To eliminate such prejudice
and discrimination, an instrumentality should be
qestablished through which the citizens of Elgin may be kept
informed of developments in human relations, the citizens
and public officials of the city may obtain expert advice
I and assistance in progressive practices to keep peace and
good order, and private persons and groups may be
• officially encouraged to promote tolerance, goodwill,
• interfaith and interracial harmony between all people.
I B. It is declared to be the public policy of the city to assure
full and equal opportunity to all residents of the city to
I obtain fair and adequate housing for themselves and their
- families in the city without discrimination against them
because of their race, color, religion, creed, sex, .
1 national origin, . age, ancestry, familial status or
handicap, and to secure to its residents the economic.,
social, and professional benefits of living in an
1 integrated society.
3.12.030 Appointment of members-composition-term-salary.
II A. ' The human relations commission shall consist of up to eight
members appointed by the mayor with the advice and consent
of the city council. Commission members shall be as
II broadly representative of the community as practically
feasible, in such areas as race, color, religion, creed, •
sex, national origin, 'age, ancestry, familial status,
I handicap, education, welfare, labor, and management. There
shall be two •x officio members of the human relations
1! • ` - -
1
•
•
•
• C. All rules of procedure and "regulations adopted by the
commission shall preserve the right of due ,process under
law established with respect to civil cases in the circuit
courts of the state.
31., The commission is empowered to determine the facts and such
findings must be made by a majority vote of the commission.
" I. The commission is empowered to issue an order for relief as
may be appropriate, including monetary relief. In the case
of an order issued pursuant to Section 3. 12.090, the
commission may order such relief as provided in that
section including paragraph (J) .
The commission shall make a final administrative
disposition of a complaint within one year of the date of
receipt of a complaint unless it is impracticable to do
so. If the commission is unable to do so it shall notify
the complainant and respondent, in writing, of the reasons
for not doing so.
J. Any resolution of a charge before a final order under this
section shall require the consent of the aggrieved person
on whose behalf the charge is issued.
• 1C. Judicial Review.; Any party aggrieved by a final order for
relief may upon application obtain judicial review of such
order, in accordance with the provisions of I11. Ann. Stat.
Ch 110, paragraphs 3-110 and 3-111, in the judicial circuit
in which the discriminatory housing practice is alleged to
have occurred, and filing of the petition for review shall
be not later than 30 days after the order is entered.
The commission may not continue administrative proceedings
under this section regarding any alleged discriminatory
housing practice after the beginning of the trial of a
civil action commenced by the aggrieved party under an Act
of Congress or a State or local law, seeking relief with
respect to that discriminatory housing practice.
3.12.100 Affirmative action-City contracts.
A. The city shall not contract with any contractor or vendor,
maintain any financial relation with any financial
institution, or use the service of any labor organization
or member thereof, which employs five or more person which
does not first submit to the city a written commitment to
provide equal employment opportunity. However when .a
contractor, vendor, financial institution, labor
organization or member thereof is the sole source of the
particular work product or service desired by the City of
Elgin and such work, product or service is essential for
the efficient governmental operations of the City of Elgin
such written commitment shall not be required.
- 28 - 1
•
•
•
The written commitment required by this section shall:
1. Set out and agree to :maintain specific employment or
membership. practices and policies sufficient to
achieve equal opportunity;
2. Set out specific goals for participation by minority
groups and female person _qualified by or for training
or through previous work experience. This provision
will not infringe upon the right of the employer to •
determine the need for or qualifications of employees;
3. Agree to submit to the city upon request written
evidence of the effectiveness of the above-required
practices, policies and goals;
4. Agree to submit to the city upon request statistical
data concerning employee composition or membership
composition on race, color, sex and job description;
5. Agree to distribute copies of the above commitment to -
all persons who participate in recruitment, screening,
referral and selection of job applicants, prospective
job applicants or members; •
•
6. Agree to require any subcontractor to submit to the
•
• city a written commitment which, contains the
provisions required by subdivisions one (1) through
• . . five (5) of this subsection;
7. The written commitment required by this section may
also be satisfied by filing ' a copy of an affirmative
action program of the contractor/vendor which is in
effect and which has been approved by any local, state
. or federal agency with jurisdiction to approve such
programs.
B. All such contracts by and between the city of Elgin and
contractors and vendors for the purchase of the city of
. Elgin of goods and/or services shall contain the following
elapses:
"The contractor/vendor will not discriminate
against any employee or applicant for employment
. because of race, color, religion, sex, ancestry,
national origin, place of birth, age or physical
• handicap which would not interfere with the
efficient performance of the job in question. •
The contractor/vendor will take affirmative
action to comply with the provisions of this
ordinance and will require any subcontractor to
submit to the city of Elgin a written commitment
to comply with those provisions. The
contractor/vendor will distribute copies of this
commitment to all persons who participate in
•
•
- 29 -
. i
' recruitment, ' screening, referral and selection of
job applicants, prospective subcontractors."
"The contractor/ vendor agrees that the I
• ' provisions of Chapter 3.12 of the Elgin Municipal
Code, 1976, is hereby incorporated by reference,
as if .set out verbatim."
I
•
C. Any contractor, vendor, financial institution or labor
organization contracting with the city of Elgin will be
. required to 'submit to the city, upon written request by the
city, compliance reports containing such information as to
the. practices, policies, programs and statistics of
employee or .membership composition on race, color, sex, age
and job description, as may be prescribed by the city and
will require any subcontractor to submit a compliance
report upon written request by the city. The required
compliance report shall be substantially in the form
attached hereto as Exhibit A, a copy of which is on file in
the purchasing' office. I
D. Before a contract is let to a contractor or financial
institution by the city of Elgin, or before purchases are
I
made from a vendor, the purchasing agent or city clerk must
have on file a written statement from the staff
representative that the contractor, vendor, or financial
• institution has a present or . proposed program which is
approved as an acceptable equal employment opportunity or
affirmative action plan for the utilization of minorities
in their work force. Neither this section, nor any other
• . section of this chapter, shall be 'construed to prevent the
. . - city manager or department heads from authorizing or doing
- . • business with contractors or vendors for emergency services
or supplies. I
E. In the event that any contractor, vendor, financial '
institution or labor organization contracting with the city I
-of Elgin fails to comply -with the fair employment and
affirmative action provisions of this section, the city of
• Elgin, in its discretion, may:
1. Cancel, -terminate or suspend the contract -in whole or
In parts ' -
2. Declare the contractor, vendor, financial institution
or labor organization ineligible for further contracts
for a calendar year;
3. Recover from the contractor or vendor by setoff
against the unpaid portion of the contract price, or
otherwise pursuant to this contract, the sum of fifty
dollars per day, as liquidated damages and not as a
penalty, for each day that the contractor or vendor
shall fail to comply , with these provisions of the
contract, as determined by the city council after
•
recommendation by the human relation commission in
accordance with its rules, the said sum being fixed
and agreed upon by and between the contractor and the
city because of that impracticability and extreme
difficulty of fixing and ascertaining the actual
damages which the .city would sustain in the event of
such a breach of contract, and said amount is agreed
to be the amount of damages which the city would
sustain; •
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• 4. Impose such other sanctions as may be recommended by
the human relations commission pursuant to this
• section or other ordinances.
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Section 2. That all ordinances or parts of ordinances in
conflict with the provisions of this ordinance be and are hereby
repealed.
Section 3. That this ordinance shall be in full force and
effect from and after its passage and publication in the manner
provided by law-. . -
r a��s%t/
Geor• - VanDeVoorde, Mayor
Presented: Kay 12, 1993
Passed: May 12, 1993
Omnibus Vote: Yeas 7 bays 0
Recorded: May 13, 1993
Published: May 13, 1993 . •
Attest: •
Ae4.1,14C Ate
Dolonna Mecum, City Clerk
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