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s 7078.3. Need for Activity (200 points).
The Department will assign points based on the seriousness of the locality's community development needs, and the impact the program will have on those needs using the following criteria:
(a) Need for community development assistance (200 points). The Department will evaluate each applicant's needs based upon the extent to which:
(1) The need for the program is well-documented, and the program addresses needs which are basic and serious;

(2) Most or all of the funds address basic and serious community development needs and these needs are more crucial than the needs of other applicants;
(3) The program resolves completely or to a large degree basic and serious community development needs.
(b) For the following activities, the Department shall evaluate the factors stated below in establishing a need score:
(1) For housing rehabilitation activities: The Department shall assess the relative condition of local housing stock based on data requested and described within the annual Notice of Funding Availability. The Department shall accept supplemental information regarding housing stock condition. The Department shall assign competitive points based upon its evaluation of the supplemental data. An applicant may designate a target area wherein the rehabilitation will occur and data for those areas, in addition to community-wide information, will be evaluated in assessing need.
(2) For public works projects: The Department shall assess the relative severity of the health and safety problem to be addressed and the likelihood that the funds requested will substantially reduce or eliminate the problem. Those applications with strong third party documentation, including ranking on other agencies' funding lists, and orders from governmental agencies, will be more competitive.
(3) For new construction projects: The Department shall assess the relative need for new construction based on data requested and described in the annual Notice of Funding Availability. The Department shall accept supplemental information regarding new construction needs. The Department shall assign competitive points based upon its evaluation of the supplemental data.
(4) For community facilities and public services activities: The Department shall assess the relative need for community facilities and public services based on: (i) the severity of the problem being addressed; and (ii) the extent to which the proposed action would solve the problem. Those applicants providing strong third-party documentation of the problem, including but not limited to waiting list information, ranking on other agencies' funding lists, and orders from governmental agencies, will be more competitive.
The Department will evaluate the above factors and assign points based upon the relative severity of each factor among all applicant communities.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: Sections 50406 and 50407, Health and Safety Code; and 24 CFR 570.489.








s 7078.4. Prior Performance Operating CDBG Grants (150 points).
(a) The Department shall rate applications based on the applicant's performance in administering non-economic development grants for grants funded within the four (4) program years preceding the program year under which the application has been submitted. Applicants that have not received a non-economic development grant during this period shall be rated on their capacity to administer a CDBG grant as set forth in section 7078.5 below.
(b) The Department shall give greater weight to performance under the general allocation and Native American grants than to performance under planning and technical assistance grants.
(c) The Department shall rate applicant's performance based on the following criteria:
(1) For a prior single year funding award 24 month contract, a competitive applicant will have expended at least twenty five (25%) of awarded dollars by the twelfth month of the Program contract and at least seventy-five percent (75%) by the eighteenth (18th) month.
(2) For each program activity with multi-year funding awards, a grantee that has more than 50% of a prior annual funding award disencumbered pursuant to subsection (c) of Section 7066 will be subject to negative performance points.
(3) For a project-specific multi-year funding award, a grantee that has had more than 50% of a prior annual funding award disencumbered pursuant to subsection (d) of Section 7066 will be subject to negative performance points.
(4) For all CDBG activities from open grants, the most competitive applicants will have expended a larger percentage of the awarded dollars than as set forth in this section.
(5) For all CDBG activities described within this section, competitive applicants will have expended all dollars and concluded all work by the date specified in the CDBG contract with the State. If there are delays in expenditures, circumstances must be described to the Department, in writing, at the time of the delay. If the Department previously has advised the jurisdiction in writing that there will be no performance consequences as a result of the delay, then the jurisdiction will not be at a competitive disadvantage.
(d) The Department shall also rate applications based on the applicant's timeliness in reporting to the Department, pursuant to Section 7110. The most competitive applicants will have submitted all required reports for past non-economic development grants to the Department in accordance with deadlines established and publicized by the Department. Such reports include, but are not limited to annual grantee performance reports, quarterly or other periodic reports, and close out reports.
(e) The Department shall also rate applications based on the applicant's timeliness in resolving audit and monitoring findings, if any. Where a jurisdiction demonstrates a good faith attempt to resolve outstanding issues, they will not suffer a competitive disadvantage.
(f) Applicants with no CDBG grant experience within the timeframe described in 7078.4(a), will be at no competitive disadvantage compared to those applicants who have met but not exceeded their milestones and will receive all of the available performance points, except those points awarded under Section 7078.4(c)(4).
(g) The Department shall also rate applications based on the applicant's timeliness in clearing special conditions or starting the project.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: Sections 50406 and 50407, Health and Safety Code; and 24 CFR 570.489.








s 7078.5. Capacity (150 points).
(a) If the applicant has administered a CDBG grant within the time frame set forth in paragraph 7078.4(a) above, they will be deemed to have some capacity to administer the proposed activity and will receive up to 100 points. If the applicant has not administered a CDBG grant within the time frame set forth in paragraph 7078.4(a) above, the application will be evaluated based on the following criteria:
(1) The applicant currently has staff with the capability or experience to administer the funds being applied for as demonstrated by resumes and descriptions of duties included as part of the application; or
(2) The applicant has contracted with, or will contract with a subcontractor that has the capacity or experience to administer the funds being applied for. The applicant shall include either an executed copy of a contract between the applicant and the subcontractor, or a copy of a signed letter of interest to enter into a contract from the proposed subcontractor.
(b) The applicant can demonstrate an increased level of capacity by completing and documenting actions that make the proposed project ready to proceed. Applicants that document actions or activity directly linked to the proposed project or program will be awarded up to 50 points. Readiness to proceed may be demonstrated by such factors as: documented commitments from all funding sources to the project; completion of environmental reviews; site control; procurement of a program operator.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: Sections 50406 and 50407, Health and Safety Code; and 24 CFR 570.489.








s 7078.6. Leverage (50 points).
(a) The Department shall rate applications based on private and local governmental commitments to provide additional resources which will be directly linked to the proposed project or program. To be considered for rating under this section, a commitment must be in writing, specify the dollar amount committed and, in the case of a governmental entity, be accompanied by an authorizing resolution from the governing board. Redevelopment agencies and counties providing resources to a city-sponsored program or project shall be considered local government for purposes of this section. Federal or state funds being passed through a private entity shall not be considered a commitment. For competitive purposes, the Department will evaluate private leverage by comparing committed dollars among applications for the same activity.
(b) For non-monetary commitments from a local government, such as a relaxation of regulatory requirements, the Department, in its sole discretion, shall rate each jurisdiction in comparison with its competitors on the extent to which they contribute to the project's objectives. For competitive purposes, the Department will evaluate local regulatory relief by comparing local actions among applications for the same activity.
(c) Local government commitments shall be separated into groups based on applicants' relative tax bases. Groupings shall be calculated annually based on the information on local revenues contained in the most recently published Financial Transactions Concerning Cities and Counties of California published by the State Controller. These groupings shall be announced in the annual Notice of Funding Availability.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: Sections 50406 and 50407, Health and Safety Code; and 24 CFR 570.489.








s 7078.7. State Objectives (50 points).
(a) The Department may award an application up to 50 points for addressing one or more state objectives as identified in the annual CDBG NOFA.
(b) Department selection of state objectives shall be based on one or more of the following:
(1) Emergent circumstances such as natural disaster or economic dislocation.

(2) Imbalance among the types of activities funded in prior years' awards such as housing rehabilitation programs compared to public infrastructure projects.
(3) Imbalance in the geographic distribution of funds in prior years' awards.
(4) Imbalance in the population served in prior years' awards such as smaller jurisdictions compared to larger jurisdictions, general program beneficiaries compared to special needs groups such as farm workers, under-trained work force, or historically unsuccessful or inactive applicants compared to active, successful applicants.
(5) Federal funding priorities as publicly announced by HUD.
(6) Housing and community development needs or objectives identified in the annual Consolidated Plan required by HUD.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: Sections 50406 and 50407, Health and Safety Code; 42 U.S.C. 5306(d)(2); and 24 CFR 570.483(b).










s 7080. Citizen Participation.
Each applicant shall provide opportunities for the participation of all persons who may be affected by the program, especially persons with incomes in the targeted income group. The opportunity to participate shall be available, at minimum, during the following phases of the program: program design and preparation of the application; the preparation of the annual performance report required in Section 7110; the preparation of any program amendments which constitute a reallocation of more than ten percent (10%) of the total program budget; and the preparation of any program amendments which constitute changes in policies, standards, or criteria for program implementation. A minimum of one public meeting is required at each of the program phases listed above. In addition, each applicant shall hold a minimum of one public hearing prior to submitting the application to the Department. The applicant shall provide for public notice prior to each meeting and public hearing and shall make program information available to the public prior to these meetings and hearings. Applicants shall use standard legal and other forms of notice including bilingual notice in areas with concentrations of non-English speaking minorities.
Applicants shall invite written comments on the proposed program and shall write a reply to any comments received. This written correspondence shall be maintained as a part of the public record and copies shall be submitted to the Department along with the application. The Department will respond within thirty (30) days to all correspondence written directly to the Department regarding an applicant's program. Applicants shall maintain a file of documents relevant to their block grant program, including proposed activities and final application, minutes of public meetings and hearings, copies of public notices and performance reviews; these documents shall be available to the public during normal working hours. Citizens shall be provided full and timely access to program records and information in a manner consistent with applicable laws regarding personal privacy and obligations of confidentiality.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; 42 U.S.C. 5304(a) and (b), and 5306(d)(2); 24 CFR 570.489.








s 7082. Environmental Reviews.
The grantee shall assume the responsibility for environmental review, decision-making and all other actions required under the California Environmental Quality Act of 1970 (CEQA), Public Resources Code 21000 et seq.; and the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq.
In order to ensure compliance with NEPA, grantees shall assume the responsibilities for environmental review and decision making following the procedures for "recipients" of Block Grant funds as set forth in 24 CFR, Part 58, entitled "Environmental Review Procedures for Title I Community Development Block Grant Programs." The Department shall assume the responsibilities set forth in Subpart C of 24 CFR, Part 58 and fulfill the State's role under Subpart J of 24 CFR, Part 58.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: Section 50406 and 50407, Health and Safety Code; Section 21000 et seq., Public Resources Code; 42 U.S.C. 4321 et seq.; 42 U.S.C. 5304(g)(4); and 24 CFR, Part 58.








s 7084. Nondiscrimination.
(a) Discrimination prohibited. No person shall, on the grounds of race, color, religion, ancestry, marital status, physical handicap, national origin, sex, or any other arbitrary basis be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any program or activity funded in whole or in part with CDBG funds made available pursuant to this subchapter. All grantees shall comply with the requirements contained in 24 CFR 570.601, 570.602, 570.607, 570.506(g).


Note: Authority cited: Section 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 570.506(g), 570.601, 570.602, 570.607.









s 7086. Relocation and Acquisition.
The provisions of the Uniform Relocation Act, as amended, 49 CFR Part 24, and 42 U.S.C. 5304(d) shall be followed where any acquisition of real property is carried out by a grantee and assisted in whole or in part by funds allocated pursuant to this subchapter. In addition, where the rehabilitation of residential rental units results in increased rents for members of the targeted income group, the grantee shall also comply with the requirements of the above-cited sections of federal law. Relocation expenses which may, by law, be paid are eligible expenses for use of CDBG funds.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 42 U.S.C. 5304(d).








s 7088. Labor Standards.
(a) All laborers and mechanics employed by contactors or subcontractors on construction work assisted pursuant to this subchapter shall be paid by wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276(a) to 276(a)(5)), and shall receive overtime compensation in accordance with and subject to the provisions of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), and the contractors and subcontractors shall comply with all regulations issued pursuant to these Acts and with other applicable federal laws and regulations pertaining to labor standards. This section shall apply to the rehabilitation of residential property only if such property is designed for residential use of eight or more families. The Secretary of Labor has, with respect to the labor standards specified in this section, the authority and functions set forth in Reorganization Plan Number 14 of 1950 (5 U.S.C. 133z-15), and Section 2 of the Act of June 13, 1934, as amended (40 U.S.C. 276(c))
(b) Grantees shall also assume all responsibilities for compliance with the provisions of Cal. Labor Code, Section 1720 et seq., regarding State labor standards compliance for Public Works as defined in Cal. Labor Code, Section 1720.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; Section 1720 et seq. of the Labor Code; 18 U.S.C. 874; 40 U.S.C. 276(a) to 276(a)(5) and 276(c); 40 U.S.C. 327 to 333; 42 U.S.C. 5310; 24 CFR 570.489 and 570.496(c).








s 7090. Architectural Barriers Act of 1968.
Every building or facility, other than a privately-owned residential structure, designed, constructed, or altered with funds made available pursuant to this subchapter, shall comply with the requirements of 24 CFR Parts 40 and 41 issued pursuant to the Architectural Barriers Act of 1968 (42 U.S.C. 4151).


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; 42 U.S.C. 4151; 24 CFR, Parts 40 and 41; 24 CFR 570.489.








s 7092. Hatch Act.
Neither the Community Development Block Grant Program nor the funds provided therefor, nor the personnel employed in the administration of the program shall in any way or to any extent engage in the conduct of political activities in contravention of Chapter 15 of Title 5, United States Code.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; 5 U.S.C. 1501 et seq.; 24 CFR 570.489.








s 7094. Lead-based Paint Poisoning Prevention Act.
CDBG grantees must comply with HUD's Lead-Based Paint Regulations (24 CFR, Part 35) issued pursuant to the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4831 et seq. ) requiring prohibition of the use of lead-based paint, whenever funding awarded pursuant to this subchapter is used directly or indirectly by the grantee for construction, rehabilitation, or modernization of residential structures, elimination of immediate lead-based paint hazards in residential structures assisted pursuant to this subchapter, or the notification of the hazards of lead-based paint poisoning to purchasers and tenants of residential structures constructed prior to 1950 and funded under the CDBG program.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; 42 U.S.C. 4831 et seq.; 24 CFR, Part 35; 24 CFR 570.489 and 570.496(f).








s 7096. Use of Debarred, Suspended, or Ineligible Contractors or Subrecipients.
CDBG funds shall not be used directly or indirectly to employ, award contracts to, or otherwise engage in the services of, or fund any contractor or subrecipient during any period of debarment, suspension, or placement in ineligibility status under the provisions of 24 CFR, Part 24. "Subrecipients" includes eligible entities under 24 CFR Part 570.204(a)(2) or private entities as described under 24 CFR 570.202(c)(1).


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; 24 CFR, Part 24; 24 CFR 570.204(a)(2); 24 CFR 570.202(c)(1); 24 CFR 570.489.








s 7098. Cash Depositories.
Grantees are not required to establish physical separation of cash depositories for State CDBG funds. Grantees shall establish and maintain all accounts in accordance with 24 CFR 570.489(d)(2)(iii) and 24 CFR 85.20 et. seq.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 570.489(d)(2)(iii) and 85.20 et. seq.










s 7100. Bonding.
Grantees shall comply with all bonding requirements described in 24 CFR 85.36(h).


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 85.36(h).








s 7102. Retention and Custodial Requirements for Records.
The grantee shall retain financial records, supporting documents, statistical records, and all other records pertinent to a grant in accordance with 24 CFR 570.502(a)(16) and 24 CFR 85.42.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 570.502(a)(16) and 85.42.










s 7104. Program Income.
(a) "Program Income" means gross income earned by the grantee from grant-funded activities as defined in 24 CFR Section 570.489(e).
(b) Grantees shall account for and disburse program income related to projects financed in whole or in part with grant funds pursuant to 24 CFR Section 570.489(e).
(c) Grantees shall account for disbursement of program income annually or more frequently as required by the Department for cause.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 570.489(e).








s 7106. Standards for Grantee Financial Management Systems.
Grantees shall establish and maintain their financial management systems for CDBG grants in accordance with 24 CFR 85.20 et. seq.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 85.20 et. seq.








s 7108. Financial Reporting Requirements.
Grantees shall report at least annually on financial matters as required by 24 CFR 85.41.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 85.41.








s 7110. Monitoring and Reporting of Program Performance.
(a) Grantees shall monitor the performance of grant-supported activities to assure that time schedules are being met and the milestones in the work schedule are being accomplished. This review shall be made for each activity in the approved grant agreement.
(b) Each grantee shall prepare annual and periodic performance reports. Except as provided for in subdivision (d) below, performance reports shall not be required more frequently than quarterly unless warranted by special circumstances.
(c) The performance report for each activity shall describe the following:
(1) A description of actual accomplishments compared to the objectives established for the reporting period. In addition, where the results of activities can be quantified, unit costs shall be reported.
(2) Reasons why established objectives were not met.
(3) Other information such as a specific explanation of cost overruns or high unit costs.
(d) Between the required performance reporting dates, events may occur which have an impact upon the activity or program. In such cases, the grantee shall inform the Department in writing as soon as the following occur:
(1) Problems, delays, or adverse conditions which will affect the grantee's ability to attain program objectives, prevent the meeting of time schedules or goals, or preclude the attainment of work units by the established time period. This reporting shall be accompanied by a statement of the action taken or contemplated, and any assistance needed, to resolve the situation.
(2) Completion of each milestone in the work schedule.
(e) If a performance review conducted by a grantee discloses the need for change in the budget estimates in accordance with the criteria established in Section 7114, the grantee shall submit a request for budget revision pursuant to that section.
(f) The Department will make site visits to review program accomplishments and management control systems, and to or provide program assistance.
(g) The Department will review each grantee's performance to determine whether:
(1) the grantee has carried out the program as described in its application;
(2) the program complies with this subchapter and other applicable laws and regulations; and
(3) the grantee has the continuing capacity to complete the approved program according to time schedules approved by the Department.

If performance is found not to be in conformance with the grant application, agreement, or approved amendments, the Department may require corrective or remedial actions, or may recall or disencumber grant funds.


Note: Authority cited: Sections 50406(h) and (n) and 50407, Health and Safety Code. Reference: 24 CFR 85.40.








s 7112. Grant Payment Requirements.
(a) Grant payment methods shall minimize the time elapsing between the disbursement by a grantee and the transfer of funds from the State to the grantee, whether such disbursement occurs prior to or subsequent to the transfer of funds.
(b) Grant payments are made to grantees by an advance or a reimbursement. An advance is a payment made by the State to a grantee upon its request before cash outlays are made by the grantee, subject to limitations provided in the grant agreement, and based on the type of grantee program. A reimbursement is a payment made to a grantee upon request for payment of costs already paid by grantee.
(c) Unless otherwise provided by regulation, the State shall not withhold payments for allowable charges made by grantees at any time during the grant period unless (1) a grantee has failed to comply with the grant agreement, or (2) the grantee is indebted to the State and collection of the indebtedness will not impair accomplishment of the objectives of any grant program sponsored by the Department. Under such conditions, the Department may, upon 15 days notice, inform the grantee that payments will not be made for obligations incurred after a specified date until the noncompliance is resolved or the indebtedness to the State is liquidated.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; and 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; 42 U.S.C. 5306(d)(3)(A); 24 CFR 570.489, 570.494 and 570.497; and Office of Management and Budget (OMB) Circular A-102.









s 7114. Revision Procedures.
(a) "Cost categories," as used in this section, means any of the following: personal services, operating expenses, capital outlays, loans, grants or indirect costs.
(b) "Grant budget," as used in this section, means the approved financial plan to carry out the purpose of the grant program, or activity. It should be related to performance for program evaluation purposes.
(c) The grantee may not amend the program or activity in a manner which is inconsistent with the original basis for the award without the Department's written approval of the change. In addition, grantees shall request prior written approval from the Department when a program or budget revision will be necessary for the following reasons:
(1) Changes are to be made in the scope or the objective of the program or activity.
(2) Additional funding is needed.
(3) Amounts budgeted for indirect costs must be reallocated to absorb increases in direct costs.
(4) The need for transfers of funds among cost categories or activities when the cumulative amount of such transfers exceeds or is expected to exceed ten percent (10%) of the activity budget. The same criteria shall apply to the cumulative amount of transfers among programs or activities when budgeted separately for an award, except that no transfer is permitted that would cause any grant appropriation, or part thereof, to be used for purposes other than those intended in the grant program; or

(5) When the Department awards a grant which provides support for both construction and nonconstruction work to make any Fund or budget transfers between the two types of work supported.
(d) Grantees shall notify the Department whenever the amount of authorized funds is expected to exceed the needs of the grantee by more than ten thousand dollars ($10,000).
(e) Within 30 days from the date of receipt of the request for grant budget and program revisions, the Department shall review the request and notify the grantee whether or not the revisions have been approved. If the revision is still under consideration at the end of 30 days, the Department shall inform the grantee in writing as to when the grantee may expect the decision.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; and 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; 42 U.S.C. 5306(d)(3)(A); 24 CFR 570.489 and 570.497; and Office of Management and Budget (OMB) Circular A-102.










s 7116. Grant Closeout Procedures.
(a) The following definitions shall apply for the purpose of this section.
(1) "Grant closeout" is the process by which the Department determines that all applicable administrative actions and all required work of the grant have been completed by the grantee and the State.
(2) "Date of completion" is the date when all work under a grant is completed, or the date in the grant agreement, or any supplement or amendment thereto on which funding ends.
(3) "Termination of a grant" means the cancellation of funding, in whole or in part, at any time prior to the date of completion.
(4) "Suspension of a grant" is an action by the Department which temporarily suspends funding under the grant pending either corrective action by the grantee or a decision by the Department to terminate the grant.
(5) "Disallowed costs" are those charges to a grant which the Department determines to be unallowable.
(b) The grant closeout procedures include the following:
(1) Upon request, the Department shall make payments to a grantee for allowable reimbursable costs under the grant being closed out.
(2) The grantee shall refund to the Department any balance of unobligated cash advanced to the grantee that is not authorized to be retained by the grantee.
(3) Within 90 days after the date of completion of the grant the grantee shall provide the Department with all financial, performance, and other reports required as a condition of the grant. The Department may grant time extensions for cause when requested by the grantee.
(4) When authorized by the grant agreement, the Department may make a settlement for any upward or downward adjustments to the State share of costs after the reports are received.
(5) The grantee shall account for any property acquired in whole or in part with grant funds, in accordance with the provisions of Section 7118, pertaining to property management and Section 7104, pertaining to program income.
(6) In the event a final audit has not been performed prior to the closeout of the grant, the Department shall retain the right to recover the amount of disallowed costs after fully considering the recommendations of the final audit.
(c) The Department shall provide procedures to be followed when a grantee fails to comply with the agreement. When that occurs, the Department may, after notifying the grantee in writing, suspend the grant and withhold further payments, or prohibit the grantee from incurring additional obligations of grant funds, pending corrective action by the grantee or a decision to terminate in accordance with subdivision (d). The Department shall allow costs which the grantee could not avoid during the period of suspension provided that the costs meet the provisions of the U.S. Office of Management and Budget (OMB) Circular A-87.
(d) Grants may be terminated as follows:
(1) Termination for cause. The Department may terminate any grant, in whole or in part, at any time before the date of completion whenever the Department determines that the grantee has failed to comply with the conditions of the grant agreement. The Department shall promptly notify the grantee in writing of the determination, the reasons for the termination, and the effective date. Payments made to grantees or recoveries by the Department under grants terminated for cause shall be in accord with the legal rights and liabilities of the parties.
(2) Termination for convenience. The Department or the grantee may terminate a grant, in whole or in part, when both parties agree that the continuation of the project would not produce beneficial results commensurate with the further expenditure of funds. The two parties shall agree upon the termination conditions, and the portion of the grant to be terminated. The grantee shall not incur new obligations for the terminated portion after the effective date of the termination, and shall cancel as many outstanding obligations as possible. The Department will fund all eligible obligations that the grantee cannot cancel.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; and 24 CFR 570.489(b). Reference: Sections 50406 and 50407, Health and Safety Code; 42 U.S.C. 5306(d)(3)(A); 24 CFR 570.489 and 570.497; and Office of Management and Budget (OMB) Circulars A-87 and A-102.








s 7118. Property Management Standards.
Grantees shall adhere to the property management standards described in 24 CFR 85.30 et. seq.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 570.489(k) and 24 CFR 85.30 et. seq.








s 7120. Procurement Standards.
Grantees shall adhere to the requirements of 24 CFR 85.36.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 85.36; and 24 CFR 570.502(a)(12).








s 7122. Audit Requirements.
Grantees shall arrange for independent audits on all CDBG grants consistent with OMB Circular A-128.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 570.502(a); and Office of Management and Budget (OMB) Circular A-128.










s 7124. Lump Sum Drawdown for Property Rehabilitation Financing.
Subject to the conditions prescribed in this section, grantees may draw funds from the Department in a single lump sum to establish a rehabilitation fund in one or more private financial institutions for the purpose of financing the rehabilitation of privately-owned properties as a part of the grantee's program.
The conditions prescribed for lump sum drawndown accounts are described in 24 CFR 570, Section 570.513.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code. Reference: 24 CFR 570.513.








s 7126. Conflict of Interest.
Grantees shall enforce standards for conflicts of interest which govern the performance of their officers, employees, or agents engaged in the award and administration of State CDBG grant funds. The standards for conflicts of interest shall prohibit any conflict of interest as defined in Title 24 Code of Federal Regulations Part 570.611 (as revised on 10-14-83) which is hereby incorporated by reference. The Department shall use the criteria and standards set forth in Title 24 CFR 570.611 in evaluating questions concerning potential conflicts of interest.


Note: Authority cited: Sections 50406(h) and (n), Health and Safety Code; and 24 CFR 570.489(b). Reference: Section 50406(h) Health and Safety Code and 24 CFR 570.611 (90-14-83 edition).








s 7200. General.
These regulations set forth the policies and procedures governing the management and use of the Farmworker Housing Grant Fund established by Section 50517.5 of the California Health and Safety Code. They also delegate authority for the initial recommendation of approval, rejection, amendment, and termination of grants, with the exception of emergency grants, from the Director of the Department of Housing and Community Development to the Committee referred to in this subchapter.


Note: Authority cited: Sections 50402 and 50406, Health and Safety Code. Reference: Section 50517.5, Health and Safety Code.








s 7202. Definitions.
The following definitions shall govern for purposes of this subchapter:
"Agricultural employment" means employed in the cultivation and tillage of the soil; the production, cultivation, growing and harvesting of any agricultural or horticultural commodities; the raising of livestock, bees, furbearing animals, or poultry; dairying, forestry, and lumbering operations; and any work on a farm as incident to or in conjunction with such farming operations, including the delivery and preparation of commodities for market or storage.
"Agricultural household" means an agricultural worker or workers and other persons who reside or will reside with an agricultural worker in an assisted unit.
"Agricultural worker" means an individual who derives or prior to retirement or disability derived a substantial portion of his/her income from agricultural employment.
"Assisted unit" means a residential housing unit that is developed or rehabilitated with assistance from the Fund and is subject to the occupancy and resale restrictions of a Grant Agreement or Subsequent Grant Agreement as determined by Section 7208(g).
"Assisted real property" means any real property that is developed or rehabilitated with assistance from the Fund and is subject to the conditions of a Grant Agreement or Subsequent Grant Agreement.
"Cash investments" include but are not limited to:
(1) Grantee's cash contribution;
(2) Private financial assistance;
(3) Local public entity financial assistance;
(4) State financial assistance from programs other than the Fund;
(5) Federal government financial assistance.
"Cooperative housing corporation" means a limited-equity housing cooperative as defined by Section 33007.5 of the Health and Safety Code, which has, among other restrictions, resale controls on membership shares. A cooperative housing corporation must be legally organized as a nonprofit entity, and must be formed primarily for the purpose of holding title to improved real property where all or substantially all of the shareholders of such corporation receive a right of exclusive occupancy in a portion of the real property, title to which is held by the corporation, which right of occupancy is transferable only concurrently with the transfer of the share in the corporation held by the person having such right of occupancy.
"Cooperative housing fees" means any assessments, charges, fees, or other housing-related costs that an occupant of a unit within a cooperative housing development must pay to the cooperative housing corporation which owns the development.
"Department" means the California Department of Housing and Community Development.
"FmHA" means the Farmers Home Administration, an agency of the United States Department of Agriculture, or its successor agency.
"Fund" means the Farmworker Housing Grant Fund.
"Grant" means a commitment of money from the Fund in the form of a grant or a loan that is made to a grantee by the Department.
"Grant committee" means the Rural Loan and Grant Committee established pursuant to Title 25, California Administrative Code, Section 6902(a).
"Grantee" means an eligible organization that has applied or has received approval for a grant or loan from the Farmworker Housing Grant Fund. The term "Grantee" shall include successors in interest and assignees of a grantee.
"Housing cost" -for homeownership and cooperative developments, see Title 25, California Administrative Code, Section 6920.
"Housing development" means residential housing and related support facilities necessary to such housing that receives assistance from the Fund and includes assisted housing units.
"In-kind contributions" include but are not limited to contributions directly related to the housing development in the form of:
(1) labor and/or other eligible services;
(2) land and/or site development;
(3) existing structures;
(4) materials.
"Local public entity" means any county, city, city and county, redevelopment agency or public housing authority, and also includes any state agency, public district or other political subdivision of the state, and any instrumentality thereof, which is authorized to engage in or assist in the development or operation of housing for persons and families of low income. It also includes the governing body or housing authority of a federally recognized Indian tribe. It also includes two or more local public entities acting jointly.
"Low/lower income household" -see Title 25, California Administrative Code Section 6928.
"Manufactured housing" means a mobilehome, as defined by Health and Safety Code Section 18008, and factory-built housing, as defined in Health and Safety Code Section 19971.
"Matching share" means the proceeds of loans, cash investments, or in-kind contributions that the grantee commits to the total development or rehabilitation cost of the housing development. The Department will determine the valuation and eligibility of a proposed matching share where necessary.
"Net income" -see Title 25, California Administrative Code, Section 6916.
"Program" means the Farmworker Housing Grant Program.
"Rehabilitation" means repairs and improvements to a dwelling unit necessary to make it a modest, decent, safe, and sanitary dwelling which meets applicable state and local building and housing standards mandated by the enforcement agency.
"Related support facilities" include but are not limited to:
(1) water and sewer facilities and other utilities directly related to the proposed housing development.
(2) physical improvements for child care services, recreational activities, meeting room(s) all of which are intended for use of project residents.
(3) solar and other alternative energy efficient systems.
"Very low income" -see Title 25, California Administrative Code, Section 6926.


Note: Authority cited: Sections 50402 and 50406, Health and Safety Code. Reference: Section 50517.5, Health and Safety Code.








s 7204. Eligibility Criteria.
(a) Organizations. Only organizations which satisfy the following criteria are eligible grantees:
(1) The grantee is a local public entity, a nonprofit corporation or a cooperative housing corporation;
(2) The grantee has demonstrated its ability to proceed with the construction or rehabilitation of the housing development upon commitment of grant funds; and

(3) The grantee is or will be the record owner in fee of, or the holder of a leasehold interest in, the site on which the housing development is or will be situated. The terms and conditions of any proposed lease shall permit the lessee to make improvements on and encumber the property, and permit compliance with all requirements of this subchapter. For rental projects, a lease accepted as security shall meet the requirements of Subchapter 19, Section 8316.
(b) Housing Development. The grant may only be expended for housing developments that meet the following criteria:
(1) The housing development must contain assisted units to be occupied by agricultural households.
(2) To the greatest extent possible, assisted units are to be occupied by lower-income agricultural households.
(3) To the greatest extent possible, any non-assisted units are to be occupied by agricultural households.
(4) To the extent consistent with the maintenance of the financial integrity of the housing development, assisted units are to be made available to lower-income households at affordable rents as defined in Section 6692 of Title 25, California Administrative Code; and for lower-income occupants of cooperative housing, at a total monthly housing cost, including utilities, not to exceed 25% of monthly net income.
(5) When grant funds are to be used for homeownership purposes, assisted units are to be made available to lower-income households at a total monthly housing cost not to exceed 35% of monthly net income.
(A) An eligible household's monthly housing costs may exceed 35% of monthly net income if all of the following conditions are satisfied:
1. the proposed housing costs are approximately the same as the present housing costs of the household, and
2. a satisfactory credit record has been maintained by the households, and
3. the household has demonstrated an ability to sustain its present housing expense without serious difficulty.

(B) In the alternative, a different standard can be applied if it has otherwise been determined by the Department that the eligible household can assume greater responsibility for monthly housing costs.


Note: Authority cited: Sections 50402 and 50406, Health and Safety Code. Reference: Section 50517.5, Health and Safety Code.








s 7206. Eligible Expenditures.
(a) The costs which may be charged against the grant are only those which are approved by the Department as reasonable and necessary for the construction or rehabilitation of the housing development, including, but not limited to, the following:
(1) The cost of refinancing or acquiring land and any buildings thereon, including payments for commissions, options, deposits, or contracts to purchase properties on a proposed housing development site or payments for the purchase of such properties.

(2) The cost of site preparation, demolition, and clearing.
(3) Architectural, engineering, legal, accounting, packaging and other fees paid or payable in connection with the planning, execution, and financing of a housing development and the finding of an eligible mortgage for a housing development.
(4) The cost of necessary reports, studies, surveys, plans, permits, and fees.
(5) The cost of insurance, interest and financing, tax and assessment costs, and other operating and carrying costs incurred during construction or rehabilitation.
(6) The cost of construction or rehabilitation of the housing development and related support facilities including material, direct labor, and actual construction supervision.
(7) The cost of land improvements, including, but not limited to, landscaping, site preparation and streets, sewers, utilities, and other offsite improvements, whether or not such costs are paid in cash or in a form other than cash.
(8) A reasonable profit in addition to job overhead to the general contractor and subcontractors.
(9) An allowance for reasonable reserves set aside to defray unanticipated additional development or rehabilitation costs and operating costs during the initial years of occupancy of the housing development.
(10) Repayment of a predevelopment loan made by a public entity or nonprofit corporation incorporated in any state or the District of Columbia.
(11) The cost of developing or modifying a housing development or structure so that it is accessible to and convenient for the elderly or disabled.
(12) The cost of such other items, including tenant and homeowner relocation and tenant and homeowner counseling, as the Department shall determine to be reasonable and necessary for the development or rehabilitation of a housing development.
(13) The cost of solar and other energy efficient alternative systems.
(b) Unauthorized Costs. The grant may not be used for a grantee's administrative costs, except those directly related and necessary to a grantee's implementation of its responsibilities in connection with a grant, as determined by the department. No part of grant funds may be used for project organization or planning for the housing development.
(c) Special Limitations. The following limitations on eligible expenses will apply.
(1) Engineering Fees. These fees must not exceed prevailing rates unless an unusual engineering situation exists and is substantiated. Normally, the engineering fees allowable under FmHA and/or HUD-FHA schedules and practices will provide the upper limit for such cost expenditures.
(2) Architectural Fees. These fees must not exceed prevailing rates unless an unusual architectural situation exists and is substantiated. Normally, the architectural fees allowable under FmHA and/or HUD-FHA schedules and practices will provide the upper limit for such expenditures.
(3) Grant or Loan Packager Fees. Grant funds may be used for such fees if all of the following occur:
(A) The tasks and fees of the packager are enumerated in an agreement between the applicant and the packager which is subject to prior approval by the Department;
(B) The grantee is incapable of carrying out the task for which these services are sought;
(C) The grantee does not have the funds with which to hire a packager;
(D) Payments to the packager are staged in accordance with the completion of various tasks;
(E) For FmHA financed housing developments, such fees will be disbursed from the Fund only if, in advance of the initial disbursement, FmHA approves the use of a packager and the fees to be paid;and (continued)