Fort Walton Beach Council agenda — 06-02-09 special — reading text

performed engineering and environmental review work on a project to replace sanitary sewers, but scaled back the project before awarding a construction contract due to funding constraints. Because engineering work has already been done, it may be time- or cost -effective for the grantee to issue a separate construction contract for the blocks of sewers that were excluded from the existing contract. A grantee may use CDBG -R funds to finance the rehabilitation of several apartment buildings that are on the waiting list for assistance under the grantee' s CDBG rental housing rehabilitation loan program. A grantee might consider physical improvements to a water treatment plant that will reduce the energy costs of the plant' s operations or will conserve water resources. A grantee that had to pare back funding for an activity (compared to the subrecipient' s original funding request or prior levels of service) might execute a subrecipient agreement to provide CDBG -R funds that will restore the activity to " full funding" levels.  23 CDBG -R funding will be tracked separately from a grantee' s regular CDBG funding in the Integrated Disbursement and Infonnation System ( IDIS), will have separate funding contract language, and will have a different grant number from a grantee' s regular CDBG funding. Grantees are cautioned against commingling regular CDBG and CDBG -R funds. However, this does not prevent a grantee from using CDBG -R funding in conjunction with an existing activity funded with regular CDBG funds, where the additional funding will be covered under a new contract or subrecipient agreement. Grantees will need to set up this additional increment of funding as a separate activity in IDIS. Grantees who wish to use CDBG -R funds to expand an ongoing or already- under- construction project should keep the following additional considerations in mind. Environmental review procedures: HUD legislation and regulations ( 24 CFR 58. 22) prohibit CDBG grantees and any party to the development process from committing HUD or non -HUD assistance to a project until the environmental compliance review process has been successfully completed. In adding CDBG -R funds to an existing project, grantees must carefully consider the implications of the Part 58 definition of a commitment of federal funds. No new environmental review is required when a CDBG -R project has been reviewed previously by the same responsible entity, no change to the project activities or location or size results from additional funding, and no new environmental conditions have been discovered. HUD regulations and law prohibit the commitment of HUD and non HUD assistance to a project until the environmental compliance review is successfully completed. Therefore, because Recovery Act projects must expend their CDBG -R funds in such a short timeframe, it is very important to begin and complete your environmental compliance review as soon as possible. Grantees are urged to contact their Field Environmental Officer, and to  24 visit the HUD environmental website for more detailed information on environmental clearance: http: / www / hud gov/ offices /cpd/ energyenviron/ environment /compliance /qa /clearance cfin Labor Standards applicability: HUD will issue guidance concerning the applicability of prevailing wage requirements at a later date. For more information about the federal labor standards requirements in HUD programs, please visit the Office of Labor Relations website at www.liud. g_ov /offices /olr. B. Reimbursement for Pre -Award Costs Background CDBG -R grantees will need to move forward rapidly to prepare the CDBG -R substantial amendment and to undertake other administrative actions, including envirorunentai reviews. Therefore, HUD is granting pennission to states and entitlement jurisdictions receiving a direct allocation of CDBG -R funds to incur pre -award costs associated with the development of the substantial amendment to the action plan as if each was a new grantee preparing to receive its first allocation of CDBG funds. Grantees may also take advantage of the provisions of 24 CFR 570. 200( h) regarding activity -specific pre -award costs. Grantees may incur costs prior to grant award for specific activities, as of the date the grantee submits its CDBG -R action plan substantial amendment to HUD. Where a grantee amends an existing construction contract or issues a new contract in order to use CDBG -R funding to expand an existing activity, the date on which the CDBG R - costs are considered incurred for purposes of 24 CFR 570.200( h) will generally be the date of the new or amended contract, not the date that funds were initially obligated for the original project.  25 A number of entitlement grantees have used the provisions of 24 CFR 570. 200( h)( 1)( v) to incur pre -award costs against their regular CDBG program, where payments will be made from future years' CDBG allocations. HUD has determined that it is not consistent with the requirements of the Recovery Act to allow CDBG -R funds to be used as payment for pre -award activity costs that grantees incurred under their regular CDBG funds. HUD therefore finds good cause to waive 24 CFR 570. 200( h) to the extent necessary to implement this prohibition. Requirement 24 CFR 570. 200( h) is waived to the extent necessary to allow entitlement jurisdictions receiving a direct CDBG -R allocation under this notice to incur pre -award costs as if each was a new grantee preparing to receive its first allocation of CDBG funds. In accordance with OMB Circular A -87, Attachment B, paragraph 31, 24 CFR 570. 200( h) is similarly applied to States. A CDBG -R grantee will be allowed to incur costs necessary to develop the CDBG. R substantial amendment to its action plan and undertake other administrative actions necessary to receive its grant, prior to the costs being included in the final plan, and to incur activity -specific costs as of the date the substantial is submitted to HUD, provided that the other conditions of 24 CFR 570.200( h) are met. For units of general local governments funded:by a state, 24 CFR 570.489(b) applies unmodified. 24 CFR 570. 200( h) is waived to the extent necessary to prohibit a grantee from using CDBG -R funds for reimbursement of pre -award costs incurred against the grantee' s regular CDBG funding. C. Recovery Act Requirements for CDBG -R Expenditures  W41 Title XII of Division A of the Recovery Act requires that in selecting CDBG -R projects to be funded, recipients shall give priority to projects that can award contracts based on bids within 120 calendar days from the date the funds are made available to the recipients. Section 1602 of the Recovery Act requires that grantees shall use grant funds in a manner that maximizes job creation and economic benefit. Section 1602 also states that, when CDBG -R funds are being used for infrastructure investments, grantees must give preference to activities that can be started and completed expeditiously, including a goal to obligate at least 50 percent of the funds for activities that can be initiated within 120 days of enactment of the Recovery Act. HUD has defined the term " use" for purposes of these requirements to mean obligation of funds. HUD is adopting the definition of "obligation" as it appears in 24 CFR 85. 3 for all grantees, including states, to mean the amount of orders placed, contracts and sub -grants awarded, goods and services received, and similar transactions during a given period that will require payment by the grantee during the same or a future period. Section 1605 of the Recovery Act requires that all iron, steel and manufactured goods used in construction, alteration, repair, or maintenance of a public building or public work project assisted with funds under the Recovery Act must be produced in the United States, unless the Secretary finds that: the requirement is inconsistent with public interest; those goods are not reasonably available or produced in sufficient quantity in the U. S.; or the use of the goods will increase the project cost by more than 25 percent. Grantees must request a waiver.of this provision if, in the process of carrying out an eligible activity, one of these conditions arises. If the Secretary determines that it is necessary to waive this requirement, he must publish in the Federal Register a detailed written justification why the requirement  27 was waived; therefore, all grantees are expected to adhere to these provisions. These requirements must be applied consistent with U. S. obligations under international agreements. To streamline compliance with the provision of Section 1605 in detennining the project cost using American -made materials, grantees may want to consider acquiring two cost estimates with bids: one with only American -made materials and the other with any materials. Section 1604 of the Recovery Act prohibits CDBG -R funds fi-om being used for any pool. In casino or other gambling establishment, aquarium, zoo, golf course, or swimming This applying this prohibition, HUD will interpret the definitions of these tenns broadly. requirement is further discussed in section ILE. of this notice. Section 1512 of the Recovery Act requires that for each activity carried out with CDBG -R funds, grantees must report on the number of jobs estimated to be created or retained. This reporting requirement applies to all activities, and is unrelated to the reporting ofjobs for purposes of meeting the low- and moderate- income benefit national objective requirements. This requirement is further discussed under section II.G of this notice. As part of the CDBG -R substantial amendment, grantees will be required to submit certifications regarding these requirements. D. Program Income Requirements Any program income generated from the use of CDBG -R funds will be treated as program income to the regular CDBG program, not as program income to the CDBG -R program. HUD is waiving a number of statutory and regulatory provisions to implement this requirement, many of which are described in Section F. below. 24 CFR 85. 21 and 24 CFR 570. 504 ( for entitlements) and 24 CFR 570. 489( e)( 3) and 31 CFR part 205 ( for states), require grantees and subrecipients to disburse program income before requesting additional cash withdrawals of regular CDBG funds from the U.S. Treasury. Those requirements will not apply to the drawdown of CDBG --R funds. In the regular CDBG program, 24 CFR 570. 301( b) provides for float- funded activities and guarantees, a short -term financing mechanism which allows a grantee to use undisbursed funds in its line of credit and CDBG prograrn account that are budgeted in action plans for one or more other activities that do not need the funds immediately. Each activity carried out using the float must meet all CDBG requirements and must be expected to produce program