3. Meeting a National Objective

Transcription

1 3. Meeting a Natinal Objective 3.1 Purpse The purpse f this chapter is t describe the criteria that must be met and the recrds that must be maintained in rder fr an activity t be cnsidered t have met a natinal bjective f the CDBG prgram. Additinal infrmatin in the frm f examples and tips is als prvided. Nte that states can be mre restrictive than the statutry and regulatry natinal bjective requirements, s lng as the State requirements d nt cntradict federal requirements. Fr example, a state may chse t fund nly lw- and mderate-incme (L/M) benefit activities. In additin, dcumentatin requirements fr lcal gvernments meeting natinal bjectives are set by the state. 3.2 Basic Requirements Sectin 101(c) f the Husing and Cmmunity Develpment Act (HCDA) sets frth the primary bjective f the prgram as the develpment f viable cmmunities by the prvisin f decent husing and a suitable living envirnment and expanding ecnmic pprtunities, principally fr persns f lw- and mderate- incme. The statute further states in Sectin 104(b)(3) that this is t be achieved in the CDBG prgram by ensuring that each funded activity meets ne f three named natinal bjectives. Thse three bjectives are identified as: Benefiting Lwand Mderate-Incme Persns; Preventing r Eliminating Slums r Blight; and Meeting Urgent Needs. The statute als states that each grant recipient must ensure that at least 70 percent f its expenditures ver a particular time perid must be used fr activities qualifying under the first f thse natinal bjectives (that f Benefiting Lw- and Mderate-Incme Persns). This chapter cncentrates n what is required fr CDBG-funded activities t meet each ne f these natinal bjectives. As indicated abve, the prgram rules state that in rder t be eligible fr funding, every CDBG-funded activity must qualify as meeting ne f the three natinal bjectives f the prgram. This requires that each activity, except certain activities carried ut under the eligibility categries f Planning and Capacity Building, Prgram Administratin, and Technical Assistance, meet specific tests fr either: Benefiting lw- and mderate-incme persns, Preventing r eliminating blight, r Meeting ther cmmunity develpment needs having a particular urgency because existing cnditins pse a serius and immediate threat t the health r welfare f the cmmunity, and ther financial resurces are nt available t meet such needs. An activity that fails t meet ne r mre f the applicable tests fr meeting a natinal bjective is in nncmpliance with CDBG rules. This requirement, which is smetimes called the verall benefit requirement, tgether with the rules t be used in calculating the ttal percentage f funds actually expended fr purpses f cmplying with this requirement, are bth cvered in Chapter 4. State Cmmunity Develpment Blck Grant Prgram Page 3-1

2 Each f the three CDBG natinal bjectives, and the subcategries f criteria fr hw that bjective may be met, are described belw. Because f statutry, and smetimes regulatry, limitatins, certain f the subcategries may nt be used fr a particular type f activity. These limitatins are als reflected in the guidelines shwn in this chapter. Please nte that the requirement that each activity must meet a natinal bjective shuld nt be cnfused with the requirement that at least 70 percent f a grant recipient s funds ver a particular time perid must be used fr activities that benefit L/M incme persns. 3.3 Natinal Objective Categries and Subcategries The remainder f this chapter prvides guidance n the natinal bjective categries and subcategries, guidance n dcumenting cmpliance, and sme thughts abut making the wisest chice amng available alternatives. NATIONAL OBJECTIVES LOW/MOD SLUM/BLIGHT URGENT NEED Area Benefit Limited Clientele Area Basis Spt Basis Husing Jbs State Cmmunity Develpment Blck Grant Prgram Page 3-2

3 3.4 Activities Benefiting L/M Incme Persns Benefitting Lw- and Mderate-Incme Persns is usually spken f as the mst imprtant natinal bjective f the CDBG prgram because f the related requirement that the vast majrity f CDBG expenditures must be fr activities that meet this bjective. In metrplitan areas, Sectin 8 prgram incme limits are established fr an entire metrplitan area, which may include bth entitlement and nn-entitlement jurisdictins. Fr any given state grant recipient lcated in a metrplitan area, the state must use the Sectin 8 incme limits fr that metrplitan area. In nn-metrplitan areas, HUD establishes Sectin 8 prgram incme limits n a cunty-by-cunty basis. HUD als determines equivalent figures fr the entire nn-metrplitan area f each state. Fr any given nn-metrplitan state grant recipient, a state may apply either the Sectin 8 incme limit fr that cunty r the statewide nn-metrplitan area figures Definitins Sectin 102(a)(20) f the HCDA defines the term lw- and mderate incme persns as families and individuals whse incmes are n mre than 80 percent f the median incme f the area invlved. The area invlved is determined fr the CDBG prgram the same way it is determined fr the Sectin 8 Husing prgram. The 80 percent f median incme figure is determined by HUD based n a fur-persn family and is adjusted upward r dwnward fr larger r smaller families. The State CDBG prgram regulatins d nt cntain specific definitins f the terms family r husehld, and d nt cntain a definitin f what cnstitutes incme. States are free t develp their wn definitin f incme and can fllw the CDBG Entitlement regulatins fr interpretive guidance (see 24 CFR 570.3). States may use the fllwing definitins f family and husehld frm the Entitlement prgram as interpretive guidance: A family is defined in the Entitlement prgram as a grup f persns residing tgether, and includes but is nt limited t: a family with r withut children, an elderly family; a near-elderly family; a disabled family; a displaced family; An individual living in a husing unit that cntains n ther persn(s) related t him/her is cnsidered t be a ne-persn family fr this purpse. Adult children wh cntinue t live at hme with their parent(s) are cnsidered t be part f the family fr this purpse and their incme must be cunted in determining the ttal family incme. A dependent child wh is living utside f the hme (fr example, students living in a drmitry r ther student husing) is cnsidered fr these purpses t be part f the family upn which he/she is dependent, even thugh he/she is living in anther husing unit. A husehld is defined in the Entitlement prgram as all persns ccupying the same husing unit, regardless f their relatinship t each ther. The ccupants culd cnsist f a single family, tw r mre families living tgether, r any ther grup f related r unrelated persns wh share living arrangements. State Cmmunity Develpment Blck Grant Prgram Page 3-3

4 3.4.2 Persns vs. Husehlds: It is imprtant t nte that, fr all but ne f the subcategries under this natinal bjective, the test f meeting the bjective f benefit t L/M incme persns is t be met based n L/M persns. Only with the subcategry f L/M incme husing must the test be met based n L/M husehlds. There are reasns fr this distinctin. First, the statute requires that the fcus be n the ccupants f a CDBG-assisted husing unit when determining whether the natinal bjective f benefit t L/M incme persns can be met. Secndly, there are tw underlying assumptins in the CDBG regulatins cncerning this issue: 1) that all persns wh reside in a husing unit that has been prvided r imprved with CDBG assistance will benefit frm that husing unit; and 2) that the resurces f all ccupants culd be brught t bear with respect t paying fr the rental, imprvement, r purchase f the unit. CDBG-assisted husing units can be ccupied by persns wh are nt related t each ther. Fr purpses f meeting the CDBG natinal bjective, the regulatins prvide that the incme f all persns ccupying a CDBG-assisted husing unit must be cunted, first, withut regard t their familial relatinships, and secnd, by treating them (fr this purpse nly) as thugh they were all f the same family. If the husehld/family incme qualifies it as L/M incme, then the assisted husing unit wuld be cnsidered t be ccupied by a L/M incme husehld. T illustrate this pint, assume that there are tw assisted husing units, ne f which is ccupied by three, unrelated adults and the secnd f which is ccupied by an unmarried cuple. Als assume that in each f these tw units, ne f the ccupants is currently jbless and has n incme. Fr nn-husing CDBG-assisted activities (such as a public service fair husing prgram), each f the tw persns in these units wh are withut incme wuld qualify separately as a L/M incme persn, eligible t receive the public service. (This is because the regulatins treat them as thugh they are ne-persn families, and, with n incme, each is cnsidered t be a L/M incme family.) Fr CDBG-assisted husing activities, hwever, the benefits f the assistance are shared with all f the ccupants, and the regulatins require that the incme f all husehld members must be cnsidered t determine the L/M incme status f the beneficiaries. Fr the dwelling unit ccupied by the three unrelated adults t qualify fr CDBG husing assistance, the cmbined incme f the tw wrking adults culd nt exceed the limits fr a three-persn L/M incme family. Fr the unit ccupied by the unmarried cuple t qualify fr CDBG husing assistance, the incme f the ne wrking adult wuld have t be less than the limit fr a tw-persn family. It is, therefre, imprtant t nte that even thugh an individual may qualify as L/M incme fr certain CDBG-assisted activities, the husehld f which they are a part may r may nt qualify as L/M incme fr assisted husing purpses, depending n the ttal cmbined incme f all the husehld members. State Cmmunity Develpment Blck Grant Prgram Page 3-4

5 3.4.3 Criteria Subcategries The criteria fr hw an activity may be cnsidered t benefit L/M incme persns are divided int fur subcategries: 1. Thse based n area benefit, 2. Thse serving a limited clientele, 3. Thse invlving husing, and 4. Thse invlving emplyment (jbs). These subcategries are described in detail n the fllwing pages. Challenge t presumptin: The prgram rules state that an activity that meets the specified criteria fr a natinal bjective will be presumed t have met that bjective. Hwever, it shuld be nted that, because almst all CDBG-assisted activities invlve sme benefit t L/M incme persns r husehlds, an verride t a presumptin that an activity meets the L/M incme benefit natinal bjective may cme int play. The regulatins prvide that in any case where there is substantial evidence that an activity might nt principally benefit L/M incme persns, even thugh the activity cnfrms t a literal reading f L/M incme benefit criteria, the presumptin that the activity meets the natinal bjective may be rebutted. In such cases, HUD will cnsider the full range f direct effects f the assisted activity. This means that HUD will examine the extent t which the activity, in additin t benefiting the L/M incme persns, either negatively affects such persns r prvides direct benefits t a substantial number f ther nn-l/m incme persns as well. When such a rebuttal is raised by HUD, the grant recipient will have t shw why the activity shuld nevertheless be cnsidered t meet the L/M incme benefit natinal bjective. Reference: 24 CFR (b) It shuld be nted, hwever, that certain presumptins f a persn s L/M incme status fr jb creatin/retentin activities are specifically authrized by Sectin 105(c)(4) f the CDBG statute. Insfar as this is a statutry prvisin, it verrides any presumptin that may seem unwarranted in a specific case. Thus, the evidence t the cntrary language in the regulatins is nt applicable t these L/M incme jb presumptins. Restrictin n benefit t mderate incme persns: The regulatins require that each grant recipient ensure that mderate-incme persns are nt benefited t the exclusin f lw-incme persns (see 24 CFR (b)). This des nt mean that each CDBG-assisted activity must invlve bth lw- and mderate-incme beneficiaries. Hwever, it des mean that the grant recipient s CDBG prgram, as a whle, must primarily benefit lw-incme persns, and that mderate-incme persns d nt benefit t the exclusin f lw-incme persns. State Cmmunity Develpment Blck Grant Prgram Page 3-5

6 Planning nly grants: Planning-nly grants can meet the L/M incme benefit natinal bjective if at least 51 percent f the peple wh wuld benefit frm implementatin f the plan are f lw r mderate incmes. This is mst cmmnly (but nt exclusively) demnstrated by planning activities undertaken fr an area r cmmunity wherein at least 51 percent f the residents are lw- and mderate-incme. Planning-nly means that planning is the nly activity, r the planning activity is unrelated t any ther activity assisted by the grant. Reference: 24 CFR (b)(5) 3.5 L/M Incme Area Benefit Criteria Fr these purpses, an area benefit activity is an activity that is available t benefit all the residents f an area that is primarily residential. In rder t qualify as addressing the natinal bjective f benefit t L/M incme persns n an area basis, an activity must meet the identified needs f L/M incme persns residing in an area where at least 51 percent f the residents are L/M incme persns. The benefits f this type f activity are available t all residents in the area regardless f incme. The requirement that an area benefit activity must qualify n the basis f the incme levels f the persns wh reside in the area served by the activity is statutry. (See HCDA Sectin 105(c)(2).) This means that the activity may nt qualify as meeting the L/M incme area benefit natinal bjective n any ther basis. Fr example, if the assisted activity is a park that serves an area having a L/M incme cncentratin belw 51 percent, the activity may nt qualify even if there is reasn t believe that the park will actually be used primarily by L/M incme persns. Fr example, typical area benefit activities include: Street and sidewalk imprvements, Water and sewer lines, Acquisitin f land t be used as a neighbrhd park, Cnstructin f a cmmunity center r health clinic Facade imprvements in neighbrhd cmmercial districts. Determining the service area: The determinatin f the area served by an activity is critical t this subcategry. The inclusin r exclusin f a particular prtin f a cmmunity s jurisdictin can make the difference between whether the percentage f L/M incme residents in the service area is high enugh t qualify under the L/M incme benefit natinal bjective. The principal respnsibility fr determining the area served by an activity rests with the state. HUD will generally accept a state s determinatin unless the nature f the activity r its lcatin raises serius dubts abut the area claimed by the state. In making this determinatin, a state may use the HUD-prvided data n percentage f L/M incme residents by census tract/blck grup, derived frm the mst recently available decennial Census/American Cmmunity Survey, tgether with the Sectin 8 incme limits that wuld have applied at the time the incme infrmatin was cllected by the Census Bureau. (The American Cmmunity Survey ffers Census data n ppulatin demgraphics, descriptin f husing stck cst, cnditin and wrkfrce characteristics, such as earnings by sectr and travel time t wrk). The new Lw/Mderate Incme Summary Data (LMISD), based n the State Cmmunity Develpment Blck Grant Prgram Page 3-6

7 ACS data, is available n HUD s website at: The prir, 2000 Census-based data is n HUD s website at: Alternatively, a state may allw the use f methdlgically sund lcal surveys t determine the percentage f L/M incme residents in activity service areas (Reference: 24 CFR (b)(1)(i)). If s, the state must decide which survey methdlgy is apprpriate fr determining the L/M incme beneficiary area t be served. Fr additinal guidance n apprpriate survey methdlgies, see Ntice CPD 05-06: Suggested Survey Methdlgy t Determine the Percentage f Lw- and Mderate-Incme (LMI) Persns in the Service Area f a Cmmunity Develpment Blck Grant-Funded Activity (Appendix K). The area that will be served by an activity need nt be cterminus with census tracts, blck grups, r ther fficially recgnized bundaries. It is critical, hwever, that the service area determined by the state be the entire area served by the activity. Fr example, even thugh a predminantly L/M incme neighbrhd may be ne f several neighbrhds served by an activity (fr example, a grcery stre) the percentage f L/M incme persns in the ttal area served by the activity is cnsidered fr this purpse. Hwever, the service area bundaries f State CDBG-funded activities frequently d nt cincide with census r ther fficial gegraphic bundaries. This is especially true in smaller cmmunities and rural areas, where lw ppulatin densities mean that blck grups r census tracts cver large areas. One census tract may cver an entire city; r there may be nly tw r three census tracts in an entire cunty. Scenaris cmmnly faced by states and state grant recipients include: The service area cmprises nly a small prtin f the unit f general lcal gvernment, r f a blck grup. In such situatins, infrmatin n the percentage f L/M incme persns in the unit f gvernment r the blck grup/census tract is nt useful, because the service area residents make up a small fractin f the ttal, and their ecnmic characteristics may nt mirrr thse f the larger area. A survey f the service area residents may be the mst apprpriate way t determine whether the service area qualifies under the L/M incme area benefit criterin. Examples f such activities include: extending water lines t serve a small, unincrprated rural settlement in a cunty; cnstructin f a neighbrhd tt lt serving ne subdivisin in a city f 4,000, where the entire city is ne census tract. The service area includes all r part f several units f general lcal gvernment; the service area might cntain bth incrprated and unincrprated areas. The HUD-prvided data may be usable fr a prtin f the service area, but may need t be supplemented by survey data fr ther prtins f the service area. It may be necessary t survey a large area t determine the percentage f service area residents wh are L/M incme. Examples f such activities include: Cnstructin f a rural water system which serves nine small incrprated twns plus prtins f the surrunding unincrprated area f the tw cunties where the twns are lcated; cnstructin f a new fire statin in a city f 2,800, where the municipal fire department prvides, thrugh cntract, fire prtectin service fr tw adjining twnships (ne f which is in a different cunty). State Cmmunity Develpment Blck Grant Prgram Page 3-7

8 Fr the mst part, activities qualifying under the basic eligibility categry f Public Facilities and Imprvements prvide a benefit t all the residents f an area and thus wuld be subject t meeting the criteria described here in rder t meet the L/M incme benefit natinal bjective. A few activities that qualify as Public Services als prvide an area benefit, mst ntably plice r emergency medical/rescue services. CDBG assistance t a fr-prfit entity that is a cmmercial/retail establishment generally als prvides an area benefit (see the Clearance, Rehabilitatin, Recnstructin and Cnstructin f Buildings categry cncerning eligibility f cmmercial rehabilitatin; see Ecnmic Develpment Assistance t Businesses categry fr eligibility f ther assistance t a fr-prfit). Certain activities that serve an area are designed t meet the needs f nly sme persns in that area. An example f this wuld be a facility that is used exclusively as a senir center fr a particular neighbrhd. Such Area Benefit activities serving special needs usually must qualify under the Limited Clientele subcategry f the L/M incme benefit natinal bjective. Althugh public schls may nt be used by all the residents f the area they serve, in the CDBG prgram they nevertheless are cnsidered t benefit all the residents, nt nly because any husehld with children can avail themselves f the services f the schl, but als because f the cntributin schls make t determining the value f the residential prperty in that area Special Situatins Activities utside the bundaries f the lcal gvernment: Any activity carried ut by a recipient f State CDBG prgram funds must significantly benefit residents f the jurisdictin f the grant recipient, and the unit f general lcal gvernment must determine that the activity is meeting its needs in accrdance with sectin 106(d)(2)(D) f the Act. Fr an activity t significantly benefit residents f the recipient jurisdictin, the CDBG funds expended by the unit f general lcal gvernment must nt be unreasnably disprprtinate t the benefits t its residents. Reference: 24 CFR (b) (regulatin change published April 23, 2012) Activities benefiting Entitlement city residents: Any activity carried ut by a recipient f State CDBG prgram funds in entitlement jurisdictins must significantly benefit residents f the jurisdictin f the grant recipient, and the State CDBG recipient must determine that the activity is meeting its needs in accrdance with sectin 106(d)(2)(D) f the Act. Fr an activity t significantly benefit residents f the recipient jurisdictin, the CDBG funds expended by the unit f general lcal gvernment must nt be unreasnably disprprtinate t the benefits t its residents. In additin, the grant cannt be used t prvide a significant benefit t the entitlement jurisdictin unless the entitlement grantee prvides a meaningful cntributin t the prject. Reference: 24 CFR (c) (regulatin change published April 23, 2012) Activities benefiting residents f Indian reservatins: The issue f serving residents f a federally-recgnized Indian Reservatin is similar, but slightly mre cmplicated. In mst cases, Reservatin residents are als residents f the cunty where the Reservatin is lcated. Activities that benefit residents f Indian reservatins that are cntained within the bundaries f the unit f general lcal gvernment that receives State Cmmunity Develpment Blck Grant Prgram Page 3-8

9 the grant are cnsidered t benefit the residents f the grant recipient, as reservatin residents are citizens f the unit f lcal gvernment(s) that their reservatin is lcated in. State CDBG funds may benefit residents f Indian reservatins nt cntained within the state grant recipient's bundaries, as lng as the state grant recipient determines that the activity meets its husing and cmmunity develpment needs, in accrdance with HCDA Sectin 106(d)(2)(D). Other federal and state laws dealing with the legal status f Indian Reservatins culd affect unique situatins, such as lcating a facility wned by a unit f general lcal gvernment n tribally-wned land, r activities that wuld exclusively benefit Native Americans. (Fr example, s-called Indian preference prvisins which apply t certain federal funding given directly t tribes d nt apply t State CDBG prgram funding.) If any questins f authrity exist, it is suggested that units f general lcal gvernment determine that they have sufficient legal pwers t implement cmmunity develpment activities n reservatins befre prceeding in unusual situatins. Water and sewer hkups: Hking residential buildings up t water and sewer lines cannt be undertaken as an L/M incme area benefit activity, because water and sewer hkups are nt eligible under the public facility eligibility categry. Water and sewer hkups are eligible under the Clearance, Rehabilitatin, Recnstructin, and Cnstructin f Buildings eligibility categry, and must, therefre, meet the L/M incme Husing criteria Special Situatins Applicable t Specific Activities The statute prvides that certain kinds f area benefit activities may meet the L/M incme benefit natinal bjective when the general requirements cannt be met. These special situatins are discussed belw. 911 systems: An activity t develp, establish, and perate fr up t tw years after the establishment f a unifrm emergency telephne number system serving an area having less than the percentage f lw- and mderate-incme residents therwise required under this subcategry may qualify as benefiting L/M incme persns, prvided the grant recipient btains prir HUD apprval. The details cncerning what the grant recipient must shw and what HUD must determine fr this purpse can be fund at 24 CFR (b)(1)(iii). Special assessments: When the nly use f CDBG funds t assist in the financing f a public imprvement is t pay special assessments (as defined in Appendix D, Special Assessments under the CDBG Prgram) levied against residential prperties that are wned and ccupied by L/M incme persns, such use f the funds will qualify under this natinal bjective subcategry even if the public imprvement prvides a benefit t all the residents f an area. Sectin 105(c)(2)(A)( iii) f the HCDA authrizes the means f meeting the L/M incme area benefit requirement. Reference: 24 CFR (b)(1)(ii) State Cmmunity Develpment Blck Grant Prgram Page 3-9

10 3.5.4 Grant Recipient Optins fr Jb Creatin/Retentin There are tw special situatins that prvide the grant recipient with the ptin t qualify activities that meet the jb creatin r retentin natinal bjective criteria under the area benefit criteria when prgram rules wuld therwise require the activity t meet the criteria under the jb creatin r retentin subcategry. These situatins are: In the case where the state has apprved a Cmmunity Revitalizatin Strategy (CRS) pursuant t the authrity f 24 CFR (e)(2) f the regulatins, activities undertaken pursuant t the strategy fr the purpse f creating r retaining jbs may, at the ptin f the grant recipient, be cnsidered t meet the area benefit subcategry criteria in lieu f the jbs subcategry criteria (the area cnsidered fr this purpse is the CRS area); and Reference: 24 CFR (e)(5)(i). (See Appendix E, Cmmunity Revitalizatin Strategies.) Where CDBG-assisted activities are carried ut by a Cmmunity Develpment Financial Institutin (CDFI) whse charter limits its investment area t a primarily residential area cnsisting f at least 51 percent L/M incme persns, activities that the CDFI carries ut fr the purpse f creating r retaining jbs may, at the grant recipient s ptin, be cnsidered t meet the area benefit subcategry criteria in lieu f the Jbs subcategry criteria. The area cnsidered fr this purpse is the CDFI s investment area. Reference: 24 CFR (e)(4)(i) Please nte, hwever, that althugh the reprting requirements fcus n area benefit, it is still necessary t shw the basis upn which the abve activities are creating r retaining jbs in rder t be able t use the Area Benefit subcategry alternative Recrds t be Maintained The recrds needed t demnstrate cmpliance under this subcategry include: Bundaries f the service area and the basis fr determining thse bundaries, and The percentage f L/M incme persns in the service area and the data used fr determining that percentage. Dcumentatin f survey results and methdlgy, if the percentage f L/M incme area residents is determined by survey rather than by HUD-prvided data. If the activity is ne f the special situatins described abve, the recrds must identify the unique aspects f the activity that qualify it under the respective subcategry. (See Appendix I, Mdel Recrd-Keeping Requirements.) Criteria L/M incme Limited Clientele An L/M incme limited clientele activity is an activity that prvides benefits t a specific grup f persns rather than everyne in a defined service area. It may benefit particular persns withut regard t the area in which they reside, r it may be an activity that prvides benefit n an area basis but nly t a specific grup f persns wh reside in the area. In either case, at least 51 percent f the beneficiaries f the activity must be L/M incme persns. It shuld be State Cmmunity Develpment Blck Grant Prgram Page 3-10

11 nted, hwever, that, because f certain statutry limitatins, the regulatins preclude the fllwing kinds f activities frm qualifying under this subcategry: Activities invlving the acquisitin, cnstructin, r rehabilitatin f prperty fr husing, including hmewnership assistance (these must qualify under the husing subcategry, because f Sectin 105(c)(3) f the authrizing statute) r Activities where the benefit t L/M incme persns is the creatin r retentin f jbs (these must qualify under the Jbs subcategry with certain exceptins as nted under the previus area benefit sectin, because f the different presumptins prvided under Sectins 105(c)(1)(C) and (4) f the authrizing statute). T qualify under this subcategry, a limited clientele activity must meet ne f the fllwing tests: Exclusively benefit a clientele wh are generally presumed by HUD t be principally L/M incme persns. The fllwing grups are currently presumed by HUD t be cmprised principally f L/M incme persns: Abused children, Elderly persns, Battered spuses, Hmeless persns, Adults meeting Bureau f Census definitin f severely disabled adults *, Illiterate adults, Persns living with AIDS, and Migrant farm wrkers. Reference: 24 CFR (b)(2)(ii)(A) * See discussin abut the change frm the term handicapped in Chapter 2, Sectin 2-7, Architectural Barrier Remval. (Nte: this presumptin may be challenged in a particular situatin, if there is substantial evidence that the persns in the grup the activity is designed t serve are mst likely nt principally L/M incme persns.) OR Require infrmatin n family size and incme s that it is evident that at least 51 percent f the clientele are persns whse family incme des nt exceed the L/M incme limit. (This includes the case where the activity is restricted exclusively t L/M incme persns). Reference: 24 CFR (b)(2)(ii)(B) and (C) State Cmmunity Develpment Blck Grant Prgram Page 3-11

12 OR Be f such nature and in such lcatin that it may reasnably be cncluded that the activity s clientele will primarily be L/M incme persns (fr example, a day care center that is designed t serve residents f a public husing cmplex). Reference: 24 CFR (b)(2)(ii)(D) OR Be an activity that serves t remve material r architectural barriers t the mbility r accessibility f elderly persns r f adults meeting the Bureau f the Census Current Ppulatin Reprts definitin f severely disabled, prvided it is restricted, t the extent practicable, t the remval f such barriers by assisting: The recnstructin f a public facility r imprvement, r prtin theref, that des nt qualify under the L/M incme area benefit criteria; The rehabilitatin f a privately-wned nnresidential building r imprvement that des nt qualify under the L/M incme area benefit criteria r the L/M incme Jbs criteria; r The rehabilitatin f the cmmn areas f a residential structure that cntains mre than ne dwelling unit and that des nt qualify under the L/M incme Husing criteria. Reference: 24 CFR (b)(2)(iii) OR Be a micrenterprise assistance activity carried ut in accrdance with the prvisins f HCDA Sectin 105(a)(22) r 24 CFR (c) with respect t thse wners f micrenterprises and persns develping micrenterprises assisted under the activity during each prgram year wh are lw- and mderate-incme persns. (Nte that, fr these purpses, nce a persn is determined t be L/M incme, he/she may be presumed t cntinue t qualify as such fr up t a three-year perid. This wuld enable the prvisin f general supprt services t such a persn during that three-year perid, withut having t check t determine whether the persn s incme has risen.) Reference: 24 CFR (b)(2)(iv) OR Be an activity designed t prvide jb training and placement and/r ther emplyment supprt services, including, but nt limited t, peer supprt prgrams, cunseling, child care, transprtatin, and ther similar services, in which the percentage f lw- and mderate-incme persns assisted is less than 51 percent which qualifies under the Limited Clientele natinal bjective in the fllwing limited circumstance: In such cases where such training r prvisin f supprtive services assists business(es), and the nly use f CDBG assistance is t prvide the jb training and/r supprtive services; and the prprtin f the ttal cst f the services brne by CDBG funds is n greater than the prprtin f the ttal number f persns benefiting frm the services wh are L/M incme. Reference: 24 CFR (b)(2)(v) State Cmmunity Develpment Blck Grant Prgram Page 3-12

13 The census definitin f severely disabled is as fllws: Persns are classified as having a severe disability if they: (a) used a wheel-chair r had used anther special aid fr six mnths r lnger; (b) are unable t perfrm ne r mre functinal activities r need assistance with an ADL r IADL; (c) are prevented frm wrking at a jb r ding husewrk; r (d) have a selected cnditin including autism, cerebral palsy, Alzheimer s disease, dementia, r mental retardatin. Als, persns wh are under 65 years f age and wh are cvered by Medicare r wh receive SSI are cnsidered t have a severe disability. Nte: Fr purpses f this definitin, the term functinal activities includes seeing, hearing, having ne s speech understd, lifting and carrying, walking up a flight f stairs, and walking. An ADL is an activity f daily living which includes getting arund inside the hme, getting in r ut f bed r a chair, bathing, dressing, eating, and tileting. An IADL is an instrumental activity f daily living and includes ging utside the hme, keeping track f mney r bills, preparing meals, ding light husewrk, and using the telephne Examples Activities that wuld be expected t qualify under the L/M incme Limited Clientele subcategry include: Cnstructin f a senir center, Public services fr the hmeless, Assistance t L/M incme persns develping a micrenterprise, Meals n wheels fr the elderly, and Cnstructin f jb training facilities fr severely disabled adults Tips Activities that serve an area generally cannt qualify under the Limited Clientele criterin. Fr example, while a clinic serving nly persns with AIDS living in a particular area wuld clearly qualify as a Limited Clientele activity, a clinic prviding CDBG-subsidized health services which are available t all persns in a neighbrhd wuld nt. It must instead meet the criteria fr an area benefit activity. Hwever, if the use f a clinic prviding general health care were t be administered in a way such that the services are nt available t everyne in the neighbrhd, but nly t L/M incme persns, the activity wuld qualify under Limited Clientele. (This is, f curse, because the benefits wuld nt be available t all the residents f the area.) Recrds t be Maintained Fr each activity, ne f the fllwing five types f dcumentatin must be maintained: 1. Dcumentatin shwing that the activity is designed t be used exclusively by a segment f the ppulatin presumed by HUD t be L/M incme persns (fr example, abused children); r 2. Dcumentatin describing hw the nature and the lcatin f the activity establishes that it will be used predminantly by L/M incme persns; r State Cmmunity Develpment Blck Grant Prgram Page 3-13

14 3. Data shwing the size and annual incme f the family f each persn receiving the benefit; r 4. Data shwing that barriers t mbility r accessibility have been remved and hw the barrier remval was restricted t the extent feasible t ne f the particular cases authrized under this subcategry; r 5. Dcumentatin shwing that the activity qualifies under the special cnditins regarding jb services where less than 51 percent f the persns benefiting are L/M incme persns. Reference: 24 CFR L/M Incme Husing Criteria Sectin 105(c)(3) f the authrizing statute requires that an activity which assists in the acquisitin, cnstructin, r imprvement f permanent, residential structures may qualify as benefiting L/M incme persns nly t the extent that the husing is ccupied by L/M incme persns. (This includes activities directed twards hmewnership assistance.) Thus, this subcategry prvides that fr such activities t qualify under the L/M incme benefit natinal bjective, it must result in husing that will be ccupied by L/M incme husehlds upn cmpletin. The husing can be either wner- r renter-ccupied and can be either ne family r multi-unit structures. When the husing is t be rented, in rder fr a dwelling unit t be cnsidered t benefit a L/M incme husehld, it must be ccupied by the husehld at affrdable rents. The grant recipient is respnsible fr establishing the criteria it will use t determine rent affrdability fr this purpse and must make these criteria public. Reference: 24 CFR (b)(3) Occupancy Rule Occupancy f the assisted husing by L/M incme husehlds under this subcategry is determined using the fllwing general rules: All assisted single unit structures must be ccupied by L/M incme husehlds, An assisted tw-unit structure (duplex) must have at least ne unit ccupied by a L/M incme husehld, and An assisted structure cntaining mre than tw units must have at least 51 percent f the units ccupied by L/M incme husehlds. Exceptin: Under the fllwing circumstances, structures with less than 51 percent ccupancy by L/M incme husehlds may be assisted. The new cnstructin f nn-elderly, multi-family rental structures need nly have at least 20 percent f the units ccupied by L/M incme husehlds. Hwever, when ccupancy by L/M incme husehlds falls between 20 and 50 percent, the CDBG prtin f ttal develpment csts may nt be greater than the prprtin f units ccupied by L/M incme husehlds. (Fr this purpse, ttal develpment csts include the cst f all wrk frm design and engineering thrugh cmpletin f the physical imprvements and, if integral t the prject, State Cmmunity Develpment Blck Grant Prgram Page 3-14

15 the cst f acquisitin.) Fr example, if such a structure were t cst $1 millin and 35 percent f the units are ccupied by L/M incme husehlds at affrdable rents, the grant recipient culd nt prvide mre than $350,000 in CDBG assistance fr the prject. Reference: 24 CFR (b)(3)(i) Presumed single structures: In sme cases, CDBG assistance t tw r mre structures may meet the ccupancy-bystructure test as thugh all f the assisted structures were in a single structure. These cases are as fllws: Buildings used fr rental husing which are under cmmn wnership and management and are lcated n the same r cntiguus prperties; Reference: 24 CFR (b)(3); r All husing activities undertaken in Cmmunity Revitalizatin Strategy area, where a state has apprved such a strategy area pursuant t 24 CFR (e)(2) f the regulatins, Reference: 24 CFR (e)(5)(ii); r Where CDBG-assisted husing activities are carried ut by a Cmmunity Develpment Financial Institutin (CDFI) whse charter limits its investments t a primarily residential area that has at least 51 percent L/M incme residents, all husing units fr which CDBG assistance is bligated by the CDFI during the prgram year may be cnsidered t be within a single structure; Reference: 24 CFR (e)(4)(ii). Cndminiums: Where rehabilitatin f ne r mre units in a multi-unit building that are wned n a cndminium basis is limited t the particular unit(s) and des nt invlve rehabilitatin f prtins f the prperty that are held in cmmn wnership, the unit(s) are cnsidered t be separate structure(s). Architectural barriers: When remval f existing barriers t accessibility r mbility is undertaken in ne r mre units within a multi-unit structure, it is cnsidered t be rehabilitatin f the unit(s) and must qualify under the L/M incme benefit natinal bjective based n the husing criteria and nt limited clientele. Remval f such barriers t the cmmn areas f such structures wuld als qualify under husing criteria, prvided that the percent f units ccupied by L/M husehlds is sufficiently high. Where the ccupancy test cannt be met under the husing subcategry, remval f barriers frm cmmn areas culd qualify under the Limited Clientele subcategry. (Fr purpses f satisfying the verall 70 percent L/M benefit requirement, it is advantageus fr a state t qualify such activities under the husing criteria when it can legitimately d s.) Prject administratin fr HOME: As nted in the discussin under the subsectin entitled Husing Services in the preceding chapter, CDBG funds may be used t pay (in whle r in part) fr staff csts invlved in prviding services fr the cnstructin r rehabilitatin f husing r fr tenant-based rental subsidies that are assisted under the HOME prgram. When CDBG funds are s used, the activity qualifies under the L/M incme Husing subcategry, prvided the requirements f 24 CFR r are met. State Cmmunity Develpment Blck Grant Prgram Page 3-15

16 3.7.3 Examples CDBG-assisted activities that, in rder t be cnsidered as benefiting L/M incme husehlds, must qualify under the L/M incme husing subcategry include: Acquisitin f prperty t be used fr permanent husing, Rehabilitatin f permanent husing, Cnversin f nnresidential structures int permanent husing, Assistance t a husehld t enable it t acquire wnership f a hme (hmewnership assistance), and Hkups t cnnect residential structures t water and sewer systems Tips Fr any type f husing activity, cmpliance with the L/M incme benefit natinal bjective is based n the initial ccupancy f the husing fllwing cmpletin f the CDBG-assisted wrk; the CDBG prgram regulatins d nt cntain any requirements fr hw lng units must be ccupied by L/M incme residents in rder t meet the natinal bjective. Ntwithstanding this, states and state grant recipients are urged t establish their wn requirements fr replacing such husehlds with ther L/M incme husehlds whenever the assisted unit becmes vacant within a perid f time fllwing cmpletin that is cmmensurate with the amunt f CDBG financial assistance that was prvided t the husing unit. Fr last resrt husing prvided pursuant t 24 CFR Part 42, Subpart I, cmpliance with a natinal bjective is based n the activity that caused the displacement, rather than the incme f the ccupants. Nte that the eligibility categry f hmewnership assistance at HCDA Sectin 105(a)(24) cntains within it the requirement that nly L/M incme husehlds may be assisted. The effect f this eligibility cnstraint serves t prhibit the use f any ther L/M natinal bjective ptin that is less restrictive than might have therwise been applied. A state grant recipient is respnsible fr determining and making public its standards fr what cnstitutes affrdable rents, fr rental husing assisted with State CDBG funds. The CDBG prgram regulatins d nt cntain any requirements fr hw lng the affrdable rents must be maintained. States are free t set standards regarding affrdable rents in their prgram Recrds t be Maintained In rder t demnstrate cmpliance, the grant recipient must maintain the fllwing recrds: A cpy f the written agreement with each landlrd r develper receiving CDBG assistance indicating the ttal number f dwelling units in each multi-unit structure assisted and the number f thse units which will be ccupied by L/M incme husehlds after assistance; Ttal cst f the activity, including bth CDBG and nn-cdbg funds; and Fr each unit claimed t be ccupied by a L/M incme husehld, the size and cmbined incme f the husehld. State Cmmunity Develpment Blck Grant Prgram Page 3-16

17 Fr rental husing nly: The rent charged (r t be charged) after assistance fr each dwelling unit in each structure assisted and Infrmatin as necessary t shw the affrdability f units ccupied (r t be ccupied) by L/M incme husehlds pursuant t criteria established and made public by the grant recipient. Fr each prperty acquired n which there are n structures, evidence f cmmitments ensuring that the abve criteria will be met when the structures are built. Where applicable, recrds dcumenting that the activity qualifies under the special cnditins regarding the new cnstructin f nn-elderly, multi-family husing that will have L/M incme ccupancy f less than 51 percent. Where applicable, infrmatin shwing that the husing units assisted, althugh lcated in different structures, are authrized t be cnsidered t be lcated in a single structure under ne f the special situatins described previusly. Fr husing services undertaken under the authrity f HCDA Sectin 105(a)(20) (activity delivery csts fr HOME-assisted prjects), evidence that the prject(s) r assistance meet the HOME prgram incme targeting requirements at 24 CFR r Criteria L/M Incme Jbs Mst, but nt all, ecnmic develpment activities are undertaken fr the purpse f jb creatin r retentin; cnversely, mst, but nt all, jb creatin r retentin activities are classified as eligible under ne f several ecnmic develpment-riented eligibility categries. (Hwever, there are several ntewrthy exceptins: acquisitin f land, clearance, and cnstructin f public imprvements may all be undertaken t facilitate ecnmic develpment, thugh thse eligibility categries d nt exclusively fcus n ecnmic develpment.) The statutry basis fr the CDBG regulatins cncerning the L/M incme jbs natinal bjective criterin is fund in HCDA Sectin 105(c)(1). This sectin describes three ways in which certain ecnmic develpment activities may meet the L/M incme benefit natinal bjective; ne f these is t Invlve the emplyment f persns, the majrity f whm are L/M incme persns. The State CDBG prgram regulatins extend the applicability f this prvisin t be available t a wide range f ecnmic develpment activities. This sectin f the Guide prvides the criteria fr the s-called L/M incme jbs standard, which implements the abve-referenced statutry prvisin. Reference: 24 CFR (b)(4) An L/M incme jbs activity is ne which creates r retains permanent jbs, at least 51 percent f which, n a full time equivalent (FTE) basis, are either held by L/M incme persns r cnsidered t be available t L/M incme persns. State Cmmunity Develpment Blck Grant Prgram Page 3-17

18 Examples f activities that may be qualified under the L/M incme jbs natinal bjective include: Clearance activities n a site slated fr a new business; Rehabilitatin activity that will crrect cde vilatins and enable a business t survive and retain jbs; Financial assistance t a manufacturer fr the expansin f its facilities that is expected t create permanent jbs General Rules What jbs can be cunted: In cunting the jbs t be used in the calculatin fr determining the percentage that benefit L/M incme persns, the fllwing plicies apply: Part-time jbs must be cnverted t full-time equivalents (FTE) (fr example, a jb that will require wrking nly half time wuld cunt as nly half a jb); Only permanent jbs cunt; temprary jbs may nt be included; Seasnal jbs are cnsidered t be permanent fr this purpse nly if the seasn is lng enugh fr the jb t be cnsidered as the emplyee s principal ccupatin; All permanent jbs created r retained by the activity must be cunted even if the activity has multiple surces f funds; and Jbs indirectly created r retained by an assisted activity (i.e., spin ff jbs) may nt be cunted (fr example, jbs created by an unrelated cmpany that supplies parts t the manufacturing firm being assisted). Jbs held by L/M incme persns: A jb is cnsidered t be held by a L/M incme persn if the persn is, at the time their emplyment cmmences, a member f a family whse incme falls at r belw the applicable Sectin 8 prgram incme limits. The family s entire incme must be cunted. (This is particularly imprtant when dealing with part-time jbs r jbs held by students.) The annual salary r hurly wage f the jb that the persn fills is irrelevant. Jbs available t L/M incme persns: Jbs that are nt held (filled) by L/M incme persns may be claimed t be available t L/M incme persns nly when bth f the fllwing are met: The jbs d nt require special skills that can nly be acquired with substantial (i.e., ne year r mre) training r wrk experience, and educatin beynd high schl is nt a prerequisite t fill such jbs, unless the business agrees t hire unqualified persns and train them and The state grant recipient and/r the assisted business takes actins t ensure that L/M incme persns receive first cnsideratin fr filling such jbs. State Cmmunity Develpment Blck Grant Prgram Page 3-18

19 Principles invlved in prviding first cnsideratin : The business must use a hiring practice that under usual circumstances wuld result in ver 51 percent f L/M incme persns interviewed fr applicable jbs being hired, The business must seriusly cnsider a sufficient number f L/M incme jb applicants t give reasnable pprtunity t fill the psitin with such a persn, and The distance frm residence and availability f transprtatin t the jb site must be reasnable befre a particular L/M incme persn may be cnsidered a serius applicant fr the jb. Special rules fr retained jbs: In rder t cnsider jbs retained as a result f CDBG assistance, there must be clear and bjective evidence that permanent jbs will be lst withut CDBG assistance. Fr these purpses, clear and bjective evidence that jbs will be lst wuld include: Evidence that the business has issued a ntice t affected emplyees r made a public annuncement t that effect, r Analysis f relevant financial recrds which clearly and cnvincingly shws that the business is likely t have t cut back emplyment in the near future withut the planned interventin. T meet the L/M incme Jbs standard, 51 percent r mre f the retained jbs must be either: Knwn t be held by L/M incme persns at the time CDBG assistance is prvided and/r Jbs nt knwn t be held by L/M incme persns, but which can be reasnably expected t turn ver t L/M incme persns within tw years. (This wuld invlve the grant recipient r business taking actins t ensure that such a jb, upn turnver, will be either taken by r made available t a L/M incme persn in a manner similar t that pertaining t a newly created jb, as discussed abve.) Reference: 24 CFR (b)(4)(ii) Presumed L/M incme status: HCDA Sectin 105(c)(4) prvides that, fr purpses f determining whether a jb is held by r made available t a L/M incme persn, the persn may be presumed t be L/M incme in the fllwing situatins: The persn resides within a census tract (r blck grup) that either: Has at least 70 percent f its residents wh are L/M incme persns r Meets the criteria related t enterprise znes OR Bth the assisted business and the created r retained jb are lcated in a census tract r blck grup that meets the criteria related t enterprise znes. In rder t qualify fr ne f the presumptins referred t abve, the census tract r blck grup must either: State Cmmunity Develpment Blck Grant Prgram Page 3-19