Selection Of A Local Management Structure
Local management of CDBG projects generally takes one of three forms. In some cases the local governing body designates a new or existing public agency and/or public employee to manage the CDBG program. In other instances the locality will contract with a private individual or entity to manage the activities. In still other cases the local government may choose to carry out program activities using both their own public agencies/employees and contractors.
Management by Public Agencies/Employees
When using existing staff or hiring additional public employees, the responsibilities of local officials include ensuring that hiring and employment are consistent with Equal Employment Opportunity requirements of Section 109 of the Housing and Community Development Act of 1974, as amended for all projects, and Section 3 of the Housing and Community Development Act, as amended for projects containing construction, conversion or rehabilitation of housing or other public. See Section V: Civil Rights for more detailed information. Other responsibilities of local officials include complying with various other applicable laws and accurately documenting all costs relating to the project.
Documentation of Equal Employment Opportunity - Generally, when using existing staff or hiring additional staff on the local payroll, the local governing body should ensure that:
- The locality has written personnel and employment policies that specifically prohibit discriminatory practices based on race, national origin, religion, sex, age, or handicaps;
- "Equal Employment Opportunity" is specified in advertisements for new employees;
- Sufficient records are maintained related to persons interviewed and hired with specific data on race, color, national origin, sex, age, and handicaps; and
- Sufficient records are maintained related to training for, promotion of, or compensation to, any individual paid with CDBG administrative funds.
Documentation of Section 3 Employees and Contracts - For projects containing the activities of construction, reconstruction, conversion or rehabilitation of housing, or other public construction which includes buildings or improvements assisted with housing or community development assistance need to report annually.
- For more information regarding grantee and subgrantee responsibilities pertaining to training and employment under the new federal regulations known as "Section 3", please refer to Section V: Civil Rights of this guidebook.
- Section 3 covered contract means a contract or subcontract (including a professional service contract) awarded by a recipient or contractor for work generated by the expenditure of Section 3 covered assistance, or for work arising in connection with a Section 3 covered project.
Documentation of Administrative Costs - When using local employees for CDBG project management, the key is to document All expenditures of Time And Dollars associated with the administrative activities.
Samples of documentation include:
- Employees' time and attendance sheets which indicate the amounts of time allocated for administration of the project;
- Documentation of all other direct expenses (e.g., printing, telephones and advertising); and
- Evidence of an approved cost allocation plan for claiming indirect costs, if applicable.
- See Section II: Financial Management for further guidance.
Management by Private Contractor
When opting to contract for private professional services for project management, the local government is required to follow certain procedures to ensure compliance with applicable standards for procurement of services specified in the Administrative Requirements for the CDBG program. (A copy of the Administrative Requirements is included in Section II: Financial Management of this Guidebook.) The primary local responsibility is to ensure that there is open and fair competition among potential service providers.
Using a procedure known as "Competitive Negotiation" or "Requests for Proposals" (RFP), the grantee prepares an invitation for contractors to submit competitive proposals to provide the desired services. The RFP contains information describing the scope of desired services, the type of payment (e.g., cost reimbursement or fixed price), information that the locality needs from each bidder to make the selection, and the method by which proposals will be evaluated. (A sample RFP is available from state staff upon request.)
Upon selecting the successful candidate, the locality executes a contract that sets forth the specific activities to be performed by the contractor; the amount of compensation the locality will provide the contractor, and other terms and conditions of the contract. (A sample contract for professional services is contained in Section VIII: Labor And Construction Standards, Exhibit VIII-A.)
OEDIT Revolving Loan Funds Only
A grantee is not required to follow procurement procedures when contracting with a non-profit corporation (sub-grantee) to administer revolving loan funds for the grantee.
Housing Projects Only
Program Design
Of all CDBG supported activities, housing projects (particularly housing rehabilitation and/or alternative relocation) place the greatest administrative burden on the local grantee. This is a result of the number of ultimate applicants and beneficiaries and the specific characteristics of each case. Additionally, the local CDBG administrating agency remains constantly involved in the process, from the determination of eligibility requirements, to selection of recipients, to the final inspection of rehabilitation work performed by contractors.
For Division of Housing Revolving Loan Fund (RLF) Policies, Contact your Asset Manager or go to the DOH website.
The Extent Of Administrative Involvement In A Housing Rehabilitation And/Or Relocation Program Can Leave The Administative Unit Open To Criticism Or Questioning from recipients, non-recipients, and contractors performing the work. It is important, therefore, to establish and publish the procedures by which the local program will be conducted.
Before proceeding, please read the Civil Rights section of this guidebook. These laws apply to every phase of your program from hiring staff through awarding funds and selecting contractors. Discrimination of any kind under any circumstances is not permitted, and affirmative actions in minority contracting and fair housing are mandated.
Whether doing rehabilitation grants or loans, acquisition, or relocation, or code enforcement, the grantee must establish written local program guidelines. The program guidelines must be approved by the local governing body. The local program guidelines should contain, at the least, the following elements:
- Program Purpose. A general statement outlining the reasons why the locality has elected to establish a program.
- Designated Authority. Establishes the public agency or third party contractor who will be responsible for administering the local program and outlines the administrator's responsibilities
- Recipient Eligibility Requirements. Establishes a threshold for participation in the program including income limits and geographic boundaries if the program is targeted to specific areas.
Assistance Options. Describes the range of assistance that can be provided with CDBG dollars including grants, loans, loan guarantees, or interest subsidies. - Recipient Application Procedures. Outlines the length of time and the process by which the local agency will receive applications for assistance.
- Selection of Beneficiaries. Outlines the criteria by which the applicants will be selected. There are two major methods of selecting recipients: 1) first come, first served (This is the easiest method, but it is not the most effective way of allocating scarce funds.); or, 2) a priority rating system. Generally, rating systems give priority to the neediest applicant based upon the lowest incomes and with the most serious housing deficiencies. For example, the eligibility and selection determination may be based on the following factors:
- Allowable Rehabilitation Program Expenses. Outlines the range of housing repairs and/or improvements for which CDBG funds may be used. The range or allowable expenses may be written directly into the guidelines or may be referenced.
- Property Rehabilitation Program Standards. States the minimum standards that must be achieved as a result of any CDBG assisted rehabilitation effort. Generally, these are established by local building codes or HUD's Section 8 Housing Quality Standards and Cost Effective Energy Conservation and Effectiveness Standards. For Single Family Housing Rehabilitation, HUD'S Section 8 Housing Quality Standards Will Be Required, As A Minimum Rehabilitation Standard.
- Maximum Assistance Amounts for Rehabilitation and Down payment Assistance Programs. Establishes the maximum amount a single household may receive and describes other dollars that may be leveraged with CDBG funds.
- The extent to which the applicant is below the established income limits;
- The condition of the structure, i.e., extent and urgency to which the grant or loan would be used to eliminate unsafe and unsanitary and overcrowded conditions; and
- Restriction of housing choice, i.e., households with members who are handicapped or disabled, elderly, the single head of household with dependent children and households with four or more dependent children.