CDBG Section 1 - Project Start-Up

Step 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8

There are eight procedural steps which typically precede actual initiation of CDBG project activities.

These steps are considered to be typical.  All eight steps, however, are not necessarily present in all projects. Also, the steps are not intended to be strictly sequential or seperate. In some cases the order of the steps may be altered, and in many cases a number of the steps can be undertaken concurrently.

Step 1: Receipt Of The Award Letter

A letter announcing the award is sent to each successful CDBG program applicant.  This letter specifies the amount of the award, the activity or activities for which the award is being made, and any special conditions or requirements placed on the award.  It also identifies the State staff person whom the grantee should contact in order to initiate contracting procedures.  For OEDIT projects the contract is generally sent with the award letter. Finally, and perhaps most importantly, the award letter cautions the grantee that it cannot begin to incur either administrative or program costs associated with the project until:

1. Completion And Submission Of All Application Documents.  See Project Start-Up Exhibits I below for more detailed information.
2. The Grantee Has Completed An Environmental Review And Funds Have Been Released By The State As Applicable.
3. A contract between the State and the locality is fully and properly executed.  The State cannot reimburse the grantee for expenses incurred prior to the effective date of a contract.  (This date can be found on the signature page of the contract – it is the date the controller signs and fully executes the contract.)  Included in costs that cannot be reimbursed are:  expenditures associated with preparation of the application, including expenditures for architectural, engineering and other professional work performed prior to the effective date of the contract; and costs associated with preparation of the Environmental Review Record which are incurred prior to the effective date of the contract.

Step 2: Completion And Submission Of All Application Documents

The grantee certified that they will comply with all federal and state requirements.  

• Exhibit I-B: Assurances and Certifications (Word download)
• Exhibit I-C: Citizen Participation (Word download)
• Exhibit I-D: Excessive Force (Word download)
• Exhibit I-E: Pre-Public Hearing (Word download)
• Exhibit I-F: Residential Anti-Displacement and Relocation Plan Assistance (Word download)
• Exhibit I-G: Intergovernmental Agreement (if applicable) (Word download)
• Exhibit I-H: Memorandum of Understanding (if applicable) (Word download)
• Exhibit I-J: Project Files Checklist (Word download)

Step 3: Preparation Of The Environmental Review Record

This step is discussed in detail in SECTION IV, Environmental Review, of this Guidebook.

Step 4: Negotiation And Execution Of The Grant Agreement

Following the receipt of the Final award letter, the grantee should contact the Regional Manager/Asset Manager or Business Manager identified in the award letter to initiate contracting procedures.  The grant agreement is a written contract entered into by the State and the local grantee which specifies the responsibilities, authority and benefits of both parties and of subcontractors of the grantee.  

Based on the grantee's application and subsequent negotiations and discussions with the grantee, the Contract Specialist from DOLA prepares the final draft grant agreement for signature by all parties.  The State staff then transmits three copies of the agreement to the grantee for review and signature.  It is recommended that local officials have the municipal/county attorney review the document for accuracy and to ensure that it is consistent with local power and authorities.  Any discrepancies or issues should be raised with the State Project Monitor assigned to the project or with the Contract Specialist.

Following local review and acceptance of the contract, the chief elected official or his/her authorized designee must sign all three copies of the contract and return all three copies to the state.  The State will then execute the agreement and specify the effective date (on the last page of the main body of the grant agreement.)  A fully executed copy of the contract will then be returned to the grantee.

Once an environmental review has been completed and the contract is fully executed by all parties, the grantee can begin to incur costs subject to:

• Limitations And Restrictions Resulting From Federal Environmental Review Requirements; and

• Any Special Conditions (which are identified in the award letter and/or contract).

  This procedural step is not always applicable; however, special conditions are occasionally imposed by State staff.  Any special conditions that may have been established are usually identified in both the award letter and contract.  An example of such a special condition may be a requirement that certain other financial commitments be finalized within certain time frames.  If these special conditions are not met, then the State may withdraw its award.

Step 5: 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.)

Step 6: Identification Of Local Requirements That May Affect Project Implementation

Beyond the State and Federal program requirements outlined in this Guidebook, each grantee may also be subject to local resolutions, laws and rules specific to that jurisdiction.  Prior to the implementation of actual project activities, the locality should review each project element to determine if any local zoning, land use, or other requirements may apply.

Step 7: Addressing Special Federal And State Requirements

The grantee certified at the time of project application that they will comply with all federal and state requirements.  Please refer to Exhibits I in Step 2 above for sample documents.

Intergovernmental Agreement for Multi-Jurisdictional Projects

If two or more municipalities and/or counties are proposing to carry out a "multi-jurisdictional" project, it is required that one of the participating municipalities or counties be authorized by the other participating municipalities and counties to act in a representative capacity for all of the participants.  This designated entity must assume overall responsibility for ensuring that the entire project is carried out in accordance with all program requirements.  This overall responsibility and any related individual responsibilities must be specified in a legally binding cooperation agreement between the designated entity and all other directly participating municipalities and counties.  (A sample of an intergovernmental agreement is contained in Exhibit I-G in Step 2 above.)

Each participating jurisdiction, to meet the requirements of Title 42, Chapter 69, 5306(d)(5)(A-D) of the Act, must comply with:  Displacement, Fair Housing, Citizen Participation, Civil Rights and Section 504 (described in the Civil Rights Section of this manual) and regulations pertaining to special assessments.

Memorandum of Understanding

A memorandum of understanding (MOU) is a document describing a bilateral or multilateral agreement between two or more parties. It expresses a convergence of will between the parties, indicating an intended common line of action.  (A sample of a memorandum of understanding is contained in Exhibit I-H in Step 2 above.)

Local Determinations

(Does not typically apply to RLF's)

Additionally, Federal CDBG law and regulations require certain local determinations in the case of certain activities as a condition for eligibility of such activities.  Specifically, cases in which local determinations are required and Must Be Documented include:  

• Preparation Of Applications For Other Federal Programs.  This activity is eligible if the grantee "determines that such activities are NECESSARY OR APPROPRIATE to achieve its community development objectives." 
• Relocation Payments And Assistance Not Required By Or Above Those Required By The Uniform Act (unless such payments or assistance are made pursuant to State or local law).  Such activities are eligible "only upon the basis of a written determination that such payments are Appropriate."
• Loans For Refinancing Existing Indebtedness Secured By A Property Rehabilitated With CDBG Funds.  Such loans are eligible "if such financing is Necessary Or Appropriate to achieve the (grantee's) community development objectives."
• Interim Repair Of Public Facilities And Provision Of Special Public Services.  Such activities may be undertaken on an interim basis in areas exhibiting objectively determinable signs of physical deterioration where "the grantee has determined that Immediate Action Is Necessary to arrest deterioration and those permanent improvements will be carried out as soon as is practicable."
• Activities Carried Out By Subrecipients When Such Activities Are Not Otherwise Eligible Activities.  An example is construction of new housing which is generally an ineligible activity.  Such activities are eligible when the grantee "determines that such activities are Necessary Or Appropriate to achieve its community development objectives."

The grantee's documentation regarding the determination should include the basis for the determination.

Step 8: Establishing A Record Keeping / Data Collection System

The State has established uniform record keeping requirements for local governments receiving funds under the State CDBG program (24 CFR Part 570). See Exhibit I-A above for details. We suggest the grantee establish separate files for each of the major compliance areas. These files will be required in all instances for Items A through E below.  Some projects, e.g. construction, will also be required to establish and maintain separate files for Items F thought H, as applicable. See Exhibit I-K: Project Files Checklist above.

1. Contract
2. Project Start-up
3. Financial Management and Reporting
4. Environmental
5. Civil Rights
6. Labor Standards (if applicable)
7. Acquisition and Replacement (if applicable)
8. Relocation (if applicable)

The lists of required records for each compliance areas are contained in the exhibits for each of those respective sections of this Guidebook.

The checklists that state staff will use for monitoring compliance with national objectives, eligibility, and start-up/certification requirements are contained in Section X: DOLA CDBG Monitoring Checklist.