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(v) The applicant has attached or enclosed any comments or recommendations made by or through State and areawide clearinghouses or has stated that no comments or recommendations have been received within the 45-day review period.

(2) If the application is accepted in accordance with the preceding paragraph, the date of acceptance of the application will be the date of receipt of the application in the HUD field office, and the applicant will be so notified in writing. If the application is not accepted for review, the applicant will be so notified in writing, and will be advised of the specific reasons for nonacceptance.

(b) Scope of review. (1) The Secretary will normally base his review upon the applicant's certifications, statements of facts and data and other programmatic decisions. The Secretary reserves the right, however to consider substantial evidence which contradicts or challenges the certifications, or significant facts and data, in accordance with the review criteria in this section and to require additional information or assurances from the applicant as warranted by such evidence.

(2) Based on that review, the Secretary will approve the application unless:

(i) On the basis of significant facts and data, generally available (whether published data accessible to both the applicant and the Secretary, such as census data, or other data available to both the applicant and the Secretary, such as recent local, areawide or State comprehensive planning data) and pertaining to community and housing needs and objectives, the Secretary determines that the applicant's description of such needs and objectives is plainly inconsistent with such facts or data, or

(ii) On the basis of the application, the Secretary determines that the activities to be undertaken are plainly inappropriate to meeting the needs and objectives identified by the applicant, or

(iii) The Secretary determines that the application does not comply with the requirements of this part or other applicable Federal laws, or proposes activities which are ineligible under this part.

(c) Approval or disapproval of application. Within seventy-five days of the date of receipt of the application, or at such earlier time as review is completed, the Secretary will notify the applicant

in writing that the application has been approved, partially approved, or disapproved. In the event the Secretary has not mailed a notification to the applicant within seventy-five days from the date of acceptance of the application that it has been disapproved, the application shall be deemed to be approved. If the application is disapproved, the applicant shall be informed of the specific reasons for disapproval.

(d) Approval of less than full entitlement. The Secretary may adjust the entitlement amount to the extent identified in an application submitted under this part designated for an activity or activities that are not eligible under § 570.200, and the deficiency has not been corrected prior to the expiration of the 75-day review period for the application. Funds not approved under the preceding sentence will be reallocated pursuant to § 570.107.

(e) Conditional approval. The Secretary may make a conditional approval, in which case the full entitlement amount will be approved but the utilization of funds for affected activities will be restricted. Conditional approvals may be made only where local environmental reviews under § 570.604 have not yet been completed, where the requirements of § 570.607 regarding the provision of public services or flood or drainage facilities have not yet been satisfied, or where the provisions of § 570.802 are exercised.

Subpart E-Applications and Criteria for Discretionary Grants

SOURCE: 40 FR 5952, Feb. 7, 1975, unless otherwise noted.

§ 570.400 General.

(a) Applicability of rules and regulations. The policies and procedures set forth in Subpart A, B, C, F, G, H, I, and J of this Part shall apply to this subpart and to the funds described in § 570.104, except to the extent that they are specifically modified or augmented by the contents of this subpart, including specified exemptions described herein. The HUD Environmental Review Procedures contained in 24 CFR Part 58 also apply to this subpart, unless otherwise specifically provided herein.

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Fiscal Year 1975, a full application that was not preceded by a preapplication will nevertheless be considered without prejudice by HUD. The purpose of the preapplication is basically: (1) To determine how well the application compares with similar applications from other jurisdictions, and (2) to discourage applications which have little or no chance for Federal funding before applicants incur significant expenditures for preparing an application.

(i) Submission requirements. Preapplications shall be submitted on HUD forms to the appropriate HUD Area Office. The preapplication shall consist of a brief description of the applicant's community development needs, the activities proposed to meet those needs, and the general location and estimated cost of the proposed activities. The applicant's statement shall address the specific criteria under which it requests priority consideration for funding under § 570.402(b).

(ii) HUD review of preapplications. HUD will review preapplications based upon the appropriate criteria set forth in this subpart, to determine how well an application is likely to compete with other applications for the same discretionary funds submitted by other jurisdictions. Applicants will be advised of HUD's determinations and judgments on the preapplication, and of the availability of funds for that particular fiscal year. Notwithstanding the nature of such advice, any eligible applicant may submit an application under the provisions of this subpart.

(3) Preapplication submission dates. The Secretary will establish from time to time the earliest and latest dates for submission of preapplications for each fiscal year. For Fiscal Year 1975, the earliest date for submission of a preapplication shall be January 1, 1975; the latest date shall be March 1, 1975.

(c) Applications—(1) Submission requirements. Applications shall be submitted on HUD forms to the appropriate HUD Area Office. Specific submission requirements are contained in the following sections of this subpart which describe each discretionary fund. To the maximum extent possible, and with the prior concurrence of the Secretary, documentation submitted in support of an application previously submitted for funding under this part will be accepted and need not be resubmitted with an application for a discretionary grant.

(2) Scope of application. An application may include any number of eligible activities up to the maximum dollar amount established by the Secretary for applications submitted under this subpart. An application may be for any reasonable period of time necessary to complete the proposed activities. For new activities to be carried out with a discretionary grant the applicant shall apply for discretionary funds in an amount which, along with any other resources that may be available, will be adequate to complete the activities. While a recipient remains eligible for discretionary grant funding in subsequent years, an applicant shall not assume that additional funding will be available in subsequent years to continue or expand activities. An application may not, however, be only for planning purposes, as defined in § 570.200 (a) (12).

(3) Application submission dates. The Secretary will establish from time to time the earliest and latest dates for submission of applications for discretionary grants for each fiscal year. For Fiscal Year 1975 the earliest and latest dates shall be as follows:

(i) General purpose funds for metropolitan and nonmetropolitan areasMarch 15, 1975 through May 15, 1975;

(ii) Urgent needs fund-January 1, 1975 through May 15, 1975;

(iii) Secretary's fund:

(A) New communities--February 1, 1975 through May 15, 1975;

(B) Areawide projects-reserved; (C) Guam, the Virgin Islands, American Samoa, and the Trust Territory of the Pacific Islands-February 1, 1975 through May 15, 1975;

(D) Innovative projects-February 1, 1975 through April 20, 1975;

(E) Federally recognized disastersJanuary 1, 1975 through June 30, 1975; and

(F) Inequities-February through May 15, 1975.

1, 1975

(d) Meeting the Requirements of OMB Circular No. A-95- (1) Preapplications. Applicants must comply with the procedures set forth in OMB Circular No. A-95 which include the requirements of paragraph 7, Part I, for submission of a preapplication to the appropriate State and areawide clearinghouses at the same time that it is submitted to HUD. Although HUD has up to 45 days to respond to a preapplication, the Department expects

health and safety or to avert or lessen the threat of a major disaster, or (2) in the determination of a Federal agency requires disaster or emergency assistance pursuant to the statutory authority of such Federal agency.

(b) Eligible Applicants. Eligible applicants are States, and units of general local government as defined in § 570.3 (v). For the purpose of this section, the second sentence in § 570.3(v) includes those entities described in § 570.403 (b) (1), (2) and (3).

(c) Criteria for Funding. Within the limits of available funds, applications will be funded on the basis of the following criteria:

(1) Severity and magnitude of the federally recognized disaster, with priority given to needs caused by Presidentially declared major disasters.

(2) Community development needs identified which are essential for the immediate restoration or maintenance of community health, safety, or economic stability and resources are not available from other sources to meet these community development needs in a timely fashion.

(d) Application Requirements. An application should be submitted within 120 days after either the Presidential declaration or other Federal recognition that disaster or emergency assistance is required. The application shall describe the emergency needs, the proposed program of activities, sources of funds and the level of funding requested. If the emergency nature of the needs requires, satisfaction of selected application requirements may be postponed or waived by the Secretary. Applications shall be submitted to the appropriate HUD Area Office in a form and manner prescribed by HUD to ensure coordination with respect to other disaster relief and emergency measures undertaken or being considered.

§ 570.408 Inequities funds.

(a) General. Funds are available under this subpart to correct in whole or in part inequities resulting from the allocation provisions of Section 106 of the Act.

(b) Eligible applicants. Eligible applicants are States, and units of general local government as defined in the first sentence of § 570.3 (v) or in § 570.403(a).

(c) Criteria for selection. The Secretary shall make grants to eligible appli

cants, giving priority to the following: Applications for funds available under this subpart shall be reviewed by the Secretary in accordance with the following criteria:

(1) Funding under this subpart is necessary to correct a technical error in the computation of a locality's entitlement amount.

(2) Funding under this subpart is needed by an applicant, meeting the criteria as specified in § 570.401(b) for urgent needs funds.

(3) Funding under this subpart is necessary to compensate for the fact that the applicant's hold harmless amount as calculated pursuant to § 570.103 (c) is significantly lower than the average amount of funds approved by HUD for applicable programs in such governmental unit during the fiscal years immediately preceding and immediately following the base period of Fiscal Years 1968 through 1972, and the applicant is subject to the phase-in provisions of $ 570.102(c).

Grants may also be made under this section whenever implementation of the provisions of § 570.105 regarding the qualification of urban counties results in a significant decrease in the anticipated levels of funding available for discretionary grants in metropolitan areas in accordance with § 570.104(c) (1).

(d) Application requirements. Applicants shall meet all application requirements in § 570.303.

Subpart F-Grant Administration § 570.500 Designation of public agency.

One or more public agencies, including existing local public agencies, may be designated by the governor of a State or the chief executive officer of a unit of general local government to undertake a Community Development Program in whole or in part. Notwithstanding such designations, the State or unit of general local government shall be the applicant, and, in the absence of special circumstances in which there is a legal incapacity on the part of the applicant to accept funds for eligible activities, the grant agreement shall be between HUD and the State or unit of general local government. Such designations do not relieve the State or unit of general local government of its responsibilities in assuring the administration of the program in accordance with all HUD requirements, including these regulations.

§ 570.501 Grant agreement.

Upon approval of the application, the Secretary will authorize the execution of a grant agreement. These regulations become a part of the grant agreement. § 570.502 Method of payment.

(a) Advance payments. Advance payments will be made by either a letter of credit or by U.S. Treasury checks to recipients when the following conditions are met:

(1) The recipient has demonstrated to the Secretary, initially through certification in a form prescribed by HUD and subsequently through performance, its willingness and ability to establish procedures that will minimize the time elapsing between the transfer of funds to it and its disbursement of such funds;

(2) The recipient's financial management system meets the standards for fund control and accountability prescribed in Appendix G of Federal Management Circular 74-7.

(b) Reimbursement. Recipients which do not meet the above conditions will receive grant payments by U.S. Treasury checks on a reimbursement basis.

§ 570.503 Disbursement of advances against entitlement.

Advances against entitlement made available pursuant to § 570.302 will be made through the same disbursement method as is appropriate for the recipient during the first program year. § 570.504 Release of funds pursuant to § 570.603 and § 570.607.

Recipients may spend funds for projects requiring environmental review pursuant to § 570.603, and for public services activities or for flood and drainage facilities for which other Federal funds must be sought pursuant to § 570.607, only after notification to HUD that the requirements of these sections have been met and receipt of authorization to spend funds for affected activities. If recipients receive funds through a letter of credit, the letter of credit shall, at the time of approval of the application, be in the amount of all grant funds approved in the application including those portions subject to the environmental review provisions of § 570.603, the requirements of § 570.607 regarding activities for which other Federal funds must be sought, and the provisions of Subpart I. However, these provisions must be sat

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Each recipient shall be required to maintain a financial management system which complies with Appendix G of Federal Management Circular 74-7, "Standards for Grantee Financial Management Systems" or use the existing facilities of a constituent municipal, county or State government (or unit thereof) to perform the necessary fiscal and accounting functions for the grantee.

§ 570.506 Program income.

(a) Units of general local government shall be required to return to the Federal Government interest (except for interest described in paragraph (c) of this section) earned on grant funds advanced by Treasury check or letter of credit in accordance with Appendix E of Federal Management Circular 74-7. (b) Proceeds from the sale of personal property shall be handled in accordance with Appendix N of Federal Management Circular 74-7 pertaining to Property Management,

(c) All other program income earned during the grant period, including proceeds from the disposition of real property, payments of principal and interest on rehabilitation loans, and interest earned on revolving funds, shall be retained by the recipient and in accordance with the grant agreement, shall be added to funds committed to the program and be used in accordance with the provisions of this part.

(d) Recipients shall record the receipt and expenditure of revenues related to the program (such as taxes, special assessment, levies, fines, etc.) as a part of the grant program transactions. § 570.507 Procurement standards.

Recipients shall comply with the requirements of Appendix O of Federal Management Circular 74-7, "Procurement Standards."

§ 570.508 Bonding and insurance.

Recipients shall comply with the requirements of Appendix B of Federal Management Circular 74-7, "Bonding and Insurance."

§ 570.509 Audit.

(a) The Secretary, the Comptroller General of the United States, or any of

their duly authorized representatives, shall have access to all books, accounts, records, reports, files, and other papers or property of recipients or their subgrantees and contractors pertaining to funds provided under this Part for the purpose of making surveys, audits, examinations, excerpts and transcripts.

(b) Recipient financial management systems shall provide for audits to be made by the recipient or at his direction to determine, at a minimum, the fiscal integrity of financial transactions and reports, and the compliance with laws, regulations and administrative requirements. The recipient will schedule such audits with reasonable frequency, usually annually, but not less frequently than once every two years, considering the nature, size, and complexity of the activity. Audits performed by, or at the direction of recipients, for activities funded under this Part may be paid for from community development block grants, but the responsibility for payment of these audits rests with the recipient.

(c) The Secretary shall, at least on an annual basis, audit or arrange for the audit of recipients as appropriate. The results of audits made by recipients which follow criteria prescribed by the Secretary will be given full consideration in determining the frequency and scope of audits by the Secretary. § 570.510 Retention of records.

Financial records, supporting documents, statistical records, and all other records pertinent to the grant program shall be retained by the recipient for a period of three years from the date of the submission of the annual performance report, except as follows:

(a) Records that are the subject of audit findings shall be retained for three years after such findings have been resolved.

(b) Records for nonexpendable property which was acquired with Federal grant funds shall be retained for three years after its final disposition.

(c) Records for any displaced person shall be retained for three years after he has received final payment. § 570.511

HUD administrative services for rehabilitation loans and grants. [Reserved]

§ 570.512 Grant close out procedures. [Reserved]

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(a) Discrimination prohibited. Section 109 of the Housing and Community Development Act of 1974 requires that no person in the United States shall on the ground of race, color, national origin or sex, 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 community development funds made available pursuant to this Part. For purposes of this section "program or activity" is defined as any function conducted by an identifiable administrative unit of the recipient, or by any unit of government or private contractor receiving community development funds or loans from the recipient. "Funded in whole or in part with community development funds" means that community development funds in any amount in the form of grants or proceeds from HUD guaranteed loans have been transferred by the recipient to an identifiable administrative unit and disbursed in a program or activity.

(b) Specific discriminatory actions prohibited. (1) A recipient may not, under any program or activity to which the regulations of this part may apply, directly or through contractual or other arrangements, on the ground of race, color, national origin, or sex:

(i) Deny any facilities, services, financial aid or other benefits provided under the program or activity.

(ii) Provide any facilities, services, financial aid or other benefits which are different, or are provided in a different form from that provided to others under the program or activity.

(iii) Subject to segregated or separate treatment in any facility in, or in any matter or process related to receipt of any service or benefit under the program or activity.

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