[Federal Register Volume 59, Number 102 (Friday, May 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13104]


[[Page Unknown]]

[Federal Register: May 27, 1994]


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Part V





Department of Housing and Urban Development





_______________________________________________________________________




Funding Availability for the HUD-Administered Small Cities Community 
Development Block Grant (CDBG) Program, Fiscal Year 1994; Notice
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Community Planning and 
Development
[Docket No. N-94-3766; FR 3723-N-01]

 
Funding Availability for the HUD-Administered Small Cities 
Community Development Block Grant (CDBG) Program--Fiscal Year 1994

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice of Funding Availability (NOFA) for Fiscal Year (FY) 
1994.

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SUMMARY: This Notice of Funding Availability (NOFA) announces the 
availability of $50,616,000 in FY 1994 funding for the HUD-administered 
Small Cities Program in New York State under the Community Development 
Block Grant (CDBG) Program. The NOFA contains information concerning 
the deadline for filing grant applications; eligibility of applicants; 
available amounts; selection criteria; and the application process, 
including how to apply for funding and how selections will be made.

DATES: Applications are due by July 26, 1994. Application kits may be 
obtained from and must be submitted to either HUD's New York or Buffalo 
Office. Applications, if mailed, must be postmarked no later than 
midnight on July 26, 1994. If an application is hand-delivered to the 
New York or the Buffalo Office, the application must be delivered to 
the appropriate office by no later than 4 p.m. on the deadline date. 
Application kits will be made available by a date that affords 
applicants no fewer than 30 days to respond to this NOFA. For further 
information on obtaining and submitting applications, please see 
Section II of this NOFA.
    The above-stated application deadline is firm as to date and hour. 
In the interest of fairness to all competing applicants, the Department 
will treat as ineligible for consideration any application that is not 
received by 4 p.m. on, or postmarked by, July 26, 1994. Applicants 
should take this procedure into account and make early submission of 
their materials to avoid any risk of loss of eligibility brought about 
by unanticipated delays or other delivery-related problems.

FOR FURTHER INFORMATION CONTACT: Stephen Rhodeside, State and Small 
Cities Division, Office of Community Planning and Development, 
Department of Housing and Urban Development, room 7184, 451 Seventh 
Street SW., Washington, DC 20410. Telephone (202) 708-1322 (voice) or 
(202) 708-2565 (TDD). (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act Statement

    The information collection requirements related to this CDBG 
program have been approved by the Office of Management and Budget (OMB) 
and have been assigned OMB approval number 2506-0020.

Contents

I. Purpose and Substantive Description

A. Authority and Background

1. Authority
2. Background
3. Statutory Changes
    a. Principal Benefit Certification
    b. Program Income
    c. Microenterprises and Small Business Development
    d. Lump Sum Drawdowns
    e. Eligible Activities
    (1) Changes Affecting Existing Categories
    (a) Assistance to For-Profit Businesses
    (b) Direct Homeownership Assistance
    (c) Code Enforcement
    (d) Loans to Subrecipients
    (e) Public Service Cap
    (f) Neighborhood-Based Nonprofit Organizations
    (2) New Categories of Eligibility
    (a) Nonprofit Capacity Building
    (b) Institutions of Higher Education
    (c) Acquisition by Tax Foreclosure
    (d) Microenterprises
    (e) Housing Services
    (f) Lead-Based Paint
    (3) Changes Concerning National Objectives
    (a) Low/Mod Jobs Presumption
    f. Housing Strategies
    g. Section 3
4. Accountability in the Provision of HUD Assistance
    a. HUD Responsibilities
    (1) Documentation and Public Access
    (2) Disclosures
    b. Units of Local Government Responsibilities
    (1) Disclosures
    (2) Documentation and Public Access
    (3) Disclosures

B. Allocation Amounts

1. Total Available Funding and Allocations
    a. Buffalo Office
    b. New York Office
2. Distribution of Funds Between Single Purpose and Comprehensive 
Grants
3. Imminent Threats

C. Eligibility

1. Eligible Applicants
2. Previous Grantees
3. Eligible Activities and National Objectives
4. Environmental Review Requirements

D. Types of Grants

1. Comprehensive Grants
    a. General
    b. Funding Requirements
2. Single Purpose Grants
    a. General
    b. Funding Requirements
    c. Projects with Multiple Activities
    d. Applications with Multiple Projects
3. Final Selection

E. Selection Criteria/Ranking Factors

1. General
2. Performance Evaluation
    a. Community Development Activities
    b. Compliance with Applicable Laws and Regulations
    c. Performance Assessment Reports
3. Four Factor Rating
    a. Need--Absolute Number of Persons in Poverty
    b. Need--Percent of Persons in Poverty
    c. Program Impact--General
    (1) Program Impact--Single Purpose Grants
    (a) Program Impact--Single Purpose--Housing
    (i) Housing Rehabilitation
    (ii) Creation of New Housing
    (iii) Direct Homeownership Assistance
    (b) Program Impact--Single Purpose--Public Facilities Affecting 
the Public Health and Safety
    (c) Program Impact--Single Purpose--Economic Development
    (i) The Appropriate Determination
    (ii) CDBG Assistance Must Minimize Business and Job Displacement
    (iii) Section 105(a)(17) requirements
    (iv) National Objectives
    (v) Application Requirements
    (vi) Review Criteria
    (vii) Scoring
    (2) Program Impact--Comprehensive Program Grants
    (a) Criterion 1
    (b) Criterion 2
    (c) Criterion 3
    (d) Criterion 4
    (e) Criterion 5
    (f) Criterion 6
    (g) Criterion 7
    (h) Criterion 8
    (i) Criterion 9
    (j) Criterion 10
    d. Fair Housing and Equal Opportunity Evaluation
    (1) Housing Achievements
    (a) Provision of Assisted Housing
    (b) Implementation of HUD-Approved New Horizons Fair Housing 
Assistance Project or a Fair Housing Strategy Equivalent in Scope to 
a New Horizons Project
    (2) Entrepreneurial Efforts and Local Equal Opportunity 
Performance
    (a) Minority Contracting
    (b) Equal Opportunity Employment

II. Application and Funding Award Process

A. Obtaining Applications
B. Submitting Applications
C. The Application
D. Funding Award Process

III. Technical Assistance

IV. Checklist of Application Submission Requirements

V. Corrections to Deficient Applications

VI. Other Matters

I. Purpose and Substantive Description

A. Authority and Background

1. Authority
    Title I, Housing and Community Development Act of 1974 (42 U.S.C. 
5301-5320); 24 CFR part 570, subpart F.
2. Background
    Title I of the Housing and Community Development Act of 1974 
authorizes the Community Development Block Grant (CDBG) Program. 
Section 106 of Title I permits the States to elect to assume the 
administrative responsibility for the CDBG Program for nonentitled 
areas within their jurisdiction. Section 106 provides that HUD will 
administer the CDBG Program for nonentitled areas within any State that 
does not elect to assume the administrative responsibility for the 
program. Subpart F of 24 CFR part 570 sets out the requirements for 
HUD's administration of the CDBG Program in nonentitled areas (Small 
Cities Program). This NOFA supplements subpart F of 24 CFR part 570, 
which sets out the requirements applicable to the CDBG Program in 
nonentitled areas.
    In accordance with 24 CFR 570.420(e) and 570.420(h)(3), and with 
the requirements of section 102 of the Housing and Urban Development 
Reform Act of 1989 (HUD Reform Act), HUD is issuing this NOFA for New 
York State's Small Cities Program for Fiscal Year (FY) 1994 to announce 
the allocation of funds for Single Purpose and Comprehensive grants, 
and to establish the deadline for filing grant applications. The NOFA 
explains how HUD will apply the regulatory threshold requirements for 
funding eligibility, and the selection criteria for rating and scoring 
applications for Comprehensive grants and for scoring projects in 
applications for Single Purpose grants.
    Section I.A.3 of this NOFA provides a description of certain 
statutory amendments that apply to the HUD-Administered Small Cities 
Program, even though conforming regulations have not yet been adopted. 
The statutory amendments listed in Section I.A.3 require little or no 
regulatory elaboration. Conforming amendments will be made to 24 CFR 
part 570, subpart F in future rulemaking. Other information about the 
Small Cities Program will be provided in the application kit, which 
will be made available to applicants by HUD's New York and Buffalo 
Offices.
3. Statutory Changes
    Both the National Affordable Housing Act (Pub. L. 101-625, approved 
November 28, 1990) (NAHA) and the Housing and Community Development Act 
of 1992 (Pub. L. 102-550, approved October 28, 1992) (the 1992 Act) 
amended Title I of the Housing and Community Development Act of 1974 
(the HCD Act). Various amendments made by the two recent statutes are 
applicable, as described below, to the funds made available under this 
NOFA.
    a. Principal Benefit Certification. NAHA amended section 101(c) of 
the HCD Act to require that at least 70 percent of the CDBG assistance 
provided over a specified period must be used for activities that 
principally benefit low- and moderate-income persons. Applicants must 
certify that CDBG assistance will be used as required by the amended 
section 101(c). The principal benefit certification has been revised to 
incorporate this change from 60 percent to 70 percent.
    b. Program Income. In determining the applicability of CDBG 
requirements to the use of program income, section 804 of the 1992 Act 
removes any consideration of whether the grantee is still participating 
in the CDBG program. This means that program income generated from 
projects funded in FY 1993 and thereafter will always be subject to all 
of the CDBG requirements.
    c. Microenterprise and Small Business Development. Section 807(c) 
of the 1992 Act defines a ``small business'' as one that meets the 
criteria set forth in section 3(a) of the Small Business Act (15 U.S.C. 
632(a)), and defines a ``microenterprise'' as a commercial enterprise 
having five or fewer employees, one or more of whom own the enterprise.
    Additionally, section 807(c) of the 1992 Act provides that in the 
provision of assistance under Sec. 570.203(b) to for-profit 
microenterprises and small businesses, HUD will not consider the use of 
CDBG funds for training, technical assistance, and other support costs 
provided to such entities to be planning or administrative costs.
    (Section 807(c) also directs HUD not to consider CDBG funds as 
being used for a planning or administrative activity when the funds are 
used to pay costs to develop the capacity of the grantee (or a 
subrecipient) to provide training, technical assistance or other 
support services to small businesses or microenterprises. 
Consequently--since these activities are not to be considered as 
planning or administrative activities--they are subject to compliance 
with the national objective requirements.)
    d. Lump Sum Drawdowns. The use of lump sum drawdowns for 
residential rehabilitation has been re-authorized for CDBG funds 
appropriated after Fiscal Year 1992.
    e. Eligible Activities--(1) Changes Affecting Existing Categories--
(a) Assistance to For-Profit Businesses. Section 806(b) of the 1992 Act 
amends section 105(a) of the HCD Act so that CDBG assistance provided 
to for-profit businesses is not limited to activities for which no 
other forms of assistance are available, or to activities that could 
not be accomplished, but for that assistance.
    (b) Direct Homeownership Assistance. NAHA amended section 105(a) of 
the HCD Act to provide that CDBG funds can be used to provide direct 
assistance to facilitate and expand homeownership among persons of low- 
and moderate-income. Under this provision, CDBG funds may be used to: 
subsidize interest rates and mortgage principal amounts for low- and 
moderate-income homebuyers; finance the acquisition by low- and 
moderate-income homebuyers of housing that is occupied by the 
homebuyers; acquire guarantees for mortgage financing obtained by low- 
and moderate-income homebuyers from private lenders (except that 
assistance under Title I of the HCD Act may not be used by recipients 
or subrecipients to guarantee mortgage financing directly); provide up 
to 50 percent of the downpayment required from low- and moderate-income 
buyers; and pay reasonable closing costs normally associated with the 
purchase of a home incurred by a low- and moderate-income homebuyer. 
While this provision was set to expire on October 1, 1993, it has been 
extended to October 1, 1994 by section 807(b) of the 1992 Act. Under 
the terms of this provision, the locality must commit funds to a 
specific homeowner prior to October 1, 1994. It is extremely likely 
that this provision will be extended until October 1, 1995. 
Applications will be rated assuming that the extension will be granted.
    (c) Code Enforcement. Section 807(e) of the 1992 Act adds ``private 
improvements or services'' undertaken in an area to the list of 
activities that may be considered, together with code enforcement, in 
determining whether CDBG funds may be used to pay for the code 
enforcement in an area.
    (d) Loans to Subrecipients. Section 807(d) of the 1992 Act amends 
section 105(a)(14) of the HCD Act to authorize the use of CDBG 
assistance for activities in the form of loans--both interim and long-
term--as well as grants.
    (e) Public Service Cap. NAHA amended section 105(a)(8) of the HCD 
Act by placing the 15 percent cap for public services on each State's 
total nonentitlement CDBG allocation, plus 15 percent of program income 
anticipated to be received in the fiscal year. (Previously, the 15 
percent cap for public services was applied to each recipient's grant.) 
As a result of this provision, HUD may award a grant to a recipient for 
public service activities with 100 percent of the funds spent for 
public service activities. However, any application requesting funds 
for public service activities must be ratable under one of the existing 
Single Purpose or the Comprehensive grant categories. HUD will apply 
the 15 percent statewide cap to public service activities by funding 
public service activities in the highest-rated applications until the 
cap is reached.
    (f) Neighborhood-Based Nonprofit Organizations. Section 807(f) of 
the 1992 Act amends section 105(a)(15) of the HCD Act to add nonprofit 
organizations serving the development needs of communities in 
nonentitlement areas as entities eligible to carry out CDBG activities.
    (2) New Categories of Eligible Activities--(a) Nonprofit Capacity 
Building. Section 807(a)(4) makes eligible the provision of technical 
assistance to public or nonprofit entities to increase the capacity of 
these entities to carry out eligible neighborhood revitalization or 
economic development activities. Section 807(a)(4) makes clear, 
however, that the use of funds for technical assistance is not to be 
considered as a planning or administrative cost of the program. Before 
the amendment, the use of CDBG funds for nonprofit capacity building 
was an eligible activity only under Sec. 570.205, and therefore was 
subject to the cap on planning and administration set out at 
Sec. 570.200(g). While nonprofit capacity building is now eligible 
under the new provision and is not subject to a percentage limitation, 
it should be noted that any such use of funds under the new authority 
must be shown to meet one of the national objectives. (This may be 
difficult in some cases, since all activities carried out by the 
nonprofit using the added capacity will need to be considered for that 
purpose.)
    (b) Institutions of Higher Education. Section 807(a)(4) of the 1992 
Act makes it possible for a grantee to provide CDBG funds to 
institutions of higher education to carry out activities otherwise 
eligible for CDBG assistance, provided that it can be determined that 
the institution has demonstrated a capability to carry out such 
activities.
    (c) Acquisition by Tax Foreclosure. Section 807(a)(4) of the 1992 
Act makes eligible the use of CDBG funds to make essential repairs and 
to pay operating expenses necessary to maintain the habitability of 
housing units acquired through tax foreclosure proceedings in order to 
prevent abandonment and deterioration of housing in primarily low- and 
moderate-income neighborhoods.
    (d) Microenterprises. Section 807(a)(4) of the 1992 Act establishes 
a new category of eligibility under which CDBG funds may be used to 
provide assistance to public and private organizations, agencies, and 
other entities (including nonprofit and for-profit entities) to enable 
these entities to facilitate economic development by:

  Providing credit (including providing direct loans and loan 
guarantees, establishing revolving loan funds, and facilitating peer 
lending programs) for the establishment, stabilization, and expansion 
of microenterprises;
  Providing technical assistance, advice, and business support 
services (including assistance, advice, and support relating to 
developing business plans, securing funding, conducting marketing, and 
otherwise engaging in microenterprise activities) to owners of 
microenterprises and persons developing microenterprises; and
  Providing general support (such as peer support programs and 
counseling) to the owners of microenterprises and to persons developing 
microenterprises.
    (e) Housing Services. Section 807(a)(4) of the 1992 Act establishes 
a new category of eligibility for ``housing services''. Housing 
services include housing counseling, energy auditing, preparation of 
work specifications, loan processing, inspections, tenant selection, 
management of tenant-based rental assistance, and other services 
related to assisting owners, tenants, contractors, and other entities, 
participating or seeking to participate in housing activities 
authorized under the CDBG program or the HOME program. Activities that 
are carried out under this provision are to be subject to the 20 
percent limitation on administrative expenses.
    It is important to note that these activities are currently 
eligible in the CDBG program when carried out in conjunction with 
rehabilitation (see 24 CFR 570.202(b)(9)), and therefore not subject to 
the administrative cap on expenditures.
    (f) Lead-Based Paint Hazards. Section 1012 of the 1992 Act amends 
section 105(a) by stating that CDBG funds may be used for lead-based 
paint hazard evaluation and reduction, as defined in section 1004 of 
the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 
U.S.C. 4851). It should be noted that Sec. 570.202(a)(iv) currently 
authorizes inspection and abatement of lead-based paint in conjunction 
with CDBG-assisted rehabilitation. Additionally, Sec. 570.205 
authorizes evaluation of lead-based paint hazards within the 
jurisdiction generally. Until the regulations are modified to 
incorporate this new provision, grantees may use the new authority to 
fund lead-based paint inspection of houses whether or not 
rehabilitation of the houses will be CDBG-funded. The new authority may 
also be used to fund large scale evaluation of lead based-paint hazards 
in the community (assuming that it is an approved activity in the Small 
Cities application), outside of the 20 percent limitation on planning 
and administration cost, if the grantee can demonstrate that the 
evaluation addresses a CDBG national objective.
    (3) Changes concerning national objectives--(a) Low/mod jobs 
presumption. Section 806(e) of the 1992 Act amends section 105(c) of 
the HCD Act by adding a new paragraph (4) which states that, for 
purposes of determining whether an activity involves the employment of 
persons the majority of whom are low- and moderate-income persons, a 
person may be presumed to be a low- and moderate-income person in 
either of the following circumstances:

 If the employee resides in, or the assisted activity through 
which he or she is employed, is located in a census tract that meets 
the Federal enterprise zone eligibility criteria; or
 The employee resides in a census tract where not less than 70 
percent of the residents are low- and moderate-income persons.

The provision of new paragraph (4) concerning the percentage of low- 
and moderate-income persons residing in a census tract was effective 
upon enactment. However, because existing HUD regulations do not 
clearly apply enterprise zone criteria to census tracts, the portion of 
new paragraph (4) concerning census tracts that meet the Federal 
enterprise zone eligibility criteria will not become effective until 
regulations are established identifying the specific criteria that must 
be met.
    f. Housing Strategies. Any applicant which plans to undertake a 
housing activity with Fiscal Year 1994 funds under the HUD-administered 
Small Cities Program must prepare and submit a comprehensive housing 
affordability strategy (CHAS) to be eligible to apply for such 
assistance. In order to receive funding if the Small Cities application 
is approved, the housing strategy must be approved by HUD. Further, any 
Small Cities application for which a housing strategy is required must 
include a certification that the application is consistent with the 
housing strategy.
    Current CHAS regulations were published in the Federal Register on 
September 1, 1992, at 57 FR 40038, as amended, in part, on March 12, 
1993 at 58 FR 13686. These regulations are codified in 24 CFR part 91. 
Applicants under this NOFA are permitted to use an abbreviated housing 
strategy, as set forth in Sec. 91.25 of the CHAS regulations. 
Applicants are advised to begin preparation of the abbreviated strategy 
at the earliest possible time in order to have sufficient time to 
fulfill the applicable citizen participation requirements, which 
provide that the strategy must be available to the public for at least 
thirty days before its submission to HUD.
    If possible, applicants should endeavor to submit the abbreviated 
strategy in advance of the Small Cities application due date. The 
latest time at which the abbreviated strategy will be accepted by HUD 
for the HUD-administered Small Cities Program in New York will be the 
application due date for the Small Cities application. Failure to 
submit the abbreviated strategy by the due date is not a curable 
technical deficiency. Questions regarding the housing strategies should 
be directed to the appropriate HUD field office.
    Complete Small Cities applications for which the abbreviated 
strategy has been submitted but not yet approved will still be rated 
and ranked with the other applications; if determined to be fundable, 
those applications will receive a conditional approval subject to 
approval of the abbreviated strategy. However, such an approval will be 
rescinded if the abbreviated strategy has not been approved by HUD 
within 60 days from the date that the conditional approval has been 
announced. In such event the funding will be awarded to the highest 
rated fundable applicant that did not receive funding under this 
competition.
    g. Section 3. Section 3 of the Housing and Urban Development Act of 
1968 was amended substantially by section 915 of the Housing and 
Community Development Act of 1992, and the issuance of regulations to 
implement the new requirements was mandated. The following policy was 
set forth in the statute:
    ``It is * * * the purpose of this section to ensure that the 
employment and other economic opportunities generated by Federal 
financial assistance for housing and community development programs 
shall, to the greatest extent feasible, be directed toward low- and 
very low-income persons * * * ''
    HUD published a proposed rule October 8, 1993 (24 CFR part 135) 
with a public comment period extended to December 8, 1993. Upon 
publication of the interim rule, requirements (including reporting 
requirements) relative to section 3 (for the purpose of determining the 
effectiveness of section 3) will be applicable to the HUD-administered 
Small Cities Program. At the time of publication of the interim rule, 
HUD will provide further information and instructions to applicants 
concerning the requirements of section 3.
    4. Accountability in the Provision of HUD Assistance: Documentation 
and Public Access Requirements; Applicant/Recipient Disclosures. HUD 
has promulgated a final rule to implement section 102 of the Department 
of Housing and Urban Development Reform Act of 1989 (HUD Reform Act). 
The final rule is codified at 24 CFR part 12. Section 102 contains a 
number of provisions that are designed to ensure greater accountability 
and integrity in the provision of certain types of assistance 
administered by HUD. (See also Section II.D. of this NOFA.) On January 
16, 1992, HUD published at 57 FR 1942, additional information that gave 
the public (including applicants for, and recipients of, HUD 
assistance) further information on the implementation of section 102. 
The documentation, public access, and applicant and recipient 
disclosure requirements of section 102 are applicable to assistance 
awarded under this NOFA as follows:
    a. HUD responsibilities--(1) Documentation and public access. HUD 
will ensure that documentation and other information regarding each 
application submitted pursuant to this NOFA are sufficient to indicate 
the basis upon which assistance was provided or denied. This material, 
including any letters of support, will be made available for public 
inspection for a five-year period beginning not less than 30 days after 
the award of the assistance. Material will be made available in 
accordance with the Freedom of Information Act (5 U.S.C. 552) and HUD's 
implementing regulations at 24 CFR part 15. In addition, HUD will 
include the recipients of assistance pursuant to this NOFA in its 
quarterly Federal Register notice of all recipients of HUD assistance 
awarded on a competitive basis. (See 24 CFR 12.14(a) and 12.16(b), and 
the notice published in the Federal Register on January 16, 1992 (57 FR 
1942), for further information on these requirements.)
    (2) Disclosures. HUD will make available to the public for five 
years all applicant disclosure reports (HUD Form 2880) submitted in 
connection with this NOFA. Update reports (also Form 2880) will be made 
available along with the applicant disclosure reports, but in no case 
for a period of less than three years. All reports--both applicant 
disclosures and updates--will be made available in accordance with the 
Freedom of Information Act (5 U.S.C. 552) and HUD's implementing 
regulations at 24 CFR part 15. (See 24 CFR subpart C, and the notice 
published in the Federal Register on January 16, 1992 (57 FR 1942), for 
further information on these disclosure requirements.)
    b. Units of General Local Government Responsibilities. Units of 
general local government awarded assistance under this NOFA are subject 
to the provisions of either paragraph b(1), or paragraph (b)(2) and 
(b)(3). For units of local government awarded assistance under this 
NOFA which in turn make the assistance available on a non-competitive 
basis for a specific project or activity to a subrecipient, paragraph 
b(1) applies. For units of local government awarded assistance under 
this NOFA, which in turn make the assistance available on a competitive 
basis for a specific project or activity to a subrecipient, paragraphs 
b(2) and (3) apply.
    (1) Disclosures. The units of general local government receiving 
assistance under this NOFA must make all applicant disclosure reports 
available to the public for three years. Required update reports must 
be made available along with the applicant disclosure reports, but in 
no case for a period less than three years. Each unit of general local 
government may use HUD Form 2880 to collect the disclosures, or may 
develop its own form. (See 24 CFR 12 subpart C, and the notice 
published in the Federal Register on January 16, 1992 (57 FR 1942) for 
further information on these disclosure requirements.)
    (2) Documentation and Public Access. The recipient unit of general 
local government must ensure that documentation and other information 
regarding each application submitted to the recipient by a subrecipient 
applicant are adequate to indicate the basis upon which assistance was 
provided or denied. The unit of general local government must make this 
material, including any letters of support, available for public 
inspection for a five-year period beginning not less than 30 days after 
the award of the assistance. Unit of general local government 
recipients must also notify the public of the subrecipients of the 
assistance. Each recipient will develop documentation, public access, 
and notification procedures for its programs. (See 24 CFR 12.14(b) and 
12.16(c), and the notice published in the Federal Register on January 
16, 1992 (57 FR 1942) for more information on these documentation and 
public access requirements.)
    (3) Disclosures. Units of general local government receiving 
assistance under this NOFA must make all applicant disclosure reports 
available to the public for five years. Required update reports must be 
made available along with the applicant disclosure reports, but in no 
case for a period less than three years. Each unit of general local 
government may use HUD Form 2880 to collect the disclosures, or may 
develop its own form. (See 24 CFR subpart C, and the notice published 
in the Federal Register on January 16, 1992 (57 FR 1942) for further 
information on these disclosure requirements.)

B. Allocation Amounts

1. Total Available Funding and Allocation
    The nonentitlement CDBG funds for New York State for FY 1994 total 
$50,616,000 and will be allocated as follows:
    a. Buffalo Office. $44,438,000 is allocated for distribution to 
eligible units of general local government within the jurisdiction of 
HUD's Buffalo Office. Maximum grant amounts for units of general local 
government under the jurisdiction of the Buffalo Office will be 
$400,000 for Single Purpose grant applications and $900,000 for 
Comprehensive grant applications, except that counties may apply for up 
to $600,000 in Single Purpose funds. The maximum amount for Single 
Purpose grant applications made jointly by units of general local 
government will be $600,000.
    b. New York Office. $6,178,000 is allocated for distribution to 
eligible units of general local government within the jurisdiction of 
HUD's New York Office. Maximum grant amounts for communities under the 
jurisdiction of the New York Office will be $400,000 for Single Purpose 
grants and $750,000 for Comprehensive grants, except that counties may 
apply for up to $600,000 in Single Purpose funds. The maximum amount 
for Single Purpose grant applications made jointly by units of general 
local government will be $600,000.
2. Distribution of Funds Between Single Purpose and Comprehensive 
Grants
    Generally, 85 percent of the funds allocated separately to the New 
York and Buffalo offices shall be for Single Purpose grants with the 
remaining 15 percent to be reserved for Comprehensive grants. However, 
in order to assure a competitive distribution of funds, each HUD office 
has the option to revise the division of funds between Single Purpose 
and Comprehensive grants to as low as 75 percent for Single Purpose and 
up to 25 percent for Comprehensive grants. Applicants requesting more 
that $600,000 in Comprehensive funding will be expected to provide 
clear and convincing evidence that the proposed activities will 
effectively address and correct conditions affecting large segments of 
the low- and moderate-income community, and that the grantee has the 
capability to expend the funds in a timely fashion. If this is not 
provided, the field office may reduce the grant amount.
3. Imminent Threats
    The criteria for grants to alleviate or remove imminent threats to 
health or safety that require an immediate solution are described at 
Sec. 570.432. All imminent threat projects must meet the national 
objective of benefitting low- and moderate-income persons. For FY 1994, 
$6,665,700 is being set aside in the Buffalo Office, and $926,700 is 
being set aside in the New York Office for imminent threat projects. 
These funds will be available in each office until the office completes 
the rating and ranking process for funds distributed under this NOFA.

C. Eligibility

1. Eligible Applicants
    Eligible applicants are units of general local government in New 
York State, excluding: metropolitan cities, urban counties, units of 
government which are participating in urban counties or metropolitan 
cities even if only part of the participating unit of government is 
located in the urban county or metropolitan city, and Indian tribes 
eligible for assistance under section 106 of the HCD Act. Applications 
may be submitted individually or jointly.
2. Previous Grantees
    Eligible applicants, which previously have been awarded Small 
Cities Program CDBG grants, are also subject to an evaluation of 
capacity and performance. Numerical thresholds for drawdown of funds 
have been established to assist HUD in evaluating a grantee's progress 
in implementing its program activities. (These standards apply to all 
CDBG Program grants received by the community.) An additional threshold 
relates to the submission of annual Performance Assessment Reports 
(PARs) which are due annually for each grant which a local government 
has received. Failure to submit a PAR is not a curable technical 
deficiency. Applicants generally will be determined to have performed 
adequately in the area(s) where the thresholds are met. Where a 
threshold has not been met, HUD will evaluate the documentation of any 
mitigating factors, particularly with respect to actions taken by the 
applicant to accelerate the implementation of its program activities.
3. Eligible Activities and National Objectives
    Eligible activities under the Small Cities CDBG Program are those 
identified in subpart C of 24 CFR part 570. Each activity must meet one 
of the national objectives (i.e. benefit to low- and moderate-income 
persons, elimination of slums or blighting conditions, or meeting 
imminent threats to the health and safety of the community), and each 
grant must meet the requirements for compliance with the primary 
objective of principally benefitting low- and moderate-income persons, 
as required under the provisions of Sec. 570.200(a) (2) and (3) and 
Sec. 570.208, which supersede Sec. 570.420(h)(2). As described in 
Section I.A.3.a. of this NOFA, the principal benefit requirement was 
increased by NAHA from 60 to 70 percent. The method of calculating the 
use of these funds for compliance with the 70 percent overall benefit 
requirement is set forth in Sec. 570.200(a)(3) (i) through (v).
4. Environmental Review Requirement
    The HUD environmental review procedures contained in 24 CFR part 58 
apply to this program. Under part 58, grantees assume all of the 
responsibilities for environmental review, decision-making and action 
pursuant to the National Environmental Policy Act of 1969 and the other 
provisions of law specified by the Secretary in 24 CFR part 58 that 
would apply to the Secretary were he to undertake such projects as 
Federal projects.

D. Types of Grants

1. Comprehensive Grants
    a. General. Comprehensive grants are available to fund projects 
which meet the following criteria:
    (1) Address a substantial portion of the identified community 
development needs within a defined area or areas;
    (2) Involve two or more activities related to each other that will 
be carried out in a coordinated manner;
    (3) Have a beneficial impact within a reasonable period of time.
    HUD may make an exception to the requirement that all activities 
must be carried out in a defined area or areas if the applicant can 
demonstrate that the comprehensive strategy is a reasonable means of 
addressing identified needs.
    If an application for a Comprehensive grant does not meet the 
requirements of the Comprehensive Grant Program, HUD will rate the 
proposal as a Single Purpose grant.
    b. Funding requirements. The total amount of funds requested for a 
Comprehensive grant must be within the established ceilings. Grant 
ceilings for each of the administering offices are indicated in Section 
I.B.1 of this NOFA. Grant funds requested must be sufficient, either by 
themselves or in combination with funds from other sources, to complete 
the project within a reasonable amount of time. If other sources of 
funds are to be used with respect to a project, the source of those 
funds must be identified and the level of commitment indicated.
2. Single Purpose Grants
    a. General. Single Purpose grants are designed to address and 
resolve a specific community development need. A Single Purpose grant 
may consist of more than one project. A project may consist of one 
activity or a set of activities. Each project must address community 
development needs in one of the following problem areas:

--Housing
--Public Facilities
--Economic Development

    Each project will be rated against all other projects addressing 
the same problem area, according to the criteria outlined below. It 
should be noted that each project within an application will be given a 
separate impact rating, if each one is clearly designated by the 
applicant as a separate and distinct project (i.e. separate Needs 
Description, Community Development Activities, Impact Description and 
Program Schedule forms have been filled out, indicating project names). 
In some cases, it may be to the applicant's advantage to designate 
separate projects for activities that can ``stand on their own'' in 
terms of meeting the described need, especially where a particular 
project would tend to weaken the impact rating of the other activities, 
if they were rated as a whole, as has been the case with some economic 
development and housing projects. If, however, the projects tend to 
meet impact criteria to the same extent, or the weaker element is only 
a small portion of the overall project, there is no discernable benefit 
in designating separate projects.
    b. Funding requirements. The total amount of funds requested for a 
Single Purpose grant must be within the established ceilings. Grant 
ceilings are discussed in Section I.B.1. of this NOFA. Grant funds 
requested must be sufficient, either by themselves or in conjunction 
with funds from other sources, to complete the project within a 
reasonable period of time. If other sources of funds are to be used 
with respect to a project, the source of those funds must be identified 
and the level of commitment indicated.
    c. Projects with multiple activities. If a project consists of more 
than one activity, the activity that directly addresses the need must 
represent at least a majority of the funds requested. Other activities 
must be incidental to, and in support of the principal activity.
    d. Applications with multiple projects. If an application contains 
more than one project, each project will be rated separately for 
program impact. Applicants should note that regardless of the number of 
projects, the total grant amount cannot exceed the appropriate grant 
ceilings identified in Section I.B.1. of this NOFA.
3. Final Selection
    The total points received by a project for all of the selection 
factors are added, and the project is ranked against all other projects 
from all applications, regardless of the problem areas in which the 
projects were rated. The highest ranked projects will be funded to the 
extent funds are available. Applicants will receive a single grant in 
the amount of the project or projects applied for which were ranked 
high enough to be funded. In the case of ties at the funding line, HUD 
will use the following criteria in order to break ties:

--The project receiving the highest program impact rating will be 
funded;
--If tied projects have the same program impact rating, the project 
having the highest combined score on the needs factors will be funded;
--If tied projects have the same program impact ratings and equal needs 
factor scores, the project having the highest score on the percent of 
persons in poverty needs factor will be funded; and
--If tied projects have the same program impact ratings, equal needs 
factor scores, and an equal percent of persons in poverty needs factor 
score, the application having the most outstanding performance in fair 
housing and equal opportunity will be funded.

    As soon as possible after the rating and ranking process has been 
completed, HUD will notify all applicants regarding their rating scores 
and funding status. Thereafter, applicants may contact HUD to discuss 
scores or any aspects of the selection process.

E. Selection Criteria/Ranking Factors

1. General
    Complete applications received from eligible applicants by the 
application due date are rated and scored by HUD. Regardless of the 
type of grant sought (Single Purpose or Comprehensive), applications 
are rated and scored against four factors. These four factors are 
discussed in more detail in subsection 3 of this Section E. Previous 
grantees of Small Cities Program CDBG grants also undergo a performance 
evaluation. The criteria for determining adequacy of performance are 
discussed in subsection 2 of this Section E.
2. Performance Evaluation
    As noted in Section C of this NOFA, previous grantees of Small 
Cities Program CDBG grants are subject to an evaluation of performance 
and capacity to undertake the proposed program. For purposes of making 
performance evaluations, HUD will use any information available as of 
the application due date. Performance also will be evaluated using 
information which may be available already to HUD, including previously 
submitted performance reports, site visit reports, audits, monitoring 
reports and annual in-house reviews. Grantees may be requested to 
submit additional information, if generally available facts raise a 
question as to capacity to undertake the proposed program. No grants 
will be made to an applicant that does not have the capacity to 
undertake the proposed program. A performance determination will be 
made by evaluation of the following areas:
    a. Community Development Activities. The following thresholds for 
performance in expending CDBG funds have been established for FY 1994 
and pertain to all Single Purpose and Comprehensive Grants:

FY 1989 and earlier--Grants must be closed out
FY 1990--Grant funds 100% expended
FY 1991--Grant funds 75% expended
FY 1992--Grant funds 30% expended
FY 1993--Recipients must be on target with respect to the latest Small 
Cities Program Schedule received by HUD.
    Note: These standards will be used as benchmarks in judging 
program performance, but will not be the sole basis for determining 
whether the applicant is ineligible for a grant due to a lack of 
capacity to carry out the proposed project or program. Any applicant 
that fails to meet the percentages specified above may wish to 
provide updated data to HUD, either in conjunction with the 
application submission or under separate cover, but in no case will 
data received by HUD after the application due date be accepted.

    b. Compliance with applicable laws and regulations. An applicant 
will be considered to have performed inadequately if the applicant:
    (1) Has not substantially complied with the laws, regulations, and 
Executive Orders applicable to the CDBG Program, including applicable 
civil rights laws as may be evidenced by: an outstanding finding of 
civil rights noncompliance, unless the applicant demonstrates that it 
is operating in compliance with a HUD-approved compliance agreement 
designed to correct the area(s) of noncompliance; an adjudication of a 
civil rights violation in a civil action brought against it by a 
private individual, unless the applicant demonstrates that it is 
operating in compliance with a court order designed to correct the 
area(s) of noncompliance; a deferral of Federal funding based upon 
civil rights violations; a pending civil rights suit brought against it 
by the Department of Justice; or an unresolved charge of discrimination 
issued against it by the Secretary under section 810(g) of the Fair 
Housing Act, as implemented by 24 CFR 103.400;
    (2) Has not resolved or attempted to resolve findings made as a 
result of HUD monitoring; or
    (3) Has not resolved or attempted to resolve audit findings.
    An applicant will be ineligible for a grant where the inadequate 
performance in compliance with applicable laws and regulations 
evidences a lack of capacity to carry out the proposed project or 
program. An application also will not be accepted from a unit of 
general local government which has an outstanding audit finding or 
monetary obligation for any HUD program. Additionally, applications 
will not be accepted from any entity which proposes an activity in a 
unit of general local government that has an outstanding audit finding 
or monetary obligation for any HUD program. The Director of the 
Community Planning and Development Division of the HUD field office may 
provide waivers to this prohibition, but in no instance will a waiver 
be provided where funds are due HUD, unless a satisfactory arrangement 
for repayment of the debt has been made.
    c. Performance assessment reports. Under 24 CFR 570.507, Small 
Cities CDBG grantees are required to submit Performance Assessment 
Reports (PARs) annually on the date when the grant was originally 
executed. For an application for FY 1994 funds to be considered for 
funding, the applicant must be current in its submission of Performance 
Assessment Reports. Failure to submit a PAR is not a curable technical 
deficiency under Section V of this NOFA.
3. Four Factor Rating
    As noted in subsections 1 and 3 of this Section E, all applications 
are rated and scored against four factors. These four factors are:

--Need based on absolute number of persons in poverty;
--Need based on the percent of persons in poverty;
--Program Impact; and
--Outstanding performance in fair housing and equal opportunity.

    A maximum of 615 points is possible under this system with the 
maximum points for each factor being: 

------------------------------------------------------------------------
                                                                  Points
------------------------------------------------------------------------
Need--absolute number of persons in poverty....................       75
Need--percent of persons in poverty............................       75
Program Impact.................................................      400
Outstanding performance--FHEO:                                          
  Provision of fair housing choice.............................       20
  Fair Housing Programs........................................       20
  Minority contracting.........................................       15
  Equal opportunity employment.................................       10
                                                                --------
        Total..................................................      615
------------------------------------------------------------------------

    Each of the four factors is outlined below. All points for each 
factor are rounded to the nearest whole number. Applicants should note 
that there is a distinct difference in the methods used to evaluate 
Program Impact for Single Purpose grants versus Program Impact for 
Comprehensive grants. These differences are more fully discussed below.
    a. Need--Absolute number of persons in poverty. HUD uses 1990 
census data to determine the absolute number of persons in poverty 
residing within the applicant unit of general local government. 
Comprehensive and Single Purpose grant applicants are grouped and rated 
separately for this factor. Applicants which are county governments are 
rated separately from all other applicants. Applicants in each group 
are compared in terms of the number of persons whose incomes are below 
the poverty level. Individual scores are obtained by dividing each 
applicant's absolute number of persons in poverty by the greatest 
number of persons in poverty of any applicant and multiplying by 75.
    b. Need--Percent of persons in poverty. HUD uses 1990 census data 
to determine the percent of persons in poverty residing within the 
applicant unit of general local government. Comprehensive and Single 
Purpose grant applicants are grouped and rated separately for this 
factor. Applicants in each group are compared in terms of the 
percentage of their population below the poverty level. Individual 
scores are obtained by dividing each applicant's percentage of persons 
in poverty by the highest percentage of persons in poverty of any 
applicant and multiplying by 75.
    c. Program Impact--General. In evaluating program impact, HUD will 
consider:

--Extent and seriousness of the identified needs;
--Results to be achieved;
--Number of beneficiaries, given the type of program;
--Nature of the benefit;
--Additional actions that may be necessary to fully resolve the need;
--Previous coordinated actions taken by the applicant to address the 
need;
--Environmental considerations;
--Whether displacement will be involved and what steps will be taken to 
minimize displacement and to mitigate its adverse effects or related 
hardships; and
--Where appropriate, housing site selection standards.

    Assessments are done on a comparative basis and, as a result, it is 
important that each applicant present information in a detailed and 
uniform manner.
    In addressing Program Impact criteria, applicants should adhere to 
the following general guidelines for quantification. Where appropriate, 
absolute and percentage figures should be used to describe the extent 
of community development needs and the impact of the proposed program. 
This includes, but is not limited to, appropriate units of measure 
(e.g., number of housing units or structures, linear feet of pipe, 
pounds per square inch, etc.), and costs per unit of measure. These 
quantification guidelines apply to the description of need, the nature 
of proposed activities and the extent to which the proposed program 
will address the identified need.
    Appropriate documentation should be provided to support the degree 
of need described in the application. Basically, the sources for all 
statements and conclusions relating to community needs should be 
included in the application or incorporated by reference. Examples of 
appropriate documentation include planning studies, letters from public 
agencies, newspaper articles, photographs and survey data.
    Generally, the most effective documentation is that which 
specifically addresses the subject matter and has a high degree of 
credibility. Applicants which intend to conduct surveys to obtain data 
are advised to contact the appropriate HUD office prior to conducting 
the survey for a determination as to whether the survey methodology is 
statistically acceptable.
    There are a number of program design factors related to feasibility 
which can alter significantly the award of impact points. Accordingly, 
it is imperative that applicants provide adequate documentation in 
addressing these factors. Common feasibility issues include site 
control, availability of other funding sources, validity of cost 
estimates, and status of financial commitments as well as evidence of 
the status of regulatory agency review and approval.
    Past productivity and administrative performance of prior grantees 
will be taken into consideration when reviewing the overall feasibility 
of the program. Overall program design, administration and guidelines 
are other feasibility issues that should be articulated and presented 
in the application, since they are critical in assessing the 
effectiveness and impact of the proposed program.
    (1) Program Impact--Single Purpose Grants. Each project will be 
rated against other projects addressing the same problem area, so that, 
for example, housing projects only will be compared with other housing 
projects, according to the criteria outlined below. It should be noted 
that each project within an application will be given a separate impact 
rating, if each one is clearly designated by the applicant as a 
separate and distinct project (i.e. separate Needs Descriptions, 
Community Development Activities, and Impact Description and Program 
Schedule forms have been filled out, indicating separate project 
names).
    In some cases, it may be to the applicant's advantage to designate 
separate projects for activities that can ``stand on their own'' in 
terms of meeting the described need, especially where a particular 
project would tend to weaken the impact rating of the other activities, 
if they were all related as a whole, as has been the case with some 
economic development projects. If, however, the projects tend to meet 
the impact criteria to the same extent, or the weaker element is only a 
small portion of the overall program, there is no discernable benefit 
in designating separate projects.
    Applicants should bear in mind that the impact of the proposed 
project will be judged by persons who may not be familiar with the 
particular community. Accordingly, individual projects will be rated 
according to how well the application demonstrates in specific, 
measurable terms, the extent to which the impact criteria are met. 
General statements of need and impact alone will not be sufficient to 
obtain a favorable rating.
    (a) Program Impact--Single Purpose--Housing. There are three 
distinct types of Single Purpose Housing projects: Housing 
Rehabilitation, Creation of New Housing and Direct Homeownership 
Assistance. Separate rating criteria are provided for each type of 
project.
    (i) Housing Rehabilitation--Needs. Each application should provide 
information on the total number of units in the project area, the 
number that are substandard, and the number of substandard units 
occupied by low- and moderate-income households. The purpose of this 
information is to establish the relative severity of housing conditions 
within the designated project area compared to other housing 
rehabilitation applications. The application also should describe the 
date and methodology of any surveys used to obtain the information, 
including an explicit and detailed definition of ``substandard''.
    Surveys of housing conditions. Surveys of housing conditions serve 
several purposes in evaluating applications for housing rehabilitation 
activities. These include establishing the seriousness of need for such 
assistance in the project area, providing a basis for estimating 
overall budgetary needs, and providing an indication of the 
marketability of the project.
    Project design and feasibility. The application should describe the 
project in sufficient detail to allow the reviewer to assess its 
feasibility and its probable impact on the conditions described. It 
also should describe project requirements in such a way that regulatory 
and policy concerns will be addressed.
    In reviewing applications from grantees with prior housing 
rehabilitation projects, reasonableness of cost-per-unit, stated in the 
application, will be compared against the grantee's actual past 
performance. All applications should provide documentation to justify 
the cost-per-unit estimates, particularly grantees where past 
performance does not support the estimates in the applications.
    It should be noted that HUD encourages communities to design 
projects supplementing CDBG rehabilitation funds with private funds 
wherever feasible and appropriate, especially in the case of rental 
units and housing not occupied by lower income persons. In such cases, 
the CDBG subsidy should be as low as possible, while retaining 
sufficient incentive to attract local participants. On the other hand, 
projects designed for low income homeowners should not require private 
contributions at a level that puts the project out of reach of 
potential participants.
    Where the creation of new units is proposed through conversion, the 
application should document the need for additional units based on 
vacancy rates, waiting lists, and other pertinent information. The 
proposed project clearly must support, or result in, additional units 
for low- and moderate-income persons. The units may result from the 
rehabilitation of currently vacant structures, conversion of non-
residential structure for residential use, or new construction projects 
for which the proposed project will provide non-construction 
assistance.
    Where the proposed project involves the use of Federally assisted 
housing, the applicant must identify and document the current 
commitment status of the Federal assistance. Lack of a firm financial 
commitment for assistance may adversely affect project impact. 
Applicants should address issues of site control and marketability, in 
addition to addressing feasibility from the standpoint of market 
financing.
    The impact of the proposed project will be based on the degree of 
need, the number of units to be created, overall feasibility and the 
nature and cost of the proposed activities.
    For projects consisting of more than one activity, the activity 
that directly addresses the need must represent at least the majority 
of funds requested. Other activities must be incidental to and in 
support of the principal activity. For example, public improvements 
included in a rehabilitation project that addresses housing need must: 
be a relatively small amount in terms of funds requested; clearly be in 
support of the housing objective; and demonstrate a positive and direct 
link to the national objective.
    For incidental activities claiming benefit to low- and moderate-
income persons on an area basis, the application must document that at 
least 51 percent of the residents of the service area meet the low- and 
moderate-income requirement. Funds should not be requested for 
activities that are not incidental to, and in support of the principal 
activity.
    Scoring. Individual projects often vary in the extent to which they 
meet the criteria outlined above. Accordingly, it is difficult to 
define precisely those combinations of characteristics which 
constitute, for example, ``maximum'' versus ``substantial'' impact. Not 
all projects receiving a particular rating will match all the criteria 
point-by-point, in the same manner. The objective for non-target area 
projects, in as much as they are sparsely populated, only should be to 
assist low- and moderate-income persons. Accordingly, the following 
standard will be used for rating housing rehabilitation projects:

Maximum (400 Points)

    1. Severe need is shown in the project area, in terms of the 
proportion of units that are substandard and the extent of disrepair in 
the units.
    2. The project would bring all, or almost all, of the units in the 
project area up to standard.
    3. There are no feasibility questions, such as availability of 
other resources, marketability, or appropriateness of project design, 
which would hinder the timely completion of the project as proposed.
    4. Benefits a large number of persons when compared to other 
housing projects.
    5. Significantly supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Substantial (300 Points)

    1. Serious need is shown.
    2. Project would bring most of the units in the area up to 
standard.
    3. There are no major feasibility questions.
    4. Benefits a substantial number of persons.
    5. Substantially supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Moderate (200 Points)

    1. Serious need is shown, but is not as well documented as in other 
applications.
    2. Project would bring units up to standard, but not to the same 
extent as other applications.
    3. There may be some minor feasibility questions.
    4. Benefits a significant number of persons.
    5. Moderately supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Minimal (100 Points)

    1. Some need is evident, but it is not serious compared to other 
applications, or is not well documented.
    2. Project may bring most units up to standard, but not to same 
extent as in other applications.
    3. There are serious feasibility questions.
    4. Benefits a small number of persons.
    5. Minimally supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Insignificant (0 Points)

    1. Very little need has been demonstrated.
    2. Project would not rehabilitate most units.
    3. There are serious feasibility questions.
    4. Benefits a very small number of persons.
    5. Does not support the strategic plan of a designated Empowerment 
Zone or Enterprise Community.
    (ii) Creation of new housing. CDBG funds may be used to support the 
construction of new housing units, and, in certain circumstances, to 
finance the actual cost of constructing new units. New construction may 
be carried out by an eligible non-profit entity pursuant to 24 CFR 
570.204, or as last resort housing. Support of new construction could 
include activities such as the acquisition and/or clearance of land, 
the provision of infrastructure, or the payment of certain planning 
costs.
    Where the creation of new units is proposed, the application should 
document the need for additional units based on vacancy rates, waiting 
lists, and other pertinent information. The proposed project clearly 
must support, or result in, additional units for low- and moderate-
income persons. The units may result from new construction projects for 
which the proposed project will provide non-construction assistance.
    Where the proposed project involves the use of Federally assisted 
housing, the applicant must identify and document the current 
commitment status of the Federal assistance. Lack of a firm financial 
commitment for assistance may adversely affect project impact. 
Applicants should address issues of site control and marketability, in 
addition to addressing feasibility from the standpoint of market 
financing.
    The impact of the proposed project will be based on the degree of 
need, the number of units to be created, overall feasibility and the 
nature and cost of the proposed activities.
    Scoring. Individual projects often vary in the extent to which they 
meet the criteria outlined above. Accordingly, it is difficult to 
define precisely those combinations of characteristics which 
constitute, for example, ``maximum'' versus ``substantial'' impact. Not 
all projects receiving a particular rating will match all the criteria 
point-by-point, in the same manner. Accordingly, the following standard 
will be used for rating projects supporting new housing construction:

Maximum (400 Points)

    1. Severe need for new housing affordable to low- and moderate-
income persons is shown in the project area.
    2. Project would create a large number of new housing units 
affordable to low- and moderate-income persons.
    3. There are no feasibility questions, such as availability of 
other resources, marketability, or appropriateness of project design, 
which would hinder the timely completion of the project as proposed.
    4. Benefits a large number of persons when compared to other new 
housing projects.
    5. Project would affirmatively further fair housing choice by 
resulting in the spatial deconcentration of minorities throughout the 
community, or would provide spatial deconcentration of low- and 
moderate-income households if there are no areas of minority 
concentration.
    6. Significantly supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Substantial (300 Points)

    1. Serious need for new units affordable to low- and moderate-
income persons is shown.
    2. Project would create a substantial number of new housing units.
    3. There are no major feasibility questions.
    4. Benefits a substantial number of persons.
    5. Project would affirmatively further fair housing choice through 
significant efforts toward the spatial deconcentration of minorities 
throughout the community, or would provide significant efforts toward 
spatial deconcentration of low- and moderate-income households if there 
are no areas of minority concentration.
    6. Substantially supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Moderate (200 Points)

    1. Serious need is shown, but is not as well documented as in other 
applications.
    2. Project would create new units but not a substantial number.
    3. There may be some minor feasibility questions.
    4. Benefits a significant number of persons.
    5. Project would have some effect of affirmatively furthering fair 
housing choice by encouraging spatial deconcentration of minorities 
throughout the community, or would encourage spatial deconcentration of 
low- and moderate-income households if there are no areas of minority 
concentration.
    6. Moderately supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Minimal (100 Points)

    1. Some need is evident, but it is not serious compared to other 
applications, or is not well documented.
    2. Project will create a few new units but not as many as in other 
applications.
    3. There are serious feasibility questions.
    4. Benefits a small number of persons.
    5. Project would minimally affirmatively further fair housing 
choice by encouraging spatial deconcentration of minorities throughout 
the community, or would encourage spatial deconcentration of low- and 
moderate-income households if there are no areas of minority 
concentration.
    6. Minimally supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Insignificant (0 Points)

    1. Very little need has been demonstrated.
    2. Project would not provide for new units.
    3. There are serious feasibility questions.
    4. Benefits a very small number of persons.
    5. Project would have no effect of affirmatively furthering fair 
housing choice through the spatial deconcentration of minorities 
throughout the community, or would not encourage spatial 
deconcentration of low- and moderate-income households if there are no 
areas of minority concentration.
    6. Does not support the strategic plan of a designated Empowerment 
Zone or Enterprise Community.
    (iii) Direct homeownership assistance. Homeownership activities are 
defined as activities which would promote homeownership within the 
applicant jurisdiction, focusing particularly on aiding low- and 
moderate-income persons in becoming homeowners. While declining to 
identify any particular type of proposed project as superior, HUD is 
identifying several criteria which must be addressed within the project 
design, in order for the application to receive the maximum project 
impact.
    Applications must include a well developed description of 
homeownership needs in the applicant jurisdiction, focusing 
particularly on the needs of low- and moderate-income persons. The 
description also should include, if applicable, any alternative 
approaches which have been considered in meeting homeownership needs. 
Project feasibility must be addressed as part of the application.
    The application must demonstrate that the proposed project would 
make effective use of all available funds. This would include any 
local, State or other Federal funds which would be utilized by the 
proposed project. If other such funds are included as part of the 
proposed project, the applicant must demonstrate that such funds are 
committed and truly available for the project.
    Any efforts which would affirmatively further fair housing, by 
promoting homeownership among minorities as well as homeownership 
throughout the community, must be outlined in the application.
    The application must explain how the project would benefit low- and 
moderate-income homebuyers, particularly focusing on first-time and 
minority homebuyers. The application also should address any 
homeownership counseling services, including counseling pertaining to 
Federal, State, and local fair housing laws and requirements, which 
would be provided to persons selected to participate in the proposed 
project. Finally, the application should describe how the project would 
utilize public/private partnerships to promote homeownership, 
particularly in the sense that private sector financing would be 
accessible, as necessary, to project participants to complement 
available public sector funds, including CDBG money.
    HUD will review each application which meets the threshold against 
the following criteria:

Maximum (400 Points)

    1. Project design is appropriate to meet demonstrated homeownership 
need and alternative approaches to meeting the need are shown to have 
been considered. Additionally, there are no feasibility questions 
regarding the implementation and execution of the proposed project 
according to the schedule.
    2. The application documents serious homeownership needs in the 
community and the proposed project would make effective use of 
available funds.
    3. The proposed project would affirmatively further fair housing by 
including initiatives to reach out to potential minority homeowners and 
by promoting homeownership opportunities throughout the community.
    4. The proposed project would target first-time homebuyers.
    5. The proposed project would provide homeownership counseling to 
project participants.
    6. The proposed project would complement other Federal, State or 
local programs which promote homeownership.
    7. The proposed project would utilize public/private partnerships 
in attempting to promote homeownership, particularly in regard to 
participation by local financial institutions.
    8. Significantly supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Substantial (300 Points)

    1. Project design demonstrates a workable approach to homeownership 
assistance needs, and there are no major feasibility questions 
regarding implementation of the proposed project.
    2. Substantial homeownership needs are documented by the 
application, and the proposed project would make effective use of 
available funds.
    3. The proposed project would affirmatively further fair housing by 
promoting homeownership opportunities throughout the community.
    4. The proposed project would encourage homeownership among first-
time homebuyers.
    5. The proposed project would encourage local financial 
institutions to lend to assisted homebuyers.
    6. Substantially supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Moderate (200 Points)

    1. The proposed project has potential to meet homeownership needs 
in the community, and there are minor feasibility questions regarding 
implementation.
    2. Homeownership needs in the community are documented, but not as 
well as in other applications.
    3. The proposed project would include efforts to affirmatively 
further fair housing through homeownership.
    4. The proposed project would educate and inform citizens of 
homeownership assistance available through the project.
    5. The proposed project would not include private sector 
involvement.
    6. Moderately supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Minimal (100 Points)

    1. There are serious feasibility questions regarding the 
implementation and execution of the proposed project.
    2. The proposed project would have little impact upon homeownership 
needs in the community.
    3. The proposed project would contribute minimally to fair housing 
in the community.
    4. The proposed project would marginally aid first-time homebuyers 
versus all homebuyers.
    5. Minimally supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Insignificant (0 Points)

    1. The proposed project has major feasibility questions which would 
inhibit its implementation and execution.
    2. The proposed project does not address identified homeownership 
needs in the community.
    3. The proposed project would not actively affirmatively further 
fair housing.
    4. The proposed project would be of little benefit to first time 
homebuyers.
    5. Does not support the strategic plan of a designated Empowerment 
Zone or Enterprise Community.
    (b) Program impact--single purpose--public facilities affecting 
public health and safety. In the case of public facility projects, 
documentation of the problem by outside, third-party sources is of 
primary importance. In the case of water and sewer projects, 
documentation from public agencies is particularly helpful, especially 
where such agencies have pinpointed the exact cause of the problem and 
have recommended courses of action which would eliminate the problem. 
Such supporting documentation should be as up-to-date as possible: the 
older the supporting material, the more doubt arises that the need is 
current and immediate. Applicants also should be sure to indicate how 
the project would address public health and safety needs and 
conditions. Quantification also is essential in describing needs. 
Documentation from those affected should be included.
    In order to show that the project is likely to impact upon the 
problem, the following items should be covered:
    (1) Total project costs. Total project costs should be documented 
by qualified third party estimates, and be as recent as possible.
    (2) Source of other funds. To the extent that CDBG funds will not 
cover all costs, the source of other funds should be identified and 
committed. If local funds are to be used, the applicant should show 
both the willingness and the ability to provide the funds.
    (3) How the project will solve the problem. The applicant should 
demonstrate that the project will completely solve the problem and, if 
applicable, the applicant should address whether the proposal would be 
satisfactory to other State/local agencies which have jurisdiction over 
the problem.
    (4) Cost effectiveness of the proposal. The applicant should 
address whether the proposal is the most cost effective and efficient 
among the possible alternatives considered.
    (5) Reasonableness of service area. The applicant should address 
whether the service area claimed for the project is reasonable, in view 
of the nature of the proposed project, and if not, the applicant should 
address what effect a more realistic appraisal would have on overall 
benefit to low- and moderate-income persons.
    (6) Project impact on public health and safety; and
    (7) Other applicable feasibility issues have been addressed.
    Individual projects often vary in the extent to which they meet the 
criteria outlined above. Therefore, it is difficult to define precisely 
those combinations of characteristics which constitute, for example, 
``maximum'' versus ``substantial'' impact. Not all applications 
receiving a particular rating will match point-for-point all the 
criteria in the same way. The following standards will be applied:

Maximum (400 Points)

    1. Need is serious, current and requires prompt attention.
    2. Program would resolve the problem completely, either through 
funds requested or with the support of other resources already 
committed.
    3. No other obstacles to timely and effective implementation of the 
program exist.
    4. Benefits a large number of persons when compared to other public 
facility projects.
    5. Demonstrates that the applicant has considered and, as 
appropriate, will use alternative cost effective methods or material in 
the execution of the project.
    6. Public health and safety concerns are fully resolved by the 
project.
    7. Project would significantly address serious deficiencies in 
accessibility for disabled persons and/or provide a substantial 
increase in the number of public facilities accessible to disabled 
persons.
    8. Significantly supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Substantial (300 Points)

    1. Serious need is shown.
    2. Program would resolve the problem completely.
    3. There are no major feasibility questions.
    4. Benefits a substantial number of persons.
    5. There is evidence that efforts have been made to minimize 
project costs through use of alternative methods and materials, as 
appropriate.
    6. Public health and safety concerns are substantially resolved by 
the project.
    7. Project would substantially address serious deficiencies in 
accessibility for disabled persons and/or provide a significant 
increase in the number of public facilities accessible to disabled 
persons.
    8. Substantially supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Moderate (200 Points)

    1. Serious need is shown, but is not as serious or well documented 
as other applications.
    2. Program may not meet the need as completely as in some other 
applications.
    3. There may be some questions relative to feasibility.
    4. Benefits a significant number of persons.
    5. There is evidence that efforts have been made to minimize 
project costs.
    6. Public health and safety concerns are partially met by the 
project.
    7. Project would somewhat address serious deficiencies in 
accessibility for disabled persons and/or provide some increase in the 
number of public facilities accessible to disabled persons.
    8. Moderately supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Minimal (100 Points)

    1. Some need is evident, but is not serious.
    2. Only a portion of the need would be met or the problem would not 
be resolved completely.
    3. There are serious feasibility questions.
    4. Benefits only a small number of persons.
    5. There is little evidence that efforts have been made to minimize 
costs.
    6. Public health and safety concerns are minimally addressed by the 
project.
    7. Project would minimally address serious deficiencies in 
accessibility for disabled persons and/or provide a minimal increase in 
the number of public facilities accessible to disabled persons.
    8. Minimally supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Insignificant (0 Points)

    1. No clear need has been demonstrated.
    2. Program is not appropriate to meeting described needs, or there 
is serious doubt that there would be much impact on needs.
    3. There are major feasibility questions.
    4. Benefits a very small number of people.
    5. There is no evidence that efforts have been made to minimize 
project costs.
    6. Public health and safety needs are not addressed by the project.
    7. Project would not address serious deficiencies in accessibility 
for disabled persons and/or would not provide an increase in the number 
of public facilities accessible to disabled persons.
    8. Project does not support the strategic plan of a designated 
Empowerment Zone or Enterprise Community.
    (c) Program impact--single purpose--economic development projects. 
As discussed earlier in this section of the NOFA, each individual 
Single Purpose project will receive a separate impact rating. 
Applicants whose proposed economic development program will include 
multiple proposals should determine the most appropriate form of 
submission. This determination will require a choice as to either the 
incorporation of all proposals into a single project or the submission 
of separate projects for each proposal (each transaction will be 
considered a separate project). The single project format presents an 
``all or nothing'' situation. In determining the appropriate submission 
format, applicants should consider the ability of a transaction to rate 
well on its own, based on the magnitude of employment impact, size of 
the financial transaction and the other factors discussed in this 
section.
    The submission of proposals as separate projects must be clearly 
designated by the applicant with individual Needs Descriptions, 
Community Development Activities, Impact Descriptions and Program 
Schedule forms, including an appropriate name for each project on HUD 
Form 4124.1.
    Section 807(c)(3) of the 1992 Act provides that it is the sense of 
Congress that each grantee should devote one percent of its grant for 
the purpose of providing assistance under section 105(a)(23) of the HCD 
Act to facilitate economic development through commercial 
microenterprises. A microenterprise is defined as a commercial 
enterprise with five or fewer employees, one or more of whom owns the 
enterprise. This should be considered in developing an economic 
development application.
    It is noted that in accordance with section 806 of the 1992 Act, 
the Department will soon publish a proposed rule relating to evaluation 
and selection of Economic Development activities by grantees. It is 
strongly suggested that you read the proposed rule as it reflects the 
Department's latest proposed policy on the evaluation of Economic 
Development Projects.
    In addition to the standard submission requirements, to receive 
maximum points, Small Cities applicants must submit information that 
demonstrates that CDBG funds are needed for the proposed project or 
activity. HUD will evaluate this material as part of its Eligibility 
Review prior to considering an application for funding in the FY 1994 
competition. The following is a discussion of some of the factors HUD 
will consider in assessing projects in these key areas:
    (i) The appropriate determination. HUD requires that economic 
development activities undertaken with CDBG funds be appropriate to 
carry out an economic development project. Applicants should attempt to 
demonstrate that each economic development project has a reasonable 
likelihood of success.
    Applicants must document the financial analysis of the project's 
need for assistance, as well as public benefit factors that were 
considered in making its determination that assistance is appropriate. 
The applicant is expected to provide clear documentation on how the 
decision was reached.
    The written documentation of the financial analysis of the 
project's need should use the following steps:
    1. Reasonableness of Proposed Costs.--The applicant must review 
each project cost element and determine that the cost is reasonable and 
consistent with third-party, fair-market prices for that cost element. 
The general principle is that the level of CDBG assistance cannot be 
adequately determined if the project costs are understated or inflated.
    2. Commitment of Other Sources of Funds. The applicant shall review 
all projected sources of funds necessary to complete the project and 
shall verify that all sources (in particular private debt and equity 
financing) have been firmly committed to the extent practicable, and 
are available to be invested in the project. Verification means 
ascertaining that: the source of funds is committed; that the terms and 
conditions of the committed funds are known; and the source has the 
capacity to deliver.
    3. No Substitution of CDBG Funds for Private Sources of Funds. The 
applicant shall financially underwrite the project and ensure to the 
extent possible that CDBG funds are not being substituted for available 
private debt financing or equity capital. The analysis must be tailored 
to the type of project being assisted (i.e. real estate, user project, 
capital equipment, working capital, etc.). Real estate projects require 
different financial analysis than working capital or machinery and 
equipment projects. Applicants should ensure that both a significant 
equity commitment by the for-profit business exists, and that the level 
of certainty of the end use of the property or project is sufficient to 
ensure the achievement of national objectives within a reasonable 
period of time.
    4. Establishment of CDBG Financing Terms. The amount of CDBG 
assistance provided to a for-profit business ideally should be limited 
to the amount, with appropriate repayment terms, sufficient to go 
forward without substituting CDBG funds for available private debt or 
cash equity. The applicant should structure its repayment terms so that 
the business is allowed a reasonable rate of return on invested equity, 
considering the level of risk of the project. It should be remembered 
that equity funds generally should bear the greatest risk of all funds 
invested in a project.
    5. Assessing Public Benefit. The extent of public benefit expected 
to be derived from the economic development project must be assessed. 
While no standards have been promulgated in a final rule, the 
assessment of public benefit should consider such factors as the number 
and type of jobs to be created or retained, in relation to the needs of 
low- and moderate-income persons who are likely to be employed, the 
extent to which a business provides essential services to low- and 
moderate-income neighborhoods, and increases to the tax base including 
property, sales and income taxes in the area. These factors are not all 
inclusive.
    (ii) CDBG assistance must minimize business and job displacement. 
Each applicant will evaluate the potential of each economic development 
project for causing displacement of existing businesses and lost jobs 
in the neighborhood where the project is proposed to be located. When 
the grantee concludes that the potential exists to cause displacement, 
given the size, scope or nature of the business, then the grantee must, 
to the extent practicable, take steps to minimize such displacement. 
The project file must document the grantee's review conclusions and, if 
applicable, the steps the grantee will take to minimize displacement.
    (iii) Section 105(a)(17) requirements. Section 105 (a)(17) of the 
HCD Act requires that an activity assisted under that section achieve 
one of the following criteria:
    (1) Creates or retains jobs for low- and moderate-income persons 
(note that a project which meets the national objective of principally 
benefitting low- and moderate-income persons by creating or retaining 
jobs, 51 percent of which are for low- and moderate-income persons, 
will be deemed to have met this criterion without any additional 
documentation);
    (2) Prevents or eliminates slums or blight (note that a project 
which meets the national objective of aiding in the prevention or 
elimination of slums or blight on an area basis will be deemed to have 
met this criterion without any additional documentation);
    (3) Meets an urgent need (note that a project which meets the 
national objective of meeting community development needs having a 
particular urgency will be deemed to have met this criterion without 
any additional documentation);
    (4) Creates or retains businesses owned by community residents;
    (5) Assists businesses that provide goods or services needed by and 
affordable to low- and moderate-income residents;
    (6) Provides technical assistance to promote any of the activities 
under (1) through (5) of this subsection.
    (iv) National objectives. As previously stated in this NOFA, all 
CDBG-assisted activities must address one of the three broad national 
objectives. Since economic development projects usually result in new 
employment or the retention of existing jobs, these activities most 
likely would be categorized as principally benefitting low- and 
moderate-income persons in this manner. Such projects will be 
considered to benefit low- and moderate-income persons where the 
criteria of 24 CFR 570.208(a)(4) are met. HUD will consider an activity 
to qualify under this provision where the activity involves jobs at 
least 51 percent of which are taken by or made available to such 
persons, or retained by such persons. The extent to which the proposed 
project will directly address employment opportunities for low- and 
moderate-income persons in the applicant jurisdiction will be a primary 
factor in HUD's assessment of the proposed program.
    In determining whether the person is a low- and moderate-income 
person for these activities, it is the person's family income at the 
time the CDBG assistance is provided that is determinative. When making 
judgments concerning whether an individual qualifies as a low- and 
moderate-income person, both family size and the income of the entire 
family must be considered. This consideration is necessary because a 
low- and moderate-income person is defined as a member of a low- and 
moderate-income family. The 1992 Act amends the HCD Act by stating that 
a person may be presumed to be a low- and moderate-income person if the 
employee resides in a census tract where not less than 70 percent of 
the residents are low- and moderate-income persons. HUD will also 
accept a written certification by a person of his or her family income 
and size to establish low- and moderate-income status. The 
certification may simply state that the person's family income is below 
that required to be low- and moderate-income in that area. The form for 
such certification must include a statement that the information is 
subject to verification. The application must contain adequate 
documentation to explain fully, and to support, the process that will 
be used to ensure that project(s) comply with the low- and moderate-
income employment requirements. The documentation must be sufficient to 
show that the process has been developed and that program participants 
have agreed to adhere to that process.
    (v) Application requirements. To the extent feasible, the material 
listed below should be submitted for economic development projects. The 
material should be submitted for each proposed activity (e.g., each 
loan will be considered a separate activity), whether the proposed 
activity is presented as a separate project or as part of a project 
involving multiple activities. Since economic development projects are 
rated against each other, the more completely these submission 
requirements are met, the greater the potential exists for enhancing 
the impact score of the project.
    1. A letter from each appropriate developmental entity which 
includes at least the following information:
    a. A detailed physical description of the project with a schedule 
of events and maps or drawings as appropriate.
    b. The estimated costs for the project, including any working 
capital requirements.
    c. A discussion of all financing sources, including the need for 
CDBG, the terms of the CDBG assistance, and the proposed lien 
structure. The amount, source and nature of any equity investment(s) 
must also be provided as well as a commitment to invest the equity.
    d. A discussion of employment impact which includes a schedule of 
newly created positions. The schedule should identify the number, 
salary and skill level of each permanent position to be created. If 
jobs are made available to low- and moderate-income persons, the 
applicant must also demonstrate and document how persons from low- and 
moderate-income households will be accorded first consideration for 
employment opportunities.
    e. A discussion of all appropriate feasibility issues including, 
but not limited to: site control, zoning, public approvals and permits, 
impact fees, corporate authorizations, infrastructure, environment and 
relocation.
    f. An analysis and summary of market and other data which supports 
the anticipated success of the project.
    2. A development budget showing all costs for the project, 
including professional fees and working capital.
    3. Documentation to support project costs. Documentation generally 
should be from a third party source and be consistent with the 
following guidelines:
    a. Acquisition costs should be supported by an appraisal.
    b. Construction/renovation costs should be certified by an 
architect, engineer or contractor. Use of Federal Prevailing Wage Rates 
should be cited where applicable.
    c. Machinery and equipment costs should be supported by vendor 
quotes.
    d. Soft costs (e.g., legal, accounting, title insurance) need be 
substantiated only where such costs are anticipated to be abnormally 
high.
    4. Letters from all financing sources discussing (at a minimum) the 
amount and terms of the proposed financing, and the current status of 
the application for funding.
    5. Historical financial data of the development entity, preferably 
for the last three years. This information may be submitted under 
separate cover with confidentiality requested. It is recognized that 
historical financial data may be unavailable or inappropriate for some 
projects (e.g., start-up companies and real estate transactions).
    6. A two-to-five year cash flow pro forma with accompanying notes 
citing basic assumptions.
    7. The applicant's assessment of the project's consistency with the 
CDBG program eligibility appropriate standards and with the national 
objectives requirements.
    (vi) Review criteria. In evaluating and rating economic development 
projects, HUD will analyze the following factors:
    1. Employment: The extent to which the proposed project will 
directly address employment opportunities for low- and moderate-income 
persons in the applicant's jurisdiction will be a primary factor in 
HUD's assessment of program impact. Applicants are reminded that for an 
activity to be consistent with the statutory objective of low- and 
moderate-income benefit, as a result of the creation or retention of 
jobs, at least 51 percent of created or retained employment 
opportunities must be held by, or made available to, persons from low- 
and moderate-income families. Applicants must fully document and 
describe employment benefits. In addition, applicants should address 
the following issues:
    a. All employment data must be expressed in terms of full-time 
equivalents (FTEs). Only permanent jobs may be counted, and applicants 
must take into account such factors as seasonal and part-time 
employment. A seasonal job may be considered permanent if the season is 
long enough to be considered the person's principal occupation; 
permanent part-time jobs must be converted to the full-time equivalent.
    b. The amount of CDBG assistance required to produce each full-time 
equivalent job will affect the impact assessment by HUD. Lower CDBG 
costs per job are preferable to higher CDBG costs per job. Such 
assessments of impact will be done on a comparative basis among all 
projects submitted, rather than by comparison to a given standard.
    c. The use of CDBG funds to assist a business with transferring to 
a different community will generally be considered as having no 
employment impact. Exceptions to this rule may include an expansion to 
the business as a result of, or concurrent with, the transfer; or if 
the business can demonstrate that it is infeasible to continue 
operations at the current site. If the applicant proposes to assist in 
a transfer of operations based on an exception to the general rule, HUD 
should be contacted early in the planning process to discuss the 
viability of such a proposal. Failure to do so could result in the 
application receiving 0 impact points.
    d. Applicants are encouraged to use CDBG funds for projects that 
provide as many jobs as possible for individuals that are currently 
receiving public assistance. Providing employment to recipients of 
public assistance will help break the cycle of dependency and empower 
low income citizens to take control of their lives.
    2. Feasibility. A high-impact rating will not be given to projects 
that are likely to encounter feasibility issues which would hinder the 
timely completion of the project. Such issues include, but are not 
limited to: site control, zoning, public approvals and permits, 
infrastructure, environment, and relocation. Applicants should address 
these and any other applicable issues and provide documentation where 
appropriate.
    Applicants also must demonstrate the reasonable likelihood of the 
project's success, from both a financial and employment standpoint. An 
analysis or market data, which indicates an inordinate risk in the 
undertaking of the project, will affect the overall rating of program 
impact.
    3. Leverage. Leverage is defined as the amount of private debt and 
equity to be invested as a direct result of the CDBG-funded activity. 
Projects which fully conform with those requirements by providing the 
maximum feasible level of private investment will be considered as 
having appropriate leverage. The extent of firm commitments for private 
financing will be reviewed as well as the amount of equity investment. 
The project will be reviewed to determine whether CDBG funds are 
replacing private sources of funds. In order to receive maximum impact 
CDBG funds may not replace private financing, CDBG assistance must be 
limited to the amount necessary to fund the project without replacing 
CDBG funds for private funds, and equity funds should bear the greatest 
risk in the project.
    4. Taxes. While not a primary factor in the evaluation of impact, 
projects which will augment the applicant's tax base may have a 
positive effect on the rating of program impact. It is recognized, 
however, that good projects do not always result in increased tax 
revenues due to their nature.
    5. Repayment. Where CDBG repayments are to be made in some manner 
to the applicant, the proposed use of those repayments for economic 
development purposes will be considered.
    6. Cost Reasonableness. In order to receive a rating greater than 
the minimal, the costs must be reasonable, i.e. not inflated.
    7. Base Closures. The Department recognizes that communities facing 
the loss of a military base may need a well-planned economic 
development project to help alleviate the effect of the base closure. 
Well planned projects that will help successfully alleviate the 
economic impact of base closures will tend to have a high impact and 
rate well in the competition.
    8. Empowerment Zones/Enterprise Communities. The Department is 
supportive of using funds from this NOFA to support projects in 
designated Empowerment Zones and Enterprise Communities. A project that 
significantly supports the strategic plan of a designated Empowerment 
Zone or Enterprise Community will receive a maximum impact score 
provided that the other factors for maximum impact are met.
    (vii) Scoring. Individual projects often vary in the extent to 
which they meet the criteria outlined above. It is, therefore, 
difficult to precisely define those combinations of characteristics 
which constitute, for example, ``maximum'' versus ``substantial'' 
impact. Not all applications receiving a ``maximum'' rating will match 
all the criteria, point by point, in the same manner. The following 
standards will be applied:

Maximum (400 Points)

    1. The analysis of market and other risk data provides reasonable 
assurance that the project will be successful.
    2. The project will have a direct and positive impact on employment 
opportunities for persons from low- and moderate-income households, and 
the extent of that impact compares favorably with that of other 
applicants.
    3. All appropriate feasibility issues have been addressed 
(including the submission of firm private financing commitments) and 
there is reasonable assurance that the project will be completed in a 
timely manner.
    4. The Public Benefits (e.g., loan repayments, increases to the tax 
base including property, sales and income taxes to the area, other 
development likely to be stimulated by the activity) to be derived from 
the project are considerable relative to other proposals.
    5. The infusion of CDBG funds will leverage a substantial 
investment of private and other dollars.
    6. The project costs are reasonable (i.e. not inflated).
    7. CDBG funds will not replace private financing, CDBG assistance 
will be limited to the amount necessary to fund the project without 
replacing CDBG funds for private funds, and equity funds will bear the 
greatest risk in the project.
    8. Project significantly supports the strategic plan of a 
designated Empowerment Zone or Enterprise Community.

Substantial (300 Points)

    The criteria for Maximum (400 Points) is met, with either of the 
following exceptions:
    1. While the project will have a direct and positive impact on 
employment opportunities for persons from low- and moderate-income 
households, the extent of that impact is less than that demonstrated by 
applicants receiving the maximum rating.
    2. While there are no major feasibility problems, there are 
feasibility issues which have not been fully addressed and/or may have 
a negative effect on timely implementation of the project. However, 
overall success of the project appears achievable.
    In addition:
    3. The Public Benefits derived from this project will be greater 
than that received by the majority of applicants.
    4. CDBG funds will leverage more private and/or other public 
dollars than the majority of projects in the competition.
    5. The project costs are reasonable (i.e. not inflated).
    6. CDBG funds will not replace private financing, CDBG assistance 
will be limited to the amount necessary to fund the project without 
replacing CDBG funds for private funds, and equity funds will bear as 
great a risk as other project funds.
    7. Project significantly supports the strategic plan of a 
designated Empowerment Zone or Enterprise Community.

Moderate (200 Points)

    The project presents at least one of the following deficiencies 
which would affect the appropriateness of CDBG funding:
    1. An analysis of the project indicates that the likelihood of the 
availability of other required financing is questionable.
    2. There is a major feasibility issue which is likely to affect 
completion of the project.
    3. The analysis of market and other risk data indicates a 
likelihood that the project will not create a significant employment 
impact.
    4. The number of employment positions to be created is 
significantly low and/or the CDBG cost per employment position is 
significantly high in relation to other applications.
    In addition:
    5. There will be some Public Benefits resulting from this project.
    6. CDBG dollars will leverage a moderate amount of private and/or 
other public funds relative to other projects.
    7. The project costs are reasonable (i.e. not inflated).
    8. Project moderately supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Minimal (100 Points)

    The project presents at least one of the following serious 
deficiencies which would affect the appropriateness of CDBG funding:
    1. An analysis of the project indicates that other required 
financing is unlikely to be available.
    2. There will be few, if any, Public Benefits resulting from this 
project.
    3. CDBG dollars will leverage little private and/or other public 
investment in the project.
    4. Project minimally supports the strategic plan of a designated 
Empowerment Zone or Enterprise Community.

Insignificant (0 Points)

    The activity presents at least one of the following serious 
deficiencies which indicates the inappropriateness of CDBG funding:
    1. It is clear that the activity cannot be accomplished based on 
any combination of the following factors:
    (1) Major feasibility issues.
    (2) Inordinate risk.
    (3) Unavailability of required financing.
    2. The activity will not have a direct impact on employment 
opportunities for persons from low- and moderate-income households.
    3. The completion of the project will result in no Public Benefits 
or will be detrimental to the community.
    4. No other investment will be triggered by the use of CDBG funds 
for this activity.
    5. Project does not support the strategic plan of a designated 
Empowerment Zone or Enterprise Community.
    (2) Program impact--comprehensive program grants. Comprehensive 
programs must address a substantial portion of the identifiable 
community development needs of a defined area(s). The extent to which 
activities are coordinated will be a major consideration in the 
evaluation of program impact. In defining an appropriate area for 
comprehensive treatment, applicants should consider the severity of 
condition within the area and the resources to be provided. The impact 
is greatest where community development needs will be substantially 
addressed over a reasonable period of time. Exceptions to the 
requirement that activities be concentrated within a defined area or 
areas may be made if the applicant can demonstrate that the proposed 
program represents a reasonable means of addressing the identified 
needs.
    HUD will assess the impact of the program for each of the four 
program design criteria selected, based on the factors described below. 
Applicants must describe fully the extent to which the program will 
address each criterion selected. HUD will compare all programs which 
address a particular criterion. The best proposal for that criterion 
will be the standard by which all others will be judged, although that 
proposal will not necessarily be awarded a significant impact.
    Assignment of Program Impact points for a Comprehensive Grant 
application is a two-step process. First, the potential of the proposed 
program of activities to achieve the results intended by each selected 
criterion when considered in relation to other communities selecting 
the same criterion is assessed. A numerical value is assigned, based on 
the following:

The results would have insignificant impact--0 Points
The results would have minimal impact--2 Points
The results would have a moderate impact--4 Points
The results would have a maximum impact--8 points

    After each of the four criteria selected by an applicant is rated 
and a value assigned, the values are summed. A minimum of 12 points 
will be required at this stage in order for the application to be 
eligible for further consideration. A score of less than 12 points 
indicates that the proposed activities would have insufficient impact 
to warrant funding.
    Following this process, the actual points for impact are determined 
by dividing each applicant's Program Impact Score by the highest 
Program Impact Score achieved by any applicant and multiplying the 
result by 400.
    Listed below are the ten design criteria and the standards which 
HUD has developed to evaluate each criterion. The applicant must select 
and address four of the criteria. In addition to these standards, the 
Submission Requirements and Review Criteria for Economic Development 
Projects under the Single Purpose Program apply in determining the 
eligibility and rating for economic development proposals that are a 
part of a Comprehensive Program. It is particularly important that 
applicants fully address the economic development criteria should 
Criteria 5 and 6 be selected.
    (a) Criterion 1--Supports Comprehensive Neighborhood Conservation, 
Stabilization, Revitalization, New Housing Construction or Promotes 
Homeownership. The applicant must describe the degree to which the 
identified needs of a defined area or areas will be addressed in a 
coordinated manner. In defining an area or areas, applicants should 
examine carefully the extent of needs and the resources available to 
address those needs. Where an area has not been defined, the applicant 
should describe fully the appropriateness of implementing activities on 
a community-wide basis.
    In evaluating the impact of the proposed program, HUD will examine 
the following factors:

--Nature and severity of neighborhood needs.
--Extent to which needs will be addressed.
--Amount of funds required to implement neighborhood activities.
--Extent to which activities are coordinated to address housing, public 
facility and economic development needs. Program impact will be the 
greatest where a substantial portion of the needs within a defined area 
will be met.
--Extent to which the project promotes fair housing choice in 
homeownership among protected classes.
--Extent to which the project supports the strategic plan of a 
designated Empowerment Zone or Enterprise Community.

    The strongest consideration for housing rehabilitation programs is 
given to those applicants which have designed their housing programs by 
taking into account both structural conditions and appropriate 
financing mechanisms. The proposed program should be structured in a 
way to be marketable, given income and structural characteristics of 
the neighborhood area. The physical needs of residential or mixed use 
properties must be well stated and documented in terms of 
substandardness. Applicants will be expected to maximize the leveraging 
of private funds, encourage the participation of local financial 
institutions, and develop realistic program guidelines. Private funds 
available from financial lending sources should be established. If 
leveraging is infeasible, the applicant must fully document that fact. 
The most effective housing programs will be those which will address a 
substantial portion of the identified needs, while maximizing the 
impact of Federal funds.
    For those programs that will support the construction of new 
residential units, project feasibility will be critical. While the 
extent of need and number of units to be created will be a primary 
consideration in evaluating the impact, issues of site control, 
marketability and assurance of private financing must be addressed, and 
must be documented.
    Homeownership activities will be reviewed in terms of: how 
effectively the program would meet homeownership needs identified in 
the community; and the extent to which they would make effective use of 
available funds.
    Public service activities also may be considered in conjunction 
with other activities under this criterion. Again, any such activities 
would need to meet demonstrated needs within the community.
    The impact of public improvement activities will be assessed 
primarily on the documented severity of the need and the extent to 
which the proposed program will address that need. Those needs which 
directly affect the public safety and welfare will be considered the 
most severe.
    Economic development activities also will be evaluated by the 
extent to which they will alleviate the identified problems. However, 
the assessed impact for these activities is often diminished due to 
feasibility concerns.
    In addition to quantifying the extent of the anticipated 
improvements, applicants must demonstrate that the proposed activities 
can be carried out--that is, documentation with respect to private 
participation in such activities must be thorough. Letters of only 
general interest, by either property owners or other private sector 
participants, do not necessarily ensure their participation in the 
program. Some degree of assurance of participation should be presented.
    Review Criteria and Submission requirements for Housing described 
under the Single Purpose Program apply in evaluating and rating housing 
proposals that are a part of a Comprehensive Program.
    (b) Criterion 2--Provides Housing Choice within the Community 
either Outside Areas with Concentrations of Minorities and Low- and 
Moderate-Income Persons or in a Neighborhood which is Experiencing 
Revitalization and Substantial Displacement as a Result of Private 
Reinvestment, by Enabling Low- and Moderate-Income Persons to Remain in 
their Neighborhood. If a proposed program provides housing choice 
within the community outside areas with concentrations of minorities 
and low- and moderate-income persons, the application must document 
that there are existing areas which do, in fact, contain concentrations 
of low- and moderate-income families and minorities. The proposed 
program, if implemented, must result in additional housing assistance 
being provided in areas of non-concentration. Communities with no 
minorities or minority concentrations may receive impact points where 
opportunities are provided outside areas of low- and moderate-income 
concentration. The degree of impact will be based upon the severity of 
needs, the number of units to be provided, and the nature and cost of 
the activities.
    In a neighborhood which is experiencing revitalization and 
substantial displacement as a result of private reinvestment, the 
applicant must provide a detailed description of the revitalization 
efforts within the neighborhood, the amount of displacement of low- and 
moderate-income persons, and the manner in which the implementation of 
the proposed program will enable displacees to remain in the 
neighborhood. The degree of needs, nature and cost of activities, and 
percentage of needs to be addressed will be evaluated to determine 
program impact.
    (c) Criterion 3--Supports the Expansion of Housing for Low- and 
Moderate-Income Persons by Providing Additional Housing Units Not 
Previously Available. The proposed program clearly must support, or 
result in, additional units for low- and moderate-income persons. The 
units may result from the rehabilitation of currently vacant 
structures, conversion of non-residential structures to residential 
use, or new construction projects for which the proposed program will 
provide non-construction or construction assistance. Where the proposed 
project involves the use of Federally assisted housing, the applicant 
must identify and document the current commitment status of the Federal 
assistance. Lack of a firm financial commitment for assistance may 
adversely affect program impact. Applicants should address the areas of 
site control and marketability, in addition to addressing feasibility 
from the standpoint of project financing. Consideration will not be 
given to proposed programs which will rehabilitate occupied units or 
displace current occupants. The impact of the proposed programs will be 
based upon the degree of needs, the number of units to be created, and 
the nature and cost of the proposed activities.
    (d) Criterion 4--Addresses a Serious Deficiency in a Community's 
Public Facilities. Consideration will be given to the extent of 
deficiencies, and their relative seriousness, of the identified need. 
The following factors will be considered:

--Documentation of the seriousness of deficiencies. Appropriate 
documentation should be provided to substantiate the degree of 
seriousness. Those deficiencies which directly affect the public safety 
and welfare will be considered most severe.
--The nature and cost of the proposed activities in relation to the 
percentage of need to be addressed.
--The extent to which the proposed program will address a variety of 
deficiencies in public facilities within a defined area.
--Coordination with other activities within the defined area.
--The degree to which the application addresses such feasibility 
issues, including but not limited to, the validity of cost estimates by 
qualified sources, the availability of other funds, site control, and 
environmental constraints.
--The number of persons to benefit.
--The extent to which the project addresses serious deficiencies in 
accessibility requirements and/or expands the number of accessible 
public facilities.
--Extent to which the project supports the strategic plan of a 
designated Empowerment Zone or Enterprise Community.

    (e) Criterion 5--Expands or Retains Employment Opportunities. 
Consideration will be given to proposed programs that will result in 
the creation of new jobs or retention of existing employment 
opportunities. The following factors will be considered:

--The number of jobs to be created or retained in relation to the 
identified needs. Documentation should be provided to substantiate the 
number and type (permanent or seasonal, full or part-time) of job 
claimed. Letters from local development agencies or expected 
participants which express more than general interest would be 
appropriate. With respect to job retention, evidence should be provided 
to demonstrate that without the proposed program, existing jobs would 
be lost. The applicant also must address the potential impact of job 
loss on the community.

--The extent to which CDBG funds are used to leverage private 
commitments. If leveraging is proposed, applicants should analyze the 
actual amount of additional funds required to make the project 
financially feasible. In designing a program to assist existing 
business expansion or retention, or to encourage new business 
development, applicants must address whether CDBG funds will be used 
for infrastructure, land assemblage or other financial incentives. 
These factors may be important considerations for a firm deciding where 
to locate and whether to expand or reduce the scope of its operation. 
CDBG funds may be more effectively used as a loan rather than a grant. 
In this regard, the CDBG funds would generate additional program 
resources through loan repayments to the community. It is considered 
especially advantageous if a revolving loan fund is established and 
repayments continue to be used to expand or retain employment 
opportunities.

--The relationship of the activity to other projects being implemented 
within the defined area.
--The number of persons to benefit.
--Particular attention will be given to the extent to which the Review 
Criteria and Submission Requirements for Economic Development Projects 
are addressed (see Single Purpose Program Criteria).
--Extent to which the project supports the strategic plan of a 
designated Empowerment Zone or Enterprise Community.
--Extent to which the project results in the employment of persons on 
public assistance.

    (f) Criterion 6--Attracts or Retains Businesses which Provide 
Essential Services. Consideration will be given to proposed programs 
which will address the attraction or retention of businesses commonly 
associated with neighborhood needs (corner grocery stores, dry 
cleaners, pharmacies, etc.). The applicant must describe clearly the 
nature and anticipated impact of activities. Documentation in the form 
of letters from existing or new potential businesses offering a 
commitment to the program should be included. (Letters of only general 
interest by property owners do not necessarily ensure their 
participation in the program, or their willingness to secure debt if 
private lending is proposed). The following factors will be considered:

--The impact of the proposed program in relation to the identifiable 
neighborhood needs. The extent of area stability must be documented. In 
describing the needs of a business district or neighborhood commercial 
area, such factors as overall structural conditions, business 
turnovers, and vacancy rates over a period of time should be clearly 
presented. The formulation of a commercial revitalization program must 
be based on a thorough assessment of local needs and a realistic 
program design. An important consideration is whether the proposed 
program is designed to be marketable given income characteristics, 
local business condition, etc. The condition of supporting public 
facilities and improvements and their influence on the business 
environment must be established. If public improvements are proposed in 
connection with economic expansion or retention, applicants must 
address the extent to which the lack of these improvements impact on 
business.
--Attraction/retention must be fully documented by the applicant. With 
respect to business retention, evidence should be provided to 
demonstrate clearly and objectively that without the proposed CDBG 
Program, existing retail/commercial businesses would curtail their 
operations. The applicant also must document and address the potential 
impact of the business loss on the community and/or target area. HUD 
would accept as examples of clear and objective evidence a notice 
issued by the business to affected employees, a public announcement by 
the business, or financial records provided by the business that 
clearly indicate the need for closing or moving all or portions of the 
business out of the area.

--The amount of private funds to be leveraged. If leveraging is 
proposed, applicants should analyze the actual amount of private or 
public funds needed to make the project financially feasible. In this 
regard, the establishment of a revolving loan fund, in which repayments 
would continue to be used to attract or retain businesses providing 
essential services, would be considered a positive factor.

--The relationship of the activity to a comprehensive approach to 
meeting the overall needs of the neighborhood area.
--The impact of the proposed program in utilizing minority, women-
owned, and project area businesses.
--Extent to which the project supports the strategic plan of a 
designated Empowerment Zone or Enterprise Community.
--Extent to which the project results in the employment of persons on 
public assistance.

    (g) Criterion 7--Removes Slums or Blighting Conditions. 
Consideration will be given to proposed programs which will have a 
direct impact on the removal of slums or blighting conditions. 
Appropriate areas may include, but are not limited to, deteriorated 
residential or commercial structures, inappropriate land uses, or 
blighting conditions, such as repeated flooding and drainage problems 
or serious deficiencies in public facilities. Applicants should be 
aware that slum and blight activities can be carried out under the 
national objective of benefit to low- and moderate-income persons. If 
an applicant elects to qualify the activity on this basis, the degree 
of low- and moderate-income benefit must be demonstrated by the 
applicant.
    Where residential or commercial rehabilitation activities are 
proposed as preventing or eliminating blighting conditions, the 
application must clearly document the number, type, and condition of 
deteriorating or deteriorated buildings in the designated target area. 
Detailed conditions of the physical condition of buildings or 
structures would be appropriate to establish the extent of substandard 
and blighting conditions. For rehabilitation of residential structures 
to be designed as eliminating blight and addressing an area's 
deterioration, the buildings must be considered substandard under local 
definition.
    When an area is determined to be blighted, there must be a 
substantial number of deteriorated or dilapidated buildings, or the 
public improvements throughout the area must be in a state of 
deterioration. The proposed CDBG program or project must be designed to 
eliminate or address a substantial portion of the identified blighting 
conditions or physical decay. CDBG assistance for facilities or 
structures which are in good repair and show no real signs of 
deterioration would not score well under this criterion. For instance, 
minor facade improvements to a commercial building alone would not 
indicate that a building is in poor condition. However, assistance to a 
commercial area which consists of deteriorating businesses, storefronts 
in serious need of rehabilitation, a high vacancy factor, and public 
improvements, such as parking areas and parking access improvements 
which are in need of physical upgrading, would have a direct impact on 
eliminating blighting conditions. Public improvements that are so 
deteriorated that they constitute a genuine threat to the continued 
viability of an area by discouraging private investment necessary to 
maintain properties may also be considered a blighting influence. The 
following factors will be considered:

--Extent and documented seriousness of conditions/needs. References to 
engineering studies, surveys or letters from appropriate local agencies 
should be included.
--Impact of the proposed program in relation to providing long-term 
permanent solutions to alleviate the identified need. Short-term or 
superficial improvements will not be considered to have a significant 
impact.
--Coordination with other projects and activities which will address 
needs within the defined area.
--Nature of any proposed re-use: degree of commitment for re-use.
--Extent to which the project supports the strategic plan of a 
designated Empowerment Zone or Enterprise Community.

    (h) Criterion 8--Resolves a Serious Threat to Health or Safety. The 
applicant must describe the condition which poses a threat to public 
health and safety. A serious threat refers to a situation which demands 
immediate attention. This may be a condition that has just occurred or 
a condition which, though long standing, has intensified to become an 
immediate danger.
    Applicants should be aware that imminent threat/urgent need 
activities can be carried out under the national objective of benefit 
to low- and moderate-income persons. If an applicant elects to qualify 
the activity on this basis, the degree of low- and moderate-income 
benefit must be demonstrated by the applicant. Consideration will be 
given to the following:

--The extent to which a serious threat to health or safety is 
documented, or of recent origin, or which recently became urgent. 
Documentation should include the identification of the existing 
conditions by appropriate agencies.
--The extent to which the serious threat will be resolved.
--The submission of documentation which demonstrates that other 
financial resources are insufficient or unavailable to resolve such 
needs.
--The degree to which the application addresses issues such as the 
validity of cost estimates by qualified sources; the availability of 
other funds; site control and environmental conditions; or other public 
body approvals.
--The number of persons to benefit, as well as the number of 
individuals actually threatened.

    Note: This criterion is generally more restrictive than 
Criterion 4. The existing condition must pose a serious and 
immediate threat to the health or welfare of the target population.

    (i) Criterion 9--Supports Other Federal or State Programs Being 
Undertaken in the Community or Deals with the Adverse Impact of Another 
Recent Federal or State Action. The Other Federal or State Program or 
Action Must Be of Substantial Size or Impact in the Community in 
Relation to the Proposed Program. The application must contain a 
complete description of the Federal or State Program(s) (excluding 
other CDBG Programs) which currently are underway, or a complete 
description of the adverse impact of a recent Federal or State action 
(e.g. the closing of a military base). A Federal or State program or 
action not yet initiated will be considered only where the application 
provides documentation establishing the certainty of, and the 
approximate commencement date of, the described program or action.
    The proposed CDBG Program must demonstrate clearly the magnitude of 
the effect of the Federal or State Program or action on the community. 
The degree to which the proposed CDBG Program will support the Federal 
or State Program, and/or the extent to which the adverse impact of 
Federal or State action will be mitigated, also must be demonstrated.
    In addition to the above, the nature and costs of the proposed 
activities will be considered in determining the degree of impact.
    (j) Criterion 10--Supports Energy Production or Conservation. This 
criterion will be judged, and points will be awarded, based upon the 
community's ability to demonstrate that the proposed program will 
support energy production or conservation. Applicants are urged to 
develop innovative approaches toward addressing energy needs with Small 
Cities CDBG funds. Energy considerations can be a factor in most 
activities proposed by smaller communities. Attention should focus on 
new methods of producing energy or conserving energy where possible. In 
developing and evaluating proposals, there are a number of energy 
aspects to consider. The following factors will be considered:

--Cost efficiency--Relationship of dollar amount to benefits to be 
derived. The applicant must document estimates of energy costs which 
are to be saved as a result of the proposed program. The proposed 
program should make maximum use of non-CDBG resources as well as CDBG 
funds. Appropriate documentation must be provided to ensure that the 
proposal is economically feasible.
--The extent to which the proposed program will support other programs 
currently aimed at addressing energy production or conservation needs 
of the community. From a management standpoint, proposed projects 
should be consistent with needs or objectives of any plan for energy 
management or conservation. Applicants should pursue the availability 
of other resources from Federal or State energy related programs. The 
degree of commitment of other resources should be established. State 
energy offices, private as well as municipally-owned utility companies, 
and home heating oil companies may be appropriate entities to be 
involved in the development and planning of proposals.
--The application should address whether the project is based on 
appropriate technology, materials and methods to maximize energy 
conservation. Engineering reports or studies would be appropriate 
evidence to support the overall feasibility of the project. The 
conversion of existing facilities, where appropriate, rather than 
proposing new construction may be more economical.
--While housing rehabilitation programs which include weatherization/
winterization components will be considered, they generally will not be 
presumed as addressing a severe need unless unique conditions are 
specifically identified and cost savings are properly documented.

    d. Fair Housing and Equal Opportunity Evaluation. Documentation for 
the 65 points for these items is the responsibility of the applicant. 
Claims of outstanding performance must be based upon actual 
accomplishments. Clear, precise documentation will be required. Maps 
must have a census tract or block numbering area (BNA), and they must 
be in accordance with the 1990 Census data. Additionally, maps must 
identify the locations of areas with minorities by census tract or BNA. 
If there are no minority areas, state so on the map. Only population 
data from the 1990 Census will be acceptable for purposes of this 
section.
    Please note that a ``minority'' is a person belonging to, or 
culturally identified as, a member of any one of the following racial/
ethnic categories: Black, Hispanic, Asian or Pacific Islander, and 
American Indian or Alaskan Native. For the purposes of this section, 
the separate category--``women'' --is not considered a minority.
    Counties claiming points under this criterion must use county-wide 
statistics (excluding entitlement communities). In the case of joint 
applications, points will be awarded based on the performance of the 
lead entity only.
    The following factors will be used to judge outstanding performance 
in these areas. Please note that the criteria are the same for 
Comprehensive and Single Purpose applicants, and that points for 
outstanding performance may be claimed under each criterion:
    (1) Housing Achievements (40 points total). (a) 20 Points--
Provision of Assisted Housing--Providing assisted housing for low- and 
moderate-income families, located in a manner which provides housing 
choice in areas outside of minority, or low- and moderate-income 
concentrations.
    Points will be awarded where both of the following criteria are 
met:
    (i) More than one-third of the housing assistance provided by the 
applicant in the last five (5) years (excluding Section 8 existing and 
housing assistance provided in place) has been in Census Tracts (CT) or 
Block Numbering Areas (BNA) having a percentage of minority population 
which is less than the minority population in the community as a whole; 
and
    (ii) With regard to the Section 8 Existing Program, a community 
must show the location (CT or BNA) of its currently occupied family 
units by race/ethnicity. Points will be awarded if more than one-half 
of the minority assisted families occupy units in areas which have a 
lower percentage of minority population than that of the community as a 
whole.
    A community with no minorities must show the extent to which its 
assisted housing is located outside areas of concentrations of low- and 
moderate-income persons. In order to receive points under this 
criterion, applicants should follow the process outlined in (i) and 
(ii) above, substituting low- and moderate-income persons and families 
for minority persons or families. Applicants addressing the first 
criterion must use a map indicating the location of all assisted 
housing and a narrative which indicates the number of units and the 
type of assisted housing. The map also must show the general location 
of low- and moderate-income households and minority households, giving 
the numbers and percentages for both.
    To qualify as housing assistance provided, the units being claimed 
must be part of a project located outside minority or lower income 
concentrated areas which has, at a minimum, received a firm commitment 
from the funding agency.
    (iii) Points also may be awarded for efforts which enable low- and 
moderate-income persons to remain in their neighborhood when such 
neighborhoods are experiencing revitalization and substantial 
displacement as a result of private reinvestment. Applicants requesting 
points under this criterion would not need to meet the requirements of 
(i) and (ii) in order to receive points. Points will be awarded where 
more than one half of the families displaced were able to remain in 
their original neighborhood through the assistance of the applicant. 
Applicants must show that:

--the neighborhood experienced revitalization;
--the amount of displacement was substantial;
--displacement was caused by private reinvestment;
--low- and moderate-income persons were permitted to remain in the 
neighborhood as a result of action taken by the applicant.

    If the community is inhabited predominantly by persons who are 
members of minority and/or low-income groups, points will be awarded 
where there is a balanced distribution of assisted housing throughout 
the community.
    (b) 20 Points - Implementation of a HUD-approved New Horizons Fair 
Housing Assistance Project or a Fair Housing Strategy that is 
equivalent in scope to a New Horizons Project.
    The applicant must demonstrate that it is implementing a HUD-
approved New Horizons Fair Housing Assistance Project or demonstrate 
participation in a HUD-approved county/State/regional New Horizons 
Project; or that the applicant is implementing a fair housing strategy 
that is equivalent in scope to a New Horizons Project. If the applicant 
is implementing a New Horizons Project, it must include:

--the date it was approved (by HUD); and
--those actions taken to implement the plan.

    If the applicant is implementing an equivalent fair housing 
strategy, it must include:

--the strategy being implemented;
--those actions taken to implement the strategy.

    Please note that a fair housing strategy must include the four 
elements of a New Horizons Project in order to be considered equivalent 
in scope:

--Local compliance activities;
--Educational programs to enhance the clarity and understanding of the 
community's fair housing policy. For communities with few or no 
minorities, this should include publication in the surrounding 
communities of the applicant's policy of fair housing for minorities 
and the disabled;
--Assistance to minority families; and
--Special programs (e.g. utilization of Community Housing Resource 
Board (CHRB) Programs, efforts to encourage local realtors to enter 
into voluntary agreements to encourage equal access to financial 
institutions, etc.).

    The fair housing strategy must include goals for each of the above 
elements. The date of adoption or development of the strategy should be 
indicated, as well as the date proposed activities will be or have been 
implemented.
    (2) Entrepreneurial Efforts and Local Equal Employment (25 points 
total). Applicants may request points for both of these subfactors and 
must use the format sheets included in the application.
    (a) Minority Contracting. 15 points--Outstanding performance points 
will be given to those applicants who have demonstrated that they have 
utilized minority businesses to the following degree. The applicant 
must demonstrate that at least five percent of all its contracts, based 
on dollar value, have been awarded within the past two years to 
minority owned and controlled businesses (businesses that are at least 
50 percent owned by minorities) provided that the minority population 
is five percent or less. If the minority population exceeds five 
percent, then the applicant must have a corresponding percentage of its 
contracts awarded to minority businesses; however, 20 percent of the 
total dollar value of its contracts will be sufficient for award of 
points for any applicant. The applicable percentage of minority 
population is the percentage of minorities in the applicant's 
jurisdiction, or is the county percentage, whichever is higher.
    The applicant must provide the information as outlined in the 
suggested format, showing the name, address, telephone number, contract 
date and contract amount for each contract or subcontract with a 
minority business. This information is to be provided in addition to 
information required on the HUD Form 4124.4, and should be for the two-
year period ending February 1, 1994.
    (b) Equal Opportunity Employment. 10 points--In order to be 
considered for points, if claimed, the applicant must document that its 
percentage of minority, permanent full-time employees is greater than 
the percentage of minorities within the county or the community, 
whichever is higher. Applicants with no full-time employees may claim 
points based on part-time employment provided that they document that 
the only permanent employment is on a part-time basis.

II. Application and Funding Award Process

A. Obtaining Applications.

    Application kits may be obtained from either HUD's New York or 
Buffalo Offices. Applicants in New York, in the counties of Sullivan, 
Ulster, Putnam, and in non-participating jurisdictions in the urban 
counties of Dutchess, Orange, Rockland, Westchester, Nassau, and 
Suffolk should submit applications to the New York Office. All other 
nonentitled communities in New York State should submit their 
applications to the Buffalo Office. The appropriate addresses for HUD's 
New York and Buffalo offices are: Department of Housing and Urban 
Development, Office of Community Planning and Development, Attention: 
Small Cities Coordinator, 26 Federal Plaza, New York, NY 10278-0068, 
Telephone (212) 264-6500, or Department of Housing and Urban 
Development, Community Planning and Development Division, Attention: 
Small Cities Coordinator, 465 Main Street, Lafayette Court, Buffalo, NY 
14203, Telephone (716) 846-5768.

B. Submitting Applications

    A final application must be submitted to HUD no later than July 26, 
1994. A final application includes an original and two photocopies. In 
accordance with HUD's regulation at 24 CFR 570.443(a)(1), final 
applications may be mailed, and if they are received after the 
deadline, must be postmarked no later than midnight, July 26, 1994. If 
an application is hand-delivered to either the New York or Buffalo 
Offices, the application must be delivered by 4:00 p.m. on the 
application deadline date. Applications must be submitted to the 
appropriate HUD office at the address listed above in Section A.
    The above-stated application deadline is firm as to date and hour. 
In the interest of fairness to all competing applicants, the Department 
will treat as ineligible for consideration any application that is not 
received on, or postmarked by July 26, 1994. Applicants should take 
this practice into account and make early submission of their materials 
to avoid any risk of loss of eligibility brought about by unanticipated 
delays or other delivery-related problems.

C. The Application

    An application for the Small Cities Program CDBG Grants is made by 
the submission of:
    (1) a completed HUD Form 4124, including HUD Forms 4124.1 through 
4124.6 and all appropriate supporting material;
    (2) a completed Standard Form 424;
    (3) a signed copy of certifications required under the CDBG 
Program, including, but not limited to the Drug-Free Workplace 
Certification, and the Certification Regarding Lobbying pursuant to 
section 319 of the Department of Interior Appropriations Act for Fiscal 
Year 1990 (31 U.S.C. 1352), generally prohibiting use of appropriated 
funds, and, if applicable, Disclosure of Lobbying Activities (SF-LLL);
    (4) Form HUD-2880, Applicant/Recipient Disclosure/Update Report, as 
required under subpart C of 24 CFR part 12, Accountability in the 
Provision of HUD Assistance; and if applicable,
    (5) CHAS or ``abbreviated strategy''.

D. Funding Award Process

    In accordance with section 102 of the Reform Act and HUD's 
regulation at 24 CFR 12.16, HUD will notify the public by notice 
published in the Federal Register of all award decisions made by HUD 
under this competition. In accordance with the requirements of section 
102 of the Reform Act and HUD's regulations at 24 CFR part 12, HUD also 
will ensure that documentation and other information regarding each 
application submitted under this notice of funding availability is 
sufficient to indicate the basis upon which assistance was provided or 
denied. Additionally, in accordance with Sec. 12.14(b) of these 
regulations, HUD will make this material available for public 
inspection for a period of five years, beginning not less than 30 
calendar days after the date on which assistance is provided.

III. Technical Assistance

    Prior to the application deadline, the Buffalo and New York offices 
will provide technical assistance on request to individual applicants, 
including explaining and responding to questions regarding program 
regulations, and defining terms in the application package. In 
addition, HUD will conduct informational meetings around the State to 
discuss the Small Cities Program, and will conduct application 
workshops in conjunction with these meetings. Please contact either the 
New York or Buffalo Office for further information regarding these 
meetings. Application kits will be available at these meetings, as well 
as from the HUD offices previously identified in Section II of this 
NOFA, and will also be available at the informational meetings. In 
order to ensure that the application deadline is met, it is strongly 
suggested that applicants begin preparing their applications 
immediately and not wait for the informational meetings.
    In order to be considered for funding, complete applications (an 
original and two photocopies of the entire application) must be 
physically received by the appropriate HUD office on July 26, 1994, by 
4 p.m. or, if mailed, postmarked no later than midnight, July 26, 1994. 
Applications must be delivered or mailed to the appropriate HUD office 
at the address indicated in Section II.

IV. Checklist of Application Submission Requirements

    The following checklist is intended to aid applicants in 
determining whether their application is complete:

Application Completeness Checklist

Applicant:-------------------------------------------------------------
    Comprehensive Grant ________ Single Purpose Grant ______
    Amount Requested $____________
    1. Is amount of funds requested within established maximum?
    2. Part I--Needs Description (HUD Form 4124.1)

(a) Single Purpose Grants

    i--Program Area

________ Housing
________ Target Area
________ Non-target Area
________ Public Facilities
________ Economic Development (If an ``appropriate'' analysis is 
required but is not included, the application cannot be rated.)

    ii--Is description of community development needs included in 
application?

(b) Comprehensive Grants

    i--Have four design criteria been selected and discussed in 
application?
    ii--Is description of community development needs included in 
application?
    3. Part II--Community Development Activities (HUD Form 4124.2)
    (a) Has national objective been identified for each activity?
    (b) Will 70 percent of grant funds primarily benefit low- and 
moderate-income persons? (If not, the application cannot be rated.)
    4. Part III--Impact Description (HUD Form 4124.3)
    5. Part IV--Outstanding Performance (HUD Form 4124.4)
    6. Part V--Program Schedule (HUD Form 4124.5)
    7. Part VI--Maps
    (a) Location of proposed activities. (Applicants must show the 
boundaries of the defined area or areas.)
    (b) Location of areas with minorities by census tract. (If there 
are no minority areas, state so on the map.)
    (c) Housing conditions if project involves housing 
rehabilitation. (Number and location of each standard and 
substandard unit should be clearly identified.)
    8. (a) Is Standard Form 424 complete?

Yes       No

    (b) Is original signature on at least one copy?

Yes       No

    9. Is Certification signed with original signature?

Yes       No

    10. If housing activities have been proposed as part of 
application, has the Comprehensive Housing Affordability Strategy 
(CHAS) been prepared and submitted to HUD (or included with this 
application)?
    11. Form HUD-2880, Application/Recipient Disclosure/Update 
Report, as required under subpart C of 24 CFR part 12.

V. Corrections to Deficient Applications

    Under no circumstances will HUD accept from the applicant 
unsolicited information regarding the application after the application 
deadline has passed.
    HUD may advise applicants of technical deficiencies in applications 
and permit them to be corrected. A technical deficiency would be an 
error or oversight which, if corrected, would not alter, in either a 
positive or negative fashion, the review and rating of the application. 
Examples of curable technical deficiencies would be a failure to submit 
the proper certifications or failure to submit an application 
containing an original signature by an authorized official. Situations 
not considered curable would be, for example, a failure to submit 
program impact descriptions.
    HUD will notify applicants in writing of any curable technical 
deficiencies in applications. Applicants will have 14 calendar days 
from the date of HUD's correspondence to reply and correct the 
deficiency. If the deficiency is not corrected within this time period, 
HUD will reject the application as incomplete.
    Applicants should note that if a CHAS is required in support of a 
housing activity, the failure to submit a CHAS in a timely manner is 
not considered a curable deficiency.

VI. Other Matters

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was made in accordance with HUD regulations at 24 CFR part 50, 
implementing section 102(2)(C) of the National Environmental Policy Act 
of 1969 (42 U.S.C. 4332) at the time of development of the FY 1993 NOFA 
for this program. Because no substantive programmatic changes have been 
made, that Finding remains applicable to this NOFA and is available for 
public inspection and copying between 7:30 am and 5:30 pm weekdays at 
the Office of the Rules Docket Clerk, 451 Seventh Street, SW, Room 
10276, Washington, DC 20410.

Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that this NOFA 
will not have substantial, direct effects on States, on their political 
subdivisions, or on their relationship with the Federal Government, or 
on the distribution of power and responsibilities between them and 
other levels of government. While the NOFA will provide financial 
assistance to the Small Cities Program of New York State, none of its 
provisions will have an effect on the relationship between the Federal 
Government and New York State, or the State's political subdivisions.

Family

    The General Counsel, as the Designated Official for Executive Order 
12606, The Family, has determined that the policies announced in this 
NOFA would not have the potential for significant impact on family 
formation, maintenance and general well-being within the meaning of the 
Order. No significant change in existing HUD policies and programs will 
result from issuance of this NOFA, as those policies and programs 
relate to family concerns.

Accountability in the Provision of HUD Assistance

    See Section I.A.4 of this NOFA.

Prohibition Against Lobbying Activities

    The use of funds awarded under this NOFA is subject to the 
disclosure requirements and prohibitions of section 319 of the 
Department of Interior and Related Agencies Appropriations Act for 
Fiscal Year 1990 (31 U.S.C. 1352) and the implementing regulations at 
24 CFR part 87. These authorities prohibit recipients of Federal 
contracts, grants, or loans from using appropriated funds for lobbying 
the Executive or Legislative Branches of the Federal Government in 
connection with a specific contract, grant, or loan. The prohibition 
also covers the awarding of contracts, grants, cooperative agreements, 
or loans unless the recipient has made an acceptable certification 
regarding lobbying. Under 24 CFR part 87, applicants, recipients, and 
subrecipients of assistance exceeding $100,000 must certify that no 
Federal funds have been or will be spent on lobbying activities in 
connection with the assistance.
    Indian Housing Authorities (IHAs) established by an Indian tribe as 
a result of the exercise of the tribe's sovereign power are excluded 
from coverage of the Byrd Amendment, but IHAs established under State 
law are not excluded from the statute's coverage.

Prohibition Against Lobbying of HUD Personnel

    Section 13 of the Department of Housing and Urban Development Act 
(42 U.S.C. 3537b) contains two provisions dealing with efforts to 
influence HUD's decisions with respect to financial assistance. The 
first imposes disclosure requirements on those who are typically 
involved in these efforts--those who pay others to influence the award 
of assistance or the taking of a management action by the Department 
and those who are paid to provide the influence. The second restricts 
the payment of fees to those who are paid to influence the award of HUD 
assistance, if the fees are tied to the number of housing units 
received or are based on the amount of assistance received, or if they 
are contingent upon the receipt of assistance. HUD's regulation 
implementing section 13 is codified at 24 CFR part 86. If readers are 
involved in any efforts to influence the Department in these ways, they 
are urged to read the final rule, particularly the examples contained 
in Appendix A of the rule. Appendix A of this rule contains examples of 
activities covered by this rule.
    Any questions concerning the rule should be directed to the Office 
of Ethics, room 2158, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington DC 20410-3000. Telephone: (202) 708-
3815 (voice/TDD). (This is not a toll-free number.) Forms necessary for 
compliance with the rule may be obtained from the local HUD office.

Prohibition Against Advance Information on Funding Decisions

    Section 103 of the Reform Act proscribes the communication of 
certain information by HUD employees to persons not authorized to 
receive that information during the selection process for the award of 
assistance that entails a competition for its distribution. HUD's 
regulations implementing section 103 are codified at 24 CFR part 4, and 
recently were amended by an interim rule published in the Federal 
Register on August 4, 1992. In accordance with the requirements of 
section 103, HUD employees involved in the review of applications and 
in the making of funding decisions under a competitive funding process 
are restrained by 24 CFR part 4 from providing advance information to 
any person (other than an authorized employee of HUD) concerning 
funding decisions, or from otherwise giving any applicant an unfair 
competitive advantage.
    Persons who apply for assistance in this competition should confine 
their inquiries to the subject areas permitted by 24 CFR part 4. 
Applicants who have questions should contact the HUD Office of Ethics 
(202) 708-3815 (voice/TDD). (This is not a toll-free number.)

    Dated: May 24, 1994.
Andrew Cuomo,
Assistant Secretary for Community Planning and Development .
[FR Doc. 94-13104 Filed 5-26-94; 8:45 am]
BILLING CODE 4210-29-P