USING FEDERAL FUNDS FOR CITY PROJECTS

INTRODUCTION PHB’s federal funds come primarily from the U.S. Department of Housing & Urban Development (HUD). Grants managed by BHCD include: Community Development Block Grant (CDBG) HOME ESG/McKinney Housing Opportunity for People With AIDS (HOPWA) Lead

Funding Sources: Eligible Uses CDBG - Infrastructure & Revitalization HOME - Affordable Housing Development or Tenant Based Rent Assistance HOPWA - HIV/AIDS Housing Needs ESG - Homeless Shelter Operations McKinney - Certain projects that address homelessness Categorical – Lead - for uses prescribed in the grant

BHCD Budget Breakdown

General Things to Remember All federal fund sources have regulations that govern how the dollars may be used by the City. Most regulations are statutory and cannot be waived. Putting $1 of federal funds into a project makes the entire project subject to federal regulations. Compliance with federal regulations can make the project more expensive and/or take longer to complete.

Abandon Hope All Ye Who Enter Here!

PROJECTS Eligibility. –Each federal fund source is designed to serve specific clients and/or carry out specific activities. –All projects must be able to document all eligibility requirements of the fund source. –Examples: –Income - projects must collect appropriate data to verify that clients are eligible for services. –Eligible Activity - “making the world a better place” is not an eligible activity.

Costs Eligible Costs. –Federal fund source regulations and/or Office of Management & Budget (OMB) standards identify the types of costs that can and cannot be covered with federal dollars. –All costs must be directly related to carrying out the funded project. –Some costs are prohibited or only allowed in certain situations:

–Equipment. As a general rule, this is not allowable with PHB federal dollars. –Entertainment/Social Functions (or anything that might appear to be one). In most situations food, beverages, gratuities or gifts are not eligible for reimbursement. –Indirect Administrative Costs. Charges for indirect administrative costs must be supported by an indirect cost allocation plan approved by BHCD. –Political activities or general governmental operations. –Fundraising activities –Penalties & fees –Substitution of funds. » Jurisdictions cannot substitute federal funds for local funds being used to fund an activity, thus freeing local funds for other uses. »Jurisdictions cannot fund all services to low income people with federal funds an utilize all local funds for middle and upper income residents.

Reasonable Costs. –Costs must be reasonable for the services provided. –In general, an open competitive selection process is required for selecting contractors or other service providers.

CAPS Several federal fund sources limit the number of dollars that can be spent in any year on certain types of projects. –Administration/Planning. Most fund sources limit the amount of dollars that can be used for administrative activities (e.g. CDBG 20%, HOME 10%).

–Public Services. CDBG also has a 15% limit on the amount of funding for these types of activities. Examples include: –operation of homeless shelters and services to homeless persons. –most job training or educational activities. –youth education and enhancement activities. –community events and information dissemination. –HOME cannot pay for public services, even when associated with housing

Cross-Cutting Regulations These regulations apply to all federally- funded activities, regardless of fund source.

–OMB Circulars. These cover appropriate fiscal management systems and procedures as well as eligible/ineligible costs. –Audit Requirements. –Procurement Standards –Conflict of Interest. –Recordkeeping Standards –Program Income

–Environmental Review. –All expenditures of federal funds must be reviewed for environmental impacts, even if the activity is not physical in nature. –The environmental review must be carried out prior to committing any federal funds to the project and non- federal funds may not be expended until the review is complete. –Environmental reviews can take several months to complete. –In Portland the major issues that come up are: »Historic Preservation. »Endangered Species Act.

–Labor Standards. –Federally funded activities must comply with federal laws related to wages and working conditions for construction trades workers. »Davis-Bacon Act »Contract Work Hours & Safety Standards Act »Copeland Anti-Kickback Act –If federal funds are used in the project, the entire activity must comply with these laws. –Prevailing wage rates are set by the federal government and tend to be higher than market rates in this area. –Significant reporting, documentation and monitoring requirements must be implemented.

–Uniform Relocation Act –Purpose is to provide displaced persons with fair, equitable treatment and protection from disproportionate injury by projects designed to benefit the public as a whole. –Applies to real property acquisition, demolition, rehabilitation or construction and covers both residential and business displacement. –Displacement occurs when a person (or their property) moves permanently as a direct result of federally-assisted activities. –Compliance requires: »development of a relocation plan »notification prior to beginning the project »financial assistance for relocation costs

Can You Get Around These? –Statutory Requirements are those included in the legislation passed by Congress. These cannot be waived without a literal Act of Congress. –Regulatory Requirements are those developed by federal agencies carrying out legislation (e.g. HUD). There are sometimes procedures to request waivers of these requirements but waivers are not routinely granted.

Consequences of Non-Compliance The consequences of non-compliance with federal regulations can range from being told not to make the same mistake again to being required to repay federal funds back to HUD. Any repayments must come from non-federal fund sources.

Critical Issues/Gaps Eligibility Challenges Operating subsidy for rental housing Rental assistance Human and social services Staffing, training, infrastructure Requests for sponsorship