| CDBG Times News |
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Winter 2009
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| Tired of having to annually report program income? |
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If you are one of the 21 cities and counties listed below there is a CURE for this annual reporting requirement
Burns, Canyonville, Central Point, Eagle Point, Garibaldi, Glendale, Gold Hill, Jackson County, Jefferson, Keizer, Lake County, Lakeview, Lebanon, Lincoln City, Malheur County, Marion County, Mt. Angel, Phoenix, Turner, Winston and Woodburn
If you are one of the 19 cities and counties listed below, OECDD will be reviewing your files to determine if the annual reporting can be discontinued in FY 08/09:
Astoria, Bay City, Benton County, Cottage Grove, Gervais, Gilliam County, Harrisburg, Klamath Falls, La Grande, Linn County, Lowell, Manzanita, Mill City, Monmouth, Philomath, Silverton, Sweet Home, Toledo and Union.
What is Program Income (PI)?
Recipients of Community Development Block Grant (CDBG) housing rehabilitation grants from 1999 and earlier have to report PI received each year from their housing rehabilitation (HR) revolving loan fund (RLF) to OECDD. This report must show all loan repayments and interest earnings received during the annual reporting period from July 1 to June 30. If the loan repayments and interest earnings total $25,000 or more, it is considered PI and must be returned to the HR-RLF and administered in accordance with all federal CDBG program requirements. This annual PI reporting continues forever.
What is Miscellaneous Income (MI)?
If this report shows that the loan repayments and interest earnings received during the annual reporting period from July 1 to June 30 are less than $25,000 it is considered miscellaneous income (MI). Since MI loses its federal identity it does not have to be returned to the HR-RLF and therefore does not have to be administered in accordance with all the CDBG program requirements. There are no future reporting requirements once the annual loan repayments and interest earnings have been determined to be MI by OECDD.
What is the CURE to eliminate the annual PI reporting requirement?
Municipalities need to
1) enter into a sub-grant agreement with an eligible nonprofit organization meeting the requirements of 105(a)(15) of the Housing and Community Development Act (HCDA) to carry out the HR program and
2) transfer ownership of all existing loan portfolios to the eligible nonprofit.
This sub-grant agreement between the municipality and the nonprofit must ensure compliance with state and federal CDBG requirements. Under this agreement the nonprofit becomes the owner/lender and, consequently, becomes responsible for all program decisions. From this point forward, all loan portfolios, repayments and interest earnings must be owned by or repaid to the nonprofit sub-grantee.
Once the eligible nonprofit begins loaning the program income and receiving the loan repayments and interest earnings, the loan repayments and interest earnings are no longer considered to have a federal identity as long as they continue to be used by the eligible nonprofit for neighborhood revitalization; community economic development; or, energy conservation. From this point forward, there are no further reporting requirements for these funds and they no longer must be used in accordance with all the federal CDBG requirements since they are considered to have lost their federal identity.
What is an eligible nonprofit?
An eligible nonprofit must meet the following requirements by providing:
- Documentation from the Internal Revenue Service (IRS) that certifies the nonprofit organization is organized under 501(c)(3) or (c) 4 of the IRS Code.
- Documentation that the organization must have as one of its primary purposes (as outlined in its bylaws, articles of incorporation or charter) to provide affordable housing that is decent, safe and sanitary for low- and moderate-income Oregonians.
- Documentation that the organization serves the development needs of the communities in the non-entitlement areas of the state and is carrying out a neighborhood revitalization, community economic development, or energy conservation project in accordance with 105(a)(15) of the HCDA.
How do we find out if a nonprofit is considered an eligible nonprofit?
OECDD maintains a list of certified eligible nonprofits, and you can simply call OECDD to find out if the nonprofit you are considering is on that list.
What if the nonprofit we are considering as a sub-grantee is not on the certified eligible nonprofit list?
Refer to Page 17-1 of the 2009 CDBG Method of Distribution, which contains the requirements for the Certified Sub-grantee program. The nonprofit desiring to become a certified nonprofit needs to mail the documentation requested above to OECDD. OECDD is then allowed up to 30 days to review the applicant’s documentation and to mail a response back to the sub-grantee, which will either certify the organization as “eligible” or identify the items still needed for certification.
What if we want to keep the MI and get rid of the PI?
The recipient can tailor a sub-grant agreement with an eligible nonprofit, allowing the city/county recipient to keep any MI while, at the same time, sub-granting any PI to the eligible nonprofit. However, as long as the original grant recipient is receiving the loan repayments and interest earnings and is the owner/lender of the all the loan portfolios, the recipient is still required to report all PI and MI received during the annual reporting period to OECDD.
How do we do this?
The city/county needs to contact OECDD to discuss its particular situation. If the recipient desires to pursue this path, the department will need:
- All documentation regarding the eligibility of the nonprofit, as described above;
- A copy of the sub-grant agreement between the City/County and the nonprofit;
- A copy of the nonprofit’s housing rehabilitation loan policies; and
- A letter requesting an amendment to the grant contract closeout agreement between the recipient and the OECDD.
Who do we contact at OECDD?
Contact Gloria Zacharias at 503-986-0132 to find out:
- How much PI or MI has been reported to OECDD;
- How to “de-federalize” the PI and discontinue the annual reporting requirement;
- A nonprofit’s certified sub-grantee status; or
- Answers to general PI and MI questions.
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| Federal records retention requirements |
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Units of general local government shall have records sufficient to facilitate reviews and audits by the state. For fair housing and equal opportunity purposes, and as applicable, such records shall include data on the racial, ethnic, and gender characteristics of persons who are applicants for, participants in, or beneficiaries of the Community Development Block Grant program. Records of units of general local government, including supporting documentation, shall be retained for the greater of three years from closeout of the grant to the state or the period required by other applicable laws and regulations. Environmental review records are to be maintained for four years. Source: Summary of federal regulation at 24 CFR part 570.490 and 570.502(a)(16).
What does “closeout” of the grant to the state mean?
This is the closeout of the annual Federal CDBG grant between HUD and OECDD.
How will we know when the Federal grant between HUD and OECDD is closed?
Most likely the grant recipient will not know which Federal Fiscal Year (FFY) grant funds are actually disbursed by the State to its project. The program year identified in the project number (i.e. P02XXX denoting program year 2002), may not correlate with the FFY funds actually disbursed for the project.
So how long do we keep our records?
Since every project funded in whole or in part with a specific FFY grant must be administratively closed before the state can close the annual grant with HUD, it takes the state an average of 7-11 years to close out a grant with HUD. To be cautious, CDBG records should be retained by the grantee for the required four years, (for environmental records), plus 11 more for a total of 15 years.
Why do we need to retain these records?
As required by the federal statute above, “Units of general local government shall have records sufficient to facilitate reviews and audits by the state.” Failure to retain records to document compliance during a state monitoring of the project will result in not only a Finding of the records retention requirement but other program Findings, as applicable. The lack of supporting documentation to demonstrate compliance with the federal program requirements is considered non-compliance.
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| CDBG Grant Management Handbook 2009 Edition |
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The 2009 edition of the GMH is currently at the printer and will be available soon. Copies will be available by contacting OECDD. An electronic version of the manual also will be posted on our web site.
The GMH is designed to help recipients of Oregon CDBG grants complete their projects in compliance with program regulations. The GMH contains the basic information that cities and counties need to initiate, manage and close out a CDBG funded project.
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| CDBG Training in the works for early 2009 |
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Mark you calendars for February 10th in Salem or February 24th in La Grande! OECDD will be holding an Applicants’ Workshop for all interested parties. The Salem workshop will be held a the Employment Department Auditorium, 875 Union Street NE and the La Grande workshop will be held at the La Grande Library Community Room, 2006 Fourth Street.
Space is limited—the workshops will be capped at 75 attendees.
To register, please contact Gloria Zacharias by email or at (503) 986-0132
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